AHIP Survey Illustrates Physician Fee Issues

By August 12, 2009Commentary

In the last few weeks, some politicians have sharpened their attacks on insurers, blaming them both for the problems in the health system and for impeding reform.  Not surprisingly, the individual plans and their primary trade association, America’s Health Insurance Plans, have taken exception to the criticism.  One recent response was the release of a survey of physcians’ fees.  (AHIP Survey)

The survey looked at billed charges or stated fees, illustrated by out-of-network charges.  When a plan member goes to a provider who is not in the plan’s network, the member will be charged full price.  While most physicians rarely actually collect their notional normal price, seeing these fees and comparing them to either Medicare payments or typical private insurer contracted rates is a jolt.  The examples are outrageous, it was not unusual for a billed fee to be several times the Medicare payment for the same service.  But the most important reminder from the study is that the costs of coverage–the premium paid to a private insurer–are largely driven by the underlying medical costs, in fact, annual premium increases over the last few decades track very precisely with medical cost increases.  Those medical costs are a function of both unit price and number of units of service.  Physicians and other providers have tended to increase both at a pretty good clip and that is the source of our cost problem.  Some of the increase in each may be justified, but as the hullabaloo around geographic variation in Medicare spending suggests, there is reason to be concerned about whether there is significant amount of unnecessary expense.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

More posts by Kevin Roche

Leave a Reply