The Fattest Cats
On 9 October, The Economist published an article, “Who profits most from America’s baffling healthcare system”. The sub-heading read: “Hint: it isn’t big pharma”.
The article began by saying that on 4 October, 75,000 employees of Kaiser Permanente went on a 3-day strike. Kaiser Permanente is a name that many public sector senior management in Singapore may be familiar with. It was the go-to place for study trips and was touted as a model of care that we could learn from, even before the idea of population health became popular or anyone thought about Healthier SG (HSG). The article also noted that in April this year, Kaiser had acquired Pennsylvania-based Geisinger Health, yet another name that many public sector leaders in Singapore may be familiar with.
The Economist article went on to state “Pharmaceutical firms and hospitals attract much of public ire for the inflated costs. Much less attention is paid to a small number of middlemen who extract far bigger rents from the system’s complexity. Over the past decade these firms have quietly increased their presence in America’s vast healthcare industry. They do not make drugs and have not, until recently treated patients. They are the intermediaries – insurers, chemists, drug distributors and pharmacy-benefit managers (PBMs) – sitting between patients and their treatments. In 2022, the combined revenue of the nine biggest middlemen – call them big health – equated to nearly 45% of America’s healthcare bill, up from 25% in 2013”.
It seemed rather ironic to this hobbit that the biggest and fattest cats in America healthcare now are neither the folks that made the drugs and equipment that patients need, nor the hospitals or folks that actually gave the care. The fattest cats are now (drumroll please), “the middlemen”.
Thank goodness there is little chance of that happening in Singapore. For primary care, with the advent of HSG, the third-party administrators (TPA) who sat between the GPs and the patient are largely redundant and will be replaced by the one TPA to rule them all – the government. There is a lot of pain and angst with HSG, especially when it comes to the IT part (such as syncing with NEHR) and worries over drug pricing, but at least the government pays on time and pays adequately when compared to many TPAs. This hobbit does not think that the government will ever become the biggest or fattest cats making money in the primary care sector, but it needs to be said that bureaucracy does have a tendency to becoming fat and unwieldy, although not in a feline or profitable sense.
The government also makes up the lion’s share of the hospital sector, with some 80% of all acute hospital beds, so the middlemen can’t really sink their teeth there too. But when you look closer at the private hospital and specialist sector, the signs are there that we may be walking down the American path.
We need to just look at the profits insurance companies make in Singapore, as well as the increasing amount of money going to management salaries and bonuses as well as the commissions paid to insurance agents and you can see where the proverbial train may be heading.
On top of this, on the provider side, be they at the hospitals or doctors’ end, more and more resources are being spent on insurance-related matters, which include:
- obtaining pre-authorisation in a timely manner
- appealing against denial of pre-authorisation
- filing of claims after service and care has been provided
- handling denial of claims
- processing of requests for discounts from insurance companies
It used to be that hospital and clinic staff took on these insurance-related tasks in addition to the regular responsibilities they had. But no more. Now it is not uncommon for a staff nurse to tell the specialist upfront that his/her responsibilities do NOT include dealing with insurance-related matters if he/she is to work for the specialist The consequence is that the doctor now has to hire another staff just to deal with insurance-related matters.
And we wonder why healthcare spending is going up. Soon, we will end up like the USA, where folks on both sides hire legions of staff to frustrate one another in the private hospital sector.
On 10 October 2023, MOH announced that through its Claims Management Office (CMO), it was issuing Claims Rules. Medishield Life (MSL) claims deemed potentially unreasonable are now subject to adjudication by an independent panel appointed by the MSL Council.
“If the claim is found to be inappropriate, the medical institution and/or doctor will be asked to rectify and refund the inappropriate portions of the claims and not recover the monies from the patient”….”MOH is stepping up our monitoring of inappropriate claims and will not hesitate to act against the small minority of doctors who are found to be repeatedly non-compliant despite warnings. Repeat offenders may have their accreditation status under the MSL and Medisave schemes suspended or revoked”. (MOH press release dated 10 Oct 2023).
All well and good. In a population of thousands of specialists, there will be a few who don’t play by the rules or reasonableness and they have to be managed actively, if not managed out.
The press release also stated that speciality-specific claims rules have been and will be developed. These rules are based on “evidence-based literature, prevailing clinical practice and cost-effective guidelines”. It was also stated in the same release that the first set of claims rules for gastrointestinal endoscopy was released in August 2022. Two more sets of claims rules were released in September 2023 for ENT and cardiology.
