PNHP

Center for American Progress report on illusive administrative savings

Center for American Progress report on illusive administrative savings

Paper Cut – Reducing Health Care Administrative Costs

By Elizabeth Wikler, Peter Basch, and David Cutler
Center for American Progress, June 2012
This paper outlines the nature of administrative costs affecting both health care payers and providers, and considers ways to contain these costs. Many such efforts are underway, including the ongoing implementation of the Health Insurance Portability and Accountability Act alongside several different elements of the Affordable Care Act. Continued progress in these areas is thus a central step to lower administrative spending.
Even still, many additional actions will be needed. In the pages that follow, we outline a three-pronged strategy for addressing administrative costs:
* Integration: embedding administrative simplification rules and systems into existing reform efforts
* Coordination: bringing together similar administrative processes by different health care participants to maximize efficiency
* Leadership: creating a new federal office dedicated to simplifying health care administrative plans
Tackling wasteful administrative costs in our health care system in these three ways would result in savings we estimate at $40 billion per year.
These savings are eminently achievable. By integrating new performance standards to promote adoption of electronic transactions such as requiring that electronic health records include utilization metrics for electronic billing and other administrative transactions, we can achieve roughly $26.1 billion in annual savings. By coordinating similar processes by different health care participants—such as physician credentialing and enrollment, quality and safety reporting, and enrollment and retention systems for public programs—we can save $7.7 billion each year. And by ensuring leadership at the federal government level through a new senior-level office dedicated to ensuring that administrative simplification plans are carried through and that innovative results are achieved, we can save potentially much more.
Tackling excessive administrative costs offers a promising opportunity for reducing health care costs while improving the quality of care for all Americans.
report
http://www.americanprogress.org/issues/2012/06/pdf/papercuts_final.pdf
column
http://www.americanprogress.org/issues/2012/06/healthcare_admincost.html
About the Center for American Progress
The Center for American Progress is an independent nonpartisan educational institute dedicated to improving the lives of Americans through progressive ideas and action.
We develop new policy ideas, critique the policy that stems from conservative values, challenge the media to cover the issues that truly matter, and shape the national debate.
Founded in 2003 by John Podesta to provide long-term leadership and support to the progressive movement, CAP is headed by Neera Tanden and based in Washington, D.C.
http://www.americanprogress.org/aboutus

The Center for American Progress is dedicated to “improving the lives of Americans through progressive ideas and action.” Yet they were involved in bringing us the Affordable Care Act (ACA) while working with others to keep single payer off the table. They understand that one of the more important features of single payer is administrative efficiency. Let’s see how they would address that under ACA.
Basically, they have three proposals. They would move administrative functions such as billing into the patients’ electronic medical records; they would coordinate processes such as physician credentialing and patient enrollment through information technology systems, and they would add a new governmental bureaucratic agency to provide oversight of these additional administrative functions.
They contend that this would save about $40 billion annually, though $34 billion of that is already projected through the provisions of ACA and HITECH implementation. They contend that their proposal would add another $6.21 billion to the savings.
Can you imagine the expense of these complex computer systems and the nightmare of trying to coordinate and integrate the various systems amongst aggressive competitors, each of whom would attempt to position themselves in a effort to dominate the market? And obsolescence? That’s built in, both through efforts to perpetuate revenue flows to this industry, and through disruptive innovation designed to capture competitors’ markets. This won’t save costs. Costs will dramatically increase.
And adding another governmental administrative bureaucracy to our dysfunctional system is going to reduce administrative costs? In their effort to continue to suppress single payer they seem to have rejected the obvious concept that they need to REPLACE our current fragmented system of private plans and programs that wastes so much in administration. Instead, they would pile more onto the system.
It’s not as if they didn’t understand. They even cited a paper by David Himmelstein and Steffie Woolhandler, well known in the policy community as authors of landmark papers on administrative excesses in health care. But they didn’t include one of the obligatory Woolhandler/Himmelstein papers that showed that the United States could recover hundreds of billions of dollars in administrative waste by switching to a single payer system. Instead, they pushed their own proposal purportedly showing a highly dubious savings of a mere $6 billion, even though it is much more likely that their proposal would increase costs instead.
Neera Tanden, president of the Center for American Progress has been deeply involved with the current administration in formulating and advocating for the Affordable Care Act. This article seems to be a dishonest vehicle for continuing to dismiss single payer, with the excuse that they are taking care of the administrative inefficiencies, and supposedly saving us money in so doing.
This article coincides with the pending release of the Supreme Court decision on the constitutionality of the Affordable Care Act. It seems to be a preemptive maneuver in anticipation of the imminent surge in demand for a single payer national health program when the decision is announced. They may think that, with this paper as a distraction, they’re ready for us, but we’ve got their number. Let’s lead the surge.

UnitedHealth's spurious generosity

UnitedHealthcare Voluntarily Extends Important Health Reform Protections Regardless of Upcoming Rulings by Supreme Court

UnitedHealth Group
June 11, 2012

UnitedHealthcare, a UnitedHealth Group (NYSE: UNH) company, will continue to offer important health care insurance protections that were included in the 2010 health care reform law, no matter how the U.S. Supreme Court rules in cases currently pending before the Court.

UnitedHealthcare will continue provisions related to coverage of preventive health care services, coverage of dependents up to age 26, lifetime policy limits, rescissions and appeals.

“The protections we are voluntarily extending are good for people’s health, promote broader access to quality care and contribute to helping control rising health care costs. These provisions make sense for the people we serve, and it is important to ensure they know these provisions will continue,” said Stephen J. Hemsley, president and CEO of UnitedHealth Group. “These provisions are compatible with our mission and continue our operating practices.”

These protections are effective immediately, and will remain available to current and future customers and members. The company is not establishing any sunset provisions.

UnitedHealthcare recognizes the value of coverage for children up to age 19 with pre-existing conditions. One company acting alone cannot take that step, so UnitedHealthcare is committed to working with all other participants in the health care system to sustain that coverage.

