New Profit Model in Healthcare: Divorcing Insurance Service from Provider Payments

There are too many layers, too many players and too many people in this land of confusion with their proverbial hand out

Introduction

Normally we talk about healthcare and health insurance and today is no different.  Today we are going discuss all the various things that go on to attempt to get your healthcare paid for.  For those of you that follow us, this is going to be very familiar. If this is your first time in, welcome and you will probably be amazed at not only who gets involved in your health insurance but what they charge, how they muddy the waters and generally gum up the system for absolutely no reason other than personal profit.

Let’s dig in.

The Problem

The Layers

There is a lot of ‘business’ between your healthcare and your healthcare getting paid for as promised by your insurance company. Let’s discuss those layers and then we will discuss some of the idiotic things they make your healthcare provider do.

The Hospital or Practice

As a business, the hospital or practice has one reason for being: to make money.  In fact, in 1919 in “Dodge v. the Ford Motor Company” the

“Michigan Supreme Court held that Henry Ford had to operate the Ford Motor Company in the interests of its shareholders, rather than in a manner for the benefit of his employees or customers. It is often taught as affirming the principle of "shareholder primacy" in corporate America”

This cemented the purpose of corporations forever more.  Not all hospitals and practices are publicly traded. But the intent is clear.  The ‘shareholder' in that case is a single or multiple  practitioner(s) or other ownership entities, but being publicly traded does not change the goal.

To that end, we expect efficiencies to be discovered that save cost for everyone, but that isn’t the case.  The small, and privately held companies simply do what needs to be done to stay in business, as easily as possible.  The big corporations don’t know how to introduce efficiencies, just hire more layers of management to absorb any cost savings they might introduce.  Al that means more and more manual processes to ‘just get it done’ instead of actually thinking, streamlining and automating.  

Electronic Medical Records (EMR) and Medical Coding

There is not a real Electronic Medical Record (EMR) in the world today, outside of the one that Sentia provides free of charge to the practice or hospital. What we find instead of Billing systems, designed to maximize payment from the patient and the insurance company.

Upcoding is the practice of changing the procedure that a practitioner performed and documented for a similar code that pays more.  

Unbundling is the practice of taking things that are provided as a package and with a package price, and submitting them separately to increase revenue.

Both of these things are fraudulent.  We will discuss medical coding further in the insurance company section.

Brokers/Agents/Salesmen

These salesmen are never people we want to pay.  There is an inherent conflict of interest in any sales effort; unless money changes hands the salesman doesn’t get paid.  I can already see the salesmen complaining in the comments that “I am different” but they aren’t.  Any money paid to a salesman is wasted.  

Historically, the agent was the only repository for knowledge about a policy.  This was true from teahouses in London until close to the turn of the 21st century.  Today, we don’t need brokers/agents and salesmen and their associated costs, but the insurance companies can’t be bothered with single and small group policies.  

Insurance Companies/Third party Administrators (TPAs)

Speaking of the teahouses of London where insurance was codified, if not born, Insurance companies do exactly the same things in exactly the same ways that they did in the 17th century.  They use manual processes to assess risk and  keep track of what they have insured, how much they got for the policy and how much they have insured it for.  They keep those numbers on Bob Cratchit style spreadsheets. Today, they only difference is that the spreadsheets are behind glass and are manipulated with a keyboard and mouse, so the neo-bob-cratchits don’t get ink-stained fingers.  Seriously.  The whole thing could be automated, that means zero expensive people, and United Healthcare has over 150,000 employees by itself.  We will go into more detail about the processes insurance companies require practitioners, practices and hospitals to utilize in a few minutes.

The only difference between an insurance company and a TPA is the fact a self-insured company gets a report from the TPA that details an aggregate number owed for medical services performed by a practice.  We say aggregated because the TPA usually won’t release the individual charges, either because they can’t as they are incompetent, or they won’t because they are malfeasant.  The self-insured business then pays the practice the agreed upon amount instead of the insurance company.

Insurance Company Requirements for Payment

In addition to being inefficient, archaic and wasting time, money and effort, the following is a partial list of things the insurance companies, except Sentia, all require to issue payment.

Medical Coding

Insurance companies require medical coding. The only standardized codes are ICD (International Classification of Diseases) that details what the patient is sick with, and Current Procedural Terminology (CPT) that details what the practitioner is going to do to fix the patient.  

First, the ICD and CPT codes are worthless to the practitioner as they exist in a void and aren’t relevant by themselves.  Without capturing symptoms and lab results, clinical measurements and tests, these are worthless to the practitioner.  How did we get to the diagnosis?    No, these codes are to make it easy for the insurance company to pay for procedures.  They are also used to deny coverage.  If the CPT doesn't go with the preapproved list of ICD codes, the payment for the procedure is denied.  For example, If the doctor needs to perform a colonoscopy, (CPT = 45378) he or she needs to also code a  “screening for malignant neoplasm of colon” (ICD =  Z12.11), or payment will get denied.

