Sunday, November 30, 2008

On Terrorism, Risk and Mumbai

[Welcome Hugh Hewitt readers!]
A few years ago, I realized that although there are "carnivals" (hosted collections of blog posts on a specific subject or issue) for sports, medicine, politics, even religion, there were none for posts related to "risk." Thus was born the Cavalcade of Risk, the next edition of which will be posted Wednesday.
And throughout the life of this blog, risk has been a fundamental theme, as well (e.g. IVF). We've examined risk through the prism of insurance, of course, and wondered whether or not it still held a place even there.
But risk is about more than mortality tables, player injuries and MRI side-effects: it's about life and death in the real world. And this past week has brought the issue into sharp focus (again) with the tragedy in Mumbai. One of the poli-blogs I regularly read is Hugh Hewitt's (in fact, it was Hugh's book, Blog, that got me started blogging). In addition to blogging, Hugh has a radio show, often inviting interesting guests to be interviewed. Last week, one of his guests was "Frank Dowse...the head of Agemus Group, a security-consulting firm. Frank's been in the business since his retirement as a Lt.Col from the Marine Corps a few years back."
Mr Dowse later emailed a follow-up to Hugh, with real, tangible advice for CEO's whose employees are, or could be, in such perilous straits. I'm posting a snippet, but I urge our readers to "read the whole thing."
And yes, it's that important:
#1: Initiate/Designate a Crisis Response Team: If this is not an inherent function or area of responsibility within your organization, then assign a Point Man (COO/Vice President Level, with PR reps to assist) who can lead, authorize, and decide on behalf of the management, in order to best affect plans and responses as events unfold, and information is gathered. This needs to be a 24 hour operation, and should be given top priority for resources, and manpower.
#4: Establish Contact with Families/Significant others: If information is forthcoming (from the Embassy, federal authorities), tell what you know, and ensure it is not premature, rumor, or simply press reports. Ensure the Crisis Response team is the “releasing” authority for all info coming from the team. Keeping the families in the proverbial “loop” is one of the most important and valuable things an employer can do in a situation like this. This is best accomplished if a “pre-trip” brief has been conducted, in which emergency info and contacts are acknowledged, and the (now) victims have agreed and know that the people who have the need to know their status will, in fact, be contacted.
This is the essence of risk-management: identify, quantify and qualify the potential danger(s) and how to deal with them. I suspect that, unfortunately, we'll be needing this kind of information a lot more now.

Friday, November 28, 2008

Cavalcade of Risk #66: Call for submissions

"Ironman" of Political Calculations hosts next week's Cavalcade of Risk. Submissions are due this Monday (the 1rst), and he asks that you include:
■ Your blog's url
■ Your post's url
■ The post's trackback URL (if available)
■ A (brief) summary of the post
PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like).
You can submit your post via Blog Carnival or email.
We have hosting slots available for early '09 - just drop us a line to reserve yours.

When is a Door, Not a Door?

[Welcome Kaiser Network readers!]

When it is ajar.

Old joke, but serves a purpose.

When is a discount, not a discount?

When it applies to medical & dental plans that are not really insurance.

We have covered this topic before, but it bears repeating. Unemployment is high and going higher. Money is tight. Folks are looking for ways to save money.

Discount medical & dental plans are not the answer.

What are the pluses to discount plans?

There are no deductibles. Of course not. Insurance has deductibles, this is not insurance.

The benefits are unlimited. Of course not. Insurance has limits, this is not insurance.

No underwriting. Anyone can get the plan regardless of health.

Relatively low cost. Some plans are "free" while others come with fees (not premiums) as high as $200 per month.

The discounts, when applied, can be significant. Note the operative word is "can". What is promised usually is not the same as what is delivered. Therein lies the rub.

So what are the negatives?

Almost too many to mention but here are a few.

The card usually is not as widely accepted as promised.

The discounts are available WHEN you have the ability to pay. If you cannot pay the bill, the discount evaporates.

There is no limit to your liability. A $200,000 bill is still a $200,000 bill with all the liability falling on you. A discount plan can quickly bankrupt you.

There is no oversight. Discount plans are not (for the most part) regulated by state or federal insurance laws . . . because they are not insurance. If you are not satisfied with the plan, you have almost no place to address your complaint.

There is no oversight. If a provider refuses to accept the card, or seeks to offset the discount by scheduling unnecessary services (as happens all too often) there is no one to certify the services are needed. Since you pay the bill, and not a carrier, the marketing arm that issues the card really doesn't care if you pay for things that are not needed.

The discounts are almost always illusory. Many times you can get a better price by simply asking providers to work with you vs. using a card. Almost all the Rx discount cards are worthless. Smart shopping can almost always result in a lower price.

So when is a discount not a discount?

When you pay more than you would have otherwise.

Wednesday, November 26, 2008

WellSphere Update

Because we apparently don't have enough to keep us busy, IB has been selected as a "Health Maven" at WellSphere. This means that we'll be "on-call" to answer relevant questions from that community.
As always, we're happy to take our readers suggestions, questions and comments directly, via comments and email.
Have a terrific Thanksgiving!

PC Diseases?

Whatever one may think of the efficacy of targeting specific diseases for charitable contributions, isn't it important to at least treat the disease itself as something to be eradicated, and not made into a (cheap) political statement?
Turns out, CF apparently affects only white males, and is therefore "suspect" as a disease worth eliminating. Of course, one presumes that Carleton will also refuse to fund breast cancer research, as well as cycle cell anemia and prostate cancer.
UPDATE: Some folks mistakenly believe that the student council has reversed its decision to politicize a dreaded disease and those who suffer from it.
Obviously, this does nothing to absolve their leadership from its cynical decision to score cheap political points at others' expense.

Tuesday, November 25, 2008

Hey, MVNHS©: Can You Hear Me Now?

For those who continue to think that a nationalized health care scheme is the cat's meow, some bad news:
Although such screening tests have been mandated for almost 2 years, "(t)he risks are that maybe 60-70 deaf children per year are missed and have reduced life chances," according to a recent report from the MVNHS©. In London alone, only a third of the systems' hospitals made their "quota" of screening at least 98% of all newborns. That means even more children may be at risk than previously thought.
And the National Deaf Children's Society is now calling for drastic and immediate action on the problem. One significant issue is that late diagnosis can hinder both treatment and the child's language and social development. They single out London area hospitals as the worst case examples: "only 72 cases of deafness in newborn babies was reported last year, against an expected 140." And it goes downhill from there, because even those children that are identified as at-risk often face lengthy delays in obtaining proper treatment.
Doesn't sound like such a great system to me.

