Archive for January, 2009

NCN – Transparency in Medical Care Pricing

Saturday, January 31st, 2009

For those concerned about rising group health care costs, a preview of this video may provide alternatives.

Can Anyone Explain This to Us?

Saturday, January 31st, 2009

Here we go again…………..our office was asked to investigate a provider claim to determine if the billed charges were fair and reasonable. The provider is a radiology group in a large metropolitan area in Texas.

The provider’s billed charges were, on average, +370% of 2008 RBRVS. We ran the charges through a large PPO network and discovered the billed charges were reduced down to +235% of 2008 RBRVS. This significant “discount” would certainly look good on an EOB. It would also look good on a year-end PPO claim anaylsis report. You would think that the PPO people really negotiated a great deal for you, right?

However, on behalf of the employer’s self-funded group medical plan, we have negotiated fees of 115% of 2008 RBRVS with similar providers in the same geographic area.

So, why would you want to pay a bill that is 120% higher for the same exact service you could get from a provider just down the street? Can anyone explain this to us?    

Deviated Septum Repair Costs $58,000, Dr. Fees Extra

Saturday, January 24th, 2009

Recently an employee took his dependent son to a physician owned out-patient surgery center for a 45 minute operation to repair a deviated septum. This facility was out-of-network (they have not joined any network). Prior to the surgery, the employee was told by the business office of the clinic that his portion of the claim would be about $1,400 (included deductible and estimated co-insurance). The employee wrote the check and the surgery was performed successfully.

The claim was received by the employer’s third party administrator who negotiated the $58,000 in billed charges down to $56,000, and wrote a check for that amount on the employer’s claim account. A weekly check register sent to the employer for review prior to releasing claim checks for that week, caused the comptroller to question this claim as appearing to be too large for such a simple surgical procedure. The claim check for $56,000 was put on hold pending our investigation.

Medicare would have paid the clinic approximately $2,700 for this procedure. In contacting a medical care supplier that supplies this particular surgical center, the sales representative told us that the supplies used in a typical deviated septum surgery such as this one was less than $500.  In contacting the Bexar County Medical Society about this claim, we were told that it was certainly cause for concern and they would be more than happy to have their peer review committee review the claim.  Then we met with the business manager of the clinic, showed him our research, and told him that we would pay him $2,000 as payment in full for his services (employee already had paid $1,400, so with our $2,000 the total payment to the clinic was $3,400).  His response was “we hardly ever get questioned on our bills, and most insurance companies just pay us!”

This is just one example of what we have documented regarding inflated medical billing. What amazes us is that most employers, insurance companies and third party administrators don’t question medical charges and blindly pay claims. After all, it seems, it is not their money and any losses are simply passed on to the employer in the form of a rate increase.

Consumer Questions Doctor’s Charges

Thursday, January 22nd, 2009

Yesterday we received an email from one of our clients, asking us to review his recent medical charges from a local physician. He wanted to know how the charges compared to 2008 RBRVS. Here is what we found:

CPT 86000        Billed $292.80                2008 RBRVS    $9.75  

This represents a +3000% markup from Medicare reimbursement formula.

About 6 months ago we moved an employer from a PPO plan to a plan that pays claims using 2008 RBRVS as a claim payment benchmark. To date the plan has saved approximately $500,000. And, we put in place a mechanism that addresses the balance billing issue so often raised by PPO representatives as a tactic to hold employers hostage to the PPO method of controlling costs.

Consumers should compare medical costs but most don’t

PPO Discounts: “My Discounts are 37-55% Better Than Yours”

Sunday, January 18th, 2009
A large health insurance carrier has been touting their PPO discounts as being as much as 37-55% better than anyone else. And, three licensed consultants, each independent of each other, has “verified” those discounts. One consultant “proved” that average discounts on one rental PPO was 23%, while the large health insurance carrier PPO averaged 57% discounts. The PPO discount differential in this case, is a whopping 248%.
So, you would think that going with the better PPO discounts offered through this large health insurance carrier, the employer would see immediate and significant plan savings.
What we have found is the opposite. Not only are the so called discounts a figment of a salesman’s imagination, but provably untrue. Plus, in certain instances, the costs to the client actually went up, all things being equal.
We are in the process of documenting this using multiple case studies utilizing documented claim data. Once completed, this report should put an end to the unfair and untrue sales tactices employed by some.
A quote from an email received recently is a basic truth and shows the fallacy of comparing PPO discounts off billed charges:
“Our audits represent a complete flip to status-quo. We start at cost and add a margin (ground up) rather than start with the (phantom) original bill and take a percentage-off (top-down). This is much more in line with (A). common sense, (B). typical American business practices, and (C). fiduciary duty.

