Time for a Fisking

We have the best readers and commenters. Bar none. Earlier this week, Nate Ogden provided us much-needed perspective on the dramatic cost of the birth control/abortifacient mandate. Today, he offers a terrific take-down of Maggie Mahar's silly thesis that "Free Birth Control Will Not Hike the Cost of Your Insurance." Here's a sample of Maggie's "logic:

"If my married daughter lays out a $15 co-pay for birth control pills, she doesn’t save a dime ... in terms of the costs to give birth to the child, she is not much better off, because if she does become pregnant, her insurer, like many, would pay the bills above and beyond the co-pay."

Take it away, Nate:

This argument is wrong in both logic and fact. The cost of deductibles and co-pays for child birth is thousands of dollars, not the same as the monthly Rx copay. The new SBC (Summary Benefit) reporting requirement uses birth as one of the two examples of cost. I'm looking at the government issued sample SBC now and it says the patient would expect to pay $2,050. That is 136.6 months of birth control co-pays - 10 years worth of birth control. Major miscalculation by Maggie. Further this does not include lost earning potential and other costs related to being pregnant.

"By contrast, if an insurer makes birth control totally free for all of its customers, it avoids having to reimburse them for countless unplanned pregnancies and births. Overall, then, it’s cheaper for the insurer to pay a little upfront to save a ton down the line."

Maggie makes the mistake of not understanding how insurance works in this argument. Insurers charge overhead over expected claims. Their profit is a percentage of revenue, so the higher the claims, the more money they make. In reality Maggie is 100% wrong: insurers make more money if their members become pregnant because premium would be higher and their 5% would be of a higher number.

"There’s some indication that co-pays serve as a barrier to using birth control."

More than an indication, its accepted fact that unaffordable premiums are a barrier to insurance. If you can't afford the insurance policy that covers birth control at 100% you're no better off than the person with affordable insurance that covers birth control with a $10 co-pay.

"employer-sponsored insurance plans have increased considerably over the past decade to $49 in 2010 for ‘non-preferred’ brand-name drugs and $28 for brand-name drugs.”

Why would Maggie fail to mention generics in a discussion on cost [ed: that's rhetorical, right?] ? Generic birth control can be purchased for less then $9 per month. If cost is an issue, why not look at the numerous generic options instead of brand name?

Where Maggie's argument really falls apart is the unintended consequences: she fails to acknowledge any. The bill as written says birth control must be paid at 100%, but we still don't know exactly what that means. Right now millions of women take generic birth control that cost less then $10 a month because cost matters. What if they can now get the brand name drug for free? We already know Pharma is very successful in pushing the latest and greatest drug regardless of effectiveness. If the $9 generic is "free" and the $300 brand is "free" why would women not fill more of the brand? This alone would cause costs to skyrocket.

But there is more. Right now Pharma is sensitive to price; members and plans will only pay so much. Take the IUD Mirena, which might now have to be paid at 100%. When it was just an IUD subject to stricter cost control, it cost $515.85. When it was approved for the treatment of heavy bleeding and prescribed as a treatment, they raised the cost to $742.42. Now that insurers might have to cover it at 100% why not raise it to an even $1000?

"This is why the notion that President Obama’s proposal will lead to higher insurance premiums is ... just plain silly.”

Who seems silly now?

Thanks again, Nate!

Oh, and one more nail in Miss Maggie's thesis. Even HHS Secretary Shecantbeserious disagrees:

"There would be no consideration of cost effectiveness. That was the explicit condition that the Department of Health and Human Services imposed on the ... mandate that will require virtually all health-insurance plans in the United States to cover sterilizations and contraceptives—including those that cause abortions." [emphasis added]

Ooopsies.

Cavalcade of Risk #151: Call for submissions

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Lighting the way to ObamneyCare©

This is the future of health care under the bill we had to pass to learn what's in it:

"Lemnis Lighting introduces two no-frills LED bulbs--one priced under $5 and one under $7--that don't give off much light ... That means that the bulbs ... won't give off enough light for many uses, such as lighting a whole room.

A fitting metaphor.

Bad News Exchange

As Bob noted a few weeks back, "[c]ome 2014 "Exchanges" will be where many American's buy insurance. You will be encouraged to go online or call an 800 number and pick a plan. You will discuss your needs with salaried navigators that are unlicensed and unregulated."

Or will you?

Although the Exchanges are ostensibly a key component of ObamneyCare©, there's now some question as to their viability. In a pair of posts from FoIB (and Cato's Director of Health Care Policy) Michael Cannon, we learn that:

"[T]he federal government doesn’t have the money to create ObamaCare Exchanges, and the administration has no hope of getting that funding through the Republican-controlled House. So if states don’t create Exchanges, they might not exist."

Here's the rub: if your state demurs, then you're not eligible for the promised subsidies.

And speaking of states who've given HHS Secretary Shecantbeserious and her Exchanges the snub, legislators in the Beaver State have "blocked approval of Oregon’s health insurance exchange."

Are dominoes beginning to fall?

ICD-10…We Don’t Need No Stinking ICD-10

In my daily review of my medical practice list group a member posted an announcement that CMS was considering delaying the implementation of the ICD-10. Medical Practice Managers have been told for over 2 years that the date of Oct. 2013 is in concrete, will not be moved, be ready or else. Well, it seems that the implementation of moving to the ICD-10 is not really working as well as planned. As of Jan. of this year all medical offices needed to switch from billing under the ICD-9, which is called 4010 to billing under a new system, 5010, which will allow providers to bill using the ICD-10 identifications.

