Insight, analysis & opinion from Joe Paduda
There’s been so much activity on the national health care scene involving managed care, medicare, provider reimbursement, consumer-directed health plans and Part D, I’ve neglected another loyal readership, the brave souls who toil in the workers comp managed care business.
Apologies, and let’s catch up.
Continue reading The latest on the work comp managed care world…
Julie Ferguson, the force behind more than a couple health-related blogs, is hosting the latest edition of Cavalcade of Risk at Workers Comp Insider. With only five editions, the C-cade is up to 20 entries, and quality ones at that.
Peruse and ponder the non-purple prose!
Fard Johnmar of Envision Solutions and Dmitriy Krugylak of The Medical Blog Network are working on a survey of health care related bloggers. The survey, which is on-line (natch) covers a variety of topics and is open to any blogger that devotes a third of their time to the health/medical world.
So if you qualify, hop on over and render your thoughts and opinions.
Assuaging concerns about quality, treatment standards, and outcomes is one of the biggest challenges facing off-shore medical facilities eager to extract a fraction of US health care dollars. That and figuring out how to make a Mumbai hospital look and feel like the one just down the street from the medical tourist’s neighborhood.
Into this business opportunity (the former, not the latter) has stepped an Australian certification body, the Australian Council on Healthcare Standards. Working with two Indian groups, the Quality Council of India (QCI) and the National Accreditation Board for Hospitals and Healthcare Providers (NABH), the Aussies will help revise national credentialing and standards for Indian health care facilities.
The standards are likely to closely parallel those developed by another body, the ISQua, The International Society for Quality in Health Care. ISQua includes board members from URAC, JCAHO, and accrediting organizations from other countries, and is operational in 70 nations.
As healthcare goes global, and American companies and individuals seek to reduce expenses while assuring quality, expect that we’ll hear more about health plans that include first-dollar coverage for services rendered at ISQua certified facilities.
What does this mean for you?
The world is getting smaller, flatter (thanks Tom Friedman) and more competitive, and providers who ignore competition from overseas do so at their peril.
As corporate profits have surged over the last six months, retiree health care benefits have been reduced at many companies. That’s the headline, but the reality is not so simple.
Large, old-line manufacturers with negotiated benefits and lots of retirees (think steel and autos) are facing bigger-than-huge retiree health care costs, driven in large part by benefit plans that don’t even have deductibles or copays. As these firms continue to get hammered by international competitors with much lower labor expenses, they are seeking ways to reduce their costs.
And retiree health care costs are a very big drag on many of these companies, hurting their ability to invest in new products, new employees, new plants and equipment. Sure, GM, Ford, Kaiser Aluminum, US Steel and other companies made lots of decisions, including trading benefits for labor peace, that don’t look so smart in hindsight. And GM and Ford completely missed the boat on fuel economy.
But all that is beside the point. If American manufacturers can’t reduce their cost of health care, they will be increasingly unable to compete.
Here’s one potential solution.
Self-insured employers are beginning to take the drastic step of sending patients overseas for expensive, complex medical procedures. While there are likely just a few employers doing this now, there are several companies formed expressly to provide these services to employers. And, at least three large employers have contracted with benefits consulting house Mercer to research medical services offshoring.
The rationale behind these decisions is obvious – greatly reduced expenses. Procedures done in India or Thailand commonly cost one-tenth to one-fifth what they do here. And this is in facilities that have been likened to five-star hotels, with very high staffing ratios and round-the-clock pampering of American patients.
Hospitals, at least American ones, are not happy about this. Private-pay patients (those covered by private insurance) overpay for care, and that overpayment helps cover the cost of indigent care. As hospitals are required by law to provide care to all, they have relied on this cost-shifting to help balance the books.
Some employers are no longer willing or able to pay this hidden tax
What does this mean for you?
Another thread is being pulled from the worn fabric that is the US health care system.
Most employers are not confident that they understand their companies’ High deductible health plans (HDHP). According to a study released by Buck Consultants, only 20% of respondents said they understood their HSHPplans “very well”.
Notably, 81% of respondents said the key challenge to successfully implementing these plans was employee education and understanding of the plans.
It is encouraging that employers recognize that the plans will not be successful without an educated and informed employee base; it is somewhat less encouraging that these same employers don’t think they know their own plans very well.
The premise of health insurance is simple – insureds pay insurance companies a premium with the expectation that when the insured needs medical care, it will be funded by the insurance company (subject to the policy conditions). And if the care required is really expensive, well, that’s why you have insurance.
