Paying Medical Bills

A recent blog post by health care business consultant and policy expert David E. Williams suggests that medical bills are not paid because people do not understand them (as cited in a recent report by the Consumer Financial Protection Bureau). He then admits that “[e]ven though I’ve been working as a healthcare business consultant for more than 20 years, I don’t understand my bills either” and then lists several reasons for this misunderstanding. With all due respect to David, let's dissect this:

1) Providers send bills while insurance claims are still pending, so I don’t understand whether I’m being asked to pay the right amounts

In today’s modern medical offices, even those without EMR (electronic medical records), practices have Practice Management software which electronically bills insurance companies through organizations called clearing houses. When the provider receives the Explanation of Benefits (EOB) from the insurance carrier, the payment or if the patient owes is entered into the software and then a bill for the patient is generated based on the information from the insurance company. A provider would not bill while an insurance claim is pending as the software is not designed to generate a bill before the insurance information is entered. When you are billed by the provider, it is the correct amount.

2) Explanations of benefits from my health plan aren’t timely and aren’t informative. The services described sound completely generic and are hard to trace back to the provider bill

Your EOB should match the bill you receive from your physician’s office. Also, after the visit you the patient should receive a statement detailing your services, both the ICD-9 and CPT codes you were charged, the amount of money charged by the physician and any payment you made, such as a co pay or co insurance.

3) We now have a high-deductible plan and are being asked to pay more by our providers, but I’m not confident that providers are correctly taking into account our out-of-pocket maximums on an individual and family basis

As a medical practice manager, I am astounded that someone that purports to be a health care advisor would make such an inflammatory statement about medical providers. Going back to point one, the provider bills only after receiving the information from the insurance company on the patient’s portion. It is not any provider's responsibility to keep track of a patient’s deductibles, that is the patients responsibility and it is between the patient and the insurance company.

4) Providers aren’t coding claims in line with the Affordable Care Act or insurance company rules, resulting in incorrect out-of-pocket amounts

Mr. Williams then cites another post in which he discusses the “free” services to be offered by the provider, such as preventive care annual physical or the “free" screening colonoscopy. This is an oft misunderstood aspect of medical care: these services *can* be paid at 100% *provided that* the exam is purely a review, and there are no diagnostics, tests, labs etc. The minute you say, “by the way doc, my arm hurts when I do this”, it is no longer a preventive exam, it is now diagnostic and your deductible and/or co-pays will apply. Now, the logical question is, isn’t talking to the doctor about things that hurt the whole reason for seeing a doctor? Yes it is, but hey I didn’t make up the rules, I only follow them. So providers are not incorrectly coding, we are coding what actually happened.

5) Few providers (at least around here) allow online payments. I have to either call the office during work hours or mail in a check –both a hassle

Really, David? Many (most?) banks now allow for on-line bill-paying, no reason you can't set that up to pay for health care, as well. Heck, if you're on an HSA-compliant plan (as it appears you might be), you could even pay those bills from your HSA account.

This article is a rehash of every complaint I have heard in my 15 years working in health care. Why is paying your doctor any harder than paying your cable bill or your credit card bill? It is an expense you incurred of your own free will when you went to see your doctor. You know that you will receive a bill, especially with the average deductible north of $2500, and yet each patient is always surprised when the bill arrives in their mail box: “Is this the correct amount?” or “Have you billed my insurance company?” or “The doctor said he wasn’t going to bill me. My favorite is “I don’t think I should have to pay: 1) for my healthcare, or 2) such a high amount”. I have heard every excuse and reason not to pay a medical bill, and in my experience the provider is correct 90% of the time.

Silly Interweb Insurance Info

So I log off email, and see this link on the home page: "Seven Insurance Policies That Aren't Worth the Money." Intrigued, I click over, curious to see what profound wisdom is to be had.

Turns out, not much.

Here are the 7 policy types, a brief description of each, the author's take, and my own:

1. "Mini-Med" Insurance

The agent quoted here is not a fan of these policies, claiming that "(b)uyers should know that these policies are best used for minor cuts and scrapes." While I know that there are some cases where this is true, I think this brief and arrogant dismissal misses the mark: for some people, this may be the only kind of coverage for which they qualify or that they can afford.

2. Accidental Death and Dismemberment

I agree with the article that these are - at best - a waste of money. I'd also add that the AD&D rider on life insurance policies has never made sense to me, either: dead is dead, regardless of cause. And how does it make sense that your wife needs more cash if you're hit by a bus than if you die of cancer?

3. Divorce Insurance

The article's agin it; I've never even heard of it. Of course, I hadn't heard of virginity insurance before, either. The idea is that a couple buys the policy and, if they get divorced after 4 years, they get some quick cash. Uh-hunh.

4. Comprehensive or Collision Coverage for Old Cars

I'm not a P&C guy, so I asked my friend Bill M for his take. Bill's a 30+ year industry veteran, a CIC and independent agent. Here's his take:

"I advise customers to consider dropping comp and collision when the value of the vehicle hits $ 3,000 or less. At that point a minor fender bender can total your car. You also need to look at the premium charged versus the potential benefit in that decision."

5. Car Rental Insurance

Again, we turn to P&C guru Bill M:

"As far as the car rental insurance goes, you need to check your rental contract to see if you are responsible for loss of use or diminished value, two items not normally cover by your own auto insurance.

If you are going out of the country you need to check that your coverage extends to where you are going.

All of these items should be discussed with your insurance agent about your specific policy."

6. Term Life Insurance

Is term insurance really a "big waste of money" as the article claims? No more than auto, home or health insurance are: none of those pay off if you don't have a claim, either. I agree that it's often not the best choice ("permanent needs require permanent solutions" as my own mentor used to say), but if you think it's really just money down the rat-hole, consider a Return of Premium plan.

7. Mortgage Insurance

First, there is no such thing as "mortgage insurance." That's simply a marketing wrapper for folks who don't want to buy "life insurance." Second, there's no industry-standard definition of what one means by the term. The article uses it to describe a term plan that's payable to the lender. But you can make any insurance policy payable to pretty much anyone you want to. Back in the day, "mortgage insurance" was a euphemism for "decreasing term life;" that is, the face amount ostensibly declined along with one's mortgage. The premium stayed the same, though, meaning the coverage got more and more expensive with each passing year.

As they say, YMMV.

Hey Scooter!

