Balanced Choice Simplifies the Life for Stakeholders

Balanced Choice Simplifies the Life for Stakeholders

Consumers in Balanced Choice
Providers in Balanced Choice
Employers in Balanced Choice
Comparison of Stakeholder Experience in the Current System and Balanced Choice

Balanced Choice Simplifies the Life for Stakeholders

Balanced Choice may appear complicated because it involves a paradigm shift and many innovations, but the end result is a system that is easier to use and regulate than the current hodgepodge of seventeen systems. It changes health care from a uniquely complicated system to one similar to most other parts of the free market system for purchasing goods and services.

Consumers in Balanced Choice
Balanced Choice gives consumers complete confidence that they will have access to quality health care, regardless of their financial circumstances. The same comprehensive health insurance is available throughout their lifetime regardless of whether a condition is pre-existing, whether it is caused by an automobile accident, or whether it occurred on the job. Health care coverage includes pharmaceutical benefits, mental health treatment, prevention services, and long-term care. A doctor visit focuses on health care, not insurance coverage and requirements. Questions about cost can be immediately answered without consulting their insurance companies.

Consumers are assured that they will be able to afford the cost of health care. They can choose the Standard Side and there is no charge to the patient. If they choose the greater freedom of seeing providers on the Independent Side, they pay a “gap” that exists between the Balanced Choice reimbursement and the full charges of the Independent Side provider. The overall gap payments are usually less than what patients now pay for copayments, deductibles, and uncovered services.

When purchasing medications or medical supplies, patients also pay the gap. Each category of medication or medical supply has a base payment that covers most of the cost of the lowest priced competitor in the category. Patients pay the gap, which increases as the price of the chosen medication increases. Doctors decide which medications are acceptable choices and tell patients about the advantages and disadvantages of each; then patients, with their doctors at their sides advising them, can choose the most affordable appropriate medication. The gap is much smaller than the total cost of medication so that medications are affordable for most people. In cases of financial hardship, the Balanced Choice System can pay the full cost of medication.

Selecting a provider
Patients can select any provider they wish, and they can see a Standard Side provider for one condition and an Independent Side provider for another condition. When they call a provider, they first ask if the provider is accepting Standard Side patients or Independent Side patients. If the provider accepts Standard Side patients, then there will be no charge. If the provider is accepting only Independent Side patients, the next question is, “How much does the provider charge?” If a provider accepts both Standard and Independent Side patients, the next questions are both, “How much does the provider charge” and “what is the difference in care?” Providers will state their charges as a percentage of the Standard Side reimbursement rate — e. g. 110% of Standard Side, 115% of Standard Side, etc. Providers can also state the gap payment for a typical office visit. A patient can then decide which provider to choose.

Switching from one provider to another or from one Side to another
Patients can switch from one Side to the other whenever they choose to do so. If patients decide that the service on either Side is not right for their circumstances, they can see a different provider on either Side. If patients decide that they either cannot afford to pay the gap, or that they do not believe the value of Independent Side services is worth the cost of the gap payment, they can switch to a provider on the Standard Side.

Providers can also switch a patient from the Independent Side to the Standard Side. For example, if an Independent Side patient ran into a financial hardship that interfered with paying the gap, and the provider wished to continue treating that patient as a Standard Side patient, then the provider could agree to switch the patient to the Standard Side.

On the other hand, once a Standard Side agreement is made between a patient and a provider, Standard Side patients are protected from being dropped by their provider without a year’s warning. Providers could only switch a patient to the Independent Side after giving notice that in one year, the patient must either begin paying for Independent Side treatment or find another provider.

What problems does Balanced Choice eliminate for consumers?
Ý Patients are freed of their worries about loss of health care coverage due to termination of employment, preexisting conditions, seeing someone outside of a designated provider panel, failure to complete preauthorization requirements, exclusions from coverage for certain conditions, or hidden gaps in their insurance coverage. Their health care is covered whenever they need treatment or services.

  • Patients no longer need special insurance forms.
  • Patients no longer need to worry about whether their visit to the doctor was caused by a work-related injury or an accident. Health care is covered regardless of the cause.
  • Patients do not need special policies for long-term care or the gap in Medicare.
  • Patients no longer need to go to a public mental health system because their insurance coverage for mental health is inadequate.
  • Patients do not need to change their medication at the request of a pharmacy benefit manager in order to lower costs. They will be able to find the correct and economical medication in consultation with their doctor.
  • Patients no longer need to call their insurance company, wander through its telephone trees, and wait on hold while listening to messages professing that their call is important to the company.
  • Patients no longer need to attend meetings at work to learn about changes in health insurance plans or consider annual choices between insurance plans.