All these efforts are to ostensibly primary protect the interests of the patients and to keep MSL financially sustainable in the long-term. This hobbit has nothing against supporting practices that are “cost-effective” and “evidence-based”.
However, what about the other side of the equation with the insurance companies who sell Integrated Shield Plans (IPs)? IP premiums and claims sit on MSL premiums and claims. Who ensures IP providers are “cost-effective” and “evidence-based”?
Cost-effective?
Does anyone in Singapore set a minimum limit on how much of the premiums collected are spent actually on paying for healthcare? Or IPs can spend as they like on management costs and commissions and also on amassing profits?
USA’s Affordable Care Act or “Obamacare” states that 80 to 85% of premiums collected should be spent on healthcare costs. But in Singapore, between 2016 and 2019, the corresponding figure is only 75%, with the rate of rise for management costs and commissions being faster than claims (i.e. payment for claims for healthcare provided) between 2016 and 2019. Can such a state of affairs support the aim of being “cost-effective”?
Evidence-based?
As for “evidence-based”, what is the evidence for some IP providers selecting certain doctors to be empanelled over others?
It was stated in the SMA’s Position Paper on Troubled IPs (May 2021) that “The Health Insurance Task Force (HITF) Report stated ‘To enhance and ensure transparency of the arrangement (e.g. disclosures on the healthcare provider selection process)’, that is, IP insurers should state the criteria used to select doctors to be on a panel. The fact remains that no doctor or policyholder knows what the actual quantitative or qualitative measures that make up these secret criteria are”.
This was the state of affairs in 2021 and remains so today.
In other words, the exercise of selecting doctors for empaneling is a completely opaque exercise with no accountability to regulators, policyholders and of course the hapless healthcare providers who do not get selected.
But this is just the tip of the iceberg about evidence-based. What is far worse is the exclusion clauses and denial of claims that are inflicted on policyholders that are not evidence-based. Policyholders are not healthcare professionals armed with the knowledge to understand and appreciate the true impact of these clauses up-front. Only years later, when they need to make claims for conditions that are excluded, they then experience dismay if not devastation when they receive notice that their claim has been denied. Some IP providers also indulge in semantics to get away with paying for claims. The examples of non-evidence-based exclusion clauses and denial of claims are many. Some of the commonest or egregious ones include:
- A history of breast cysts leading to an exclusion clause for all breast conditions, including breast cancer. (The evidence is that breast cysts do not become cancerous)
- A history of piles or anal abscess that leads to an exclusion for all colorectal conditions. Some insurance companies even state that all gastrointestinal conditions are excluded! What has an anal abscess got to do with stomach or colorectal cancer?
- A major branch of the Left Anterior Descending Artery (LAD: a major coronary artery) is the diagonal artery. A claim for a stent inserted for a almost completely occluded diagonal artery is denied on the grounds that the diagonal artery is NOT the LAD, it is a branch. (That is like saying your car insurance policy only covers you for the main Singapore island but not Sentosa). Well for the record, a heart attack involving the diagonal artery can lead to death and disability too.
No Two-way Street
This hobbit can go on and on. But at the end of the day, one of the major conclusions from this exercise that this hobbit has arrived at is that while healthcare providers, such as doctors, are compelled to practise in a cost-effective and evidence-based way (and rightly so) when MSL is involved, there is no such requirement for IP providers although IP premiums and claims sit on the MSL framework. IP providers just need to be seen to be financially sustainable to their regulator and when things get rough for them, they can resort to that one usual and effective trick they have up their sleeves: – the ability to get away with squeezing healthcare providers and policyholders ever harder by raising the spectre of premiums increasing for policyholders if they are not allowed to get their way. (I gotta admit, this is a beautiful strategy that works like a charm, something almost akin to a kid throwing tantrums when he realises that he always gets what he wants by doing so)
But one should perhaps wonder: for how long more can this lop-sided state of affairs continue?
And while we may reassure ourselves that the private hospital and specialist sectors constitute a small part of healthcare delivered in this country, the fact that about 70% of Singapore residents have bought an IP policy means that there is great potential for this to mushroom into a big problem later on.
Previous posts on the subject of IP:
https://wordpress.com/post/hobbitsma.blog/914
https://wordpress.com/post/hobbitsma.blog/865
https://wordpress.com/post/hobbitsma.blog/773
https://wordpress.com/post/hobbitsma.blog/757
https://wordpress.com/post/hobbitsma.blog/749
https://wordpress.com/post/hobbitsma.blog/731
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