Monday, August 03, 2015

Urban Legends, Insurance File No. XXIV

A lot of people suspect insurance companies systematically and fraudulently deny perfectly valid claims for some nefarious, greed-driven reason, and then blame someone else for it – e.g., missing information from physician; or your claim was never received; or hospital miscoding.  Our breathless media and too-often unprincipled politicians stoke this suspicion weekly if not more often.  So people who trust that our media and politicians are truth-tellers naturally come to believe these suspicions are all true.  
But as we so often see with media and politicians’ stories – they’re not all true.

My opinion?  Most claims submitted are valid claims.  And systematic denial of valid claims is an urban legend. 
Questioning the facts of a claim happens all the time.  This is done to ensure the facts are known so that the correct reimbursement is made.  Questioning the facts of a claim does not imply that hospitals or physicians are always trying to pass bogus claims.  They aren’t.  Nor does it mean the insurance companies are always deliberately engaged in wrongful denials.  They aren’t.  If otherwise, there would be clear evidence.  If that elephant were really inside the refrigerator, we'd see her tracks in the jello.   Those tracks aren’t there.
This is not to say there is no insurance fraud; of course there is.  Insurance fraud is committed by insured persons; by providers of medical services; and by employees of claims administrators. Insurance fraud exists in Medicare and Medicaid; in the so-called national, single-payer plans around the world; and in private insurance schemes. Fraud blooms wherever there is lax vigilance. But it is simply wrong to cry “fraud” any time your claim is denied or your reimbursement is less than you want it to be.  When those things happen, the most likely reason is (1) your policy doesn’t cover the expense submitted or (2) the reimbursement is correctly calculated and you are disappointed, or (3) someone made an error that can be corrected.

At one time I was chief of benefits for a very large organization (more than 40,000 members).  I saw claims denied or "pended" when the physician's office submitted incomplete or incorrect info – a correctable error.  I ALSO saw correctable processing errors made by our administrators.  I saw these claims when the members contacted my office for help.  In most cases, the cause was human error, which for insurance reimbursement is correctable. And for that reason, it was never helpful in resolving such matters when either party insisted on accusing the other of intent to defraud.
I can bore you with examples but here are two:  (1) OP surgery performed in the surgeon's Manhattan office, but billed from the suburban Connecticut office - a different UCR area.  That caused the claim to be underpaid.  My office found the problem, and got it fixed.  (2) female employee prescribed sildenafil acetate (Viagra), but reimbursement was denied.  The denial was reversed after my office got involved.  Reason? The physician had prescribed the medication for pulmonary hypertension - the very heart condition sildenafil acetate was originally developed to treat - but the administrator overlooked that fact likely because the drug had only recently completed its clinical trials for the heart condition.   These examples were "typical" for my office in that they illustrate (1) how important it is to get all the relevant facts when resolving claims and (2) despite the best of intentions, people make mistakes.

There are reliable industry-wide statistics that support what I observed in my office.  
According to Athenahealth the median "first pass" rate (reimbursement based on the info submitted with the original claim) is running nearly 96% of all claims for the top 10 commercial insurers in 2015. Their median denial rate for the same period is running about 4% of all claims. About the same results emerged for all of 2014.  That is a LOT of data.  These data certainly do not suggest that hospitals and physicians' offices are submitting mostly incomplete or incorrect claims; nor do they suggest insurers are systematically denying a suspicious number of claims.  In fact, as my two examples show, some fraction of claims initially denied are eventually approved and paid on the basis of additional - or corrected - information.  
The Athenahealth data is here (Athenahealth's customers are hospitals and physician offices; it is not affiliated with insurers)
Healthcare reimbursement challenges and payer responsiveness analyzed in athenahealth’s 2015 PayerView annual report.
Preview by Yahoo

So I don't believe that insurers systematically deny valid claims; and I don't believe medical service providers systematically submit incomplete, incorrectly-coded, or even fraudulent claims.  There is a relatively small number of such claims but that does not mean the cause is systematic or deliberate.  I think it's urban legend that says otherwise. The urban legend may be popular, even deliciously conspiratorial; but it's wrong.  The truth is actually quite mundane.

Saturday, August 01, 2015

Paying More and Enjoying it Less

If you like your plan ......... If you like your doctor ........... We will reduce premiums by $2500 .........