The specific provisions being extended by UnitedHealthcare are:

Preventive Health Care Services without Co-Pays

Providing Dependent Coverage Up to Age 26

Eliminating Lifetime Limits

No Rescissions, Except for Fraud

Providing Clear and Timely Options for Appeals

http://www.unitedhealthgroup.com/newsroom/news.aspx?id=59c64ad7-908b-4806-931f-aed3beff7ba0

Comment: 

By Don McCanne, MD

You have to hand it to UnitedHealth’s public relations department. No matter how the Supreme Court rules on the Affordable Care Act (ACA), this press release establishes UnitedHealth as a leader in patient advocacy, or at least it would seem so.

If ACA is upheld, this press release means nothing since these are already requirements of the Act. If ACA is struck down, these are very popular measures that are quite inexpensive and thus will not drive up premiums to non-competitive levels. The most expensive measure is the coverage of dependents up to age 26, but that adds only about one percent to the premiums. Besides, other insurers will likely follow suit in order to more effectively market to a greater number of young, healthy families. So no matter what happens, UnitedHealth takes credit for taking the lead.

UnitedHealth used one example of a policy that they will not follow, indicating that they will not unilaterally provide patients with some of the more important protections required in ACA. They are correct when they say that they cannot cover children with preexisting conditions unless the entire industry cooperates in distributing those higher cost risks. If one insurer generously accepts those risks, then their costs would skyrocket and they would be forced out of the market by the death spiral of insurance premiums.

UnitedHealth has remained silent on some of the more important requirements not yet in effect that could be overturned by the Supreme Court decision. Insuring preexisting conditions for adults in addition to children, guaranteeing issue of coverage to all individuals regardless of projected costs, and setting premiums based on community rating – driving up premiums for lower-cost, healthier patients – are more significant measures that could impair their competitiveness if they acted unilaterally. We won’t see these policy changes unless ACA is upheld and all insurers are required to comply.

Also they are silent on keeping administrative costs and profits down to a level that complies with the medical loss ratios dictated by ACA. Turn ACA over then there would be no federal requirement to comply, though that would still be the prerogative of the states. States under the political control of anti-government, free-market advocates would likely leave medical loss ratios to the insurers and their Wall Street promoters (where low medical loss ratios – spending less on patients-  is a business activity that is rewarded with higher stock valuations).

UnitedHealth’s “generosity” in conceding the very modest positions they listed in their release applies only to the individual and small group markets – a relatively small proportion of their business. Most plans for large employers will be grandfathered, and most of the ACA provisions will not apply – certainly not the requirements specific to the exchanges since large employer plans will not be included in the state exchanges. Also, many large employers are self-insured, and for them UnitedHealth provides only administrative functions, while specific benefits are determined by the employers.

We can’t blame UnitedHealth for trying to protect its market position, but we can blame our elected representatives for adopting policies that perpetuate and expand an industry which must comply with market demands for lower prices – a demand that can be met only by strategic decisions to avoid market segments such as children who are ill.

Is that what America is about? Let’s take care of the kids, even up to age 26, but not the sick ones? What other country does that?

UnitedHealth’s spurious generosity

UnitedHealthcare Voluntarily Extends Important Health Reform Protections Regardless of Upcoming Rulings by Supreme Court

UnitedHealth Group
June 11, 2012

UnitedHealthcare, a UnitedHealth Group (NYSE: UNH) company, will continue to offer important health care insurance protections that were included in the 2010 health care reform law, no matter how the U.S. Supreme Court rules in cases currently pending before the Court.

UnitedHealthcare will continue provisions related to coverage of preventive health care services, coverage of dependents up to age 26, lifetime policy limits, rescissions and appeals.

“The protections we are voluntarily extending are good for people’s health, promote broader access to quality care and contribute to helping control rising health care costs. These provisions make sense for the people we serve, and it is important to ensure they know these provisions will continue,” said Stephen J. Hemsley, president and CEO of UnitedHealth Group. “These provisions are compatible with our mission and continue our operating practices.”

These protections are effective immediately, and will remain available to current and future customers and members. The company is not establishing any sunset provisions.

UnitedHealthcare recognizes the value of coverage for children up to age 19 with pre-existing conditions. One company acting alone cannot take that step, so UnitedHealthcare is committed to working with all other participants in the health care system to sustain that coverage.

The specific provisions being extended by UnitedHealthcare are:

Preventive Health Care Services without Co-Pays

Providing Dependent Coverage Up to Age 26

Eliminating Lifetime Limits

No Rescissions, Except for Fraud

Providing Clear and Timely Options for Appeals

http://www.unitedhealthgroup.com/newsroom/news.aspx?id=59c64ad7-908b-4806-931f-aed3beff7ba0

Comment: 

By Don McCanne, MD

You have to hand it to UnitedHealth’s public relations department. No matter how the Supreme Court rules on the Affordable Care Act (ACA), this press release establishes UnitedHealth as a leader in patient advocacy, or at least it would seem so.

If ACA is upheld, this press release means nothing since these are already requirements of the Act. If ACA is struck down, these are very popular measures that are quite inexpensive and thus will not drive up premiums to non-competitive levels. The most expensive measure is the coverage of dependents up to age 26, but that adds only about one percent to the premiums. Besides, other insurers will likely follow suit in order to more effectively market to a greater number of young, healthy families. So no matter what happens, UnitedHealth takes credit for taking the lead.

UnitedHealth used one example of a policy that they will not follow, indicating that they will not unilaterally provide patients with some of the more important protections required in ACA. They are correct when they say that they cannot cover children with preexisting conditions unless the entire industry cooperates in distributing those higher cost risks. If one insurer generously accepts those risks, then their costs would skyrocket and they would be forced out of the market by the death spiral of insurance premiums.

UnitedHealth has remained silent on some of the more important requirements not yet in effect that could be overturned by the Supreme Court decision. Insuring preexisting conditions for adults in addition to children, guaranteeing issue of coverage to all individuals regardless of projected costs, and setting premiums based on community rating – driving up premiums for lower-cost, healthier patients – are more significant measures that could impair their competitiveness if they acted unilaterally. We won’t see these policy changes unless ACA is upheld and all insurers are required to comply.