I personally oversaw the billing transition from the old system (4010) to the new system (5010) and it was an unmitigated disaster. Our software company was not ready for the transition and we suffered a two to three month loss of monies due to software issues (and the physicians were none too happy). I attended a seminar at the beginning of this year discussing the 5010 problems and was given a handout from CMS which outlines how to get ready for the 5010 transition. These are the recommendations:

How to Ensure a Smooth Transition to Version 5010 Below is an overview of steps providers can take to maintain continuity of operations for their practices as they prepare to complete Version 5010 testing and implementation by the January 1 deadline:

• Be sure to have a transition plan in place. The plan should document the steps that will be followed and the dates that milestones will be achieved to comply with Version 5010 requirements. Make your plan available to payers and other business partners so that testing can be scheduled.

• Communicate with vendors regularly; encourage them to take action now to avoid problems with reimbursements. Providers should identify areas within their practice that depend on vendor support and communicate with their vendors immediately to ensure their systems will be up-to-date. Hold vendors accountable by discussing business requirements to ensure products are Version 5010 compliant. Ask vendors about the new Version 5010 features and request trainings to make sure internal staff is comfortable using the updated system. Lastly, talk to vendors about any contract upgrades or costs involved with implementing the new software.

• Reach out to a clearinghouse for assistance. A clearinghouse ensures that claims smoothly transition between practices and payers. When providers submit noncompliant claims, the clearinghouse translates the claims into a compliant format and sends the compliant transactions to payers. The clearinghouse serves as a translator from the Version 4010/4010A to 5010 format. Even if you normally submit your claims to your business partners directly, a clearinghouse can bridge the gap if you are behind in implementing Version 5010, and maintain the submission and processing of your claims while you complete your transition.

• Establish a line of credit. Providers should work with their financial team to establish or increase a line of credit to cover potential cash flow disruptions. A line of credit will help a provider’s practice prepare for potential delays and denials in payer claims reimbursements due to noncompliant Version 5010 transactions being submitted. A practice should also evaluate its cash reserves.

• Take advantage of the free software available to Medicare Fee-for-Service (FFS) providers via Medicare Administrative Contractors (MACs). Providers should contact their MAC for more information.

Take note of recommendation number 4, establish a line of credit. Physicians cannot afford a two to three month break in their revenue due to the incompetency’s of the federal government. Our office did have a line of credit which got us through the drought; however, not all physicians have the collateral to establish a line of credit to cover three months of anticipated revenue. “The Medical Group Management Association recently sent a letter to Department of Health and Human Service Secretary Kathleen Sebelius, saying that if the government does not rectify the current problems with the transition to HIPAA Version 5010 electronic transaction standards, physician practices may face "significant cash flow disruptions, operational difficulties…or even the prospect of closing their practices."

So now the federal government is back peddling so fast they are going to get whiplash. “CMS Acting Administrator Marilyn Tavenner said the agency plans to “re-examine the pace” of implementing ICD-10, marking the first public indication that the 2013 implementation date is not as firm as CMS has repeatedly said it is.”

As I have stated before, the only reason for going to ICD-10 is because the rest of the world is on ICD-10 and we need to be like the rest of the world. So I state again, the rest of the world is also metric, but I don’t see America jumping on the metric bandwagon.

Health Wonk Review: Beyond Contraception edition

Our favorite healthcare economist, Jason Shafrin, has a very topical round-up of the fall-out from the recent Komen/PP/HHS kerfluffle. As usual, his 'Review is well-organized, compelling and eclectic.

Enjoy!

Inside Baseball and ObamneyCare©: Is it a tax?

We've been pretty silent on the Constitutional fate of ObamneyCare© as it wends its way to the SCOTUS. For one thing, we've already made it perfectly clear how we feel about the (Evil) Individual Mandate, and the other myriad of problems inherent in the bill we had to pass to learn what's in it.

But today, the folks behind ObamneyCare© let slip the mask, and perhaps tipped their hand:

"In a hearing of the House Budget Committee ... pressed [Acting Budget Director Jeffrey] Zients on whether the penalty that the health care law imposes on individuals who do not purchase health insurance constitutes a tax. Eventually, Zients said it did not." [emphasis added]

Of course, characterizing the fine as a tax is what gets them under the Commerce Clause umbrella, and hence (potential) legitimacy. One wonders if Mr Z was inspired by Tom Brady.

From the P&C Files: Get a CLUE!

As we've mentioned, Bob and I frequent an online consumer bulletin board, where we offer advice when appropriate. One of the frequently asked questions is how to find out if a recently deceased loved one had any life insurance. Unfortunately, there is no central repository of that information.

About the closest thing to that kind of data warehouse would be the Medical Information Bureau (MIB), about which we've written several times. The MIB doesn't have records of issued policies, but can be helpful in determining whether or not a person had applied for life or health insurance. It does not, however, collect actual claims information.

Which may or may not be a "good thing" depending on one's perspective.

But if you've had a claim on your homeowners policy, that information is available to other agents and carriers. And it's not just your claims, but your home's claims; that is, even if you sell your house and move away, that claim will (essentially) follow it.

This information is readily available to companies and agents via a CLUE report. And here to explain that is our P&C guru Bill M:

CLUE stands for Comprehensive Loss Underwriting Exchange, which is a database subscribed to by most Insurance Companies. A reported claim will show up as a claim for the individual insured and as a claim on that property location. When looking at a new property for someone, a CLUE report will show both claims that the individual has had as well as claims at the location being looked at.

For example:

Maybe you've never had a claim, but the previous owners' had several. Well, that's going to show up and may affect your rate.

That's the part I hadn't known, and that I suspect a lot of readers hadn't, either. Thanks, Bill!