United States Economy – Documentary

Sunday, January 18th, 2009

Former CEO Alleges Bid Rigging Conspiracy

Saturday, January 17th, 2009

Attorneys for Antonio Juarez, BISD’s former chief financial officer, on Friday filed a lawsuit alleging a conspiracy by former and current school board members to coerce his participation in the “manipulation of the bidding procedures” used to award a district basic life and stop-loss insurance contract. 

The lawsuit alleges that when Juarez would not participate, current majority members of the Brownsville Independent School District Board of Trustees coerced Superintendent Hector Gonzales to obtain Juarez’s resignation. Gonzales then reassigned Juarez as BISD’s grants administrator. 

At the same time, the lawsuit alleges that current and former BISD trustees sought to coerce Juarez into a conspiracy to oust Gonzales, for which Juarez was promised support for restoration to his status as chief financial officer. 

The lawsuit says the board members attempted to force Juarez to file a grievance against Gonzales prior to a Jan. 6 board meeting concerning the superintendent’s contractual status. It says Juarez was threatened with retaliation if he did not. 

The lawsuit was filed against Gonzales, in his capacity as the district’s chief executive officer, as well as any successor; Mike Saldaña, who serves as BISD’s counsel, and board members Rolando Aguilar, Joe Colunga, Ruben Cortez Jr. and Rick Zayas. 

“ C o m p l a i n t a n t (Juarez) has chosen not to participate in the Board’s conspiracy, and fears that termination will result by not taking action,” the lawsuit states. 

The lawsuit is a petition for declaratory judgment that seeks an injunction to prevent BISD from firing Juarez or taking action that would affect his contractual status. 

It was filed by Brownsville attorneys Ben Neece and Star Jones in state District Judge Janet Leal’s 103rd District Court.

FBI – Brownsville, Texas  (956) 546-6922

San Antonio Insurance Agent Becomes Speaker of the House

Thursday, January 15th, 2009

It appears the House will be getting a new Speaker, Rep. Joe Straus. Known as a moderate Republican, he has served only two terms in the House but has lined up significant support. A wealthy San Antonio businessman, Straus held minor posts in the Bush and Reagan Administrations. He is a principal in the insurance and executive benefits firm of Watson, Mazur, Bennett & Straus, L.L.C. He also is affiliated with National Financial Partners, a leading financial services company in the insurance, investments, and benefits industry.

Texas Bill Would Mandate Medical Loss Ratios

Thursday, January 15th, 2009

TEXAS: A bill was filed last week that would require insurers to report their medical loss ratios to the Department of Insurance on an annual basis and to maintain those ratios at 75 percent. The bill further gives authority to the Commissioner to order rebates, rate rollbacks or take other necessary steps to penalize any carrier in violation of the minimum ratio.

Text of Bill: texas-house-bill-medical-loss-ratio-hb00531i

UnitedHealth Group Reaches Agreement to Settle Class Action Lawsuits Related to Out-of-Network Reimbursement

Thursday, January 15th, 2009


Kidnapping & Ransom Insurance – Growing Market in Mexico

Wednesday, January 14th, 2009

News reports show that kidnappings are up in Mexico. Over 4,500 in 2008 alone. Tourists are in danger, even in class resorts in places like Cancun.

kidnapping-a-changing-and-growing-risk     epic_050106

Cuomo Announces Major Health Care Reform

Wednesday, January 14th, 2009

Editor’s Note: This is going to impact the group health care market in a big way.

Evercare of Texas Fined More than $1 Million

Saturday, January 10th, 2009

DALLAS — A health-care company hired to manage a program for elderly Texans as part of a broad privatization plan was fined more than $1 million by the state in the past year over mounting complaints that included delayed or denied medical care.

Evercare of Texas, a unit of Minnesota-based UnitedHealth Group, has drawn the ire of some powerful Austin lawmakers over its management of preventative and long-term care for the state’s most vulnerable, The Dallas Morning News reported Sunday in the first of a four-part investigative series.

Food Insurance PPO Network

Tuesday, January 6th, 2009
Excerpt from an email received yesterday:
This morning I had some tests run at Valley Diagnostic Clinic in Harlingen, Upon finishing the tests, I was directed to go to the cashier to settle my bill.
The clerk said “Mr. XXXXXX, I have already checked with your insurance company and you have a $10,000 deductible! Therefore I am going to have to ask you for your payment now please.”
I said “well, why don’t we wait to see what my PPO allows for these charges, so go ahead and file the claim, then I will return and pay you the discounted rates your clinic has negotiated with my insurance company.”
“Oh, Mr. XXXXX, that won’t be necessary. I can reprice your charges right now on my computer!”
That really surprised me. So I inquired “can you re-price claims through all the PPO networks that your patients use?”
“Of course, Mr. XXXXX! We are fully automated!”
“Are all services priced the same for all patients, or is there pricing differentials among PPO networks?’, I innocently asked.
“Oh no Mr. XXXXX, prices vary from one PPO to the next.”
So the nice little clerk entered the data into her computer, and a total came out, which I promptly paid.
Upon driving home, I reflected upon this interchange with the insurance clerk, and I thought;
This is like buying donuts at HEB. Ten different people go to HEB and buy the same dozen donuts but each is charged a different amount based on their Food Insurance PPO network. This is an amazing way to conduct business.

