Saturday, September 30, 2006

Here it Comes


A federal advisory panel said Monday that Congress should take immediate steps to guarantee that all Americans have access to affordable health care by 2012

Access to affordable health care. How will this be accomplished?

While leaving many details to be worked out, the panel declared, “It should be public policy, written in law, that all Americans have affordable access to health care.”

What kind of details? Maybe how this will be accomplished? How much it will cost?

The number of uninsured Americans keeps growing

As long as the population grows, so will the number of uninsured. For the last 10 years the PERCENTAGE of uninsured has fluctuated between 14 and 17%. The latest figure puts it around 15% of the total population and 40% of those earn in xs of $50,000.

The panel did not say how much its proposals would cost or how to pay for them.

This seems to be a major point that needs to be addressed. Can't imagine why this was overlooked.

But, it reported, many consumers said they were “willing to pay more to ensure that all Americans are covered.”

Where are these consumers? How much more are they willing to pay?

Friday, September 29, 2006

I'm A Travelin' Man . . .

Brought to you by Mr. Peabody . . .

An Ohio chiropractor who claimed to treat patients using time travel has surrendered his license to practice.

State regulators had been investigating Dr. James Burda of Athens, who said he could take care of anyone, anywhere by reaching back in time to when the injury occurred.

Burda said he discovered the skill six years ago when he hurt his own foot while driving. He said he gave the pain a command to stop and it went away.

He said he doesn't use force to realign bones, but he uses his mind to manipulate the body. But if that doesn't work, he said he travels back in time to fix the problem. He calls the practice Bala-Keem. State medical officials call it malpractice.

Burda's Web site offered long-distance healing service for $60 an hour.

Burda said that his practice is beyond chiropractic, and is beyond what "they understand." He said that anything that's beyond what people don't understand scares them.

The Ohio State Chiropractic Board accused him of being unable to practice due to mental illness. Now, in a written statement, Burda acknowledges his form of treatment was not acceptable.

Not acceptable huh?

No kidding . . .

The 4th Commandment

Okay, so what does keeping the Sabbath have to do with insurance? Well, it’s not so much “the Sabbath,” per se, but taking a sabbatical. Many not-for-profit organizations (NFP’s) offer periodic sabbaticals to their employees, in order to help them refresh and renew their commitments. Unfortunately, such practices may be unlawful under the little-known legal principle of “personal inurement.”
In law, “compensation based on skill, effort and time expended, remunerated by salary or fee, does not constitute personal inurement.” So the challenge is in determining the monetary value of a sabbatical. Common sense [ed: quite the oxymoron, no?] would seem to equate a sabbatical to “unpaid leave;” the only real “value” is that one is assured of having a job to come back to. So what is the value of that certainty, and how would it apply to, say, a minister taking a year off to “find himself?”
Peter Marathas, a benefits attorney, warns that “(n)onprofit employers have to be sensitive about setting compensation. And when they're considering all parts of compensation, they shouldn't ignore sabbaticals." In other words, if the sabbatical has a value, then it has to be included with the rest of said minister’s benefits package. This hasn’t, apparently, been a big deal until recently, when the Infernal Revenue Service (at the urging of Congress) decided to start “cracking down” on NFP’s which offered such benefits as part of their employees’ compensation arrangements.
There are some pretty hefty fines that can be levied against folks who run afoul of these reg’s: starting with a 25% individual tax penalty. And the fines go up from there. And the NFP itself can face substantial whacks, as well: such as a $10,000 penalty on each of their trustees. Ouch!
We tend to think of benefits in terms of health and life insurance, flex plans and vacation days. We’ve discussed transportation reimbursement, of course, as an unusual type of benefit. But I’ve never really thought about sabbaticals as such, and this is a heck of an intro, to boot.

Thursday, September 28, 2006

No Insurance? Different Protocol.

Doctors treat patients who lack health insurance differently than patients who are insured, a major new study finds.


For example, the uninsured are much more likely to get two generic medications instead of one easier-to-take brand-name drug. Or, they might be prescribed a cheaper generic drug that must be taken longer than a pricier brand-name version

Cheaper as in more affordable. Not necessarily less effective.

Both of these prescribing decisions make it harder for uninsured patients to stick to their medications as needed, experts warned


Well excuse me! Just go ahead and order up the more expensive med they cannot afford.

What am I missing here?

According to the survey, 88 percent of the doctors made at least one change in their patients' clinical management due to his or her insurance status. Overall, physicians changed management strategies for 99 of 409 patients. Nearly two-thirds (62.6 percent) of the time, doctors discussed insurance issues with patients and made changes based on insurance status

I believe this would be considered not only practical but sensitive to the needs (and ability) of the patient.

uninsured patients often have trouble getting timely appointments with specialists, Mendoza said. In those cases, "I continue to take care of them even though I want them to see a specialist," he said. "I do the best I can -- as a primary care physician -- to take care of their specialty needs. That can definitely compromise care."

This is called compassion.

Marcus Welby is alive & doing well.

Yo Quiero HSA?

The growing number of Latinos without health insurance could be reduced if the government offered small businesses tax incentives to provide coverage, a Hispanic advocacy group said Thursday.

Many Latinos hold low-wage jobs in small businesses that are not as likely to offer health insurance, according to a report issued by the Latino Coalition. The group said only one in four Latinos nationwide has employer-provided insurance.

The report also recommended that the government offer tax credits, which would reduce taxes by a dollar for every dollar put into health savings accounts. These accounts use a mixture of savings and insurance to
help people cover medical expenses

Granny Can Keep Her Meds

House Republicans tentatively agreed Thursday to prohibit U.S. Customs agents from seizing prescription drugs that Americans buy in Canada and bring back into the United States.

The deal would let Americans carry up to a 90-day supply of medication back to the United States from Canada without being stopped by Customs agents, House and Senate Republicans said

But . . .

But it would not let Americans purchase cheaper prescriptions over the Internet or by mail order

Someone tell me the logic behind this one.

Transparency Uber Alles...

Well, well, well...Here at IB, we've been blogging on healthcare transparency for almost two years. And, as noted, we get results. So far, that's two BX's, an Aetna and a QwikHealth. And now, we have United Healthcare, from whom I've just received this email:
"We are proud to announce an exciting new consumer resource: the UnitedHealth PremiumSM hospital comparison program. Beginning February 2007, all UnitedHealthcare members will have access to the UnitedHealth Premium hospital comparison directory on®.
The UnitedHealth Premium hospital comparison program will provide consumers valuable comparison information so they are better able to make informed decisions about where to seek care. More specifically, the directory will offer condition/procedure level quality, and cost information, on approximately 80 inpatient and outpatient procedures in more than 140 markets."
Looks like someone took our challenge seriously because, unlike Anthem's anemic effort, this one looks to rival Minnesota Blues' efforts.
Of course, it's still vaporware, but we'll keep our eye on it, and offer an analysis when we're able.

Wednesday, September 27, 2006

Always Low Prices . . . Always

Wal-Mart confirmed that it will drop traditional plans for new hires beginning Jan. 1. Those plans offer annual deductibles as low as $350 for a yearly premium of $1,043 for single-person coverage.

I have no idea what kind of benefits are offered after the deductible but the price is right.

New hires from next year will only be able to sign up for one of two plans that have premiums as low as $11 a month but annual deductibles starting at $1,000 for most medical expenses as well as separate deductibles for special events, like outpatient treatment, and for prescriptions.

$11 per month is a bargain. Where do I sign up?

Cavalcade of Risk #9 Has Rolled on in...

Joe Kristan, who runs the Roth & Co Tax Update blog, has a witty and pretty CoR for us. With some 20 entries, it's the biggest edition yet. Posts are grouped by subject (more or less), and each post is accompanied by a little blurb (and sometimes a barb).
Former CoR host LA Money Guy warns us about a new(?) scam involving jury duty and phishing. Definitely worth a click.