Thanks and Giving

If you need a reason to be thankful . . .

St. Jude Childrens Hospital, founded by entertainer Danny Thomas, provides health care to children regardless of ability to pay.

Here are just a few of the medical advances made possible by St. Jude.

1970: A supplemental feeding program is proven to correct nutritional deficiencies of children in poverty-level families. This achievement attracts national recognition from Senator Hubert Humphrey and other congressmen. (Dr. Paul Zee, MD)

1971: A combination of chemotherapy and cranial irradiation is proven to cure at least half of all children with acute lymphocytic leukemia (ALL). This finding revolutionized leukemia therapy worldwide. (Donald Pinkel, MD)

1975: A new drug combination is found to be effective against leukemia that had recurred after initial treatment. This leads to improved therapy for hundreds of leukemia patients, especially those with a very high risk of early failure. (Gaston Rivera, MD)

1984: Rearrangement of the genetic material within human chromosomes found to be an important factor in how a child with leukemia responds to treatment. (Dorothy Williams, MD)

1991: Neuroblastoma survival rate reaches 57 percent. An evaluation of neuroblastoma treatment at St. Jude over the previous 25 years finds a 25 percent improvement in survival rates for children. (Laura Bowman, MD)

1998: Study reveals that the long-term survival rate for acute lymphoblastic leukemia, the most common form of childhood cancer, has increased from 73 percent to 80 percent. (William Evans, PharmD; Ching-Hon Pui, MD)

St. Jude does accept insurance payments, but much of their funding comes from donations and corporate sponsorships.

So who benefits from St. Jude?

Here are just a few stories.

So if you need a reason to be thankful, then consider making a donation to this wonderful organization.

Monday, November 24, 2008

Lehman, AIG, CitiGroup and The Hole

We are, by definition, a blog (primarily) about insurance. But that risk management tool doesn't exist in a vacuum: it's part of the larger economic system to which we all contribute. For the past few weeks, the news has been about the $700 billion "bail out" (Latin for: "You own it now, sucker!"), which is itself a rather improbable number.
Now comes word that our political class is considering upping that ante, to the tune of almost 8 trillion dollars:
Words fail.
But thankfully (?), video comes through:
'Nuff said.

Pre-Thanksgiving LinkFest

From time to time, we like to send a little link-love to folks whose work we find valuable:
■ Our good friend Joe Kristan, host of the Tax Update blog, has some timely and helpful news about S Corporations and how owners' comp can affect insurance premium reimbursement. This is a good time of the year to start considering these issues.
■ If you're a realtor, the Specialty Insurance Blog warns that it's not just the economy, credit crunch and housing market that could do you in: your E&O (errors and omissions) policy needs to be kept up to date, as well. Host Bob Sargent has some news on that front.
■ Dr Devon Herrick, though not a blogger, has an interesting Op-Ed which stresses that most Americans want the freedom to make their own health care choices. This is, of course, in direct contradiction of the nanny-staters. Recommended.
[Hat Tip for the Op-Ed to Jordan Tuch]

From the Mailbag: We'll Have a Gay Ol' Time!

[Welcome Industry Radar readers!]
We get some interesting, often provocative email here at IB. For example, we're constantly bombarded with offers to host advertising links for various products and services (which we always decline). We also get a lot of "insider info" from various politicos and lobbying organizations, some of which make good blog-fodder.
Today's mail, however, brought something completely different:
"Market to the Gay Friendly Insurance Agents Community-One of the fastest growing market today.
...They would also like to secure the services of all the professionals who are a part of the process in securing and protecting their dream home...We don't request an exorbitant premium to be listed on our directory, nor do we demand a portion of your commissions, like some other gay sites do."
Frankly, I think this is a tremendous idea: while this isn't a new market, per se, it seems to me that it's most likely an underserved one. The email seems to imply that they're really looking for P&C agents as opposed to life and health, although that would certainly be an interesting niche, as well.
As noted above, we'll decline this offer (because we do no paid advertising here), but if there are any P&C agents who'd like to know more about it, just drop me a line and I'll send you the site's info.

180th Carnival of Personal Finance

Living Almost Large hosts this week's edition of the venerable collection of personal finance posts.

Sunday, November 23, 2008

The Case for Nationalizing Whatever-It-Is

For the record, this article appeared in the Washington Post Tuesday, November 18. Coupla comments -

1) Mr. Kennedy has been an advocate for nationalized health insurance, or nationalized something-or-other, since at least the early 1970’s. And his Elmer Gantry persona continues to preach “legislation that would vastly expand health coverage.” That sounds like he's talking about health insurance. But . . .

2) But . . . strangely, for someone who claims to have immersed himself in this issue for nearly 40 years, the Senator from the People's State of Massachusetts serves up a garbled message. For that matter, so does the Post reporter. Just look at this mess of reportage. First paragraph, health care. Second paragraph, coverage – that is, health insurance. Third and fourth paragraphs, health care. Fifth paragraph, health insurance again. What the heck is Mr. Kennedy talking about? Does he know? Does he have some reason to pretend health insurance and health care are synonymous? Does he think the public either won't pay attention to what he says or won't care? It's impossible to tell from this article whether Mr. Kennedy's confusion is deliberate - or results from carelessness or ignorance.

Right now, Mr. Kennedy's positions do not show that he understands the difference between health care and health insurance. Doesn't the public deserve better? Shouldn't the Elmer Gantry of nationalized whatever-it-is be able to clearly articulate whatever it is?? There are lots of ways Mr. Kennedy could fix his own message. He could ask someone on his staff. Better yet, he could read this.

Saturday, November 22, 2008

Got Teeth?

Dental insurance is generally a waste of money, but there are some exceptions.

If your employer offers dental, and the premium is heavily subsidized, it might be a worthwhile investment on your part.

Most individual plans are like throwing money out the window. They have waiting periods, caps on benefits, deductibles, coinsurance . . . all designed to keep you out of the carriers pocket.

There are a few exceptions. In some cases a discount dental plan (PPO) such as Toothplans is an option.

