skip to main |
skip to sidebar
Louise Norris presents a colorful, thoughtfully laid out collection of the best of the past week's posts from around the medblogosphere.I was particularly impressed with how obvious it was that Louise had read each entry, even with a short deadline, and the fact that she and Jay are also hosting this week's Cavalcade of Risk.Kudos, Louise!
Normally, we wouldn't bother posting about something that, after all, affects so few people, but I think there are some interesting lessons here.Via email from Anthem:"Wood Anesthesia and Pain Management, LLC, in Wood County, Ohio, has chosen to terminate its provider contract with Anthem effective 10/25/11 ... Consequently, Anthem members may be billed by Wood Anesthesia and Pain Management for any balance not covered by Anthem. However, since our members do not have a choice of anesthesiologists for surgeries performed at Wood County Hospital, Anthem will apply the equivalent of any member liability amounts" [emphasis added]Anthem goes on to say that, although they'd really like to have hammered out an agreement that would keep the gas-passers in-network, the carrier has an obligation to its members (and, of course, its shareholders) to "negotiate a contract that will keep their health care costs as affordable as possible."Remember: health care costs drive health insurance costs.As we've previously discussed, "hidden providers" like anesthesiologists (and radiologists, etc) often have no incentive to belong to any network, and this case graphically illustrates why: "members do not have a choice of anesthesiologists for surgeries performed at Wood County Hospital." This is often (generally?) the case at most hospitals, and is one reason that folks are surprised (and not in a good way) when they are balance-billed for services rendered where no negotiations are possible.It's fashionable to bash the carriers for heavy-handedness (and, frankly, they often deserve it), but here we have a very public airing of the specific problem.I also got a bit of a smirk from this:"[P]ayment for services will be issued to the member, who will then be responsible for making payment to Wood Anesthesia and Pain Management."Nice.This serves two purposes: first, the provider is going to have to go after the patient directly in order to be paid. One wonders how well that will work out. Second, and not-unrelated, is the fact that these patients will now see first-hand how much this part of their medical procedure really cost. One of the biggest problems with our current system (and, of course, the gummint-run ones, as well) is that the patient is insulated from the true cost of care. We know how much that oil change costs, because we foot that bill. And we know how much those peas cost, because we bought the can ourselves. But when health insurance (or the government) becomes an intermediary, the price is obscured and distorted.What a great teaching moment.
Just a quick heads-up on a case the Supreme Court has already accepted for review this term - it's known as Douglas v. Independent Living Center. The issue in simplest terms, is whether Medicaid recipients and providers can sue a state for failing to pay the rates required by the Medicaid Act. Well, that seems straightforward enough . . . before, that is, one takes into account the actual law and the courts' reading of the law. The linked article reveals some of the complications - for example, that the Ninth Circuit previously ruled the State of California "failed to produce evidence that it complied with requirements that do not appear in the [federal] statute." Huh? With all the attention given this term to the probable hearing of the Obamacare appeal, other important insurance-related issues such as Douglas v. Independent Living Center aren't getting any air time. This case is worth following because of its potential to increase the cost of Medicaid--even before the increase in Medicaid cost that will result from Obamacare.
Jay Norris hosts next week's CavRisk. Entries are due by Monday (the 3rd).NB: We're now using this submission tool: The BC WorkAroundOnce there, you'll be asked to provide: ■ Your post's url and title■ Your blog's url and name■ Your name and email■ A (brief) summary of the post ("Remarks")At the bottom of the form, you'll see a drop-down menu; simply select "Cavalcade of Risk" then press "Submit" and you're good to go.And PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like).Thanks!
As we enter a New Year, our thoughts turn to new beginnings, new possibilities, new hopes.
May you be inscribed for a blessing in the Book of Life.L'Shannah Tovah T'kateyvu.
InsureBlog is once again nominated for the Lexis-Nexis Top 50 Insurance Law blogs, and we would really appreciate your support. . Would you please pop over (just click here) and leave a comment in support of us. You may need to register (it's easy and free), and please make sure to mention InsureBlog.Thanks!
Last week the UK announced that it will scrap its 9-year-old Information Technology (IT) project intended to digitize all National Health Service patient records and link all parts of the enormous NHS together. The reason? According to Britain’s department of health, the project “has not and cannot deliver to its original intent”. What has this project cost so far? About $6.4 billion British pounds, or about $10 billion US dollars. In response to charges that this money was wasted, NHS indignantly responded that “around two thirds” has resulted in “substantial achievements.” Well, whatever those achievements may be, that response is a clear admission that the other one-third was, indeed wasted. That one-third waste is the equivalent of more than $3 billion US dollars. Perhaps more important is the global impact on thinking about health IT. For example US policymakers hope that IT will save scads, tons, bundles, oodles of money in the delivery of medical care. That would make medical care more effective and less costly, it would make Americans healthier, make us live longer, and make all our children handsome and above average. Perhaps now that hope needs to be re-examined. Hope, you see, is necessary when there is no evidence. In the UK contrary evidence has been accumulating.