Also they are silent on keeping administrative costs and profits down to a level that complies with the medical loss ratios dictated by ACA. Turn ACA over then there would be no federal requirement to comply, though that would still be the prerogative of the states. States under the political control of anti-government, free-market advocates would likely leave medical loss ratios to the insurers and their Wall Street promoters (where low medical loss ratios – spending less on patients-  is a business activity that is rewarded with higher stock valuations).

UnitedHealth’s “generosity” in conceding the very modest positions they listed in their release applies only to the individual and small group markets – a relatively small proportion of their business. Most plans for large employers will be grandfathered, and most of the ACA provisions will not apply – certainly not the requirements specific to the exchanges since large employer plans will not be included in the state exchanges. Also, many large employers are self-insured, and for them UnitedHealth provides only administrative functions, while specific benefits are determined by the employers.

We can’t blame UnitedHealth for trying to protect its market position, but we can blame our elected representatives for adopting policies that perpetuate and expand an industry which must comply with market demands for lower prices – a demand that can be met only by strategic decisions to avoid market segments such as children who are ill.

Is that what America is about? Let’s take care of the kids, even up to age 26, but not the sick ones? What other country does that?

5 Myths About Canada’s Health Care System

The truth may surprise you about international health care

By Aaron E. Carroll, M.D., M.S.
AARP Newsletter, April 16, 2012

How does the U.S. health care system stack up against Canada’s? You’ve probably heard allegedly true horror stories about the Canadian system — like 340-day waits for knee replacement surgery, for example.

To separate fact from fiction, Aaron E. Carroll, M.D., the director of the Center for Health Policy and Professionalism Research in Indianapolis, identified the top myths about the two health care systems.

Myth #1: Canadians are flocking to the United States to get medical care.

How many times have you heard that Canadians, frustrated by long wait times and rationing where they live, come to the United States for medical care? 

I don’t deny that some well-off people might come to the United States for medical care. If I needed a heart or lung transplant, there’s no place I’d rather have it done. But for the vast, vast majority of people, that’s not happening.

The most comprehensive study I’ve seen on this topic — it employed three different methodologies, all with solid rationales behind them — was published in the peer-reviewed journal Health Affairs.

The authors of the study started by surveying 136 ambulatory care facilities near the U.S.-Canada border in Michigan, New York and Washington. It makes sense that Canadians crossing the border for care would favor places close by, right? It turns out, however, that about 80 percent of such facilities saw, on average, fewer than one Canadian per month; about 40 percent had seen none in the preceding year.

Then, the researchers looked at how many Canadians were discharged over a five-year period from acute-care hospitals in the same three states. They found that more than 80 percent of these hospital visits were for emergency or urgent care (that is, tourists who had to go to the emergency room). Only about 20 percent of the visits were for elective procedures or care.

Next, the authors of the study surveyed America’s 20 “best” hospitals — as identified by U.S. News & World Report — on the assumption that if Canadians were going to travel for health care, they would be more likely to go to the best-known and highest-quality facilities. Only one of the 11 hospitals that responded saw more than 60 Canadians in a year. And, again, that included both emergencies and elective care.

Finally, the study’s authors examined data from the 18,000 Canadians who participated in the National Population Health Survey. In the previous year, 90 of those 18,000 Canadians had received care in the United States; only 20 of them, however, reported going to the United States expressively for the purpose of obtaining care.

Next: Are Canadian doctors taking U.S. jobs? »

Myth #2: Doctors in Canada are flocking to the United States to practice.

Every time I talk about health care policy with physicians, one inevitably tells me of the doctor he or she knows who ran away from Canada to practice in the United States. Evidently, there’s a general perception that practicing medicine in the United States is much more satisfying than in Canada.

Problem is, it’s just not so. Consider this chart:

Source: “2009 International Health Policy Survey of Primary Care Physicians in Eleven Countries,” The Commonwealth Fund, November 2009.

The Canadian Institute for Health Information has been tracking doctors’ destinations since 1992. Since then, 60 percent to 70 percent of the physicians who emigrate have headed south of the border. In the mid-1990s, the number of Canadian doctors leaving for the United States spiked at about 400 to 500 a year. But in recent years this number has declined, with only 169 physicians leaving for the States in 2003, 138 in 2004 and 122 both in 2005 and 2006. These numbers represent less than 0.5 percent of all doctors working in Canada.

So when emigration “spiked,” 400 to 500 doctors were leaving Canada for the United States. There are more than 800,000 physicians in the United States right now, so I’m skeptical that every doctor knows one of those émigrés. But look closely at the tan line in the following chart, which represents the net loss of doctors to Canada.


Source: Canadian Institute for Health Information

In 2004, net emigration became net immigration. Let me say that again. More doctors were moving into Canada than were moving out.

Myth #3: Canada rations health care; that’s why hip replacements and cataract surgeries happen faster in the United States.

When people want to demonize Canada’s health care system — and other single-payer systems, for that matter — they always end up going after rationing, and often hip replacements in particular.

Take Republican Rep. Todd Akin of Missouri, for example. A couple of years ago he took to the House floor to tell his colleagues:

“I just hit 62, and I was just reading that in Canada [if] I got a bad hip I wouldn’t be able to get that hip replacement that [Rep. Dan Lungren] got, because I’m too old! I’m an old geezer now and it’s not worth a government bureaucrat to pay me to get my hip fixed.”

Sigh.

This has been debunked so often, it’s tiring. The St. Louis Post-Dispatch, for example, concluded: “At least 63 percent of hip replacements performed in Canada last year [2008] … were on patients age 65 or older.” And more than 1,500 of those, it turned out, were on patients over 85.

The bottom line: Canada doesn’t deny hip replacements to older people.

But there’s more.

Know who gets most of the hip replacements in the United States? Older people.

Know who pays for care for older people in the United States? Medicare.

Know what Medicare is? A single-payer system.

Next: Does Canada have longer wait times than United States? »

Myth #4: Canada has long wait times because it has a single-payer system.

The wait times that Canada might experience are not caused by its being a single-payer system.

Wait times aren’t like cancer. We know what causes wait times; we know how to fix them. Spend more money.

