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Tuesday Aug 21, 2018

The Illogical Cost of Care: Why Do We Stand for It?

My colleagues and I in the Midwest Direct Primary Care Alliance(www.midwestdpcalliance.org) recently came together and donated enough to erase $1.4 million in unpaid medical bills for hundreds of patients in Kansas and Missouri. The news of this gift(www.kansascity.com) spread from our city across the two states, then leapt from a regional story to the national press.(www.dailykos.com)

[hospital bill stamped final notice]

My thoughts on this are incredibly mixed: I couldn't be more excited that this initiative has received the notice it has; it was our goal to make a bold statement. I also couldn't be more upset that it was newsworthy enough to garner national attention; we shouldn't have to do things like this. But here we are.

The cost of health care affects all of us. It doesn't care about your income -- although it does affect those struggling with poverty the most. It doesn't care if you have insurance or not. It doesn't care if you were healthy when you woke up this morning. It doesn't care if your accident was just that -- an accident.

Why do we, as a nation, stand for this?


Back in my intern year, I was presenting during morning rounds when I paused outside a patient's room. We were in the corner of the ninth floor, and the west-facing windows in front of me provided a panorama of the vast Front Range of the Rockies. The sun was starting its climb from the horizon and was set at a sharp angle in the sky, casting an orange glow over the mountains. As I was finishing my presentation, the senior resident nodded, allowed my plan to stand, and then said, "Since this patient is more straightforward, we're going to take a little time to talk about something else."

He pulled a copy of an academic study report from the pocket of his white coat. This happens often during rounds, and the studies usually relate to the organic pathologies and treatments relevant to the patient. He held it folded crisply in half and pointed it at me, asking, "Do you know the average amount of debt that leads to bankruptcy? And do you know to what extent medical bills play into that?"

I had not prepared for that question. He got a blank stare and a shrug as a response.

"Five thousand dollars," he said. "And most are due to medical debt. Do you really think we need to keep this patient another day? And do they need that last X-ray and labs?"

The idea of discussing finances during hospital rounds was odd, and it was a subject I had thought less and less about as my training had gone on. I remember bringing it up in my third year of medical school with my attending, an oncologist. I asked if she ever considered cost when ordering these massive, sometimes futile treatment regimens, and she quickly shot back, "I couldn't do that and still care for my patients appropriately."

I filed that away and learned to not worry about costs; I was going to care for my patients appropriately.

But here I was, on the general floor of the hospital, being asked by my senior resident if I really needed to impose extra costs on my patient. And I wasn't sure what the right answer was.


Americans don't have "universal access to timely, acceptable and affordable health care of appropriate quality," even if the AAFP and I believe they should. We've all got to figure out how to pay for health care through some combination of insurance, government assistance, employer contributions (if you're fortunate) and cash out of pocket. This task is complicated by a dearth of transparency in pricing and a certain amount of limitless demand in the context of limited supply.

Medical debt affects every community and can destabilize any household. A recent article in The Kansas City Star(www.kansascity.com) brought the local impact of medical debt into sharper focus for me: In some parts of my metro area, about 30 percent of households have medical debt in collections. This isn't unique. The number of households with medical debt in collections jumps to more than 30 percent in many other parts of the United States, including vast swaths of the South, along the Mississippi River and in Appalachia. Although these high rates aren't the norm, 2016 data collected by the Urban Institute plotted on an easy-to-use online map(apps.urban.org) illustrate that 18 percent of households nationwide have medical debt in collections.

Although these families aren't yet at the point of bankruptcy, that 2009 research piece (www.sciencedirect.com)my senior resident(www.sciencedirect.com) referenced found that more than 60 percent of bankruptcies studied were due to medical debt. For more than 90 percent of these medical debtors, the amount leading to the bankruptcy was less than $5,000.


In the public discussions bemoaning the bloat of health care costs in our country, people like to blame subsets of the health care delivery system. Perhaps Big Pharma is to blame. Or maybe doctors are the villains. Or really, it's big hospital administrators that bear responsibility. And don't forget the insurance industry.

Although each of these parties has a role in the glut of health care to a different degree, we can't point fingers if we want to solve this problem. We've been doing that for decades and have watched the problem worsen. Instead, I believe the whole health care system must come together to pursue a solution that economists have heralded all along.

