American Medical News
Aug. 4, 2003
PPO “administration fee”: Physicians pay to get paid Doctors must pay 3% to 5% of their reimbursement check to a company that organizes health networks. And that company is growing.By Robert Kazel
HealthLink, with no insurance assets of its own, is a “rental” network, a go-between that has signed mostly PPO contracts with at least 25,000 doctors
on one side and more than 400 payers on the other. Middleman networks such
as HealthLink make money by charging myriad payers — unions, self-funded
employers, third-party processors and others — for assembling and maintaining health networks. In HealthLink’s case, however, money is streaming in from both sides; every physician in the network must pay a fee ranging from 3% to 5% of each discounted reimbursement, depending on the doctor’s contract.
Because of corporate growth and mergers, the specter of administration fees for doctors has grown far beyond HealthLink’s roots. Many more physicians are seeing the fees, and more are likely to in the future.
California-based WellPoint Health Networks Inc. purchased HealthLink in 2001, and the company already has roughly tripled the number of doctors in the network by expanding to markets in the mid-Atlantic states and the District of
Columbia.
John Seidenfeld, MD, HealthLink’s medical director:”I think they’re getting very many things for this fee, but they don’t really understand what they’re getting.”
http://www.ama-assn.org/sci-pubs/amnews/pick_03/bil10804.htm
About HealthLink:
http://www.healthlink.com/about_us.asp
Comment: What is there to not understand about being impaled by a shaft between the shoulder blades?WellPoint, formed through the for-profit conversion of Blue Cross of California, is the nation’s leader in innovative health insurance
products.
It is the darling of Wall Street primarily because of its consistently favorable medical loss ratios. That’s Wall Street talk for improving profits by reducing payments for health care services.With lower medical loss ratios, investors gain while patients and providers lose.With HealthLink, WellPoint has succeeded in reducing the medical loss ratio to zero! It has inserted itself into the health care arena, disguised as a PPO, without funding any medical services whatsoever! It is a very expensive middleman that has totally abandoned the principle of insurance: pooling risk. But it is highly successful as a business model since it has diverted 100% of its revenues into administrative costs and profits!
The only benefit that HealthLink offers is price control. But by using this private sector, marketplace model of controlling fees, we are subjected to an inefficient, fragmented, and outrageously expensive mechanism of fee control. In contrast, our Medicare program already controls fees with virtually no additional administrative costs over the very nominal costs to run the system. A universal, public program of social insurance would ensure that costs would be contained and that fees would be equitable while also ensuring administrative efficiency.
Why do our public policymakers continue to commit health policy malpractice
by insisting that private bureaucratic parasites, such as WellPoint, be included in the health care equation?