Our single-payer system, which is called Medicare (see above), manages not to have the “wait times” issue that Canada’s does. There must, therefore, be some other reason for the wait times. There is, of course. It’s this:


Source: Organisation for Economic Co-operation and Development (OECD)

In 1966, Canada implemented a single-payer health care system, which is also known as Medicare. Since then, as a country, Canadians have made a conscious decision to hold down costs. One of the ways they do that is by limiting supply, mostly for elective things, which can create wait times. Their outcomes are otherwise comparable to ours.

Please understand, the wait times could be overcome. Canadians could spend more. They don’t want to. We can choose to dislike wait times in principle, but they are a byproduct of Canada’s choice to be fiscally conservative.

Yes, they chose this. In a rational world, those who are concerned about health care costs and what they mean to the economy might respect that course of action. But instead, they attack the system.

Myth #5: Canada rations health care; the United States doesn’t.

This one’s a little bit tricky. The truth is, Canada may “ration” by making people wait for some things, but here in the United States we also “ration” — by cost.

An 11-country survey carried out in 2010 by the Commonwealth Fund, a Washington-based health policy foundation, found that adults in the United States are by far the most likely to go without care because of cost. In fact, 42 percent of the Americans surveyed did not express confidence that they would be able to afford health care if seriously ill.

Further, about a third of the Americans surveyed reported that, in the preceding year, they didn’t go to the doctor when sick, didn’t get recommended care when needed, didn’t fill a prescription or skipped doses of medications because of cost.

Finally, about one in five of the Americans surveyed had struggled to pay or were unable to pay their medical bills in the preceding year. That was more than twice the percentage found in any of the other 10 countries.

And remember: We’re spending way more on health care than any other country, and for all that money we’re getting at best middling results.

So feel free to have a discussion about the relative merits of the U.S. and Canadian health care systems. Just stick to the facts.

Aaron E. Carroll frequently blogs about this topic for The Incidental Economist and is the coauthor of Don’t Swallow Your Gum: Myths, Half-Truths, and Outright Lies About Your Body and Health.

UnitedHealth's spurious generosity

UnitedHealthcare Voluntarily Extends Important Health Reform Protections Regardless of Upcoming Rulings by Supreme Court

UnitedHealth Group
June 11, 2012
UnitedHealthcare, a UnitedHealth Group (NYSE: UNH) company, will continue to offer important health care insurance protections that were included in the 2010 health care reform law, no matter how the U.S. Supreme Court rules in cases currently pending before the Court.
UnitedHealthcare will continue provisions related to coverage of preventive health care services, coverage of dependents up to age 26, lifetime policy limits, rescissions and appeals.
“The protections we are voluntarily extending are good for people’s health, promote broader access to quality care and contribute to helping control rising health care costs. These provisions make sense for the people we serve, and it is important to ensure they know these provisions will continue,” said Stephen J. Hemsley, president and CEO of UnitedHealth Group. “These provisions are compatible with our mission and continue our operating practices.”
These protections are effective immediately, and will remain available to current and future customers and members. The company is not establishing any sunset provisions.
UnitedHealthcare recognizes the value of coverage for children up to age 19 with pre-existing conditions. One company acting alone cannot take that step, so UnitedHealthcare is committed to working with all other participants in the health care system to sustain that coverage.
The specific provisions being extended by UnitedHealthcare are:
Preventive Health Care Services without Co-Pays
Providing Dependent Coverage Up to Age 26
Eliminating Lifetime Limits
No Rescissions, Except for Fraud
Providing Clear and Timely Options for Appeals
http://www.unitedhealthgroup.com/newsroom/news.aspx?id=59c64ad7-908b-4806-931f-aed3beff7ba0

You have to hand it to UnitedHealth’s public relations department. No matter how the Supreme Court rules on the Affordable Care Act (ACA), this press release establishes UnitedHealth as a leader in patient advocacy, or at least it would seem so.
If ACA is upheld, this press release means nothing since these are already requirements of the Act. If ACA is struck down, these are very popular measures that are quite inexpensive and thus will not drive up premiums to non-competitive levels. The most expensive measure is the coverage of dependents up to age 26, but that adds only about one percent to the premiums. Besides, other insurers will likely follow suit in order to more effectively market to a greater number of young, healthy families. So no matter what happens, UnitedHealth takes credit for taking the lead.
UnitedHealth used one example of a policy that they will not follow, indicating that they will not unilaterally provide patients with some of the more important protections required in ACA. They are correct when they say that they cannot cover children with preexisting conditions unless the entire industry cooperates in distributing those higher cost risks. If one insurer generously accepts those risks, then their costs would skyrocket and they would be forced out of the market by the death spiral of insurance premiums.
UnitedHealth has remained silent on some of the more important requirements not yet in effect that could be overturned by the Supreme Court decision. Insuring preexisting conditions for adults in addition to children, guaranteeing issue of coverage to all individuals regardless of projected costs, and setting premiums based on community rating – driving up premiums for lower-cost, healthier patients – are more significant measures that could impair their competitiveness if they acted unilaterally. We won’t see these policy changes unless ACA is upheld and all insurers are required to comply.
Also they are silent on keeping administrative costs and profits down to a level that complies with the medical loss ratios dictated by ACA. Turn ACA over then there would be no federal requirement to comply, though that would still be the prerogative of the states. States under the political control of anti-government, free-market advocates would likely leave medical loss ratios to the insurers and their Wall Street promoters (where low medical loss ratios – spending less on patients-  is a business activity that is rewarded with higher stock valuations).
UnitedHealth’s “generosity” in conceding the very modest positions they listed in their release applies only to the individual and small group markets – a relatively small proportion of their business. Most plans for large employers will be grandfathered, and most of the ACA provisions will not apply – certainly not the requirements specific to the exchanges since large employer plans will not be included in the state exchanges. Also, many large employers are self-insured, and for them UnitedHealth provides only administrative functions, while specific benefits are determined by the employers.
We can’t blame UnitedHealth for trying to protect its market position, but we can blame our elected representatives for adopting policies that perpetuate and expand an industry which must comply with market demands for lower prices – a demand that can be met only by strategic decisions to avoid market segments such as children who are ill.
Is that what America is about? Let’s take care of the kids, even up to age 26, but not the sick ones? What other country does that?

