An Embarassment of Riches: Transparency Edition

Recently, Bob wrote about cost-efficiency and claims management. In that post, he said "The more you learn about using tools that are readily available the better equipped you will be to maximize ALL your health care dollars."

And he's right [ed: you're surprised?]

But it gets better. Knowing my penchant for transparency in healthcare, Bob sent me a handful of relevant links and articles, which I'll share with IB readers in our first "mini-carnival:"

First up, Physician Reports is a sort of "self-serve" site that rates (dunh!) physicians. It's a free service, which is nice, but I'm a little turned off by the lack of accountability. That is, I poked around quite a bit, and still have no idea who runs the place, or how to contact them. It seems to me that there needs to be transparency in transparency, too.

Next, Florida's looking to increase the availability of cost information. A bill currently in the state Senate would require "pricing information from hospitals for 150 of the most commonly performed medical procedures to be posted on a state website." While I applaud this effort, I have two reservations: first, pricing information without matching outcomes (results) is potentially dangerous. Second, I'm not sure that legislation is really needed here: it seems to me that the market is beginning to drive carriers and providers to make these tools more widely available.

Regular readers know that we accept no paid advertising here, but we do "plug" carriers and providers whom we think deserve mention. Such is the case with HSA Trustee Services, an online Health Savings Account (HSA) administrator. What sets them apart are two interesting services they provide "over and above" just plain HSA oversight. First, they've added a "price negotiation service" to help keep their clients' out of pocket costs down. Second, they've teamed with a private lab service to help keep diagnostic expenses down, as well.

We're all familiar with the ubiquitous "name your own price" services for travel and the like. How would you like to bid on how much you'd pay for a nosejob? How about a colonoscopy? Forbes Magazine reports that "Medicine Online's network of 35 surgeons can bid for a job by responding with their fees and credentials." The service went online and live in March, and has already stirred up quite a debate. In terms of transparency, this may well be too much of a good thing.

Carriers Hate to Pay

[Welcome Industry Radar readers!]

Here is a thought.

Carriers hate to pay claims with their own money.

They don’t mind using your money but they really don’t want to use any of their own money unless they absolutely have to.

(More on this later).

This became quite clear to me several years ago when I worked in the medical stop loss business. I noticed that carriers became quite aggressive in case management if a claim looked like it would become expensive.

This was especially true if the claim had the potential to get into their wallet.

Want to know something else?

Your doc may not know the most effective treatment for your illness.

Much of what docs do is trial and error. “Let’s try this. If it doesn’t get better, call me and we will try that.”

Carriers have programs that most policyholders (and agents) don’t know about. They fall under Disease Management, Large Case Management and other titles.

Carriers have access to vast databases, both internal and external by subscription. They spend a lot of time and money learning what treatment protocol’s are effective and which ones aren’t.

Some view this as invasive and punitive. Why shouldn’t the carrier pay for the latest drug or procedure?

Isn’t newer better?

Not always.

In fact, rarely ever.

Remember the recent flap over Lipitor? A widely popular (and heavily advertised to consumers) medication has recently lost favor as studies have shown it is no more effective than older meds costing much less.

Lipitor, 20mg is about $120 per month after carrier discounts. Generic equivalents are as little as $4.

When you are paying a $35 copay and the carrier is paying the balance you can expect calls and correspondence from the carrier suggesting lower priced alternatives. Most likely that will fall on deaf ears . . . until you switch away from a copay plan.

Doctors and pharmaceutical companies know this and really don’t care. After all, when you buy the higher priced med the only one that is hurt is the carrier.

So what does a carrier do to discourage you from filling the $120 med?

They shift some of the responsibility to you by first requiring you to fund the first $500 - $1000 in Rx benefits out of pocket before you can access the Rx copay. They also pad the premium on the copay plan, especially if you are already taking the med, so they will be out little (if any) of their own money.

In other words, they use YOUR money to pay YOUR bills and they do this by way of the overcharge.

What are other ways the carriers avoid using their own money?

They are masters at finding the most cost EFFICIENT way of treating patients. If there is a way to stabilize or cure you before they get into their pocket they will do that.

Note that cost efficient does not mean ineffective.

Treatment for a condition that is ineffective more often than not ends up being more expensive. That’s why they rely on efficacy data to design and implement their DM and LCM programs.