ObamneyCare© vs Jobs (Redux)

Just a few months ago, we brought you the story of a mid-sized law firm which perfectly illustrated the jobs-killing effect of ObamneyCare©. Of course, proponents of nationalized healthcare would pooh-pooh this as a one-off, but would they be right?

Turns out, not so much:

"U.S. small-business owners who aren't hiring -- 85% of those surveyed -- are most likely to say the reasons they are not doing so include not needing additional employees ... nearly half of small-business owners point to potential healthcare costs (48%)"

That only makes sense, of course: if you're a small business owner struggling merely to survive this oppressive economy, you're already well aware of how much your existing workforce's health insurance costs. Adding to that? Get real. And this is after just a couple of years of ObamneyCare©; imagine how much uncertainty will increase as we draw ever closer to 2014.

United Healthcare Drinks the Kool Aid

“UnitedHealth Will Tie Doctors’ Payments to Quality of Care in U.S. Shift” was the headline I saw during my morning review of medical news. The article describes in glowing terms how United Healthcare will save money because people will be healthier.

“UnitedHealth expects to save twice as much as it would spend on incentive payments for doctors because patients will be healthier, according to company documents ... The nationwide expansion of the program follows similar efforts by the U.S. government and rival insurers to trim medical costs by shifting away from paying based on the amount of services provided.”

The age-old argument of quality over quantity. Currently, the payment system in place is quantity. Providers are paid per CPT code billed, which defines either an office visit or a procedure performed. Medical notes, referred to as SOAP(S=Subjective, O=Objective, A=Assessment, and P=Plan) notes do not mention quality of care, only that care was delivered and the plan (if any) for continued care. The current guidelines to writing a SOAP define the exam, the chief complaint, what was examined, diagnosis and treatment. In situations of a chronic condition the provider can note if the patient is getting better or worse in terms of recovery, but this does not relate to the quality of care.

The argument to move away from quantity in terms of payment is that physicians are over-worked (a physician needs to see a minimum of 28 patients a day to make enough revenue to simply maintain a business) and patients are not receiving good care. Concierge medicine attempts to deal with this issue by limiting the number of patients a physician has by charging each patient a retainer to be their personal physician. A limited number of physicians have moved to this model, but it cannot be implemented with Medicare Patients: Medicare prohibits charging a patient more than the Medicare Fee Schedule for medical treatment. So, two solutions have emerged, ACO’s and payment for quality. ACO’s are a capitation plan which failed under HMO’s and will fail again, but quality is a new concept. The theory is that if a physician knows that he/she will only be paid if their care is high quality, then the physician will take the time to truly treat the patient. As with all theories, only practical application will prove their viability, but I do have some thoughts on the theory itself based on common sense and my experience.

Thought 1: People do not always do what is in their best interests. The Darwin Awards are a testimony to this thought. In medicine the physician is only as successful as his patient. If his patient is 200 lbs overweight, smokes, and has a steak for dinner every night, there is a high probability of heart disease or stroke. The physician puts the patient on a diet, enrolls him in smoking cessation classes and gets him a life time subscription to Veggies International. The physician provided quality care. But the patient ignores the diet, blows off the classes and sic’s his dog on the nice lady from the Veggie group. He has a stroke and is admitted to the hospital. Who is to blame for this situation, the physician or the patient? Under the quality mandate it would be the physician because his treatment did not prevent the stroke.

Thought 2: Pre existing conditions or genetic time bombs. Science has demonstrated that each of us have genetic markers that can become a myriad of diseases. The federal government takes this so seriously that as an employer I cannot discriminate against someone who has had a genetic test and came back positive for some chronic and life threatening disease. Even though that disease will cause my health care insurance premiums to sky-rocket, I cannot take that into consideration when hiring an individual. What if a physician takes on a patient that is unlucky enough to get one of those chronic, expensive diseases that have death as the only outcome? Will he not be paid because his treatment could not keep his patient alive? After all isn’t that the true outcome of quality care, staying alive?

Thought 3: Who defines "quality care?" In the 1980’s the argument revolved around the best care for a child, home with a parent or in a daycare setting. It was the same argument: the stay at home parent offered quantity time, while the child in daycare received quality time from one’s parent. That argument was not resolved because we all have our own definition of quality. In terms of medical care, is the fact that you did not die during your appointment prove quality care or is it keeping the person from ever getting sick or injured or suffering any bad thing from ever happening, (remember, even bad things happen to good people)? It cannot be answered, and if it cannot be answered then a payment system cannot be linked to it.

Thought 4: If the insurance company and/or government define quality and their definition determines if the provider gets paid, will the provider ever get paid? In medicine right now providers and insurance companies are competitors; competitors for the patient’s dollars. The insurance companies are a business and it is in their best interest to keep the money. The providers did the work and thus the money is owed to them. It is getting harder for a provider to be paid for treatment rendered simply based on the objective parameter of delivering treatment. How much harder will it be to get paid with the parameter as subjective as quality?

Based on these thoughts, it is my hypothesis that payment for quality care will fail because of one simple fact: We are mortal and no amount of medical treatment will alter that reality.

Tuesday LinkFest

First up, FoIB Sam B tips us to the story at the McPaper which reports that "little of the medicine they receive is actually backed by evidence."

Well, d'unh! How about a little Tort Reform to rein that in?

Oh, and in a nice touch, the reporterette includes the long-debunked (and silly) canard that the "USA ranks low among industrialized countries in life expectancy, at number 50."

Next up, our friend Holly R has some good news for those underpaid docs:

"WellPoint [has] announced a plan to pay primary care doctors as much as 10 percent more.

The idea is to reduce the overall cost of health care, by increasing the number of primary care physicians."

