Nevada Hospital System Adopts Cost-Plus Reimbursement

We received a call this morning from an actuary firm in Nevada informing us that one of their clients, a hospital system, has agreed to accept cost plus 12%  reimbursemet from all local political subdivisions whose insureds seek treatment at the hospital.

Details to follow.

Editor’s Note: In Texas we know of five (5) hospitals who have adopted the Cost Plus approach for their own self-funded employee benefit plans. We also know of several hospitals who have agreed to accept Cost Plus insureds and are happy to earn a 12% profit margin. And, recently, we have learned of one major hospital system who has agreed to accept Medicare +35%. This is encouraging to traumatized consumers who have been pounded with ever increasing health care costs, year after year, despite representations from PPO networks who tout “superior discounts” for their clients.

 www.ahd.com – look up hospital’s cost to charge ratio here. 

   We have learned that the reason the hospital system agreed to Cost Plus 12% is because the same system has contracted with a few local  payers on a flat per diem of $1,800 for both medical and surgical admissions, with no outlier. They will earn more under a Cost Plus 12% contract.

Blue Shield of California Raises Rates – Points to Rising Health Care Costs – Policyholders Stunned – Huge Increases as High As +59%

Another one of California’s largest health insurers has stunned individual policyholders with news of huge rate increases — this time it’s Blue Shield of California seeking hikes of as much as 59% for tens of thousands of customers March 1.

Blue Shield’s plan comes less than a year after Anthem Blue Cross tried and failed to raise rates as much as 39% for about 700,000 California customers.

San Francisco-based Blue Shield said the increases were the result of fast-rising healthcare costs and other expenses resulting from the new healthcare laws passed last year. “We raise rates only when absolutely necessary to pay the accelerating cost of medical care for our members,” the company told its customers last month.

In all, the insurer said that 193,000 policyholders would see increases averaging 30% to 35%, the result of three separate rate hikes since October that have been rolled into one for about 7,000 members.

Nearly one-quarter of the affected customers — 44,000 — will see cumulative increases of more than 50% over five months.

Blue Shield notified some policyholders of the rate increases in late December. That’s when Michael Fraser, a longtime Blue Shield policyholder from San Diego, learned that his monthly bill would climb 59%, to $431 from $271.

“When I tell people, their jaws drop and their eyes bug out,” said Fraser, 53, a freelance advertising writer. “The amount is stunning.”

The increases prompted complaints to new Insurance Commissioner Dave Jones, criticism on the Internet and letters to The Times. They are providing an early test for Jones, a former Democratic state assemblyman who targeted Anthem last year after it sought its big increases. . . .

Jones said the Blue Shield premiums underscore the need for the Legislature to give the insurance commissioner legal authority to regulate insurance rates the same way he does automobile coverage.

At present, the commissioner can block increases only if insurers spend less than 70% of premium income on claims. Jones’ office said that Blue Shield’s March 1 increase is still under review.

“Blue Shield’s increases pose the same problem posed by Anthem Blue Cross last year and other health insurers as well,” Jones said in an interview. “My hope would be that Blue Shield would reexamine these rate hikes, particularly in the face of the impact they are having on individual policyholders.”

Blue Shield said the cost of health coverage is being driven up by large hospital expenses, doctors’ changes and prescription drug prices. Blue Shield spokesman Tom Epstein said other factors also contributed to three increases in five months.

On Oct. 1, he said, Blue Shield imposed increases averaging 18%, and reaching as high as 29%. Those hikes had been delayed for three months while state regulators examined Blue Shield’s filing, costing the company tens of millions of dollars.

Epstein said Blue Shield raised rates again Jan. 1 to pay for reforms under the national healthcare overhaul and a new state law that bars insurers from charging women more than men. (Some policyholders will pay less under the state gender law, while others will pay more.)

A third round of hikes scheduled for March 1 comes in response to rising healthcare costs, he said. Those increases will average 6.5% and be as high as 18%.

Some policyholders have seen their bills rise gradually over the last five months, while others will see the charges lumped together March 1.

“It’s unfortunate that they all came in a five-month period,” Epstein said. “Rates are going to continue to rise unless the cost of medical care is brought under control. We need to reduce what we pay to hospitals, medical groups and pharmaceutical companies.”

Despite the large increases, Epstein said Blue Shield would again lose “tens of millions of dollars” on its individual business in 2011.

Not included in the rate increases are 78,000 Blue Shield individual policyholders whose insurance is regulated by a second state agency, the Department of Managed Health Care. Those customers have seen two rate increases since October that together average 37%, Epstein said

Blue Cross Talks with NorthWest Fail; Cost Rise

January 6, 2011

By JANELLE STECKLEIN

Blue Cross Blue Shield of Texas consumers can expect to pay more out of their own pockets for some treatment after negotiations between Northwest Texas Hospital and the region’s largest insurer failed.

As of Saturday, at the start of the new year, Blue Cross patients are now being charged out-of-network prices at Northwest, which means people needing specialized treatment – like trauma and wound care and some pediatric services that only Northwest provides – could potentially see costs increase by tens of thousands of dollars depending on the treatment.

Northwest houses the region’s largest designated trauma center.

John Greeley, a spokesman for the Texas Department of Insurance, said in most cases when someone goes out of network, it means that the amount of coverage from the insurer drops and the percentage of the bill the patient is responsible for rises.

According to the Texas Department of Insurance’s 2010 annual report, in 2009 Blue Cross was by far the state’s largest accident and health insurer. In 2009, Blue Cross Texans held about 27.3 percent of the market share for written premiums, according to the state.

Blue Cross spokeswoman Margaret Jarvis said Blue Cross will still pay in-network treatment costs, but the patient will cover the co-pay and whatever the difference is between what the insurer covers and the final hospital bill.

Jarvis said she wouldn’t speculate on the cost impact for consumers, but Northwest officials have previously said the patients’ out-of-pocket expenses could top tens of thousands of dollars on a trauma bill.

Starting in 2005, the hospital charged Blue Cross in-network prices – or essentially a discounted rate – for specialized services. But in September, hospital officials announced they canceled the contract with the insurer because Northwest was not a full network provider. Hospital officials said it didn’t make sense for them to offer Blue Cross a discount for specialized services when the insurer was directing patients with all other medical needs to Baptist St. Anthony’s Health System for treatment.

Both sides initially said they hoped talks could resolve the dispute before it affected patients’ pocketbooks, but negotiations ultimately failed.

Martin said the hospital “hates this (outcome) as much as everybody,” but still has to do business.

“We were the ones that canceled our contract,” said Northwest spokeswoman Caytie Martin. “They have refused to accept our calls to have any further conversations. Blue Cross is not willing to allow us to (be) a fully in-network facility.”

Jarvis said she doesn’t expect a big effect for consumers because they can get all their emergency care needs – minus trauma care – at BSA.

She said it’s up to Northwest how much extra the patient will have to pay.

“It’s up to them if they choose to balance-bill a patient and charge them over and above the rate that their insurance pays,” she said.

Martin said no contract means no discount for Blue Cross patients.

“We hope those that may be impacted by that decision have the ability to speak with their employers about their concerns that they don’t have trauma coverage,” she said.

Ultimately, Greeley said the state has little oversight on the relationship between insurers and hospitals other than to make sure insurers provide enough in-network specialists.

“We can’t change the fact that a particular facility and a particular insurer have parted ways,” Greeley said. “We can’t make that better.”

Greeley said the state offers a consumer hot line to help people understand their insurance bills and responsibilities.

“At some point they’re going to get a bill and they’re going to have questions about it,” he said. “(We can help) make sure it is according to the contract they have and answer any other questions.”