Simplifying the payment system.(Guest Editorial)

The administrative complexity of the current payment system is a lose-lose proposition for all of its participants. It's costly, duplicative, and it needs to be simplified.

Multiple credentialing, multiple clinical guidelines, multiple billing processes, and multiple coding rules, not to mention multiple fee schedules, add no value to the health care system. These activities create mounds of paperwork, drive physicians into retirement, irritate patients, hurt employers, and drive administrators to drink.

Complexity also helps make payers the enemy. In manufacturing terms, physicians and hospitals are suppliers to the payer, and patients are their customers. I know of no other industry where a business considers their customers and suppliers to be their adversaries. But health plans see patients as demanding unlimited care and physicians and hospitals as wanting to provide as many such services as they can. It's a crazy way to do business.

What isn't needed is a government-run, single-payer system, as some have suggested.

Instead, consider a "simplified payment system" that would retain multiple public and private payers, but create a limited set of standardized insurance plans.

Such a simplified system would use a single fee schedule. If a routine office visit is worth $25, it ought to be $25 no matter who's paying the bill. A single fee schedule might eliminate the economic advantage some large practices have in negotiating with payers. However, this would be offset by the savings those practices would realize by not having to reconcile different payments for a particular service from every payer.

Because each of the payers would pay the same price for a particular service, the only way to differentiate themselves from their competitors would be to offer better customer service and a more efficient claims payment process.