Now about that Medicare DocFix...

Lastly, ever wonder why Medicare drug costs seem to fluctuate from state to state? Well wonder no more. According to a new University of Pittsburgh (PA) study (just published in The New England Journal of Medicine), variations "across the United States [are] largely due to the use of more expensive brand-name drugs and not because of the amount of drugs prescribed"

Who knew?

[Pitt Study Hat Tip: Allison Schlesinger]

ADDENDUM [Offered without comment]:

"64-Year-Old Can of Lard Still Edible Today ... a can of lard that Hans Feldmeier, an 87-year-old man from Germany, has kept for the past 64 years ... Feldmeier decided to save the lard tin for emergencies and he has held onto it ever since."

Paula Deen says "Hallelujah!"

Tooting our own horn

Recently, I was offered the opportunity to tout InsureBlog to online college students considering a career in the exciting field of insurance. My first reaction was "what, are they nuts?!" But apparently there are still young people interested in this field, for which I am truly grateful.

And so I shared my thoughts on insurance and blogging, and these have been included (along with those from a handful of other sites) in this post written by Jim Varnon.

Thanks, Jim!

Maybe it’s because you are a business…

I have come across another article about how physicians are losing money. The usual culprits are blamed, “Among the factors they cite for their shrinking revenue: falling insurance reimbursements, changing regulations and rising business, medical liability and drug costs.” While all these factors contributed to the situation, the blame must lie at the feet of the physicians. I have worked with doctors for over 10 years, both as a provider and as an administrator and I am constantly surprised at their inability to grasp the concept that medicine is a business. In a business, if your revenues continue to drop year after year and expenses continue to grow, then maybe you need a new business model. The article does discuss concierge medicine; however, that is a limited business model that does not deal with the situation at hand.

“From 2000 to 2011, Small Business Administration loans to physicians' offices, including private practice doctors and mental health specialists, ballooned to $675 million from less than $60 million.”

It is interesting that the article cites the growth of Small Business Loans to physicians began about the time that Medicare froze the Fee Schedule, effectively keeping a physician’s reimbursement at pre-millennial dollars. When a business is suddenly facing a reduction of revenue, for whatever reason, the successful business changes to meet the new reality, businesses that do not change fail. Doctor’s did not change to meet the new reality of medicine and as a result are failing.

The successful physicians are those that realize that they do not have the business acumen needed to keep up with the changing landscape. They will actively seek professionals in the healthcare business field to assist them. A successful physician, either through consulting or direct hire, is going to work with professionals to develop and implement the business changes needed for success. They will put the needed funds into technology, staff, marketing, billing, and administration. They will diversify their services, have office hours when patients want to be seen, and offer products for purchase. They will recognize that right now medicine is a volume business; the more patients that are seen in a day, the more money that comes into the office. Finally, doctors will recognize that medicine is no longer the cash cow it once was and work with business professionals to keep their medical practice viable so they can do what they went to school to do, practice medicine. In other words, they will begin to act like other successful businesses and businessmen.

Romantic Grand Rounds

Dr John's Valentine's Day-themed collection of medblog posts is bright, cheerful and full of heart-healthy info.

Wherein Free gets Very, Very Expensive

Frequent commenter Nate Ogden is a TPA (Third Party Administrator) in Northeast Ohio. In that role, he sees exactly what medical care costs, because his firm arranges payment for it. And he has some very disturbing information about ObamneyCare©'s most recent paean to Big Pharma, the one that's been making headlines the past few days:

As Henry mentioned, I'm a Third Party Administrator, which means that I help employers with "self-funded" plans track and pay for health insurance benefits. Generally, we pay claims based on the agreement we have with the employer (client); when we go over a pre-arranged maximum, we turn to our reinsurer. Think of it as a really high deductible plan.

The key is that we have to know what things cost, and we have to know what's supposed to be covered. A lot of readers may not be aware that some 60% of all people covered by group insurance are in self funded plans, and that 85% (or more) of large employers, colleges and hospitals are self funded. Since the "insurer" in this context is actually the employer, not an insurance company:

1. They won't have access to "free" birth control
2. These organizations will be forced to pay for birth control

Here's why: When employers pay claims under a self funded plan, the majority of the time that is coming right out of the employer's general account. So while it may seem like it's "free" to the employees (just like it seems like it's "free" to folks on fully insured plans), it's really coming out of their raises, bonuses, even salary.

Which brings up the first big question, one that hasn't seen much (if any) press: What birth control is provided for free? Can we cover the generic 100%, or if their doctor prescribes something new at $500 per month are we stuck covering that 100% as well? Remember, it's not the insurance company getting stuck with the bill here.

We have seen this in the past when a med went from OTC (over-the-counter) or Compound to prescribed-only: cost skyrockets. And this is the other key point currently being drowned out by other issues:

Knowing that all insurers are required by law to pay 100%, Obama just eliminated all price pressure. No matter what the charge is, we are required to pay it. Why wouldn't manufacturers jack up the price of all birth control? After all, "[w]orkplace health plans will have to cover all forms of contraception approved by the Food and Drug Administration, ranging from the pill to implantable devices to sterilization."

Although much (most?) of the emphasis has been on birth control pills, IUDs are also quite popular. So how would covering them at 100% work out?

There are currently no generic versions of these devices available, and:

"Due to a recent price increase by the manufacturer, UMP has increased the allowed amount for the Mirena IUD from $515.85 to $742.42"

So how does an insurer, required by law to cover a single source Rx or device, prevent the manufacturer from increasing price?

