Memo from the Editor

December 3, 2004

A way to curb healthcare costs?

The United States spends a lot of money on healthcare-nearly $1.6 trillion in 2002 according to CMS figures. Some estimates put that number at almost $1.8 trillion today. That's nearly 15 percent of gross domestic product.

Prescription drug costs eat up more than $162 billion and hospital spending accounts for nearly $490 billion. That still leaves $1 trillion, give or take a couple billion, on other healthcare expenditures.

Those numbers are huge. In fact, they're really too big to fully comprehend. What does a trillion of anything look like? Or even a billion? It's only when you bring things down to a level that people can comprehend that you can seriously begin to look at ways to curb them. The Medical Group Management Association has done that with just one cost component-administrative tasks.

Their figures enumerate some of those group-wide costs: $19,444 a year on the phone with pharmacies resolving drug formulary issues; $38,761 verifying such health plan information as coverage, copays, and deductibles; $9,248 resubmitting denied claims; $7,618 submitting credentialing applications; and $33,800 a year negotiating contracts with an average of 15 different health plans.

The MGMA suggests that a simplified insurance payment system would cut down those administrative costs significantly. Their plan would have insurers agree to a single set of insurance options-a tiered approach-that they'd sell to purchasers, be they government, employers, or individuals. There would be a single credentialing form that a physician would fill out once and that all insurers would refer to, a single set of clinical guidelines and protocols, a single formulary, a single set of coding, billing, and documentation protocols, and a single fee structure negotiated by a state or local entity representing doctors in that area. (Clearly that latter proposal would necessitate a change in antitrust laws.)

Would such a program work? Probably. The carrot that could entice the insurance industry to buy in would be the fact that it might forestall national health insurance. But with President Bush in the White House for another four years, the chances for any sort of single-payer national health insurance plan are slim indeed. And critics faulted both Bush and Kerry for not taking the skyrocketing costs of healthcare seriously enough.

One thing the MGMA proposal would do, though, is make physicians' lives easier. We think that's a worthy goal, and we urge all physicians to investigate ways to support the proposal. The association has suggestions for "what you can do" on its Web site ( http://www.mgma.com/simplify2.cfm). Anything that will make your life easier and help control healthcare costs at the same time is worth at least a small effort on your part.