Well, scooters, to be precise. As in, those now-becoming-ubiquitous motorized units one can rent on the fly. Well, as with much new transportation tech, new insurance issues arise.

The folks at the Insurance Information Institute  alerted us to a story focusing on the question of how or even whether these scooters, and those who rent them, will be covered in the event of an accident:

"An e-scooter company’s insurance policy might not cover a user in the event of an accident. Many e-scooter companies also require users to assume all liability arising out of their e-scooter use."

Okay, that makes sense; after all, Hertz isn't responsible when one of its customers totals someone else's car. But auto insurance generally covers that (as usual, always confirm this with your own agent ahead of time). How does this apply to renting one of these little guys?

I reached out to our guru of P&C, Bill M, asking:

This is about those e-scooter (like rental bikes, but motorized). Specifically, I'm curious about:

"An e-scooter company’s insurance policy might not cover a user in the event of an accident. Many e-scooter companies also require users to assume all liability arising out of their e-scooter use."

And

"Whether a user’s personal insurance would cover any third-party liability arising out of an accident they caused or contributed to depends on the specific terms and conditions of their policies."

So for example, if I rent a bike (you see these at UD, etc), and hit someone, how would this be any different, liability-wise?

And:

"Personal auto: A standard personal auto policy excludes liability coverage for a vehicle with fewer than four wheels"

So I'm wondering if there's any coverage at all. And not just liability: what if I rent one of these and wreck it? Am I on the hook for replacing it, or will my insurance step in?"

To which Bill graciously replied:

"Spoke with one of my carriers and they said that we would cover this under the auto policy.  This would require each individual to ask their home and auto carrier specifically.

They said they would treat it just like a leased auto in extending coverage.

Just keep in mind it is one company’s opinion."

Of course!

This specifically caught my eye:

"...treat it just like a leased auto"

As I told Bill, "Okay, that surprises me: it makes actual sense."

Again, please make sure to check with your own agent before pulling clicking "Yes."

Bond, College Bond

Readers may recall our post last month regarding the plight of Oberlin College in Ohio. At the time, they had just lost a lawsuit brought against them by a local bakery that the college had apparently victimized. As we noted at the time, the institution's insurers may balk at covering it at all:

"[I]t appears that the insurer, Lexington Insurance Company, is likely to disclaim coverage for the intentional torts which gave rise to the verdict."

But wait, it gets better (well, for certain values of "better"):

"Will Oberlin College be able to secure a bond? Probably, but it might not be as easy as you would think."

What's this about a bond, you ask?

Well, as expected, the college is appealing the rather large judgment; the challenge is that such appeals take a while, and the interest alone on that sum is over $4,000 a day. The Gibson family is concerned that Oberlin might metaphorically "bleed out" and have nothing on which they can collect:

In Ohio, folks (and institutions) that wish to appeal an award are free to do so, but must post a bond which essentially guarantees that the amount will be paid if the appeal is lost. It's important to note that, as our good friend and guru of P&C Bill M points out, a bond is not an insurance policy, but a 'financial instrument.'

Okay, so what?

Well, in the post we excerpted above, it's claimed that the carriers "writing these appeal bonds want to take zero risk."

Which is kind of the anti-thesis of insurance, which is acknowledging and underwriting for a specific risk. In this case, the carrier(s) will want to have some pretty substantial collateral to back up their guarantee of such a large sum. This could be in the form of cash (as in the school's endowment), and/or buildings and equipment. The point is that, unlike a typical insurance policy, these plans are not risk-based.

That may yet prove to be critical.

[Special IB thanks to Bill M for taking the time to help us understand this]

Stupid Client Tricks: P & C Edition

So, your car sits idle (but hopefully not idling) 22 hours a day. Your car payment and insurance meters, though, run 24/7. Wouldn't it be great if there were some way to turn that down-time into cold cash?

Turns out, there just might be, but there's a catch. Actually, there are a lot of catches.

Here's the scoop:

Yesterday's McPaper featured a front-page item on "personal car-sharing:"

"Seeing a business opportunity in millions of cars that sit idle at office parking lots or on weekends, several start-up companies have introduced "peer-to-peer" car-sharing services ... Renters pay typically $5 to $15 an hour for a car in their neighbor's garage or office parking lot."

It goes like this: Jim's newish Saturn sits in the parking lot all day, and Bob needs to run some errands out in the 'burbs. Bob signs up with (for example) Getaround, to which Jim is also subscribed (as a vehicle provider). Getaround charges Bob $10 an hour for the use of Jim's car, which it then splits with Jim. Win-win-win.

Or is it?

This is a blog about insurance, after all, and there are a host of issues with this seemingly simple and convenient new business model. Unlike a regular rental car service, Getaround doesn't own the vehicles. And since these are private passenger automobiles, they're covered by private passenger automobile insurance. Thanks to my friend Bill M, I was able to score the relevant portions of a typical auto policy (YMMV):

"Exclusions:

... to any automobile while used as a public or livery conveyance." [emphasis added]

Now, this doesn't apply to "ride-share" or other car-pooling arrangements. But the Getaround model isn't a car-pool: you're renting out your car, and that changes the risk in a myriad of ways.

When you bought your policy, you agreed to the coverages and exclusions in the policy, and also to your own (minimal) obligations, one of which is to inform the carrier of a "material change" in the risk. Those of us with teenagers are well-aware of how this works: you can't just neglect to tell your insurer that your 16 year old son is now driving the family station wagon minivan and expect them to pay up with no fuss when it gets totaled. Likewise, renting out your car to someone you've never met (and will probably never even see!) is a dramatic change in the nature of your insurance policy's risk.

Which then raises all kinds of issues:

First, let's say that you've already bought insurance, and then you sign up with Getaround. If you call your agent and tell him, the likelihood is that the policy's going to be canceled, because you now need a commercial lines plan.

Let's say you don't call him: what are the odds you're going to be a happy camper when Bob totals your car into the side of a schoolbus full of elementary students?

Then there's this: you've now dramatically restricted your ability to shop around for new coverage. Again, if you don't tell the new carrier, then you've lied on the application (a bad idea, and a felony). If you do disclose it, you're going to be looking at some major premiums for a commercial policy.

California recently passed (and Oregon is poised to pass) a law forbidding carriers from dropping drivers who engage in car-sharing. That seems great on paper, but again, Bill M points out that this will have one of two outcomes: either carriers will flee the state, or they'll raise everyone's premiums to make up for the increased risk.