Editor’s Note: HEB is a large chain of grocery stores in South Texas

Health Care Costs – By George Will

Tuesday, January 6th, 2009

Washington Post Writers Group

Sunday, January 04, 2009

Washington —- Health care, says the man most concerned with that 17 percent of America’s economy, can be “a nation-ruining issue.” As Michael Leavitt ends four years as secretary of health and human services, he offers this attention-arresting arithmetic: Absent fundamental reforms, over the next two decades the average American household’s health care spending, including the portion of its taxes that pays for Medicare and Medicaid, will go from 23 percent to 41 percent of average household income.

It is, Leavitt says, “predictable” that today’s traumatizing economic turbulence, by heightening Americans’ insecurity, will complicate reforming entitlements. This, too, is predictable: By curtailing revenues, today’s recession will bring closer the projected exhaustion of the Medicare Part A trust fund, from early 2019 to perhaps 2016. That should get the president-elect’s attention.

When Medicare was created in 1965, America’s median age was 28.4; now it is 36.6. The elderly are more numerous and medicine is more broadly competent than was then anticipated. Leavitt says that Medicare’s “big three” hospital procedure expenses today are hip and knee replacements and cardiovascular operations with stents, which were not on medicine’s menu in 1965.

After being elected to three terms as Utah’s governor, but before coming to HHS, Leavitt headed the Environmental Protection Agency. He came to consider it a public health agency because the surge in Americans’ longevity in the last third of the 20th century correlated with cleaner air and fewer waterborne diseases. Longevity is, however, expensive, and demography is compounding the problem.

In the 43 years since America decided that health care for the elderly would be paid for by people still working, the ratio of workers to seniors has steadily declined. And the number of seniors living long enough to have five or more chronic conditions —- 23 percent of Medicare beneficiaries —- has increased. Many of those conditions could be prevented or managed by better decisions about eating, exercising and smoking. The 20 percent of Americans who still smoke are a much larger percentage of the 23 percent who consume 67 percent of Medicare spending. Furthermore, nearly 30 percent of Medicare spending pays for care in the final year of patients’ lives.

Suppose, says Leavitt, buying a car were like getting a knee operation. The dealer would say he does not know the final cumulative price, so just select a car and begin using it. Then a blizzard of bills would begin to arrive —- from the chassis manufacturer, the steering-wheel manufacturer, the seat and paint manufacturers. The dealership would charge for time spent there, and a separate charge would cover the salesperson’s time.

Leavitt says that until health care recipients of common procedures can get, upfront, prices they can understand and compare, there will be little accountability or discipline in the system: “In the auto industry, if the steering-wheel maker charges an exorbitant price, the car company finds a more competitive supplier. In health care, if the medical equipment supplier charges an exorbitant price, none of the other medical participants care.”

Medicare is a price-fixing system for upward of 12,000 procedures and drug codes —- and for hundreds of categories of equipment, the providers of which tenaciously oppose competition. Leavitt began implementing a tiny program of competitive bidding covering just 10 products in 10 cities. Based on the 15 days it lasted before Congress repealed it, savings were projected to be substantial. That is why equipment providers got it repealed.

Rather than ruining the new year by dwelling on Medicare’s unfunded liabilities of about $34 trillion (over a 75-year span), ruin it with this fact: In the next 50 years, Medicaid, the program for the poor —- broadly, sometimes very broadly defined —- could become a bigger threat than Medicare to the nation’s prosperity.

This is partly because of the cost of long-term care for the indigent elderly, some of whom shed assets to meet Medicaid’s eligibility standard —- sometimes as high as income under 200 percent of the federal poverty level. And many states, eager to expand the ranks of the dependent with the help of federal Medicaid money, use “income disregards” to make poverty an elastic concept. For example, they say: A person who gets a raise that eliminates his eligibility can disregard the portion of his income that pays for housing or transportation.

Governments with powerful political incentives to behave this way will play an increasingly large role in health care. As is said, if you think health care is expensive now, just wait until it is free.