Not only are legal Americans paying more for their health insurance AND health care while enjoying it less, some have figured out how to get money without buying coverage.
The IRS fined more than 7.5 million Americans who didn’t have health insurance in 2014, even as Obamacare subsidies flowed to people who didn’t even exist. - Watchdog
Presumably these non-existent subsidy recipients were people who also voted in the last two presidential elections.
But an investigation by the Government Accountability Office recently revealed that fake applicants who enrolled in health insurance programs through the federal exchange were receiving subsidies. Those phony applicants had initially enrolled during 2014, but they were automatically re-enrolled and continued to benefit from tax subsidies in 2015, the GAO said.
The GAO was successful in 11 of 12 attempts to register fictitious people with the federal health insurance exchange. In seven of those cases, the fake applications were missing vital pieces of information, which should have raised red flags during the approval process.
This is a feature, not a bug.
Any real person who knowingly falsified information on a application could face the prospect of a $250,000 fine.
How much is the fine for a fake person?

Friday, July 31, 2015

Punctuation Counts

Are you the type that pays attention to punctuation? How about an asterisk that directs you to a footnote.

If you just ignore them, you should consider changing.

Here's a wake up call about your Social Security statement.
At first glance, the statement did not appear menacing. I was told I could expect to receive a benefit of “about $2,136 a month” upon reaching age 70 — which certainly seems like good news. But immediately I thought of a parallel of President Obama’s infamous Obamacare promise: “If you like your Social Security, you can keep your Social Security.” - National Review
Get ready for the asterisk.
The law governing benefit amounts may change because, by 2033, the payroll taxes collected will be enough to pay only about 77 percent of scheduled benefits.
That's 18 years away. So what? They can just increase FICA taxes on the working class, right? That's only a 30% increase.

Yes, but they can also do this.

I could not believe I was seeing the equivalent of what I was just thinking, but with a new twist, “If I like my Social Security, I can keep 77 percent of it.
Yeah, that's going to hurt a bit.

Thursday, July 30, 2015

About that promise

So I'm currently going through a batch of renewals for clients with Grandmothered individual medical plans. Briefly, these are older plans that are exempt from some (but not all) SCOTUScare requirements. In general, they have much lower out-of-pocket maximums and (for co-pay plans) unlimited co-pays for doctor's visits and the like.

The downside is that, although these can (currently) be renewed, they can't be changed in any substantive way (such as increasing the deductible to lower the premium). This creates a challenge: my clients want to keep plans that are becoming increasingly less affordable.

So, no problem, we'll just shop around for a new plan with a different carrier; in the past, this was nearly guaranteed to save dollars. The problem is that the reason that this strategy worked is no longer operative.

Allow me to explain:

Pre-ACA, as years went by, the initial underwriting went "stale;" that is, insureds aged, had claims, developed health problems (or not). Information that was true when the policy began was no longer operative. Applying for a new plan meant the underwriter for the new policy got new, current information, and could then make an informed decision. Healthy folks benefited from this because they could then get new plans with lower rates (in general).

This is no longer operative - can you guess why?

Exactly: ObamaPlans are Guaranteed Issue, so there is no underwriting, and hence no way to effectively assess the risk. So, no new underwriting means no new savings.

A couple examples:

Client 1's plan was written when both he and his wife smoked; she's subsequently quit, but neglected to let me know. That's a shame, because we could have asked the company to adjust her to non-smoker rates (yeah, there's some paperwork, but it's minimal). Their HSA-compliant plan has a $6,000 maximum family out-of-pocket, and their renewal rate is $900. They're not subsidy-eligible, so have the privilege of paying full freight for their plan.

Shopping should be easy: after all, I can plug her in as a non-smoker [ed: yes, I know, industry lingo is now "non-tobacco." Get off my lawn]. Turns out, not so much:

Company A's comparable plan, with a $12,800 family max (more than twice their current plan) is $938, and that's with the wife unit as non-smoker.

Company H's is $914, again as non-smoker.

Company H does offer a plan with "only" $7,300 family max, but it's over $1,000 a month. Some bargain.

Needless to say, Client 1 got me the non-smoker paperwork tout suite.

Client 2 is subsidy eligible, but that may not help him much; he has a slightly different problem. His grandmothered co-pay plan has a maximum $10,000 family out-of-pocket, and unlimited co-pays for doc visits. His renewal rate just broke the $1,000 barrier ($1110, to be precise). Thing is, even with the subsidy, he's only able to lower the premium by about $100 or so per month.

But Henry, that's $1,200 a year savings - what's not to love?