Mea Culpa...

The most recent edition of the Health Wonk Review slipped under my (slightly overworked) radar last week. Leif W Haase, of The Century Foundation's blog, presents over a dozen interesting and enlightening posts.
I hated statistics when I took that course in college, but David Williams, host of the Health Business Blog, writes that physicians may well benefit from a better understanding of them.

Tuesday, September 26, 2006

A Disproportionate Share

Hospitalizations are the single most expensive component of the U.S. health care system and more than 60 percent of hospital bills in 2004 were sent to federal and state governments for Medicare and Medicaid patients, a new federal study says.

It get's worse . . .

The study reported in 2004 hospital bills totaled $790 billion, and $475 billion of that amount was billed to Medicare and Medicaid patients. The charges do not include physician fees.

Medicare bills totaled $363 billion, or 46 percent, and Medicaid, $112 billion or 14.1 percent. Charges to private insurers amounted to $252 billion or nearly a third of all billings, the AHRQ study showed

Medicare & Medicaid patients are roughly 40% of the insured population, yet they usurp 60% of the resources.

A Delectable Grand Rounds

Dr Enoch Choi, host of Tech Medicine blog, presents a delicious 'Rounds this week. He's catered to our every medblog whim, with a generous buffet of posts, each garnished with a soupcon of commentary.
When my better half and I were younger, we absolutely loved to watch the back-to-back shows Hill Street Blues and St. Elsewhere (who else remembers the episode featuring a dour Howie Mandel, the police chief from Newhart and a paper bag?). Well, HIStalk blog reports that St E's season 1 is due out at Thanksgiving. WooHoo!

Monday, September 25, 2006

We Get Results...

Much like Bob’s hard-hitting analysis got Wellpoint to “roll” on its policy rescission, um, policy, my own relentless push for transparency, including in-depth interviews with folks In The Know, has yielded similar results:
Much like Aetna’s pilot program, Anthem has chosen a relatively modest roll-out, with the estimated costs of a few procedures available on-line. As the program develops, I would anticipate that more types of information will become available, along with more detailed financial information.
It strikes me as significant that the Gem City is home to the “national” roll-out of “CompareCare.” Last year, Aetna introduced its pilot program down the road, in Cincinnati. Is there something in the air or water that make the Cin-Day corridor so attractive to carriers looking to break the mold? More likely, it’s the confluence of industry, agriculture and technology that offers a unique incubator for such endeavors.
I think it's wise that Anthem is starting small, with only a few procedures and limited cost information. Having spoken with the folks at corporate cousin Minnesota BX, I know that it takes a lot of effort to put these plans together.
It would be to Anthem’s benefit to expand this effort as quickly as possible. As we’ve noted often here at IB, transparency is coming sooner, rather than later. As more carriers introduce their own implementations, the pressure will be on to offer more information, with more detail, more quickly.

We applaud Anthem for seeing the light, and look forward to a more integrated and comprehensive program.

Carnival Time!

The epynomously-named Canadian Capitalist hosts this week's Carnival of Personal Finance. We're treated to over 50 great entries, each with a helpful blurb about the subject matter.
What do Richard Dean Anderson and Red Green have in common? Why, duct tape, of course! And this post, at 2 Million Blog, binds them cleverly together. Recommended for those who need a smile.
After last week's abortive attempt, this week's Carnival of the Capitalists is a breath of fresh air. Our hostess, Evelyn Rodriguez of Crossroads Dispatches, brings us over 40 posts, in useful categories and with thoughful commentary. Thanks, Evelyn!
For those of us who abhor change, David St Lawrence offers wisdom and inspiration. Check out his post on how to move past your personal bubble.

Doughnut Drop-outs study released today by Wolters Kluwer Health, a global provider of drug and medical information services and content to the healthcare and pharmaceutical industries, projects that by year’s end, 35 percent of all Medicare Part D enrollees or approximately six million people will have entered the ’doughnut hole,’ a nearly $3,000 coverage gap inherent to the new Medicare drug prescription plan. By the end of this month alone, a total of four million Medicare-eligible seniors and disabled, averaging seven prescriptions per month, are estimated to enter the gap.

According to the new data, those who fell into the doughnut hole this year chose to discontinue therapy 16 percent of the time across all non-acute therapeutic categories. Some discontinuance rates were considerably higher, for example, the anti-arthritics category saw a 33.4 percent drop in usage. The findings also indicate a 4 percent increase in brand utilization across all non-acute therapies during the period January-August 2006.

To Boldly Go . . .

Since 2002, people from around the world have been choosing PlanetHospital to find safe, affordable, and high quality medical care. This has made us the global leaders in Medical Tourism.

The doctors and nurses on our team will help you choose the right surgeon for your needs. We have a friendly concierge staff in each country to look after your needs as soon as you arrive. We arrange everything from the appointment with the doctor of your choice to passports and visas, airline tickets, and hotels. All you have to do is show up.

I wonder how many U.S. doctors will be thrown out of work due to cheap overseas labor as more jobs that can be performed here at home are shipped overseas?

Sunday, September 24, 2006

The Bidding Process

A recent post seems to have stirred the pot with regard to the bidding process on large group health cases. I will take no particular side in this issue, but rather will attempt to share my experience in these kind of transactions and the way they have played out in the past.

In a large case, 1000+ lives, almost everything is negotiable. I say almost because some things such as premium taxes, retention allocation for fixed home office expenses and state mandated reserves are off the table when the negotiation starts. That leaves almost everything else open to discussion and negotiation.

If the client company has retained a consultant, that consultant will be paid a fee to assemble the data, submit to the carriers for review, analyze the bids and present them to the client along with a recommendation. In some cases the consultant is merely compensated for their time in the bidding process but will not be a participant in the final award. Other times the consultant will be retained on an ongoing basis to continue to provide advice but will not be the named agent of record. And some times the consultant may also bid the case, either exclusively or in conjunction with other bidders, in hopes of generating additional revenue as the agent of record for servicing the account on an ongoing basis.

Four scenarios.

Each involves different situations where the consultant may, or may not, remain in the picture and on the payroll in one form or another.

In light of the recent controversial post, let’s use the scenario where the consultant is paid a fee AND is allowed to bid on the business as the servicing agent of record.

When the data is submitted to the carrier, the consultant tells the carrier how much to build in for servicing fees. In some cases the carrier will fully disclose this financial arrangement in their proposal, and sometimes not. Whether disclosed or not, the service fees are in the carriers retention charges and in turn reflected in the rates.

In simplistic terms, the rates quoted consist of two or three items. The fixed costs, referred to as the carriers retention charges, and the claim charges. The claim charges may be broken down further into expected paid claims and estimates for reserves.

Retention charges include premium taxes, home office overhead allocation, reinsurance premiums, profit margin, network access fees and agent servicing fees.

Claim charges are an estimate of future expected paid claims + the reserve margin.

Within the retention charges the only thing really open to negotiation is the agent servicing fees. Everything else is mostly set in stone.

Claim charges are another animal entirely and where the bulk of the premium dollars lie. A typical split on a large case may see fixed costs in the 10% range and claims the other 90%. This is also the area where negotiations can have a major impact on the rate finally paid by the client.

In projecting the next years claims the carrier reviews prior claims history, including shock claims. The larger, non-recurring claims are pulled out of the mix as well as those claims that exceed the SIR (self insured retention) or stop loss level for the group. In smaller cases this might be claims in excess of $50,000. With a larger group the underwriter might choose to pull out claims excess of $250,000.

The net claims are trended to arrive at an estimate for next years expected paid claims. A margin is added to the expected paid claims to arrive at a final projected claim liability.

The projected claim liability plus the carriers retention charges are added together, divided by 12 months and then divided again by the expected number of employees in an average month. This rate is the composite rate to be collected and is expected to be sufficient to cover retention charges and claims for the group.