FEHBP as a model for exchanges

Federal Employees Health Program Experiences Lack Of Competition In Some Areas, Raising Cost Concerns For Exchange Plans

By Timothy D. McBride, Abigail R. Barker, Lisa M. Pollack, Leah M. Kemper and Keith J. Mueller
Health Affairs, June 2012

The Affordable Care Act calls for creation of health insurance exchanges designed to provide private health insurance plan choices. The Federal Employees Health Benefits Program is a national model that to some extent resembles the planned exchanges. Both offer plans at the state level but are also overseen by the federal government. We examined the availability of plans and enrollment levels in the Federal Employees Health Benefits Program throughout the United States in 2010. We found that although plans were widely available, enrollment was concentrated in plans owned by just a few organizations, typically Blue Cross/Blue Shield plans. Enrollment was more concentrated in rural areas, which may reflect historical patterns of enrollment or lack of provider networks.

http://content.healthaffairs.org/content/31/6/1321.abstract

Comment: 

By Don McCanne, MD

Supporters of the Affordable Care Act claim that the the state insurance exchanges would provide a robust market of private plans. One need look only as far as the Federal Employees Health Benefits Program (FEHBP) – the largest employer-sponsored private health insurance program in the nation – to see that such markets tend to concentrate dominant players. Instead of the magic of market competition, we can anticipate only more pain characteristic of dysfunctional or non-existent markets.

Single payer, anyone?

Additional comment from QotD reader Joel Segal

I have been on FEHBP plan for the past 12 years, and therefore can credibly speak about the positive and negative aspects of the program.

With the FEHBP plan, I have been able to receive medically necessary care, and the program has covered a good percentage of the costs of my CPAP and bi-pap machines that I use for my severe obstructive sleep apnea. Before I was on the FEHBP plan, I could not receive medically necessary health care services for my sleep apnea and other chronic health conditions. I was forced to become a “health care beggar,” borrowing money from friends, family members, and people of good will just to pay for some of my most serious health care needs. However, despite my charitable friends, for years, I went without the needed care, and remained sick, disabled, and often unable to work a full time job or work at all.

Without the FEHBP plan, I would have become permanently disabled, or developed other serious life-threatening health complications such as heart problems, which often result from untreated sleep apnea. The worst aspect of the FEHBP plan are the steep out-of-pocket costs for hospital visits, doctor’s visits, and other treatment that I need to live a healthy life. Having a chronic illness such as sleep apnea, means high out-of-pocket costs for CPAP masks, sleep studies, and new machines — which are often several hundreds of dollars per year, and sometimes a few thousand dollars per year. My co-pays are often very steep, and there have been many times where providers tried to deny me care that I truly needed, because I could not afford to pay prior balanced billing charges. But, because I demanded that I be treated in their offices (or begged for care!) they let me get the care. Most people are very fearful of their health care providers, and often leave doctor’s offices having been denied medically necessary care due to unpaid bills. This is just a reality of our current for-profit health care system.

I owe approximately $8,000 in co-pays over the last 5 years under the FEHBP, and have paid out-of-pocket approximately $15,000 for medically necessary care over the last 12 years. The problem with the FEHBP plan is that it typically covers 70-80 percent of the bill, leaving the patient who uses the health care system the most with enormous co-pays and medical bills. For young and healthy persons who get sick with the flu or a cold, and see a doctor perhaps twice a year, the program works fine. The people who suffer the most under the FEHBP plan are government employees who have chronic illnesses, or have an emergency surgery or procedure, and must pay the 20 percent of the bill that the plan does not cover.

We need a universal single-payer program like H.R. 676 or H.R. 1200, which will contain rising health care costs, while providing the highest standard of universal health care to all Americans.

Sincerely,

Joel Segal
Universal Single Payer Advocate

FEHBP as a model for exchanges

Federal Employees Health Program Experiences Lack Of Competition In Some Areas, Raising Cost Concerns For Exchange Plans

By Timothy D. McBride, Abigail R. Barker, Lisa M. Pollack, Leah M. Kemper and Keith J. Mueller
Health Affairs, June 2012
The Affordable Care Act calls for creation of health insurance exchanges designed to provide private health insurance plan choices. The Federal Employees Health Benefits Program is a national model that to some extent resembles the planned exchanges. Both offer plans at the state level but are also overseen by the federal government. We examined the availability of plans and enrollment levels in the Federal Employees Health Benefits Program throughout the United States in 2010. We found that although plans were widely available, enrollment was concentrated in plans owned by just a few organizations, typically Blue Cross/Blue Shield plans. Enrollment was more concentrated in rural areas, which may reflect historical patterns of enrollment or lack of provider networks.
http://content.healthaffairs.org/content/31/6/1321.abstract

Supporters of the Affordable Care Act claim that the the state insurance exchanges would provide a robust market of private plans. One need look only as far as the Federal Employees Health Benefits Program (FEHBP) – the largest employer-sponsored private health insurance program in the nation – to see that such markets tend to concentrate dominant players. Instead of the magic of market competition, we can anticipate only more pain characteristic of dysfunctional or non-existent markets.
Single payer, anyone?
Comment from QotD reader Joel Segal

