(I published a shorter version of this last week; this is the full piece in all its glory!  As always, I love a good discussion, so please feel free to reach out with any discourse. — Allison Edwards, MD)

Last week was a big week: my colleagues and I came together and donated enough to erase $1.4 million in unpaid medical bills for hundreds living in Kansas and Missouri. The news of this gift spread from our city across our state, then leapt from a regional story to getting coverage in the national press.

My thoughts on this are incredibly mixed: I couldn’t be more excited that this initiative has received the notice it has; it was our goal to make a bold statement.  I also couldn’t be more upset that our initiative was newsworthy enough to garner national attention; we shouldn’t have to do things like this. But here we are.

The cost of healthcare affects each and every one of us.  It doesn’t care about your income — though it does affect those struggling with poverty the most.  It doesn’t care if you have insurance or not. It doesn’t care if you were healthy when you woke up this morning.  It doesn’t care if the accident was just that — an accident.

Why do we, as a nation, stand for this?  

Back in my intern year of residency, I was presenting during morning rounds, paused outside a patient’s room. We were in the corner of the 9th floor, and the Westward-facing windows opened up in front of me to the vast expanse of the Rockies.  The sun was starting its climb from the horizon and was set at a sharp angle in the sky, casting an orange glow over the mountains. As I was finishing, the senior resident nodded, allowed my plan to stand, and paused: “Since she’s more straightforward, we’re going to take a little time to talk about something else.”

He pulled an academic study from the pocket of his white coat.  This happens often during rounds, and the studies usually relate to the organic pathologies and treatments relevant to the patient.  He held it, folded crisply in half, and pointed it at me, imploring, “Do you know the average amount of debt that leads bankruptcy? And do you know to what extent medical bills play into that?”

I had not prepared for that question.  He got a blank stare and a shrug as a response.

“$5000.  And most are due to medical debt.”  He paused. “Do you really think we need to keep this patient another day?  And do they need that last X-ray and labs?”

The idea of discussing finances during hospital rounds was odd, and it was a subject I had thought less and less about as my training had gone on.  I remember bringing it up my third year of medical school with my attending, an oncologist. I had asked if she ever considered cost when ordering these massive, sometimes futile treatment regimens, and she quickly shot back, “I couldn’t do that and still care for my patients appropriately.”  

I filed that away and learned to not worry about costs; I was going to care for my patients appropriately.

But here I was, on the general floor of the hospital, being asked by my senior resident if I really did need to incur extra costs for my patient.  And I wasn’t sure what the right answer was.

In the United States, health care isn’t a right.  We’ve all got to figure out how to pay for it through a combination of insurance, government assistance, employer contributions (if you’re lucky), and cash out of pocket.  This is complicated by a dearth of transparency in pricing and a certain amount of limitless demand in the context of limited supply. It’s a tough situation, and it’s more common that you may realize.

Medical debt affects every community and can destabilize any household.  A recent article in the Kansas City Star brought the local impact of medical debt into sharper focus for me: in some parts of the our metro, up to 30% of households have medical debt in collections.  This isn’t unique: the number of households with medical debt in collections jumps to over 30% in many other parts of the US as well, including vast swaths of the South, along the Mississippi River, and in Appalachia.  Though these high rates of aren’t the norm, 2016 data collected by the Urban Institute, illustrated in an easy-to-use map an online map, demonstrate that 18% of households nationwide have medical debt in collections.

Though these families aren’t yet at the point of bankruptcy, that 2009 research piece referenced by my senior resident found that over 60% of bankruptcies studied were due to medical debt, and that the average balance leading to the bankruptcy was well over $5000.

In the public discussions bemoaning the bloat of healthcare costs in our country, people like to blame subsets of the healthcare delivery system. Perhaps Big Pharma is to blame.  Or maybe doctors are the villains. Or really, it’s big hospital administrators that bear responsibility. And don’t forget the health insurance industry; it’s their fault.

While each of these parties has a role in the glut of healthcare to a different degree, to solve this problem, we can’t sit at the table and sling mud at one another or point fingers.  We’ve been doing that for decades and have watched the problem only worsen. Instead, I believe, the whole healthcare system must come together to pursue a solution economists have heralded all along.

