Senate gives final approval to health care exchange bill

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?

By Richard N. Gottfried
timesunion.com, April 1, 2012

You buy a health insurance policy that covers care by “in-network” doctors and other providers, but also promises that if you go to an “out of network” provider, it will pay based on “usual and customary charges.” Your family doctor refers you to an out-of-network specialist, and it turns out the insurance company offers to pay about half the bill you get.

A few years ago, then-Attorney General Andrew Cuomo and a group of physicians brought a massive lawsuit against the top insurance companies. The charge was that those insurers were promising to pay based on “usual and customary” rates for out-of-network services, but those rates were bogus — and outrageously low.

The insurance companies agreed to settle the case. They agreed that the attorney general would set up an independent nonprofit organization, called Fair Health, to publish legitimate data the insurance companies would use for determining “usual and customary” charges.

Now, insurers are getting around the settlement by no longer promising to pay based on usual and customary; they will pay whatever they choose to pay.

So I have introduced a bill in the Assembly, carried in the Senate by Senate Health Committee chairman Kemp Hannon. It says that your health insurer company must disclose how it calculates out-of-network payments, and state them as a percentage of the Fair Health usual-and-customary rate. And it says the state Department of Financial Services — the new name of what used to be the Insurance Department — may not approve an out-of-network insurance policy unless it actually provides “significant coverage” of the Fair Health usual-and-customary rate.

In other words, insurers have to be open with their customers, and they can’t claim a policy covers out-of-network services if it doesn’t really pay reasonable amounts for them.

The Fair Health court settlement was hailed as a landmark. But the health insurance companies quickly found a way around it. If our bill becomes law, they may find a way around that, too. The problem is, whatever reforms we enact, our health coverage still relies on insurance companies.

Instead, New York should establish a universal publicly funded single-payer system, funded by broad-based revenue based on ability to pay. I sponsor an Assembly bill, carried in the Senate by Tom Duane, to set up such a system, called “New York Health.”

You and your doctor would work on keeping you healthy, and New York Health would pay the bill.

(Richard N. Gottfried of Manhattan is chairman of the state Assembly Committee on Health.)

http://www.timesunion.com/default/article/Let-New-York-Health-help-pay-the-bills-3451653.php

Comment: 

By Don McCanne, MD

Yesterday’s Quote of the Day message explained how, in a legal settlement, private insurers were required to develop a new program – FAIR Health – to be used to determine what were fair “usual and customary” fees after they had been caught cheating patients through the Ingenix program they had been using. We were rightfully outraged when the insurers bypassed this new program on the basis that the legal settlement did not require them to actually use FAIR Health.

Chairman Richard Gottfried of the New York State Assembly Committee on Health has introduced a bill – A. 7489-B – which would require private insurers to disclose how they calculate usual and customary fees plus require that they disclose them as a percentage of what the FAIR Health fees would be. There is nothing like requiring transparency of entities that are trying to cheat you.

But what will this accomplish? As Gottfried states, “The Fair Health court settlement was hailed as a landmark. But the health insurance companies quickly found a way around it. If our bill becomes law, they may find a way around that, too. The problem is, whatever reforms we enact, our health coverage still relies on insurance companies.”

The private insurers will never change. Gottfried certainly understands this. That is why he has introduced another Assembly bill – A. 7860. As he states, instead of relying on insurance companies, “New York should establish a universal publicly funded single-payer system, funded by broad-based revenue based on ability to pay.”

Come to think of it, we should do that for the entire nation.

Let New York Health help pay the bills

By Richard N. Gottfried
timesunion.com, April 1, 2012

You buy a health insurance policy that covers care by “in-network” doctors and other providers, but also promises that if you go to an “out of network” provider, it will pay based on “usual and customary charges.” Your family doctor refers you to an out-of-network specialist, and it turns out the insurance company offers to pay about half the bill you get.

A few years ago, then-Attorney General Andrew Cuomo and a group of physicians brought a massive lawsuit against the top insurance companies. The charge was that those insurers were promising to pay based on “usual and customary” rates for out-of-network services, but those rates were bogus — and outrageously low.