We must work toward creating transparency in health care costs and pricing.

This seemingly simple economic solution is remarkably hard to enact. The U.S. health care industry is built around layers of contracts, negotiations, secrecy, handshakes, laws, special interests, investment firms and umpteen other layers of an onion you do not want to peel.

Unless you like crying.

And it's largely because there are so many hands in the cookie jar, so to speak. It doesn't matter if a patient has Medicare, Medicaid, Humana, Aetna, UnitedHealthcare or whatever. Any of those players could invite opaqueness and bureaucracy into the patient-physician relationship and, ultimately, drive up the cost of care. This effect is particularly pronounced in the realm of office visits and other routine elements of health care.

If I am to discuss the cost of care with my patients and work toward the larger solution of price transparency, I simply can't factor these third-party payers into the equation. More than that: If I care about reducing the price of health care, I must step outside the insurance system and operate in a cash-based, consumer-driven world.

From my vantage point as a direct primary care (DPC) physician, I can tell my patients that an MRI will cost them $257.70 if they forgo using insurance and pay cash at the time of service. If they want to use their insurance, I have no idea what the eventual cost will be (although it wouldn't surprise me if the bill wandered upward of $2,500).

I can tell my patients that a hemoglobin A1c lab draw to check on their diabetes will be $10. I can't even begin to guess the cost if insurance is involved.

This is the crux of our movement as DPC doctors. As a community, we are committed to providing primary care with a fair, transparent price tag. It's our grassroots way of starting the conversation, and it's been enlightening.

But the process of getting cash-based pricing is far from easy.


Kansas City is lucky to have a dedicated group of independent DPC physicians working to encourage specialists across the metro to provide care for a fair, transparent price. Two of my colleagues have been leaders in this effort. Their clinic is tucked away in a quiet corner of a one-story office building in a Kansas City suburb, just far enough from a busy road that traffic can't be heard. They have four exam rooms, all with matching furniture but still personalized for each doctor: kids' drawings in one room, fliers for fitness apps in another.

They both left the traditional, fee-for-service system in 2015 looking for a different way to provide primary care. DPC -- providing unlimited care for a flat, monthly fee and eschewing insurance contracts -- was their exit strategy. They hung their shingle, and they set out into the community to network and find specialists who would accept cash payments from their patients.

What they found shouldn't surprise any of us: The health care industry has become so accustomed to patients using insurance and not paying directly for care that it has become close to impossible to pay cash for any health care service on the spot. As consumers, we're encouraged to shop around for the best price, but calling different hospitals and physician groups gets us nowhere.

(Let's let this settle for a second: These two set out to search for businesses that accepted cash as a form of payment. That's insane. No other industry operates like this. Can you imagine if the car-buying experience operated like health care? You would show up at the dealership knowing that you need a vehicle. You're in a little bit of a tough situation -- you need the car today -- and you've got "Car Buying Insurance," so you feel safe to go ahead with the purchase. You pick out a car, show your insurance card, and drive off after making a small copay-like down payment. Two months later, you get a bill for $40,000 with an explanation that you picked the wrong dealership, the wrong car color, and possibly the wrong features. And also, the car's not returnable. Now you've got to figure out how to pay this bill.)

By the time late 2017 rolled around, enough DPC clinics had opened in the area that my colleagues were joined by 18 other health care professionals caring for nearly 10,000 patients. They formed the Midwest Direct Primary Care Alliance, and it was at this point that they found an imaging center -- we'll call it Acme Imaging -- that was ready to come up with a fair price list.

Through the alliance's efforts to get transparent pricing for our patients, we learned the following:

  • Medicare pays, more or less, the basement reimbursement rate for medical services and sets the rate that all other contracts follow. Commercial insurers calculate their reimbursement rates as multipliers of Medicare rates.
  • It is in Acme Imaging's best interest to negotiate with each of these insurers for the best rate possible. This usually means that Acme won't (and technically can't) publicly acknowledge what its reimbursement is for each of these commercial insurance companies. It's a secret.
  • As anyone who has ever negotiated the sale of goods or services knows, it's ideal for sellers to start with a somewhat high price so their negotiations with buyers end up in a decent spot. That initial high asking price becomes the "price" of the MRI for anyone who calls asking -- even though Acme Imaging never expected anyone to actually pay that much. It was a highball price to start negotiations with insurers.
  • But this means any cash customer is expected to pay that highball price. If Acme Imaging advertised something lower, the insurance companies would seize the opportunity to renegotiate their contracts based on that lower price, and Acme Imaging would be at a disadvantage in the negotiations.
  • Acme Imaging believed it could not publish a fair, transparent cash price list because of this.
  • It would, however, give us (secret) favorable rates that we could charge our patients for imaging services, and Acme would invoice us (not the patients) after our patients went in for radiology exams.

