Coalition America, Inc.

The party’s over. After a decade of keeping the lid on health care costs, most PPOs, HMOs and other managed care organizations have announced another round of double-digit premium increases.

This has industry experts again predicting a cost crisis for health care. Unfortunately, the timing could not be worse for companies caught in a slowing economy. Now, more than ever, is a time when managed care companies and health care providers need to link arms in search of new, innovative approaches to ensure high quality medical care at affordable prices.

Otherwise, the third leg of the American health care system-employers-may take a hike. Their exit would invite wholesale intrusion by the federal government into health care, which translates into universal Medicare.

To preserve and enhance our health delivery system, payers and providers both must accept that quality and affordability are not mutually exclusive. Further, payers and providers both have a stake and a role in ensuring a system of high quality reasonably priced medicine.

Quality as a marketing edge

While companies are now primarily interested in reducing their insurance costs, it does not mean they are uninterested in the quality of care their employees receive.

Quality health care is not just a consumer expectation or demand, but it offers a distinct marketing advantage to managed care companies that are quality-focused. First, however, payers and providers must first understand that they are allies, not enemies, in achieving affordable, quality health care and that certain actions are in their mutual interest.

For example, some health care costs, particularly those tests, treatments and technologies used by doctors to protect themselves from litigation do drive up health care costs. However, as long as they feel threatened by the legal system, it will be difficult to persuade doctors that such precautionary treatments are unwarranted.

During congressional debate on the Patients Bill of Rights, many physicians supported provisions that allowed patients to sue their managed care providers. What we need, however, is less litigation in health care, not more. Thus, a common strategy to obtain rational tort reform would be a better step in achieving quality, affordable health care.

Another area for cooperation is looking for creative ways to find cost savings in the health care delivery system. That need has spawned a new breed of specialized cost containment organizations over the past five years.

Benefits for managed care

More payers are partnering with a new breed of cost containment company that can help them save money by: 1) developing primary PPO management programs across multiple locations; 2) offering access to lower-cost supplemental networks for managing out-of-network costs; and 3) direct negotiations with health care providers where no PPO contract exists.

The most effective cost containment companies have contracts with hundreds of PPO networks nationwide. Through these relationships, they can develop either primary or supplemental networks for true national coverage at much lower costs.

In addition, some cost containment companies have other ways to lower costs. For example, if it lacks in-network access to certain providers, they will negotiate directly with the doctor or hospital on behalf of the PPO or corporate self-insurer to obtain a reasonable discount.

Repricing lowers cost

Even if an insurer does not need a true national network, they can still benefit by having a cost containment company reprice their out-of-network claims. Working through a cost containment company, insurers can use supplemental networks to lower their out-of-network claims or they can obtain retrospective discounts after the claim is submitted through a process called "claims repricing."

Today, repricing should be automated, so that clients of the best cost containment companies can go online to access PPO networks and capitalize on a broad range of pre-negotiated discounts.

Claims sent by Internet, EDI, fax or mail are computer matched to the network delivering the best results under existing contracts. If no network match is found, the claim is automatically routed for negotiation.

Once the new prices are obtained, they are immediately transferred back to the payer for disbursement. The most sophisticated cost-containment and repricing vendors are able to electronically dump data right into their clients adjudication systems for immediate processing and payment.

Finally, PPO contracts are constantly changing. Since cost containment companies are always updating their own network data, they can provide access to the best coverage at all times.

These broad-based networks not only save money, but make life easier for employees. Having access to broad provider and network choices minimizes disruption, keeping employees happier and moral higher.

Approach helps providers, too

However, cost containment is not a one-way street where providers are continually asked to negotiate with payers for lower prices. Cost containment companies are simultaneously working with providers to simplify the claims process and minimize the hassles they face in being paid.

Doctors are in the business of medicine; claims management is a patient service that adds cost to their operations. They are willing to pass along any savings in time and money they achieve in handling patient claims.

With their expertise in information processing technology, cost containment firms are efficiency experts who can use their technology prowess to create savings in claims management for providers, too.

For example, Coalition America is currently analyzing the backroom operations of health care providers to see where the typical bottlenecks and problems occur. With this information, we are developing software to reduce the time involved in handling claims and achieving real time claims processing.

Fewer than five percent of the claims processed through our systems are on paper forms. Most are digitized and processed via the Internet, EDI or similar systems.

This ability reduces claim loss, improves efficiency, expedites claims adjudication and accelerates payments. These benefits translate into lower total medical costs.

A byproduct of the shift toward improved electronic claims management is better HIPAA compliance by ensuring the protection and privacy of patient information and standardizing transactional information. Without industry-wide transaction standards, claims processing will remain a slow, costly process.

Cost containment a must

Given the challenges facing our health care delivery system, everyone involved has a stake in maintaining quality while improving affordability.

One criticism of health care is that it is the only area of the economy where technology drives up the price of service. That is why both providers and payers are looking for cost containment partners that can deliver both the technology and the professional expertise needed to boost efficiency and reduce costs.

Regardless of the financing mechanisms that evolve in the future, there will be a great need for cost containment systems that deliver quality and affordability. These two words may become the most important medical terms of the 21st Century.

David Rearick, DO, MBA, CPE., Chief Medical Officer

David Rearick brings a unique skill-set as a physician executive to Coalition America by overseeing medical cost containment strategies. He is charged with the task of aggressively fighting medical fraud and wasteful practices, which lead to rising healthcare costs. He is also responsible for implementing unbundling and other medical logic into the CAI system, enhance databases and initiate strategies to reduce the costs of prescription drugs for CAI customers.

Dr. Rearick is skilled in contract negotiations and is board certified in family practice and medical management. He received his medical degree from Midwestern University, Chicago College of Osteopathic Medicine. He earned a bachelor’s degree in zoology and philosophy from Baldwin-Wallace College in Ohio, a MBA from Emory University, and his Certified Physician Executive certification from The American Academy of Physician Executives. David has a distinguished 20-year career in clinical practice, group practice formation, business development and managed care.

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