You can view several plans and pick the one that best suits you. There are no waiting periods or caps. Discounts are available when you use a par provider.

Another option is a DHMO. These plans have fewer dentists than the PPO approach referenced above, but you will also get more bang for your buck. Like the PPO, you do not have to go through a waiting period or have your benefit limited by artificial caps.

If you don't want to pay a premium or network fee, a third alternative is calling around for prices.

If you are going to check local dentists, you will need to know the procedure codes. Dentists use CDT coding in their billing practice. The codes change slightly each year. Here is a 2005 list that will at least point you in the right direction.

Friday, November 21, 2008

Mind-Numbingly Stupid Industry Tricks

Question for America’s Health Insurance Plans and the Blue Cross and Blue Shield Association: What part of "risk" don't you rocket surgeons understand?
Recently, the largest industry trade group (which represents the carriers, not the agents) and one of the largest insurance conglomerates got together and decided that we no longer need health insurance here. Insurance, as regular readers know, is a risk management tool. Absent risk, there's no need for insurance:
Um, NO: these geniuses do not speak for "the health insurance industry." They speak for themselves, and represent only a portion of our industry. They certainly don't represent those of us on the front lines, dealing with real people very day. And yet they're perfectly willing to state that we no longer need an entire industry.
Oh, Henry, you're over-reacting; this isn't so bad.
Yes, in fact, it is.
Think of it this way, if you have no nails, you need no hammer.
Now this would be fine if you're, say, an accountant. After all, what difference does it make to a CPA whether or not someone's making and selling hammers? But it's mighty important if you're Stanley Tools or Home Depot. Wouldn't it be, um, ill considered for the folks at Stanley to suddenly announce that hammers are no longer necessary? And why would Home Depot then applaud such a move?
Well, that's precisely the policy position taken by the folks who "make" insurance (Blue Cross/Shield) and those who market it (AHIP). And how pathetic is it that the most liberal Senator, now our President-elect, espouses a plan that's actually less draconian (at least initially)?
Words fail.
I often tell clients that not all insurance companies are run by idiots: some are run by morons. This is usually said half in jest, but this example serves to truly underscore its seriousness. The problem here is not just in what these deep thinkers are saying, but in what they've left unsaid:
■ How do you enforce such a law (cf Massachusetts)?
■ Who defines adequate coverage?
■ What mandated benefits are going to get tacked on, increasing the costs?
■ How and when will pre-existing conditions be covered?
■ How does this address the underlying problem of rising health care costs? [hint: it doesn't]
After the AIG debacle, I was certain that nothing my industry could do would surprise me.
Guess I was wrong.
[Hat Tip: Holly Robinson]

Thursday, November 20, 2008

Daschle Speaks

Meet the new Secretary of Health & Human Services in the Obama administration.

Daschle says Medicare should pay more for care that leads to good outcomes, and should stop paying for unnecessary or harmful treatments.

Be careful what you wish for.

He stops short of saying the U.S. should have a U.K.-style, hard-and-fast rule on cost-effectiveness. But he does say the U.S. “won’t be able to make a significant dent in health-care spending without getting into the nitty-gritty of which treatments are the most clinically valuable and cost effective.”

Mr. Daschle, meet Dartmouth

The records of about 4.7 million Medicare patients who died between 2000 and 2003 were studied in the new Dartmouth research. The patients all had one or more of 12 chronic diseases, including cancer or heart, lung, or kidney conditions. It was estimated that almost one-third of the Medicare spending on those patients did not improve health and was therefore termed "unnecessary."

Other recent Dartmouth studies have shown that regions with the highest health care costs actually have lower-than-average outcomes and poorer quality of care in general. With about three-quarters of total US health care costs resulting from treating the chronically ill, some may argue that we needlessly sacrifice resources on end-of-life cases that could be applied to those with the chance of brighter outcomes.

and JAMA.

Medical care at the end of life consumes 10% to 12% of the total health care budget and 27% of the Medicare budget. Many people claim that increased use of hospice and advance directives and lower use of high-technology interventions for terminally ill patients will produce significant cost savings.

So . . . who wants to be the first to pull the plug on Grandma?

Health Care Costs: Part of the Story

As mentioned previously, health insurance biggie Humana has begun producing some interesting videos as a sort of "Newby's Guide to Health Insurance." We'll continue to post the ones we feel most relevant to our readers. This one is pretty good, although I had some reservations about it. Take a look, and then I'll share some of my co-bloggers' reactions:
As I said, I have some reservations, chief among them being the implication that simply choosing a network provider will generate a discount. As we've learned, this is not always true.
Bill's concern was that "IPA’s [Individual Practitioner Associations] are not mentioned and the implication is that a sole practitioner is always more expensive." On the other hand, he noted that, while "(i)t may not be 100% technically’s a good way of presenting things in an understandable way."
And Bob said that he "wouldn't use the word "discount" but apparently the attorney's don't care. One could also infer that network docs are "better" (certified) than out of network docs, but lets not go there."
Finally, Mike had no major objections: "The only thing that sounds off-key to me is the statement (actually made twice) that network doctors agree to lesser fees in return for more patient volume. Doctors may acquiesce to lesser fees, but I think it's mainly because they are afraid that if they don't go along, they will lose patients. If additional volume were the whole story, no doc would sign with any but the insurer having the greatest membership - and that clearly isn't true.
And based on conversations with our family docs I doubt docs see a net gain of new patients - if they do, it's small. What Humana is not saying is that sometimes docs lose patients to other networks and some of the patients they "gain" thru a particular network were already their patients anyway."
We'd be very interested in our readers' thoughts on this.

Wednesday, November 19, 2008

Group Insurance and "Voluntary Data Sharing"

Just got an email from one of our carriers updating us on the (formerly voluntary) "Data Sharing Agreement." For some time, carriers have been "legally permitted to provide eligibility data for its customers' employees to the Centers for Medicare and Medicaid Services (CMS)." [emphasis added]
Come this January 1, however, the "rules of engagement" change dramatically; "the previously voluntary data exchange program will become mandatory and all employers, insurers and plan administrators will be required to share eligibility data with CMS."
And this little gem has teeth:
"Failure to report eligibility data and Social Security numbers...may subject...insurers, third-party administrators, employer and/or plan administrators to civil monetary penalties up to $1,000 for each day of noncompliance for each individual for which data exchange is required."
That could add up to some pretty hefty fines. And these requirements apply to all insured and self-insured groups, large and small. No ERISA skirts to hide behind.
I'm actually okay with this: if nothing else, it should help weed out some of the illegals, and perhaps folks making a run at double-coverage.
Got questions? Then click here.

