Managed Care Matters

We're going to stick with the hospital story for just a bit longer. So far posts have discussed the significant profits generated by workers comp payments, the inability of comp networks to manage facility costs, and a cornucopia of other hospital-related issues.

The thesis statement for all could be summed up thusly - Hospitals are gaining power at the expense of commercial payers.

Here's the proof.

The largest hospital/surgery center company in the nation, HCA reported a 21.6% jump in profits in the last quarter. Revenues "increased 3.7 percent to nearly $7 billion despite a decline in surgeries and flat admission numbers. "

Lets parse that statement out.

Profits were up much more than revenues, indicating the company (also known as Hospital Corp of America) has been able to keep expenses under control while delivering higher margin services.

Revenues were up even though surgeries (which tend to be very profitable) were down (albeit slightly at 0.5% for inpatient and 0.7% for outpatient facilities) and admissions were flat. The only way that can happen is by changing the mix of services delivered and improving the payer mix (think private insurance instead of Medicaid).

HCA's success wasn't an anomaly. Unlike the other hospital companies, Universal Health Services (could we please get just a bit creative with the company names here?) enjoyed an increase in profits and revenue. UHS saw its profits increase 35%, driven by a big increase in inpatient admissions (up 8.5%) and smaller, yet significant increase in the length of hospital stays (up 3.1%). This wasn't just a one-quarter event; looking at the first half of the year, revenues were up 8% and net income rose 34%. Note that UHS is one of the smaller for-profit hospital companies with fewer than 31 hospitals.

Revenues and profits were also up at HMA, with top line increasing 3.9% despite a decline in patient volumes. HMA, which operates 58 hospitals, also had a good first half of the year with profits almost doubling on a 4% increase in revenue. Interestingly, surgery counts also declined slightly at HMA over the same quarter in the prior year.

We'll round out the review with a quick look at Tenet - the 58 hospital company saw admissions up almost 2%, driven mostly by 'governmental managed care admissions' which jumped 16%. (I wonder, does that mean the Medicaid and Medicare Advantage programs are seeing higher inpatient admission rates? or is it just a shift from unmanaged Medicare?) Tenet also enjoyed a 7.5% increase in 'same hospital commercial managed care revenues'. (which brings up the rather uncomfortable question - is Tenet a preferred partner with the big managed care companies, or are the big managed care companies seeing a jump in hospital admits?)

Notably, Tenet's revenues were up 6.3% on that 1.9% increase in admits, a rather surprising jump given that the Feds are not exactly a generous payer. And digging deeper into Tenet's earnings report, one learns that commercial insurer admits actually declined 2.2% and patient days dropped 3.1%, while outpatient visits were also down 1.8%. So, revenues were up 7.5% on fewer admits and shorter stays...Cost-shifting, perhaps?

Here are a couple statements from Tenet's earnings report that shed additional light on the situation.

• Outpatient pricing outpaced the growth in inpatient pricing due to an improving mix of procedures performed in our outpatient facilities.
• Pricing improvement was evident across all key metrics, primarily reflecting the improved terms of our commercial managed care contracts [emphasis added]

And this from Forbes "Price increases from better terms in its commercial managed-care contracts also helped boost Tenet's profit and revenue."

Looks like a trend to me - hospital revenues are up slightly, profits are up much more than revenues, and this despite (mostly) flat patient volumes and lower surgical volumes.

The source of all these profits? Commercial managed care companies.

Which brings us back to a question I asked a while ago; "what exactly are 'managed care' companies managing?"

Thanks to FierceHealthcare for the heads up

Posted by at 7:08 AM | Permalink | Comments (3)

I think I've figured out why analysts have been unable to accurately forecast health plan financials - they don't know what questions to ask.

That's the only conclusion I can draw after listening to the latest earnings call from Coventry Health. The mid-tier health plan company is still reeling a bit from last month's announcement that it had been surprised by a sharp increase in medical costs, an increase that evidently had caught management by surprise.

Folks, this is a health plan company - one that claims "We deliver exceptional value every day, driving solutions that help people enjoy optimal health."

One might think that a health plan company makes money by managing medical care for hundreds of thousands of Americans. Near as I can tell, Coventry isn't a health plan, it is a transaction processor that makes money by pricing its insurance far enough above medical costs to administer the plans and make a bit of margin.

And from the questions that were asked ,and the ones that weren't, it is pretty obvious Wall Street analysts think Coventry is a transaction processor as well. Out of the twenty or so questions after the management presentation, there was one - yes, one, that got anywhere close to actually inquiring about medical management. That questioner asked what Coventry could do or had done to deliver care to Medicare enrollees through an HMO at lower cost than thru the standard Medicare plan. Coventry Chairman Dale Wolf responded by noting that hospital days per 1000 members among Medicare HMO plans could be in teh 900-1300 range, compared to standard Medicare rates of around 3000 days/1000.

That was it. No follow up question as to how they could do that, what the long term implications were, how that affected pricing, what the techniques were that delivered such a great result and could those techniques be used for commercial members.

The entire conversation was about medical trend and how Coventry was fixing its pricing model to reflect higher trend, and if enrollment was going to decrease as a result. Not the factors causing medical trend and what Coventry was doing about it. Well, to be fair, there was a little dialogue about higher inpatient utilization and unit costs in Medicare, and higher hospital utilization on the commercial side. But if you were interested in Coventry's solution to same, you're out of luck. Not one analyst even asked.

