Our present health care system is based on the premise that if care is medically indicated, then it should be covered by health insurance. However, given the almost unlimited and increasingly expensive options for care, whole and complete coverage is both unsustainable and impossible. My proposed hybrid health organization (HHO) plan would use International Classification of Diseases (ICD-10) and Current Procedural Terminology (CPT) codes to divide up medically indicated care into essential care (basic, lifesaving, and catastrophic), which is a right, and elective care, which is a privilege. This differentiation of care would allow different payment sources to be used for each category. The HHO plan is not a new system. It is a framework for leveraging existing components of the present health care system and hybridizing them to reestablish patients rather than profits as the priority of health care.

This division of care into distinct categories would be done by a bipartisan Congressional Health Care Committee (i.e., a federal health board) with broad public and private representation. The positive and negative political consequences of significant changes to the health care system need to be shared and fully understood by both Republicans and Democrats. Health care is nonpartisan, as human life is nonpartisan. Under the Affordable Care Act (ACA), Congress has already established the Center for Medicare and Medicaid Innovation (CMMI) by the Center for Medicare and Medicaid Services (CMS) to trial new health care delivery systems. The HHO plan would simply be an extension of these efforts.

The following breaks down the forms of payment based on the types of care:

Basic care. (e.g., yearly exam, simple lacerations, or fractures) A patient pays directly based on the level of service (e.g., 1-5, $50–250), not codes, to a provider/health care system through their health savings account (HSA). The state government is to fund the HSAs of those in need. This ensures patients’ access to, and control of, needed care.

Lifesaving care. (e.g., heart attack or stroke) A patient, an employer, or the government pays a set fee directly to a hospital/health care system based on a patient’s age, sex, and ZIP code for a comprehensive managed health care plan (that includes preventive and chronic care issues). Liability for the plan will be limited to $250,000 or the catastrophic care threshold, and will give the hospital/health care system an incentive to decrease costs, and care would be authorized by unbiased (i.e., with no direct or indirect financial interests) health care professionals (HCPs)—and not insurance companies—using standard protocols. If a patient desires an appeal, there would be a second medical opinion. Emphasis on chronic and end of life care is essential, since financially, both take up a large segment of our health care dollar.  Standardized treatment for all affected can not only save money but also lives as well as provide comfort as we age.

Catastrophic care. (e.g., Organ transplant or metastatic cancer treatment) The federal government reimburses a hospital/health care system for actual justifiable wholesale expenses (e.g., over $250,000). These payments then become incentives to ensure that hospitals/health care systems meet all the requirements for HHO cost-saving measures. Such payments will make care accessible to patients with high health care needs who in the past had been rejected by the traditional private health insurance system. Funds will be generated by Medicare without increasing any Medicare taxes.  Instead, funds currently used to cover these expenses for Medicare and Medicaid patients will be redirected to cover catastrophic care costs. Subsidies, grants, and tax breaks given to hospitals and other programs in the past to indirectly cover these patients will be reallocated to cover individuals’ direct catastrophic care expenses. If available funds are not enough to cover these expenses, then the threshold dollar amount for coverage would go up. Determination of the threshold amount available by Medicare without increasing the Medicare tax   would be based on a recommendation from the nonpartisan Congressional Budget Office. The cost of treating this group of patients is anticipated to drop with competition, aggressive contracting with pharmaceutical, medical supply and equipment companies to name a few, decreased administrative costs, and other cost-saving measures such as tort reform.

Elective care. (e.g., joint replacement, cataract surgery or breast reduction) Elective care would include non-life or limb-saving yet medically indicated care. Patients, employers, and the government will have options to purchase an elective health insurance policy based on CPT codes to cover benefits they wish to include. Providers/health care systems will be paid according to bundled payments or a diagnosis-related group (DRG). This will give payers control over their health care expenses and allow HCPs to actively participate in cost control. Currently, a large segment of medically indicated services and treatments that consumers wish insurance would cover such as joint replacement falls under the elective category. There certainly should be elective care policies that cover whatever a payer (an individual, an employer, or the government) wants and is willing to pay for. An insurance actuary would determine the cost of such policies, including a fair profit for insurance companies, with no cost shifting or unfunded government mandates.

Here, I propose four steps to implement the HHO plan:

1. Allow pretax deposits into HSAs for all medically indicated care. The government subsidizes basic care for those in need on a predetermined financial sliding scale.
2. Allow hospitals and health care systems (including networks) to contract directly with payers, specifically individuals, employers, and the government, for lifesaving care.
3. Allow the government to modify Medicare to provide payments for catastrophic care for those under age 65.
4. Allow health insurance companies to cross state lines and provide various standardized policies (without changing the policy in each state for varying regulations) for elective care.