Well, his new plan would be effective September 1. His family's already met a good portion of their 2015 deductible, which would then reset to zero under the new plan in September, and then again in January. So they'd have three deductibles in 12 months.

Still sound like a good deal?

Yeah, didn't think so.

Gee, SCOTUScare's been such a boon for working folks, no?

Wednesday, July 29, 2015

Don't Believe Everything

Just because you saw it on the internet, does not mean it's true. - A. Lincoln

Headline reads, "Obamacare rates only going up 4%".

However .............
While average premiums will rise only 4 percent statewide, rates will climb as high as 12.8 percent in Santa Cruz County, 7 percent in Santa Clara County and more than 6 percent in Alameda and San Mateo counties, exchange officials revealed. - Washington Times
Even then, it could be worse.
But he acknowledged that Northern California would be harder hit in 2016. So did others.
“Particularly in the Bay Area and Sacramento there is a lack of choice among providers, putting the health plans in a difficult place in terms of getting a good price,” 
Guess we will wait until October to learn the truth.

LTCi in 1,000 words

Interesting Long Term Care insurance infographic (although they missed one in the "Care Giver Troubles" category: loss of Social Security and other retirement plan buildup, payout):

[Click image to embiggen]

[Hat Tip: FoIB Allison Bell]

Wednesday LinkFest (Cui Bono edition)

■ From the "Hey, It's Only Money" Department:

"The federal government and the states have no idea what happened to billions of dollars given to create Obamacare's exchanges ... The Government Accountability Office charged the Obama administration and many state-run healthcare exchanges with not adequately tracking federal funding"

To be fair, you can bet that was never in the job description.

■ LifeHealthPro's Allison Bell opens a discussion on how insurance professionals can help our clients (and other folks in our communities) manage the costs of long term care. These range from volunteer work to "informal non-family care."

While I appreciate her efforts at raising awareness, I'm concerned about potential liability issues arising from non-family caregivers. I think that one needs a lot more thought first.

■ As if SOTUScare wasn't causing enough financial headaches, here's one we're just now starting to hear about:

"Hey, employers, don’t even think about reimbursing your workers’ health-insurance premiums.

Beginning this month, the IRS can levy fines amounting to $100 per worker per day or $36,500 per worker per year, with a maximum of $500,000 per firm."

Best part: this never even shows up in the actual ObamaTax text, but that isn't stopping the Infernal Revenue Service from "enforcing" it. What's so ironic about this is that it's actually counter to the ostensible goal of the new regime, making health insurance more affordable.

Big surprise there, no?

Tuesday, July 28, 2015

TX BX lying

Why would a carrier tell such an obvious fabrication?

"BlueCross BlueShield of Texas to drop individual PPO plans in 2016"

We all know that it couldn't possibly be true:

[Hat Tip: FoIB Holly R]

Fitbit vs HIPAA

As who's actually subject to HIPAA restrictions becomes ever murkier, technology continues to pile on. And it's not just Electronic Health Records (EHR). As we noted a few months ago, John Hancock is tapping into the FitBit craze, offering policyholders the chance to trade laps around the track for dollars off their premiums.

It seems pretty obvious that buying and using a FitBit for oneself doesn't entail HIPAA issues (although it could cause problems for would-be criminals). But what if it's tech that was prescribed (and/or provided) by a medical provider?

We've posted about who actually owns the data in these kinds of cases, but not really addressed HIPAA considerations (if any). Over at SearchHealthIT, David Reis, Ph.D., vice president of information services and chief information security officer at Lahey Hospital and Medical Center in Burlington, MA (there's a mouthful!) notes:

"[I]f a person receives a wearable device through their hospital or doctor, the healthcare data that device collects is covered by HIPAA. At least, the data HIPAA defines as protected healthcare information (PHI) is safeguarded."

So what does HIPAA consider as "healthcare data?" Well, ostensibly that could be anything from your latest MRI but probably not your BP (if not linked to you specifically).

But is that really the case?

Security litigation specialist Kirk Nahra is skeptical. He thinks that wearables may fall outside HIPAA's authority (well, CMS's authority to enforce the regs).

Here's the problem, though: he posits this example to bolster his position:

"If a person is in a car accident, both the health insurer and auto insurer receive that person's medical bills. The health insurer protects that person's health data under HIPAA, while the auto insurer does not."

That struck me as unlikely, so I contacted a claims supervisor for a major P&C company to confirm whether or not this was the case.

In a word: No.