From time to time, we note trends in various lines of insurance, and a recent email from the Council for Disability Awareness has information from the 2011 Long-Term Disability Claims Review.Disability insurance replaces lost income in the event of an injury or (usually long-term) illness. It's available in both group and individual flavors.I found these results particularly noteworthy:1) Over half 50% of those carriers which participated "reported increased claim incidence, and most suggested the increase was impacted by the recession."That conclusion's not as far-fetched as it may sound: these numbers track pretty well with previous recessions.2) The number of folks covered by disability insurance actually declined, and again the economy was cited as the primary factor.This also makes sense: if you're out of work, you don't need (and may not be able to afford) disability insurance.3) On the other hand, applications for Social Security Disability benefits increased by almost 3 million people in '10, "the most ever."That's the "good news." The bad news is that the percentage of these applications that were actually approved by Social Security remained pretty much "near its 25-year low."There's much more in the report, including this interesting graphic:
Click here for the full report.
[Hat Tip: Barry Lundquist]
If you're a United HealthCare insured and you've had any lab work done the past few years, then you're probably familiar with LabCorp. That's because they're (apparently) the largest such labs in the market, and they (again, apparently) had quite the cozy relationship with UHC.Maybe a little too cozy for some: Andrew Baker (formerly of Unilab) has filed a suit against LabCorp, alleging a rather massive fraud at the expense of Medicare and its beneficiaries (not to mention taxpayers). In brief, LabCorp is accused of charging Medicare much more than it charged United HealthCare, which is also accused of pressuring its network doc's to use LabCorp exclusively.I was offered, and gladly accepted, the opportunity to interview Mr Baker. Here's that interview, as well as some observations:InsureBlog: Thanks for agreeing to speak with us, Mr Baker. Could you tell us a little about yourself, and why you brought this lawsuit?Andrew Baker: Of course. I was President of MedPath, which was owned by Corning Glassworks. That was spun off, and I ended up buying the lab, which became Unilab. Eventually, I sold the lab to a private equity firm, which then re-sold it a short time later at a much greater price. I was a bit curious about the difference because, as far as I could tell, the market itself hadn't changed dramatically in such a short time, and I didn't understand how the value could have increased so quickly and so greatly. As it turns out, the lab had increased its use of "pull-through" business, which I had objected to during my tenure there. This is the practice of enticing business through deep discounts and kickbacks, and I was, and continue to be, an opponent of it.After speaking with several law firms, I decided to press forward, because it's wrong and anti-competitive to small business. as well as costly to Medicare.IB: Your fact sheet accuses UHC of threatening to kick providers out of their network if they didn’t play ball. This seems unlikely. What proof can you offer that this occurred?AB: We have plenty of documentation to back that up. Doctors were not happy to have their livelihood threatened, as would be the case if they were kicked out of UHC's network.IB: The Stark Law has some pretty severe restrictions regarding this kind of activity. Why would providers risk their own licenses (insurance notwithstanding) in such a scheme?AB: That really applies to providers steering patients to vendors in which the doctors have an ownership stake, which was not the case here. In fact, this was sort of a reverse-Stark situation, in that doctors who refused to participate could end up losing, but were actually paid nothing for the referrals.IB: In reviewing the facts, it’s clear that Medicare was not defrauded in the generally understood meaning of the term. If LabCorp had not discounted their billed charges to UHC, Medicare would have paid the exact same amount. So who got hurt here?AB: Medicare could have been paying less versus the capitated (insured) plans. The law says they can't charge Medicare and insurers different amounts, and yet they did, and so Medicare, and thus the taxpayer, ended up spending more than necessary [ed: here's where Mr Baker and I really part company; I'll explain why in a moment].IB: The fact sheet and legal briefs refer to UHC’s fully insured business. Was their ASO line also involved? What did the TPA’s and plan sponsors think of this arrangement?AB: Yes, I believe that was the case, although it wasn't consistent along all the lines. That is, some plans got the severely discounted rate, and others didn't.IB: It appears that the folks who most benefited from this arrangement were UHC’s insureds, who will now have to pay higher costs. Is that right?AB: Yes, that seems to be the case. But why should UHC benefit at Medicare's expense?IB: What relief are you actually seeking here? How much do you think you’ll net from this lawsuit?AB: I want the rules to change so that Medicare gets the same rates as UHC and others, or "Most Favored Nation" status, and