At least one of the carshare companies provides liability coverage to the renters. That's nice, but anyone that thinks that the parents of the kids in the aforementioned schoolbus aren't going to be coming after the car's owner is definitely inhaling.

In perhaps the stupidest comment I've read in a long time, Getaround's CEO avers that "[o]wners' insurance carriers are not liable for anything that happens during the sharing period. Consequently, it should be no impact to owners."

Rotsa ruck with that, Mr Zaid.

Helping Sarah Kliff Solve Her Medical Bill Issue

Former WaPo Wonkblog health policy writer Sarah Kliff is a huge proponent of Obamacare and the expansion of health insurance. She's also been a recipient of excellent employer sponsored insurance benefits. Sarah has a problem. Here is what she tweeted:

2/20 at 11:27am
Sarah Kliff ‏@sarahkliff
Received today an $820 medical bill that I was not expecting nor can I decipher because American health care.
 
2/20 at 11:35am
Sarah Kliff ‏@sarahkliff

I've never tried to negotiate down a medical bill before, but excited for this new personal and professional adventure! 

Sarah, please allow me to help you out.

First, you can't blame the American health care system as the reason for not being able to understand the bill. It's probably an issue with the coding - the little thing called ICD-9 soon to be ICD-10 that you wrote about just a week ago. If the coding was incorrect then the insurance company might have pended the claim until additional information was received.

 

Second, since the bill came from the provider my guess is that the $840 probably is retail charges. Having insurance provides you with a discount on the service. There are a few other things that could have caused you to receive the bill.

• Could it be that the service isn't covered under your plan?
• Could it be that you went to a non-network provider?
• Could it be because your plan has a deductible that you haven't met yet? 

You need to find an EOB that matches up to the bill you received. You should also review your SBC to make sure that the healthcare service was covered under the plan. 

These are the questions a professional advisor would be asking you. From there we would take your bill and your EOB and work with your provider and insurance company to have the claim fixed. It is NOT an easy process - something I'm sure you are finding out.

Bad news: A P&C case study

Our friend Jeff M sent along the link to this sad story:

"Owners and renters in North Carolina say they were left in the dark after a beach condominium community suddenly shut down. The condos were condemned Friday, after an engineering report found that the property has dangerous structural issues."

It's not clear whether the owners will be allowed to retrieve their personal property.

Okay Henry, that is a sad story, but what's the insurance angle?

Well, Jeff asked if the owners' condo policies would cover this situation. As usual in these cases, I turned to our good friend (and P&C guru) Bill M. Now keep in mind that his answers are specific to Ohio, but that it's likely that they'd also apply in other states.

Basically, the owners are out of luck.

Now, why is that?

Well, Bill taught me a new phrase, and suggested I use it whenever I'm looking at these kinds of (potential) claims: "cause of loss." That is, which circumstances are specifically covered, and which are specifically excluded.

So here's the relevant exclusion:

(4) (a) wear and tear, marring, scratching or deterioration; (emphasis added)

So the "cause of loss" is specifically excluded. Which is a double whammy: the owner now has no place to live, but the bank still wants their mortgage paid off, and there's not going to be a check from the insurance company to pay off the old place, or pay for a new one.

But what about their personal property (clothes, appliances, furniture, etc)? Well, they're likely outta luck there,  too:

(1) Enforcement of any ordinance or law regulating the construction, repair or demolition of a building or other structure, unless specifically provided under this policy

The "cause of loss" here would be the government forbidding the owners to retrieve their belongings. So again, no insurance to pay for replacing them.

Yikes.

Health Care Town Hall - West Hartford CT, Sept 2. Part I

Here’s a summary of my notes from the Town Hall meeting on health care, hosted by Congressman John B. Larson, First District, Connecticut. The meeting took place in West Hartford Wednesday evening September 2. For background on this Town Hall, look in the comments section here. Also, there are presently 5 bills in Congress (3 in the House and 2 in the Senate). The discussion September 2 focused on one of the House Bills, HR3200.

This is Part 1 of 2 Parts. It summarizes some of the Q and A interaction in the Town Hall meeting. Part 2 contains my overall impressions and observations.

Each numbered item below includes a question posed to the Congressman, the Congressman’s answer, and where I have a comment it's [in brackets]. I haven't included all the questions that were asked.

1. Obama says we can keep our existing insurance if we like it. Is that just for 5 years?
--Larson simply answered "you can keep your insurance". He did not refer to the 5-year grace period at all. A voice from the back of the room shouted "Sir you are lying! I'm a physician and I've read the bill!" Larson's face got red, he raised his own voice to say "I have never lied to you" and moved on to the next question.

2. Will you pledge that you & your family will join the public option?
--Larson said that there is presently no public option, and that he is not in the federal employees' plan either.

[This was a confusing answer. He apparently has insurance thru his wife's employment. His answer stimulated a lot of crosstalk from the floor, the loudest ones asking if Larson read the bill. Larson responded by stating that he "had the bill read" one day to the Democratic Caucus for "5 1/2 hours" followed by a couple more hours of discussion. I think this is a whopper. This bill is complicated legalese and it's a real tough slog to read. Reading the whole Bill - 1,017 pages - in 5 1/2 hours, works out to less than 20 seconds per page. Is THAT all the attention HR3200 gets from our Congressman? I doubt the complete bill was actually "read" in the time frame Larson claimed. But clearly Larson wanted the audience to believe it was.]

7. Will this raise my taxes? Will it raise my insurance premiums?
--Larson said the Bill will cut Medicare waste and claimed that Medicare savings will help pay for the cost of the Bill. He also cited a RAND Corporation study that there would be $77 billion annual savings from health information technology.

[He didn't explain how Medicare might reduce "waste", he just said it would happen. He also failed to explain how HIT would save anything and I think left the impression that significant savings would come from reductions to HIT spending. Well, how much HIT spending is there, now?]

11. Why can't we just buy our insurance directly from an insurance company? Why does it have to go true an employer?
--Larson said "that would be single-payer"

[Many people shouted No it's not! - including me. Larson just moved on to the next question.]