Vignettes illustrating how consumers might make decisions in the Balanced-Choice System
Arthur is a rugby player who injured his knee. After waiting in the Standard Side emergency room for three hours, he realized that his injury was not as urgent as other cases, and he may need to wait another eight hours. He then decided to go two blocks away to an Independent Side urgent care center where he was seen almost immediately but needed to pay a gap that amounted to $1500.

Mary is a low-income single mother of two children. She has a Standard Side physician whom she has seen for years, and with whom she is pleased. However, the pediatrician she likes was only accepting patients on the Independent Side. She believes that she can continue with him as long as the gap does not greatly increase. If it does greatly increase, she will need to have her children see a Standard Side pediatrician.

The Singleton family is a middle income family that has been very healthy and has received all of its treatment through the Standard Side clinic down the street. When Ralph Singleton was diagnosed with benign brain tumors that would require an operation, they decided to pay a gap of $5,000 to make sure that they could use the Independent Side neurosurgeon recommended by their physician.

Jim Walker is an upper middle income self-employed family breadwinner. He and his family had always had Independent Side treatment. However, when he was diagnosed with cancer and faced a period of disability and a possible terminal illness, he decided to save his money and use Standard Side treatment.

Providers in Balanced Choice
In Balanced Choice, providers would be able to base their practices, personal satisfaction, and financial success on the treatment of patients, rather than on their negotiations with managed care corporations. Whether they would choose to see patients on the less competitive Standard Side or choose to increase their income on the Independent Side, administrative and bureaucratic hassles would be dramatically reduced. The primary relationship would again be the doctor-patient relationship.

Providers would have the assurance that their patients can obtain necessary health care coverage, including pharmaceutical benefits, mental health treatment, prevention services, and long-term care. Appointments with patients could focus on health care, not insurance coverage and requirements. On the Independent Side, when there is a question of cost, patients could be informed immediately of the out-of-pocket cost without consulting their insurance companies. The cost of medications would be readily available in a provider-friendly periodical that lists on one page the relative costs of all medications in a designated category.

Configuring a practice
In the Balanced Choice System, providers may choose which Side of the system they use when they contract with new patients and may design their practices to create any mix of Standard and Independent patients that they desire. When beginning a practice, providers might choose to see all Standard Side patients in order to establish themselves as quickly as possible. Because Resource Balancing maintains the quality of care on the Standard Side, working on the Standard Side must be desirable enough so that approximately half of all providers will choose to work on this Side. Some providers will choose to continue working primarily on this side throughout their careers.

When providers want either to increase their income or to have less regulation, they may choose to see patients on the Independent Side. On this Side, at the beginning of treatment with each patient, providers negotiate a fee that is based on a percentage of the Standard Side reimbursement. One provider may choose to charge 110%, another 115% or any other percentage of the Standard Side fee. Some providers may be able to attract Independent Side patients based solely on their reputations. Other providers may offer improved or upgraded service in terms of less waiting time, longer appointments, improved patient education, or other services that would convince consumers that it is worthwhile to pay the gap in order to receive the better quality of services.

Providers are free to set their own policies about how to mix Standard and Independent patients. A provider could continue with established Standard Side patients and only accept Independent Side new patients. Other providers could have different appointment times for Standard Side and Independent Side patients or split their time between a Standard Side clinic and a private Independent Side practice.

Switching patients from one Side to the other
Providers are also able to choose to increase fees or switch patients from one side of the system to the other. The only restriction is the need to give advance notice of changes that increase patient fees. For example, if a provider wishes to switch patients from the Standard Side to the Independent Side, it is proposed that patients be given one-year’s notice that they will either be expected to pay Independent Side fees thereafter or find another provider. If providers increase fees for Independent Side patients, it is proposed also that their patients be given an advance notice of the increase.

Moving a patient from the Independent Side to the Standard Side can be done at any time. If, for example, a patient had a financial setback and could not afford Independent Side treatment, and the provider also wanted to continue treatment, the provider would have the option of switching the patient to Standard Side payment. Providers who did not want to continue treatment on the Standard Side would be assured that adequate care would be available from another provider.

Unless there are financial hardships, patients are expected to pay a gap payment when purchasing medication. In each category of medication, Balanced Choice pays most of the cost of the least expensive comparable medication. Pharmaceutical companies would be required to publish the maximum retail price of their medications, and a provider-friendly periodical would be available showing the medication gap payments. All medications in each category of comparable medication would be displayed on a single page. First, physicians decide which category of medications are appropriate choices (e.g., a beta blocker), and then the doctor-patient team can consider the cost of the various appropriate medications within the category. This system uses free market cost competition to lower the cost of medications and keeps the physician in charge of medication decisions. There are no pharmacy benefit managers second guessing medication choices because doctor-patient teams have enough information to appropriately take cost into consideration.