Finally, the practice or hospital must hire a staff or a service to do nothing but medical coding.  Estimates state that $18.2 billion was wasted in 2023 on medical coding alone.

Pre-Authorization

There is a growing list of  procedures that require pre-authorization.  The big payers require that the practitioner call them or go to a third party site to authorize a procedure.  There are layers of problems here.

Doctor Says I Need It.

If my doctor says I need a procedure, I need it.  Who do you, Mr. Insurance-is-really-a-bank, think you are, to second guess a trained and trusted medical professional who has actually examined me?

Medical Coders

The medical coders are the ones who generally end up attempting to obtain this pre-authorization.  This decreases their productivity and increases cost and complexity.

Adjudication

The payers themselves have to have staff to authorize or deny care based on the submitted pre-authorization request.  Most payers use a third party web based company to collect the data. Adding additional expenses.

Denials

Pre-Auth simply adds another layer to the process where a typographical error can cause a denial of coverage or the payer can just deny it for no particular reason.  Every dollar they pay is a dollar they don’t get in profit.

Networks

Networks are presented as a set of practitioners the insurance company has examined as a reliable source of medical care and has negotiated a special rate to save every one money.  This, of course, is a complete, fictional, fallacy.

Negotiated Rates

Networks are actually more expensive in every case. The negotiated rate is always more expensive than the cash price because the practice has to do battle with the payer to get paid.  First the negotiated rate has to be negotiated, sometimes by attorneys costing hundreds of dollars per hour.   Second, there has to be staff either at the practice or the billing company to deal with the barriers to payment that the insurance company places to avoid paying.

Geography

You, as a patient, are limited to practices with a contract with your insurance company.  This is designed to get you to not use your insurance.  If you have to drive to the next city, or even across town, you have to take off work and plan for the event.  You can't just go on your lunch hour, it turns into a major production.

Adjudication

Your insurance company reserves the right to simply deny your claim.  Yes, they are contractually obligated to pay for your covered procedures, but as shown above if the claim is not coded correctly they can deny it.  They can deny it because the sun is out.  They can deny it because the sun is not out.  They can deny it because the adjudicator is over-caffeinated.  They can deny it because the adjudicator hasn’t had enough coffee, and there is nothing you can do about it.

Your practitioner's billing department will spend their time and effort  trying to get a claim paid, but that is a complete waste of resources. It doesn’t need to happen.  Who do these big payers think they are anyway denying coverage they are contractually obligated to fund?

Delaying Payment

Your insurance company takes your premiums and invests the money.  PayPal figured out that they could take a payment, invest it for a day or two and make billions before they paid you.  A few years later, the insurance company figured out the same thing, except they didn’t tell you they would delay beforehand.  They can’t, because this delay is illegal and quite literally murdering people.

This is called float.  The big payers will delay paying a valid claim for days, weeks, or months in the interest (see what I did there?)  of keeping the cash flow from their investments.

Rate Negotiation

We discussed this previously, but let’s be very clear.  Either the practice says “this is what it costs” or the payer says “this is what I’ll pay.  We don’t need to negotiate every procedure in every hospital in the country because some banker (an insurance company is really a bank) thinks that is what needs to happen.  If the banker was smart, he would have done something useful instead of being a paper shuffling banker.  If you are a banker I will print a retraction if you can explain how precisely you add value to any transaction, and compare that with the cost of your services.  You can’t because you are paid more than you are worth and you don’t need people to run a bank.  …or an insurance company.

Skyscrapers in Every Major City

We already posited that you don’t need people to run a bank or an insurance company and we are going to show you how.  If you don’t need people, you don’t need places for people to work.  Next time you are in a city of more than a few hundred thousand, look at all the big buildings owned by insurance companies.  How much do you personally think you pay for those buildings?

Hundreds of Thousands of Employees

Those big buildings  are there for a reason.  They have to have somewhere to put all their employees.  Between the agents and brokers and actual employees, I’ll bet there are over a million of them total.  United Healthcare has almost 150,000 employees alone.  What do you think those million people do?  Would you hire an employee who didn’t directly contribute to the bottom line?  So what can those employees be ding to contribute to that bottom line, except to deny your contractually obligated claim?

Conclusion to The Problem

Unlike every other keyboard warrior on the internet, we do not identify problems without offering a viable, well thought out and in this case, designed and built, solution.

