By Uwe E. Reinhardt
The New York Times
November 7, 2008

Even if the financial markets had not gone into a tailspin and the economy had not slouched toward a prolonged recession, non-elderly Americans in lower-middle-income families — those with family incomes between $20,000 and $60,000 — would have sailed into a perfect storm brewing in health care. Roughly one-third of American households fall into that category.

Consider a family headed by two income earners each with a gross wage base of $30,000. One might be a taxi driver, and the other a sales clerk in a department store or at, say, Home Depot.

By “gross wage base” is meant here the sum of all of the debits that an employer makes to the account “Payroll Expense” for an employee. It includes the employee’s cash take-home pay, all the income taxes and Social Security taxes and other deductions — for example, the employee’s contributions towards health insurance and pensions — withheld from the employee’s paycheck, as well as the employer’s share of Social Security taxes and the employer’s contributions toward the employee’s health insurance, pension, vacation pay, sick days and so on. It is a sum that supports all taxes paid by or on behalf of the employee and all fringe benefits earned by the employee, whether formally paid by the employer or taken out of the employee’s paycheck.

It follows from this definition of gross wage base that it must support all of the health expenditures made by or on behalf of the family in a given year — that is, the employer’s contribution to premiums for the employee’s health insurance, the employee’s own contribution and the employee’s out-of-pocket health spending.

According to the Milliman Medical Index, this total health spending figure for a typical non-elderly American family of four had reached an average of $15,600 by 2008. It had grown at an average compound growth rate of about 8.6 percent from $11,192 in 2004.

To return to our family with an assumed gross wage base of $60,000: If that gross wage base grew by, say, 3 percent per year over the next decade, to $80,600 by 2017, while total family health spending grew by, say, 8 percent per year over the same time frame, to $33,700 by 2017, then about 41 percent of the family’s gross wage base would be taken up by health care alone, before any deductions for taxes or fringe benefits. If the wage base grew by 4 percent, health spending still would absorb about a third of the family gross wage base.

These numbers, which are realistic, suggest that before long the gross wage base earned by American households will become too small a donkey to carry the load of the family’s spending on health care. It will put before Americans an uncomfortable choice.

Either Americans in the higher income strata must step up to the cashier’s window to help subsidize, with higher income taxes, the health care of the most hard-working members of the lower income classes, or the United States will have to evolve toward a noticeable two-tiered or multi-tiered health care system, with bare-bones, low-tech health care for families in the bottom half of the income distribution and increasingly superior, high-tech health care for families in the upper-income strata.

It is one of the several unpleasant trade-offs facing President-elect Barack Obama.

http://economix.blogs.nytimes.com/2008/11/07/the-health-care-challenge-sailing-into-a-perfect-storm/?hp

And…

2008 Milliman Medical Index

The total medical cost in 2008 for a typical family of four is $15,609.

http://www.milliman.com/expertise/healthcare/products-tools/mmi/pdfs/milliman-medical-index-2008.pdf

Comment:

By Don McCanne, MD

If we are truly serious about establishing an affordable system that would provide all necessary care for everyone, we have to seriously look at the Milliman Medical Index numbers. We are already spending an average of $15,609 for a family of four, with a typical family income of maybe $60,000. Those numbers no longer compute.

If we include everyone, how should we pay this bill? Should we attempt to continue with an administratively wasteful and inequitable system of private health plans with unaffordable premiums? Or should we adopt an efficient and equitable single payer national health program.

Regardless, if we want everyone to have the health care that they should have, higher income individuals must help pay for the care of those with modest incomes, as Uwe Reinhardt explains.

If we used private health plans, we would have to depend on an unstable and administratively burdensome system of sliding scale subsidies to help pay these high premiums (tax credits, vouchers, employer and/or individual indexed mandates, etc.).

If we established a single payer national health program, it would be simple to finance it with an equitable, stable and administratively efficient system of progressive taxes.

$15,000 means a lot to a great many of us and forces us to make choices that we shouldn’t have to make. For the wealthy, the progressive tax that they would pay would not force them into any difficult choices at all. It would merely be reflected in some numbers that would appear in the forms provided by the accountant. The emotional trauma of being exposed to some numbers on a sheet of paper is not a very big price for them to pay.