15. Will drug prices go down?
--"What will make drug prices go down is when the government negotiates them down like VA"

18. In the current system private companies sell Medicare supplement insurance. Will that disappear in the new public option?
--Larson said no, they won't disappear

[btw he gave a very different answer regarding Medicare Advantage - see #19 below]

Larson also stated that the CBO projects "only about 10 million participants in the public option".

[A question no one asked: if there are 47 million uninsured, how does a public option that covers only 10 million in total solve the uninsured problem? My guess is that he would answer that HR3200 will subsidize the uninsured so they can buy insurance either thru the public option or private insurance. My response would then be "doesn't that mean government subsidy of the insurance companies? Isn't that exactly what he objects to in Medicare Advantage?]

19. Do you support dissolving Medicare Advantage to save money?
--Larson said yes, and the reasons he gave were that Medicare Advantage plans are "subsidized by the government" yet provide the "same benefits and no better health outcomes".

[Larson - and the President - ignore (a) MA plans provide extra benefits (vision, hearing, dental, home care, wellness, and others not included in original Medicare; (b) MA also provides other modern health services not available in original Medicare (case management, disease management programs, nurse hotlines) (c) MA participants have fewer out-of-pocket expenses than original Medicare participants - documented by CMS and the Kaiser Family Foundation, (d) CMS data show that fewer MA participants, compared with original Medicare participants, have reported delayed care, and fewer reported having trouble getting care - perhaps because more MA participants report a regular relationship with a physician. An old report in JAMA (Jan 15, 2003) found that MA participants outperformed original Medicare in five of the seven HEDIS quality measures for health care.

Larson also ignored the cost-shift from Medicare and Medicaid into the private sector which has been going on for more than FORTY YEARS.

It appeared to me that Larson substantially skirted important facts on this question.]

22. The President says a public option will keep insurance companies honest. Aren't state regulators doing this? Who will keep the public option honest?
--Larson's answer - "the people - you can vote us out of office"

[This answer strikes me as inane. Federal agencies are the nearest things to immortality on earth. And besides, when has a Congressional election ever resulted in the closure of a federal agency? Ever? Anyway, Larson's seat is very safe as are most Congressional seats. The answer might be acceptable in a 9th grade civics class but in the real world I think it falls flat. It comes across as condescending to the extent that Larson expects anyone is so naive to believe it, and cynical to the extent he does not care if anyone believes it but says it anyway because it's politically correct.]

25. National debt is $12 trillion going up another $9 trillion in the next 10 years. And CBO estimates that health care will increase the deficit.
--Larson said "this bill is paid for by savings and it's revenue neutral."

[Another whopper. CBO said exactly the reverse. According to CBO, House bill HR3200 would increase the federal budget by $239 billion in the first 10 years. What's more, when the Director of the CBO was asked point-blank if HR3200 would “bend the cost curve,” he responded “no.”]

26. Will there be interstate portability?
--"Yes".

[No explanation. I wonder whether most people understood the question or the answer.]

Part 2 is here.

Post-Isaac Insurance Tips

The folks at the Insurance Information Institute sent us some helpful information to pass along to our readers. Since this is an area outside our own expertise, I turned to our on-call P&C guru Bill M for vetting. He gave it his seal of approval, so here ya go:

1. Is damage from hurricanes covered under my homeowners insurance policy?

Standard homeowners insurance policies cover damage to the structure of your home and to personal possessions from windstorms such as hurricanes, tropical storms and tornadoes. There is also coverage for storm damage to a garage, deck, gazebo, shed, swimming pool and other structures on your property.

2. Does my renters insurance cover damage from hurricanes?

A renters policy provides coverage for personal belongings damaged by a hurricane. Damage to the apartment’s structure, such as walls and floors, is covered under the insurance policy of the building owner.

3. Are flood losses covered under my homeowners or renters insurance policy?

Flood damage is generally not covered under standard homeowners and renters insurance policies. Flood coverage is available from the National Flood Insurance Program (NFIP) and from a few private insurers. Flood insurance covers losses resulting from heavy or prolonged rain, coastal storm surge and failure of levees or dams ... For more information about flood insurance, watch the I.I.I. video, Water and Flood Damage: What Is Covered and What Is Not.

Oberlin Gets Schooled

As you may have seen, Oberlin College (a private liberal arts school in northeast Ohio) was recently successfully sued for trying very hard to put a local bakery out of business:

"A jury has awarded Gibson’s Bakery and its owners $11 million in compensatory damages against Oberlin College, for libel, intentional interference with business, and intentional infliction of emotional distress."

So how did this come about? Well, a couple years ago some yutes ... er ... underage Oberlin students tried to buy adult beverages, and when they failed to produce proper ID, decided to just help themselves. Even though they were arrested and eventually pled guilty, the college bureauweenies decided that this was obviously racially motivated by the shop's owners, and proceeded to act accordingly:

By passing out fliers accusing the business of racism, and urging customers to take their business elsewhere (the flyers helpfully included suggestions as to alternate merchants, aka competitors). In fact, at least one administrator was actively handing out these flyers.

The store sued the college, and has won a judgment of $11 million; yesterday saw the start of a hearing for an additional 22 million in punitive damages.

Okay, that's very interesting, Henry, but what the heck does it have to do with insurance?

I'm so glad you asked.

Turns out, at least one of the school's insurance carriers is likely to deny coverage:

"[I]t appears that the insurer, Lexington Insurance Company, is likely to disclaim coverage for the intentional torts which gave rise to the verdict."

Lexington had issued a commercial liability umbrella policy, which (as is typical of these plans), "does not provide coverage for “bodily injury” or “property damage” intentionally caused by defendants."

Think of it like this:

As we've pointed put before, one's homeowner’s policy is unlikely to cover the shooting of someone, even if that shooting was entirely lawful. It's that whole "intentional act" issue. And, as our guru of P&C Bill M points out, it doesn’t get more "intentional" than having your vice president and dean of students deliberately undermining a local establishment while calling its owners racist.

Bill also pointed out that coverage for the (expected) punitive damages may be in doubt, as well, since these are generally excluded.

R'unh r'oh.

Bill and I were also curious about the underlying coverage, which was not through Lexington, but by the "College Risk Retention Group, Inc. (“CRRG”) and an Educator’s Liability policy issued by United Educators (“UE”)."

Turns out, CRRG is "a privately held company in Burlington, VT and is a Single Location business."

How enlightening.

And what about UE?