Any medical info that the auto insurer receives is absolutely subject to HIPAA confidentiality rules. Still, Mr Nahra's basic point, that 1996-era (when it was written) tech couldn't realistically predict the explosion of so much new technology and its ramifications is sound.

In the event, the key question remains: How, if at all, does HIPAA apply to "wearables?"

Part of the problem is that one doesn't necessarily know exactly where one's data is going to end up:

"[The] U.S. Federal Trade Commission recently tested 12 mHealth and fitness applications and discovered these apps sent consumer data to 76 third-party companies."

Did users agree to this? Well, one presumes that the info was disclosed in the EULA (and, of course, we all read those religiously). So there's that.

The sticking point seems to be: what happens to the data when it hits the end-vendor? Well, that seems to depend on whether that vendor has some kind of relationship with a "HIPAA covered entity" (basically, one that deals with personal health info, such as a provider or insurer).

I've reached out to FoIB David Williams, who's written extensively on wearables and health care, for his insights on this.

Meantime, something to think about while you're walking up and down the stairs.

[Hat Tip: FoIB Holly R]

Monday, July 27, 2015

Feel the Love

Anthem wants to add Cigna to their stables. But Blue Cross is not pleased.
Anthem (ANTM), may be causing anxiety for fellow Blue Cross and Blue Shield plans across the country with its $54 billion purchase of Cigna (CI). - Forbes
Why is that you ask? Aren't they the same company?

The (Blue Cross) association’s rules prevent Anthem from using the well-recognized Blue Cross and Blue Shield brand in regions where Anthem doesn’t have the Blue Cross license or own a Blues plan, Anthem is forced to sell health insurance under a different brand like Amerigroup, which will fight for business against other Blues plans.
“The deal sets Anthem in direct competition against other Blue Cross Blue Shield plans nationwide,”

Blue Cross needs to put on their big boy pants and move into the 21st century.

But have no fear.
In the past, Anthem’s commercial businesses that operated without the benefit of the Blue Cross license haven’t always done so well when they couldn’t market as “Blue.” 
“There’s amazing wellness programs that Cigna’s developed,” DeVeydt said. “I think our Blue brethren, they compete today in those markets with us and others and have always welcomed competition. From our perspective, we hope the consumer can get the best of both brands, and that includes the value of the Blue network.”

Sounds like Anthem is looking forward to competing with their Blue brethren.

State HIX circling the drain

Who could have seen this coming?

"State-run health insurance markets ... are struggling with high costs and disappointing enrollment."

Well, the high costs were a given (as we correctly predicted almost 6 years ago!), and not exactly a surprise.

But low enrollment? Whatever do they mean?

"The viability of state health insurance exchanges has been a challenge across the country, particularly in small states, due to insufficient numbers of uninsured residents."

Whoa - hold the presses!

What was that again?

"[I]nsufficient numbers of uninsured"

Um, wasn't the whole point of this fiasco to address the roughly 87 billion Americans without health insurance, affordable or otherwise? And here's Aloha State (Democratic) Gov. David Ige lamenting the fact that this was - how to put it gently? - a big, fat lie?

Who'da thunk it?

[Hat Tip: Ace of Spades]

A Tangled Web Update

A few months ago, we posted on the strange case of the elderly housekeeper and the $1 million life insurance policy. At the time, we wondered how she was able to qualify for that much coverage given her apparently meager income.

More information has come to light that (perhaps) explains the apparent discrepancy.

According to her family's lawyer, Ms Fox "was not some poor, desolate little lady ... Her husband owned and operated mobile homes and RV parks and developed them. They had a pretty substantial income and made some pretty good money selling those.”

And then there's this:

In 2013, Mark Buckland (Mrs Fox's son-in-law) called the agent who wrote the policies [ed: yes, "policies" - told you this was a convoluted situation], and asked about converting them from term pans to whole life. When he was told that the total monthly premiums for such a conversion was north of $6,000 (yes, that's thousands) he took a pass.

Nothing wrong with that, of course, but it's his next move that's, um, interesting:

Allegedly, the agent (Charles Mercier),  "suggested entering into a plan where a third party invested in one of the converted policies so that they could share the benefits when the policy paid out ... that transferring one of the policies to a third party was “legal and done all the time.”

Um, no, it's not, and these kinds of "arrangements" have come under increasing scrutiny. Add to that the fact that Mercier wasn't even licensed to facilitate such a deal, and one has the makings of quite the kerfluffle.

Meantime, the beneficiaries are suing the carriers to try to collect on the policies.

Ellery Queen fans should definitely read the whole piece.