Systemic Denial: How Healthcare's Broken System Was Exposed Last Week
Fraud, Waste, and Abuse...but Whose?
Last week, two seismic events exposed the raw tension between doctors and insurers. UnitedHealthcare CEO Brian Thompson was tragically shot and killed in New York City before a company event. Hours later, Anthem announced (and quickly reversed) a controversial policy change regarding anesthesia reimbursement. Both stories ignited emotional, divisive reactions and laid bare the fundamental misalignment in health care: doctors, insurers, and patients are at odds — and no one is winning.
My intent here is not to delve into these events and the reactions they elicited. Others have done a masterful job doing so in a thoughtful and balanced way. Surgeon colleagues Sanat Dixit and Quinn Wang did an excellent job covering the Thompson killing.
These events reveal deeper truths about health care’s ongoing crisis: the growing tension between doctors and insurers and the broken nature of utilization management (UM). If UM was designed to ensure value-based care, why does it leave so many feeling devalued? In this post, I’ll explore the causes of this tension, the fundamental flaws in UM, and possible paths forward — if any exist.
[Editor’s Note: This article was written prior to Monday’s arrest of a suspect in the Brian Thompson murder.]
Is There a Case for Utilization Management?
In an ideal world, all physicians would deliver care that is high-value, high-quality, and appropriately indicated. Evidence-based medicine would be a guiding principle, making treatment decisions clear and precise. Insurance companies would wield utilization management (UM) and prior authorization (PA) judiciously and earnestly. Well-intentioned, equitable mechanisms would be in place to save the system from fraud, waste, and abuse.
Sadly, we do not live in an ideal health care world.
As a practicing physician, I have always found the UM/PA process arbitrary and pointless. Denials revolve around the lack of specific language in supporting documentation or some random, clinically irrelevant, unmet payer requirement. In my experience, 99% of the denials have been reversed after a brief conversation with the “peer” reviewing the case. The entire process seems like a colossal waste of time and resources for all involved.
Granted, I do hip and knee replacements — the indications for which are comparatively straightforward. Decisions regarding cancer care that involve expensive and often experimental treatments are more complicated and high-stakes. In theory, UM exists to ensure that patients receive care that is safe, cost-effective, and based on science. Many patients and physicians would argue this doesn’t happen in practice. Critics argue that insurance companies pervert this altruistic goal to control the process and improve their bottom line. In response, payers argue they’re not denying care — they’re just saying their guidelines don’t justify them paying for it.
Is VBC Just a Different Flavor of UM?
We spend a lot of time extolling the virtues of value-based care (VBC). Even though many have soured on the concept, there’s broad agreement that the best health care system delivers high-quality, high-value, evidence-based treatment. Low-value, unnecessary care should be eschewed. A system with finite resources and spiraling costs begs for workable solutions.
By definition, VBC programs incorporate many features of utilization management. Comparing these care models to payer-driven UM isn’t as much of a false equivalency as it may seem. VBC rations care and manages resources via different mechanisms, but the end effects are similar. Providers are incentivized to steer patients away from over-imaging, unnecessary procedures, or expensive medications in the name of value. But who’s realizing that value? The patient? The provider? The insurance company? The employer? Some form of gatekeeping is necessary, but where do we draw the line? Patients can sense when they’re being denied care. Whether there are clinically valid, altruistic reasons or not, they often don’t like it.
Walmart's Centers of Excellence Program reduces low-value care, but not without controversy. Patients who are denied surgery under COE programs may be told they can still proceed with surgery — just not on Walmart’s dime. For the patient, the decision can feel like a “denial of care,” not an objective measure of value. It’s a microcosm of the entire debate over utilization management.
Hard Truths About Low-Value Care
As clinicians, we argue that treatment decisions should be solely between doctor and patient. We have the patient’s best interests in mind, not some third party with ulterior motives. Standing on moral high ground, our recommendations are informed by years of experience, firsthand knowledge of the patient, and adherence to the standard of care. The hard truth is that this isn’t always the case. Low-value, inappropriate care exists—accounting for up to $935 billion in wasteful spending per year—and we’re responsible for some of it.
Myriad factors drive low-value care. The anti-FFS crowd (including a certain Vox reporter) point to fraud and greed — the “perverse incentives,” “quantity over quality” argument. To suggest unscrupulous motives don’t play a role would be disingenuous. How big a role is debatable. Ignorance and incompetence are additional, less nefarious considerations. Some health care providers simply don’t know what they don’t know. They’re ignorant of the latest evidence-based treatments. Incompetence here is not meant in the pejorative sense but rather to indicate lack of competency in a specific area. I’m a decent orthopedic surgeon but an incompetent cardiologist. When doctors stray too far from their area of expertise, low-value care can result.
There are less obvious factors contributing to low-yield medical care: consumerism and compassion. Doctors may realize the care they’re offering isn’t high-yield or evidence-based. However, they acquiesce to appease the patient or avoid a negative review. Consumerism can be interpreted as “the customer is always right.” Such an approach can have expensive and harmful consequences in medicine. This mechanism may be the driving force behind many low-yield MSK treatments, including MRIs and knee scopes.
Some low-value treatment is borne from compassion — offering a glimmer of hope in an otherwise dire situation. As I’ve written before, evidence-based medicine isn’t as black and white as we’d like. There are a lot of gray areas and many studies that contradict other studies. Low-value treatment isn’t no-value treatment. How do we set the ROI bar for medical interventions? Should a patient desperate for answers and running out of options be denied a treatment that has a low, but non-zero, probability of working? In such situations, compassion may supersede value considerations.