If analysts don't know to ask the company why their costs are going up and what they are going to do about it and how that will play out, what, exactly, are they 'analyzing'?

There's this thing in business called a sustainable competitive advantage - something you do really well, that is hard to do, that others don't do well. This gives you an edge in the market, one that makes you a perennial winner. Coventry doesn't have one, and neither do any of the other health plans. Because all they do is process transactions, adding no value.

Here are some of the questions they should have been asking.

• What key indicators of medical trend do you watch closely?
• Exactly what is your average inpatient days per thousand for each block of business and how does that compare to industry standards?
• How about admissions per thousand?
• what is driving trend? Is it unit cost (price per service), utilization (number of those services received by a member when they do get those services), frequency (percentage of members that get that service) or intensity (higher cost version of a technology or more expensive procedure type than expected)?
• Which types of medical care are the biggest drivers; ancillary, physician services, pharma, inpatient, outpatient?
• What is your plan to address those issues?
• How will you measure results and when will you know if you've been effective?
• What is Coventry doing about members with chronic conditions? How have your results compared to industry standards?

And the big one:

How would Coventry compete and win if it could not risk select and had to take all comers at a community rate?

Because that may well be the scenario Coventry, and all its competitors, face in two short years.

Note - this applies almost equally to most every health plan. In fact you could just about replace 'Coventry' with Wellpoint, Cigna, Humana, Blue Cross, etc and the same perspective would hold true.

Now I really am going on vacation.

Posted by at 8:32 AM | Permalink | Comments (3)

Like a man stumbling through a darkened room full of sharp objects, the individual health insurance industry continues to bash itself bloody.

Today's painful encounter is the news that individual health policy marketer HealthMarkets agreed to pay a $20 million fine to 36 states for failing to educate sales reps, failing to fully inform customers, and allegedly not paying providers promptly. HealthMarkets caved quickly, as the agreement came less than a year after the initial suit was filed.

This isn't the first time HealthMarkets has felt the wrath of regulators.

• In 2006, Massachusetts required HM "reassess denials of policyholders' medical bills dating to January 2002" (Appleby USAToday)
• Maine levied a million dollar penalty earlier this year, while also requiring HM to refund $5.6 million to policyholders
• Delaware fined HM $500k in 2006 (the largest fine in the state's history) for "steering consumers into individual rather than group health insurance policies, failing to provide state-required coverages, engaging in deceptive and improper marketing, mishandling consumer complaints and failing to institute adequate management controls" (Commissioner's statement); the insurer also failed to cover immunizations and mental health benefits, in direct violation of state and Federal law.

The Delaware case is especially revealing. There are better benefits, more state controls, and more regulation of small employer policies. And insurers are required by state law to offer those policies - but HealthMarkets' subsidiary insurer didn't, instead steering applicants to the 'more costly, less benefits, more complicated' individual policies.

HealthMarkets' leadership team should know better. Led by Allen Wise (ex-founder of Coventry), the board includes Steve Shulman (ex-Value Health CEO), Harve DeMovick (ex Coventry CIO), the board also is populated with notables from the various investment firms that bought HM several years ago. Fortunately, HM brought a seasoned compliance officer on board earlier this year, but you've got to wonder why it took them so long. Wise et al have been in the business for many years, the company had a checkered past (to be kind), and the pressure from regulators didn't start last year.

Why am I highlighting a relatively small player (>700,000 insureds) that operates on the fringes of the insurance market?

To show what can happen when the insurance business operates in the 'free market'. This company took advantage of uneducated consumers, sold them policies that weren't as advertised, took their money and left them with lousy coverage. For all those staunch advocates of deregulation - here's what you can look forward to - but on a much grander scale.

What does this mean for you?

Most insurance companies aren't like this. Most are staffed by good people trying to do the right thing, to get policies issues, pay claims fairly and promptly, and operate ethically. But when companies cheat and lie and steal, they make it all too easy for folks to tar all insurers with the same brush.

Posted by at 6:29 PM | Permalink | Comments (2)

In yet another blow to the big health plans, giant UHC will be cutting 4000 positions as part of a restructuring plan. The plan involves ditching the Uniprise brand and putting all commercial products under the UnitedHealthcare banner.

The announcement comes at a time when UHC's stock has been battered by bad news throughout the sector, with UHC recently announcing it is projecting weaker earnings. On the heels of Coventry's missed forecast and following the CalPers settlement (see below), the bad news has driven UHC's stock price to less than half its 52 week high.

The company also will be paying a fine of just under $900 million to settle CalPers' lawsuit stemming from UHC's stock option manipulation - while admitting no wrongdoing. Got to love that last phrase - if there was no wrongdoing I kind of doubt UHC would have agreed to pony up $895 million.

Apparently United has decided to fix its finances by cleaning out its book of business by dumping less-profitable business and tightening underwriting. These moves, coupled with increased premiums, will cut the medical loss ratio, but at the cost of membership. Expect UHC's trend-neutral revenues to decline in 2008 and possibly 2009 (remember that all health plans have a built-in annual growth rate equivalent to medical trend; to accurately calculate growth one has to correct for that trend).