Doctors Acting Pragmatically

Question: would we see more or less of this under a nationalized health care scheme?

Shortsighted Gummint Tricks

On the face of it, the new CincyCare health benefit program would seem to be a dream come true:
"CincyCare will provide primary care, a prescription drug benefit, and care coordination for 2,000 workers in Cincinnati who need affordable healthcare, but currently are not eligible. Best of all, this program will come free of charge to participating employers."
And how many of those employers will now drop their group cover in favor of this scheme? Yes, it excludes major (read: hospital) claims, but how many employees will understand that? And it's aimed directly at the folks who'll be most affected: groups with high premiums due to major, on-going claims. Heck, who wouldn't bail under those circumstances?
And it's an over-utilization nightmare in the making, featuring unlimited $10 co-pays (whatever happened to "skin in the game?") for primary care. On the bright side, it limits drug reimbursement to $100 a year.
Now, there's a way for this to actually work: couple it with a mandatory high deductible plan to cover those catastrophic claims and non-reimbursed rx expenses (hello chemotherapy?!). But of course, that would involve a) some forethought and b) cash, two things apparently in short supply in the Queen City. As it stands, however, the plan is destined to draw the most claims-prone groups; one wonders how long that "free to employers" component will last.

Cavalcade of Risk #65 Up and Running

Joe Paduda presents this week's compendium of risky-related posts. As usual, he's done a great job of culling through the submissions to bring us the best of the best.
And do consider hosting your own Cav: it's fun, easy and a nice traffic boost. Just drop us a line to reserve your early 2009 slot.

MVNHS© Be Not Proud...

First, a point of order: this post is not about the efficacy, necessity or morality of organ donation. I happen to think that it's a good idea, and my driver's license affirms that. However, it was, and is, my choice to make available whatever body bits for which medical science can find a use after my demise.
My choice.
But our Cousins Across the Pond may have other ideas about that; at the beginning of this year, British Prime Minister Gordon Brown opined:
In Britain, as here, the current default position regarding the ownership of one's organs is that they are the individual's, the citizen's, to do with (pretty much) as they please. That is, doctors do not have the power of the state to force folks to donate their own, or other's, organs or anatomical parts. But PM Brown proposes to turn that very fundamental right on its ear (or spleen, etc), arguing that indeed the state is the best judge of how we dispose of our bodies.
And that, I'm afraid, is a slippery slope indeed. Because we're not just talking about post-mortem remains here, but living tissue and organs (and arms and legs, for that matter). Don't want to donate one of your two well-functioning kidneys? Too bad, you have no say in the matter.
That's all very interesting, Henry, but what does that have to do with insurance?
Over the years, we've catalogued a lot of misfires undertaken by the MVNHS©, and this is precisely the agency that would be responsible for implementing this widespread initiative. The good news is that, PM Brown's authoritarian leanings aside, said initiative is unlikely to be implemented in the near future. But it is instructive that the discussion is even taking place: what kind of government would presume to excercise ownership rights over the individual?
And while we're on the subject of health care, death and the MVNHS©, regular reader and commenter Scott M tips us to this gem:
Mr Rosser's advanced kidney cancer could be treated by the drug, but the $4,650 per-treatment price tag was apparently too much for the compassionate, gummint-run health care system. And for those folks who still believe, despite all the contradictory evidence, that a nationalized system is the way to go, there's this to chew on:
"The spending about 100 billion pounds this fiscal year, or more than double what it spent a decade ago, as the cost of treatments increase and the population ages."
So they've had no more success in reining in costs than we have, and since health care costs drive health insurance costs, the British taxpayer's taking more than one shot to that famed stiff upper lip. Which then exacerbates the problem thusly:
"The higher costs are forcing the NHS to choose between buying expensive drugs for terminal patients and providing more services for a wider number of people."
For proof, one need only look to the Canterbury-based charity Rarer Cancers Forum, which claims that over 25% of cancer patients "lose their appeals for regulator-approved drugs each year because of cost."
Or, as we might more succinctly call it: "rationing."
Still want to go there?
[Hat Tip: reader Scott M]

In a more perfect world...

Cartoon by Marshall Ramsey, ©2008
[Hat Tip: Bill M]

Attention Blue Cross Shoppers

You can now save 40% or more by using your Family Blue Card at participating providers.

Doctor visits, regularly $99 are now only $67 with your Family Blue Card.

Mammograms, regularly $156 are now only $132 with your Family Blue Card.

Notice. This is NOT insurance. Use of the Family Blue Card may force you in to bankruptcy in the unlikely event of a major claim.

You may now return to your regular shopping.

Tuesday, November 18, 2008

Bye Bye Birdie

If you want the stork to come visit in Commerce, GA don't count on using the local hospital.

Banks Jackson Medical Center is closing their labor & delivery doors in early December.

According to Henry Slocum, the hospitals community relations director, hard times are taking their toll.

He said that it is possible that BJC could re-establish labor and delivery services if demand increases and the economy improves.

Slocum says 66 babies were delivered at BJC last year, and expectant parents will be directed to other hospitals in northeast Georgia that offer labor and delivery services

Most of those births were Medicaid patients. The hospital can no longer afford to treat these patients due to the low reimbursement from Medicaid.

