New Plan Incorporates New Management and Technology Infrastructure to Replace Insurance Companies
Everyone agrees that healthcare in this country is in crisis, that it is unaffordable and unavailable to a large segment of the American population. Suggested solutions range from adopting a universal healthcare plan to lowering malpractice rates. But according to Rick Jackson, Chairman and CEO of Jackson Healthcare, these are not solutions, they are merely band aids to treat the symptoms. The true problem, says Jackson, can be defined in two words – insurance companies. And Jackson's provocative new proposal to resolve the healthcare crisis also involves insurance companies – eliminating them. According to Jackson, insurance companies no longer provide value. "They need to be replaced with a more efficient system that significantly reduces unnecessary costs, passing those savings on to employers and patients," says Jackson. "The new system must return physicians to the practice and control of medicine," he adds, "while reinstating the relationship between doctors and their patients." And Jackson's bold new alternative plan, a national healthcare reimbursement system (HRS), would do just that.
The elimination of the middleman – the insurance companies
According to the insurance industry, 24% of the healthcare dollar is spent on insurance administrative expenses and payment processes, the cost of selling insurance and its profits, as well as the providers' billing and collections. Only 76% actually buys health-care. But those estimates do not include the estimated 5% that is spent by providers in processing insurance claims, as well as 5% savings from using new technology and physician incentives to reduce costs for patients and employers. Therefore, Jackson believes the ratio is really 66/34 with only 66% actually being spent on healthcare. "Before the technology era, the use of insurance companies made sense," says Jackson. "But with advances in computerized transactions and innovative smart card technology, insurance companies have become unnecessary middlemen that merely complicate and increase the cost of healthcare," he adds.
Healthcare Reimbursement System
Jackson's HRS would replace insurance companies with a new management and modern technology infrastructure. Key to the system is the use of an individual Personal Health smart card (PH Card), which is similar to a credit or debit card with a memory chip. These would be tied to a system similar to an electronic bank transfer or ATM system that would house each person's medical information relating to eligibility, coverage, deductibles, protocols, care plan, etc.
Each time a patient is treated, they would present their PH Card and it would auto-matically verify eligibility, authorize pre-certifications and procedures of treatments, compute co-pays (taken out of checking account or charged to credit card) and transfer funds to a provider's account through ACH (just like Visa/Amex). This system would ensure that the proper party would receive payment immediately with no costly billing or collection staff. All data would be downloaded to the System and accessible by all providers and payers. The total cost of all transactions should be no more than 10 to 25 cents.
Central Repository for all medical information
This reduces duplicate tests, x-rays, labs, etc. Each individual's entire medical history would be downloaded to the smart card, so everything would be available within seconds to speed up routine services as well as emergency visits. Physicians would be able to get a comprehensive picture of a patient's health over time, making it easier to detect patterns and progressions of a symptom or disease.
Healthcare Reimbursement Trust, a risk pool
This would act as a trust fund managed by one or more independent financial entities for the beneficiaries. The Trust would eliminate the need for insurance companies and save up to 8% by doing away with insurance sales costs and profits. Just as insurance companies currently do, all funds held in the Trust would be invested, again lowering the costs. All payers (Medicare, Medicaid, Employers, self insured, and third party payers) would pay premiums into the Trust. Actuaries would determine ongoing premiums based on desired coverage, with patients/employers permitted to pay more for increased health benefits. Actuary tables would reflect higher costs (out of pocket) for those whose lifestyles make them poor health risks.
National Physician Review Panels
NPRP's would take the control of healthcare from insurance companies and return it to physicians and patients. The Panels would control protocols for patient care and decide what is medically necessary; the HRS would administer the plan. If there is an exception, regional physician panelists could approve it electronically, similar to getting authorization on a credit card. "We need to trust physicians again," says Jackson. "It's not necessary to have $30,000 a year insurance clerks challenging a physician's treatment."
The reduction of malpractice and defensive medicine costs
In today's healthcare system, the present cost of malpractice and defensive medicine is about 10% of healthcare costs. Physicians order unnecessary and expensive tests in an effort to protect themselves from negligence claims. Under Jackson's HRS Plan, malpractice claims would be reviewed by regional NPRP's, non biased, independent peers, to determine if negligence occurred and whether the claim should be litigated, thereby eliminating about 95% of all lawsuits. The number of pharmaceutical errors would also be reduced because a central repository would include all the medications a patient is taking, as well as their allergies, thereby avoiding prescribing incorrect medication or pharmaceuticals that cannot be taken together.
The elimination of PPO'S and provider networks, while creating a National Fee Schedule
All physicians and other providers would be part of the same system, eliminating the administrative expenses of managing and supporting provider networks, about 1% to 2% of healthcare costs. A national fee schedule would be created, approved by the Physician Panels, hospital executives and other third parties, actuaries, etc. This fee schedule would have modifications based on the cost of living in each geographical region. Physicians could still differentiate their income by service, efficiency, as well as customer care, and add other services that are self pay, such as plastic surgery, private rooms, anesthesia for colonoscopy, birthing suites, etc.
Incentives to physicians and private industry
Doctors and surgeons who create a better financial model to cut the costs of medical care would be rewarded. These incentives would encourage physicians to control costs, resulting in lower premiums for all. Jackson's Plan includes creating private industry incentives to develop innovative technology and pharmaceuticals, making healthcare more efficient and cost-effective. Jackson believes that if MRI technology were just being developed today, it would never make it to the marketplace. "Private industry invested over $ 250 million years ago to develop the MRI, and its payoff has been significant," says Jackson. "But in today's healthcare environment, MRI's would be considered 'exploratory' by Medicare and other payers, with no assurance that it would qualify for reimbursement, thus making it a worthless purchase," he adds. Under Jackson's Plan, inventors would be encouraged to develop new cost-efficient technologies and pharmaceuticals, receiving incentives and additional remuneration over an extended period of time for their work. Jackson is concerned that without private industry incentives, technological advances will disappear, and the future of medicine will depend on government and non-profit scientists and grants. "That would be a death knell for the technological future of U.S. healthcare," says Jackson. "In those countries that have universal government healthcare, innovation has come to a screeching halt," he adds, "and they are forced to rely on the U.S. for advances and improvements."
The lack of control over their own practice, the hassle of billing and collections, the loss of the doctor/patient relationship and the overwhelming need to practice defensive medicine has taken "the bloom off the rose" for some doctors as they view their careers. "Physicians are leaving the medical profession, and if something isn't done to resolve these problems, we will continue to lose the best and the brightest," says Jackson. "And because of supply and demand," he adds, "logic dictates it can only mean more costly healthcare."
Other proposed solutions for revamping America's inefficient healthcare system abound. One popular so-called remedy is mandatory health insurance for all. But according to Jackson, guaranteed healthcare treats a symptom, not the problem. "Under today's antiquated system, healthcare is neither efficient nor affordable, and making it mandatory isn't going to change that," says Jackson. Great advancements in medicine have been made, he adds, yet the system that manages it dates back to the 1980's. "Technology now provides us the opportunity to return doctors to the practice of medicine, eliminate the middle man, improve the quality of healthcare and make it affordable and accessible to everyone," he says. "And to the majority of Americans," says Jackson, "that's a solution that can't come soon enough."