We must work towards creating transparency in healthcare costs and pricing.  

This seemingly simple economic solution is remarkably hard to enact.  The US healthcare industry is built around layers of contracts, negotiations, secrecy, handshakes, laws, special interests, investment firms, and umpteen other layers of an onion you do not want to peel. Unless you like crying.

And it’s largely because there are a ton of hands in the cookie jar, so to speak.  I don’t care if my patient has Medicare, or Medicaid, or Humana or Aetna or United Healthcare or whatever.  Any of those players invite opaqueness and bureaucracy into the relationship I have with my patient and, ultimately, drive up the cost of care.  This effect is particularly pronounced in the realm of office visits and other routine elements of healthcare.

If I am to discuss the cost of care with my patients and work towards the larger solution of introducing price transparency, I simply can’t factor these third-party payors into the equation.  More than that: if I care about reducing the price of healthcare, I have to step outside of the insurance system and operate in a cash-based, consumer-driven world.

I can tell my patients that an MRI will cost them $257.70 if they pay cash for it at the time of service.  If they want to use their insurance, I have no idea what the eventual cost will be (though it wouldn’t surprise me if the bill wandered upwards of $2,500).  

I can tell my patients that a hemoglobin A1c lab draw to check in on their diabetes will be $10; I can’t even begin to guess the cost if insurance is involved.

This is the crux of our movement as direct primary care (DPC) doctors.  As a community, we are committed to providing primary care with a fair, transparent price tag.  It’s our grassroots way of starting the conversation, and it’s been enlightening.

But the process of getting cash-based pricing is far from easy.

Kylie Vannaman, MD and Haseeb Ahmed, DO MBA are co-owners of the direct primary care clinic Healthsuite 110.  Their clinic is tucked away in a quiet corner of a one-story office building in a Kansas City suburb, just far enough from the busy road that the noise from traffic can’t be heard.  They have 4 exam rooms, all with matching furniture but with personalization for each doctor: kids’ drawings in one room; flyers for fitness apps in another.

They both left the traditional, fee-for-service system in 2015 looking for a different way to provide primary care.  Direct primary care (DPC) — providing unlimited care for a flat, monthly fee and eschewing insurance contracts — was their exit strategy.  They hung their shingle, and they set out into the community to network and find specialists who would accept cash payments from their patients.

What they found shouldn’t surprise any of us: the healthcare industry has become so accustomed to patients using their insurance and not paying directly for their care that it has become close to impossible to pay cash for any healthcare service on the spot. As patients, we’re encouraged to “shop around” for the best price, but calling different hospitals and physician groups gets us nowhere.

(Let’s let this settle for a second: these two set out to search for businesses who accepted cash as a form of payment.  That’s insane. No other industry operates like this. Can you imagine, for a second, if the car-buying experience operated like healthcare?  You’d show up at the dealership knowing that you need a vehicle to commute to work, take your kids to school, attend family functions, and get out for vacations every once in a while.  You’re in a little bit of a tough situation — you need the car today — and you’ve got “Car Buying Insurance,” so you feel in a safe place to go ahead with the purchase. You pick out a car, show them your “Car Buying Insurance” card, and drive off with a small copay-type down payment.  Two months later, you get a bill for $40,000 explaining that you picked the wrong dealership, the wrong car color, and possibly also the wrong features. And also — the car’s not returnable. You’ve got to figure out how to pay this bill.)

By the time late 2017 rolled around, enough direct primary care clinics had opened in the area that Drs. Vannaman and Ahmed were joined by 18 other providers caring for close to 10,000 patients.  They formed an informal organization and called themselves the Midwest Direct Primary Care Alliance. It was at this point that they found an imaging center that was ready to come up with a fair price list.