The final calculation is to split the composite rate into 2, 3 or 4 rate factors. A four tier rate structure would have an employee rate, another rate for employee + spouse, another for employee + child(ren) and a fourth rate for employee + spouse and child(ren).

The carrier proposal is then compared by the consultant against other proposals from competing carriers and presented to the client for review.

A wise buyer will ask for a full disclosure and a break down of the retention charges as well as claim trend factors & margins. As part of the buyers due diligence they should also review not only the consultants proposal but the actual bid as submitted by the carrier.

Once all the information is on the table, the final negotiations can begin.

I say final because a good consultant will have already negotiated some items with the carriers before ever making a presentation to the client. If claim projections appear out of line with other carriers, or if the retention fees are in misstep the consultant should have already pointed this out to the bidding carriers.

Some clients (mistakenly) make a decision based solely on the lowest combined premium. Others focus (also mistakenly) on the claim figures since they make up the largest portion of the total cost of the plan. The client may attempt to secure a lower rate by asking the carrier to review the total package, or just the claim figures.

Claims have the most wiggle room since a relatively minor adjustment to trend or margins can have a major impact on the final, total cost of the plan. In order to get the numbers in line the carrier can age the data by averaging the composite claim costs over an 18 or 24 month time frame rather than the most recent 12 months. They can also look for month to month trends in the claims that could show an improving claim factor (where month to month claims per capita are declining) as opposed to a deteriorating one.

Future claims can be trended at 10% vs. 12% and can significantly impact the final total. Claim margins are typically calculated at 25% but on occasion I have seen those margins reduced to 10%.

Adding all this up, an improving and re-aged claim history, plus lower trend for future claims, plus lower margin can make a 20% or more difference in the final TOTAL rate charged to the client.

All the while, nothing has ever been said about the retention charges.

Most buyers focus on the bigger number and completely ignore this fact. The cost of the plan over the next 12 months will vary only by the amount that is being charged to administer the fund. The future claims will be what they will be, regardless of whether they were trended at 10% or 12%. Future claims will be the same whether the margin is 10% or 25%. It does not matter if Aetna is paying the claims or Blue Cross or a TPA. The final result will be the same.

The ONLY difference in the total cost of running the plan is how much the carrier or TPA is going to charge to administer the plan. Everything else is extraneous.

How much a servicing agent is paid, and how that agent is paid, almost never comes in to play. In some cases the agent will ask the carrier to reduce the amount paid if it has a noticeable impact on the bottom line rate. This rarely happens.

Insurance Dispatch

This week's edition, available at the Medical Blog Network, is a reprise of my Rosh HaShannah post here at InsureBlog. Look for a small twist, though, about how long our New Year's celebration lasts.

Friday, September 22, 2006

Cavalcade #9 - Submissions Due

Just a reminder that submissions for next week's C of R are due Monday (the 25th). Joe at Roth & Co would love to see your work. You can submit entries:

■ via email


■ at Blog Carnival

[Note: Ferdy's has suspended their submission engine]

PS: We're still looking for hosts. If you'd like to host a future edition, just drop us an email.

Good (?) News...

Apparently, the ban on meds imported from our Neighbor To The North may be eased:

"House Republicans tentatively agreed Thursday to relax a ban on importing prescription drugs from Canada."

The move would allow Americans to bring home (up to) a three month supply of medicine, with the potential for even more flexibility in the future.

L’Shannah Tova

Tonight, those of us who practice Judaism, the oldest of the “Abrahamic faiths,” will begin to usher in our New Year.

Unlike December 31st, though, there will be no “Dick Clark’s Rocking Rosh HaShannah Eve,” no champagne corks flying, and no confetti streaming from the rafters.

In Judaism, Rosh HaShannah, while a joyous and festive occasion, is part of a ten day cycle called The Days of Awe, which begin tonight, and continue until we break our day-long fast at the end of Yom Kippur. It is a time of intense self-examination, as we try to identify and atone for, the wrongs we’ve done to others in the past year, and to find a way to return to a more spiritually productive path.

So what does that have to do with insurance? Well, truthfully, not much. But how we sell insurance, and how we treat our clients and carriers, have a lot to do with it. In my faith, we believe that, when we die, we will be judged first and foremost on how we conducted our business. How we treat those with whom we conduct commerce, the thinking goes, says a lot about how we treat all the people in our lives.

And I believe that.

It’s why I conduct my practice the way I do. It’s why I choose to blog with someone who shares my values (if not all of my opinions). It’s why, when I teach insurance to other agents, I always stress the importance of doing the right thing. Always.

Part of our process of atonement is to ask forgiveness from those whom we’ve hurt, by word or deed. On the one hand, I’m proud that, in the almost 2 years that I’ve been blogging, InsureBlog has had over 56,000 visitors. On the other hand, I’m sure that I’ve managed to hurt or offend at least a few of them. And so, if you’re one of the latter, I ask your forgiveness, and pledge to do better in the coming year.

I wish all of our readers a joyous, prosperous, and healthy 5767.

Thursday, September 21, 2006

An Idea That Might Have Legs

Four central Ohio legislators have joined together to sponsor a change to the state's Medicaid law, allowing working people to buy the government-provided health insurance instead of losing eligibility altogether.

At first blush, this is one of the more novel ideas I have seen to cover the uninsured.

"Ohioans with disabilities want to work," he said. "This measure will enable Ohioans with disabilities to work without the threat of losing their Medicaid health coverage."

Many of the social welfare programs have disencentives built in to them. Earn too much, you forfeit your benefits. Sometimes the amount you can earn is only marginally better, or even worse after tax, than what you can get for "free" through public assistance.

Why would anyone try and get off public assistance when it is easier to maintain status quo?

As introduced, the bill would allow disabled individuals to earn up to 250 percent of the federal poverty guideline income amount but still remain eligible to buy Medicaid coverage.

To purchase coverage, the disabled person would have to pay a premium equal to 10 percent of the amount of their income that exceeds 150 percent of the federal poverty guideline for the applicable family size, after subtracting out any amounts already paid for health insurance to an employer.

Stivers said he was motivated to study the issue after attempting to hire a former Miss Wheelchair Ohio, Melissa Day, as a statehouse page.

Day could not accept the job because of the threat of losing Medicaid coverage, and instead served as a volunteer page

I will be anxious to see Professor Stern's take on this since he is the Buckeye and I am just a good ole southern boy.

Who Get's Hurt?

Many consultants hired by businesses to find the best deals on health insurance or prescription drug plans receive "significant" bonuses, commissions or consulting fees from the companies they are hired to consider, the Wall Street Journal reports. These financial arrangements are often disclosed "only partially or not at all" to employers, the Journal reports.


The Journal profiles a case involving the Ohio-based Columbus Public Schools District, which starting in 2001 paid a consultant $35,000 per year to find the best insurance deal. The consultant recommended UnitedHealth Group and ultimately received $517,138 from UnitedHealth, allegedly without disclosing the financial relationship to the district

Seems to be an ethical issue here, but it begs the question. Did the school district feel they were being overcharged before or after they learned of the compensation deal?

The Journal looks at a deal that consultant Pharmaceutical Strategies Group brokered between the United Brotherhood of Carpenters and Joiners of America and Medco Health Solutions. PSG does not charge UBCJA a consulting fee and instead receives 25 cents from Medco for each UBCJA prescription. The three-year deal could be worth more than $1 million for PSG.

What is the issue here? Was the deal inked with the UBCJA a good one or not?

UBCJA officials said they are "extremely satisfied" with their contract with Medco and expect to save more than $30 million over the three-year deal.

The client was happy.

The consultant was happy.

Who got hurt?

Carnival Hero...

The other day, I noted my disappointment with this week's Carnival of the capitalists, wherein the host decided that he couldn't be bothered to put together an actual Carnival.