Well, they provide "liability insurance and risk management services to more than 1,600 members representing schools, colleges, and universities throughout the United States."

No word yet on whether that includes intentionally sabotaging a local business.

HSA's in Jeopardy?

As a member of the National Assocation of Alternative Benefits Counselors, I receive periodic updates on legislation, pending and otherwise, regarding HSA's, HRA's, etc. Mostly, it's routine stuff, and merely confirms information I've already received from other sources.

Today, though, I learned for the first time about a move in Congress to further complicate HSA (Health Savings Account) distribution requirements. Although the email did not mention the name, number or sponsor of the bill (nor, indeed, much of anything else), a quick search of Thomas.gov gave me the information necessary to write an informed post about it.

[PARA REDACTED: Thanks to a tip from a detail-oriented reader, I've been reliably informed (and confirmed) that the bill originally referenced here is NOT ABOUT HSA's, substantiated or otherwise. This makes it even more frustrating, since the NAABC "alert" made no mention of which bill is involved. I'll keep digging, and update as necessary. My apologies to Congressman McNerney. HGS]

Let's take a step back and talk about a detail of HSA's which we don't much discuss here. When one makes a withdrawal (or "distribution") from almost any "qualified" (i.e. tax-favored) account, there are certain rules and requirements. With Health Reimbursement Arrangements (HRA's) and Flexible Spending Accounts (FSA's), one is required to "substantiate" or prove that the expense is eligible for that favorable treatment. This is really a pretty simple hoop through which to jump: the receipt is going to say "allergy med" (so it's okay) or "Snicker's bar" (which is not) [ed: Dang! Are you sure about that?]. Under Section 105 of the Internal Revenue Code, only folks participating in HRA's and FSA's are required to provide that proof; HSA participants are pretty much "on their own." That is, unless and until one is audited.

Until now.

The (as yet unidentified) bill would change that, and require HSA participants to substantiate each of their withdrawals, as well. Is this a big deal? Maybe, maybe not. According to the NAABC email:

"The proposed solution to this undiagnosed problem is to require that expenditures from an HSA be substantiated as a qualified medical expense. This would surely lead to higher administrative costs and more hassles for consumers."

I'm not convinced that that conclusion necessarily obtains. After all, many carriers offer HRA and FSA administration gratis, or for a nominal fee. Admin costs for the HSA loss-funds (the actual "accounts" in "HSA") are already all over the board; as their popularity (and marketshare) continues to grow, more admin's will come into the market, and competition will help to rein in costs. Based on this fact alone, I doubt that substantiation will be much more than a minor nuisance.

UPDATE, NAABC Responds: I sent a link to this post to the NAABC, and Harvey Randecker, its president, sent me this helpful reply:

"My only point in circulating this "Alert" was to indicate exactly how consumer-driven health plans can be destroyed...incrementally.

After The Clinton Reform Plan [ed: "HillaryCare"] was defeated in the early 90's, Bill Clinton was quoted as saying that the lesson they learned was that, in order to get what they wanted, they would need to proceed "incrementally," passing small legislation that will chip away at the system and, gradually, force a more socialized system on the American public.

Now, due to the expansion of HSAs and HRAs, the only way to halt their growth is to make them less desireable to the public. Admittedly, I thought that [the recent Medicare] legislation...made HSA provsions too liberal and that it was bound to incite anti-CDHP legislators, once they assumed control, to do whatever necessary to reverse the trend and, to me, it looks like this is just the first small step.

We are so small staffed at NAABC that all we can do is pass along Alerts like this that we receive that we feel would begin to adversely affect the CDHP market in one way or another. Unfortunately, having a tiny staff means that we really don't have anyone with the time to really digest what we receive. Nevertheless, if we ignored the alarm bells being sent us, we would not be doing a service to our members.

I appreciate your comments."

Thank you, Harvey, we appreciate both your prompt response and your insights. The point about staffing problems is, of course, spot on: it's one of the banes of such associations. It seems to me, however, that this may be one of the key benefits of blogs (such as IB): the ability to do "distributed computing" type analysis on these issues. The appeal of this method would be financial (i.e. free to the organization) as well as comprehensive (i.e. lots of folks working on pieces of the puzzle).

UPDATE 2: I received a phone call from Congressman McNerney's office this afternoon, after I'd already corrected the post. Although I was happy to have given the Congressman free publicity for his bill, I still wanted to know the name and number of the correct bill, since I still couldn't find it at Thomas. So I emailed the NAABC (again) to ask for this information, and their spokescritter had no idea what it was, or any other relevant and important details.

This is outragous: you don't send out an "Alert" about legislation when you don't even know the name or number of the bill. Regardless of the staffing issues, this is just inexcusable. I no longer consider the NAABC as a credible source for legislative information, and won't be troubling our readers with its "Alerts" in the future.

An Unlikely View of Transparency...

Transparency in health care is a favorite topic here at IB. Recently, I came across this (perhaps over the top) example on the web:

What Doctor's Say And What They Are Thinking

■ "Welllllll, what have we here...?" (He has no idea and is hoping you’ll give him a clue.)

■ "Let me check your medical history." (I want to see if you’ve paid your last bill before spending any more time with you.)

■ "Why don’t we make another appointment later in the week." (I’m playing golf this afternoon, and this a waste of time or I need the bucks, so I’m charging you for another office visit.)

■ "We have some good news and some bad news." (The good news is, I’m going to buy that new BMW. The bad news is, you’re going to pay for it.)

■ "Let’s see how it develops." (Maybe in a few days it will grow into something that can be cured.)

■ "Let me schedule you for some tests." (I have a forty-percent interest in the lab.)

■ "I’d like to have my associate look at you." (He’s going through a messy divorce and owes me a bundle.)

■ "I’d like to prescribe a new drug." (I’m writing a paper and would like to use you for a guinea pig.)

■ "If it doesn’t clear up in a week, give me a call." (I don’t know what it is. Maybe it will go away by itself.)

■ "That’s quite a nasty looking wound." (I think I’m going to throw up.)

■ "This may smart a little." (Last week two patients bit off their tongues.)

■ "Well, we’re not feeling so well today, are we?" (I’m stalling for time. Who are you and why are you here?)

■ "This should fix you up." (The drug company slipped me some big bucks to prescribe this stuff.)

■ "Everything seems to be normal." (Rats! I guess I can’t buy that new beach condo after all.)