Over the long term, I don't like UHC's chances. This is not a company that invests in medical management - despite its trove of data, analytical expertise, participation in NCQA accreditation and inhouse capabilities, UHC has always been about managing reimbursement, not care. Their latest move to increase premiums is the way United has always reacted to bad financial results. And it may work for a while, but over the long term the winners in the health plan business will be those who actually understand how to manage care.

And United doesn't.

Posted by at 8:51 AM | Permalink | Comments (2)

The notice for the teleconference popped up in my email inbox a mere hour and a half before the telecon was scheduled to begin. That was the first indicator of potential trouble.

The second was the opening line from Coventry's CEO: "To say we're disappointed with the news we shared earlier this afternoon is an understatement..."

The source of Mr Wolf''s disappointment was Coventry's report that it will miss its financial projections - by a wide margin.

For a company that has long been (justifiably) proud of its ability to tightly monitor and manage its business, the disclosure that it had significantly underestimated Q1 and Q2 medical costs was a bitter pill indeed, all the more so as it came a few weeks after Wolf's recent efforts to pump up internal morale by comparing Coventry's management discipline favorably to competitors.

Earnings will fall short due in large part to higher than expected medical costs in Coventry's Medicare private fee for service and core group health businesses. In explaining the failure to meet the Medicare program’s projected MLR, CFO Shawn Guertin described the problems inherent in the claims submission and processing flow. Guertin went on to note that the company also had identified some problems in Coventry’s internal claims processing. Curiously, management blamed part of the problem on ID cards not being used by claimants, which delayed claims flows internally. Evidently some members don't bother to show their Coventry cards when leaving the doctor's office. The office sends the bill to Medicare, who returns the bill with a note that the patient is not a member. The office then contacts the patient, gets the correc claims submission info, and sends the bill to Coventry.

This takes time, and has led to Coventry under-estimating claims volume and expense for its Medicare private ffs business. I'd note that in prior calls management has been effusive in its self-praise for its ability to operate this business with statements like 'we couldn't be more pleased with how this business is running'.

For the Medicare business, the MLR is up 300-340 basis points over prior guidance. This isn’t even close enough for horse shoes or hand grenades. From comments by management on last night's call, it appeared this popped up in April and May, after things appeared to look pretty solid earlier in 2008.

Again, this is a pretty big surprise.

On the group health front, higher trend in group outpatient utilization and inpatient unit cost, or price per service appear to be the problem. Instead of the forecast 100 basis point reduction in MLR, management is now expecting higher medical costs - with a potential swing of 400 basis points for outpatient expense. Inpatient costs are also up 100 basis points, so the combination is driving up total MLR by 150 basis points.

Another significant contributor to the higher MLR is an increase in the number of more severe (more costly) claims – not more claims, but more high cost claims, specifically between 50k and 150k in dollars paid.

In contrast hospitals are not seeing increased utilization. Facility revenue numbers are not trending up. Coventry wasn’t able to figure out why their hospital costs were going up while overall hospital utilization nationally is not.

Admittedly Coventry has not yet determined all the factors causing these increases in MLR. They do appear to have a grasp on the major factors; from the tone and delivery
of management comments I'd expect there's a lot of yelling at Coventry HQ, likely to be followed shortly by the distinctive sound of heads rolling. (During the call Wolf did allude to staff reductions in a response to an analyst's query.)

Lastly, management reported that the work comp business is not meeting projections due in part to lower fee revenue for bill review.

As the market closed, Coventry's stock price had dropped to $40.97, resulting in a P/E just under 10. Coventry has long been rumored to be a potential acquisition target, and if the stock price declines further (a not unreasonable expectation) suitors will likely emerge.

Posted by at 8:07 AM | Permalink | Comments (6)

Disclaimer - This is the kind of post that makes one want to take a shower after reading. My apologies to readers without convenient access to bathing facilities.

One of the fastest growing segments of the surgical industry is the spinal implant business. In what may be the most comprehensive review of the problem, the Orange County Register reported:

"About 70 percent of U.S. adults -- or 153 million people -- have lower back pain, according to Millennium Research Group. Of those, about 15 million require medical treatment, and most eventually get spinal implants." My take is that is a wildly overstated estimate; one survey reported that the total world market for devices was $4.2 billion; note this study used 2006 data. Another indicated the market was $5 billion in 2005, and predicted growth to $20 billion by 2015. Stryker, one of the major manufacturers, expects growth of 16% per year in the spinal implant market. Yet another report(note opens .pdf) indicated the 2007 worldwide market was $7 billion, with the US accounting for $5.4 billion of that total.

And boy is it profitable. One manufacturer (Allez Spine) sold screws to an implant device company for $79.31 each - screws that were then sold to hospitals for $1000 each (who then marked them up even more when billing insurers).

Yep, there are $480 worth of screws in this xray (wholesale), $6000 retail, and probably $9-12,000 to the insurer/patient. And that doesn't include the other parts...

Medtronic, one of the larger device companies with about 45% market share in the US and the same worldwide, reported sales of $869 million for spinal implants last quarter, driven in part by a big jump in sales of its Kyphon technology. The $869 million represents growth of 35% from the same quarter last year.

The Kyphon story is an ugly one, and points to one potentially significant problem in the spine surgery industry - the focus on devices as a tool to maximize reimbursement.

Kyphon (the company) was acquired by Medtronic in 2005. The company settled a lawsuit filed by the Feds, agreeing to pay $75 million in fines. Kyphon agreed to stop providing inappropriate advice on reimbursement to providers, advice that resulted in hospitals filing inflated claims with Medicare for a spine procedure with the otherworldly name of kyphoplasty.