I have been on FEHBP plan for the past 12 years, and therefore can credibly speak about the positive and negative aspects of the program.
With the FEHBP plan, I have been able to receive medically necessary care, and the program has covered a good percentage of the costs of my CPAP and bi-pap machines that I use for my severe obstructive sleep apnea. Before I was on the FEHBP plan, I could not receive medically necessary health care services for my sleep apnea and other chronic health conditions. I was forced to become a “health care beggar,” borrowing money from friends, family members, and people of good will just to pay for some of my most serious health care needs. However, despite my charitable friends, for years, I went without the needed care, and remained sick, disabled, and often unable to work a full time job or work at all.
Without the FEHBP plan, I would have become permanently disabled, or developed other serious life-threatening health complications such as heart problems, which often result from untreated sleep apnea. The worst aspect of the FEHBP plan are the steep out-of-pocket costs for hospital visits, doctor’s visits, and other treatment that I need to live a healthy life. Having a chronic illness such as sleep apnea, means high out-of-pocket costs for CPAP masks, sleep studies, and new machines — which are often several hundreds of dollars per year, and sometimes a few thousand dollars per year. My co-pays are often very steep, and there have been many times where providers tried to deny me care that I truly needed, because I could not afford to pay prior balanced billing charges. But, because I demanded that I be treated in their offices (or begged for care!) they let me get the care. Most people are very fearful of their health care providers, and often leave doctor’s offices having been denied medically necessary care due to unpaid bills. This is just a reality of our current for-profit health care system.
I owe approximately $8,000 in co-pays over the last 5 years under the FEHBP, and have paid out-of-pocket approximately $15,000 for medically necessary care over the last 12 years. The problem with the FEHBP plan is that it typically covers 70-80 percent of the bill, leaving the patient who uses the health care system the most with enormous co-pays and medical bills. For young and healthy persons who get sick with the flu or a cold, and see a doctor perhaps twice a year, the program works fine. The people who suffer the most under the FEHBP plan are government employees who have chronic illnesses, or have an emergency surgery or procedure, and must pay the 20 percent of the bill that the plan does not cover.
We need a universal single-payer program like H.R. 676 or H.R. 1200, which will contain rising health care costs, while providing the highest standard of universal health care to all Americans.
Sincerely,
Joel Segal
Universal Single Payer Advocate

OIG catches PacifiCare red-handed

Risk Adjustment Data Validation of Payments Made to PacifiCare of Texas for Calendar Year 2007

Office of Inspector General
Department of Health and Human Services, May 2012

Executive Summary

Background

Under the Medicare Advantage (MA) program, the Centers for Medicare & Medicaid Services (CMS), makes monthly capitated payments to MA organizations for beneficiaries enrolled in the organizations’ health care plans (beneficiaries). Subsections 1853(a)(1)(C) and (a)(3) of the Social Security Act require that these payments be adjusted based on the health status of each beneficiary. CMS uses the Hierarchical Condition Category (HCC) model (the CMS model) to calculate these risk-adjusted payments.

Under the CMS model, MA organizations collect risk adjustment data, including beneficiary diagnoses, from hospital inpatient facilities, hospital outpatient facilities, and physicians during a data collection period. MA organizations identify the diagnoses relevant to the CMS model and submit these diagnoses to CMS. CMS categorizes the diagnoses into groups of clinically related diseases called HCCs and uses the HCCs and demographic characteristics to calculate a risk score for each beneficiary. CMS then uses the risk scores to adjust the monthly capitated payments to MA organizations for the next payment period.

PacifiCare of Texas (PacifiCare) is an MA organization owned by UnitedHealth Group. For calendar year (CY) 2007, PacifiCare had multiple contracts with CMS, including contract H4590, which we refer to as “the contract.” Under the contract, CMS paid PacifiCare approximately $1.3 billion to administer health care plans for approximately 118,000 beneficiaries.

Objective

Our objective was to determine whether the diagnoses that PacifiCare submitted to CMS for use in CMS’s risk score calculations complied with Federal requirements.

Summary of Findings

The diagnoses that PacifiCare submitted to CMS for use in CMS’s risk score calculations did not always comply with Federal requirements. The risk scores calculated using the diagnoses that PacifiCare submitted for 57 of the 100 beneficiaries in our sample were valid. The risk scores for the remaining 43 were invalid because the diagnoses were not supported for one or both of the following reasons:

* The documentation did not support the associated diagnosis.

* The diagnosis was unconfirmed.

PacifiCare did not have written policies and procedures for obtaining, processing, and submitting diagnoses to CMS. Furthermore, PacifiCare’s practices were not effective in ensuring that the diagnoses it submitted to CMS complied with the requirements of the 2006 Risk Adjustment Data Basic Training for Medicare Advantage Organizations Participant Guide (the 2006 Participant Guide) and the 2007 Risk Adjustment Data Training for Medicare Advantage Organizations Participant Guide (the 2007 Participant Guide). UnitedHealth Group officials stated that the providers were responsible for the accuracy of the diagnoses that PacifiCare submitted to CMS.

As a result of these unsupported and unconfirmed diagnoses, PacifiCare received $183,247 in overpayments from CMS. Based on our sample results, we estimated that PacifiCare was overpaid approximately $115,422,084 in CY 2007.

http://www.oig.hhs.gov/oas/reports/region6/60900012.pdf

Comment: 

By Don McCanne, MD

As you know, Medicare beneficiaries have the option of leaving the traditional Medicare program and obtaining their care through private insurers offering Medicare Advantage plans. These private plans receive from the government monthly capitation payments (a set dollar amount for each beneficiary enrolled). To protect the private insurers from the higher spending required for sicker patients, the capitation payments are adjusted upward based on how ill the patients are. This is known as risk adjustment. Sounds reasonable. So what’s the deal here?

Keep in mind that the traditional Medicare program is designed to serve patients whereas the private Medicare Advantage plans are private businesses designed primarily to make money. So how can these private plans meet their business obligation of keeping their spending down while increasing their revenues?

Quite simple. Game risk adjustment. Report many of the patients as having more serious disorders than they really do in order to increase the capitation payments. Although the insurers have denied that they do this, the Office of the Inspector General has caught them red-handed.

Based on this chicanery, UnitedHealth’s PacifiCare was overpaid about $115 million for this one contract alone. That is almost $1000 excess for each of the 118,000 beneficiaries enrolled!

The Affordable Care Act is perpetuating and expanding our fragmented health care financing system which is dependent to a great extent on private insurers. To avoid the problems of favorable selection (insurers enrolling only healthy patients and keeping the extra profits) and adverse selection (the government being stuck with the losses of high cost patients after the healthier are siphoned off), the Act calls for risk selection.