This seems like a great opportunity for providers that implant the IUDs to ding insurance plans (well, those who pay for them, anyway): 100% benefit, no member liability. Why would doctors not suggest it and why would we expect members not to follow their guidance? At $9 a month for "the pill [ed: aye, but for how long will that price hold?], and up to $2000 for some IUDs and insertion? How does an insurer -- required by law to cover a single source Rx or device -- prevent the manufacturer from increasing price?

And when (not "if") they do jack up the price, what happens when insurers are required to pay 100%?

Doesn't this put the lie to all the talk of affordability and accessibility?

Thanks, Nate, for sharing your expertise and insights. I'd like to emphasize two key points you've made, because they really lie at the heart of this "debate:"

First, no health care is "free;" that is, it is paid for either by the patient or his insurance (often a combination of both). So when the President unilaterally says that "birth control" must be free, he means that either its manufacturers must charge zero for it, or that the cost must be passed along to other insureds (and, of course, the taxpayer).

The second issue is that, since there are no boundaries, there are no limits on how much the manufacturers can charge. Of course, there will be claims of "gouging," but who will make them? The consumer? No, because she has no skin in that game: it's "free" to her. By the government? Why? It is, after all, the government that has mandated this outcome.

Which brings us to perhaps the most important question of all: Whatever happened to personal responsibility?

It ain't over - til it's over

And it ain't over:



Not yet, anyway.

Data, Data, Who owns the Data?

While we've occasionally blogged on medical tech, it's usually regarding electronic records keeping issues. While this is important, it's really only part of the equation: many folks have various gizmos implanted in their bodies, from pace-makers to prosthetics, even defibrillators, which are the subject of this post.

These little wonders represent a true feat of medical engineering: technically known as implantable cardioverter defibrillators (ICDs) they're "placed in the chest or abdomen. Doctors use the device to help treat irregular heartbeats called arrhythmias ... An ICD uses electrical pulses or shocks to help control life-threatening arrhythmias."

And they do something else, as well: they collect data about one's cardio system and transmit that information back to the device's manufacturer.

And therein lies the rub:

"Hugo Campos has [an ICD] buried in his chest to help keep him alive. But he has no idea what it says about his faulty heart."

All the pertinent data is collected and then sent back to the manufacturer, which then shares some of it with Hugo's doc.

But what if Mr Campos wants to see that data for himself?

Tough beans. Although Federal law says that patients are supposed to be given ready access to their health records, there's a "loophole" of sorts:

"[I]mplanted defibrillator data is different. The information stays with manufacturers, who use it to monitor and improve their products."

In fairness, it's unclear how useful this data would be to a layman. For one thing, it's apparently transmitted in a proprietary format. For another, raw data may or may not be meaningful to someone without the requisite knowledge (eg med school) to interpret it. On the other hand, Mr C is serious about this, earning a "certificate from the Arrhythmia Technologies Institute."

Ideally, making this information more easily accessible (and meaningful) may not require government intervention. At least one ICD manufacturer "is looking into ways to provide patients with meaningful and actionable information with regard to their implantable devices."

It seems to me that enabling patients to more fully understand what's going on inside their bodies is simply one more tool in the consumer empowerment tool box. And that might be a very good thing.

Long Term Care News

As we've mentioned, Ohio requires agents who want to work the Long Term Care insurance (LTCi) market to take biennial "refresher courses" (at 4 hours a pop!) in order to stay up to speed on these products. So yesterday I attended such a class, again provided by my colleague Ray Copenheaver, an acknowledged expert in the field.

I must admit to a bit of trepidation: after all, how much could possibly have changed so much in the past two years to justify 4 long hours of information overload?

Turns out, quite a bit.

We already knew about the recent spate of rate increases, and the exits of several carriers from the market, but that was just the tip of the iceberg. For example, it's (relatively) common knowledge that Unum bailed on the individual marketplace a few years ago, but did you know that they also announced (just a couple of days ago!) that they're also pulling out of the group LTCi business? I sure didn't.

There are also several new developments on the legislative front, such as the PPA (Pension Protection Act). This little beauty, which became the law of the land in 2010, has spawned a raft of new LTCi-enabled annuities, offering a potentially attractive alternative to folks who may not qualify for "regular" long term care plans.

And I learned something new about the Partnership Program. As we've previously reported, Partnership-compliant LTCi policies let one take chunks of assets "off the Medicaid table," protecting them from the dreaded "spend down." But it turns out that that's only half the story: folks who avail themselves of these plans may* also inoculate their estates from Medicaid Recovery efforts. This is a very significant bonus, potentially saving those "left behind" from losing the family homestead.

[*This is not entirely clear - I spent a great deal of time this morning with the Ohio DOI, who could neither conform nor refute this. I'll be speaking with the Medicaid folks shortly to see what they have to say.]

All in all, a very productive 4 hours, indeed.

Irony, Thy Name is ObamneyCare©

You can't make this stuff up:

"The Medicaid Health Plans of American (MHPA) ... says letting the government apply the "health insurer fee" provisions in [ObamneyCare©] ... would, in effect, amount to taxing Medicaid plans to help pay for expansion of Medicaid plans." [emphasis added]

Bet MHPA wishes that Congress had read the plan before they passed it...

Cavalcade of Risk #150: Sesquicentennial edition

My Wealth Builder hosts this week's round-up of risky posts. Do check it out.

And BTW: We're scheduling Spring Cavs - just drop us a line to claim yours.

Reflections on a Broken Window

In his groundbreaking analysis, Frédéric Bastiat postulated his Fallacy of the Broken Window. Simply put, it means that there is always an opportunity cost. In his classic example, a window is broken, which some people think is a wonderful thing because it means paid work for the local glazier. The reality, of course, is that the shop owner whose window now lies in shards had planned to buy (for example) eggs from a local farmer, or a new hat from the local milliner; these gentleman are now out of a sale.