The details of the case, as reported by the New York Times, are revealing.

Kyphon "persuaded hospitals to keep people overnight for a simple outpatient procedure [bold added] to repair small fissures of the spine. Medicare then reimbursed the hospitals much more generously than it otherwise would have for the procedure, which was developed as a noninvasive approach that could usually be done in about an hour.

By marketing its products this way, Kyphon was able to artificially drive up demand among hospitals, bolstering its revenue and driving up its stock price. Medtronic subsequently bought the company, its competitor, for $3.9 billion, greatly enriching Kyphon’s senior executives. "

Margins for Kyphon's devices approached 90%, due in large part to the high price the company charged, a price that hospitals offset by extending hospital stays (as advised by Kyphon's sales reps and reimbursement experts), thus generating higher bills and much higher revenue.

Another major contributor to the rapid increase in spinal implant surgeries may be the growth of device companies that have spine surgeons as stockholders. The OCR article reported that physician-owned companies are now under investigation by HHS' Office of the Inspector General (OIG). In testimony before the Senate Special Committee on Aging, Gregory E. Demske, Assistant Inspector General for Legal Affairs at the OIG said:

"These financial relationships [between device manufacturers and physicians] can benefit patients and Federal health care programs by promoting innovation and improving patient care. However, these relationships also can create conflicts of interest that must be effectively managed to safeguard patients and ensure the integrity of the health care system...during the years 2002 through 2006, four manufacturers (which controlled almost 75 percent of the hip and knee replacement market) paid physician consultants over $800 million [bold added] under the terms of roughly 6,500 consulting agreements. Although many of these payments were for legitimate services, others were not. The Government has found that sometimes industry payments to physicians are not related to the actual contributions of the physicians, but instead are kickbacks designed to influence the physicians’ medical decisionmaking [bold added]. These abusive practices are sometimes disguised as consulting contracts, royalty agreements, or gifts."

All this growth may well be based on a focus on surgical treatment that is just not supported by research. Some studies indicate surgery is not the best treatment for a substantial number of patients. According to the OCR article (source above);

a "2005 study of patients with back pain published in the journal of the British Medical Association concluded: "No clear evidence emerged that primary spinal fusion surgery was any more beneficial than intensive rehabilitation."

"You look at the number of procedures and the rate of growth and it seems to far outstrip the number of patients who need this," said Dr. Steven J. Atlas, a back specialist and Assistant Professor of Medicine at Harvard Medical School."

And that old nemesis, provider practice pattern variation, is nowhere as obvious as with back surgeries. Looking at Medicare data, the back surgery rate in Fort Myers, Florida was 5 times higher than in Miami. Same population demographics, same state, but different providers.

Perhaps the best explanation for the considerable growth in the use of implants and spine surgery is the lack of evidence either for or against these procedures. There are some reports that indicate positive or negative outcomes, but nothing definitive has been published that could be used by payers and providers to judge the appropriateness of surgery for most patients with back injuries or degenerative conditions.

Posted by at 7:10 AM | Permalink | Comments (0)

Productivity.

Lost in the great debate about the role of the employer, the individual, and the government in health care reform is the critical link between health insurance, care, and productivity.

Years ago when I was responsible for the Travelers' utilization review account management function I met with Bruce Bradley, who was then the head of employee benefits at telecom giant GTE. I was going thru the data, reporting on how well Travelers had done reducing this and cutting that, when he stopped me and asked about the ER and inpatient admissions rate for children with asthma. I didn't have the data, and asked why he wanted to know.

Bradley proceeded to educate me on GTE's workforce and their functions. To summarize, they had a lot of employees who were single parents or one parent in a dual-income family. Many of their employees worked in line maintenance, directory assistance, and other blue- and pink-collar jobs.

And when one of these workers was out of work, caring for a child experiencing an acute asthmatic attack, the lines didn't get fixed and calls didn't get answered. Bradley wanted to know what the Travelers was doing about this. Truth was, we weren't doing anything.

GTE is long gone, swallowed up in the telecom mergers in the nineties. But Bradley's point is as true now as it was then - keeping workers, and their families, healthy and productive is the primary objective of health insurance.

I'll grant that few policy wonks look at it from this perspective. Perhaps that's because they didn't have the pinned-to-the-wall-like-a-butterfly-in-a-display-case experience I went thru. But because they don't consider the impact of health insurance on employer productivity, they miss the reason employers offer health insurance in the first place - to attract, and keep, good workers.

If employers are removed from the process of vetting and selecting health insurance vendors, individuals would be responsible for choosing their carrier. Insurance companies would 'win' based on how cheaply they could provide insurance to individuals and families, and the less care delivered, the lower the premiums. I don't see what would prevent those vendors from suggesting each and every injured or ill worker or dependent tried bed rest and over the counter drugs for two weeks, then an x-ray or basic lab test, and only then would they get to see a diagnostician.

What does this mean for you?
Health care reform based on an individual market would work against employers' desires and needs, and over the long term, against the nation's best interests.

Posted by at 6:55 AM | Permalink | Comments (8)

Niko Karvounis has written a terrific summary of the evolution of the Chinese health care system over at The Century Foundation's blog.

