By Anemona Hartocollis
The New York Times
January 24, 2010

A front in the national health care battle has opened in New York City, where a major hospital chain and one of the nation’s largest insurance companies are locked in a struggle over control of treatment and costs that could have broad ramifications for millions of people with private health insurance.

The fight is between Continuum Health Partners, a consortium of five New York hospitals, including Beth Israel Medical Center and St. Luke’s-Roosevelt Hospital Center, both major teaching hospitals, and UnitedHealthcare.

The prestigious hospitals and the major health insurer have been in bitter contract negotiations, not just over rates but also over UnitedHealthcare’s demand that the hospitals notify the insurance company within 24 hours after a patient’s admission. If a hospital failed to do so, UnitedHealthcare would cut its reimbursements for the patient by half.

UnitedHealthcare says the proposed rule is meant to improve the quality of care and cut costs by allowing insurance case managers to jump in right away. The hospitals say that having their reimbursement cut in half is too much to pay for a clerical error, and that the revenue drain would ultimately hurt their patients.

The dispute signals a “ratcheting up” of a long tradition of insurers trying to cut costs, said Jeffrey Rubin, an economics professor at Rutgers University.

http://www.nytimes.com/2010/01/25/health/policy/25insure.html?ref=health&pagewanted=all

Comment:

By Don McCanne, MD

The leadership of America’s Health Insurance Plans (AHIP) and Physicians for a National Health Program (PNHP) do agree on one crucial point: the current health care reform proposal does very little to control the intolerable escalation of health care costs. Both agree that Congress must provide the remedies to control spending and improve health care value.

What will occur without government action? Cost containment will remain in the hands of the private insurance industry. The tools at their disposal are very intrusive and are what resulted in the managed care backlash by unhappy patients and their providers. With the continuing increase in costs and the need to avoid pricing premiums totally out of the market, more intensive and extensive intrusions can be anticipated.

Look at this provision that UnitedHealth is demanding in its contract negotiations with a prominent New York hospital chain. If a hospital commits the clerical error of failing to notify UnitedHealth of a patient’s admission within the first 24 hours, the hospital is penalized 50 percent of its already reduced contracted rate! When the insurer is notified, they have the “insurance case managers jump in right away.” Although they claim that it is to improve quality, no sane person is deceived by the budget machete that they wield.

Without effective reform, it will get much worse since premium increases must be limited – they’re already too high – so insurers will be left with no alternative but to whack away at spending. Whacking spending means whacking patient care. Insurers really don’t want to do that. It is not for altruistic reasons, but it is rather the fear that their business model could suffer irreparable harm under the wrath of enraged patients and their health care providers (not that it hasn’t already).

It is no wonder that AHIP wants Congress to enact cost containment so the government becomes the bad guys. But do they really expect Congress to establish a government bureaucracy of machete-wielding case managers while the insurance industry gets a free ride? Yet that is the form of cost containment that fits with the model in which the private insurers retain control of the funds.

We’ll say it again. Private health insurance plans are an obsolete model of financing health care. Affordable premiums, adequate benefits, and affordable out-of-pocket costs are incompatible under the private insurance model because of the very high health care prices in the United States.

Methods of cost containment is where PNHP and AHIP part ways. PNHP recommends eliminating the obsolete private insurance industry and replacing it with a single payer national health program – an improved Medicare for everyone.

An improved Medicare for all would save hundreds of billions of dollars in wasted administrative excesses. Although some claim that this is a one-time benefit, it is a profound waste that never returns, providing savings every year thereafter. The system would be operated under a global budget, adjusted for demographics, inflation, and beneficial advances in technology, maintaining spending at a sustainable level. Hospitals would be funded through global budgets, eliminating the need for armies of clerks attempting to obtain reimbursement from a multitude of payers for each itemized expenditure of the hospital. Health professionals would negotiate compensation to meet their costs and provide fair profits. Bulk purchasing at negotiated rates would enable fair pricing for pharmaceuticals and medical supplies. Capital improvements would be separately budgeted to correct for both excessive and deficient supply side capacity, avoiding excess costs by improving efficiency.

The differences could not be more clear. Private insurers want government interventions to protect their businesses. Advocates of an improved Medicare for all want everyone to have the health care that they need, while making the health care system affordable for all – individuals, businesses, and the government and its taxpayers.

