New models of payment: Cutting out the insurer, or can I have a lower price for that?

6793815283This is the third part in our series of new models of payment in the health-care marketplace, touching employers and individuals. The first part is here, and the second part is here.

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We’ve been writing about new models of payment for health care by employers. So individuals might ask: How does this affect me?

As employers are starting to turn away from insurance companies and contract directly with providers, individuals are, too.

We’ve written about the cost-plus or Medicare plus model of figuring payment that excludes insurance companies. This is a big change; it’s long been said that the Medicare price is so low that providers won’t accept it, but Bill Rusteberg, an insurance consultant in Victoria, Texas, is finding plenty of business.

What’s to bar individuals from asking that same question: “If I will pay the Medicare rate plus 15 percent right now, will you accept that?”

You can find the Medicare rate for a procedure using the calculator at the top of this page.

Providers may not welcome this conversation, and individuals may not feel comfortable with such a negotiation. As a result, some institutions are springing up to carry the burden.

One is the Patient-Physician Cooperatives, now in Houston and Portland, Ore. The Houston site explains: “Patient/Physician Cooperatives (PPC), established in 2005, is a non-profit organization of

patients, physicians and member representatives. PPC is not an insurance product or discount program; it is a group of physicians who have joined together to give their patients access to affordable, basic health care through mutual support.

“How does the program work?

“Through the concept of cooperative purchasing, the members function as a group to obtain access to health care at affordable prices. Primary or basic medical care services are provided to members with no co-payments or with a $0 office visit co-payment and no health qualifications. Currently, members may select from 49 primary care physicians in the greater Houston area. Each member signs a monthly payment plan agreement with a primary care provider through which the availability of the physician and his or her services are paid in full. Primary care physicians are located at convenient locations throughout the greater Houston area.”

Members of the cooperative agree to a schedule of rates that is based on Medicare rates. Here’s the page describing the rates with a search tool.

“The prices listed are based on the rates used by Medicare in 2009 in Harris County Texas. Harris County is among the more expensive areas of the country for medical services, however Medicare rates are still about 60% below the usual charges for patients who are not insured and those who have insurance with companies that don’t hold contracts with the specific provider being consulted.

“In PPC, the physicians and medical facilities have agreed to charge our members based on these published prices. If a member has purchased the PPC group insurance from New Era Life issued to the Association then their policy pays claims based on this published price list.”

The PPN also has branches in Portland, Ore., where this list of discount labs and providers with prices is posted on the site.

A similar organization exists in Nevada. The Access to Healthcare Network is a medical discount plan that helps uninsured Nevada residents get care from 2,000 providers in the state, paying cash at the time of the procedure, and also paying $35 a month for ts coordinators who help them understand their options. Providers also accept lower rates that the organization negotiates with them, according to a Kaiser Health News article.

Another way the changing market might affect individuals: We have heard from a number of people who have found that their prices for health-care services without invoking their insurance are better than they would be with insurance. This is a sea change in thinking; many of us are accustomed to thinking that insurance always gains us a lower price. That’s simply not true any more.

This is fairly common with things like generic prescription drugs and other low-cost medications, which people are buying for cash at big-box stores: places like Costco, WalMart, Shop-Rite, Target and drug chains like Walgreens and Rite-Aid. These places can often have generic drug plans that supply common medications for a fixed monthly rate: $4 a month, $9 a month, or whatever. We hear increasingly that people are finding these to be less expensive than their pharmacy co-pays.

Of course, the rise in direct-pay medicine, including street-corner providers, retail clinics and membership medical practices are a part of the changes in the shape of the marketplace too.  We sorted through the options in this blog post.

With the coming of the Affordable Care Act, and the expectation that health insurance will be available and affordable to all, perhaps it’s worth asking why this direct-pay model would be important or interesting. If you’ve always lived in the land of the $20 co-pay, that’s a valid question. But, as we now know, the exchanges will offer insurance plans of increasing value, from catastrophic (for catastrophes, available only with certain limits) up through plans named for metals: bronze, silver, gold and platinum. The bronze level will cover 60 percent of your charges, silver 70 percent, gold 80 percent and platinum 90 percent. So perhaps the direct-pay model will be less expensive in some cases. Too, there will be people who choose not to buy insurance for whatever reason.

Also, during our recent crowdsourcing project with the Brian Lehrer show on WNYC,  we heard from a few people who wanted us to know that they are on a high-deductible plan and they choose not to invoke their insurance when receiving health care.

“I have a very high deductible policy. I always say I don’t have insurance as I never meet the deductible.  …  I pay $100 for the mammogram and a similar amount for the radiologist to read it. I have done this for the past 10 years. I am lucky enough to be very healthy but I have had an occasional expense. All have been out of pocket, paid by credit card and are far less than I would have paid using an insurance policy. “