I want the existing rules enforced so that this pull-through activity comes to an end.As to what my share of any settlement might be, I really have no idea. Frankly, it's not something I necessarily count on; I have other business and income. And, of course, being in England now, half would go to taxes anyway. I do plan to donate at least a portion of any proceeds to charity.IB: Thanks, Mr Baker, for your time and candor, and best of luck with your efforts.I'd like to thank Co-Blogger Kelley and FoIB Nate for their help in formulating the questions and reviewing the final interview, and to Ania Kapla of Hinton Communications for making it happen.Now, let's cast a more critical eye on this lawsuit, shall we?Before we start, I do want to mention that I had asked Mr Baker about his standing to bring the lawsuit. He demurred (correctly) to his attorneys, who confirmed that this is a qui tam (aka "whistleblower") lawsuit, so standing is not an issue here.Based on the facts we've been given (and which I will happily forward to interested readers), it seems pretty clear that LabCorp engaged in fraud based on Medicare's definition of fraud.Isn't that nit-picking, you may ask?No, it's not, and here's why: the general legal definition of fraud is "a false representation of a matter of fact ... by false or misleading allegations, or by concealment of what should have been disclosed — that deceives and is intended to deceive another so that the individual will act upon it to her or his legal injury."Medicare fraud, though, is really more analogous to "breaking our rules." As Kelley explains:"We would not consider this fraud since the labs billed Medicare the correct fee and collected the correct fee. However, the government states this is fraud because the lab charged Medicare more than they charged the other lab. In the business world, this is called giving discounts for volume."The key is that "if LabCorp had not discounted their billed charges, Medicare would have still paid EXACTLY the same amount. No more or no less money was paid by the Federal Government to LabCorp than to any other labs for the same service."As to Mr Baker's assertion that this was a sort of "reverse-Stark" scenario, in that doc's weren't remunerated for referrals, but punished for the lack of them, well, that doesn't hold water, either. As Kelley points out, he's "technically incorrect because the physician would benefit financially by keeping his United Healthcare patients, so the Stark Law could be applied in this case. The Stark Law is written such that it implies any type of compensation, be it pens and pads, or monies received from "funneled patients."Mr Baker also avers that "the law says they can't charge Medicare and insurers different amounts, and yet they did," which serves as the crux of his Medicare fraud argument.Kelley expands on this point:"The law states that all patients must be charged the same amount, without differentiation based on any type of preferred status: i.e. physician courtesy discounts, discounts to people without insurance, etc. It is not that LabCorp charged a different amount, it is that they accepted a reimbursement lower than the Medicare Fee Schedule. Thus, the lawsuit stems not from the charges but the reimbursement accepted."So who was hurt here?Not Medicare or its beneficiaries or the taxpayer. Not United HealthCare's insureds, who benefited from lower health care costs (hey, aren't we supposed to want that?). It seems to me that the only folks who were really hurt by this activity - and I'm in no way minimizing their loss - would be the smaller labs who couldn't compete. And that's not a little thing: absent a level playing field, free markets founder.Still, I'm having a very difficult time casting LabCorp as "bad guys" here. If anyone fits that role, it's Medicare and HHS Secretary Shecantbeserious. As we saw just two weeks ago, it's darned near impossible to get that agency to actually police its providers. Of course, it's not their money, so no harm no foul.Right?
Speaking of passing the bill to see what's in it, HHS Secretary Shecantbeserious gets to see what's in your medical records:"(T)he federal government is demanding insurance companies submit detailed health care information about their patients"And, of course, we're all confident that these records will be secured in a HIPAA-compliant manner and would never be used by, oh, Death Panels.As Rep. Huelskamp points out, the reality is less, um, confidence-boosting. For example:"(T)the HHS contractor who lost a laptop containing medical information about nearly 50,000 Medicare beneficiaries."
Of course, when such things happen in the private sector, there is legal recourse via the courts. But how do you sue the Fed's?Well, it's just data, so no worries, right?Right??
As we watch (not without trepidation) the descent of the UARS satellite, it's becoming increasingly likely that it will land in an American backyard or, worse, living room.So, is that a covered exposure?It's not an Act of War or G-d, but it's not your typical hail- or windstorm, either. So, as with most things P&C, I turned to FoIB (and P&C Guru), Bill M.With the usual caveats (including "read your policy!") Bill's "reasonably certain they'd pay for that."So now you know.
Bob recently posted about the act of balance billing by providers.