Insurer Steps Up Fight to Control Health Care Cost

By Anemona Hartocollis
The New York Times
January 24, 2010
A front in the national health care battle has opened in New York City, where a major hospital chain and one of the nation’s largest insurance companies are locked in a struggle over control of treatment and costs that could have broad ramifications for millions of people with private health insurance.
The fight is between Continuum Health Partners, a consortium of five New York hospitals, including Beth Israel Medical Center and St. Luke’s-Roosevelt Hospital Center, both major teaching hospitals, and UnitedHealthcare.
The prestigious hospitals and the major health insurer have been in bitter contract negotiations, not just over rates but also over UnitedHealthcare’s demand that the hospitals notify the insurance company within 24 hours after a patient’s admission. If a hospital failed to do so, UnitedHealthcare would cut its reimbursements for the patient by half.
UnitedHealthcare says the proposed rule is meant to improve the quality of care and cut costs by allowing insurance case managers to jump in right away. The hospitals say that having their reimbursement cut in half is too much to pay for a clerical error, and that the revenue drain would ultimately hurt their patients.
The dispute signals a “ratcheting up” of a long tradition of insurers trying to cut costs, said Jeffrey Rubin, an economics professor at Rutgers University.
http://www.nytimes.com/2010/01/25/health/policy/25insure.html?ref=health&pagewanted=all

The leadership of America’s Health Insurance Plans (AHIP) and Physicians for a National Health Program (PNHP) do agree on one crucial point: the current health care reform proposal does very little to control the intolerable escalation of health care costs. Both agree that Congress must provide the remedies to control spending and improve health care value.
What will occur without government action? Cost containment will remain in the hands of the private insurance industry. The tools at their disposal are very intrusive and are what resulted in the managed care backlash by unhappy patients and their providers. With the continuing increase in costs and the need to avoid pricing premiums totally out of the market, more intensive and extensive intrusions can be anticipated.
Look at this provision that UnitedHealth is demanding in its contract negotiations with a prominent New York hospital chain. If a hospital commits the clerical error of failing to notify UnitedHealth of a patient’s admission within the first 24 hours, the hospital is penalized 50 percent of its already reduced contracted rate! When the insurer is notified, they have the “insurance case managers jump in right away.” Although they claim that it is to improve quality, no sane person is deceived by the budget machete that they wield.
Without effective reform, it will get much worse since premium increases must be limited – they’re already too high – so insurers will be left with no alternative but to whack away at spending. Whacking spending means whacking patient care. Insurers really don’t want to do that. It is not for altruistic reasons, but it is rather the fear that their business model could suffer irreparable harm under the wrath of enraged patients and their health care providers (not that it hasn’t already).
It is no wonder that AHIP wants Congress to enact cost containment so the government becomes the bad guys. But do they really expect Congress to establish a government bureaucracy of machete-wielding case managers while the insurance industry gets a free ride? Yet that is the form of cost containment that fits with the model in which the private insurers retain control of the funds.
We’ll say it again. Private health insurance plans are an obsolete model of financing health care. Affordable premiums, adequate benefits, and affordable out-of-pocket costs are incompatible under the private insurance model because of the very high health care prices in the United States.
Methods of cost containment is where PNHP and AHIP part ways. PNHP recommends eliminating the obsolete private insurance industry and replacing it with a single payer national health program – an improved Medicare for everyone.
An improved Medicare for all would save hundreds of billions of dollars in wasted administrative excesses. Although some claim that this is a one-time benefit, it is a profound waste that never returns, providing savings every year thereafter. The system would be operated under a global budget, adjusted for demographics, inflation, and beneficial advances in technology, maintaining spending at a sustainable level. Hospitals would be funded through global budgets, eliminating the need for armies of clerks attempting to obtain reimbursement from a multitude of payers for each itemized expenditure of the hospital. Health professionals would negotiate compensation to meet their costs and provide fair profits. Bulk purchasing at negotiated rates would enable fair pricing for pharmaceuticals and medical supplies. Capital improvements would be separately budgeted to correct for both excessive and deficient supply side capacity, avoiding excess costs by improving efficiency.
The differences could not be more clear. Private insurers want government interventions to protect their businesses. Advocates of an improved Medicare for all want everyone to have the health care that they need, while making the health care system affordable for all – individuals, businesses, and the government and its taxpayers.