There are a few early tells. To notice them, you have to recognize how change occurs in healthcare. Hint: Follow the flow of money. But not just the money itself, but how the money interacts with the practice of clinical care. The way that those interactions change portends much of how healthcare will change.
In recent years, prior authorization denials and the subsequent denials of appeals have increased. It’s something you wouldn’t notice unless you’re a health policy wonk and you actively stay abreast of these things – or, more pertinently, if you’re a patient noticing the decreasing coverage. However, the increase in denials is a major bellwether: It signals how healthcare administrative bloat will drive cost-cutting measures.
Health insurance entities have refined bureaucratic paperwork down to a science. If they want to limit reimbursements for a particular clinical service or treatment, they’ll add prior authorization documentation requirements and eventually increase the denial rates in short order. They won’t change their coverage scheme clinically, but they’ll make it harder to obtain coverage, and thereby adjust their bottom line through the pretense of clinical documentation paperwork.
The bureaucratic overload will increase. It’ll look like growth. But the bottom line will decrease. It sounds counterintuitive. A larger bureaucracy normally means a larger overhead, which would imply growth under normal circumstances. But this is just a sleight of hand. See healthcare can’t contract like other industries. There’s too much at stake politically.
When a hospital lays off staff, the protests begin, and the political capital vanishes. So to save face, and to contract at the same time, the health industry has device a unique model of using bureaucratic angst as a cost cutting measure.
As a result, health insurance entities don’t have to dole out as much per patient financially while avoiding the impression that they’re inadequately providing coverage. And, of course, then hospitals can justify charging patients without incurring any political backlash.
It’s hard to notice at first, but if you’re keenly watching, you’ll see it everywhere. It’s already quite apparent to patients struggling with mounting medical debt. Where do you think all that debt came from? Denial of coverage means less money out of the pockets of insurance companies and more out of the pockets of patients.
It’s part of a broader cost cutting shift in healthcare that places more financial burden on patients. And it’s disguised through a veil of clinical oversight. Hospitals and insurance entities aren’t overtly denying care to patients. They’re just making it harder to justify coverage for that care. But, regardless of what the payer system algorithm calculates, that care is still needed. So the costs come out of the pocket of patients.
This is a reaction to the unprecedented growth of healthcare in recent decades. Since the late twentieth century, healthcare in the United States has enjoyed incredible growth, incredible technological developments, and life-altering breakthroughs. It was all subsidized by a health system that depended on a fast charging American economy.
Now with the economy slowing, healthcare faces unique financial pressures. But it can’t just contract or enforce traditional cost cutting measures. It has to bloat administratively before it collapses on itself like a decaying star that’s not big enough to explode into a supernova.
The key factor to look out for is: How do changes in clinical care, or more specifically, what aspects of care that can be defined through documentation, coding schedules, protocols and procedures – things that matter to the health payers and other the financial intermediaries – affect the patient financially? The answer’s not always immediately apparent.
Healthcare entities that run modern medicine never directly reveal their true intention. It’s always seen through a fog of war – carefully revealing select things at select times. So the next time you see a new agency or a new action committee, just remember, that bloat’s just the canary in the coalmine for healthcare’s pending period of contraction.
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