Well, Execupundit host Michael Wade has stepped up to the plate in a big way: he's gone through all the links that okDORK ignored, and put together a supplemental CotC, complete with commentary. Be sure to check it out:

Part 1
Part 2
Part 3
Part 4

Kudos to the Execupundit!

Wednesday, September 20, 2006

Blue Follow Up

Blue Cross of California has announced it is changing their underwriting philosophy with regard to retrospective review and rescission. We are almost certain the turning point came when InsureBlog brought pressure to bear on the carrier by shining a bright light in the midst of underwriting darkness.

Blue Cross of California (Blue Cross) today outlined a series of steps it will implement to revise its process for rescinding health insurance in cases where the policy holder misrepresented his or her true health status when applying for insurance.

Key components of this initiative include 1) development of new insurance application wording; 2) new written rescission policies and procedures; 3) creation of a Rescission Review Committee that includes at least one medical doctor; and 4) creation of a dedicated ombudsman to communicate with customers on rescission issues

Let's look at this piece by piece.

New Health Statement for Application Form

The new application is designed to simplify the medical questions, provide additional clarity to the questions and shorten many time periods covered by the questions.

Simplify is code for asking broader questions. With regard to illness, the question can be phrased "Have you ever been sick? If so, tell us about it."

As for shortened time frames, the question may be "At any time between 1916 and the present, have you ever seen a doctor? If so, why?"

Revised Policies & Procedures for the Underwriting and Retrospective

Review Processes

These revised policies memorialize and clarify the initial underwriting process which will help explain certain underwriting practices. The policies also clearly document certain practices such as when follow-up investigation is or is not necessary and the process for reviewing an applicant's prior claims history if the applicant previously was a BCC member.

"memorialize and clarify". This has a lawyer's fingerprints all over it.

"clearly document certain practices such as when follow-up investigation is or is not necessary". Translation, don't you dare file a claim.

New Committee Structure for the Rescission Review Process

In all cases where the reviewing underwriter recommends rescission, the final decision whether to rescind will be made by a newly formed committee which will include a Medical Director

No more flipping a coin, tossing darts, or asking Susie the janitor to decide. Now it is you vs. the committee.

Dedicated Ombudsman for Rescission Issues

Blue Cross will have a dedicated ombudsman for members undergoing retrospective review or who have been rescinded

Meet our new Obmudsman.

Revised Procedures for Review of Rescissions

Blue Cross will clarify and further document its procedures for review of rescissions upon request of a rescinded member

We will make it clear, very clear, why you should accept our offer to rescind coverage.

Revised Documentation for Retrospective Review Decisions

This revised documentation creates better documentation and explanation of rescission decisions.

Please feel free to ask any questions about our policy.

Focused Training in Underwriting Department

Blue Cross will develop enhanced training programs in both the upfront underwriting and the retrospective review process.

Our new underwriter training class.

Increased Audits of Underwriting and Retrospective Review

Blue Cross will enhance the internal audit frequency of the upfront underwriting process, the retrospective review process, and the documentation of retrospective reviews. These increased audits will also serve the goal of accuracy and consistency in the decision-making proces

More audits are better for everyone. Don't you agree?

See how much better life will be now?

Tuesday, September 19, 2006

Feelin’ Blue...

[UPDATE: For more insight, check out Bob's follow-up, and especially these commments from a CA agent]

I am not a shill. My challenge is that, if I’m going to write about health insurance (and I am), I can’t help but discuss Blue Cross (in all its various and sundry forms). It would be like writing about the automotive industry without mentioning GM, or discussing the fast food sector while ignoring McDonald’s.
So why the disclaimer and qualifications? Well, because I’m going to defend BX (of California, of all places). Well, that’s not really accurate: it’s more a matter of explaining how and why insurance works the way it does, and how sometimes folks have to live with the bad decisions they make (or others make on their behalf).
When she was 2 years old, little Selah was found to have a lump on her chin, and a case of the croup. About that time, her parents applied for medical insurance with the aforementioned BX, and neglected to completely, accurately, and honestly answer all the medical questions. About two years later, Selah has been diagnosed with a potentially fatal tumor in her jaw, and BX (having reviewed her application and medical records) has rescinded the policy [rescission is a process whereby the insurer essentially annuls the policy, and returns all the premiums]. They did so because, at the time, their underwriting guidelines apparently required that folks with the croup and/or undiagnosed (but visible and known) lumps be declined.
In fairness, I looked at the current underwriting guidelines for the BX available here, and it is silent as to both. Since I don’t keep outdated guidelines handy, I have no idea what they might have done with this several years ago. Regardless, according to the carrier, they would not have accepted this risk had the conditions been fully disclosed.
Which brings us to the “controversy:” my friend Joe Paduda calls the Blues’ decision “cheap, heartless, and stupid.” Based on the news report he cites, though, it appears to be none of those, but good business sense. Contrary to popular belief, underwriting guidelines are not “fine print” nor are rescissions based on “obscure technicalities.” Rather, the guidelines are based on research and experience, and policy provisions (including the right of rescission) are based contract law. In this case, the insurer was apparently prevented from adequately assessing the risk, and faced the very real possibility that it would harm its other policyholders (as well as stockholders) if they had actually paid such a claim.
That’s right, it’s not just about poor little Selah (although she’s been victimized as a result of her parents’ apparent actions); it’s about treating all insureds fairly and equally. If BX had paid her claims, what about the next insured who “fudged a little” on their application? It’s not a perfect system, of course, but it requires that we all follow the same rules. It appears that Selah’s folks chose not to, and now seek to blame someone else for their own mistake.
Of course, I’m relying on a newspaper article that may (or may not) have all the facts. For example, it appears that the BX in question has a reputation for post-issue underwriting, and rescission. If true, this is no less wrong than what Selah’s parents did; that is, the carrier is obliged to follow the rules, as well. What, if any, consequences ultimately befall the BX remains to be seen. The consequences for Selah appear to be self-evident.
The article doesn’t say whether or not Selah’s parents bought their policy through an agent, nor is it clear that the end result would have been different had they done so. But, having a professional, independent agent at least gives the consumer an advocate, one who knows the system, and can “work it” on their client’s behalf.
Let the firestorm begin…

Grand Rounds

Tundra Medicine Dreams hosts this week's 'Rounds, and does a fine job. In addition to the 47 posts, complete with useful summaries, there are beautiful and serence pictures of the Alaskan landscape.
David Williams, host of the Health Business Blog, has a provocative post on Electonic Medical Records, and especially about some EMR implementations.

Your Tax Dollars at Work

A controversial $1 billion federal program trumpeted as salvation for hospitals and others stuck with illegal immigrants' unpaid emergency care bills has largely gone unused

Controversial. That's a good word.

None of that money went to Stroger Hospital, Illinois' largest public hospital where 40 percent of its patients' bills go unpaid. However, hospital officials told the Tribune last week that they plan to put in for the federal money.

40% don't pay their bill.

Wonder how high gas prices would be if 40% of customers failed to pay their bill?

In the meantime, some say the money should go elsewhere.

Like maybe back to the taxpayers?

"Providing illegal aliens with free health care is an incentive for more illegals to come here," said Rep. Dana Rohrabacher (R-Calif.), one of the louder voices today calling for tougher immigration policies.

So THAT'S why they come here. For the free health care. I thought it was for the opportunity to earn a better living.

These hospitals are uneasy with the requirement that they document whether their patients are eligible for the federal money. It's an awkward process, the hospital officials say. They are told not to ask if someone is undocumented but to seek proof of birth outside the U.S. such as a driver's license, passport or birth certificate

Since it is awkward to ask personal questions of someone who is getting FREE health care, we better not do it.

Makes sense to me.

Monday, September 18, 2006

Money Monday!