Of particular interest is this - health care inflation in China is in the 16% range, a full seven points higher than GDP growth. This inflation is primarily driven by physicians overprescribing drugs and imaging - the only two types of care that they can price high enough to generate a profit.

Yes, communist physicians are making money the old-fashioned way, by over-utilizing.

Posted by at 7:24 AM | Permalink | Comments (1)

regulators and legislators take charge. Legislators in California are well on the way to passing a law that would severely restrict health plans' ability to cancel members' coverage, a law that would supersede internal guidelines and policies.

Over the last five years, about 700 individual policies have been canceled under these internal guidelines, with members having little in the way of formal recourse. The press has publicized some of the more egregious cancellations, where individuals with serious health problems had policies cancelled because they did not document minor health issues that occurred years before the application was filed (conditions unrelated to the member's current health problems) .

Even more egregious, at least one payer evaluated, and bonused, a manager in part on her ability to find policies to cancel.

There are actually two bills (which may be merged), one that requires all cancelations be approved by a third party; the other would give health plans a maximum of six months from the date of issue to review patients' policy applications. While many bills are offered, few are passed - but that doesn't look to be the case here; one of the bills has already passed out of the Health Committee on a unanimous vote.

If these bills, or something like them, are passed and signed into law, it may well make it more difficult and expensive to underwrite individual health insurance in the state. It may make it harder to obtain health insurance.

But these bills never would have come about if certain insurers hadn't crossed the stupid line. Here's hoping other insurers in other states watch and learn.

Posted by at 6:10 AM | Permalink | Comments (2)

The sleazy world of surgical implants has been exposed recently, with reports of doctors receiving kickbacks, huge settlements by manufacturers, and outrageous pricing.

Just when you thought "finally, a company gets hammered", we find out that the corruption doesn't stop with the implant manufacturers, but infects the regulators themselves.

The US Attorney who settled the case against Zimmer for $311 million forced Zimmer to pay his former boss, John Ashcroft, between $28 and $52 million over 18 months (on a no-bid contract) to oversee the settlement. According to Ashcroft's firm, the fees are justified because they have hired an additional 30 employees and outside consultants for this project, and Ashcroft himself has actually traveled to Indiana several times (several times!!) to oversee the work.

Ashcroft, the former Attorney General, was US Attorney Chris Christie's boss.

Among the terms of the Ashcroft deal are:

--$150,000 to $250,000 per month for travel and incidentals

--$750,000 as a monthly retainer

--hourly fees up to $895

No wonder Ashcroft's spokesman said the firm "was pleased about the deal".

And no wonder implant prices are so high - they have to be to afford the payoffs, both legitimate and illegal.

This is disgusting.

Posted by at 8:41 AM | Permalink | Comments (0)

The cost of surgical implants is increasing by over 7% annually; and even more in workers comp spinal cases. In audits my firm has performed we have seen costs ranging up to $27,000 for the hardware and related bits and pieces used (or allegedly used) in a neurosurgery case.

It looks like one of the contributors to those high costs is that old reliable - fraud. Blackstone Medical, a spinal implant manufacturer, is in deep legal trouble, facing allegations that it paid doctors kickbacks to use the company's devices.

And as I've noted before, surgeons select the specific devices used in surgeries, with little or no apparent concern about the cost.

Continue reading "Why implants cost so much" »

Posted by at 1:31 PM | Permalink | Comments (4)

I've successfully escaped the second nor'easter of the season, and won't be heard from again until next year (unless I get really bored on vacation).

It has been a good year. Thanks for reading.

Posted by at 6:53 PM | Permalink | Comments (2)

A recent court ruling in New Jersey could shut down Ambulatory Surgical Centers across the state.

The judge determined that physician-owned ASCs (almost all ASCs are at least partly owned by physicians) violate a state law banning physician self-referral. Not surprisingly, the 200 ASCs in the Garden State (there are about 5000 nationwide) are pulling out the stops to overturn a ruling that, if it stands, would effectively shut down most ASCs in NJ.

Continue reading "ASCs -- good, bad, or just ugly?" »

Posted by at 7:53 AM | Permalink | Comments (1)

A decade ago a lot of folks were working on '24 hour' coverage - the combination/integration of workers comp and group health and disability management. AIG, United Healthcare, Reliance National, Broadspire (nee Kemper) and Unisource Administrators were among the players; the Integrated Benefits Institute was founded, and consultants formed practices and marketed their expertise to interested parties. (disclosure - I was heavily involved in the AIG-UHC, Reliance-UHC, and Unisource-UHC-AIG programs)

Then it all sort of faded away, and not much was heard until today's announcement that Sedgwick CMS and UHC have re-entered the market.

Continue reading "The return of 24 hour coverage?" »

Posted by at 7:09 AM | Permalink | Comments (4)

Wellpoint, the for-profit owner of Blues plans in fourteen plus states, is doing well in California. United Healthcare is most definitely not. The whys and wherefores are both instructive and predictive.

Continue reading "A tale of two health plans" »

Posted by at 7:48 AM | Permalink | Comments (0)

I have long assumed individuals working at employers that do not offer health insurance are more likely to file workers comp claims. With the number of employers offering health insurance declining, a logical corollary is more claims will be filed.

Logical, but wrong.

Continue reading "The correlation between health insurance and work comp claims" »

Posted by at 6:20 AM | Permalink | Comments (6)

Just when you think the health insurance industry just could not do anything more self-destructively stupid, they raise the bar.

