Open Letter to Rep. Murphy on Health Care Reform

Dear Congressman Murphy:

I strongly support your decision on July 24th to oppose the currently proposed House and Senate Health Care Reform Bills, a decision which must have been both politically and personally difficult.  While health care reform is sorely needed, we need real reform, rather than the creation of a less robust version of the troubled Canadian Medicare system.

In your letter declaring your position to your constituents, you raised several issues that needed to be addressed in the reform process.  The following are some suggested practical solutions to the issues you raise.


As you pointed out in your letter to your constituents in the New York 20th Congressional District (http://www.timesunion.com/ASPStories/Story.asp?StoryID=823908&LinkFrom=RSS), Health Care has become a volume business.  The rise of Preferred Provider Organization (“PPO”) in the late 1990s and the early part of this decade allowed patients to access specialists directly, limited the requirement for Primary Care Physician (“PCP”) “Gate Keepers” and allowed people to visit physicians “outside of the network” by paying a premium.  This market-driven change from more invasive and controlling Health Maintenance Organizations, was a vast improvement in most people’s eyes, as it allowed for greater freedom of choice.  However, PPOs’ payment method was (and remains) discounted fee for service, where physicians and institutional providers (such as hospitals and imaging sites)  gave (often substantial, the Wall Street Journal to the contrary) discounts from their Usual Customary and Reasonable (“USR”) rates in return for patient-volume.

This gave doctors the incentive to treat more patients (for PCPs, such as Family Practice Docs and Internists, the gold-standard is now 6-10 patient encounters per hour at a Resource Based Relative Value Scale of Level 3 or higher) or (for Specialists) to perform more procedures.  The recent New Yorker article on McAllen, Texas is an extreme example of this trend.

To move away from this trend, there needs to be an emphasis on measuring quality, rather than on mere quantity.  Academics, notably Dr. Don Berwick of Harvard and Dr.Wennberg of Dartmouth Medical School, have done a great deal of work on evidenced-based medicine, which is a good mechanism to measure outcomes against inputs.  However, as with PPOs providing greater patient choice 10 or 15 years ago, businesses, rather than the government, have to figure out how to turn improved techniques for measuring quality into a functional reimbursement system.


While your letter indicates that you believe that administrative procedures need to be standardized, it is important to understand that in many ways they already are standardized.

Most coding, for example, uses the Common Procedural Terminology (“CPT”) system for coding procedures and the International Statistical Classification of Diseases (“ICD-9, ICD-10, ICD-11”) system for coding clinical complaints.  Most manual billing uses what old timers still call “The HCFA Form 1500.”  The Bush Administration’s main (perhaps only, depending on how you view the HIPAA Privacy Rule and changes to the Stark Amendment Rules) contribution to health care reform was to create a standard for transfer of electronic data sets under the Health Insurance Portability and Accountability Act (“HIPAA”).  There is a good degree of standardization already, at least in billing and coding procedures.

Where there is a lack of standardization, is in the variety of Plans offered, their terms and in the procedures of various payors in terns of things like pre-approval requirements.  While this takes up a lot of time for Doctor’s offices, this also reflects that fact that patients want  . . . and should have  . . . a lot of choices in the Plans and coverage offered.  While there are problems, getting the Provider’s Manuel back in the days before these things were on the payors’ web-sites was always like pulling teeth (even if you weren’t working for a dentist or oral surgeon’s office) and knowing what the current insurance ID Card is supposed to look like remains a low-grade pain, this has also improved with the pervasive use of the internet.

However, this does take up a lot of time and effort on the part of physician’s offices, often small businesses with a lot of overhead.  It would seem logical that this management of coverage and resolution of billing disputes could be done better by a business entity other than the doctors office.


Your third point, prompts me to suggest a different take on the Public Option.

Instead of a creating a government-sponsored payor, which a consulting firm called the Lewin Group’s analysis (done, it should be stated for the Heritage Foundation) estimated would shift more than 80 million people from private payors to this “Public Option,” why don’t we take a page from a successful entity in another aspect of the Insurance industry: USAA, an entity that provides auto insurance at a low rate and with outstanding service for active and retired military personnel?

USAA is a not-for-profit insurance exchange, established under Texas law which contracts for insurance with various auto insurance payors.  It operates in a way that is somewhat analogous to how large employers’ self-insured Employee Retirement Income Security Act (“ERISA”) health  care plans(an “employee welfare benefit plan” in ERISA terms) operate.

Instead of the self-employed, a growing part of the work force, attempting to obtain insurance in the individual market, with limited choice, no group discounts and limitations on even being insurable based on pre-existing conditions (likely the source of those individuals making $65,000 per year who are a statistically significant component of the uninsured), why don’t we allow not-for-profit organizations to offer ERISA plans, managed like USAA?  Why don’t we open this option up to small businesses as a source of coverage, small businesses which often struggle to provide insurance and are often not able to manage coverage for employees as well as they would like?

The outstanding service offered by USAA to its auto insurance members also points towards a solution to the time and expense that physician’s offices have to expend in dealing with payors.  A private, not-for-profit, USAA-type insurance co-op would wrestle with payors and resolve coverage and payment disputes as its main business.  It would have lower over-head than a physician’s office and, would never be in the position of having to take time away from a patient to get deeply involved in an insurance dispute, as doctors often must today.

Changing ERISA to allow for the growth of these kinds of co-ops out of ERISA plans already offered by Unions and individual health insurance insurance plans offered by not-for-profits like the ABA, AMA and various Chambers of Commerce should form the Public Option.  Additionally, legislation should also end the burden on inter-state commerce created by current restrictions on the sale of insurance across state lines and by state laws regulating the business of health care, rather than the profession of medicine.  For example, eliminating state corporate practice and fee-splitting laws would allow sophisticated business entities, for example Wal-Mart, to enter the business of Health Care delivery to reduce costs, increase quality and expand access.


Given that the Madoff Ponzie was detected by a prospective investor who reported the issue to the SEC years before the defalcation was finally detected by the government and given the existence of a federal Qui Tam law in health care as to government funded programs, it appears that market driven entities and not-for-profits are in a far better position to fight fraud than the Federal Government.  This would be especially true where the USAA-style not-for-profit benefit management entities suggested in this letter were dealing with payors at arms length, with a mandate from their members to control costs.

Again, thank you for your courageous stand.  I remain


John Minehan