■ "I’d like to run some more tests." (I can’t figure out what’s wrong. Maybe the kid in the lab can solve this one.)

■ "Do you suppose all this stress could be affecting your nerves?" (You’re crazier’n an outhouse rat. Now, if I can only find a shrink who’ll split fees with me.)

■ "There is a lot of that going around." (My God, that’s the third one this week. I’d better learn something about this.)

■ "If those symptoms persist, call for an appointment." (I’ve never heard of anything so disgusting. Thank God I’m off next week.)

Happy Fun Time Insurance

The other day, we discussed what we've been calling "Special Event" insurance. And that's an accurate designation, up to a point. That type of plan falls under the category of "indemnification" (being made whole).

But there's another type of Special Events coverage, one that covers liability.

Hunh?

Here's an example:

A good friend of mine hosted his daughter's wedding reception at a local luxury car museum. He knew that there would be alcohol, as well as little children running around. And he knew that there were millions of dollars’ worth of antique luxury cars protected by, at most, a velvet rope.

So he (wisely) purchased this second kind of Special Events cover.

Why?

Well:

"Markel’s special event cancellation and event liability insurance protects event hosts and honorees from losses they may face, should the unfortunate occur. Policies start as low as $75"

(I'm going to focus on the liability aspect of this plan, because I think the cancellation part falls into the indemnification/"baseball insurance" camp)

Think about all the different kinds of events to which this would apply: weddings, of course, but Bar/Bat Mitzvah celebrations, auctions, and offsite business meetings, for starters.

And especially if these involve serving alcohol:

"Host liquor liability included."

And as the brochure points out "[m]any venues require liability insurance." I have to admit, I hadn't even thought of that. But it makes sense, no?

Oh, one last thing, which now seems obvious:

"Policies ... can be purchased any time at least one day before the event date" [emphasis added]

No kidding.

Special IB Thanks to Bill M for suggesting this topic and helping put together this post.

Medical Bill Helper: The Rest of the Story

As promised when introducing the newest member of the "Resources" section of our sidebar, here's what Rick Lifsitz, CEO of Medical Bill Helper, shared with me in an extended phone interview:

InsureBlog: First, thanks so much for taking the time to help our readers understand what your service is all about. Can you tell us about your background? Are you a physician, for example?

Rick Lifsitz: I'm always happy to explain what we do. No, I'm not a physician, I'm a businessman, MBA, with many years of experience starting and running companies. Mostly with technology and how to apply technology to solve business problems.

IB: What was the original motivation for Medical Bill Helper (MBH)?

RL: As a business owner, I'd heard lots of stories, and seen firsthand, how folks with no insurance, or who had to go out of network, were routinely charged much more than the insurance companies paid. They needed the health care, and were stuck with the bills. I didn't think that was right.

For example, I looked at what radiologists were charging in a specific area for a certain test. The exact same test ran anywhere from $300 to $3,000, all from providers all within a few blocks or miles of each other. It just didn't seem to make sense. And it didn't seem fair that people without insurance were having to pay such high amounts. I knew that a lot of these prices could be negotiated, but most people don't know that, or know how to go about it. [ed: This may be particularly helpful when dealing with Hidden Providers]

IB: How is MBH different from, for example, those discount card programs we see advertised so heavily?

RL: Well, for one thing, we don't have any kind of on-going fee arrangement. You sign up and we charge you a percentage of what we save on a claim. There's no monthly "membership fee" or the like. And we don't charge anything if we aren't able to save our client at least 10%. I think that any consumer can go to their doctor and ask for a simple 10% discount, so we don't charge unless we generate a bigger savings than that. And that's also why we don't work with charges under $500; the point is to deal with the runaway costs, not the small ones.

IB: Okay, but that begs the question, just how do you know what the "right" number or charge should be?

RL: We have databases with UCR [ed: Usual, Customary and Reasonable] for different procedures and areas, and we have people on staff with many years of experience negotiating these costs for the insurance companies. Even though we actually opened up MBH in 2009, our people have decades of experience in these kinds of negotiations.

IB: One of the challenges with the discount cards is that they typically require payment in full at time of service, or within a very narrow timeframe afterwards; there's generally no "payment plan" arrangement available. Does MBH work pretty much the same way?

RL: Well, by definition there's no requirement for payment at time of service; we only come into the picture afterwards. Our experience is that providers, while the preference is for payment in full, we've also had occasions where there's been a payment arrangement set up. The big issue is that there are really two kinds of people in this situation: those that have no intention of paying, and those that want to but have finance or budget issues. That first group (non-payers) isn't coming to us, anyway; why bother negotiating on something you're not going to pay in the first place? It's that second group that we're trying to help.

IB: Thanks so much for your time, and we'll remind our readers that they can find the MBH link in the "Resources" section of our sidebar. And we'll also point out that that's a direct link to MBH; we don't receive any compensation for folks who find you because of us [ed: darn!].

Call it Macaroni? Er, No, It's Still a Feather.

The Congressional Budget Office issued a report November 30 prepared in conjunction with the Joint Committee on Taxation. Among other things, the report states (bottom of page 4):

"CBO and JCT estimate that the average premium per person covered (including dependents) for new nongroup policies would be about 10 percent to 13 percent higher in 2016 than the average premium for nongroup coverage in that same year under current law."

Got it. That outcome is financially WORSE than doing nothing.

And who are the people who buy “nongroup policies”? They’re individuals. A great many of these individuals are uninsured. The uninsured are the very people who need the most help. But the Senate Bill will increase the premiums that the uninsured would have to pay to get medical insurance they already can't afford. Does this make sense?

I think even more important, the effect of the Senate Bill on medical insurance premiums tells us that the cost of medical care would also be greater under the proposed law, than under current law. That’s because the cost of insurance is driven by the cost of medical care. In other words, the Senate bill does bend the cost curve. It bends the curve UPWARD.

The November 30 report goes on to say (still on page 4):

"About half of those enrollees would receive government subsidies that would reduce their costs well below the premiums that would be charged for such policies under current law."

The administration and Senate leadership selected this comment for their great “AHA!” on Monday – AHA!! CBO proves us right! The premium per participant will reduce under the Senate Bill!! [they said]

Sure - - after the subsidy.

So you tell me. Will it cost taxpayers more to subsidize the more-expensive medical care caused by bending the curve upward ? Or will it cost taxpayers more to subsidize the less-expensive medical care we have now? C’mon, it’s an easy question.