From FierceHealthcare comes the news that HealthNet actually paid bonuses to staff based on how many claimant policies they could terminate.

Continue reading "Dumber than a box of rocks" »

Posted by at 7:56 AM | Permalink | Comments (0)

Market consolidation continues unabated...

Industry giant United Healthcare is acquiring Fiserv's TPA and related businesses for $775 million in cash. The deal, slated to close either this quarter or next, does NOT include Fiserv's third party biller operations.

Continue reading "United buys Fiserv Health" »

Posted by at 4:06 PM | Permalink | Comments (1)

$150 billion.

That's how much revenue that's up for grabs if/when mandated universal coverage becomes law.

Continue reading "Why private insurers will back reform" »

Posted by at 6:44 AM | Permalink | Comments (4)

Health Affairs is holding a healthcare issues summit in DC on November 1st. Attending will be more than a few of the nation's health policy experts and policy-setters.

Theme of the day is the future of health care, including S-CHIP's future direction, a roundtable with Presidential candidates' health policy advisers, and a CEO roundtable.

With CEOs from Aetna, Merck, Wellpoint, GE HealthCare, HCA, the SEIU, and AARP on stage, I'm hoping we'll learn a lot more about how they will address health care reform, and the role private industry will take in the discussions about and implementation of that reform.

Posted by at 7:33 AM | Permalink | Comments (0)

Is it just me, or does anyone else think that Bill Gates has zero credibility when it comes to advocating for a seamless, integrated streamlined system to collect, store, and disseminate health care data?

I'm writing this on a Mac, because I finally threw my Windows PC out the window after one too many system freezes, followed by some unintelligible error message, which presaged a long and frustrating effort to get it resolved.

Continue reading "Do you trust Microsoft?" »

Posted by at 6:48 AM | Permalink | Comments (1)

The GM-UAW health care deal is momentous. And not just because it saves GM a lot of money and transfers the liability for the UAW's health benefits from GM to the union.

The tectonic shift is the change from a 'defined benefit' to a 'defined contribution' program. The UAW has essentially agreed to a cap on future health care costs. Now they will have to figure out how to deliver on members' expectations without going broke.

Continue reading "The death of defined healthcare benefits?" »

Posted by at 9:34 AM | Permalink | Comments (0)

Diabetes, congestive heart failure, and heart disease are increasingly conditions of the poor. And the poorer one is, the more common the condition.(free reg req)

Most health plans have little experience dealing with poor folks with chronic health problems.

They'd better start learning.

Continue reading "Aetna's figured it out" »

Posted by at 6:20 AM | Permalink | Comments (10)

An example is worth a thousand studies - the free market can work to limit health care costs.

Continue reading "The market for doctors" »

Posted by at 6:58 AM | Permalink | Comments (1)

may be yet to come. The second-tier managed care company has positioned itself well for the future, diversifying away from its traditional small group HMO plans in secondary and tertiary markets into a mix of governmental, ASO, individual, and workers comp managed care services.

The strategy makes sense.

Continue reading "Coventry's good year" »

Posted by at 7:10 AM | Permalink | Comments (0)

The latest data shows that while there has been some growth in the two types of consumer-directed health plans, it is not 'statistically significant' (3.8% of covered workers are enrolled in these plans in 2007, up from 2.7% in 2006).

Put another way, it looks like the CDHP movement is running out of steam.

That's too bad.

Continue reading "Has the CDHP movement peaked?" »

Posted by at 6:27 AM | Permalink | Comments (1)

The average cost for a family's health insurance coverage this year is $12,106. That amounts to just over a quarter of gross median household income ($46,326). (a 'household' is defined as two or more individuals).

Lets put that in context.

Continue reading "How much is too much?" »

Posted by at 7:09 AM | Permalink | Comments (6)

A group of docs in Texas has decided that two can play the ratings game. They are working on a project to rate insurers - on their "billing procedures and issues".

It strikes me that these physicians may be engaging in the same type of behavior that infuriates them when exhibited by insurers - using an arbitrary, internally-developed methodology to evaluate payers solely on administrative indicators.

Continue reading "Two can play that game" »

Posted by at 6:14 AM | Permalink | Comments (4)

And the bad news just keeps on coming. The ranks of the uninsured increased for the sixth straight year, to 47 million. The increase this time was 2.2 million; 15.8% of Americans, or about one in seven, does not have health insurance.

This despite a slight decline in the national poverty rate and a leveling-off of health insurance premium increases.

So in a 'best-case' environment, 2.2 million Americans still lost their health insurance.

If the problems in the credit markets continue, they will likely drag down the economy, leading to even more becoming uninsured. And this will all happen just in time for the fall 2008 elections.

Posted by at 8:28 AM | Permalink | Comments (3)

Carol Gentry of the Tampa Tribune has authored one of the more accessible pieces on the hows and whats of hospital price variation.

Carol's piece illustrates two key issues - the data is available, and consumers aren't using it.

Continue reading "Humana's good effort" »

Posted by at 7:29 PM | Permalink | Comments (2)

Several sources indicate health care cost inflation is now running about 7%, with the latest coming from Towers Perrin. This jibes with other reports, and is consistent with last year's final figures.

As always, the data underlying the overall result paint a more complete picture.