This week's Carnival of Personal Finance is hosted by Flexo at Free Money Finance. He's done a terrific job, organizing almost 50 posts, and included helpful context and comments.
In a rare two-fer, my favorite item also happened to be one of his. We've blogged about outsourcing medical care overseas, and Flexo offers this post about traveling overseas for surgery.
WordNet defines "dork" as "a dull stupid fatuous person," and blogger okDORK certainly lives up to his (her? its?) billing. In a deliberately terse (and sometime obscene) post, okDORK "presents" what may well be the worst Carnival of the Capitalists yet. Instead of actually reading each post, perhaps organizing them, or even including some brief commentary, okDORK takes the easy way out, highlighting a handful of posts he actually deigned to read, and then simply posting links to the rest.
What's so disappointing about this is that okDORK seems proud of his poor work. With less than 30 posts to deal with, one would presume that this did not present an insurmountable challenge.
In any case, I liked this item from Vihar Sheth at Green Rising. Using Chipotle food services as a model, Vihar discusses business growth based on "conscience." Nicely done.

Sunday, September 17, 2006

An Apology, and a Thank You...

IB readers may have noticed a dearth of substantive posts by yours truly this past week.

I have been dealing with issues relating to aging parents (to which I allude in this week's Dispatch), and have had scant time to do any "real" blogging. A side-effect has been that I have been experiencing painful "net-withdrawal."

I'd like to take this opportunity to thank my co-blogger, Bob Vineyard, for his yeoman efforts, and his concern on my behalf. We tend to get so wrapped up in the issues of the day (or week) that we forget that the web, and especially the blogosphere, is about people. Those of us who have been in the insurance biz for any length of time recognize that this is a business built on relationships, far more than on product or prices. And so it is with blogging; it is hard to express the relief I found when, on the rare occasions recently that I have been able to log on, I have found interesting, provocative, and helpful posts already up.

Thanks, somarco!

And thank you, InsureBlog readers.

/maudlin off

Insurance Dispatch

In this week's column, now available at The Medical Blog Network, we look at how increased life expectancy also means increased costs. A new study by researchers at Harvard and the University of Michigan shed some interesting light on the subject.

Stop by, won't you?

Friday, September 15, 2006

Free Care = Bankruptcy

The board of Doctors Medical Center San Pablo/Pinole voted unanimously Wednesday to take the hospital into bankruptcy as a last resort to keep it open.


The hospital lost $1.5 million in July.


"There's no way we can meet payroll if we keep the ER open."

Ah! The money hole.


Later in the meeting, she declined Wallace's request to reconsider, after Hansen told her he could not guarantee the hospital would stay open if the emergency room closes. Managers long have identified the emergency room as a financial drain, because about 30 percent of the 47,000 patients it sees annually have no insurance

If even half those treated had cat cover perhaps the hospital would not be in this mess. Yet time and again we find those who would rather go naked than buy a plan that does not have low copays & deductibles.

Here are the demographics for San Pablo.

Cost of cat cover in zip 94806?

A 35 year old male will pay Health Net $75 per month for a plan that pays 100% of charges after a $4k deductible. That's about $2.50 per day.

A Package Deal...

It is my habit to pop home about noon or so, to get some lunch and let the dog out. One day late last month, I did so, and found a package waiting for me. The return address was enigmatic: HealthcareFacts, PO Box so-and-so, Minnesota, featuring an eye-catching, stylized cereal box. More interesting, perhaps, was that it was addressed to me, c/o InsureBlog.
Since I wasn't expecting any packages, I was intrigued, and proceeded to open it up. Inside, I found a cover letter attached to a glossy marketing folder, inside of which was information on a new type of transparency program. There was also a small cereal box, containing a granola bar and some more marketing info (well done, too).
Turns out, Blue Cross Blue Shield (BX) of Minnesota has designed, and now implemented, a different kind of consumer empowerment program, and they wanted me to know about it. I suppose, too, that they hoped that I’d help promote it. Indeed, I was invited to call and interview the woman who had designed it. Very heady stuff, and intriguing, as well.
So, pick up a box of cereal, a package of pasta, or a can of peas, and you’ll find a handy little chart on the side. This is the Nutrition Facts label, which tells us how many calories, which vitamins, how much salt is in that product (among other things).
What if we could get comparable information about that upcoming knee surgery?
That’s the premise behind “HealthcareFacts,” a fairly new, definitely unique effort from the folks at the aforementioned BX.
In the past, I’ve touted the “McDonald’s” metaphor when discussing health care transparency. That is, positing that prices for services be available, in advance, so that consumers know upfront what a given service will cost.
HealthcareFacts goes one (or three) better, by disclosing not just prices, but quality of care, outcomes, and more.
As long-time IB readers know, health care transparency has been sort of my "pet cause" for a long time, and I've interviewed a number of industry folks regarding it. This promised to be interesting as well, and so I began to read through the material. My goal was to formulate the questions which IB readers would like answered, in preparation for the interview. In this regard, I’d like to acknowledge the invaluable assistance of long-time IB reader John Fembup, who graciously took weekend time to help me with those. Thanks, John!
MaryAnn Stump, RN, is the Senior Vice President and Chief Innovation Officer of Blue Cross and Blue Shield of Minnesota. In deciding how I wanted the interview to go, it occurred to me that IB readers would be more interested in how the whole process of rolling out a new service would go - “what were they thinking?” - as opposed to just product information.
So I asked MaryAnn to tell me how she became interested in this concept we call “transparency,” and how she came to the conclusion that bloggers could help get the message out. Her first response surprised me: she likes blogs. And she was well aware of ours in particular, because of our interest in, and frequent articles on, transparency. So it seemed to her kind of a natural avenue to explore. She asked “how else could we be heard, with authentic information and perspective” other than through the blogosphere? One of her primary goals with this program is to “demystify the data;” that is, make the raw information meaningful to the consumer.
This perspective intrigued me. I asked her to tell us a little about herself, and how she came to be the Chief Innovation Officer of a large insurer. Turns out, she started her career as a critical care cardiac nurse and, in fact, continues to work as a “health professional who happens to also be a health provider.” One of her major issues is that of competency: she tries to bring the same skillset that helped her with the “predictable unpredictability of cardiac care" to the field of insurance. She’s been with BX for 16 years, and took over as CIO a couple years ago.
In Part 2 (now posted),we look at how HealthcareFacts is looking to change the way we look at our own care, how it’s funded, and our own role as consumers.

Thursday, September 14, 2006

Risk vs. Fantasy

According to the latest UBA survey, the average cost of providing insurance through employee benefit plans is $311 per employee per month. This is based on a survery of 13,663 health plans sponsored by 9,603 employers covering 3.52M lives.

What is significant is the cost per employee per month . . . $311.

Compare that to the MN plan to insure everyone for $190 per person per month, and the infamous CA plan (BS 840) who claims to be able to insure everyone for $95 per person per month.

The $311 figure comes from people who are actually MANAGING risk.

The other figures come from . . . magicians.

The $311 figure includes plans that have deductibles & penalties for out of network utilization.

The other figures are based on plans with no deductibles and free access to any provider.

Carriers are risk takers with years of actuarial data to support their figures.

Politicians are people who watch the polls and make statements that have little or no data to support their promises.

Carriers are accountable to regulatory agencies.

Politicians are accountable to no one.

No doubt, having health insurance without restriction for less than $100 per month is something all of us would like. Making it a reality is like pulling a rabbit out of the hat.

Wednesday, September 13, 2006

Cavalcade #8 is up...

Jay Norris, of Colorado Health Insurance Insider, hosts this week's edition of the Cavalcade of Risk. He's done a great job of organizing 14 posts, complete with interesting details. Thanks, Jay!!

I especially enjoyed David Williams' post over at the Health Business Blog, in which he examines how our parents managed risk "back in the day," especially since we're inundated with so much emphasis on safety.

The $2.5M Bite

In the summer of 2004, Jerry Ansley suffered a $2.5 million mosquito bite.
What started as a simple bite led to acute viral encephalitis and a bizarre onset of hemophilia that had doctors pumping Ansley full of a drug that cost up to $21,500 a dose.