With the HHO plan’s required components already available, mechanisms to bring these components together need to be put in place and effectively implemented from a realistic, practical, political, and clinical standpoint. It is important that the HHO system and traditional systems not be implemented concurrently under the same organization, since traditional systems will, at least initially, generate much more revenue for the current health care system. However, the HHO system will be much more sustainable in the long run. The redirection of current government health care expenditures and subsidies would not only be essential in covering lost revenue with the initial changes of the new payment model but would also accelerate the transition to a more competitive, redesigned system. As the HHO plan expands, elements of the present health care system will be kept in place. By design, its cost-effective components will survive, and the fiscally abusive, legal, and illegal kickbacks, and safe harbor elements will eventually cease to exist due to diminishing employer and government support. As a result, better and less expensive options will satisfy employer and government health care obligations. The HHO plan’s growth and implementation can advance rapidly if the plan is taken up by emerging health care entities that are ready to discover the benefits of implementing a direct-to-consumer (i.e., without traditional insurance) health care model. An option for implementation and enhanced cost savings would be to temporarily allow (until large HHO provider networks develop) the use of the Medicare provider network and fee schedule for emergency care while outside of the HHO system, as the government has already made the provision of emergency room care mandatory with  Emergency Medical Treatment and Active Labor Act (EMTALA).

Initial changes, including those affecting hospitals/health care systems, governments, and insurance companies, would only apply to HHO plan participants to minimize the possible political, legal, and public opinion challenges raised by the numerous special interest groups currently benefiting from the fractured system of today. The most important immediate consideration is not how, when, or where integration will occur. It is that cost-saving and health care access issues are not overlooked in the process of redesigning. The following are potential options for patients to benefit from the HHO plan.

Hospital option

The above four steps will be implemented within a thriving hospital or health care system whose vision is to truly decrease health care costs. More likely, the HHO plan will be crucial to hospitals or health care systems that are unable to survive financially in the current collapsing health care environment despite having the infrastructure and clinical staff needed to deliver excellent care. Implementation would begin with hospitals or health care system’s submission of a proposal for a trial study to the CMS Innovation Center that is looking at alternative health care delivery and payment models. Federal funding will be needed in the transition due to changing incentives for health care payment. This financial support will be needed until the cost-saving components of the system are fully implemented.

Employer option

An alternative method of implementation would be to allow employers to modify their self-funded Employee Health Benefit Plans to enable each company to develop their own segment of the HHO plan. For example, employers may fund employees’ HSAs. Employees would purchase or be supplied with a managed health care plan with a local hospital/health care system (potentially part of a large system or network) for lifesaving care. The federal government (Medicare) would cover catastrophic care if a catastrophic care program is available under the national implementation of the HHO plan. Alternatively, a private “reinsurance” catastrophic care policy (a health insurance policy with an extremely high deductible) would cover such costs.  A very limited health insurance policy or employer “self-insurance” would be used to pay for the desired elective care. To promote the HHO plan’s rapid expansion and increased cost savings with volume discounts, companies should be allowed to easily pool resources, combine plans, form a co-op, enable employees to use other employers’ plans, and allow the creation of   networks for cost savings and the expansion of employee options. There  would be  employer  options  with the ability to provide a  “skinny health care plan” or a more comprehensive one.

Individual option

Another method of implementation would be self-insurance or insurance with an existing faith-based or other group plan that has already incorporated patient-to-provider payment methods, negotiation, and shared risk. An individual would use their HSA to pay for basic care, contract with a local hospital/health care system, maintain access to (Medicare) catastrophic care coverage if available, or to purchase a very-high-deductible health insurance policy. In addition, an elective care policy to ensure all their desired health care needs are met. Self-insurance works to meet medical needs only if healthcare costs are controlled.

The following are examples of critical cost-saving measures that are already in various stages of implementation or development:

1. Continue and support aggressive drug price negotiations when contracts with pharmaceutical companies for medications expire on behalf of not only Medicare beneficiaries but also any individuals who need or will need health care (which is everyone). The Inflation Reduction Act of 2022 has allowed Medicare negotiations for an initial list of ten items (drugs). This is certainly a significant first step. In addition, the establishment of essential drug formularies that identify and use generic, biosimilar, and favorably contracted name brand medications is needed. Furthermore, the individual and hospital/health care system importation of medications from overseas if needed to address cost or supply issues that cannot continue to be ignored and would foster true competition in a currently high profit market among pharmaceutical companies. Limited or no negotiation with drug companies that do direct-to-consumer advertising can be an immensely powerful negotiation tool. The goal is to decrease the costs of essential drugs for patients, not increase profits for pharmacy benefit managers’ that are usually controlled by and often owned by health insurance companies.
2. Establish and enforce site-neutral clinical based guidelines and payments for determining whether procedures are to be conducted under local anesthesia with or without oral sedation, IV sedation, or general anesthesia. Create guidelines for determining the site of service (e.g., office procedure room, surgical center, hospital procedure room or hospital operating room [OR]). There would be no restriction on how or where procedures can be conducted, but payment would reflect the need for anesthesia (i.e., whether it was needed) and the site of service. Rare exceptions (likely less than 1% of cases) will occur due to factors such as age, mental ability, or medical issues. Such exceptions should be authorized by the treating HCP and not an insurance company. These exceptions would go in both directions with some cases needing more intensive care and others perhaps less intensive care for the same CPT code. They should balance each other out for no net gain or loss for the hospital/health care system The appropriate peer review of exceptions would be expected. Any individual or parent may elect for (if medically able) a higher level of sedation/anesthesia or “premium” procedure than is recommended. However, they would then be personally responsible for any additional actual costs.
3. Development of a standardized program for individualized ownership and governmental safeguards for medical records is critical. The standardization of and ability to access such records would benefit patients, health and emergency care providers and statistical researchers who can use such information, which will be kept anonymous, to benefit all. For example, such efforts can help prevent/address the next pandemic. Individuals and providers will have the option to not participate in such a program. However, they would be disqualifying themselves from any benefits of the standardized program or the HHO plan. Electronic medical record programs like Epic and Oracle, the Dragon dictation system, and other competing companies would all integrate with the one medical record. Instead of various competing systems coalescing together with corresponding control and forming a monopoly, they must compete and integrate with each other to foster cost control and clinical improvement. Reasonable profits would be expected. It is exceedingly important that for all aspects of the HHO system and health care in general, the components should be financed either by users or the government to avoid the need for sponsorship or ads that would influence clinical decision making with regards to  the use of medications/devices or any other components of the health care system.
4. An overhaul of healthcare regulation needs to occur to decrease administrative burdens on providers, so they have time to care for patients. Especially with a growing and aging population causing increased demands for health care workers.
5. Tort reform would help to not only decrease costs by lowering malpractice premiums but also to decrease the costs of “defensive medicine” (Medical care given to avoid potential legal liability).