The Solution

The solution, of course, is to divorce the business of the insurance service from the cost of the risk.  We at Sentia have done just that.  We, as a new breed of insurance company, offer the insurance service for a flat rate $10 per month.  The risk is a separate thing and kept in different accounts to pay for the healthcare of the population.  

How do we do this?  We put health insurance companies, with their silly manual processes and requiring work of external entities, out of business, and we are going to show you how, right here and right now.  First, you don't want greedy, profit-above-everything business people, bankers, in charge of your healthcare.  The Commonwealth Fund identified several problems in their paper “U.S. Health Care from a Global Perspective, 2022: Accelerating Spending, Worsening Outcomes” That basically boiled down to two problems:

• Health insurance is too expensive
• Patient education is largely ignored

When we address these two problems, along with streamlining and automating the process, we fix the US healthcare system.

The Concept

Health insurance companies have two inputs: a patient and a procedure, and one output: a check to the practice for the procedure performed.  That is it.  If we automate the process between the input and the output, then we have eliminated everything the insurance company does.  The only other thing we will address is the way to educate and incentivize the patient on how to live a healthy lifestyle.  That would result in fewer claims, causing reduced rates for everyone.

The Execution

We at Sentia have designed and developed a solution that completely automates health insurance.  We provide the Electronic Medical Records (EMR) system to the practice, and when they document a patient encounter, we pull out the procedures performed and pay for them in real time.  There are no networks, no adjudication, no denials, no medical coding, no big buildings, no people and most importantly, little to no cost once the system is built.  For this service we charge $10 per month plus the actual cost of the risk.  According to iii.org, your health insurance company only returns 53% of your premiums as benefits.  We can return the 47% they waste to the patient, in lieu of the previously stated $10 per month, plus the actual cost of the risk.  That 47% does not include all the things that practices and hospitals have to do to actually coerce the payers to, well, pay. There are other efficiencies we will explain, and a way to manage chronic, behavior-based disease.

Patient Education

Also remember that treatment for chronic, behavior based disease consumes 84%, or $3.7 trillion, of the $4.9 trillion spent on healthcare in 2024 in the US.  The average of avoidable deaths per 100,000 in OECD countries is 225.  In the US it is 335, or about 1/3 higher.  If we could bring the US average down to the OECD average, we would save about $1.34 trillion.  

That is a further reduction in costs of about a quarter.  

How do we do this?  We offer financial incentives for people who live a healthier lifestyle as measured by our built-in health and wellness system.  This system takes into account measurements taken at the primary care physician’s practice, like height, weight and  blood pressure, plus things screened for in blood work.  Additionally, there is a mental health screening right in the wellness package.  This system looks at all these factors and then prescribes patient education based on the results. At Sentia, this is part of the system. We can tell when the patient opened the patient education and how long they spent reading it, and offer a small discount for simply doing so.  A larger, double digit, discount is offered for following the education, as evidenced by better results in the patient’s health assessment.

The Finances

Let’s look at big round numbers.  Let’s say we can save the patient about half on their health insurance up front.  Let’s say that we save the people of the US another 25% by being educated about healthy living and getting to the average OECD deaths per 100,000.  We know that eliminating medical coding, providing a free EMR to the practice and putting compliance and efficacy reporting into that system will save each and every practitioner an additional $77,000 per year that they currently spend.  That, however, is only about 2% of the total, so we’ll just give that to the doctors as either a raise or hire more doctors and decrease the workload, while we still have some doctors left.  If we total all that up, we see about 75% in savings.  That means that we would have not only the best healthcare on the planet but also the cheapest.

Conclusion

We have shown a way to save 75% from the cost of health insurance and have addressed both of The Commonwealth Fund’s two conclusions about health insurance in the US: cost and education.  We have all of this written and deployed in a prototype application.  

We have shown a way to make patients healthier by educating them on the consequences of their behavior, and a way to capitalize on that to the sum of $1.34 trillion or about 25%. If we add that to the process automation savings of our solution, we are in the ballpark of 75% savings in total. We already have the best doctors and the best equipment; we just need to implement the above detailed framework to give them all the tools necessary for success.

We have this system in prototype now, fully functioning.

Contact us here or on our site and we will be happy to provide a demonstration of the fully functional prototype.

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We have built a comprehensive health information system to keep the patient healthy and on the right track with the ability to incentivize healthy living. Implementing this system should be fairly simple and will completely revolutionize the way healthcare is paid for, saving countless lives. We have shown a way to use this system to make the best healthcare system in the world also the most efficacious and the most affordable, and a way to move toward value-based care.

If you liked what you read, contact us here, on our site, SentiaHealth.com, our parent company SentiaSystems.com, or send us an email to info@sentiasystems.com or info@sentiahealth.com.