Continue reading "Medical cost trends and consumer-directed health plans" »

Posted by at 9:33 AM | Permalink | Comments (3)

CMS' hospital reimbursement change is going to create winners and losers; among the biggest winners will be UnitedHealthcare.

Among the losers, their competitors.

Continue reading "United Healthcare wins" »

Posted by at 8:14 AM | Permalink | Comments (0)

Much has been made here and elsewhere of the issue of cost-shifting. Cost-shifting happens when a provider treats a patient, does not receive 'full' reimbursement, and then increases what s/he charges another patient to make up the difference.

There's a lot of evidence that cost-shifting is pervasive, expensive, and results in a hidden tax of about $1000 for the average insured family.

But what forces providers to treat the uninsured?

In a word, EMTALA.

Continue reading "What's EMTALA?" »

Posted by at 7:02 AM | Permalink | Comments (6)

I'm covering the "Take Back America" conference in DC this week. It's one of the leading progressive confabs, attended by everyone from subscribers to "the Weekly Worker" to green investment funds to Families USA to Sens. Edwards, Obama, Clinton, and Klobuchar to MoveOn.org. I'm here to hear what progressives are saying about health care and health reform.

So far, it appears the short answer is "not much".

Continue reading "Where's the progressive movement on health care?" »

Posted by at 2:26 PM | Permalink | Comments (4)

Ok, time to get back to examining Coventry. The second quarter earnings report is out, and things are looking good on the commercial side. I'll look at that in detail later; for now, the work comp business is top of mind after the Concentra deal.

Continue reading "Coventry's new numbers" »

Posted by at 7:28 AM | Permalink | Comments (2)

I don't see how - because we'll still have to pay for the uninsured. I've been mulling this over since reading a post on Health Care Policy and Marketplace Review. Bob's post points out that a large enough group spreads risk well enough to help keep insurance affordable.

My take is coverage has to be mandated in order to prevent cost-shifting.

Continue reading "Can we control cost without universal coverage?" »

Posted by at 5:20 PM | Permalink | Comments (3)

The statistics are starting to come in and they aren't pretty; Consumer directed health plans' growth is all but stalled. Despite advocates claims to the contrary, employers are just not buying into CDHPs.

According to a study by the Kaiser Family Foundation, 19% of people with a choice of CDHPs or traditional forms of coverage choose CDHPs. And most of those folks (71% to be precise) don't put any money into their accounts.

Continue reading "Will consumer-directed health care make it?" »

Posted by at 6:33 AM | Permalink | Comments (5)

After going thru a major spring office cleaning and overhaul, I found a really intriguing report buried under books and papers. Well, intriguing for health care geeks...

The combination of two statistics adds a lot of clarity to the US health insurance picture. The two, health care inflation and the uninsured rate, have been combined into the HEMI (healthcare economic misery index). The HEMI is both descriptive and revealing, especially when tracked over time and used to compare states.

Continue reading "What's your healthcare misery index?" »

Posted by at 6:20 AM | Permalink | Comments (0)

And the award for "most factual errors in a debate" goes to...Mitt Romney, the dynamic (as in changes positions quickly) GOP presidential candidate! In the June 5 presidential debate Romney actually said:

"Every Democrat up there’s talking about a form of socialized medicine, government takeover, massive tax increase…. I’m the guy who actually tackled this issue. We get all of our citizens insured..."

There are at least three mistatements here.

Continue reading "Romney the spinmeister" »

Posted by at 9:52 AM | Permalink | Comments (1)

In all the excitement about the Democratic Presidential contenders' health care plans and platforms, I'd neglected to check on their competitors across the virtual aisle.

Fortunately, Bob Laszewski has already done this. The net? GOP candidates are paying very little attention to health care.

Posted by at 9:20 AM | Permalink | Comments (4)

We can't afford universal health care. It's too expensive.

Actually, that's not true. We just choose to spend our dollars on other things. For example, medical care and indemnity payments to American troops hurt in the Iraqi war. The latest projections have the long-term expense of caring for Iraqi war veterans totaling 1/3 to 2/3 of a trillion dollars.

So far.

We sure do make interesting choices. Why just the other day Congress voted enough money to fund the war effort for another few months. That expenditure could have provided every uninsured American with health insurance for a year.

Sometimes all you can do is shake your head...

Posted by at 6:05 PM | Permalink | Comments (7)

If only it were that easy. I'm talking about the legislation proposed in Michigan to allow motorcyclists to ride without helmets. If they are dumb enough to do that, fine. Except we end up paying their health care bills, which is most definitely not fine.

Continue reading "Should we just let Darwin decide?" »

Posted by at 1:53 PM | Permalink | Comments (5)

Pharmacy and Therapeutics committees have been around for ages in the provider community - they are the "link between medicine and pharmacy". In the managed care world, P&T committees take on a somewhat different role, establishing formularies, reviewing medical device reimbursement (at some health plans), contributing to coverage determinations and benefit design.

Mostly, they provide the health plan or insurer with an expert opinion on most things pharmacy-related. Without a P&T Committee, these decisions often are left to a medical director, or worse, claims adjuster (in the P&C world), individuals who are not equiped to make educated decisions about pharmaceuticals.

