Published October 2003

Program simplifies
health-care expenses
SimpleCare creator: Back-to-basics approach
cuts medical bills, doctors’ business costs

By Kimberly Hilden
SCBJ Assistant Editor

Medicare reimbursements declining, insurance premiums rising, medical clinics closing — such topics have dominated the news in recent years, pointing to an ailing health-care system.

For Dr. Vern Cherewatenko and the 20,000 other members of the American Association of Patients and Providers, the solution is simple: SimpleCare.

A nonprofit program of the AAPP, SimpleCare is “pay as you go” health care that enables physicians and allied health-care providers to charge a lesser fee for patients who pay in full at the time of service.

It’s the brainchild of Cherewatenko, a Renton-based family physician, and two of his colleagues who saw their practices’ financial viability decline during the mid-1990s as reimbursements from insurance companies and government agencies dropped dramatically.

After studying the numbers that added up to their bottom line, the doctors discovered two things:

• It cost more to treat an insurance-covered patient than a cash-paying patient due to the administrative cost of working through the insurance system.
• Although the cash-paying patient cost less to treat, that patient was paying the full fee, unlike the insurance patient, whose insurance was reimbursing the practice for only a percentage of the cost.

The doctors asked themselves, what if they could charge the cash-paying patient less — and still make a profit? Gone would be the administrative hassles and partial reimbursements. The uninsured would be charged a fair price for the cost of services, and, just maybe, a health-care transformation would be launched.

To prevent potential conflict over price of services with insurance providers, Cherewatenko and the AAPP would create a payment/service system of their own for cash-paying patients, one that didn’t require health-care providers to fill out insurance-specific paperwork and go through insurance-specific procedures.

While insurance patients’ medical needs are commonly billed using the Current Procedural Technology code, which contains more than 8,000 codes for medical procedures, cash-paying patients would be served under a five-code system designated brief, short, medium, long and extended. Under this simplified code, health-care providers could set their own fees and expect to collect those fees at the time of service directly from their patients.

The result: the doctors figured they could charge cash-paying patients 30 to 50 percent less than the fee charged to insurance patients and still come out ahead.

Thus was born SimpleCare, which began in 1998 with three physician members and has since grown to include 1,800 health-care providers nationwide, including family physicians, chiropractors, naturopathic doctors, physical therapists and counselors.

To become a part of the SimpleCare program, patients pay an annual fee of $20; families, $35; and health-care providers pay an initial $125 and then a $50 renewal fee annually. A Web site, www.simplecare.com, offers a directory of SimpleCare health-care providers.

But it doesn’t have to be an all or nothing deal, Cherewatenko said. Although his practice no longer contracts with insurance companies, many other health-care providers do so while offering the benefits of SimpleCare to their cash-paying patients, including the Clearview Clinic in Snohomish.

An early member of SimpleCare, the clinic has enjoyed the hassle-free payment process and the ability to charge cash-paying patients a more reasonable price, said Betty Hunholz, a nurse and head of billing at the clinic.

“When I go to osteopathic (association) meetings, doctors have asked me about it. They want to know, ‘Does it work?’ Yeah, it really does,” she said.

A fundamental aspect of SimpleCare is its reliance on free-market forces, said Cherewatenko, who is also the head of the nonprofit AAPP. Health-care providers set their own fees, SimpleCare doesn’t tell them what to charge.

For critics who warn that such a system would drive up the cost of health care, Cherewatenko points to Lasik eye surgery, which has become less costly over time as competition in the marketplace has prevailed.

“It used to be $3,000 an eye, and Lasik didn’t get billed to the insurance company; it was cash. Then it was $2,000 an eye, then $1,500 an eye; now it’s $999 an eye,” he said.

SimpleCare also puts control back in the patient’s lap, Cherewatenko added.

“When you don’t have health insurance that tells you where you can go and what you can go for, you can go anywhere you want, and you can see anybody you want,” he said.

And as more patients tell their doctors about SimpleCare, the list of health-care providers offering its “pay as you go” services will grow.

“What we try to do is empower the patient,” Cherewatenko said. “We’ll send you information; you can take it to the doctor you want to go to and explain the program and its benefits.”

But that’s not to say health insurance doesn’t have its own benefits in the health-care system, Cherewatenko said. Indeed, insurance to cover catastrophic illnesses or injuries is important and can be cost effective.

“We’re trying to help educate people that insurance, true, major-medical insurance ... is affordable,” he said.

Not just for the individual but also for businesses who find themselves struggling to provide health-care benefits, said Cherewatenko, who pays between $44 and $50 a month per employee at his medical practice for catastrophic insurance policies that have a $1,500 deductible.

“So my employees sleep at night knowing that if they get cancer or a brain tumor, they have to cough up $1,500, but that the insurance kicks in at 80 percent until $3,000 and then 100 percent after $3,000, which is extremely affordable.”

For more information on SimpleCare, call 425-255-4166, send e-mail to membership@simplecare.com or go online to www.simplecare.com.

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