Disease management and large case management become very important tools for those who opt for higher deductible plans, especially plans that are HSA compliant.

Working with your agent, and carrier, can help you find ways to minimize your out of pocket expenses without sacrificing effective treatment.

The more you learn about using tools that are readily available the better equipped you will be to maximize ALL your health care dollars . . .both on the premium side and on the claim side.

With careful management, most people can cut their outlay in half without sacrificing quality.

Howdy, Pardner!

Ohio is in the vanguard of states offering the new "LTCi Partnership Program." Enabled by the Deficit Reduction Act of 2005, PP's are the latest signal from the gummint that it wants out of the long term care financing business. Briefly, the Ohio Partnership Program (OPP) allows one to "shelter" more money if and/or when one "spends down" to become Medicaid-eligible.

Many folks believe, erroneously, that Medicare will pay for their long term care needs. It doesn't: Medicare pays for medical expenses, which may sometimes include brief stints at a skilled nursing facility. But this is limited to a total of 100 days, which isn't exactly "long term." So, we turn to our long term care policies (if we have them) to foot a chunk of the bill. Often though, it isn't enough, so one turns to the state for assistance. The mechanism for this is called Medicaid, which is a federal program administered by the states. In order to qualify for this assistance, though, one must "spend down" one's assets. There are some allowances made for a spouse that's still well, and some personal belongings. But in general, one is allowed to keep only $1,500 in assets (Ohio's the lowballer here: most other states allow one to keep $2,000).

The Ohio Partnership Program changes that by allowing one to keep more assets if one buys a qualifying Long Term Care policy (PQ). Let's say you buy a plan that pays $100 a day for 3 years. That's a maximum benefit (or "pool of money") of about $110,000. If it's a PQ policy (more on that in a moment), then you're allowed to take $110,000 (plus the original $1,500) "off the table" when spending down. It's a way to preserve some, perhaps most, of your assets. Not a bad deal.

PQ plans are pretty simple, too, and most LTCi policies currently being sold would probably qualify. There are really only three criteria:

1) The plan must be federally Tax Qualified (most are)

2) Generally, the plan must include some cost-of-living or inflation protection

3) The carrier must be "approved" to participate

I'd daresay most plans sold these days fit at least the first two, and more carriers are signing on to participate. Still, it pays to ask your agent about your own plan.

If there's any downside to the program, it's this: since most plans sold prior to February of 2006 (when the DRA took effect) aren't Partnership Qualified, I suspect that there will be a rash of folks replacing their older, non-PQ plans with the newer model. This may or may not be a good idea, but I would be very suspect of any agent who suggests this course without a thorough fact-finding about one's current physical and financial health.

Oh, and the Law of Unintended Consequences comes into play on the agent's side, as well: we now have a new Continuing Education requirement. Effective September 1, we can't sell any LTCi plans (PQ or no) unless we're "certified;" the certification requires us to take a special 8 hour class on long term care in general, and the Partnership Plan in particular (and also requires us to have 4 hour "refresher" courses every two years after that). Nothing inherently wrong with that, but the class I took crammed 3 hours of material into 8 hours of instruction. Not the instructor's fault, of course, but completely unnecessary.

Long Term Care insurance is among the most complicated of the products we sell, so intensive training is not necessarily a bad thing. But I just don't think that it's 8 hours worth of material.

Still, it was worthwhile, if only because I'm now certified [ed: don't you mean "certifiable?"] to sell LTCi and the Ohio Partnership Program.

Cavalcade of Risk #51 is up!

Three-time host Spencer Hill presents this week's Cav. It's chock full of risky posts.

You don't have to be a three-timer to host: we have slots available for June and July. Just drop us a line to claim yours!

Interesting HSA "Gotcha"

I have the privilege of working with some truly great talent here in "Southwest Flyover Country" (aka Dayton, Ohio). One of my favorites is Pete Deist, who runs FlexBank, a local FSA/HRA/HSA administrator. Pete has a long and storied career "in the biz," and so has a unique and helpful perspective for those of us still in the trenches.