Political Subdivisions Sometimes (or all the time) Make Political Business Decisions

Sunday, January 4th, 2009

A large South Texas school district recently went out for Request for Proposals (RFP) seeking competitive stop-loss insurance for their self-funded employee health insurance program. Several proposals were received. A consultant was retained to review the offers but was not asked to make a recommendation. The recommendation was to be made internally to the Board of Trustees. The district’s CFO made it known that he recommended the apparent “low bidder.” However, the Board of Trustees voted to select the highest bid through a local insurance agent. Subsequently the CFO was removed from his position and given the job of “grants administrator.”

An Open Records Request was received by the district in November 2008 seeking documentation of the stop-loss insurance RFP. The requestor subsequently received an anonymous phone call stating that “I have seen your Open Records request, and I can tell you that you will not get everything you have asked for, and documents are being destroyed.”

If this scenario is true, it is a sad commentary on how some political subdivisions make business decisions at the expense of the taxpayers. Vendors become aware of those political subdivisions that consistantly make “political business decisions” and usually decline to offer competitive proposals/bids in future RFP’s. This has become such a prevalent issue that some carriers have “red-lined” South Texas and seek to derive business elsewhere.


Retail Care off Fast Track

Saturday, January 3rd, 2009

Modern Healthcare – December 22/29, 2008

A new study says the boom in convenient-care clinics appears to be slowing, and this could have a negative implications for the people most likely to use them; the uninsured and Hispanics.  The study indicated that only 1.2% of U.S. families reported visiting a convenient-care clinic in the past 12 months, while only 2.3% reported ever visiting one. Uninsured families accounted for 27% of convenient-care clinic users. Also 1.9% of Hispanic families surveyed had used such a clinic in the past year, compared with 1% of non-Hispanic whites.

According to the Convenient Care Association trade group, there are now roughly 1,150 retail clinics operating in some 38 states.

The most common services obtained at convenient-care clinics were diagnosis of a new illness or symptom, 48%,  prescription drug renewal, 47%,  vaccination, 23%, and care for an ongoing condition, 18%.

Editor’s Note: While we don’t question the accuracy of this study,  we find that convenient-care clinics are in a growth mode in Texas. Texas Med Clinics in Bexar County (San Antonio) is one example of the economic success potential of this business model. Just recently a group of deep pocketed investors in Amarillo started a company that will be building clinics throughout the Panhandle to gear towards walk-in traffic as well as employer based health plans. We expect the convenient-care clinic business model will grow significantly in Texas.

Congressional Budget Office Weighs Reform Proposals

Saturday, January 3rd, 2009

Cover Story – Modern Healthcare – December 22/29, 2008

The Congressional Budget Office (CBO) laid out scores of ideas last week as a way to help federal lawmakers craft what could become the most sweeping legislation seen in a generation. Healthcare policy experts praised the CBO analysis as a handy reference tool for reform that they believe will serve as a prelude to the main event when lawmakers release an actual bill in 2009.

In one report the CBO addresses our healthcare system that spends with abandon more than $2 trillion a year and showing how it threatens the U.S. The CBO report stresses that a solution would require a variety of approaches, not just a “one size fits all” scheme, such as mandating universal coverage.

A second report lays out more than 115 different options for reform, encompassing a wide swath of issues related to how healthcare is delivered and paid for. Among the options are some that would reduce spending and others that would increase it.

Some of the options that would reduce spending include trimming billions of dollars in Medicare and Medicaid payments from the provider community. The CBO proposal looks at a proposal to bundle payments for hospital care, a move it found would save $18.6 billion over 10 years. Separately, an option to reduce Medicare payments to hospital with high readmission rates would shed another $9.7 billion.

Editor’s Note:  2009 may bring significant changes to the U.S. healthcare delivery system. Powerful lobbying entities will spend millions to sway 435 people to vote on proposals that benefit special interests.

Tax Victory Buoys Captives

Saturday, January 3rd, 2009

December 29, 2008 – Business Insurance

It isn’t often that the captive insurance industry scores a victory of the Internal Revenue Service, but in 2008 it did just that.

That victory came in February, when the IRS withdrew a proposed 2007 rule affecting sponsors that use captives to fund risks of various corporate entities and that file a consolidated tax return covering the affiliates and the captive.

The rule would have barred captives from taking an immediate tax deduction at the time reserves were established. Instead, tax deductions would have been allowed only at the time claims are paid – a change that wold have made captive programs much less attractive financially, especially for captives used to write long-tail business.

Editor’s Note: Employers are beginning to realize that funding a health benefit program through a captive makes sense for some. Those employers utilizing existing captives for other lines may be wise to consider the scheme. Auto dealers have used captives successfully for years on their credit life business, for example. Large retail chains such as furniture outlets have done so as well. A large national TPA is marketing a product utilizing a Rent-A-Captive scheme for employer groups of 50-250 employee lives.