The insurance companies agreed to settle the case. They agreed that the attorney general would set up an independent nonprofit organization, called Fair Health, to publish legitimate data the insurance companies would use for determining “usual and customary” charges.

Now, insurers are getting around the settlement by no longer promising to pay based on usual and customary; they will pay whatever they choose to pay.

So I have introduced a bill in the Assembly, carried in the Senate by Senate Health Committee chairman Kemp Hannon. It says that your health insurer company must disclose how it calculates out-of-network payments, and state them as a percentage of the Fair Health usual-and-customary rate. And it says the state Department of Financial Services — the new name of what used to be the Insurance Department — may not approve an out-of-network insurance policy unless it actually provides “significant coverage” of the Fair Health usual-and-customary rate.

In other words, insurers have to be open with their customers, and they can’t claim a policy covers out-of-network services if it doesn’t really pay reasonable amounts for them.

The Fair Health court settlement was hailed as a landmark. But the health insurance companies quickly found a way around it. If our bill becomes law, they may find a way around that, too. The problem is, whatever reforms we enact, our health coverage still relies on insurance companies.

Instead, New York should establish a universal publicly funded single-payer system, funded by broad-based revenue based on ability to pay. I sponsor an Assembly bill, carried in the Senate by Tom Duane, to set up such a system, called “New York Health.”

You and your doctor would work on keeping you healthy, and New York Health would pay the bill.

(Richard N. Gottfried of Manhattan is chairman of the state Assembly Committee on Health.)

http://www.timesunion.com/default/article/Let-New-York-Health-help-pay-the-bills-3451653.php

Comment: 

By Don McCanne, MD

Yesterday’s Quote of the Day message explained how, in a legal settlement, private insurers were required to develop a new program – FAIR Health – to be used to determine what were fair “usual and customary” fees after they had been caught cheating patients through the Ingenix program they had been using. We were rightfully outraged when the insurers bypassed this new program on the basis that the legal settlement did not require them to actually use FAIR Health.

Chairman Richard Gottfried of the New York State Assembly Committee on Health has introduced a bill – A. 7489-B – which would require private insurers to disclose how they calculate usual and customary fees plus require that they disclose them as a percentage of what the FAIR Health fees would be. There is nothing like requiring transparency of entities that are trying to cheat you.

But what will this accomplish? As Gottfried states, “The Fair Health court settlement was hailed as a landmark. But the health insurance companies quickly found a way around it. If our bill becomes law, they may find a way around that, too. The problem is, whatever reforms we enact, our health coverage still relies on insurance companies.”

The private insurers will never change. Gottfried certainly understands this. That is why he has introduced another Assembly bill – A. 7860. As he states, instead of relying on insurance companies, “New York should establish a universal publicly funded single-payer system, funded by broad-based revenue based on ability to pay.”

Come to think of it, we should do that for the entire nation.

Let New York Health help pay the bills

By Richard N. Gottfried
timesunion.com, April 1, 2012
You buy a health insurance policy that covers care by “in-network” doctors and other providers, but also promises that if you go to an “out of network” provider, it will pay based on “usual and customary charges.” Your family doctor refers you to an out-of-network specialist, and it turns out the insurance company offers to pay about half the bill you get.
A few years ago, then-Attorney General Andrew Cuomo and a group of physicians brought a massive lawsuit against the top insurance companies. The charge was that those insurers were promising to pay based on “usual and customary” rates for out-of-network services, but those rates were bogus — and outrageously low.
The insurance companies agreed to settle the case. They agreed that the attorney general would set up an independent nonprofit organization, called Fair Health, to publish legitimate data the insurance companies would use for determining “usual and customary” charges.
Now, insurers are getting around the settlement by no longer promising to pay based on usual and customary; they will pay whatever they choose to pay.
So I have introduced a bill in the Assembly, carried in the Senate by Senate Health Committee chairman Kemp Hannon. It says that your health insurer company must disclose how it calculates out-of-network payments, and state them as a percentage of the Fair Health usual-and-customary rate. And it says the state Department of Financial Services — the new name of what used to be the Insurance Department — may not approve an out-of-network insurance policy unless it actually provides “significant coverage” of the Fair Health usual-and-customary rate.
In other words, insurers have to be open with their customers, and they can’t claim a policy covers out-of-network services if it doesn’t really pay reasonable amounts for them.
The Fair Health court settlement was hailed as a landmark. But the health insurance companies quickly found a way around it. If our bill becomes law, they may find a way around that, too. The problem is, whatever reforms we enact, our health coverage still relies on insurance companies.
Instead, New York should establish a universal publicly funded single-payer system, funded by broad-based revenue based on ability to pay. I sponsor an Assembly bill, carried in the Senate by Tom Duane, to set up such a system, called “New York Health.”
You and your doctor would work on keeping you healthy, and New York Health would pay the bill.
(Richard N. Gottfried of Manhattan is chairman of the state Assembly Committee on Health.)
http://www.timesunion.com/default/article/Let-New-York-Health-help-pay-the-bills-3451653.php

