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Comment by duk3luk3 | Hacker News Reader

You seem to be implying that the providers set the prices, but isn't it true that insurers can pick and choose which providers they cover, and because of the large amount of patients they insure, they have a huge amount of negotiation power to exert downward pressure on what providers charge?

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No, that's not true. All the market power is with the providers, which is why they're responsible for something like 9x total health care spend in the US than all health insurers combined.

Medicare is better than private insurers at regulating prices (to wit: when Anthem tried to adopt Medicare's rules for anesthesiology comp, they were excoriated, and the governor of New York proposed a statute preventing them from doing it). But they still wildly overpay for services; in fact, what they pay is not really materially different from what private insurers do (it's less, but not by that much).

  to wit: when Anthem tried to adopt Medicare's rules for anesthesiology
  comp, they were excoriated

For everyone in the back: that's not what happened. BCBS tried to place arbitrary limits on anesthesia payment. Medicare does not do this. Physician complaints with Medicare payments revolve around the hourly rate. Physician complaints with BCBS revolve around arbitrarily setting a hard limit for the amount of time a procedure is allowed to take. One is limiting cost, the other is limiting care.

No, that's precisely what they didn't do. Medicare has a schedule of anesthesia compensation rates broken down by procedure; the last time this came up on a thread, the schedule was literally posted. Anthem announced they were using it.

Yeah the last time this came up I posted the CMS handbook. If Medicare operated the way you falsely claim there would be an outcry similar to that over BCBS's behavior. BCBS was proposing something entirely different from how Medicare operates.

Clearly not, because this is how Medicare operates. In fact, it's the whole premise for why Medicare is meant to bring prices down!

I am an anesthesiologist. This is false. We bill 1 unit every 15 minutes, and then we receive startup units on top. A gall bladder removal is 7 units and often takes an hour. So we would receive 11 units for that hour. If it takes 2 hours we would get 15 units. If it takes 3 hours we would get 19 units.

There is no cap for billing, but realize when an operation goes long it not only means we make less per hour, but there is also usually a good reason for that. Even if there isn’t a good reason, it’s not like we have control over how fast a surgeon operates.

  Clearly not, because this is how Medicare operates.

Yeah, we've been over this: Medicare does not set arbitrary caps on the length of a procedure. They pay for anesthesia services from the time the patient goes under to the time the patient wakes up.

  In fact, it's the whole premise for why Medicare is meant to bring prices down!

In fact, it's not. Limiting care is pretty much the opposite of how Medicare operates and you can see this reflected in the claim denials. For-profit insurance companies deny claims at 2–3x the rate of Medicare because they are incentivized to deny care.

From Medicare's policy manual:

https://www.cms.gov/files/document/chapter2cptcodes00000-019...

  A unique characteristic of anesthesia coding is the reporting of time units.
  Payment for anesthesia services increases with time. In addition to reporting
  a base unit value for an anesthesia service, the anesthesia practitioner reports
  anesthesia time. Anesthesia time is defined as the period during which an
  anesthesia practitioner is present with the patient. It starts when the anesthesia
  practitioner begins to prepare the patient for anesthesia services in the operating
  room or an equivalent area and ends when the anesthesia practitioner is no longer
  furnishing anesthesia services to the patient (i.e., when the patient may be placed

Now I made a good faith look through your comment history to see if you'd actually posted anything like that. Barring something I missed I can only assume you're working based on an incorrect assumption of how Medicare pays for the cost of anesthesia.

There is a fixed component per procedure (base unit). This is based on the complexity of a procedure and roughly how long it's expected to take. That is why CMS would track how long a procedure is expected to take. There is a time based factor (time unit), and that is not limited in the way that BCBS was proposing.

It's there in black and white on the other thread, down to the individual surgical procedure.

Later

(The comment I replied to was edited extensively after I replied to it.)

> All the market power is with the providers

How does that work? Do the providers have cartels that set prices?