The problem is that we do not know how to detect and correct for all of the games that the insurers play to work risk adjustment to their own advantage. It has been estimated that risk adjustment captures only about 10 percent of the overpayments that the private insurers gain through this gaming. As further adjustments are added, the insurers simply find new ways around the system. These are not necessarily illegal maneuvers but are rather simply “good business practices.”

Our own government stewards from the OIG, working for us, have exposed this scheme that is being used to skim off our tax dollars. So what are we going to do about it? Don’t you think it’s time to get rid of the amoral business ethic in health care financing and instead place in charge people dedicated to a service ethic?  We can do this by establishing our own single payer national health program. But first we have to elect people who place public service above all. Supporting the 1 percent isn’t working.

OIG catches PacifiCare red-handed

Risk Adjustment Data Validation of Payments Made to PacifiCare of Texas for Calendar Year 2007

Office of Inspector General
Department of Health and Human Services, May 2012
Executive Summary
Background
Under the Medicare Advantage (MA) program, the Centers for Medicare & Medicaid Services (CMS), makes monthly capitated payments to MA organizations for beneficiaries enrolled in the organizations’ health care plans (beneficiaries). Subsections 1853(a)(1)(C) and (a)(3) of the Social Security Act require that these payments be adjusted based on the health status of each beneficiary. CMS uses the Hierarchical Condition Category (HCC) model (the CMS model) to calculate these risk-adjusted payments.
Under the CMS model, MA organizations collect risk adjustment data, including beneficiary diagnoses, from hospital inpatient facilities, hospital outpatient facilities, and physicians during a data collection period. MA organizations identify the diagnoses relevant to the CMS model and submit these diagnoses to CMS. CMS categorizes the diagnoses into groups of clinically related diseases called HCCs and uses the HCCs and demographic characteristics to calculate a risk score for each beneficiary. CMS then uses the risk scores to adjust the monthly capitated payments to MA organizations for the next payment period.
PacifiCare of Texas (PacifiCare) is an MA organization owned by UnitedHealth Group. For calendar year (CY) 2007, PacifiCare had multiple contracts with CMS, including contract H4590, which we refer to as “the contract.” Under the contract, CMS paid PacifiCare approximately $1.3 billion to administer health care plans for approximately 118,000 beneficiaries.
Objective
Our objective was to determine whether the diagnoses that PacifiCare submitted to CMS for use in CMS’s risk score calculations complied with Federal requirements.
Summary of Findings
The diagnoses that PacifiCare submitted to CMS for use in CMS’s risk score calculations did not always comply with Federal requirements. The risk scores calculated using the diagnoses that PacifiCare submitted for 57 of the 100 beneficiaries in our sample were valid. The risk scores for the remaining 43 were invalid because the diagnoses were not supported for one or both of the following reasons:
* The documentation did not support the associated diagnosis.
* The diagnosis was unconfirmed.
PacifiCare did not have written policies and procedures for obtaining, processing, and submitting diagnoses to CMS. Furthermore, PacifiCare’s practices were not effective in ensuring that the diagnoses it submitted to CMS complied with the requirements of the 2006 Risk Adjustment Data Basic Training for Medicare Advantage Organizations Participant Guide (the 2006 Participant Guide) and the 2007 Risk Adjustment Data Training for Medicare Advantage Organizations Participant Guide (the 2007 Participant Guide). UnitedHealth Group officials stated that the providers were responsible for the accuracy of the diagnoses that PacifiCare submitted to CMS.
As a result of these unsupported and unconfirmed diagnoses, PacifiCare received $183,247 in overpayments from CMS. Based on our sample results, we estimated that PacifiCare was overpaid approximately $115,422,084 in CY 2007.
http://www.oig.hhs.gov/oas/reports/region6/60900012.pdf

As you know, Medicare beneficiaries have the option of leaving the traditional Medicare program and obtaining their care through private insurers offering Medicare Advantage plans. These private plans receive from the government monthly capitation payments (a set dollar amount for each beneficiary enrolled). To protect the private insurers from the higher spending required for sicker patients, the capitation payments are adjusted upward based on how ill the patients are. This is known as risk adjustment. Sounds reasonable. So what’s the deal here?
Keep in mind that the traditional Medicare program is designed to serve patients whereas the private Medicare Advantage plans are private businesses designed primarily to make money. So how can these private plans meet their business obligation of keeping their spending down while increasing their revenues?
Quite simple. Game risk adjustment. Report many of the patients as having more serious disorders than they really do in order to increase the capitation payments. Although the insurers have denied that they do this, the Office of the Inspector General has caught them red-handed.
Based on this chicanery, UnitedHealth’s PacifiCare was overpaid about $115 million for this one contract alone. That is almost $1000 excess for each of the 118,000 beneficiaries enrolled!
The Affordable Care Act is perpetuating and expanding our fragmented health care financing system which is dependent to a great extent on private insurers. To avoid the problems of favorable selection (insurers enrolling only healthy patients and keeping the extra profits) and adverse selection (the government being stuck with the losses of high cost patients after the healthier are siphoned off), the Act calls for risk selection.
The problem is that we do not know how to detect and correct for all of the games that the insurers play to work risk adjustment to their own advantage. It has been estimated that risk adjustment captures only about 10 percent of the overpayments that the private insurers gain through this gaming. As further adjustments are added, the insurers simply find new ways around the system. These are not necessarily illegal maneuvers but are rather simply “good business practices.”
Our own government stewards from the OIG, working for us, have exposed this scheme that is being used to skim off our tax dollars. So what are we going to do about it? Don’t you think it’s time to get rid of the amoral business ethic in health care financing and instead place in charge people dedicated to a service ethic?  We can do this by establishing our own single payer national health program. But first we have to elect people who place public service above all. Supporting the 1 percent isn’t working.

Insurers, not insured, in driver’s seat

By Rep. Dennis Kucinich
The Hill, Congress blog, June 5, 2012

When the Supreme Court issues its decision on the Affordable Care Act (ACA), the debate will not stop. The ACA brought about immediate relief from some of the worst outcomes of for-profit health care, but it is by no means sufficient to temper the rapacious conduct of insurance companies who are determined to make money by not providing health care.