Providers Behaving Badly, Part 2

Guest Blogger "Roland" offers us an inside look at how some health care providers "game" the system for monetary gain, often at the expense of the patient. In Part 1, we learned that many providers sell medication at a greatly increased price as an additional "profit center." Today, we see first hand how this impacts their patients:

Unknown to us, the patient had another chemotherapy session slated for this past Thursday. She called us at 8 a.m on Thursday (her treatment was at 10), crying that the facility was refusing to treat her unless we kowtowed to their demands by then.
My manager immediately got onto the phone with our PBM, who attempted to call the facility. They would not return my manager's calls. She then called the provider herself. They also would not return her calls. Finally, she was able to get hold of the provider's account manager, who was forced to admit that the real reason behind their not cooperating was the cost, *not* because there was no longer any real concerns about the PBM or how the drugs were shipped. She actually admitted that it was about the cost.
My manager quickly stated "I think what we need to do is for you to tell us how much you'll be charging for the drug and then we'll take it to our PBM and see what they would reimburse for it. If what you're charging is lower than that...we'd be foolish not to accept your billing."
Which, unbeknownst to the facility, we already knew they were billing well above AWP. They had put the NDC number [National Drug Code Directory, a list of all drugs manufactured, prepared, propagated, compounded, or processed by drug manufacturers] on one of their claim submissions for a drug billed with a miscellaneous HCPCS code [Healthcare Common Procedure Coding System, a Medciare initiative to identify various treatments and medications]. They charged $450. The AWP was $210. I doubt that was a fluke.
The account manager stumbled and said she'd have to run it by her superiors, and as of now that's where the situation stands. They did, however, give the patient her treatment that day, so that's something.
All through this, however, the facility was painting us out to be the bad guys on this to the patient. That we were being unreasonable and all the usual insurance stereotypes. The fact is, we were trying to bend over backwards to work with the facility to ensure that the patient got the maximum benefit allowable under her plan. Which is a contract. The facility seemingly won't accept less than what they normally mark a drug up for, yet the insurance carriers are supposed to pay above and beyond what the contract would allow because of that?
I take no pleasure in the fact that this poor woman is having to deal with this when she's going through chemotherapy. It's been on my mind all weekend. Yet, if physicians and facilities weren't continuously marking up the costs of their services well beyond a reasonable margin of profit, carriers wouldn't have to do things like this, either. I've been running AWP on many chemotherapy claims that come in, some from well-known cancer treatment facilities, and the drugs are sometimes marked up $10,000 above AWP. AWP which is already artificially inflated and was the subject of a lawsuit against the manufacturers of some of these drugs.
So this is the other side of the story whenever you hear about the evil insurance companies. There's not one person in our office who didn't feel for this poor woman. However, we are also obligated to do our jobs and make sure that the terms of the contract apply. That's what insurance is. It's not an ATM card doctors and facilities can swipe anytime they want reimbursement.
Until we start holding them accountable for some of their actions...national health care would be a complete and utter joke.
Thank you, Roland, for your insights and information. It truly underscores the distinction that must be made (as we do so often here at IB) between health care and health insurance.

Grand Rounds: Music to One's Ears

Dr. Deb presents this week's roundup of interesting medblog posts. Do check it out.

Monday, November 17, 2008

Providers Behaving Badly

We're quite privileged to present our latest Guest Blogger. Regular reader and commenter "Roland" (not his real alias) worked for over 10 years for a major insurance carrier, transitioning to a TPA (Third Party Administrator) in the past year. Because of his unique perspective from the claims side of the business, Roland has graciously agreed to share a recent situation, in which he played a pivotal part, in order to present "the rest of the story" for our readers:
I had a file at work this week that's been bothering me all weekend and I'd like to share it to tell the other side of the coin that the MSM always seems to ignore: physicians and hospitals behaving badly.
A few of our groups have elected to use a Specialty RX Program through their PBMs [Pharmacy Benefit Managers: companies hired by insurers to handle the procurement and disbursement of meds] to control the cost of some of the more expensive drugs/injectables out there and, of course, chemotherapy drugs are at the top of that list.
As it stands now, when we receive a claim for chemotherapy case management is immediately initiated and we administratively cover the first visit. We then send a letter to both the facility and the patient stating that, on subsequent visits, the facility will have to purchase the chemotherapy drugs through the PBM. The reason for this (for people outside the industry) is that providers tend to jack up what they actually paid for the drug well over AWP [Average Wholesale Price], sometimes up to 500% over that amount. To which of course then the facility usually has a contact with a network that just knocks X% (normally anywhere from 5% to 15%) off whatever they bill, a thorn in my side that's a discussion for another time.
When we initiated this procedure on one file, we got a letter from the facility with two complaints. The first was that, by the time they got the letter, the patient had already had 5 chemotherapy treatments, and the provider had already bought and supplied those drugs.
While this seems like a valid argument, we didn't know that this patient was receiving chemotherapy until we got the claims in. Considering in today's health care world that there isn't an insurance carrier out there who isn't utilizing case management on chemotherapy files, I find part of the fault of that lies at their feet. A simple phone call before the patient had begun chemotherapy (even by the patient) would have averted that issue.
The second complaint was that they refused to participate in what they term "brown bagging" situations. This term comes from the fact that some PBMs will ship the drugs to the patient's normal pharmacy (say Walgreen's) and then the patient picks them up and brings them to the facility themselves. They claim there are major liability risks in this and quite honestly, I tend to agree since the drugs have to be handled carefully.
However, our PBM is a step "above" some of its competitors, and will work with the facility to ship the drugs directly to the provider, thereby avoiding the "brown bagging" issue. Which means that the only difference between the facility buying it from their vendor and buying it from our PBM is...cost. When they buy it from the PBM, the PBM will cut it down to AWP plus a certain percentage over it (anywhere from 150-200%). When the facility buys it from their own vendor, we don't know what they actually paid for it and can mark the drug up as much as they want and then get their PPO "discount".
[ed: Think of it like a furniture store. They buy the mattress for $100, tag it at $500, then have a 50% off sale. They're still making a $150 profit on the item, but it "looks" like a "deal."]
The facility basically stated that unless we agreed to cover the claims business as usual, they would no longer be able to treat the patient.
The Friday before last, I sent a letter to the facility offering them three options:
1. I detailed that this PBM would ship the drugs directly to their facility and therefore since their concerns about "brown bagging" were unfounded due to that, implored them to work with the PBM.
2. Stated that if they still decided not to cooperate with the PBM, they could then supply the drugs as usual. However, we would then deny those charges until the invoices and/or NDC numbers of those drugs were supplied and we would internally apply AWP to them and not honor any PPO percentage discount.
3. The patient could pay for the cost of the drugs themselves (an unlikely scenario due to the cost of some of them), and then we would still request the same information as in number two, but send the payment directly the patient.
What we really wanted was a paper trail, a way to show the patient that we were doing our best to get the facility to cooperate so she would get the maximum benefit allowable under the terms of her contract. We stated that we would need a written response within thirty days stating what they would do, otherwise we didn't see how it would be feasible for the patient to continue treatment there.

Stay tuned for Part 2 to learn more about this heart-breaking example of health care run amok.

