PNHP

WellPoint walks away from sick patients

WellPoint's Profit, Membership Shrinks

By Anjali Athavaley
The Wall Street Journal, April 25, 2012

WellPoint Inc. reported a 7.6% decline in first-quarter earnings and a decrease in members, but the health insurer also gave indications that the problems affecting its Northern California business are easing.

While health insurers, in general, have benefited from the sluggish pace of patient visits to operating rooms and doctors’ offices, WellPoint’s gains have been muted by unexpectedly high costs for seniors in Northern California, where the company picked up thousands of members with expensive health issues.

The company has said it has fixed the problem by walking away from the difficult market, which is part of some planned membership losses for the new year aimed at boosting profit margins.

http://online.wsj.com/article/SB10001424052702304811304577365640340787690.html

Comment: 

By Don McCanne, MD

What is a private commercial insurer to do when when one or more of their plans has thousands of members with expensive health issues? Walk away, of course. That’s exactly what WellPoint did with its expensive plan membership in Northern California.

What else can you expect from a private, for-profit health insurer? It is first and foremost a business, which must never allow its role of patient service to interfere with its profit mission.

Insurers providing Medicare Advantage plans are prohibited from exercising favorable selection – cherry picking, cream skimming, or whatever – but what do you call it when they dump an entire plan population of sicker than average patients? That’s worse than cherry picking individuals because that involves an entire plan population.

The plans have figured out how to cheat on the Medicare adjustments for adverse selection when their patients are actually healthier and less expensive than average. They just haven’t figured out how to cheat when their patients are less healthy. They certainly don’t want to make them look healthier which would then adjust downward their payment rates. No, walking away from their sicker populations seems to be their only answer.

And what is the Obama administration doing about this? Not only do they let them walk away from high-cost populations, they also are rewarding these overpaid plans with extra “quality award” money – a phony guise since these awards are going to almost all plans regardless of how mediocre their quality scoring. This is really a money allocation scheme designed to enable plans to offer extra benefits in order to entice patients away from the traditional Medicare program. Numerous releases from HHS have bragged about the increased enrollment in these private Medicare Advantage plans. Why are they promoting and awarding such a despicable industry?

President Eisenhower warned us about the military-industrial complex. Arnold Relman warned us about the medical-industrial complex. But what about the government-private insurer industry complex. That one is killing us… literally.

NOTE TO READERS: There are now almost 3000 of these Quote of the Day messages posted at www.pnhp.org/news/quote-of-the-day. I don’t recall any suggesting that it was wise for the government to continue to provide both financial and policy support for the private insurance industry. Quite the opposite. This despicable, wasteful, expensive, intrusive, uncaring industry merits only our scorn. The question is, with all of the evidence before us, what will it take to reach a threshold at which we are finally willing to do something about it?

WellPoint walks away from sick patients

WellPoint’s Profit, Membership Shrinks

By Anjali Athavaley
The Wall Street Journal, April 25, 2012
WellPoint Inc. reported a 7.6% decline in first-quarter earnings and a decrease in members, but the health insurer also gave indications that the problems affecting its Northern California business are easing.
While health insurers, in general, have benefited from the sluggish pace of patient visits to operating rooms and doctors’ offices, WellPoint’s gains have been muted by unexpectedly high costs for seniors in Northern California, where the company picked up thousands of members with expensive health issues.
The company has said it has fixed the problem by walking away from the difficult market, which is part of some planned membership losses for the new year aimed at boosting profit margins.
http://online.wsj.com/article/SB10001424052702304811304577365640340787690.html

What is a private commercial insurer to do when when one or more of their plans has thousands of members with expensive health issues? Walk away, of course. That’s exactly what WellPoint did with its expensive plan membership in Northern California.
What else can you expect from a private, for-profit health insurer? It is first and foremost a business, which must never allow its role of patient service to interfere with its profit mission.
Insurers providing Medicare Advantage plans are prohibited from exercising favorable selection – cherry picking, cream skimming, or whatever – but what do you call it when they dump an entire plan population of sicker than average patients? That’s worse than cherry picking individuals because that involves an entire plan population.
The plans have figured out how to cheat on the Medicare adjustments for adverse selection when their patients are actually healthier and less expensive than average. They just haven’t figured out how to cheat when their patients are less healthy. They certainly don’t want to make them look healthier which would then adjust downward their payment rates. No, walking away from their sicker populations seems to be their only answer.
And what is the Obama administration doing about this? Not only do they let them walk away from high-cost populations, they also are rewarding these overpaid plans with extra “quality award” money – a phony guise since these awards are going to almost all plans regardless of how mediocre their quality scoring. This is really a money allocation scheme designed to enable plans to offer extra benefits in order to entice patients away from the traditional Medicare program. Numerous releases from HHS have bragged about the increased enrollment in these private Medicare Advantage plans. Why are they promoting and awarding such a despicable industry?
President Eisenhower warned us about the military-industrial complex. Arnold Relman warned us about the medical-industrial complex. But what about the government-private insurer industry complex. That one is killing us… literally.
NOTE TO READERS: There are now almost 3000 of these Quote of the Day messages posted at www.pnhp.org/news/quote-of-the-day. I don’t recall any suggesting that it was wise for the government to continue to provide both financial and policy support for the private insurance industry. Quite the opposite. This despicable, wasteful, expensive, intrusive, uncaring industry merits only our scorn. The question is, with all of the evidence before us, what will it take to reach a threshold at which we are finally willing to do something about it?