Continue reading "You need a P&T Committee" »

Posted by at 6:31 AM | Permalink | Comments (0)

Those who find problems should identify solutions as well. My post last week about the "pre-lash" against consumer-directed health plans (CDHPs) identified a number of problems - but for all their warts, CDHPs, and particularly HSAs, do have a very important role to play in health care reform.

Continue reading "Fixing consumer-directed health care" »

Posted by at 9:24 AM | Permalink | Comments (3)

A backlash is what happens after something occurs. That being the case, a "pre-lash" is a "reaction" to something before it occurs. Awkward, but accurate when describing what's happening with consumer-directed health care.

Continue reading "The consumer-directed "pre-lash"" »

Posted by at 7:56 AM | Permalink | Comments (4)

Richard Eskow of Sentinel Effect reports on the latest revelations about a bit of book-cooking at the VA. Seems the VA has been a bit, or perhaps more than a bit, overly positive about its record.

More troubling than boosterism is the allegation that the VA selectively reported results, and even fabricated conclusions to make the system appear better than it actually is.

As a fan of the VA, I'm concerned about two things.

Continue reading "The VA's been cooking the books" »

Posted by at 7:13 AM | Permalink | Comments (0)

The press is reminding us on a daily basis of the problems inherent in a health insurance system based on private insurers. And it's not like the media has to go searching very far for examples of egregious misconduct.

And I'm an advocate of private health insurance.

Continue reading "Private insurers aren't helping themselves" »

Posted by at 7:23 AM | Permalink | Comments (2)

The good folks at the California Healthcare Foundation explain why more information does not necessarily equal better consumerism.

Their main point? Consumers' decision making processes are not linear, simple, or straightforward; the deep complexities of the health care decision-making process do not lend themselves to simple metrics and ranking systems, yet that's what consumers like to use.

Continue reading "Decisions about health care" »

Posted by at 6:34 AM | Permalink | Comments (2)

The largest health plan trade group wants to form a new agency to "compare the cost and effectiveness of medical treatments as part of a series of recommendations to reduce health care costs." (California HealthLine from CongressDaily) At first blush that's pretty similar to what the Agency for Health Care Research and Quality is doing today.

Continue reading "Desperate times, desperate measures" »

Posted by at 6:32 AM | Permalink | Comments (2)

As part of a very good (defined as substantive, open-minded, and comprehensive) discussion on health care reform options going on at TPMCafe, Jonathan Cohn notes:

"a lot of these people don’t understand how precarious their current situation is – because they don’t realize how easily they could lose coverage or the extent to which their insurance might not cover their bills.(emphasis is mine) (Indeed, that’s the whole point of my book.) But for now, anyway, that’s what they think. And if you start telling them you’re going to change their health insurance – even for an alternative as well-liked as Medicare – a lot of them will get skittish."

That's true. But at some point, enough of "those people" who lose coverage or go broke paying bills will decide to do something about it. And that "something" doesn't have to be national; I'm of the opinion that there will be real reform in more than one state years before we do something nationally.

But which ones, and why them?

Continue reading "When will reform come?" »

Posted by at 9:16 AM | Permalink | Comments (1)

Richard Eskow has a great synopsis of the historical roots of capitation over at Sentinel Effect - brief, entertaining, and well worth the click-thru.

Posted by at 7:36 PM | Permalink | Comments (0)

An effort in Connecticut to implement a single payer, universal coverage program is just about dead, after the state's Office of Fiscal Analysis determined it would cost as much as the entire state budget.

Politicians were shocked by the estimated total cost, which ranged from $12 billion to $18 billion.

I'm shocked that they were shocked.

Continue reading "Connecticut's still-born single payer plan" »

Posted by at 6:53 AM | Permalink | Comments (2)

TPMCafe has an ongoing debate amongst health policy types about the pros and cons of single payer. There's an all-star cast, and your lunch hour is coming up, and you're kind of wondering why single payer is good/bad...

Posted by at 11:14 AM | Permalink | Comments (0)

I'm having a tough time getting mad at United Healthcare. The huge managed care company is under fire for penalizing docs who use any lab other than UHC's preferred partner, LabCorp. The AMA, regulators, individual physicians, and a few consumer groups are all screaming about UHC's heavy-handed, dictatorial infringement on their right to practice medicine.

They've got it all wrong.

Continue reading "Hooray for United Healthcare" »

Posted by at 7:45 AM | Permalink | Comments (24)

What gets lost in the healthcare debate is the impact of our dysfunctional system on individuals and families. Jon Cohn of The New Republic and elsewhere has gone a long way to personalizing the health care mess in his new book, "Sick".

Jon's also leading a debate on the topic at TPM. Several health care types including your author are arguing to and fro, while others are keeping us honest.

Posted by at 11:28 AM | Permalink | Comments (0)

Consumer directed health plans will make all of us better users of the health care system. We'll shop for price, be careful about what procedures we get from whom for how much how often. We'll bargain, examine data, and carefully compare providers.

And as a result, we'll all save a bundle, and the US health care system to boot.

Sort of.

Continue reading "You're it. No, you're it. No..." »

Posted by at 6:58 AM | Permalink | Comments (9)

The fine may be a million bucks, but the PR damage is much worse.

Continue reading "WellPoint's stupidity" »

Posted by at 7:00 AM | Permalink | Comments (1)

You're swamped. I'm swamped. Work, kids, parents, sports, Iraq, vacation plans, tax season, Anna Nicole - there are hundreds of urgently important things filling your time, demandin