The treatments saved his life. But he remains disabled and dependent on his wife, Kathie, for care. Now the Ansleys are being sued by the state-supported UNC Health Care system because they cannot pay their medical bills. They fear they will lose their home.

The Ansleys' story highlights both what is possible with modern medicine and the worsening problem of how to pay for it.

Note: I have written the reporter and am hoping to have more details to report . . . such as the name of the carrier . . .

After posting this article the reporter responded to my request and indicated the carrier was MidWest National of Tennessee. This carrier does not offer true major medical coverage, but limited benefit, hospital indemnity type plans with caps on reimbursement and little to no Rx benefit.

First You Are In, Then You Are Out . . .

Irene Greco knew she would have to pay from her own pocket to use the surgeon she wanted, rather than one in her insurer’s network, but she thought she knew how much the additional cost would be. She was wrong — by almost $5,000.

She had her operation at a hospital that was in Oxford Health Plans’ network. But Oxford, her insurer, says that because the surgeon was outside its network of doctors, the hospital bill as a whole would also be considered out of network, and therefore subject to less coverage

I have to admit, this is a new one on me. Hidden providers are a frequent occurrence, but have not (yet) experienced a claim where a network facility was adjudicated as non-par simply because you used a non-par physician.

Ms. Greco said, “It’s an unreasonable policy that an in-network hospital suddenly becomes an out-of-network hospital just because you use a different doctor.”

Officials at the hospital and the Healthcare Association said they had never heard of such a practice until she complained to them. They say they have since learned of a few insurance policies with similar provisions, but that in those cases, the rules are more clearly stated.

This deserves more research.

D. I. Study

Most of our focus is on health insurance and primarily individual coverage. Very little is said about disability mostly because it is an "oh by the way" topic. Very few agents lead with a disability insurance question and even fewer clients ask about the coverage.

A recent Harris survey reveals some interesting facts.

-- Nearly two-thirds (64 percent) of working adults place either their homes, savings/investments or car/boat/vehicle as most valuable assets, as opposed to income from work.

Reality check: The average salary of a white collar professional is $48,000, meaning a 30-year-old would earn nearly $1.7 million by retirement age. By contrast, the average price of a U.S. home is $264,000.

-- More working adults (42 percent) would rely on savings to make ends meet than on any other resource through an extended disabling illness or injury.

Reality check: The average American family maintains just $3,800 in savings. In fact, the U.S. Department of Commerce reported that Americans actually spent more than they earned in 2005 - something that hasn't happened since the Great Depression.

-- The overwhelming majority of workers (97 percent) believe some level of disability income replacement is necessary. Ironically, just over a third (37 percent) has the coverage.

Reality check: Disability insurance is a very affordable employee benefit. For every dollar an employer spends on benefits and compensation, an average of 6.7 percent supports health insurance, 0.2 percent supports life insurance, 0.2 percent supports short-term disability and 0.1 percent supports long-term disability.

-- Nearly half of U.S. adult workers (47 percent) thought income replacement coverage for one year or less was adequate.

Reality check: Industry experience shows that the odds are as high as 1 in 3 of missing at least three months' pay due to injury or illness. Once an individual has been disabled for 90 days, the average length of disability is two years.

-- Of those surveyed who carry disability insurance, nearly two in five (37 percent) did not understand that this benefit would replace a portion of income and help pay for monthly expenses.

Reality check: Disability insurance can provide a level of income replacement of 50 percent to 100 percent.

Bob Taylor, executive director of a new disability industry organization, the Council for Disability Awareness, sees the lack of awareness about the growing potential of becoming disabled as a real issue for many workers and their families. "The likelihood of becoming disabled is on the rise for working Americans while the financial consequences are growing more severe," Taylor said. "Most working folks either don't realize or grossly underestimate how vulnerable they may be."

Discount Plan Crack Down

We have posted on the non-insurance discount plans before but it is one of those topics that too much cannot be said. In an effort to save money, people will buy these plans based on a smooth pitch that makes it sound like the best thing since PB&J.

Some states have outlawed the plans altogether while others are attempting to reign in the plans and provide some form of accountability. The NAIC has addressed the issue of discount plans. Here is a summary.

The Discount Medical Plan Organization Model Act establishes a comprehensive regulatory scheme for discount medical plan organizations, enabling state regulators to track the organizations and ensure that they are legitimate and not fraudulent in their claims.

The model, crafted by the NAIC Health Insurance and Managed Care (B) Committee’s Discount Plan Working Group, introduces uniform disclosure requirements to help eliminate consumer confusion about what they are buying, making it clear to consumers that the coverage is a discount program and not an insurance policy.

As it now stands, most of the attempts to regulate these plans have fallen on the A.G. in each state to prosecute as a criminal act. In some cases, the plans have been forced to make cursory disclosures in sales literature and on web sites. The problem comes more in the pitch, particularly one that is made over the phone by some fast talking salesperson in a boiler room. No waiting period, immediate coverage, no deductibles, no cap on benefits, no health questions, pre-existing conditions are covered. Sign up today before the price goes up tomorrow.

The model act creates uniform marketing and advertising requirements to ensure that consumers are not subjected to high-pressure sales tactics or provided fraudulent or misleading information. Administrative actions and civil and criminal penalties may be imposed by the state against any organization that is involved in such fraudulent or deceptive practices.

In addition, the model act requires the discount plan organization to not only contract with a network of service providers, but also ensure that its network is adequate to meet the needs of consumers enrolled in its plan. The organization also must maintain a Web site with an updated list of providers under contract that accept the discounted payment.

Nice thoughts, but as long as there are gullible people I don't expect things will change much.


Dr Rob Lamberts, writing at The Medical Blog Network, has some disturbing news about physicians' access to their patients' EMR's (Electronic Medical Records). Apparently, a number of physicians (and, presumably, other providers) electronically offload their patients' medical info to vendors, who then host the files for them.
The benefits of this technique are, presumably, cost- and security-related, which makes it an attractive option for non-geek doc's. If you're not buying, maintaining, and servicing computer hardware, you've got extra money and personnel available for, well, doctoring.
The problem about which the good doctor reports is that some doc's have fallen behind in paying their vendor's bills (or flat-out refuse to do so), and said vendor's are then withholding access to the records. The doc's call that "extortion;" the vendors, presumably, call it good business sense.
Physicians are quite unhappy with this arrangement, but there is precious little they can do about it: it's all perfectly legal. And why not? If I don't pay my insurance premium, I can hardly complain when my claim goes unpaid. Still, this tends to harm the patient as much as (or perhaps more than) the doc; after all, whose health is put at risk?
I suspect that Dr Lambert will be following this story for a while, so we'll keep you posted.

Tuesday, September 12, 2006

Grand Rounds...

Blogger Amy, over at Diabetes Mine, presents an outstanding and uniquely creative Grand Rounds. In celebration of matriculation, she's fashioned her 'Rounds after a college student's emails home. It's a terrific metaphor, well executed.
I never gave much thought to the role and training of hospital chaplains. I just assumed that one's Minister, or Priest, or Rabbi would drop by to offer spiritual encouragement. But Susan, hostess of Rickety Contrivances of Doing Good blog, reports that there's quite a debate about the subject.

A Quick Blip from the P & C World...

We don't write much about the Property and Casualty side of the insurance business here. But once in a while, it can be pretty interesting (I'm sure there are folks who believe that it's interesting more often than "once in a while," but they can get their own blog).
Special Event insurance is just that: coverage to protect one from a sudden loss during some unusual activity or promotion. Think "$1 million Hole In One Contest." That kind of thing.
Not being much of a football afficianado myself (although all three of my girls were glued to the OSU/Texas game this past weekend), I was unaware that "Da Bears" had shut out the Green Bay Packers in the teams' season opener. As disappointing as this must have been for the "Cheeseheads," it could have been catastrophic for one Chicagoland merchant:
Store owner Randy Gonigam stood by his promise, and stood to lose almost $300,000 to boot. Fortunately, he had purchased a Special Events policy "just in case."
Good on him, and Congrats to Da Bears.