Carnival of Personal Finance now online

MoneyNing hosts this week's roundup of personal finance posts.

Sunday, November 16, 2008

Michael Crichton, M.D. 1942 - 2008

May he rest in peace.

Although it is well-known that Crichton trained as a physician it's likely most people think of him as an author. My first encounter with any of his writings was in
this March 1970 Atlantic Monthly article. Crichton was 27 years old when he wrote it.

The article is lengthy but you really should read the whole thing. Here is a sampling:

1. "Most research scientists in history are alive today; therefore most of the discoveries in history are being made today. But the consequences of this vast outpouring of information and technology have yet to be grasped. Major questions are raised in such widely diverse subjects as medical education and euthanasia."

2. "welfare reimbursements are always less than the true costs of care. In this situation, the hospital makes ends meet by overcharging private patients and their insurance companies to cover the welfare deficit-in the case of the MGH, roughly $10 [15%] a day overcharge."

3. "to pass on costs to insured patients and make them augment insufficient tax funding for welfare . . . all works out to the same thing: one can pay the money either in taxes or in higher health insurance premiums. But in such a situation, it is probably more efficient to choose one or the other -- and the trend is toward universal health insurance in this country, unmistakably. "

4. "the American medical system . . . has never been able to structure the kind of competitive situation which encourages and rewards economies. Nor has American medicine tried. The American physician has been grossly irresponsible in nearly all matters relating to the cost of medical care. One can trace this irresponsibility quite directly to the American Medical Association."

5. "Other countries are doing better, and most of them have some form of socialized medicine. The United States is extraordinarily backward in this respect. However, many American observers have looked at European socialized systems and have come away shaking their heads; and there is a widespread doubt whether any European system can be adapted to this country. Very likely, America will have to work out its own system. The combination of group insurance with a group-practice system seems a feasible, economical, and practical, method, acceptable both to doctors and patients."

The first half of the article is as clear an explanation as you will find anywhere of the stunning challenges and successes of modern medicine. And the second half remains, after all these years, a valuable critique of the organization and leadership of American medicine, from the AMA, to hospitals, to individual practitioners. I think it's fair to ask: aside from the costs stated in 1970 dollars, what has fundamentally changed in the 38 years since this article appeared?

Saturday, November 15, 2008

Health Insurance is not health care. So what?

[Welcome Kaiser Network readers!]

InsureBlog consistently points out that health care and health insurance are different animals. When media and pundits and politicians confuse the two – and it happens with depressing frequency – we think that’s misleading, and we say so. Maybe you believe that's just semantics. Or maybe you reply, so they’re different, so what? Well, let’s look at it.

1. Observe that high health insurance premiums result from high health care costs. If health care were not expensive, health insurance would not be expensive. If the cost of health care were not rising, the cost of health insurance would not be rising. The cost of health care is the deeper problem.

2. The problem of high health care costs is not solved by finding clever ways to shift costs to somebody else via insurance premiums. Insurance is inherently a cost-shifting device, whether private or public. And sometimes the cost-shifting is just politics. Either way, shifting of health care costs does not reduce them by a nickel.

3. It's fine to seek the best & fairest way to allocate health care costs via insurance premiums. But even the optimal manner of setting premiums won't reduce health care costs by a nickel.

4. The problem of high health care costs is not solved by a strategy to subsidize health insurance premiums. That is an aspirin tablet that treats a symptom (high insurance premiums) but ignores the disease (high health care costs). When one has a bad headache, an aspirin is helpful. But if the headache persists for, say, FORTY YEARS, perhaps stronger medicine is needed.

5. And so understanding the distinction between health insurance and health care leads us to the insight that the high cost of health insurance is not primarily an "insurance" problem - it's one of the problems within our present health care delivery system. And in order to eliminate some significant part of the high cost of health care, our attention must be focused on reforming the delivery system.

If there is confusion from the start between health insurance and health care, the analysis will be confused and still more ineffective "solutions" will result. This is why we think understanding the distinction between health care and health insurance is so important.

Friday, November 14, 2008

File under Good to Know

The Wall Street Journal Best of the Web Today reports that Gerry Spence, a prominent California plaintiffs attorney, has this advice for us: legal representation is essential, even more important than health care.

He has more to say here:

"I want to ask you which would be more important: If all of the doctors in the country somehow disappeared or all the trial lawyers in America somehow disappeared?" he asked. "We can live without medical care, but we cannot live without justice."

As Jack Benny said, “I’m thinking! I’m thinking!”


The folks in Saginaw, Michigan have been the beneficiary of a taxpayer subsidized health plan, but that is going away.

Those who are eligible must earn $14.50 or less an hour, work part- or full-time at companies with no more than 50 employees and have proof that they have waived group-sponsored coverage and had no insurance for the previous 12 months.

Interesting qualifiers.

You must have waived an employer sponsored plan AND have been uninsured for 12 months.

So much for personal responsibility.

The cost of the insurance is divided equally among an employee, an employer and the county. For an unmarried worker, for example, each would pay $53 a month to cover a $159 monthly premium.

Sounds like a very attractive premium for the benefits.

Part of the cost of the program came from taxpayer subsidies. But a proposed levy on property was defeated.

The levy would have generated about $5 million and brought in $1.2 million in federal matching funds in its first year. It would have cost the owner of a $100,000 home about $50 a year.

So much for spreading the wealth.

And then there is this.

Thomas R. Call Jr. of Saginaw Township, head of the grassroots opposition group Stop Taxing Our People, said he is happy the tax failed.

"We have to be diligent about the rampant tax movements popping up every few months. This issue goes beyond the county. The federal and state governments aren't taking care of people, so we should do it?

So Mr. Call thinks it is OK for the state & federal government to tax people in order to fund health care, as long as the locals are not asked to chip in.


Cavalcade of Risk #65: Call for submissions

Managed Care Matters host and CoR veteran Joe Paduda hosts next week's Cavalcade of Risk.
Please send in your risk-related post by this coming Monday (the 17th). As usual, Joe asks that you include:
■ Your blog's url
■ Your post's url
■ The post's trackback URL (if available)
■ A (brief) summary of the post
And remember: ONLY posts that relate to risk (not personal finance tips and the like).
You can submit your post via Blog Carnival or email.
Oh! We have hosting slots available for early '09 - grab yours while you can!