In this system, medications are affordable. The gap is much smaller than the total cost of medication so that medications can fit within most people’s budgets. In cases of financial hardship, Balanced Choice can pay the full cost of medication.

What problems does Balanced Choice eliminate for providers?

  • Providers no longer need to be concerned with whether a condition is preexisting, preauthorized, or a covered benefit. Referrals can be made to the most appropriate professional without concern about participation on a provider panel or other hidden gaps in a patient’s insurance coverage.
  • Providers no longer need to learn the regulations for multiple insurance companies.
  • Providers no longer need to apply and negotiate with multiple health care insurance systems to be on their panel of providers.
  • Providers no long need to concern themselves with whether an illness or injury is the result of a work-related incident or an automobile accident. Health care is covered on a no-fault basis.
  • Providers no longer need to deal with insurance companies who erroneously delay payment for months because there are financial incentives for delayed payments. It is proposed that the Balanced Choice System be required to pay for services within two weeks of the billing date.
  • Providers no longer will be caught between two insurance companies each wanting the other to pay for treatment; there will be only one System that pays for all treatment.
  • Providers no longer need to worry about how patients can afford mental health, prevention, long-term care, or any other service because all residents would be covered for all conditions and medically necessary treatments.
  • Providers no longer need to negotiate with pharmacy benefit managers.
  • Providers do not need to negotiate with case managers for continued treatment. (On a limited basis, for some expensive treatment issues where there may be questionable benefits, independent medical consultations still may be used to determine medical necessity.)
  • Providers no longer need to consult with insurance companies, listen to their telephone trees, and wait on hold while listening to messages professing the importance of their call.
  • Providers can reduce overhead by reducing the staff needed for insurance related activities.

Vignettes illustrating how providers might make decisions in Balanced Choice
Dr. Jones wanted to build his practice after medical school. Initially, he opened a practice in which he would see new Standard Side patients and was able to fill his practice quickly. As he became more experienced and established a solid reputation in the community, he chose to limit new patients to the Independent Side, and he gradually increased his income.

Dr. Paulson is a specialist who developed a good reputation for excellence with both his patients and the medical community. Based on this reputation, he was able to establish a practice that was completely on the Independent Side.

Dr. Nelson is a good internist, has great business savvy, and has an excellent bedside manner. She developed an Independent Side practice and emphasized longer appointment times, shorter waiting times, excellent patient education, and a supportive and friendly staff.

A large metropolitan hospital developed two maternity floors. One was developed for Standard Side patients and was operated efficiently so that the hospital had a substantial financial gain. The other was a more luxurious Independent Side “birthing center” that emphasized the family birthing experience. Rooms were bigger, and there were more staff per patient. Because it offered a different service, many patients willingly paid the gap, and this floor also had a substantial financial gain.

Dr. Peterson enjoyed a mix of Standard Side and Independent Side patients. Her practice was not always full, and when Resource Balancing changed the fee structure so that the Independent Side gap was larger, she had difficulty finding new Independent Side patients. Therefore, rather than have empty appointments, she accepted Standard Side patients. The following year, a Resource Balancing adjustment lowered the Independent Side gap, and her practice was almost full. She then accepted only Independent Side new patients.

Dr. Maxwell is a family physician in a small town whose main industry is a textile mill. She always enjoyed a mixed practice, seeing many of the town’s higher-paid residents as Independent Side patients and some of the lower paid workers and their families as Standard Side patients. When the mill closed because its operations were outsourced to China, Dr. Maxwell quickly accepted her collective fate with that of the community and moved many of her patients to the Standard Side.

Employers in Balanced Choice
In Balanced Choice System, employers gain financially from the elimination of health insurance expenses, lowered administrative expenses, less expensive workers’ compensation costs, and lower automobile insurance premiums. In the long-term, Balanced Choice puts the United States in a better position for global competition. The improved efficiency of health care provision will stimulate the economy. Moreover, by removing employers from responsibility for unpredictably rising health care expenses, employers are in a better position to control their expenses.

  • Balanced Choice would result in the following direct savings for employers:
  • Balanced Choice would eliminate the cost of health insurance premiums for employees.
  • Balanced Choice would eliminate the cost of administering the health insurance benefits, which includes the costs of negotiating health insurance contracts, educating employees about health insurance, scheduling meetings explaining health insurance changes and choices, collecting monthly premiums, answering inquiries about health insurance, and resolving complaints.
  • Balanced Choice would eliminate the need to administer programs to set aside tax shelters for medical expenses in cafeteria plans.
  • Workers’ compensation expenses would be lower because all health care would be covered by Balanced Choice on a no-fault basis, including the medical expenses from work related injuries.
  • Automobile insurance would be lower for employers because Balanced Choice would cover all medical expenses on a no-fault basis, including medical expenses related to automobile accidents.
  • When negotiating with unions, insurance cost increases are removed from negotiations.