WHY THE HHO PLAN WILL WORK WHEN OTHER PLANS HAVE FAILED

It is easy to list the cost and access-to-care problems with health care delivery, but you might be surprised to find out that it is just as  easy to come up with workable solutions to these problems. The difficult step is successfully bringing about meaningful change, as even presidents and Congress have been unable to ensure that the health care system works for the people and not corporations. Past attempts have been hindered by numerous special interest groups and the lack of bipartisan congressional support. The HHO plan would bypass the need for Congress to reach an elusive and unobtainable consensus. Nevertheless, we need the government’s help. For example, Congress has taken initial steps to support change with the formation of the CMS Innovation Center. The following are reasons why the HHO plan will succeed where other plans have failed:

• Bipartisan support—Democrats to gain universal coverage for essential care and Republicans to gain cost control.
• Basic care does not need risk sharing and is paid directly by the patients HSA account.
• Pretax dollars for all medically indicated care.
• Lifesaving care provided by a hospital/health care system using a managed care contract gives a strong incentive to keep costs down.
• Catastrophic care paid for by Medicare switches an “undesirable” high health care needs patient to one that is at least “tolerable” to the hospital/health care system.
• Elective care is covered by optional health insurance policies.
• Payer control over benefits.
• All pay the same to prevent selectivity by a provider or health care system.
• Payment by level of service, capitation, bundled payments, or DRGs and no codes; ICD-10 and CPT codes to be used clinically and for the division of medically indicated care but not for billing.
• HCPs rather than health insurance companies authorizing care.
• A second medical opinion as an appeal for the denial of care (true peer review).
• Direct-to-consumer pharmaceutical or device advertisements to lead to direct consumer-to-advertiser payments.
• Drug and device formulary include generic brands, favorably contracted brand name items and bioequivalent or biosimilar drug treatments with exceptions as needed.
• Voluntary participation in the HHO plan by patients, employers, local and state governments, and providers (non-participation by anyone  would lead to no federal  government health care benefits or payments).
• Legislative changes applied exclusively to HHO plan participants to limit political, legal, and public opinion challenges
• Competition and aggressive contracting as well as enforcement of antitrust laws.
• Use of existing facilities and clinical systems with clinical integration.
• Health system employees who currently offer no direct health care benefit retrained if they wish to become health care employees.
• Public and private financing of health care with choice and competition retained.
• World-famous tertiary (advanced) care centers available to all.
• No additional taxation, advertising (HealthCare.gov instead as well as websites), unnecessary care, copays/coinsurance (limited exceptions e.g., medications), deductibles, prior authorizations, patient billing, cash payments, unfunded mandates, cost shifting, kickbacks, monopolies, blackballing, safe harbors, cherry picking of patients, or patient dumping by providers or hospitals/health care systems.

To ensure universal essential health care coverage, employers need to transition from the increasingly unaffordable defined benefit plan (which theoretically covers all medically indicated care) to a defined contribution plan (essential care is covered and elective care is optional). This is similar to how employers switched from the traditional defined benefit to the 401K defined contribution retirement plans. The government will follow suit but not lead in pivoting to the HHO plan, as it will initially cost jobs and votes. Let us consider the example of the cosmetic surgery field where patients pay physicians prices that are not inappropriately inflated, directly, to both their benefits.

The separation of elective care from medically indicated care using ICD-10 and CPT codes is, in my opinion, the most important contribution of the HHO plan, since this would allow patients to choose the benefits they want or employers and governments to choose the benefits they wish to provide. While the HHO plan would only serve as a starting point for conversations on health care reform, serious efforts need to be made to protect the health of every person—a goal that will not be met under the current health care system.