The Affordable Care Act prevented insurance companies from denying care to a patient who had a pre-existing condition like cancer or heart disease. It allowed young adults to remain on their parents’ family plan until age 26. It required that the kind of care that saves lives but is usually not profitable to cover — preventive care — is covered for free. It provided health care for tens of millions of Americans. It lowered the cost of prescription drugs for seniors. It gave states more authority to challenge exorbitant rate increases by insurance companies. It showed that the health care system can be reformed within the current health care model.

However, health care reform within the current health care model has glaring deficiencies. In the current model, insurance companies increase profits by not providing health care.

They avoid paying bills when their customers need health care. They compete by trying to invent creative ways to deny care, like providing complicated plans with large loopholes buried in the fine print that are only discovered if a person falls ill.

They also refuse to pay bills after care has been delivered, knowing patients often don’t have the time or strength to fight insurance company practices. For-profit health care has produced economic hardship for millions of Americans: it’s estimated 46 percent of all bankruptcies [PNHP note: a 2009 study showed 62 percent of all bankruptcies] are tied to medical bills piling up due to an illness in the family. Three-quarters of those bankrupted by illness were insured when they first got sick, which shows that the insurance policies did not pay the bills. It defeats the purpose of buying insurance.

People buy health insurance expecting that it will protect them from financial disaster. The for-profit model of “care” is fundamentally and inherently flawed.

The Affordable Care Act represented reform only within the context of a for-profit system. We must change the incentives that drive a health care race to the bottom. We must stop insurance companies from making a profit by denying care. We must get the insurance companies out of the doctor-patient relationship, where they influence the practice of medicine by dictating limitations on care. Health care must not be out of financial reach for any American.

There is only one solution: Medicare for All. Embodied in H.R. 676, Medicare for All would cover everyone in the United States for all medically necessary services with no co-payments, premiums or deductibles, for the same amount we currently pay for health care. This not-for-profit system would cover all residents, reduce costs, increase the quality of care, lower costs to businesses and families, increase worker pay and relieve state governments of the significant financial burdens that come with our health care system.

Guaranteed health care systems have repeatedly proven themselves by outperforming alternative health care models. That is one reason states are pursuing them. California’s legislature has passed legislation similar to H.R. 676 twice, only to be vetoed by a Republican governor. Pennsylvania’s bill has strong bipartisan interest, and one of its largest advocacy groups has elected a Republican former member of Pennsylvania’s legislature as its president. Most promising is Vermont, where Gov. Peter Shumlin ran on a platform that called for a Medicare for All-type system. The Vermont legislature is currently working through legislation that is predicted to “produce savings of 25.3 percent of total health expenditure between 2015 and 2024.” Most recently, a report by The Lewin Group showed that Minnesota would save $189.5 billion over 10 years if they adopted a similar guaranteed health care model, adding to a long list of studies commissioned by states that find similar savings.

Guaranteed health care will improve the quality of care, control costs and create jobs. It is only a matter of time until it becomes a reality. It is also the right thing to do.

Kucinich, D-Ohio, serves on the House Education and the Workforce Committee and the Oversight and Government Reform Committee.

http://thehill.com/blogs/congress-blog/healthcare/231075-insurers-not-insured-in-drivers-seat

John Geyman's "Health Care Wars"

Copernicus Healthcare

Health Care Wars: How Market Ideology and Corporate Power Are Killing Americans

By John Geyman, M.D.

From the Preface

We have been told from time immemorial in this country that free markets, unfettered by government interference, are the fix for any of our problems. The notion that a competitive private marketplace gives us more information, choice, efficiency and value has been repeated so often for so long that it has become a meme (a self-replicating idea that is perpetuated regardless of its merits). Although this idea has become as American as apple pie and might work in some sectors of the economy, it does not work that way in health care.

The shared prosperity that followed World War II gave rise to the American dream that brought new hope and opportunities for much of our population. But over the last 30 years, under a relentless attack by conservatives and willing Democrats, this dream is disappearing.

This book takes an evidence-based approach to assess and describe the track record of health care markets as they actually work. As you will see, it is a story of profiteering, greed and waste with very little accountability. I hope that this book is useful in informing the public, policymakers and politicians of the real problems with markets. We will need a strong and powerful unified grassroots movement to push our leaders toward real reform.

http://www.copernicus-healthcare.org/

Comment: 

By Don McCanne, MD

It has long been recognized that health care does not follow the rules of free markets, yet the United States continues to rely on a fragmented, dysfunctional financing system that fails to adequately correct for these market deficiencies. In Health Care Wars, John Geyman shows us how this has been a disaster, while providing us with hope through the prospect of our empowerment as both patients and taxpayers.

John Geyman’s “Health Care Wars”

Copernicus Healthcare

Health Care Wars: How Market Ideology and Corporate Power Are Killing Americans

By John Geyman, M.D.

From the Preface

We have been told from time immemorial in this country that free markets, unfettered by government interference, are the fix for any of our problems. The notion that a competitive private marketplace gives us more information, choice, efficiency and value has been repeated so often for so long that it has become a meme (a self-replicating idea that is perpetuated regardless of its merits). Although this idea has become as American as apple pie and might work in some sectors of the economy, it does not work that way in health care.

The shared prosperity that followed World War II gave rise to the American dream that brought new hope and opportunities for much of our population. But over the last 30 years, under a relentless attack by conservatives and willing Democrats, this dream is disappearing.

This book takes an evidence-based approach to assess and describe the track record of health care markets as they actually work. As you will see, it is a story of profiteering, greed and waste with very little accountability. I hope that this book is useful in informing the public, policymakers and politicians of the real problems with markets. We will need a strong and powerful unified grassroots movement to push our leaders toward real reform.

http://www.copernicus-healthcare.org/

Comment: 

By Don McCanne, MD

It has long been recognized that health care does not follow the rules of free markets, yet the United States continues to rely on a fragmented, dysfunctional financing system that fails to adequately correct for these market deficiencies. In Health Care Wars, John Geyman shows us how this has been a disaster, while providing us with hope through the prospect of our empowerment as both patients and taxpayers.