I’m not saying we should be satisfied with what we’ve got. What we’ve got is far too expensive and it’s far too inefficient. The current “system” not only drives people nuts, it drives doctors nuts and payers such as the government, small employers, and large employers nuts, too. We need to change it. But the Senate Bill will give us no better than we have now, at higher cost.

The Senate leadership wants to stick a feather in its cap, and call it macaroni. But CBO says not so fast. Thanks to CBO, the information before the public is now clear and settled fact. It is wrong to assert that the Senate Bill will save money, or will be “budget neutral”. It will instead cost much more than doing nothing, and will not accomplish the very things we understand are most important.

By the way, remember when candidate Obama promised a health care plan that would save every American family $2,500 a year? I’d like to know, where the heck is THAT plan?

SSM & Church Insurance

The other day, we looked at how health insurance (particularly group plans) will be impacted by the recent SCOTUS ruling on Same Sex Marriage (SSM). Now, the legal beagles over at Legal Insurrection have a very interesting post about the future of liability insurance in this new, enlightened age, and it's not pretty:

"On July 1, David Karns, vice president of underwriting at Southern Mutual Church Insurance Company (which “serve[s] more than 8,400 churches”), wrote ... The main concern is whether or not liability coverage applies in the event a church gets sued for declining to perform a same-sex marriage"

The short answer: No.

As usual when it comes to issues involving Property and Casualty (P&C), I turned to good friend and guru Bill M for his insights:

The reason that coverage in such circumstances would (likely) be declined is that it was an intentional act of violating the law. So if (when?) a church (or synagogue, or mosque) is sued for refusing to perform a SSM, the resulting lawsuit would not be covered. That also means the carrier has no "duty to defend" (basically: provide legal counsel).

Of course, any fines imposed by the state would also be excluded.

This is not quite the same as the linked post's headline:

"Churches refusing to perform same sex marriages may be denied liability insurance"

At this point, no carrier is refusing to actually underwrite and issue a policy to non-complying churches for the simple reason that it's not currently a part of the underwriting process. That is, there's no question on the app that reads "Do you refuse to perform gay weddings?" If and/or when a claim arises because of such refusal, the carrier would simply deny coverage.

Now, actually declining to write a policy in the first place is currently pretty speculative. But as Bill pointed out to me, such a scenario is not necessarily farfetched:

Imagine Acme Church Insurance Company with 50,000 policyholders, 10,000 of which get sued for refusing SSM, and all 10,000 of these claims are denied. That's a lot of ticked off customers, no? So what's the likelihood that the next application version's going to include a question about SSM, and if the answer's not "sure, all the time," then no soup policy for you.

Is that likely to happen in the next year or two? Probably not, but don't be surprised when it does happen a few years down the road.

Bill also brought up another very disturbing thought: many (most?) churches have Boards of Directors (or Elders, or Deacons, etc), and thus likely have D&O (Directors and Officers) coverage:

"Errors and omissions coverage for an organization, its leaders, and governing bodies while acting within the scope of their duties."

The reason for this coverage is that board members could be sued individually, putting their personal assets at risk for something their church or its leaders may have done (or not done).

Bill mused about whether such policies might also decline coverage for SSM-related claims. Talk about a chilling effect on lay folks volunteering for leadership positions in their congregations.

Brave new world, indeed.

Best of All Worlds? The Healthcare Affordability Model [Updated & Bumped]

[Welcome Industry Radar readers!]

Bob Laszewski is one of the brightest health wonks I know, and a frequent read for me. Joe Paduda, another bright health care policy guy, sent us (and several other health care policy bloggers) a link to Bob's newest effort, called the Health Care Affordability Model.

Bob's proposal is, if nothing else, exceedingly long, and unnecessarily repetitive. It pains me to be so critical, because he's generally a very profound guy, but I fear that a lot of potential readers will be turned off simply by the length of the post (which clocks in at just under 7,000 words). Very frankly, I was disappointed in the effort, and have chosen to address a few of its problems. Readers wishing for an extended analysis may drop me an email, and I'll happily comply.

Bob starts out by positing that, under his plan, providers and insurers who fail to toe the line would lose tax advantages. He specifically states that premiums "for a non-qualified health plan would no longer be tax deductible for individuals or plan sponsors who used these unqualified plans."

Is he so out of touch with the current system that he doesn't know that premiums for individual plans are not generally deductible now?

He then posits that providers "who were not in a tax qualified health care network would lose patients to networks that did control costs." I'm not convinced that this follows: quality of care may be more important than cost.

He next claims that "insurers and providers would be required to first begin to stabilize and then control their costs." A noble goal, to be sure, but he never really lays out specific ways for that to be accomplished.

Bob then moves on to a Nine Point strategy to implement his recommended policy; as noted, I'll address only a key few:

■1. "(L)ive healthier lifestyles and more often practice good prevention." Well, that's certainly preaching to the choir as far as IB and its readers are concerned. But how do we encourage and/or enforce this? Maybe no tax deductions for fatties or smokers? Rotsa ruck with that.

■2. "We Have to Work Together." No kidding. But, and I realize that I'm beginning to sound like a broken record, what policy needs to be changed/implemented for this to occur?

■4. "Payers and providers generally know...where waste is." Really? How does he know this? And what's "waste" versus "defensive medicine?" If that's what he means, then let's see tort reform on the table.

■5. "During the last decade quality has slipped and health care costs have doubled." I reject that. First, care has improved and second, I suspect cost has more than doubled.

■7. "Patient-centered solutions cannot occur in a system driven by central planning." No argument, but no real progress, either. Lots of pretty words, and yes we're very bright people. But there needs to be incentives and/or "consequences."

■8. He calls for stakeholders to meet "face to face." And that's why there are so many insurance AGENTS being asked to the table? We have a unique and valuable perspective to offer: we know what works, and doesn't work, from all three sides (consumer, provider and insurer). Why isn't our input being actively solicited?

Keep in mind that saying "health insurers have been consulted" is meaningless in this context: their interests and perspective do not often coincide with agents'.

Once he's outlined his starting assumptions, Bob makes a rather startling new one: that we can "begin to slow, and then moderate, and even reduce the climb in America’s health care costs."