Yes. I don't know if that's the primary factor that gives them their market power; it might be even simpler than that. But yes, they absolutely do.

Unless you're Kaiser, in which case you're the insurer and most of the providers, which is the whole idea behind Kaiser. But every other insurer --- and overwhelmingly, Americans aren't on Kaiser --- is beholden to providers. And of course, Kaiser competes with providers for service providers and vendors.

Then why isn’t everyone on Kaiser? Because they’re stupid?

Providers is also kind of vague. You show up at a hospital, does the nurse practitioner who does your intake set the price of your ER service? Who specifically sets the prices?

UnitedHealthcare operates in DC and all fifty states and has north of 26 million customers. Kaiser operates in eight states and DC and has around 12 million customers. It's safe to say plenty of folks use Kaiser when it's available.

The downside is that because Kaiser operates as an HMO, any specialists you need to see must be approved by your primary care physician (typically GP, ob-gyn, or uro). They have an abysmal record with mental health, and folks who need chronic non-routine care often struggle to get that care. If all you need are routine checkups, cheap prescriptions, routine immunizations, etc. they're quite competent.

  Who specifically sets the prices?

Kaiser is a vertically integrated HMO. Like other HMOs, to get coverage (with a few exceptions) you need to see a provider within the (Kaiser) network. As a vertically integrated HMO the providers in the Kaiser network are all employed directly by Kaiser. So Kaiser sets the its own employee compensation.

It's worth noting that all insurance companies are required to emergency care at any provider as if it were in network. If a Kaiser member were to go to a non-Kaiser ER they would see the same cost as if they'd gone to a Kaiser ER. Whatever Kaiser pays to the out of network hospital/staff is almost certainly negotiated beforehand.

I acknowledge there are issues on the provider side, but it is disingenuous to say that providers set the prices alone. Payers introduce a ton of inefficiencies in billing and also remove money from the system, which negatively impacts care. They implicitly affect care patterns and pricing through denials.

HMOs, for all their problems, have many advantages as well, such as the aligned incentives you allude to.

So, I don't disagree that there are inefficiencies with private payers, but I do disagree that they're significant, or the reason US costs are so high, or that insurers deny so many services. You can see this for yourself with Medicare's admin overhead. Admin overhead is, roughly, the ratio of money spent by insurers to money insurers pay to providers. Medicare has "low" admin overhead --- but that's in large part because they serve the most demanding segment of the market. If Medicare covered 30 year olds, their admin overhead would mathematically be significantly higher: same money in, much less money out.

I agree with you about the efficiency of HMOs, but customers hate HMOs.

A useful Google search: "National Health Expenditures by Type of Expenditure and Program: Calendar Year 2022". It's a single spreadsheet, and it's really something. It covers insurers (public and private), providers (hospitals and outpatient), facilities, state health care programs, even dental, all on one sheet. The numbers are hard to get around.

  inefficiencies with private payers

Inefficiencies like billions of dollars in overbilling annually?

Providers overbill. Insurers inappropriately deny coverage. This is pretty basic stuff. What would insurer overbilling even mean? You pay a fixed premium.

  What would insurer overbilling even mean?

It would mean something like this:

https://www.nytimes.com/2017/05/19/business/dealbook/unitedh...

Or this:

https://www.sacbee.com/news/local/health-and-medicine/articl...

Your second link is literally Anthem passing provider fees (in violation of their contract, sure!) through to customers. The bills were from providers.

Fuck if I know what's going on between Medicare and UHC. It's a mess. Medicare Advantage is a hybrid Medicare/private system; once again, whatever fees were being passed to Medicare, they were coming from providers. Insurers can certainly inappropriately deny coverage, but they don't generally make de novo charges up. Charges come from providers.

Upcoding scandals, which literally appear to be what the UnitedHealth link you provided was about, were exactly what Anthem was trying to control for with its new announcement.

Medicare Advantage is a capitated program. The provider fees aren't being passed through to Medicare.

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