Healthcare Hullabaloo: Bizarro #7

Thanks, Hollywood.

Because of your obsession with organized crime, most Americans are intimately familiar with the world of organized crime – even those who live in North Dakota.

Over the years, ‘Mafia’ movies are perennial favorites with the American moviegoer. Such classic films like the Godfather trilogy, Goodfellas, Once Upon a Time in America, Casino, and my all time favorite, My Blue Heaven have given us a an immersion into the life of American Mafioso.

Not to be outdone, the small screen has contributed to our national obsession with such classic series such as ‘The Sopranos’ and ‘Boardwalk Empire’. The History, Discovery, and Biography channels also contribute their fair share of Mafia inspired reality stories.

Fortunately for me, being raised in Northern New Jersey, I was never subjected to the real thing . RIP, Tony Pro.

Most of us are familiar with the modus operendi of the American mob. Gambling, Robbery, extortion, and prostitution were all major revenue streams for the 20th century mobster. However prevalent these activities were, however, the classic mob fundraiser has always been the ‘Protection’ racket.

The way ‘protection’ works is simple - If you don’t want your small business to suffer from broken windows or worse, you would pay your local mafia soldier a weekly stipend to ‘protect’ your business interests. An ‘unprotected’ business also suffered because legitimate customers were fearful to patronize the establishment, as they might be subject to some form of retribution themselves for doing so.

Thankfully, law enforcement has worked tirelessly over the past century to help eradicate this type of “strong arm’ behavior.

Today, the world of ‘Protection’ schemes is mostly limited to the silver screen…and your doctors’s office.

Yes, health insurance companies utilize many of the same threats that mustached Pete’s used to employ in their protection schemes. Sure, they don’t send a few goons to an office and have them crack a few heads (that could potentially result in some unwanted and expensive neurosurgical claims to process – and they certainly don’t want that) but they do employ many of he same fear tactics in order to get providers to join their networks (and accept lower fees).

Thirty years ago, when manages care plans were first being marketed, physicians were urged to join the networks in spite of the lowered compensation that they offered. “Soon everyone will have this type of insurance” they were told. “If you don’t join our plan, you soon won’t have any patients”. Many physicians fell for this line, and soon afterwards the hold outs started following them as they grew fearful of being left out.

Like the Mafia itself, these physicians soon discovered that, once joined, these networks were almost impossible to get out of. Leaving a plan would mean losing a significant chunk of their patient base all at once as these patients would switch to an in network office in order to avoid the high out of pocket expense of “out-of-network” benefits. Like a small businessman beholden to a Godfather, these in network offices were forced at accept an ever-growing list of demands and compromises from these carriers lest they get dropped from a plan.

This scenario was especially true of primary care physicians. Sub-specialists could normally survive leaving a network (or never joining one in the first place) especially if they were the “only show in town”.

I worked extensively with one such sub-specialist who never joined any insurance networks. He was constantly barraged by different insurance plans, all cajoling him to join their networks. When he refused, they would always act incredulous at his audacity. As time went by, these same companies would make his business more and more challenging as they would underpay or even out rightly deny claims for out of network benefits. It soon became a full time job to collect on these out of network claims. We would have to make numerous phone calls and write threatening letters to the carrier. At one point Horizon Blue Cross decreed that they would no longer accept letters of phone inquiries regarding claims from out of network physicians. If the patient was deceased or incapacitated (as was often the case with his office) there was nothing that you could do with the carrier to collect on a claim. Often we would enlist the aid of the state medical society and the Department of Insurance to intercede on our behalf. Often we would be forced to hire a well known law firm to handle our collections from these carriers. It would often take years to collect on a simple claim.

While they didn’t employ goons carrying baseball bats or ice picks, these were nonetheless strong arm tactics used by these companies to threaten the doctor and to get him to ‘play ball’.

I think I know why you can’t buy Blue Cross insurance from an out of state plan – doing so would violate the RICO Act.

If an Italian-American businessman tried to use these same tactics with his customers, he would end up on trial racketeering charges. Yet, we allow our health insurance companies to use these fear and intimidation tactics without any retribution.

Tony Soprano types used to claim that they were in the ‘waste management’ business. Today, it wouldn’t surprise me if they say that they are in ‘health insurance’.

Bizarro.

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