AMA wants physicians to stake a claim for accurate insurer payments this fall

AMA
October 29, 2008
As part of its national campaign to save the health system billions of dollars by improving the accuracy and efficiency of medical claims processing, the American Medical Association (AMA) today announced it has selected November for the first national Heal that Claim Month.
Many physician practices often experience an increase in claim denials from health insurers during the last quarter of the year, making November an ideal time to appeal inappropriately underpaid and denied claims. An estimated 90 percent of claim denials are preventable and 67 percent of denials are recoverable, according to the Advisory Board Company, a Washington-based research organization. Based on those estimates, physicians collectively lose billions of dollars a year of revenue to health insurers.
Heal that Claim Month is part of the AMA’s ongoing Heal the Claims Process campaign, which launched last June with the unveiling of the AMA’s first National Health Insurer Report Card, an objective comparison of the nation’s largest health insurers and their claims processing performance.
http://www.ama-assn.org/ama/pub/category/20209.html

And…

2008 National Health Insurer Report Card

AMA
Contracted payment rate adherence
On what percentage of records does the payer’s allowed amount equal the contracted payment rate?
Aetna – 70.78%
Anthem – 72.14%
CIGNA – 66.23%
Coventry – 86.74%
Health Net – not reported
Humana – 84.20%
UHC – 61.55%
Medicare – 98.12%
http://www.ama-assn.org/ama1/pub/upload/mm/368/reportcard.pdf

And…

Appeal that Claim

AMA
When a physician practice assumes that the reimbursement it receives from health insurers is always accurate, the practice may lose revenue. Even when a practice codes claims correctly, health insurers may still inappropriately deny, delay or significantly reduce payments. By implementing claims auditing processes, you can ensure that health insurers pay your practice appropriately for your physician procedures and services.
Step 1: Determine who will be responsible for auditing health insurer payments
Step 2: Collect recommended health insurer auditing resources
Step 3: Run monthly collection reports
Step 4: Review the health insurer explanation of benefits (EOB)/remittance advice (RA) on each claim identified on the collection report
Step 5: Identify the health insurer basis for the denied, delayed or partially paid claim
Step 6: Gather supporting documentation to corroborate reversal of the health insurer’s determination through the claims appeals process
Step 7: Develop a claim appeal letter and resubmit the claim to the health insurer
Step 8: Maintain a health insurer follow-up log
Step 9: Hold claims processing and review meetings
Step 10: Continue to appeal inappropriately denied, delayed or partially paid claims
Appeal that Claim (65 pages):
http://www.ama-assn.org/ama1/pub/upload/mm/368/appeal-that-claim.pdf

The AMA has selected November as the first national Heal that Claim Month. The problems that this addresses must be fairly significant if they are going to declare a special month to address them; so what are these problems?
The U.S. health care financing system is infamous for its profound administrative waste. Some of it is due to the fragmented system of a great multitude of private payers plus public programs with various rules and regulations which increase the complexity of the billing process. Besides the administrative costs of the insurers, which is typically about 18 percent of their premiums (i.e., medical loss ratio of 82 percent), the administrative burden that this system places on physicians and hospitals consumes about another 12 percent of the insurance premiums.
These numbers refer to the routine of claims preparation and processing. But the 2008 National Health Insurer Report Card demonstrates that the nefarious behavior of the private insurers has compounded the complexity by reimbursing at rates significantly below those that were established in contracts with the physicians.
The private insurers are cheating, and they depend on physicians being overwhelmed by this administrative burden to not get caught in their evil deeds. This goes far beyond the complex routine of private insurance administrative processes. This is racketeering.
In the ultimate of ironies, the AMA has responded with an additional, complex, burdensome administrative process to ferret out the private insurers that cheat (which is all of them!), so that they can demand reimbursement at rates that the insurers contractually agreed to. Understanding the element that they are dealing with, the final step recommended is to continue to assert compliance with these contracts agreed to by these recalcitrant crooks.
So what is the AMA recommendation for reforming this horrendous, highly wasteful system? More of it! They want to expand the market of private health plans and use our tax funds to provide credits for purchasing these plans.
The AMA should take a closer look at their own National Health Insurer Report Card. All of the private insurers are crooks, but our own public insurer, Medicare, has over a 98 percent compliance with contracted rates. Just imagine if Medicare were the only payer. The ease and transparency of the process would likely result in 99.99 percent compliance.
Instead of wasting more time and resources on a Heal that Claim Month, we need to proclaim January 2009 as a New and Improved Medicare for All Month!

