Insurance was never meant to be a first-dollar payer, with Joanne Frederick

Joanne Frederick, CEO of Government Market Strategies, has spent more than 30 years working inside Medicare, Medicaid, Tricare and VA health programs, and she opens with the one most physicians know least. Tricare covers 9.4 million service members, families and retirees, and pays at a discount off Medicare rates that plenty of practices already say don't cover their costs.

From there Frederick makes a broader argument: that insurance was never designed to sit between a patient and a physician for routine care, and that the administrative layer built around that arrangement now consumes an estimated 15% to 30% of every health care dollar. She and Medical Economics senior editor Richard Payerchin work through what a cash-based system would look like at the practice level, where artificial intelligence genuinely helps, and the one piece she thinks direct primary care is still missing.

Music Credits:
Her Name by Cephas - stock.adobe.com
A Textbook Example by Skip Peck - stock.adobe.com

Editor's note: Episode timestamps and transcript produced using artificial intelligence (AI) tools.

0:00 – 0:25 | Cold open. Frederick on a system built around fixing a problem that may have been smaller than the fix.

0:25 – 1:44 | Introduction. Austin Littrell introduces the episode, the guest and the Tricare reimbursement problem at the center of it.

1:44 – 3:00 | Meet Joanne Frederick. Richard Payerchin introduces the guest, who has worked in public sector health programs since the late 1980s and founded her first firm in 1992.

3:00 – 4:46 | What Tricare is. The program covers roughly 9.4 million service members, families and retirees, about 400,000 of them overseas, and picks up the care military treatment facilities cannot deliver.

4:46 – 6:29 | Where beneficiaries are, and the readiness mission. Frederick on the density around large installations and the twin goals of a ready medical force and a medically ready force.

6:29 – 7:45 | Paid below Medicare rates. Tricare reimburses at a discount off Medicare, sometimes a steep one, in a market where physicians already say Medicare does not cover their costs.

7:45 – 10:36 | What the rest of health care could borrow. Frederick argues readiness is the idea worth exporting, and calls the physician the most valuable player on the field of our lives.

10:36 – 13:53 | Defining a cash-based system. Insurance was never intended to be a first-dollar payer, Frederick says, and administrative costs run an estimated 15% to 30% of health care spending.

13:53 – 14:45 | P2 Management Minute. Keith Reynolds shares practice management tips and invites listeners to submit their own workflow ideas.

14:45 – 18:00 | Prior authorization and the case insurers make. Payerchin puts the industry's value argument to Frederick, who questions what is gained when a request cycles back and forth two or three times and gets approved anyway.

18:00 – 22:18 | Where artificial intelligence actually helps. Frederick calls today's note-taking applications the tip of the iceberg and makes the case for navigation tools, with the caveat that nothing replaces the physician-patient relationship.

22:18 – 25:18 | Direct primary care and the missing piece. Frederick, a direct primary care member herself, asks whether physicians have the panel time to serve as health coaches, and floats an annual health improvement plan as the wraparound.

25:18 – 26:50 | A message to primary care physicians. Frederick on the administrative burden the system places on primary care, and an open invitation for ideas on how to reduce it.

26:50 – 27:40 | Outro. Littrell thanks the guest and wraps the episode.