Yesterday’s Quote of the Day message explained how, in a legal settlement, private insurers were required to develop a new program – FAIR Health – to be used to determine what were fair “usual and customary” fees after they had been caught cheating patients through the Ingenix program they had been using. We were rightfully outraged when the insurers bypassed this new program on the basis that the legal settlement did not require them to actually use FAIR Health.
Chairman Richard Gottfried of the New York State Assembly Committee on Health has introduced a bill – A. 7489-B – which would require private insurers to disclose how they calculate usual and customary fees plus require that they disclose them as a percentage of what the FAIR Health fees would be. There is nothing like requiring transparency of entities that are trying to cheat you.
But what will this accomplish? As Gottfried states, “The Fair Health court settlement was hailed as a landmark. But the health insurance companies quickly found a way around it. If our bill becomes law, they may find a way around that, too. The problem is, whatever reforms we enact, our health coverage still relies on insurance companies.”
The private insurers will never change. Gottfried certainly understands this. That is why he has introduced another Assembly bill – A. 7860. As he states, instead of relying on insurance companies, “New York should establish a universal publicly funded single-payer system, funded by broad-based revenue based on ability to pay.”
Come to think of it, we should do that for the entire nation.

By Nina Bernstein
The New York Times, April 23, 2012

Despite a landmark settlement that was expected to increase coverage for out-of-network care, the nation’s largest health insurers have been switching to a new payment method that in most cases significantly increases the cost to the patient.

The settlement, reached in 2009, followed New York State’s accusation that the companies  manipulated data they used to price such care, shortchanging the nation’s patients by hundreds of millions of dollars.

The agreement required the companies to finance an objective database of doctors’ fees that patients and insurers nationally could rely on. Gov. Andrew M. Cuomo, then the attorney general, said it would increase reimbursements by as much as 28 percent.

It has not turned out that way. Though the settlement required the companies to underwrite the new database with $95 million, it did not obligate them to use it. So by the time the database was finally up and running last year, the same companies, across the country, were rapidly shifting to another calculation method, based on Medicare rates, that usually reduces reimbursement substantially.

In the 2009 settlement, the insurers did not admit wrongdoing. But they paid to set up FAIR Health as a replacement for Ingenix, a database owned by the insurance giant United Healthcare. Mr. Cuomo said Ingenix had consistently understated local “usual and customary” rates — so-called U.C.R.’s — that were used nationally to determine how much of a bill was paid when a patient used an out-of-network doctor.

FAIR Health collects billions of bills from insurers to calculate a usual fee for each medical procedure in a given locality. But increasingly, reimbursement is not based on such prevailing rates.

“This shift is mirrored across the country, and the implications in terms of declines in reimbursement are similar,” said Rob Parke, a benefits expert at Milliman, an international actuarial and consulting firm.

The level of reimbursement varies by plan, pegged to benchmarks unknown or misunderstood by many consumers. The traditional benchmark was 80 percent of the U.C.R., while newer ones mostly range from 140 percent to 250 percent of Medicare rates. That sounds like more, but typically amounts to less, and is drastically below charges in large, emergency out-of-network bills.