AMA
October 29, 2008

As part of its national campaign to save the health system billions of dollars by improving the accuracy and efficiency of medical claims processing, the American Medical Association (AMA) today announced it has selected November for the first national Heal that Claim Month.

Many physician practices often experience an increase in claim denials from health insurers during the last quarter of the year, making November an ideal time to appeal inappropriately underpaid and denied claims. An estimated 90 percent of claim denials are preventable and 67 percent of denials are recoverable, according to the Advisory Board Company, a Washington-based research organization. Based on those estimates, physicians collectively lose billions of dollars a year of revenue to health insurers.

Heal that Claim Month is part of the AMA’s ongoing Heal the Claims Process campaign, which launched last June with the unveiling of the AMA’s first National Health Insurer Report Card, an objective comparison of the nation’s largest health insurers and their claims processing performance.

http://www.ama-assn.org/ama/pub/category/20209.html

And…

2008 National Health Insurer Report Card

AMA

Contracted payment rate adherence

On what percentage of records does the payer’s allowed amount equal the contracted payment rate?

Aetna – 70.78%
Anthem – 72.14%
CIGNA – 66.23%
Coventry – 86.74%
Health Net – not reported
Humana – 84.20%
UHC – 61.55%
Medicare – 98.12%

http://www.ama-assn.org/ama1/pub/upload/mm/368/reportcard.pdf

And…

Appeal that Claim

AMA

When a physician practice assumes that the reimbursement it receives from health insurers is always accurate, the practice may lose revenue. Even when a practice codes claims correctly, health insurers may still inappropriately deny, delay or significantly reduce payments. By implementing claims auditing processes, you can ensure that health insurers pay your practice appropriately for your physician procedures and services.

Step 1: Determine who will be responsible for auditing health insurer payments

Step 2: Collect recommended health insurer auditing resources

Step 3: Run monthly collection reports

Step 4: Review the health insurer explanation of benefits (EOB)/remittance advice (RA) on each claim identified on the collection report

Step 5: Identify the health insurer basis for the denied, delayed or partially paid claim

Step 6: Gather supporting documentation to corroborate reversal of the health insurer’s determination through the claims appeals process

Step 7: Develop a claim appeal letter and resubmit the claim to the health insurer

Step 8: Maintain a health insurer follow-up log

Step 9: Hold claims processing and review meetings

Step 10: Continue to appeal inappropriately denied, delayed or partially paid claims

Appeal that Claim (65 pages):
http://www.ama-assn.org/ama1/pub/upload/mm/368/appeal-that-claim.pdf

Comment:

By Don McCanne, MD

The AMA has selected November as the first national Heal that Claim Month. The problems that this addresses must be fairly significant if they are going to declare a special month to address them; so what are these problems?

The U.S. health care financing system is infamous for its profound administrative waste. Some of it is due to the fragmented system of a great multitude of private payers plus public programs with various rules and regulations which increase the complexity of the billing process. Besides the administrative costs of the insurers, which is typically about 18 percent of their premiums (i.e., medical loss ratio of 82 percent), the administrative burden that this system places on physicians and hospitals consumes about another 12 percent of the insurance premiums.

These numbers refer to the routine of claims preparation and processing. But the 2008 National Health Insurer Report Card demonstrates that the nefarious behavior of the private insurers has compounded the complexity by reimbursing at rates significantly below those that were established in contracts with the physicians.

The private insurers are cheating, and they depend on physicians being overwhelmed by this administrative burden to not get caught in their evil deeds. This goes far beyond the complex routine of private insurance administrative processes. This is racketeering.

In the ultimate of ironies, the AMA has responded with an additional, complex, burdensome administrative process to ferret out the private insurers that cheat (which is all of them!), so that they can demand reimbursement at rates that the insurers contractually agreed to. Understanding the element that they are dealing with, the final step recommended is to continue to assert compliance with these contracts agreed to by these recalcitrant crooks.

So what is the AMA recommendation for reforming this horrendous, highly wasteful system? More of it! They want to expand the market of private health plans and use our tax funds to provide credits for purchasing these plans.