Improving the efficiency of the United States health care system improves the ability of every American company to compete in the global marketplace. Whether the cost of health care is taken from employers in the form of a tax or in the form of insurance, it is an expense that is overlaid on the costs of producing goods and services that could be traded globally. Because the insurance-based health care systems in the United States are the most inefficient in the world, changing to a more efficient Balanced Choice system would improve the country’s international competitiveness.

Comparison Chart of Stakeholder Experience
in the Current System and Balanced Choice
Revised 10/21/03

Current Health Care Systems Balanced Choice
Employers must evaluate insurance plans, negotiate purchases, educate employees, pay insurance, take complaints, monitor the operation of the insurance company, pay the insurance company, and negotiate changes in the insurance plan. Employers merely pay a different rate for the Medicare tax and have no other responsibility for health care. The overall employer cost of health care is lower.
Employers must negotiate contracts, manage and pay for workers compensation health benefits and auto insurance personal injury benefits. Employers only need to negotiate contracts, manage, and pay for disability in workers compensation and non-medical aspects of automobile insurance because Balanced Choice provides no-fault health care.
Small employers cannot afford health care for their employees, and if they can afford to contribute to health care, the plans are often bare bones. Small employers pay a small, affordable tax and everyone in the United States has quality health care.
Employers must pay for workers compensation and auto insurance to cover medical expenses. Employers are not responsible for medical payments because Balanced Choice is no-fault health care
Providers must negotiate with an average of seven or more different payment systems, each with their own rules and problems. Providers will be dealing with just one payer who can provide payment within two weeks of billing, and will be able to collect the last dollar payment from the client at the time of service.
Providers must commit themselves to long-term, and often onerous, contracts with insurance companies and changing these contracts can cause a major disruption in their practices. Providers contract with patients one at a time and can transition between the Standard and Independent Sides as long as patients are given sufficient advance advisements of changes that increase the cost of treatment.
Providers pay large malpractice insurance fees and many of these malpractice lawsuits are motivated by consumer concerns about having health care security for someone with a chronic illness. In addition, many of the damages sought through malpractice lawsuits are to pay for future health care expenses. Providers pay lower malpractice fees because when consumers have no-fault medical care and health care security, there will be less motivation for lawsuits and smaller awards.
Providers must negotiate and argue with managed care companies to obtain permission for needed treatment. Providers need only advise patients and obtain informed consent. On the Independent Side, a cost estimate is included in the informed consent process.
None of the stakeholders are able to understand the actual expenses and benefits because insurance policies contain complex bundles of rules that are different in each insurance plan and often changing. All stakeholders are able to find out about actual expenses because Balanced Choice is a transparent system that educates everyone about the benefits and costs. Printed materials are available to stakeholders, statements are written in a language that is easy to understand, and information is available on the Internet. Because the system is transparent, private publishers are able to offer material that competes with Balanced Choice literature.
Consumers cannot easily obtain information about the actual costs of treatment due complex and changing policies about copayments, deductibles, covered expenses, in-network providers, usual and customary fees, and hidden exclusions. Consumers can easily obtain information about costs and treatment through either printed material or the Internet. Price lists are available giving comparison pricing for medication. Doctors’ fees are based on a percentage of the Standard Side fee and this allows comparison shopping.
Common bad luck situations are often disastrous and include losing health care due to a job layoff, losing one’s home and declaring bankruptcy due to health care expenses, having to forego essential treatment due to the lack of income, and premature death due to being unable to afford recommended treatment. Common bad luck situations are mild and are limited to having a waiting list if unable to afford an Independent Side doctor or hospital, having to switch doctors when unable to afford the Independent Side, and paying a few dollars out-of-pocket for last dollar payments. Low income qualifies patients for full Balanced Choice payment.
Consumers must pay large fees for insurance, deductibles, and copays, but have no rights in negotiating provider panels. Consumers can choose any provider and fees are negotiated directly with the provider on the Independent Side.
Consumers can decide to trust their doctor and have the doctor make decisions, and if they have insurance, they can be assured that their expenses will not be large. Consumers still can decide to trust their doctor and have the doctor make decisions, and they can be assured that their expenses will not be large.
Veterans are assured of health care and specialized services. Veterans are assured of full health care coverage and can still be offered specialized services in the VA system; however, veterans will have a choice of whether to obtain health care in the VA system or anywhere else they choose.
Consumers may be ineligible for treatment because their insurance company excludes their condition because it is classified as pre-existing. Consumers are assured that all conditions are covered regardless of when the condition first existed.