Thursday, November 13, 2008

Consumer Driven Health Care: Interesting Update

[Welcome Kaiser Network readers!]
We've been vocal proponents of Consumer Driven Health Plans (CDHP) for a long time, and have seen some of the positive results of putting consumers into the health care driver's seat. Since these plans are relatively new, long term trends have been difficult to ascertain, but that's beginning to change.
Recently, health insurance leviathan WellPoint (WP) published a report that showed some interesting (and hopeful) results. The folks at WP surveyed almost 8,000 of their groups that offered some kind of CDHP in 2007, and made some startling finds:
■ Those employers that adopted a CDHP in 2006 saw their health care spending decline, while those in non-CDHP plans saw spending increase from 7% to 10%
■ Most employers that offered a CDHP also offered other, more "traditional" choices, and families with children were still more likely to opt for the CDHP
■ One of the most oft-cited objections to CDHP plans is that they discourage folks from seeking preventive care (although the logic of this canard has always escaped me). Contrary to "conventional wisdom," however, the study found that "consumers enrolled in CDHPs had higher utilization of preventive care than consumers enrolled in non-CDHPs."
One of the things I most appreciated about the report was that it generally avoids industry jargon; that is, it's understandable to non-insurance-geeks. And it's not an overwhelming amount of information, so it's easy to go through fairly quickly.
Kudos, WellPoint!
[Hat Tip: NAABC]

Post-Election Health Wonk Review now online

Louise Norris, co-blogger (co-blogress?) at Colorado Health Insurance Insider, has an outstanding edition of the HWR. It's obvious that she's read each and every post, and has taken the time to add insightful context to every one.
Kudos, Louise!

Wednesday, November 12, 2008

All in the Family(Care)

Did you know that Illinois offers low-cost health insurance to parents of young children? Based on family income, rates run from $15 to $40 a month; plans include low ($2!) co-pays for doctors' visits and meds.
Sweet deal.
But that particular gravy train has hit the bumper:
It seems that Gov Blagojevich (pronounced "Schwarzenegger") wanted more folks to qualify for the plan, and so raised the eligibility limits. For example, a family of four could have over $80,000 of income and still qualify for the plan. Seems to me that $80,000 is not "poor," but solidly middle class. This kind of "expansion by fiat" is why a lot of people find the programs themselves so offensive. If the goal is to help "the poor," then let's have a realistic definition of "poor."
And that's exactly what Cook County Circuit Judge James R. Epstein has done: after Gov Blagojevich "unilaterally reinstated the coverage and expanded it to 400 percent of the poverty level, or $83,000 for four," Judge Epstein issued a restraining order, putting the brakes on the expansion. As a result, FamilyCare officials "stopped submitting vouchers it receives from health care providers to the state comptroller for reimbursement."
The net result is that, because the Gov got greedy, even folks who, by almost anyone's definition, really are poor will now suffer. Something about the baby and the bathwater? What is it that drives politicos to take reasonably designed programs and turn them into personal causes?

Recreational Drug Use

[Welcome Industry Radar readers!]

It's no secret that the big 3 auto makers have been beating a path to the door in Washington, hoping for up to $75 billion in loans to shore up their bottom line.

Kind of makes you wonder who is next.

But in light of the negative publicity levied on AIG about how they are spending OUR money, I thought it only fair to shine a light on the auto manufacturer's as well.

So amid all those fat benefits, how much could be cut in order to make it more palatable for the Bank of the U. S. Citizens to lend money?

One area might be drug costs.

Current and former union officials share auto executives' criticisms of pharmaceutical companies' advertising, saying that it drives up costs. They say that overall costs for the benefits should be controlled, but not in ways that penalize the health or pocketbooks of workers.

Control costs, but without "penalties".

It certainly is good to know union officials want to help . . . as long as they don't have to give up anything.

Isn't this part of the problem?

Nissan has begun steering employees toward generic drugs by setting lower co-payments for them and higher co-payments for costlier medicines still under patent. DaimlerChrysler made the same change for its nonunion, salaried workers at the start of this year, and found that it helped control costs in the first quarter of 1999, said Nancy Rae, the company's vice president for compensation and benefits.

Steering towards lower costs options is certainly one way to save money. It is worthy to note that DaimlerChrysler was able to make plan alterations for their non-union employees only.

The U.A.W. has long resisted such changes. Union officials maintain that financial considerations should not discourage workers from seeking the best possible medical care.

So why does more expensive = better care?

That is not always the case. This is especially true with medications. Recent studies have shown that older, less expensive drugs are just as effective, if not more so, than newer, higher priced meds but with fewer side effects.

At G.M., Viagra accounted for $10 million of the $676 million in prescription benefit costs last year,

I certainly have nothing against having a little fun, but when my tax dollars are in play I might have to say enough is enough.

"Better Late" Update

Last week, I wrote about North Carolina's new high risk insurance pool. While I liked the plan overall, I did have some reservations about some key features.
Turns out, Colorado's had a similar plan in place for almost 2 decades, and experienced fewer of the problems I mentioned than one might imagine. Louise Norris, co-blogging at Colorado Health Insurance Insider, has the full story, as well as some observations and suggestions for her Tar Heel State colleagues.


Okay, not really the AARP (that's an American thing), but ailing English seniors in general. The MVNHS© (Britain's "Much Vaunted" National Health Service) has taken aim - again - at its seasoned citizens, opting to deny them needed health care:
Seems that Parliament was considering new legislation that would ban health care discrimination based on age. But that's now on hold for at least another year and a half, leaving elder Britons without protection against the kinds of shenanigans for which the MVNHS is so famous. In a move reminiscent of our own brilliant governing class, the "Minister of State for Care Services said the Government will set up an advisory group to look at the issues around age discrimination in health and social care."
But of course: a committee!
And also of course, said committee will use the next 18 months to study the issue, and then (perhaps) issue some guidelines and/or recommendations, which may or may not be implemented some time iin the hazy, distant future.
Which doesn't do sickly seniors much good [ed: maybe that's the point?]
I'll leave the last word to His Right Honorable Phil Hope (the aforementioned Minister), who provides the most authentic example of genuine gummint-speak we've seen in quite a while:
"The Government will undertake consultation on possible exceptions to the ban on harmful age discrimination (in health and social care) taking account of the findings of the advisory group when it has completed its work."
Couldn't have said it better myself, Gabby.