Whatever the cause of physician-driven, low-value care, it’s disingenuous to suggest this phenomenon doesn’t exist. We cannot fix the system without addressing fraud, waste, and abuse of all causes. The goals of high-quality, high-value, evidence-based treatment are laudable, even if they’re not always achievable. Resource stewardship is critical to the success of care delivery innovation.
The events of last week make it painfully clear that current mechanisms of utilization management are deeply unpopular. As it currently exists, UM is rife with shortcomings. It’s too often used to arbitrarily deny care for the benefit of the payer, not the patient. The system has strayed far from its supposedly altruistic roots and created perverse incentives of its own. As technology evolves, we’re on the precipice of an artificial intelligence war with payer denial bots battling provider appeal bots. Costs and frustrations will mount. Is there a better way?
Finding Solutions
Several utilization review replacements and revisions exist. Gold cards allow proven high-value providers to bypass PA/UM. UHC launched a gold card program in October, but the program has been derided for its limited scope (the top 10 orthopedic procedures are excluded). Well-designed and implemented VBC programs obviate the need for medical necessity determinations while offering high-value care. So far, results have been middling. Direct care, employer consortiums, and health care marketplaces represent alternatives to the traditional insurance system. They’re promising but largely in their infancy. Some argue for a universal or single-payer system — an idea fraught with enough drawbacks to warrant its own column.
If the events of last week teach us anything, it's that health care's current model is unsustainable. The systems designed to protect us from fraud and low-value care are now making patients and doctors feel like pawns. It's time for insurers, providers, and patients to come together to create something better. We don't need outrage and cynicism — we need change. The only question is, will we have the courage to demand it before the next explosion?
Small Incisions
I hesitate to share this article as it perpetuates underinformed, one-sided narratives about overpaid doctors, overbilling, and unethical practices. The article pins high healthcare costs on providers (not insurance companies) — a bold claim for sure. Of course, “providers” is a very broad term that includes not just physicians but hospitals and health systems as well. The idea that doctors are the primary drivers of healthcare costs is…a bit of a stretch. Unfortunately, misinformed pieces such as this further erode public trust in the medical profession. (Nisha Mehta, a radiologist and founder of a large online physician community, penned a strong rebuke of the Vox article that’s worth reading).
Hinge Health joins Amazon's digital health benefits program
I’ve been wondering who and when Amazon would add an MSK offering to its Health Services offering. Now we have the answer — Hinge Health. This development isn’t surprising, Hinge is one of the largest and most well-funded digital MSK providers. The company is reportedly preparing for an IPO next year. To be clear, Amazon’s Health Services helps employees find and enroll in digital health programs offered by their employer or health plan at no additional cost. While it may help drive awareness and utilization of an existing benefit, this is a bit different than a pure DTC digital health offering. Amazon’s virtual care clinic (One Medical Pay-per-visit) does offer evaluation and treatment of joint and back pain, but my quick search didn’t turn up who’s providing the backend. If/when Hinge does file an S-1, it will be our first look behind the curtain of digital MSK economics and business models. Valuations have been outsized, but are they justified?
Tim Cook Wants Apple to Literally Save Your Life | WIRED
The article is behind a paywall, but the headline is an oversell. Everyone knows that Tim Cook proclaimed that healthcare will be Apple’s greatest contribution to mankind. However, the article is short on specifics and long on company boosterism. Apple is doing interesting things in healthcare, but they seem reluctant to go all-in. Understandable as it’s very easy to get burned venturing outside your core competencies to tackle bigger healthcare issues. CVS, Walmart, and Google found this out the hard way. Shareholders love Apple Watch sales, not blowing billions tilting at medical windmills. Still, it’s a shame Apple retreated from more aggressive attempts to enter healthcare. Seems as good a time as any to re-share the open-letter article I wrote about Apple Health 5 years ago — still my most viral piece of writing. It still holds up pretty well.
Ben Schwartz, MD, MBA
Editor-in-Chief, The Surgeon’s Record
Commons Clinic Senior Clinical Fellow
VBC will never be a solution since it looks at healthcare from the revenue down and healthcare was never meant to be a profit center nor should it.
Almost all of the complexities you outline are created by those that profit from rather than provide care. These complexities simply become self fullfilling proficiens for the companies that created them.
A perfect example is the codes they have created for an initial office visit.
CPT Code Description Time Spent (Minutes) Medicare Reimbursement Rate
99202 New patient, straightforward medical decision-making 15–29 $71.06
99203 New patient, low complexity medical decision-making 30–44 $109.69
99204 New patient, moderate complexity medical decision-making 45–59 $164.38
99205 New patient, high complexity medical decision-making 60–74 $216.77
99211 Established patient, may not require the presence of a physician 5–10 $22.92
99212 Established patient, straightforward medical decision-making 10–19 $55.67
99213 Established patient, low complexity medical decision-making 20–29 $89.39
99214 Established patient, moderate complexity medical decision-making 30–39 $126.07
99215 Established patient, high complexity medical decision-making 40–54 $177.47
There is nothing value based about any of these codes nor is there any value to the actually care of the patient. What there is, is a lot of ambeguity that a;;own for an insurance company to deny care while hiding behind UM.
So much of what the insurance companies demand is "evidence based" so why ar they not held to the same standard?
The undisputed evidence of insurance is that the top six insurance companies make $100,000,000.00 PROFIT PER DAY. This would refute any evidence of over utilization.
The system we have is broken thinking that those that profit from it are going to change it is also broken. The majority of the abuse by physicians is driven by the complexity of the very system created by those that are wanting to manage it.