Carnival Monday on Tuesday...

Note: Because we chose to honor the victims of 9-11 yesterday, I'm posting this week's financial carnival notices today. Thanks for your understanding.
This week's Carnival of Personal Finance, hosted by No Credit Needed, includes 40 posts. They're all neatly categorized, but - alas! - no helpful 'blurbs.
We've talked about Section 125 plans here at IB; this post, by Daniel at My Money Path, has a consumer-friendly explanation, as well.
BONUS: Although it's not in the Carnival, Joe's post at Roth & Co, on a humorous lesson in time (mis)management, is a must-see.
And the Carnival of the Capitalists is up, as well. Joshua Sharf, blogging at A View From A Height, presents over 50 posts, each with some helpful comments.
I found this post on college tuition to be quite interesting. Boring Made Dull explains what drives the increasing cost of a higher education.

Monday, September 11, 2006

In Memoriam: Jerome Robert Lohez

As regular InsureBlog readers know, my better half has long maintained that “there are no coincidences.” That is, she believes that everything happens for a reason, although we may not be aware just what that reason is.

As for me, I’ve gradually become 90% convinced that she’s right on this (in everything else, of course, she’s 100% right). But one evening, a few weeks ago, that all changed.

I have a confession: My name is Henry, and I’m a news junkie. It is my habit to stay up way too late reading news blogs. Which I was doing several weeks ago, when I came across an item about one man’s extraordinary effort [ed: back online] to harness the power of the blogosphere, in tribute to our fellow Americans who died in The Towers, exactly five years ago today.

The concept was deceptively simple: 2996 victims, 2996 blogs, each one remembering a single person. Bloggers were invited to sign up, and each was assigned – at random – one name.

Stop for a moment, and consider this: one blogger, reading one news item, decides it’s the right thing to do, signs up, and is assigned the name of a person he’s never even heard of, let alone met. We’ll come back to this shortly.

And so I was assigned the name of Jerome Robert Lohez, given a photo of him, and told the briefest of biographical information: age 30, lived in Jersey City, New Jersey.

That was it. A name, a face, a place.

The assignment was simple: On September 11, post his name and picture.

But I’m a news junkie, and that wasn’t good enough. I had to know more about Jerome. So I Googled his name (hey, why not?) and came across a site that CNN put together in December of ’01. It had pictures and names, of course, but I also learned that Jerome, born in France, married Dening Wu some three years before The Towers fell.

One month before The Towers fell, Jerome got his Green Card, and the happy couple flew to Europe to celebrate with his family. When they got back, two days before The Towers fell, Jerome told Dening “Only in New York do we have so much sunshine."

That was Sunday, September 9, 2001.

On Tuesday morning, he left for work. And The Towers fell.

And now we've come full circle: One. Random. Name.

Jerome didn’t just work in The Towers. He worked for Empire Blue Cross and Blue Shield. He worked in the insurance industry.

90% doesn’t cut it anymore.

Thank you, Jerome, for the lives you touched, the joy you brought, your love for New York and America, and for the privilege of paying you tribute.

Au revoir, Monsieur Lohez, au revoir.

Sunday, September 10, 2006

Insurance Dispatch

The latest Dispatch is up at The Medical Blog Network. This week, we take a look at two recent surveys - one from Harris/Kronos and the other from Aetna - about how employees view the value (and importance) of their benefits.

Please take a gander.

Programming note: Tomorrow marks the 5th anniversary of 9/11, and we'll have a special post up all day in commemoration.

Saturday, September 09, 2006

Shoe, Meet Other Foot...

I’ve had the privilege of interviewing some interesting people here at IB. Recently, though, I was asked to be interviewed, by a very nice fellow with Health-Leaders. Seems they’ve been following our items on some insurance agent shenanigans, which dovetailed with their own investigations of same. The H-L folks got to wondering how the agent community was reacting to the story, and to the ethical ramifications of the situation itself.
Briefly, several agents (and agencies) agreed to help local school districts shop for their group insurance. They were paid a fee by these public entities, and charged with finding the best plans at the most attractive rates. Unbeknownst to the school districts, the agents were also paid commissions (and apparently bonuses) by the carriers, essentially getting paid twice for the same work. When the districts found out, they cried foul, and the agents now face disciplinary action (if not firing squads) by the State of Ohio.
The folks at Health-Leaders have been avidly following the money trail, and the legal one. Apparently, we’re one of a very few blogs that’s been paying much attention to this story, so they thought we’d be a good resource. They wanted to know how the agent community felt about how the Insurance Department handled the disciplinary aspect, and what we thought about the ethical ramifications of the process.
The first question was simple to answer: (sound of crickets chirping). That is, for the most part, this whole sordid mess has been under the radar, and/or ignored. There’s a reason for this: by and large, insurance agents are surprisingly good at avoiding reality, even when said reality threatens to directly impact our own wallets (and this story didn’t meet even that threshold).
The second question gets a little tougher: what, exactly, are the ethical (as opposed to the legal) issues in play here? Not being a lawyer, I’ll pass on the legal aspects; since I teach a Continuing Education course on insurance ethics (not an oxymoron, really!), I believe I’m qualified to weigh in on the ethical ones, at least from the agents’ perspective:
There really aren’t any.
In all of the brouhaha, I have not read that any school district or DOI representative have claimed that the agents did not do their job, or did an inadequate one. In fact, it appears that the districts were quite pleased with the results. Yes, the agents apparently “double-dipped,” which strikes me as incredibly stupid (not to mention, greedy), because it invites close inspection and engenders doubt. But stupid is not the same as unethical, as least insofar as the school districts were concerned.
Now, there is one item that, if true, seems to me to fit the criteria of “unethical:” allegedly, one of the agents demanded extra compensation from the carrier, and requested “that the payments not be called commissions (his contract with the district prohibited commissions) but rather be an "override, or some other form, like consulting." This would be deliberately hiding the fact that he was being paid the additional compensation. Fine line? You bet.
One thing I’d like to make perfectly clear is that I hold no brief for the agents or their actions. Frankly, I find what they appeared to have done to be reprehensible, greedy and obnoxious. It bothers me that we’re even in the same industry. If the facts, once they are exposed in court, corroborate the media accounts, I hope that they are punished to the fullest extent of the law.
But it’s also important for folks to understand that ethics are something not to be taken lightly, nor interpreted “on the fly.” There are specific, identifiable principles at work, and I want to make sure that IB readers understand that most agents do take our positions of trust seriously.
I’ll let you know when the article gets published (forgot this was about my interview, didn’t ya?).

Friday, September 08, 2006

BS 840 and the Canadian Auto

I don’t have a dog in this fight, so what happens in CA makes no difference to me. What does amaze me is the number of folks who have no clue about the dynamics of health insurance, and have been sucked in by the propaganda of those in favor of BS 840.

Here is an editorial comment from one such individual.

Annual health-care expenditures in California from all sources now exceed $184 billion, with 19 percent consumed by administrative costs. By slashing these costs and utilizing the state's purchasing power to buy prescription drugs and medical equipment at reasonable prices, studies conducted by the Lewin Group, a health-care management consulting firm, project the system would provide high-quality care and result in savings of nearly $8 billion in the first year alone, and $345 billion between 2006 and 2015.

While I have always challenged the reputed admin figures, let’s assume for a moment they actually CAN save 19% in admin costs. What happens in 2 years when medical inflation wipes out those savings?

And for anyone who is keeping track, saving $8B “the first year alone” is only 4% of the $184B reportedly spent by Californians on health care.

So what happened to the massive savings that have been touted by promoters of BS 840?