The AMA should take a closer look at their own National Health Insurer Report Card. All of the private insurers are crooks, but our own public insurer, Medicare, has over a 98 percent compliance with contracted rates. Just imagine if Medicare were the only payer. The ease and transparency of the process would likely result in 99.99 percent compliance.

Instead of wasting more time and resources on a Heal that Claim Month, we need to proclaim January 2009 as a New and Improved Medicare for All Month!

AMA wants physicians to stake a claim for accurate insurer payments this fall

AMA
October 29, 2008

As part of its national campaign to save the health system billions of dollars by improving the accuracy and efficiency of medical claims processing, the American Medical Association (AMA) today announced it has selected November for the first national Heal that Claim Month.

Many physician practices often experience an increase in claim denials from health insurers during the last quarter of the year, making November an ideal time to appeal inappropriately underpaid and denied claims. An estimated 90 percent of claim denials are preventable and 67 percent of denials are recoverable, according to the Advisory Board Company, a Washington-based research organization. Based on those estimates, physicians collectively lose billions of dollars a year of revenue to health insurers.

Heal that Claim Month is part of the AMA’s ongoing Heal the Claims Process campaign, which launched last June with the unveiling of the AMA’s first National Health Insurer Report Card, an objective comparison of the nation’s largest health insurers and their claims processing performance.

http://www.ama-assn.org/ama/pub/category/20209.html

And…

2008 National Health Insurer Report Card

AMA

Contracted payment rate adherence

On what percentage of records does the payer’s allowed amount equal the contracted payment rate?

Aetna – 70.78%
Anthem – 72.14%
CIGNA – 66.23%
Coventry – 86.74%
Health Net – not reported
Humana – 84.20%
UHC – 61.55%
Medicare – 98.12%

http://www.ama-assn.org/ama1/pub/upload/mm/368/reportcard.pdf

And…

Appeal that Claim

AMA

When a physician practice assumes that the reimbursement it receives from health insurers is always accurate, the practice may lose revenue. Even when a practice codes claims correctly, health insurers may still inappropriately deny, delay or significantly reduce payments. By implementing claims auditing processes, you can ensure that health insurers pay your practice appropriately for your physician procedures and services.

Step 1: Determine who will be responsible for auditing health insurer payments

Step 2: Collect recommended health insurer auditing resources

Step 3: Run monthly collection reports

Step 4: Review the health insurer explanation of benefits (EOB)/remittance advice (RA) on each claim identified on the collection report

Step 5: Identify the health insurer basis for the denied, delayed or partially paid claim

Step 6: Gather supporting documentation to corroborate reversal of the health insurer’s determination through the claims appeals process

Step 7: Develop a claim appeal letter and resubmit the claim to the health insurer

Step 8: Maintain a health insurer follow-up log

Step 9: Hold claims processing and review meetings

Step 10: Continue to appeal inappropriately denied, delayed or partially paid claims

Appeal that Claim (65 pages):
http://www.ama-assn.org/ama1/pub/upload/mm/368/appeal-that-claim.pdf

Comment:

By Don McCanne, MD

The AMA has selected November as the first national Heal that Claim Month. The problems that this addresses must be fairly significant if they are going to declare a special month to address them; so what are these problems?

The U.S. health care financing system is infamous for its profound administrative waste. Some of it is due to the fragmented system of a great multitude of private payers plus public programs with various rules and regulations which increase the complexity of the billing process. Besides the administrative costs of the insurers, which is typically about 18 percent of their premiums (i.e., medical loss ratio of 82 percent), the administrative burden that this system places on physicians and hospitals consumes about another 12 percent of the insurance premiums.

These numbers refer to the routine of claims preparation and processing. But the 2008 National Health Insurer Report Card demonstrates that the nefarious behavior of the private insurers has compounded the complexity by reimbursing at rates significantly below those that were established in contracts with the physicians.

The private insurers are cheating, and they depend on physicians being overwhelmed by this administrative burden to not get caught in their evil deeds. This goes far beyond the complex routine of private insurance administrative processes. This is racketeering.

In the ultimate of ironies, the AMA has responded with an additional, complex, burdensome administrative process to ferret out the private insurers that cheat (which is all of them!), so that they can demand reimbursement at rates that the insurers contractually agreed to. Understanding the element that they are dealing with, the final step recommended is to continue to assert compliance with these contracts agreed to by these recalcitrant crooks.

