COMMENTARY

Thumbscrews, Iron Maiden, the Rack… Take Your Pick With Insurance Companies

Nathan Wei, MD

Disclosures

May 10, 2017

A long time ago, when I was in college, I read about experiments in which white rats were subjected to stress. The constant stress that accompanied any behavior they engaged in eventually caused the rats to find a corner and just huddle and shiver.

Unfortunately, that's what is happening to physicians. Among the many stressors we currently have to deal with are insurance hurdles, barriers, denials, malpractice concerns, rising pharmaceutical prices, EMRs, and, most of all, limited decision-making power when it comes to our patients.

When a person has gone through college, medical school, residency, and maybe a fellowship, he or she expects to be able to make a decision when it comes to patient care. Unfortunately, that decision is often not the one that gets made for the patient. The eventual test, procedure, or medication that the patient receives might have no resemblance to what the physician ordered. This powerlessness is taking a toll on physicians today.

In the next series of articles, I'm going to be looking at the various components of healthcare that are forcing doctors into corners and causing them to shiver. I'm doing this from the perspective of a guy in the trenches. I expect to get blowback from policy wonks, insurance pimps, and so on. So be it.

First, insurance companies: I was fortunate to attend a recent talk given by Robert Walshon about the healthcare insurance industry. He has first-hand experience with this topic; at one time, he ran an HMO.

I found a number of the slides he presented to be interesting and provocative. The first has to do with CEO compensation. Here are the 2015 numbers for annual compensation for a few of the insurance companies you probably are familiar with:

  • David Cordani, Cigna: $44.6 million

  • Michael Neidorff, Centene: $20.7 million

  • Bruce Broussard, Humana: $10.3 million

  • Stephen Hemsley, United Healthcare: $20.1 million

  • Mark Bertolini, Aetna: $27.9 million

  • Joseph Swedish, Anthem: $13.6 million

And to see how their companies faired in the market, here are some interesting figures on share price increase from 2009 to 2016:

  • Dow Jones Industrial Average: 253%

  • Cigna: 1113%

  • Humana: 1010%

  • United: 814%

  • Aetna: 628%

  • Anthem/WellPoint: 469%

Walshon reviewed some of the strategies insurance companies employ to increase profits:

  • Become more efficient

  • Pay for quality care

  • Get government subsidies

  • Shift costs to members

  • Pay providers less

  • Increase premiums

  • Increase the number of profitable lives

  • Decrease the number of unprofitable lives

  • Reduce services

Without controls for acuity and severity, physicians are penalized for treating really sick patients.

These are some of the tactics insurance companies use:

  • Biologic drug-switching

  • Take-it-or-leave-it contract negotiations

  • No, low, or slow payment

  • Clawbacks

  • Arduous prior authorizations

  • Denials by rejection or aggravation

  • Limitations and restrictions on covered services

  • Bundling

  • Drug replacement vs buy and bill

  • Downcoding

  • Site-of-service restrictions

  • Closed formularies

  • Restrictive medical treatment policies

  • Payer audits

  • Phantom benefits

  • Blurring of Part B and Part D

  • Narrow provider networks

And so on.

The bad news is that this is just the beginning. However, there is a light at the end of the tunnel.

The Thucydides Trap, a theory popularized by Dr Graham Allison, a Harvard professor, states that when an established power is confronted by a rising power, war is inevitable. Although the metaphor comes from the era of the Peloponnesian War, in the fifth century BC, it has been used to describe various conflicts throughout history.

With the rise of physician supergroups, such as United Rheumatology and Bendcare, I predict there will be a conflagration of sorts that might allow physicians to escape their corners.

Stay tuned.

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