If that sounds less than ideal and overly complicated, it's because it is both.

In short, Acme Imaging has sent us all contracts that note our patients can pay cash for each radiology exam at X times Medicare rates. We aren't allowed to share these rates. When we, in our DPC practice, want to order a radiology exam, we collect X times Medicare from the patient, and then Acme Imaging sends us a monthly invoice of all our patients' bills.

This process makes us want to scream. In a sense, we're no better than the insurers. But in another way, we are -- because our patients are paying less than $300 for a brain MRI. Less than $40 for an anteroposterior chest X-ray. Less than $400 for an abdomen/pelvis CT with contrast. All without prior authorizations or insurance meddling in the transaction.

Interestingly, another radiology group in the metro area has a price list that it has published for our organization (which, like the other radiology group's, is secret). What's better with this organization, though, is that our patients pay the group directly at the time of service. In full. No invoicing. Simpler.

This has become one mission of the Midwest Direct Primary Care Alliance: to push the dialogue in health care to create cost transparency. We're starting to find good company across the nation. DPC Frontier, an independent organization led by Phil Eskew, D.O., J.D., M.B.A., has the most comprehensive list of health care professionals committed to price transparency(www.dpcfrontier.com) we've seen. Its site lists everything from radiology groups to surgical centers that have committed to publishing a set price for a specific service. The list keeps getting longer, which should bode well for patients in the long run.


Because we're constantly thinking about the cost of health care, when the Midwest Direct Primary Care Alliance discovered that we could donate to abolish unpaid medical bills in our area, it was the natural thing to do.

Our donation went to RIP Medical Debt,(www.ripmedicaldebt.org) a not-for-profit organization that acquires and then cancels unpaid medical debt via no-strings-attached gifts to individuals and families who are unable to pay their medical debts. Those on the receiving end no longer have any obligation to pay their canceled debt. Furthermore, because the debt is canceled as a gift by a nonprofit, recipients do not owe any taxes on the cancellation of debt income.

In all, 784 people in our region received cancellation notices on more than 1,200 bills in mid-July, amounting to $1.4 million in canceled medical debt.

But that's just a drop in the bucket; there's much more out there. In fact, there remain hundreds of millions of dollars' worth of medical debt in the Kansas City area alone, according to RIP Medical Debt.

It is in this context that we, as doctors, must act. We are the gas that fuels the health care industry -- without our care and the power of our orders, there would be no Big Pharma. Administrators would have no jobs. Insurers wouldn't have a product to offer.

We sit at the bedside and care for patients. We agonize over complex presentations and make decisions. We spend years to decades of our lives training to earn that privilege. But we didn't do this to put people over the financial cliff. It wasn't our goal to be complicit in pushing one in five people in our country into debt -- or in bankrupting an entire nation.

This is why we stand together to help, in a small way, relieve the debt of complete strangers while also fighting for price transparency -- so bills like this don't pile up in the first place.


Returning to my patient on the ninth floor of the hospital with the straightforward case, I didn't think she needed to stay another day. She had good support at home, and her management could be safely continued in the outpatient setting. To this day, I have no idea what became of her or what the final bill was for her hospital stay, but I do know that we can all make small steps to make health care better.

We just have to step up and start doing it.

Allison Edwards, M.D.,(www.kansascitydirectprimarycare.com) founded and cares for patients at Kansas City Direct Primary Care;(www.kansascitydirectprimarycare.com) provides locums coverage at rural hospitals with Docs Who Care in Missouri, Kansas and Colorado; and is volunteer faculty at both the University of Colorado and the University of Kansas. You can follow her on Twitter @KansasCityDPC.(twitter.com)

Posted at 03:42PM Aug 21, 2018 by Allison Edwards, M.D.

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