As part of an FAQ he recently compiled, he posed the following:

James enrolled in a High Deductible Health Plan (HDHP) with family coverage effective February 1, 2007. He contributed the maximum permissible amount of $6,450 ($5,650 plus the $800 "catch-up"). James turned 65 in January, and enrolled in Medicare effective January 1. As of that date, he was no longer eligible to contribute to his Health Savings Account. Is there a problem with his 2007 contribution?

I must confess that I have never run into this particular scenario before, but I suspect it will become more prevalent with the "graying" of the population. The answer was surprising, and enlightening:

Yes. Under the "no-proration" rule, he was treated as having been an eligible individual during every month of the year (2007) and was permitted to make contributions for those months during the year before he actually enrolled in the HDHP. However, he did not remain HSA-eligible during the 13 month "testing period" (beginning in December of the year for which those contributions were made and ending on the last day of the 12th month following that December) [ed: who writes these laws, anyway?!]. Therefore his contribution must be pro-rated based on the number of months he was an eligible individual.

Whew!

Believe it or not, there's still more: He'll have to notify the bank which holds the account that over $500 was contributed that shouldn't have been. Plus, he'll have to take that $500+ as a distribution and report it as "other income" on his taxes. Ouch!

If nothing else, this underscores the need to have a competent administrator for your HSA loss fund.

Thanks Pete!

[Hat Tip to Cornerstone]

Grand Rounds is up!

Suture for a Living hosts this week's edition. It's jampacked with interesting posts and beautiful photographs of Arkansas' flora and fauna.

David Williams, at the Health Business Blog, has a book review with a twist: the book's on not-for-profit health care providers.

Dr. Nurse

Doctor shortage. Lack of primary care providers. Aging boomers.

What do you do?

How about a new kind of PCP? A Doctor Nurse.

Doctor nurses are trained in finance, health policy and systems know-how in addition to core clinical expertise. They can do a lot of what many doctors no longer have time to do in an increasingly complex health care environment.

This is an idea that makes a lot of sense to me.

36 percent of active physicians are older than 55 and most will retire by 2020, said Edward Salsberg, director of workforce studies for the Association of American Medical Colleges. A new generation of physicians is less willing to work the long hours usually associated with the profession.

Med schools are graduating fewer docs who want to go in to primary care. Instead, they are opting for specialty practices that pay more.

This year, U.S. medical graduates filled just 1,156 of 2,387 residency positions nationally in family medicine; the rest were filled by foreign medical graduates. Primary care doctors are paid far less than specialists.

We want to watch and see if this trend catches on.

Wal-Mart Expands Rx Program

Wal-Mart is at it again.

They were the first to offer 30 day supplies of more than 300 generic drugs for $4. Now they are out to woo us again with an expanded Rx plan.

Read more here.

For the price of a gallon of gas you can get a 30 day supply of medicine.

Imagine that.

Carnival of Personal Finance is up!

This week's edition is hosted by Money & Business blog's Kimberly Palmer. Kim offers 6 posts in her "Editor's Choice" category, then the rest of the links (too numerous to count!). Definitely worth a look around.

Accutane Dangers

While doing a pre-screen for a client I discovered something that gave me pause.

Each carrier has their own underwriting rules. What one carrier considers a major health risk another may minimize.

Carriers make their underwriting guides available to producing agents in order to minimize the "hassle factor" for clients once the application is submitted.

As part of my service, I take a preliminary application from all clients and review it for potential issues that can result in excluded coverage, rate ups or even rejection of the application.

Some carriers have a list of medications that result in an automatic decline. I routinely check this list as a "heads up" that problems may be on the horizon.

Imagine my surprise when I discovered that Accutane, a popular med used for acne, can result in an automatic decline. This led me to do a bit of research which really opened my eyes.

It seems that Accutane has been linked to certain birth defects including, hydrocephaly (enlargement of the fluid-filled spaces in the brain); microcephaly (small head and brain); mental retardation; heart defects; ear and eye abnormalities; cleft lip and palate; and other facial abnormalities. "Accutane and the other retinoids can cause these birth defects in the early weeks after conception, a time when a woman often doesn't know she's pregnant," he said.

This information comes to us by way of the March of Dimes website. But similar warnings are also available at CDC and AODC sites.

Clearly the use of Accutane can not only have an adverse impact on ones ability to secure individual major medical coverage, but can have an impact on your unborn children.

