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Show Any Willing Provider: An Unacceptable Risk for a Marginal Gain Samuel Sutton ket, thus leading to more competition among providers and, as a result, lower prices and higher overall quality. While this is a solid argument for most economic sectors, it does not apply to some - and healthcare is one of these. In the healthcare market, consumers simply do not have the motivation or knowledge to comparison-shop. For example, in a classic fee-for-service model - where an insurance company pays a fee for the services provided by a doctor or hospital - there is no incentive to shop around for the best price. The consumer does not care what the doctor charges the insurance company; they are paying the same premium to their insurance company regardless of whether the clinic bills the insurance $100 or $125 for their services. Since the clinic is going to get reimbursed no matter what they charge (within reason, of course), they have no real incentive to keep costs down either in these open systems. AWP will do nothing to alleviate this problem. MCOs restrict their panels specifically so that they can control prices; if a patient is allowed to see whichever provider they choose, this advantage is undermined. Since AWP introduces no new market forces in its place to address the issue, costs are bound to increase. While most AWP laws do place caps on the amount of payout due to out-of-network providers, the volume advantage discount that most MCOs at least partially rely on is still at risk. Volume Discount Advantage Even though most AWP legislation stipulates that the MCO can still dictate the reimbursement rate (the Utah law, for example, requires an HMO to reimburse the out-of-network provider for only up to 95% of what the HMO would otherwise pay to an in-network provider), the laws still undermine the volume discount advantage. For example, if an MCO has 100 patients and five doctors, they can guarantee 20 patients to each provider, thus enabling them to negotiate discounts with their network members. However, if the MCO is forced to pay for services rendered by some out of network providers, their network effectively grows to 10 doctors, allowing them to guarantee only 10 patients to each. Eventually, as the network of willing providers grows and the MCO finds itself unable to guarantee a certain number of patients to the members of their panel, the doctors in the network will not be willing to accept the rates previously offered by the MCO. So, even in situations like Utah, where the law has a five percent discount built in initially, the rate that the MCO will be paying to in-network providers will inevitably increase as the number of doctors serving their patients increases as well and the volume discount advantage is undermined. Performance vs. Cost As mentioned above, the United States spends more on healthcare - both per capita and as a percentage of GDP -than any other nation, according to the World Health Organization's (WHO) 2000 report. So what does that extra expenditure buy us? Only the 37th position among all the WHO's members in overall health system performance. By contrast, France, who placed first in system performance, is fourth on the list of overall expenditure, and Italy, who placed second in performance, is only eleventh in the world on overall expenditure. While expenditure certainly does not always translate into health system quality (the second and third finishers in expenditure, Switzerland and Germany, finished only 20th and 25th, respectively, in system quality), most other countries are able to provide for a higher quality health system for far less money than the United States. Considering the high burden that the price of healthcare places on American consumers and businesses, we should expect a higher return on our investment. Only when some management authority steps in do doctors have an incentive to offer services for less. Even managed fee-for-service systems exhibit roughly a four percent savings over standard plans (Sheils, et al, 1995, p. iii). Under managed systems, not only do clinics have to find a way to accept the lower reimbursement rates offered by MCOs, but they have to do it while living up to quality standards. So when ten doctors are trying to get hired into only five spots on an MCO's panel, the competition between them to meet those standards can be a highly effective market regulator. Managed care has also been very effective in holding administrative costs down. Private care physicians who cater to patients from a wide range of health insurance companies often must hire some full-time staff just to handle all the billing. Those clinics who offer services to patients from only one company face a much simpler task when it comes time to collect; common reimbursement rates, schedules, procedures and paperwork all help to simplify and streamline the process, thus helping to hold costs down. Impact on the Uninsured With 16% of Americans already lacking health insurance, America simply cannot afford to push any more out of the fold. In fact, not covering those citizens may actually end up costing society even more, as many of them end up with government-sponsored Medicare coverage anyway or no coverage at all, and therefore either cannot or do not seek medical attention until their ailments become serious enough to force them to do so. Emergency care for these citizens, which is often picked up by government programs and charitable con-tributions, is by far more expensive than preventative care is for those with insurance. The Congressional Budget Office estimates that for every one percent increase in health insurance premiums national' ly, 800,000 Americans lose their coverage. While that nurri' ber is speculative in nature and national in scope, it suggests that a similar cost increase in Utah alone could push thou-sands more people into the uninsured category. Even AWP opponents will concede that these laws may increase premi' 82 |