Our friend Michael Cannon, Director of Health Policy Studies for the Cato Institute, has penned a short but powerful analysis of his own. While not directly quoting Monsieur Bastiat, the comparison is unavoidable:

"Unfortunately, the money and time this genius spent vandalizing other people’s property are resources that could have gone toward, say, buying him health insurance. Or providing a flu shot to a senior citizen."

Indeed.

HHS Sec'y Shecantbeserious: Hey, it ain't MY money!

One of the stated rationales for ObamneyCare© was that putting the nation's healthcare delivery and financing systems under the control of the Fed's would lead to increased efficiency and cost savings.

So how's that workin' out?

Turns out, not so well:

"In a letter sent Monday ... ask Secretary Kathleen Sebelius [sic] to tighten oversight of taxpayer dollars that flow in and out of the agency, including a $500 million difference between its internal accounting and the Treasury's records, and an $866 million difference in divisional budget reports."

Not to mention billions of dollars in additional discrepancies involving retiree drug plans and Medicare shortfalls.

But of course, accountability and transparency are for "the little people," not Ms Shecantbeserious.

Breaking: Forced Medicare chalks up a win

It's been almost a year since we last had any news on the forced Medicare story. Unfortunately for the good guys, the judge in the case has ruled against them:

"A federal appeals court ruled Tuesday that seniors who receive Social Security cannot reject their legal right to Medicare benefits"

We have a longstanding relationship with the lead attorney on the case, and hope to have his take on this shortly.

ADDENDUM: It occurs to me that this is completely of a piece with a regime which believes that it can force its citizens to buy a product they neither want nor need.

Lipitor Update

In email just received from Anthem:

"Lipitor will no longer be covered, effective April 1"

Since atorvastatin, the new generic version of this venerable cholesterol fighter, is now up and running, Anthem's dropping Lipitor from its covered med list. And according to the email, this means both group and individual business.

Something to consider if you have an HSA-compliant high deductible plan: as we've pointed out here at IB, non-covered items are ineligible for network re-pricing (ie "discounting"); this means you'll pay full retail for the med if you stick with the brand name. Adding insult to injury, since it's a non-network expense, it probably won't count towards your in-network annual deductible, either.

A double-whammy. Ouch.

Ethical Conundrum: Medicaid Planning

Received an email this morning with this provocative subject line:

"Medicaid planning: Should your advice be best for your clients or society at large?"

It's a legitimate question, and one that we haven't previously explored. Roccy DeFrancesco's email included a link to his more fleshed out version. In a nutshell, the question is whether or not it's ethical to find and use "loopholes" to take one's assets off the table when calculating Medicaid spend-down strategies.

He starts with this premise:

"The duty of any advisor is to do what’s in the client’s best interest, and any personal biases about the advice given needs to be left at home."

Along the way, he poses some pretty tough questions, including whether or not it's immoral to advise clients on proper Medicaid planning. The bottom line is that there's an inherent conflict between protecting one's assets while simultaneously pleading poverty.

It's not an easy call, and it's exacerbated by something which Mr DeFrancesco appears to have missed: Long Term Care Partnership Plans. After all, the Partnership Program is really just the government saying "hey, buy some insurance and you can hide protect some of your assets."

Is this ethical?

Grand Rounds: News Junkie edition

Self-described news junkie Dr Jennifer Dyer hosts this week's collection of medblog posts, with a special emphasis on politics.

MVNHS© Puts Seniors in the Crosshairs

How's this for a headline:

"[MVNHS©] 'in peril' if health reforms fail"

Now, one might be forgiven for wondering exactly what kinds of "reforms" British docs might be considering. After all, they don't have to worry about the "Doc Fix,"or being put out of business.

Their issue is that the Much Vaunted National Health Service© pays scant heed to the needs of actual patients, demanding greater "responsibility for commissioning health services." In other words, they're facing exactly the sort of problem about which Bob wrote last month:

"The doctor does not get to decide which services are best for the patient, nor are they allowed to set a price for their time."

Which brings us once again to that eternal question: why would we want to model our health care system on the MVNHS©, as ObamneyCare© obviously does?

ObamneyCare© Perspective

From our friend Michael Cannon at Cato:

"The real tragedy of the Komen/Planned Parenthood flapdoodle is that it overshadowed news that the U.S. House of Representatives overwhelmingly voted to repeal ... the ironically named CLASS Act."

And mind you, this really is a victory: the repeal passed overwhelmingly with a bipartisan majority.

ADDENDUM: I should point out that the CLASS(less) Act had any number of deal-killing problems, not the least of which was that the plans would not have been Partnership Compliant.

So, good riddance.

Unfortunate missed opportunity [UPDATED]

Ever heard of an "Interstate Compact?" Me either, but they're (apparently) for real:

"A voluntary arrangement between two or more states that is designed to solve their common problems and that becomes part of the laws of each state."

There are some hoops through which to jump, but they're authorized under Article I, Section 10, Clause 3, of the Constitution.

That's very interesting, Henry, but why are you telling us this?

Glad you asked:



The Ohio Health Care Compact‏ folks went to a great deal of trouble to produce that video (and rather nicely done, too), and to set up a reasonably navigable website, complete with a contact form.

Which, apparently, no one actually monitors, because we availed ourselves of it earlier this week, expressing interest and support, and have yet to receive any reply.

'Tis a shame, really.

UPDATE: We've just heard from the OHCC folks, and have asked to interview one of the honchos. We'll keep you posted...