So what is the AMA recommendation for reforming this horrendous, highly wasteful system? More of it! They want to expand the market of private health plans and use our tax funds to provide credits for purchasing these plans.

The AMA should take a closer look at their own National Health Insurer Report Card. All of the private insurers are crooks, but our own public insurer, Medicare, has over a 98 percent compliance with contracted rates. Just imagine if Medicare were the only payer. The ease and transparency of the process would likely result in 99.99 percent compliance.

Instead of wasting more time and resources on a Heal that Claim Month, we need to proclaim January 2009 as a New and Improved Medicare for All Month!

November 4, 2008
Chicago, Illinois

President-elect Barack Obama:
America, we have come so far. We have seen so much. But there’s so much more to do. So tonight let us ask ourselves, if our children should live to see the next century, if my daughters should be so lucky to live as long as Ann Nixon Cooper, what change will they see? What progress will we have made?
This is our chance to answer that call. This is our moment. This is our time: to put our people back to work and open doors of opportunity for our kids; to restore prosperity and promote the cause of peace; to reclaim the American dream and reaffirm that fundamental truth that out of many, we are one; that while we breathe, we hope; and where we are met with cynicism and doubt and those who tell us we can’t, we will respond with that timeless creed that sums up the spirit of a people:
Yes, we can.
http://elections.nytimes.com/2008/results/president/speeches/obama-victory-speech.html

Yes we can!

Terminally ill patients to get expensive new drugs on NHS

By Rebecca Smith
Telegraph.co.uk
November 4, 2008
The NHS drugs rationing body the National Institute of health and Clinical Excellence (NICE) will be more flexible in deciding whether drugs for patients at the end of their lives are cost effective.
The move is a victory for campaigners who have argued that it is cruel to deny patients a drug that may extend their lives long enough to see a grandchild born, a daughter’s wedding or the last Christmas with their family.
Currently expensive drugs that prolong life by a few months often breach the cost effective threshold used by Nice.
Some patients want to “top up” their care by paying for these drugs privately only then to be told they forfeit all of their NHS care and must pay for the entirety of their treatment. This is often more than they can afford.
In a fundamental shift in the health service, ministers will announce that patients will now be allowed to buy drugs privately without giving up the right to having the rest of their care paid for by the NHS.
Ministers will admit there will be no financial help for poorer patients who cannot afford to top-up their NHS care.
Critics have said allowing top-ups will create a two-tier NHS and undermine the founding principles that care should be provided irrespective of ability to pay.
http://www.telegraph.co.uk/news/newstopics/politics/health/3374318/Terminally-ill-patients-to-get-expensive-new-drugs-on-NHS.html
And UK’s private insurers move in:
http://www.telegraph.co.uk/finance/personalfinance/insurance/3378442/Victory-for-cancer-patients-as-NHS-ban-on-top-up-drugs-is-lifted.html

There have been many reports from the U.S. opponents of government health programs proclaiming that “life saving drugs are denied” for cancer patients in UK’s NHS. Generally, these are cancer drugs which had been evaluated by the National Institute of Health and Clinical Excellence (NICE) and found to have very little benefit, if any, especially when considering the high prices of these drugs.
The patients could still use the drugs, but they would have to pay for them. Because of the concern that this would create a two-tiered system within the public NHS program, it was decided that patients electing to use these drugs would have to switch to the private sector for their full care. Thus the claim that the government program “denies life saving drugs.”
The decision was reversed when it was decided that individuals obtaining their care through the NHS should not be required to leave the public program merely because, in their desperation, they wanted to be able to purchase expensive drugs of only marginal or questionable benefit.
Most would agree that the public program should cover all beneficial health care services. But should public funds be used to pay for expensive care that provides negligible value, or may even be detrimental? NICE tries to sort these out so that taxpayers are not having to foot the bill for technological and therapeutic excesses that don’t help and may harm.
The private insurance industry in the UK already has been providing supplementary coverage for health care. This coverage duplicates the services of the NHS, but because of higher reimbursement rates allows beneficiaries a greater choice of private care options, and allows them to move into the front of the queue. This has created an explicit two-tiered system in the UK, with underfunding and excessive waiting periods in the public sector. This is precisely why other nations such as Canada prohibit supplementary insurance.
On the other hand, complementary insurance is used to cover health care that is not provided by the public sector, such as drug benefits and foreign travel coverage for Canadians. This decision in the UK to allow non-covered private options for public NHS patients has opened up the market for complementary insurance in the UK, and the insurers are moving in.
The single payer model supported by PNHP would prohibit supplementary insurance, but would allow complementary insurance for services such as hospital suites or non-essential cosmetic surgery that taxpayers should not be required to finance.
The WHO has published an excellent report on private insurance and cost sharing (35 pages): What are the equity, efficiency, cost containment and choice implications of private health-care funding in western Europe?
http://www.euro.who.int/document/e83334.pdf