But the plan is vulnerable to conservative counterattacks, including cheap shots from the health-care industry, which has been predicting a calamity if universal health care is adopted

Cheap shots, huh? Using your own figures to call in to question the validity of the plan is a cheap shot?

Many troubled companies in California need single-payer health insurance because their biggest foreign competitors have some form of national health insurance -- plans that cover all of their citizens at costs far below what Americans and the companies they work for are now forced to pay.

So, having a single payor health system, with 4% projected savings, will offset the $3 per hour wages being paid by foreign competitors.

Sure. I believe that.

Ford and Daimler-Chrysler's Canadian units, for example, have found that Canada's single-payer health insurance system covering their workers significantly reduces total labor costs by at least $1,700 per car, according to Ford CEO William Clay Ford.

That must be why there are so many Canadian cars on the roads now.

I sure am glad this is starting to make sense. For a moment, I thought it was just me . . .

Would You Like Fries With That?

Half of the people Dr. Charles Hickey sees at his Columbus ophthalmology practice are Medicare patients. He makes little money on them, he says, because Medicare pays at or below his costs. Hickey, however, makes a profit when he performs surgery and sells eyeglasses. He plans on increasing this side of his practice. The Centers for Medicare and Medicaid Services have proposed cutting payments to doctors next year by 5.1 percent. Hickey and other physicians have done the math. Right now, many have quit adding Medicare patients or are cutting them. More are planning to do the same.

And many are turning to moneymaking procedures, such as cosmetic surgery, or are selling products, including beauty aids.

"I really didn’t spend 12 years in school to sell glasses, but that’s half our income right now," he said.

Medicare is 40 years old and showing signs of aging. What was once considered an alternative to high-priced health insurance from carriers is now coming apart at the seams. Not only is Medicare charging beneficiaries more and covering less, many providers are scaling back on the number of patients they will treat who have Medicare.

Others are hawking wares on the side to make up for the losses associated with treating Medicare patients.

Dr. Mary Beth Mudd, a family physician in Westerville, added a separate practice a couple of years ago to provide "nonsurgical beauty medicine," including Botox injections, laser skin-resurfacing and hair removal.

She said she spends 20 hours a week being a doctor — delivering babies, treating sick and chronically ill patients — and spends the rest of her time devoted to the cash-generating side of her practice.

Patients pay $200 for a 15-minute laser session to remove spider veins and $2,000 for six treatments of mesotherapy — injections to remove fat and cellulite.

Mudd said the beauty side of her practice is lucrative.

"If I saw a lot of patients in the … (beauty) practice, I got paid," she said.

Many docs have not only expanded the products & services offered on premises, but have moved in to other, non-related industries. One pediatrician who is a family friend started importing & selling oriental rugs (although that may not be the policitcally correct term any more) and did so well he abandoned his practice altogether.

The times are a-changin'

Thursday, September 07, 2006

Cavalcade #8 - Submissions Due

Just a reminder that submissions for the next C of R are due on Monday (the 11th). Jay at Insurance Shoppers would love to see your work. You can submit entries:

■ via email

■ at Blog Carnival


■ at Ferdy's

PS: We're still looking for hosts. If you'd like to host a future edition, just drop us an email.

News From Up North

Alberta's ban on buying private health insurance for medically necessary procedures is being challenged by a constitutional watchdog group.

The privately funded Canadian Constitution Foundation said Wednesday it is funding a class-action lawsuit and a statement of claim will be filed in Calgary on Friday.

So what? The taxpayer funded, government run system isn't good enough?

The lawsuit will argue that Murray and other Albertans have a charter right to buy private insurance that could be used for things such as high-quality hip replacements.

Do I dare ask what a "low quality" hip looks like?

"Albertans don't want a system where rich people can buy their way to the front of the line while the rest of us sit and suffer."

Of course not. Then it would be too much like the U. S. system.

Health Insurance Garage Sale

Blue Cross and Blue Shield of Minnesota wants the state to make health insurance a legal requirement for all Minnesotans.

The proposal could cost the state up to 911 (m) million dollars per year to extend coverage to its nearly 400-thousand uninsured residents.

$911M to cover 400k uninsured = $2277 per person per year.

What MN needs to do is buy the insurance from CA. The folks who are pushing BS 840 are counting on covering 7M uninsured for $8B . . . about $1142 per person per year.

Health Wonk Review: 15th Edition

Greetings fellow wonks (and wonkettes), and welcome to InsureBlog. Along with my (thus far) unindicted co-conspirator, Bob Vineyard, we try to make insurance understandable, or at least bearable, to our fellow denizens of these tubes.

Regular readers know of my food fetish; what most folks may not know is that I have my own personal food “guru.” And so, I’ve decided to merge these two seemingly disparate phenom’s into a smorgasbord of possibilities (click the "" buttons for a treat).

HWR is served:

ESI at HR Web Café writes that in the anniversary aftermath of the public health debacle that was Katrina, Human Resource managers learned some important disaster planning lessons, including the need to be alert to workers suffering Post Traumatic Stress Disorder.

HR heavyweight Peter Rousmaniere, writing at Working Immigrants, discusses how Wal-Mart is becoming the banking intermediary of choice for Mexicans living and working in the U.S. Scary and timely.

Over at Worker’s Comp Insider, Jon Coppelman offers some management lessons, Ghengis Khan style. Incredibly, there are lessons to be learned from the man who led the Mongol hordes.

Our friend Joe Paduda, posting at Managed Care Matters, questions the criteria used by some industry groups for assessing quality. He notes that doing too many procedures on relatively healthy patients can greatly improve outcomes, resulting in fancy awards and big bucks for the procedure-doers.

Associate Professor Dr Roy M. Poses blogs at Health Care Renewal. In a post that seems related to Joe’s, Dr Poses tells us that primary care doctors are now under the gun to submit to various pay for performance programs. Noting that a particular pharma company recently pled guilty to a criminal offense, he asks if the new slogan for our health care system ought to be "pay for malfeasance?"

Meanwhile, over at the Health Business Blog, David Williams argues that bias isn’t always a bad thing. Citing a recent article on FDA Advisory Panels, David posits that consumers have a bias toward cost control, and that’s a healthy attitude.

InsureBlog’s own Bob Vineyard avers that taxing smokers is one way to help pay for health care, but wonders if that’s a good thing. He asks if targeting one lifestyle choice for special taxation might not lead down a slippery slope.

Dr R Craig Lefebvre blogs On Social Marketing and Social Change, which is providential, as he takes a look at mobile technologies, their current use and promise in public health and health behavior change programs.

Another PhD, Adam J. Fein, hosts the Drug Channels blog. His post examines the "demand side" problem of drug counterfeiting, asking how we stop pharmacy buyers and consumers from purchasing outside of a theoretically secure supply chain?

This post, from Carol Kirshner at Driving In Traffic, discusses recent news that Wellpoint (one of the nation's largest insurers) has announced that they will be providing a wide range of consumer-driven health plans, from the individual to the large corporation.

Medblogosphere biggie Matthew Holt, host of The Health Care Blog, alerts us to a recent study by David Cutler, which suggests that increased spending on health care is “reasonable value.” Matthew believes that the report was destined to be used as propaganda, and wonders whether Cutler intended just that.

In what may be a harbinger of things to come, we have PhD student Jason Shafrin on board. Jason helms the Healthcare Economist blog, and wonders why some employers hesitate to offer generous health insurance benefits. He hypothesizes that when a firm offers a generous insurance package, it may attract sicker workers, driving up the cost of the firm's health insurance.

Last, but certainly not least, Medical Blog Network founder Dmitriy Kruglyak brings us exciting news about a new Medical Blog “Widget” program, and also updates us on the Healthcare Blogger Survey.

I’ve certainly enjoyed hosting duties this time around, and encourage you to catch the next episode, on the 21st, over at The Century Foundation.