The relationship is inherently based on trust; the insured trusts the insurance company to pay the bills and the insurance company trusts the insured to pay the premiums. Actually, there’s not a lot of trust on the part of the insurer, as they just cut off benefits when premium payments stop coming in. But the insureds trust the insurer to pay the bills, cover expenses, and treat them fairly.
What happens when that trust breaks down? Does it do lasting damage to the relationship between and among individuals and insurers? Absolutely.
“While deception may be tempting because it can be used to increase short-term profits for the deceiver, we find that the long-term costs of deception are very high,” the researchers conclude. In other words, in long-term relationships, it pays to cooperate.” This quote is from a very interesting experiment conducted by a couple Wharton Business School professors which examined the implications of deception on relationships between individuals.
Research indicates the health insurance industry ranks pretty low in terms of respecting customers, and customer respect, with 3 out of 5 respondents saying their general trust for insurance companies is “not much” or “not at all”.
Moreover, polls indicate that people would be willing to pay more to see certain doctors, under certain conditions. This being the case, it is puzzling as to why HSA plan sponsors (insurance companies) aren’t more forthcoming, and don’t explicitly inform insureds that services rendered by providers must be “covered” under the plan definitions if the negotiated rate is going to apply. If their members are OK with paying more, then insurers should just tell them, clearly and up front, that non-covered services are going to cost whatever the provider charges.
Many health insurance executives appear to have a large blind spot when it comes to their customers’ reactions to policy limits and restrictions. They don’t seem to “get” that customers are not expert in parsing policy language, don’t understand the intricacies of policy limits and restrictions, and get angry when they think they’re being mistreated.
The net is, insurance companies may save a few bucks by not telling HDHP buyers that their negotiated discounts don’t apply to non-covered services, but they will likely lose customers, and may well lose their battle against tighter regulation as a result.
What does this mean for you?
Perception is king, and customers/voters/health care consumers perceptions of insurers’ practices may well result in “unintended consequences” for the insurers.
My esteamed (pun intended) colleague and I spoke at length yesterday about a letter he received from Golden Rule (United Healthcare’s subsidiary). I’m paraphrasing; here’s the key points.
1. Golden Rule stated that their policy is to reprice bills for non-covered services to reflect the rate they have negotiated with the provider, and to send that information to the insured and provider.
2. It is up to the provider to determine if they will accept that amount, or if they want to balance bill the patient.
3. Here’s the corker – Golden Rule stated that this policy is not disclosed to the insured in any written materials because it is contained in the contract between the provider and Golden Rule, and is confidential. Their claim is that this matter is between the insurer and the provider, as the insured is “self-insured” for that risk…
Again, neither I (an ex-insurance company executive) or anyone else I have spoken with understand this policy.
Here’s where it really gets unpleasant. UHC, and other insurance companies, sell health plans to employers where the employer is liable for the first $25,000, $100,000, or other level of risk. Beyond that, UHC is “on the hook” for the claims expense. Moreover, employees insured through these plans who receive “non-covered” services from UHC-contracted providers usually get the benefit of the negotiated reimbursement rates.
Colleague suggested, and I agree, that this inconsistency is troubling. And not likely to make individuals, or supporters of consumer-directed health care, very happy.
I’m amazed at the blithe ignorance exhibited by insurance companies. Do they think individuals will not be upset about this? Do they think this will engender warm feelings of brand loyalty? Or do they think this will somehow endear them to their providers, even if it angers their policyholders?
Who’s the customer here?
Here’s the latest on my Colleague’s battle with his/her health plan over accessing their negotiated rate for non-covered care. While the health plan (United Healthcare/Golden Rule) promised to respond, the customer service folks had not resolved the question by the end of last week. So, s/he is still waiting.
The contention of Colleague is that since the marketing materials and policy did not state that UHC’s negotiated rates did not apply to these services, and in fact stated that one of the advantages of the plan was that access, the marketing materials are misleading at best.
Meanwhile, Hank Stern and Bob Vineyard at InsureBlog invested a considerable amount of time investigating this, and have written an excellent synopsis of the situation and the insurer’s perspectives. Hank and Bob also asked insurance companies to explain why they would adopt a policy that is so obviously consumer unfriendly; as of yesterday they are still waiting for a response…
The net from InsureBlog is that the insurance companies reprice the services to reflect their negotiated rates, but it is up to the provider to determine if they will accept that rate . So, the health plan informs the consumer what their cost could be, and the provider then says “nope, you’ve got to pay the full boat”.
Boy is this dumb. The consumer is now “educated”; they know what they could pay, and they also know that they have to pay the higher rate. Result – really angry consumers, who feel they have been bait-and-switched. Yes, the insurance companies are technically within their rights to do this, as are providers, but this will undoubtedly stoke the anger of voters, an anger that may well be directed at both offending parties.