The D'unh and the Elephant

FoIB Holly R sends us two seemingly unrelated links which, upon closer inspection, are actually inextricably intertwined.

The D'unh:

"The Congressional Budget Office (CBO) released its Budget and Economic Outlook for years 2012 to 2022 yesterday ... as a result of increasing federal spending on health care, which will more than double between 2012 and 2022."

And the Elephant:

"Federal Reserve Chairman Ben Bernanke warned Thursday that rising health care costs must be curbed ... The elephant in the room is really health care costs."

Now let's try a little exercise: what major piece of recent legislation could possibly have been passed that would cause health care spending to increase so dramatically?

See, it's not so difficult.

Cavalcade of Risk #150: Call for submissions

My Wealth Builder hosts next week's CavRisk. Entries are due by Monday (the 23rd).

Just click here to submit your post.

You'll need to provide:

* Your post's url and title
* Your blog's url and name
* Your name and email
* A (brief) summary of the post

PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like).

Planning for Tomorrow

At age 46, small business co-owner Mark C bought disability income insurance to protect himself, his family, and his company. Less than two years later, he'd developed a rare and debilitating condition, and his claim was quickly approved.

Because Mark had bought these plans, his family and his business dodged a major bullet.

Here's his story.

[Hat Tip: FoIB JeffM]

Health Wonk Review, Early Election edition

Our friend Louise Norris presents a thoughtful - and thought-provoking - selection of posts on the politics of health care. What's so great about it is that she doesn't just post the links, but adds her own analysis of each one.

Kudos!

Death Masters

Although this may sound like the latest PS3 game, it's actually the Social Security Administration's list of post-life-Americans. In a nutshell, the SSA is tasked with identifying those who have died and (in some cases) pass along that information:

"Social Security does not make its Death Master File (DMF) available online ... Under the Freedom of Information Act, we are required to disclose the Public DMF to members of the public ... The Public DMF does not contain information where SSA's only source of that data was a State record of death. Further, the Public DMF is not a complete listing of every death in the United States."

So what's the problem?

It's that there's an inherent conflict between the "official" records kept by DC and those compiled by other actors (eg the states). What's at issue is that a) there's some question as to the accuracy of "The List" and b) how it's being used. And, of course, there's the whole problem of identity theft.

What's happened is that the states, squeezed ever harder for funds, have set up their own little speed traps for insurers. To wit: forcing insurers to either track down long-lost beneficiaries or turn over death claim proceeds to the state.

One little problem: as the SSA has itself acknowledged, the DMF is itself rife with potential errors and misinformation, including:

"incorrect reporting of death “have created severe personal and financial hardship for those who are erroneously listed as deceased, including the termination of benefits and the public disclosure of information that the SSA normally keeps confidential.”

So you can see where there might be, um, issues .

As usual, it's all a game of "show me the money," using the power of the state (both metaphorical and literal). In the event, the new hearings can be expected to shed as much light on the problem as usual.

Insurance meets the 20th Century (Finally!)

One of the most frustrating things when dealing with carriers is the dearth of tech solutions to pretty basic problems. While many health insurance (and some life insurance) carriers have adopted on-line application processes (I can't speak for the P&C side), many still require "paper apps" and inked signatures to go with them.

That may be changing, however, and the folks at the Renaissance Group (a self-described "elite coalition of independent agencies, insurers, and service with over 80 member agencies") have developed are using a new tool to help decrease their paper consumption, while increasing efficiency in sending and receiving sensitive documents electronically.

Here Bob Schackner, the company's Director of Competitive Edge Services, explains their new RPost widget for email encryption and e-signatures:



UPDATE: Just to clarify, RPost created the widget, The Renaissance Group is a (satisfied) customer.

[Hat Tip: Oly Rillera]

An Open Letter to North Dakota

[We've rarely (if ever) weighed in on WC issues, but this case appears uniquely egregious. Our friend Joe Paduda has helped spearhead an effort to better publicize this travesty, and we were happy to lend our support. HGS]

An open letter to the press, business community and people of North Dakota:

The authors of this letter are journalists, columnists, bloggers and content publishers for the workers' compensation industry across the United States. We are a politically and professionally diverse group. We do not agree on everything, yet find ourselves of one opinion on a highly critical matter. We are competitors who are now colleagues for a common cause; to bring light to a serious injustice being committed within your state.

The prosecution of Charles (Sandy) Blunt was, in our view, an outrageous and almost farcical event. It is, in the final analysis, a travesty that has damaged the national view of your state, hampered the operation of a State agency, and ruined the life of a good man wholly undeserving of such results.

Sandy Blunt was Director of North Dakota's Workforce Safety & Insurance from May of 2004 until December of 2007. He was, as you are likely aware, prosecuted by state authorities for "misspending government funds". Specifically, he was charged and convicted on two counts:

During his almost 4 year tenure his agency spent approximately $11,000 on employee incentive items, including flowers, trinkets, balloons, decorations and beverages for Workforce Safety and Insurance employee meetings, and on gift certificates and cards in small denominations for restaurants, stores and movie theaters. Blunt personally approved some of these expenditures. Others were made by managers as part of daily operations under his watch. Not a dime went into an employee's pocket, nor did Blunt personally benefit from any expenditure.

His agency paid $8,000 to an employee, David Spencer, for sick pay when he was not apparently sick, and it also failed to collect $7,000 from Spencer when he left prior to the end of his employment agreement. The $7000 was for moving expenses incurred that prosecutors felt Spencer owed the state. Blunt's position was that the agency was not entitled to collect these funds, since Spencer's departure was not voluntary.

All told, the state prosecuted Sandy Blunt, and he is now a convicted felon for "misspending" $26,000 of government money.

