The 3rd Party Payers and Cost Control

The Role of Social and Personal Determinants of Health on Price Control


Originally published by Illumination Curated on Medium



Adapted from Pexels

Healthcare costs, patient premiums, and physician reimbursement for the sick’s medical care is a complicated task. Although it does not have to be that way, it is the reality. Until not long ago, companies based their care costs and reimbursement on a fee-for-service scheme. However, with the advancement of the International Code of disease, I.e., ICD-10, and the introduction of a merit-based reimbursement system, the way the cost of care is estimated is even more sophisticated.

The advent of the value-based payment system raises the question- How do 3rd party payers determine the cost of the medical care by the physician for the patient?

Almost everyone involved in one way or another with today’s healthcare system understands that physicians and patients are not in control of costs, and the concept of supply and demand is alien to the modern healthcare system. Furthermore, patients and physicians have little or no influence on what defines the quality of medical care.

The alienation of the patients and physicians who are meant to be the essence of the medical care realm has crushed control of the healthcare system and placed it in the hands of bureaucrats and corporate tyrants.

The 3rd party payers and their administrative partners in the governments and various health organizations have always tried to create chaos, as I Call it, “Murky Waters,” so they can fish or profit to the maximum. The latest of their scheme is the utility of “social determinants of health and disease.”

The Concept of Social, Physical and Personal Determinants

The social, economic, and physical environment and the person’s characteristics and behaviors are three categories of determinants payers use to determine the value of medical care or the quality of service rendered to a patient.

According to the World Health Organization, the social determinants of health are the socio-economic conditions in which people are born, nurture, lived, worked, and age. The distribution of money, power shapes these circumstances, and resources globally, at national and local levels. The organization believes the social determinants of health are primarily accountable for health inequities like the petty and preventable differences in health standing seen within and between countries. Some examples of social determinants of health are the Convenience of resources to meet daily wants, such as educational and job openings, living wages, healthy foods, etc.

Physical determinants include- Natural environments, such as plants, weather, or climate change. It also pertains to the built environments, such as buildings or transportation; Worksites, schools, recreational settings; Aesthetic elements, such as proper lighting, trees, or benches.

Individual behaviors such as diet, alcohol, tobacco, physical activity, and other drug use also play a role in health outcomes.

Although physical and personal determinants of health are of significant importance in addressing a patient’s problem while establishing real value for the care rendered, social determinants have played a crucial role in the recent past to secure the 3rd party payer’s interest.

Let us be clear- the social determinants are essential.; however, only in conjunction with personal factors.

Payers can’t Control Costs short of Social Determinants of Health Model.

As value-based payment models emerge, hospitals and clinics are absorbing more financial burden for a particular group of patients determined based on social factors. And are penalized at the same time by the Center of Medicare and Medicaid (CMS) for high readmission or visit rates.

Health insurance companies are influencing the payment because they want to make the most financial security. They have the tools to drive patients to specific services and dictate how physicians practice based on social determinants of health.

Not surprising enough, insurance companies are interested in participating in social determinants and using that for their benefit because social determinants are broad and provide payers plenty of space to navigate the domain of “Price fixing.” For instance, in a society that is said to be impoverished, it also lives those who may or may not be adversely affected. Hence it is only a matter of setting limits on what defines a community as wealthy or poor. The latter serves as the murky water or the grey zone where the insurance business can thrive. Personal determinants will not provide such flexibility; for example, a poor person can be a homeless individual in a wealthy neighborhood or be considered rich in a weak or impoverished community.

Other than the insurance industry, many organizations have yet to blend social determinants into their value-based agreements and population health strategies instead of approaching patients’ social needs through community benefit operations.

According to analytics company Change Healthcare, a 2017 review of health plan executives showed that 80% are facilitating value-based care through a focus on social necessities.

A few organizations are studying ways to capitalize on social determinants in a manner that is mountable and sustainable in the long term. That’s somewhat the Blue Cross and Blue Shield Association is engaging on- through an organization launched earlier this year.

The first step is contracting with ride-sharing services like Lyft and Uber to give patients rides to the primary-care doctor’s office in hopes of reducing trips to the emergency room, The Latter paid by local member plans.

How States Incorporate Social Determinants into Medicaid and Accountable Care Contract Requirements

The whole concept of incorporating social determinants in the valuation process in the merit-based system is to take the price itself out of the bidding practice. That means officials are finding a way to distinguish and set aside innovative and deliver quality programs. Although it may sound like a perfect solution for cost control while maintaining the quality of care, what is hidden from the picture, is that social factors poorly define the better quality and value of medical service, particularly when patients and physicians have almost no control over their decision-making process and what determines the quality and value.

While it’s typically speculated that a person's life's social and environmental context affects how healthy they are; however, there’s proof for how the healthcare system can address those factors without the influence of one-size-fits-all administrative bureaucracy. For instance, providing a free ride to or from the clinic will keep patients out of emergency rooms or offer clean water to indigenous people to determine how much a physician should be reimbursed.

Using Social Determinants Payers, and Managed Care Systems in Particular gain Flexibility to Increase Revenue

That extra flexibility comes to 3rd-party layers as the CMS boosts what it pays Medicare Advantage plans. Plans obtained a 3.4% rate increase for 2019, giving them even more incentive to enhance their benefits packages.

Today amid the value-based reimbursement scheme, Health insurers are prepared to take advantage of the additional freedom. The affordable care act (ACA) was designed to solidify the latter flexibility through individual mandate provision by further bureaucratizing the reimbursement system and determining qual