By Rebecca Smith
Telegraph.co.uk
November 4, 2008

The NHS drugs rationing body the National Institute of health and Clinical Excellence (NICE) will be more flexible in deciding whether drugs for patients at the end of their lives are cost effective.

The move is a victory for campaigners who have argued that it is cruel to deny patients a drug that may extend their lives long enough to see a grandchild born, a daughter’s wedding or the last Christmas with their family.

Currently expensive drugs that prolong life by a few months often breach the cost effective threshold used by Nice.

Some patients want to “top up” their care by paying for these drugs privately only then to be told they forfeit all of their NHS care and must pay for the entirety of their treatment. This is often more than they can afford.

In a fundamental shift in the health service, ministers will announce that patients will now be allowed to buy drugs privately without giving up the right to having the rest of their care paid for by the NHS.

Ministers will admit there will be no financial help for poorer patients who cannot afford to top-up their NHS care.

Critics have said allowing top-ups will create a two-tier NHS and undermine the founding principles that care should be provided irrespective of ability to pay.

http://www.telegraph.co.uk/news/newstopics/politics/health/3374318/Terminally-ill-patients-to-get-expensive-new-drugs-on-NHS.html

And UK’s private insurers move in:
http://www.telegraph.co.uk/finance/personalfinance/insurance/3378442/Victory-for-cancer-patients-as-NHS-ban-on-top-up-drugs-is-lifted.html

Comment:

By Don McCanne, MD

There have been many reports from the U.S. opponents of government health programs proclaiming that “life saving drugs are denied” for cancer patients in UK’s NHS. Generally, these are cancer drugs which had been evaluated by the National Institute of Health and Clinical Excellence (NICE) and found to have very little benefit, if any, especially when considering the high prices of these drugs.

The patients could still use the drugs, but they would have to pay for them. Because of the concern that this would create a two-tiered system within the public NHS program, it was decided that patients electing to use these drugs would have to switch to the private sector for their full care. Thus the claim that the government program “denies life saving drugs.”

The decision was reversed when it was decided that individuals obtaining their care through the NHS should not be required to leave the public program merely because, in their desperation, they wanted to be able to purchase expensive drugs of only marginal or questionable benefit.

Most would agree that the public program should cover all beneficial health care services. But should public funds be used to pay for expensive care that provides negligible value, or may even be detrimental? NICE tries to sort these out so that taxpayers are not having to foot the bill for technological and therapeutic excesses that don’t help and may harm.

The private insurance industry in the UK already has been providing supplementary coverage for health care. This coverage duplicates the services of the NHS, but because of higher reimbursement rates allows beneficiaries a greater choice of private care options, and allows them to move into the front of the queue. This has created an explicit two-tiered system in the UK, with underfunding and excessive waiting periods in the public sector. This is precisely why other nations such as Canada prohibit supplementary insurance.

On the other hand, complementary insurance is used to cover health care that is not provided by the public sector, such as drug benefits and foreign travel coverage for Canadians. This decision in the UK to allow non-covered private options for public NHS patients has opened up the market for complementary insurance in the UK, and the insurers are moving in.

The single payer model supported by PNHP would prohibit supplementary insurance, but would allow complementary insurance for services such as hospital suites or non-essential cosmetic surgery that taxpayers should not be required to finance.

The WHO has published an excellent report on private insurance and cost sharing (35 pages): What are the equity, efficiency, cost containment and choice implications of private health-care funding in western Europe?

http://www.euro.who.int/document/e83334.pdf