As President Biden’s term nears its end, a record 24 million Americans now benefit from Affordable Care Act (ACA) health insurance—more than double the enrollment when he took office. While this expansion has improved access to healthcare, it raises questions about whether we are truly reforming the system or merely expanding its inherent flaws.

Transforming Healthcare Payment Models for Better Patient Outcomes

The Paradox of Profit in Healthcare

In most industries, subpar service results in financial penalties. However, healthcare operates under a different paradigm. Consider the case of my friend who experienced abdominal pain and was rushed to the emergency room. Diagnosed with appendicitis, he should have undergone immediate surgery to prevent complications. Instead, due to a backlog of trauma cases, his appendectomy was delayed by 30 hours. This delay not only posed a risk to his health but also led to an inflated hospital bill.The fee-for-service model is largely to blame for such outcomes. Each additional day my friend spent in the hospital added $4,586 to his bill, solely for the bed. Over three days, this amounted to over $13,000, excluding other charges. In essence, poor care directly translated to higher revenue for the hospital—a perverse incentive that underscores the systemic issues within our healthcare delivery framework.

Addressing Billing Practices and Legislative Efforts

Over the years, attempts have been made to address these billing practices. One notable approach is bundling payments, where a fixed sum covers an entire episode of care. Despite its promise, this method has faced challenges. The No Surprises Act, aimed at preventing surprise medical bills, has introduced new complexities. Insurers may exploit loopholes, leading to increased arbitration costs and potential underpayment of healthcare providers. These unintended consequences highlight the difficulty in reforming a deeply entrenched system.

The Role of Upcoding and Technology in Healthcare Finance

Another significant issue is upcoding, where patient charts exaggerate severity to justify higher reimbursements. Research indicates that upcoding contributed to an additional $14.6 billion in hospital payments between 2011 and 2019, with private health plans bearing the brunt of this increase. The advent of electronic health records (EHR) has exacerbated this problem by enabling quick-click options that inflate patient severity. Furthermore, the rise of AI in coding has raised concerns among medical professionals, with 94% expressing doubts about the accuracy of AI-generated codes.Hospitals often outsource coding to third-party companies, some of which receive compensation based on the charges they generate. This creates a conflict of interest, as coding processes operate independently of actual patient care. As a physician, I have never reviewed the charges my patients incur or how my charts are coded, underscoring the disconnect between clinical practice and financial operations.

Ensuring Every Dollar Counts in Healthcare

Health insurance remains crucial for accessing healthcare, yet the payment structure must be reformed to ensure every dollar contributes to better health outcomes. The current system, driven by fee-for-service, can inadvertently reward poor care. To achieve meaningful reform, we must prioritize value-based care models that align financial incentives with patient well-being. Only then can we build a healthcare system that truly serves the best interests of all stakeholders.