Okay, but HOW? I don't see concrete suggestions here. There's reference to tax consequences, but I don't see them delineated. Did I miss something?

He says his plan "would not impose government controls over insurance or provider prices." But, as we'll see in a moment, that's (at best) disingenuous.

He goes on:

In fact, insurers and providers have had compelling reasons not to make the health care system cost effective—providers and insurers get paid more not to."

Bull----. First, there's the substantial cost-shifting as a result of government programs (I'm looking at YOU, Medicare). Second, technology ain't free. I think he really misses the mark on this one.

"Simply lopping off the fees either providers or insurers receive (as the Public Plan Option would do) would do little to create a sustainable system over the long-term."

Agreed; in fact, this is the first - maybe the only - thing he's said that makes sense in terms of "the big picture."

He completely misses the mark, though, with his diatribe against profitability of insurers and providers. For one thing, he seems not to understand the difference between "profit" and "profit margin" (the latter is significantly smaller than he seems to believe).

And he seems not to have been reading the WSJ for the past, oh, nine years or so:

"Between 2001 and 2008, private health insurance costs increased between 6% and 14% each year—multiples of inflation and growth in the overall economy—while health insurers, drug companies, and device companies booked record profits, and most hospitals and doctors did well."

Correlation is not causation. He's overlooking a major (likely THE major) contributor to those profits: Wall Street. Look at where the "story" ends: 2008. Ring any bells?

"Under the Affordability Model there would be less money available than what would have been in the relatively unfettered system with costs exploding as they are today."

Really? Why is that? I see the conclusion, but I don't see the facts to back it up.

Unfortunately, he takes a seriously wrong turn here, advocating that "a new system of insurance exchanges would be created for the individual and small group health insurance market."

Right, because it's worked so well in Massachusetts (for example).

And he continues down the wrong path:

"Health insurers would be required to offer at least the standard option benefit plan in each state in which they operate through the insurance exchange. Through competitive bidding each plan would establish its baseline costs in the first year."

So he knocks Medicare, but then basically buys into the MC Supplement model. I'm not claiming that that model's "fatally flawed," but look at where we are today (MC Advantage Plans or Part D, anyone?).

Bob then proposes that "(s)elf-insured plans would be required to provide an actuarial certification attesting to the relationship its overall plan costs had compared to what they would have been had the plan offered the standard plan option to all employees (including age and severity adjustments). In the first year, that cost would become the baseline for future year costs."

Uh-hunh. And guess what those first year numbers are going to look like. Color me cynical, but methinks there will be some major benefits and cost-shifting juggling going on. And I'm still waiting to hear how we cap medical inflation.

Here's a doozy:

"An employer who chose to terminate their health plans in favor of their employees purchasing benefits through the insurance exchange would be required to “cash-out” their benefits"

DING DING DING! This is one of the most insidious parts of the Public Plan, and he wants to adopt it? Sheesh.

"Legislation would set national health care affordability goals expressed as a percentage of growth in the nation’s GDP—as defined and measured by the Department of Commerce."

Oh great: because they've been so accurate on all the other metrics? Tell me about the Spendulus and unemployment rates.

He believes that his model would "reduce national health care expenditures as a percentage of GDP."

There's an assumption here that I'm not sure I buy into. What's the "appropriate" ratio of health care costs to GDP? Isn't that pretty much an arbitrary number? Yes, 17% (or whatever) SOUNDS like a lot. But is it? I'm not saying it's not, but I'm not sold that it is.

"A Health Care Actuarial Certification Board would administer the goals."

DING DING DING again! Yes, the gummint will be in charge of setting health care costs, reimbursement and inflation. Lovely.

So we get a Health Czar, too.

Frankly, I'm done. That killed any cred this plan MAY have had. Once you've ceded the cost and valuation functions to the gummint, you can call it anything you like, but it is de facto government-run health care. Period.

Mike is more succinct (no surprise there):

"The biggest obstacle for me, in deciding whether to try to read a 7,000 word paper from one of the policy wonks, is that Bob seems to be deep into solution mode at a time when you can barely find 10 people at once who agree what the problem is.

It would be easy to determine if we're going at this the wrong way, in two easy steps:

1. Ask Bob if he can succinctly (less than 7,000 words) define the problem(s) that he thinks must be solved, and then

2. Ask a broad sample of people if they agree with his definition.

My bet - this proposal will stir up conversation and argument, but not much more."

And I suspect that this post will generate some interesting comments; we ask that the level of discourse be polite and respectful.

Have at it.

UPDATE: Joe sent along this link to an abridged version of Bob's Affordability post. I'm pleased to see a tightened-up version, but there's not enough substantive difference to justify a major revision to this post.

There are, however, two items in this abbreviated version which I'll address:

1) Reference to the newer Wyden bill (about which I intend to blog shortly), which seems to be a winner, and

2) Continued reference to the mystical (likely mythical) "30% waste" figure. First, the only place I've ever seen this number applied is to Medicare, and I don't see Bob discussing major changes to that soon-to-be-bankrupt system. Second, I'm skeptical that this alleged 30% can be cut, for the simple reason that no one has ever budgeted 30% waste in the first place.

Wednesday Links-a-lot

■ We've made the case that "going bare" can certainly be a rational choice:

"There are necessities of life, but insurance is not one of them."

But what's it like actually making (and living with) that choice?

Well, FoIB Bill M points us to this rather interesting (and, I must say, relatively balanced) article on just that:

"While these people are among [those] who remain uncovered ... their stories transcend politics, reflecting tough kitchen-table decisions about health care faced by many families."

Interesting and thought-provoking.

■ Second up, FoIB Jeff M (no relation) seems to have problems with the idea that health insurance rates have decreased buy some 3000%:

"States scramble to avert Obamacare sticker shock after Democrats balk at stabilization effort"

And by stabilization, of course, they mean "throwing more money at it."

■  I can see no possible way for this to go wrong:

California Senate Bill would outlaw short-term health insurance 🤔#SB910 #California #STM #HealthInsurancehttps://t.co/I9coXHu8yX

— David Fluker (@FlukerDavid) April 3, 2018

■ BONUS ITEM: Co-blogger Bob V tips us to this interesting story on why folks choose - often at their own peril - not to buy whole life plans. What's special about this is that Burt is an industry giant, and knows whereof he speaks:

"Why didn’t Burt sell us whole life?”

Spoiler Alert: He tried.