Tuesday, November 11, 2008

Video Bonus Round!

Aside from passing references, we haven't written much on Humana. Perhaps that's because they've been relatively well-behaved, and thus stayed out of our sights. That may be a good thing, and this definitely is: Humana's launched a new PR drive to help educate the public about ways we can help control health care costs. As regular readers know, this is key to holding down health insurance costs. The carrier's rolling out a series of 10 educational videos "designed to deliver guidance, and to support awareness and understanding of the healthcare industry."
The first one is entitled "Why is Healthcare So Expensive?" Since we've recently done several posts on this very topic (here and here, for example), this seems quite the timely addition:
We'd be very interested in any feedback on this, especially whether our readers found it interesting and/or helpful, and whether we should continue to post them as they come out.

AARP Shell Game

[Welcome Insurance Forums readers!]

It is an old carny trick.

Three shells on a table. One pea.

Hide the pea under a shell. Move the shells around and ask the player to guess where the pea is hidden.

In that game, no one get's hurt.

AARP is a massive marketing organization and advocate for the "elderly", but I hardly consider 50 years of age to be elderly.

AARP has done a great job of promoting themselves. So much so that they have created their own brand.

One not so well known fact is this. The dues paid to AARP are not enough to cover the cost of their operation. AARP is a non-profit organization but don't let that moniker fool you into thinking all their work is charitable.

A major source of revenue for AARP comes from their partnership with insurance carriers.

In 2007, AARP made about $299 million just from its health insurance partnerships,

That's some serious cheddar.

But this relationship between marketing organization is not all rosey.

Bob August found out how confusing things can be when he tried to use his health insurance purchased through AARP.

My wife and I have had AARP insurance since 1982.

See the confusion?

They don't have AARP insurance. They have a policy that was purchased through AARP.

AARP is not a carrier, only a marketing partner.

This year, when we decided to get shingles vaccinations, we called AARP and were told the shots were covered.

We got the shots June 10 but didn't receive a bill until early September. We paid and sent in the forms to AARP, but our claim was denied.

AARP should not be giving out this kind of information since they are not the carrier, and are not in a position to adjudicate claims.

They also should not be handling claims, even as a facilitating agent. All it does is perpetuate the illusion that AARP is the carrier.

We were told to appeal to something called UnitedHealth Group and the appeal was denied. Apparently, there is a 60-day deadline for filing for reimbursement. So we got clipped for $518.

That "something" called United Healthgroup is actually a very large carrier, insuring 25 million individuals.

United pays a commission to AARP for every policy sold through their organization.

Many times members of associations or warehouse clubs like Costco or Sam's believe they are getting a special deal on products (including insurance) that is sold through these outlets. Most of the time the policies are identical to policies sold direct by carriers or through independent agents. Underwriting is the same, so you can be rated or rejected for coverage, just like in the free market.

If you want to buy your coverage through an association or warehouse club, just beware that you are actually on your own when it comes to advice and service after the sale. You pay a full service price but without any of the benefits.

Monday, November 10, 2008

Unintended Consequences (AIG Style)

In the comments section at our latest (well, 'til now) post on the AIG debacle, regular reader Brad Ford observes:
When the gummint is your reinsurer, you're pretty much bullet-proof as to claims, reserves, you name it. And talk about intimidating: how does one level the playing field when one's competitior is Uncle Sam? Not to mention, yourself: remember, it's taxpayor dollars propping up AIG, and agents are taxpayors, too.
And there's a domino effect here, as well: what if another carrier loses so much business to AIG that it goes under? Do they get bailed out, too?
As I asked before, where does it end?

Please sir, could I have some more?

Although it's hard to imagine erstwhile insurance behemoth AIG in the role of the hungry naif, that's precisely the request being made by the head of that brain trust:
Well sure, better get in there before those irresponsible auto industry chaps drain the well completely dry. It's just government money after all, not actually paid for by the blood, sweat and tears of the American taxpayer.
AIG rocket surgeons were huddled late in the week with gummint pencil pushers, working out a deal that would tranfer millions (billions?) of dollars of "troubled mortgage-backed securities" from AIG's books to ours. And, like the poor saps who opted for those "troubled" mortgages, AIG is now complaining about the interest rate of the original loan. Currently 8 and a half percent over the London Interbank Borrowing Rate (LIBOR), AIG points to the "5 per cent interest rate paid by the banks that recently sold preferred shares to the government." [emphasis added] Um, geniuses, what part of "troubled mortgage-backed securities" don't you get?
If you sense a bit of sarcasm here, it's because we pointed out at the beginning that this was a bone-numbingly bad idea, and this latest installment just underscores that.
But wait, it gets better:
Of course this makes great sense, since the rocket surgeons who run AIG have shown themselves to be such thoughtful stewards of our money. One supposes that this 20%-plus increase will come with a lower interest rate [ed: natch!], thus transferring even more of our wealth to the coffers of the insurance giant.
But that was then, and this is now:
But of course.
In addition to the extra bucket of moola, our gummint is lowering AIG's interest rate by an additional 5.5%, which comes out to 3% plus the aforementioned LIBOR rate (currently at 2.39%). Not a bad deal, all things considered.
And because just throwing more money at something isn't nearly sufficient, The Fed is ponying up another $22+ billion of our cash to set up a special LLC (limited liability corporation) to buy those "troubled mortgage-backed securities" for us.
Where, exactly, does this end?
Oh, one more thing.
Bob just emailed this to me:
On the one hand, this is unconscionable. On the other, these are the people that many folks want running our health care system. Where, exactly, is the transparency in this transaction, and why would we want this kind of thinking when we look at our health?
"Careful Stewards" UPDATE: Fresh on the heels of "poor mouthing" the raw deal they were offered, looks like AIG execs have some 'splainin' to do:
CORRECTION: Apparently, these folks were "independent financial advisors," not AIG execs. Still, this demonstrates the kind of brilliant thinking that goes into the AIG "decision making process:" let's see if we can frivolously spend even more of the taxpayors' dollars.
After all, figuring out how to spend $150 billion (with a "b") of the taxpayor's money isn't a piece of cake (or torte, to be precise): it takes a lot of soul-searching, and what better place to cogitate on this dilemna than the Pointe Hilton Squaw Peak Resort . Gee, life sure is tough, isn't it?