While I would never question Bob’s expertise in the field of insurance, I would like to clarify some points about balance billing. To begin, we need to understand how we have the health care payment system that is currently in place. The insurance structure that exists today came about during World War II. At the time, there was a wage freeze on American business, so in order to attract new employees, the benefit of paying for the employee’s health insurance was introduced. As employer-sponsored health insurance become more popular, the revenue cycle of medical care changed. Instead of the patient paying for the entire service at the time of treatment, the patient would pay a small amount of the medical bill and the insurance would pay the rest. Then patients began to ask the providers to submit the bill prior to them paying. The patients were tired of doing the paperwork to be reimbursed by the insurance company. (I remember sitting at my dining room table filling in my Champus forms for reimbursement for my daughter’s treatment.) The providers agreed, which created an entire medical billing industry. Then suddenly there were no monies due at time of service, or a nominal charge of $10.00, and the patient agreed to pay the provider whatever the insurance company stated was their responsibility. These changes dramatically affected how Americans viewed health care. First, by not paying the premium, they no longer had the knowledge of the cost of premiums. Secondly, by not paying for the medical care at the time of service, they no longer had the knowledge of the cost of health care.
From this system, we now have several terms: co-pay, deductibles, out-of-pocket and co-insurance. All of these terms refer to monies owed by the patient to the provider under the insurance contract system. Co-pays are the monies paid by the patient at the time of service. The other types of monies are determined after the claim has been submitted to the carrier as the patients responsibility. These are legal monies owed to the provider by the patient.Balance billing is not legal. Balance billing is the act by the provider of billing the patient the write off amount or the negotiated reduction between what the provider bills and what the insurance company pays. When a provider signs a contract with an insurance company, they are accepting the negotiated fee payment for the opportunity of having more patients directed to him by the insurance company. In this way the provider will make up in quantity the monies lost between the charges and the payments. This sounded like a great idea to physicians and they signed on by the bucketload. What happened was that the physicians set their charges based on the financial needs of the business and were getting paid 70% of that charge. The physicians were suddenly writing off 30% of each visit charge and finding that the increased number of patients were not bringing in the needed revenue. So what was a physician to do? The idea of balance billing was created. The reasoning was that the money was owed the provider since it was part of the original charge and since the insurance will not pay, then the patient must be obligated. However, the provider signed a contract with the insurance company that they would not seek the difference from the patient.
Non-participating (non-par) providers do not practice balance billing, as there is no contractual agreement for payment, as opposed to participating providers who do sign a contract. A non-par provider is free to charge the patient the entire charge without discounts. Additionally, there are no co-pays, deductibles, co-insurances or out-of-pocket expenses with a non-par provider. A non-par provider is one that does not have a signed contract with your insurance company, and as such the contract for payment for services rendered is strictly between you and the provider. However, you still can't negotiate prices with this non-par provider if the provider has a contract with Medicare; as a provider's contract with Medicare stipulates that the provider will treat all patients equal in regards to payment, whether they are a Medicare patient or not.Many times patients feel that the provider is balance billing because they are receiving a bill after they already paid at time of service. The provider is actually billing the patient the difference between what the insurance paid of the negotiated rate and what is still owed. This is not balance billing, as the insurance company has determined that the patient still owes the monies, not the provider.
Regular readers know that we're big fans of Consumer Driven Health Care (CDHC). When consumers (insureds) have "skin in the game," they're more likely to be careful health care shoppers. After all, if it's their cash at stake, there's an incentive to become actively engaged in the process. The fly in this particular ointment has always been a lack of transparency in the actual cost of care.When we use the buzz-word "transparency," we generally turn to the McDonald's model; that is, when I walk into a Ronnie Mac's, I can look up and see exactly what my fries and Diet Coke will cost. This isn't always applicable to health care, especially when it's an emergency, but certainly for chronic illnesses or elective procedures, it should be easy to find the cost of a given service (of course, this wouldn't take into account potential complications, but it's a starting point nonetheless).One major benefit of this model is that cost-conscious health care consumption can have a positive effect on the cost of delivery. If providers have to compete not just on outcomes but also price, then it's a win-win for consumers.And that's just what Prodigy Health (a health services holding company in Buffalo, NY) has decided to do with its group health benefits. Like many (most?) employers that offer (and subsidize) group health insurance, Prodigy looked around for some way to rein in skyrocketing costs. They found the answer at the drive-thru:"Before the new program, workers' incentive to shop around was limited because they had no idea — or any easy way to find out — that prices for many types of medical treatments varied widely."The "new program" is elegant in its simplicity: the company sets the price they'll pay for a given procedure, and then employees (or their covered dependents) call in for a list of local providers who meet that price-point. They can also opt for another provider, but would then be responsible for the cost difference.And it's not just a wing-thing, either: on the other coast, Safeway Foods has a similar program in place.By shifting not just the cost, but the responsibility for health care back to the insured, employers are accomplishing several things: first, of course, is a potential cost savings. But beyond that, it's a signal to folks that we need to be more actively engaged consumers - who goes and buys a car without checking the price? Look for more of this to take hold as tech and prices begin to catch up.
Posts