Depending on the plan, insurers may cover 60 percent to 80 percent of the benchmark sum; the patient is not only responsible for the rest but also for any outstanding balance, to which out-of-pocket maximums do not apply. The average emergency bill that insurers reported to state investigators, for example, totaled $7,006, or 1,421 percent of the Medicare rate, and left patients owing an average of $3,778.

http://www.nytimes.com/2012/04/24/nyregion/health-insurers-switch-baseline-for-out-of-network-charges.html?_r=1&hpw&pagewanted=all

Comment: 

By Don McCanne, MD

One of the many reasons that private insurers lost their credibility as being a fair arbiter of our health care dollars is the story of Ingenix.

An acquired subsidiary of health insurance giant UnitedHealth but used by other major insurers, Ingenix established an elaborate method of calculating “usual and customary” fees that would be paid by the insurers for out-of-network care. As it turned out, they cheated. They used innovative calculations that resulted in lower payments than fees that were truly usual and customary. In many instances, the patients were responsible not only for the deductibles, coinsurance and co-payments, but also for the higher balances resulting from these dishonest calculations.

In a settlement, the insurers agreed to set up a new program called FAIR Health as a replacement for Ingenix. We now learn that the settlement did not require the insurers to use this program. Instead many switched to Medicare as the benchmark for usual and customary fees, though the Medicare rates are usually lower, especially for specialized services.

Under Medicare, physicians and hospitals are not allowed to bill the patients for more than the Medicare-allowed balances, but in many states there is no such limitation for privately insured patients. Thus privately-insured patients may face much larger out-of-pocket costs than they would if they were covered by Medicare.

In those instances where balance billing for privately insured patients is prohibited, as is often the case with emergency care, then the providers are forced to accept less than usual and customary fees even though they have no contract with the private insurers requiring them to do so. In these instances, the state is enforcing contract provisions that do not even exist – placing the state in a position of siding with the private insurers and against the providers.

There are two sides to this story. One is that private commercial insurers cannot be relied upon to play fair. They will always game the system to protect their products and benefit their investors. The other is that insured patients must be protected from excessive out-of-pocket costs, which Medicare theoretically does by prohibiting health care providers from billing more then the Medicare-authorized amounts. The private insurers are merely following Medicare’s lead. The obvious problem is that private insurers do not have the ability to enforce prohibition of balance billing, thus patients are heavily penalized.

For many patients, even the more modest Medicare-allowed balances are an excessive burden that can impair access to care because of lack of affordability. An improved Medicare would prohibit any cost sharing for essential health care services. Yet the private insurers would never be able to produce a product that covered all essential services while eliminating patient cost sharing. Especially when adding in the costs of their administrative excesses, the premiums that would have to be charged would have a market only for the 1 percent – obviously not a viable product.

The conclusion is obvious. We need an improved Medicare that covers everyone, reduces administrative waste, eliminates the financial barriers of cost sharing, and is equitably funded. We certainly don’t need an industry forced on us that is required to establish “FAIR Health” but then uses loopholes to skirt fairness.

