Insurer as catalyst for productive change?

I am beginning to think change might be afoot in the ivory towers of insurers.

With Aetna’s chief running around talking about reform, and United Healthcare committing to improve service, it would seem so. Now Carefirst, one of the few remaining not-for-profit Blues plans, has a new CEO with some strange ideas.

Strange for a CEO of an insurance company that is. Chester ‘Chet’ Burrell took the reigns December 1 and since then has been meeting with the likes of hospital executives and others that formerly have had ‘contentious relations’ with Carefirst in the past. Why? To reassert its role as a ‘policy entity with nonprofit values’. Can such a thing still exist? If we are to believe Mr. Burrell, then apparently it does.

“Yes, it’s an insurance company, but it has a community mission,” Burrell said in a recent interview. “We want to be catalytic for productive changes in the health system.” While much of what he is proposing is modest, such as increasing electronic claim submission adoption to lower costs, some of his other ideas are quite radical including potentially offering grants to help physicians adopt EMRs more affordably.

Burrell also said he is looking to hospitals and affiliated networks of doctors to coordinate care, especially for the most expensive patients, who often have multiple chronic conditions and visit a variety of specialists.

Could it be that physicians will once again be allowed to practice medicine instead of pulling double-duty as clinicians and administrative gate-keepers?

I’ll be keeping my eye on Chet, and all the rest of them.

Medical society unable to rank top local health insurers, saying ‘they all came in last’

Harris County Medical Society released its first “Payor Survey,” in which 487 local health professionals rated the six largest insurance companies in the region on care, payment and customer service. Except, they couldn’t actually rank them because they all came in at “the cellar level”.  The insurance companies rated are Aetna, Blue Cross Blue Shield of Texas, Cigna, Humana, UniCare and United Healthcare.

About 500 members of the Harris County Medical Society responded to a survey on the top six health insurers in the Houston area. Some results:

70 percent said insurance companies had denied claims for medically necessary procedures.

66 percent said they had trouble getting insurance company preauthorization for scans and other imaging.

83 percent said the red tape and delayed payments involving insurance companies require them to have at least one employee per doctor to deal with filing and billing issues.

Read the full story here.

I applaud Harris County for its efforts, and for helping to force a dialogue where there previously has been none. In response to their efforts, most Payors have responded one way or another. Cigna cites its improvement in the denial category as evidenced in AthenaHealth’s Payor View rankings (see Physicians Practice article here) and points to its use of physician focus groups as a way of showing engagement with the issues.

United could take a leaf out of Cigna’s book. The WSJ reported Wednesday that ‘Bad Service Cost UnitedHealth 315,000 Customers’. The CEO, Mr. Hemsley, admits that UHC is the ‘industry’s worst’ at resolving billing issues with providers.  While it is refreshing to hear admissions of this nature, where is the game plan for remediation?

Perhaps as more provider-perspective rankings are made available, these issues may finally be adequately confronted. The quarterly Verden report – available late January 2008 – ranks insurers on data generated from the Verden Alert subscription service, which tracks policy and procedure changes issued by 160 companies nationally.

You’ll hear about it here first!

Another side of Consumer-Directed Health Plans (CDHP)

Advocates believe CDHPs promote better decision making regarding patients’ use of health care services. According to a McKinsey study, CDHC patients were twice as likely as patients in traditional plans to ask about cost and three times as likely to choose a less expensive treatment option, and chronic patients were 20 percent more likely to follow treament regimes carefully. Well that works great for insurers – premiums coming in without reimbursements going out.

Critics believe that CDHPs cause consumers, particularly those who are poorer and less educated, to avoid needed and appropriate health care because of the cost burden and lack of available information needed to make informed, appropriate choices. I suppose cost-sharing the price of the premium with an employer is taxing enough, doesn’t leave much left over to contribute to deductible expenses.

But these are just two sides of an octagon, in my opinion. The latest profit-maker for insurers, CDHPs are big business. Not only does this model allow for more profit from premium dollars that only need to be spent in the event of catastrophic illness, it has also opened the door to banking for many of the larger companies.

Let’s think about this.

First, if your CDHP comes with a high deductible, and you are relatively healthy, then the premiums you pay will never be used. Many plans come with deductibles of $3,000 and up. A tyical family of four plan may have a deductible of $5,000 and roughly $12,000 in premiums per year. If everyone is healthy, and the majority of insurance consumers are, then you have the privilege of paying for any health care costs throughout the year out of your own pocket while handing over thousands for insurance benefits you won’t use.  Rather than shopping around to save money, I’d be more likely to want to reach the deductible limit in order for my benefits to kick in. You want something to show for those dollars, right?

Second, it costs you to have a health savings acocunt (HSA/HRA). I had the pleasure of being covered by a UnitedHealthcare CDHP plan, who owns a bank specifically created to manage consumer and employer contributions deposited toward deductible expenses. When I received my account information, I made sure to read the fine print. It was full of charges – a monthly fee for the privilege of owning the account, a per-transaction fee any time I used the funds for health care related expenses, and even a fee for recieving statements. And I got the impression that reading the fine print had resulted in charges too. . .

So can someone please explain where the value proposition is in this for the consumer? High premiums (though lower than ‘traditional’ plans), large out-of-pocket expenses, nickled and dimed for the privilege of having an HSA/HRA, and none of the premiums being returned in the form of covered health care services – I just don’t see the value in it.

But the insurance companies sure do. Caa-ching!

Profit Maximizers Are Not Cost Minimizers

I don’t know about you, but I’m tired of hearing managed care companies talk about health care ‘affordability’. They seem to think that by offering bare-bones health plans at prices that are lower than more comprehensive policies, they are fulfilling the needs of society and ensuring that health insurance is within reach for more consumers.

But is that really the case? Many of these new plans come with lifetime caps not significant enough to cover any real catastrophic event. Several are targeted toward the young and healthy, ensuring healthy profits from an under-tapped maket. At least plans are being offered to consumers that previously had no other options, so that can be seen as progress, but is it progress in the right direction?

I think not. Insurance companies are profit maximizers, not cost minimizers. Until the focus shifts from taking as much profit as possible from the system to truly minimizing the cost of running such a system, we are simply seeing costs being shifted around. The winners? Managed care companies of course.

Who is setting the price of health care?

Today I spoke with a journalist about medical cost ratios. At one point in the conversation he asked me if I thought managed care had the potential to contain costs, even though they seem to be adding to their bottom lines currently instead. And then it struck me – managed care companies are the ones setting the price for health care. 

Let’s look at it this way – MCOs  set the price of premiums, then determine how much of those premium dollars they are going to pay out on rendered services. Contrary to what the industry would have us believe, it’s not the other way ’round (services rendered drive premiums).  Of course they cannot directly control utilization of servces, but they can control access to them, create ways to not pay for them, lower payments for them, and deny claims associated with them. So, if I’m an insurer, I simply need to be creative enough to figure out how to hold on to premium dollars, and then charge more to society for that privilege in the next underwriting cycle.

How else can we explain why medical cost ratios are going down and premiums are going up? At what point do insurers begin to cap their charges? Well, they won’t, because we continue to pay, pay, pay.