Through their discussions on trying to get transparent pricing for patients, they learned the following:

  1. Medicare is, more or less, the basement reimbursement rate for medical services and is the rate off of which all other contracts are set.  Commercial insurers — like Humana, Blue Cross, Aetna, etc. — base their reimbursement rates as multipliers of Medicare rates.
  2. It is in the radiology group’s best interest to negotiate with each of these insurers to get the best reimbursement rate possible. This usually means that they won’t (and technically can’t) publicly acknowledge what their reimbursement rates are for each of these commercial  insurance companies. It’s a secret
  3. As anyone who has had to negotiate knows, it’s ideal to start somewhat high with your selling price so that as you negotiate with a buyer, you end up at a decent spot in the end. That high, initial asking price becomes the “price” of the MRI for anyone who calls asking for a price — even though the radiology group came up with that price not expecting anyone to actually pay that price — it was the highball price for their negotiations with insurers.
  4. Because of this context, any cash paying person is expected to pay that highball price.  If the radiology group advertised a lower price, the insurance companies would seize the opportunity to renegotiate their contracts based on that lower price, and the radiology group would be at a disadvantage in their negotiations.
  5. The radiology group believed they could not publish a fair, transparent cash price list because of this.
  6. They would, however, give us (secret) favorable rates that we could charge our patients for their services, and they would invoice us (not the patients) after our patients came in for their radiology exams.

If that sounds less than ideal and overly complicated, it’s because it is both of those things.

In short: this radiology group has sent us all contracts that note that our patients can pay cash for each radiology exam at X times Medicare rates. We aren’t allowed to share these rates.  When we, in our direct primary care practice, want to order a radiology exam, we charge and collect X times Medicare from the patient, and then the radiology group sends us a monthly invoice of all of our patients’ bills.

This process makes us want to scream. In a sense, we’re no better than the insurers.  But in another way, we are — because our patients are paying less than $300 for a brain MRI.

Interestingly, another radiology group in the metro has a price list that they’ve published for our organization (like the other radiology group, it is secret and not available to the public).  What’s better with this organization, though, is that our patients pay them directly at the time of service. In full. No invoicing. Simpler.

This has become one mission of the Alliance: to push the dialogue within healthcare to create transparency in healthcare costs.  We’re starting to find good company across the nation. DPC Frontier, an independent organization led by Phil Eskew, DO JD MBA, has the most comprehensive list of healthcare providers committed to price transparency.  The site lists everything from radiology groups to surgical centers who have committed to publishing a set price for a specific service.  The list keeps getting longer, which should bode well for patients in the long run.

Because we’re constantly thinking about the cost of healthcare, when the Midwest Direct Primary Care Alliance discovered that we could donate to abolish unpaid medical bills in the metro, it was the natural thing to do.

Our donation went to RIP Medical Debt: a not-for-profit organization that acquires and then cancels unpaid medical debt via a no-strings-attached gift for individuals and families unable to pay their medical debts. Those on the receiving end no longer have any obligation to pay their cancelled debt. Furthermore, because the debt is canceled as a gift by a nonprofit, recipients do not owe any taxes on the “cancellation of debt” income.  

In all, 784 people in our region received cancellation notices in mid-July on over 1200 bills, amounting to $1,474,987.25 in cancelled debt that had been accrued from various interactions with the healthcare system.

But that’s just a small drop in the bucket — there’s much more debt out there.  In fact, there remains hundreds of millions within the Kansas City area alone, according to RIP Medical Debt.  

It is in this context that we, as doctors, must exist.  We are the gas that fuels the healthcare industry — without our care and the power of our orders, there would be no big pharma.  Administrators would have no jobs. Insurers wouldn’t have a product to offer.

We sit at the bedside and care for patients.  We agonize over complex presentations and make decisions.  We spend years to decades of our lives training to have that privilege.  But we didn’t do this to put people over the financial cliff. It wasn’t our goal to be complicit in pushing ⅕ of our country into debt — or in bankrupting an entire nation.

This is why we stand together to help, in a small way, relieve the debt of complete strangers while also fighting for price transparency — so bills like this don’t pile up in the first place.

Returning to my patient in the hospital, up on the 9th floor with the straightforward case — I didn’t think she needed to stay another day.  She had good support at home, and her management could be safely continued in the outpatient setting. To this day, I have no idea what came of her or what her final bill was for her hospital stay, but I do know that we can all make small steps to make healthcare better.  

We just have to step up and start doing it.

Allison Edwards, MD

July 28, 2018