Cavalcade #51: Submissions Due

Spencer Hill hosts next week's edition of the Cavalcade of Risk. Submissions are due by Monday the 5th, and the Cav will be up and out on the 7th. As always, please make sure to include:

■ Your blog's url
■ Your post's url
■ The post's trackback URL (if available)
■ A (brief) summary of the post

You can submit them via Blog Carnival or email.

We have slots available for June and July, so PLEASE drop us a line to reserve yours.

Medicaid Spending By State

How does your state rank?

Just released figures from CMS (by way of KFF).

Sweating to the Oldies

I know. That image of Richard Simmons with frizzy hair and gym shorts is embedded in your mind.

Let me help you get rid of that image. Think of Disney World. Now think of "It's a Small World".

Now you have Richard Simmons dancing to It's a Small World.

Loverly.

But on a serious note . . .

When was the last time you exercised? You can't count jumping to conclusions, passing the buck or touching base.

Real exercise, like walking, running, swimming or playing sports.

Checkers is not a sport.

Neither is reading the Sports Illustrated swim suit issue.

“The single thing that comes close to a magic bullet, in terms of its strong and universal benefits, is exercise,” Frank Hu, epidemiologist at the Harvard School of Public Health, said in the Harvard Magazine.

A magic bullet.

Isn't that what our society wants?

Make it quick, make it painless, make it cheap.

Bam!

I have written often about the protective roles of exercise. It can lower the risk of heart attack, stroke, hypertension, diabetes, obesity, depression, dementia, osteoporosis, gallstones, diverticulitis, falls, erectile dysfunction, peripheral vascular disease and 12 kinds of cancer.

Surely there is something on that list that either worries you or you already have. Studies have shown time and again how weight loss can REVERSE the effects of type II diabetes, HTN and high cholesterol.

And guys, you might be able to get rid of that little blue pill . . .

Aerobic exercise lowers blood pressure in people with hypertension, and it improves peripheral circulation in people who develop cramping leg pains when they walk — a condition called intermittent claudication. The treatment for it, in fact, is to walk a little farther each day.

Walking is inexpensive, available to almost everyone, and you don't need fancy clothing.

So if it makes you feel better, forget about Richard Simmons sweating to It's a Small World . . .

A Primer on End of Life Planning

End of life planning is a necessary evil. No one wants to think about death, much less plan for it.

Some folks think if they don't draft a will they will somehow, mystically prolong death. Others feel the same way about purchasing life insurance as if estate planning or purchasing life insurance becomes a jinx leading to an early death.

Of course that is nonsense.

Yet an estimated 70% of Americans either do not have an estate plan or have one that is outdated and may not even be legal.

Four documents that everyone needs as part of an estate plan include a testamentary will, a health care directive (living will), health care proxy (in some states the proxy can be incorporated into the directive) and powers of attorney.

This article addresses two of those documents and the emotions that are involved in advance planning.

This is a must read.

I was glad mom decided to tackle this delicate piece of estate planning -- whether she was facing a medical crisis or not. Although I suspected my mom shared my views on end-of-life care I wasn't entirely sure, and I knew it would be a relief to have her wishes in writing. And by designating someone to speak for her in the event she couldn't, it should help to ease any family conflicts over who would ultimately be responsible for making tough decisions.

Should being the operative word. Mom's medical directives made her wishes about medical treatment clear, but emotions ran high when one of her health-care choices unintentionally rekindled a long-simmering family conflict.

Health Wonk Review is up!

Over at Medical Humanities Blog, Daniel Goldberg hosts this week's compilation of thought-provoking, interesting posts. With over a dozen and a half wonky choices, you're sure to find something to pique your interest.

Pregnant? Eat Chocolate!

Pregnant? Want to avoid complications?

Eat chocolate.

Indulging in chocolate during pregnancy could help ward off a serious complication known as preeclampsia, new research suggests.

Chocolate, especially dark chocolate, is rich in a chemical called theobromine, which stimulates the heart, relaxes smooth muscle and dilates blood vessels, and has been used to treat chest pain, high blood pressure, and hardening of the arteries, Dr. Elizabeth W. Triche of Yale University in New Haven, Connecticut and colleagues write.

So go ahead. Order that sundae with theobromine.