Insurers Alter Cost Formula, and Patients Pay More

By Nina Bernstein
The New York Times, April 23, 2012
Despite a landmark settlement that was expected to increase coverage for out-of-network care, the nation’s largest health insurers have been switching to a new payment method that in most cases significantly increases the cost to the patient.
The settlement, reached in 2009, followed New York State’s accusation that the companies  manipulated data they used to price such care, shortchanging the nation’s patients by hundreds of millions of dollars.
The agreement required the companies to finance an objective database of doctors’ fees that patients and insurers nationally could rely on. Gov. Andrew M. Cuomo, then the attorney general, said it would increase reimbursements by as much as 28 percent.
It has not turned out that way. Though the settlement required the companies to underwrite the new database with $95 million, it did not obligate them to use it. So by the time the database was finally up and running last year, the same companies, across the country, were rapidly shifting to another calculation method, based on Medicare rates, that usually reduces reimbursement substantially.
In the 2009 settlement, the insurers did not admit wrongdoing. But they paid to set up FAIR Health as a replacement for Ingenix, a database owned by the insurance giant United Healthcare. Mr. Cuomo said Ingenix had consistently understated local “usual and customary” rates — so-called U.C.R.’s — that were used nationally to determine how much of a bill was paid when a patient used an out-of-network doctor.
FAIR Health collects billions of bills from insurers to calculate a usual fee for each medical procedure in a given locality. But increasingly, reimbursement is not based on such prevailing rates.
“This shift is mirrored across the country, and the implications in terms of declines in reimbursement are similar,” said Rob Parke, a benefits expert at Milliman, an international actuarial and consulting firm.
The level of reimbursement varies by plan, pegged to benchmarks unknown or misunderstood by many consumers. The traditional benchmark was 80 percent of the U.C.R., while newer ones mostly range from 140 percent to 250 percent of Medicare rates. That sounds like more, but typically amounts to less, and is drastically below charges in large, emergency out-of-network bills.
Depending on the plan, insurers may cover 60 percent to 80 percent of the benchmark sum; the patient is not only responsible for the rest but also for any outstanding balance, to which out-of-pocket maximums do not apply. The average emergency bill that insurers reported to state investigators, for example, totaled $7,006, or 1,421 percent of the Medicare rate, and left patients owing an average of $3,778.
http://www.nytimes.com/2012/04/24/nyregion/health-insurers-switch-baseline-for-out-of-network-charges.html?_r=1&hpw&pagewanted=all

One of the many reasons that private insurers lost their credibility as being a fair arbiter of our health care dollars is the story of Ingenix.
An acquired subsidiary of health insurance giant UnitedHealth but used by other major insurers, Ingenix established an elaborate method of calculating “usual and customary” fees that would be paid by the insurers for out-of-network care. As it turned out, they cheated. They used innovative calculations that resulted in lower payments than fees that were truly usual and customary. In many instances, the patients were responsible not only for the deductibles, coinsurance and co-payments, but also for the higher balances resulting from these dishonest calculations.
In a settlement, the insurers agreed to set up a new program called FAIR Health as a replacement for Ingenix. We now learn that the settlement did not require the insurers to use this program. Instead many switched to Medicare as the benchmark for usual and customary fees, though the Medicare rates are usually lower, especially for specialized services.
Under Medicare, physicians and hospitals are not allowed to bill the patients for more than the Medicare-allowed balances, but in many states there is no such limitation for privately insured patients. Thus privately-insured patients may face much larger out-of-pocket costs than they would if they were covered by Medicare.
In those instances where balance billing for privately insured patients is prohibited, as is often the case with emergency care, then the providers are forced to accept less than usual and customary fees even though they have no contract with the private insurers requiring them to do so. In these instances, the state is enforcing contract provisions that do not even exist – placing the state in a position of siding with the private insurers and against the providers.
There are two sides to this story. One is that private commercial insurers cannot be relied upon to play fair. They will always game the system to protect their products and benefit their investors. The other is that insured patients must be protected from excessive out-of-pocket costs, which Medicare theoretically does by prohibiting health care providers from billing more then the Medicare-authorized amounts. The private insurers are merely following Medicare’s lead. The obvious problem is that private insurers do not have the ability to enforce prohibition of balance billing, thus patients are heavily penalized.
For many patients, even the more modest Medicare-allowed balances are an excessive burden that can impair access to care because of lack of affordability. An improved Medicare would prohibit any cost sharing for essential health care services. Yet the private insurers would never be able to produce a product that covered all essential services while eliminating patient cost sharing. Especially when adding in the costs of their administrative excesses, the premiums that would have to be charged would have a market only for the 1 percent – obviously not a viable product.
The conclusion is obvious. We need an improved Medicare that covers everyone, reduces administrative waste, eliminates the financial barriers of cost sharing, and is equitably funded. We certainly don’t need an industry forced on us that is required to establish “FAIR Health” but then uses loopholes to skirt fairness.