No one has ever alleged that Blunt personally benefited from any of these expenditures. Blunt was acting like other capable, ethical North Dakota executives ‐ in the best interest of customers and of the mission of his employer. In our industry it is considered a best practice to provide employees and supervisors with incentives. It is not frivolous, it's necessary, and what every employer should do.

The first of these two charges would be, to many people, laughable if it were not for the damaging consequences associated with them. The notion that buying inexpensive incentive items for your employees could result in a felony conviction is simply stunning. This would not be elevated to a criminal status in most states in the nation. The fact that it is in North Dakota should have a chilling effect on businesses looking to move there.

The second and more serious charge, involving the sick pay and moving expenses of employee Spencer, has been fatally undermined by the revelation that the prosecutor in the matter, Cynthia Feland, withheld critical evidence from the defense - evidence that largely clears Blunt in this area. A disciplinary panel for the North Dakota Supreme Court has found on November 7, 2011 that:

"Cynthia M. Feland did not disclose to Michael Hoffman, defense attorney for Charles Blunt, the Wahl memo, and other documents which were evidence or information known to the prosecutor that tended to negate the guilt of the accused or mitigate the offense."

Withholding of evidence by prosecutors is one of the most serious acts of prosecutorial misconduct in North Dakota and all other states. In recognition of this, the panel recommended Ms Feland's license to practice law be suspended. We urge that you read the entire report of the panel, including the penalties the board recommended be imposed on Ms. Feland. For the report, go here.

Had the prosecutor not withheld evidence, in all likelihood the case would never have come to trial, and the reputation of Blunt and the WSI would be free of taint. The evidence in question shows that WSI's auditor's own findings backed Blunt's position on payments related with Spencer. However, those findings were not made available to the defense, and the prosecutor was found to have allowed testimony to be given at the trial that directly conflicted with information she had. As we indicated, Feland, now a judge in your state, has been recommended for suspension and a fine over these findings.

Yet Sandy Blunt remains a convicted felon. His crime? Buying balloons, trinkets and $5 gift cards - for his employees, not for himself. For that, Blunt, who is married with two children, has had to spend half a decade, and untold thousands of dollars trying to clear his name.

Some of us have known Sandy for quite a while. Some have come to know him while learning of his situation. Others of us have never met Sandy, but recognize the tenuous nature of his treatment. Collectively we speak to thousands within our industry every day. Our opinions have been clear; this situation needs the light of truth shone brightly upon it. The time and resources expended prosecuting a man on such questionable grounds should be more closely examined, by the business community, workers compensation professionals and the media in North Dakota.

Sandy Blunt is a good and decent man. He deserves better. So, it would seem, do the people of North Dakota.

Peter Rousmaniere
Consultant & Writer
Working Immigrants

Robert Wilson
President & CEO
workerscompensation.com

Joseph Paduda
Principal, Health Strategy Assoc, LLC
Managed Care Matters

Rebecca Shafer
Lower Your WC Costs

Julie Ferguson
Consultant & Editor
Workers' Comp Insider

David DePaolo
President & CEO
Work Comp Central

Henry Stern, LUTCF, CBC
InsureBlog

Tom Lynch
Founder & President
Lynch, Ryan & Associates, Inc.

Jon Coppelman
Senior Vice President
Lynch, Ryan & Associates, Inc.

OmniCare in the News, Again!

Well, that was fast. Previously, it took over three years between OmniCare posts; this time it's less than three weeks:

"PharMerica Corp. said Monday it hopes ... Omnicare Inc. will drop its $457 million takeover bid in the face of the federal government's suit late Friday to block the deal ... The Federal Trade Commission said a combination of the nation's two biggest long-term care pharmacies would raise the cost of Medicare Part D prescription plans"

Hey, wait a minute.

Did I just hear the gummint say that competition is a good thing and that fewer choices is a bad one?

Has anyone clued in HHS Secretary Shecantbeserious?

Because that's exactly the opposite of what she's been advocating.

[Hat Tip: FoIB Holly R]

Potter strikes (out) again

Wendell Potter, erstwhile shill for Cigna turned professional insurance industry basher, is at it again. This time, he's using the tragic death of skier Sarah Burke to indict our health care system. There are many, many holes in his diatribe, but we'll highlight a trio:

"The irony is that had the accident occurred in Canada… her care would have been covered because, unlike the U.S., Canada has a system of universal coverage"

Really?

Please tell that to Kent Pankow, little Baby Joseph, and pregnant women. The truth is that the Canadian system may offer universal coverage but has a dim track record on actual delivery .

"but with medical care covered through donations, the aftermath will not bring them additional hardship"

And so?

There are a number of lessons here: first, why would Mr Potter expect the surgeons who worked on Ms Burke to do so for free? Second, we obviously have the infrastructure here to handle these kinds of incidents, paid for by Americans. So in Mr Potter's world, it would have been perfectly fair for American citizens to be stuck with the bill for her care, because she chose not to purchase readily available travel medical insurance?

Sheesh.

Finally, Potter pulls out the ol' "medical bankruptcy" canard, long debunked, by claiming that "An estimated 700,000 American families file for bankruptcy every year because of medical debt."

No they don't, Wendell, and you (should) know it.

I'd ask this question of Mr Potter: how do you think Ms Burke would have fared had ObamneyCare© and its death panels been in full force?

Yeah, I thought so.

We're THIS many (7)!

Hard to believe, but today marks our 7th blogiversary.

With over 4,750 posts, numerous awards, and a top-shelf selection of co-bloggers, we have a lot to celebrate.

Most important, of course, are our wonderful, loyal readers.

Thank You all!