Last week HHS released new guidance on their approaches for health insurance exchanges, as well as announcing $181 million in exchange establishment grants. This brings the exchange grants to $1 billion over the last two years. Among the states, only Alaska did not apply even for a planning grant. (For detail on state activity, see here).
HHS has bent over backwards to give states options for their exchanges. The most recent guidance allows states to run the exchanges or to partner with the federal government in running them. Of course, if a state does not act, the federal government would run an exchange on behalf of the state’s residents. States have until November 16, 2012 to inform HHS about what type of exchange they intend. HHS had also previously given states discretion in defining necessary benefits. The exchanges are scheduled to go into effect as of January 1, 2014, under the provisions of the Affordable Care Act (ACA). The interested reader can view a nice overview of the recent guidance here or read the actual guidance.
Many states are not keen on the idea of an exchange under ACA. New Jersey Governor Christie recently vetoed a bill to set up an exchange in that state. Other states that have recently expressed wariness about setting up exchanges include Illinois, Louisiana, Michigan. Minnesota, and South Dakota. Curiously, Illinois and South Dakota were among the states in the most recent set of grants announced by HHS, which illustrates that taking money from the federal government is not the same as agreeing with what it wants you to do it.
Of course, much of the resistance is ideological, with Republican legislators and/or Governors doing what they can to offer resistance to ACA in an election year. It’s too bad that exchanges are caught up in that fight, because there are good reasons to see them as important components of the health care system with or without ACA.
The two operational exchanges in the country – Utah and Massachusetts – predate ACA, and were set up for distinctly different ideological reasons. Massachusetts, of course, had its own health reform bill, including a mandate for coverage, while Utah was seeking to facilitate coverage for uninsured but employed individuals. As might be expected by the political make-up of each state, the Massachusetts exchange has a more regulated approach, and the Utah exchange a more free market approach, which only demonstrates that health reform solutions can cover the political spectrum.
Even more interesting is that the private sector is interested in the exchange concept as well. On one level, shopping sites such as ehealthinsurance are a type of exchange. ehealthinsurance has been providing a consolidated online shopping experience for health insurance for over a decade, and are a leading source of sales for many carriers. They’re even licensing their underlying technology, such as to power a private exchange for Blue Cross Blue Shield of Minnesota. That exchange supports a defined contribution plan that employers can use to give their employees more choices. The Minnesota Blues may have felt pressure from competitor Medica, which announced its own private exchange earlier this year. The Medica exchange is powered by Bloom Health, which itself was acquired last fall by Wellpoint, HCSC (the holding company for Blues plans in Illinois, Texas, New Mexico, and Oklahoma), and Blue Cross Blue Shield of Michigan. Obviously those large Blue plans see a big future in exchanges.
Other Blue plans are joining the movement, including Highmark (with Array Health) and Blue Cross Blue Shield of Kansas City. Of course, it’s not only the Blues that see a new world in private exchanges. Companies such as Liazon or ConnectedHealth started out aiming to assist consumers in selecting health insurance, but now are reorienting themselves to an exchange approach. Consulting firms such as Aon Hewitt and Towers see themselves in the exchange business, because even their larger customers – even self-funded ones -- are interested in that approach. Towers just purchased Extend Health, which claims to be the largest private Medicare insurance exchange.
Let’s face it: employer-based coverage may have seen its heyday, regardless of what happens to ACA. A recent survey by GfK Custom Research found only 56% of employers are sure they would keep offering coverage once ACA fully kicks in; 12% said they would drop coverage, and almost a third did not know what they will do. CBO recently estimated only a small – 3 to 5 million people – loss in employment-based coverage due to ACA. Time will tell how large the effect is, but it’s a safe bet that the number is going down, not up. EBRI’s analysis of Census data suggest that the percentage of people with employer coverage has steadily declined over the past decade, dropping from 69% to 59% from 2000 to 2010. Those numbers reflect both a shift in jobs into industries less likely to provide coverage and employers finding offering coverage increasingly too costly, and neither of those trends is going away, regardless of ACA’s fate. There is going to be more directly purchased individual coverage.
Exchanges – private or public, through an employer defined contribution approach or for individual coverage – should help consumers by providing more choices, facilitating meaningful comparison of choices, and simplifying enrollment. What’s not to like?
When you come to think about it, the tax preference for employer-based coverage is nice, but it may increasingly rankle more consumers to have their employer dictate not only what options they have but also what specific treatments, diagnoses, or procedures are covered – as the recent contraception mess highlighted. I have previously written on these negative aspects of the employment-based system. Shouldn’t we all have broad choices, with easy comparisons?
The bitter partisan feuds over ACA and the American Recovery and Reinvestment Act (which included HITECH) obfuscate some of the good ideas contained in them. I have a hard time seeing a future of our health care system (absent single payor) that does not include:
Those genies may be out of the bottle, as both the public sector and the private sector are pursuing these concepts aggressively, and neither is likely to stop even if ACA is struck down or repealed. It would be fitting, and perhaps ironic, if the fruits of these approaches end up being ACA’s true legacy.
]]>Last year, CMS unveiled the Pioneer ACO program to spur growth of Accountable Care Organizations prior to the full implementation of the Medicare Shared Savings program. These organizations are pioneers in the sense that they have already embarked on organized care practices and have some of the needed infrastructure in place and are therefore leading the way for others. Please join Milliman's Jill Van Den Bos on Wednesday this week as she addresses the elements of the Pioneer ACO model, the components of financial risk and cost drivers involved and strategies to identify interventions and opportunities.
On Thursday this week, our webinar explores the future of California’s healthcare districts. The decades immediately after World War Two saw the creation of public healthcare districts in California that provided a framework for a burgeoning system of community and rural hospitals. Today, the purpose of these hospital districts is being questioned. Join Michael A. Dowell, partner in the law firm of Hinshaw & Culbertson LLP, Walter Kopp, president of Medical Management Services, Inc. and Cleo Burtley, manager with The Camden Group on May 24, 2012 at 10 a.m. Pacific as they explore the future of California’s healthcare districts.
To learn more about these and other upcoming Healthcare Web Summit events, visit: http://www.healthwebsummit.com/ or call MCOL's at 209.577.4888.
]]>Survey results are now available from the Contracting e-poll held in conjunction with HealthcareWebSummit’s 2012 Contracting Web Summit, which provide a measure of stakeholder contracting views and priorities, with comparisons to previous year’s answers.
Participants were asked to respond to three items:
1. Please categorize your organization. Purchaser; Provider; or Vendor/Other
2. What are the greatest opportunities from a contracting perspective?
3. What are the greatest challenges from a contracting perspective?
Responses to Greatest Opportunity by Year:
Responses to Greatest Challenge by Year:
For the third year in a row, a plurality of respondents thought that the emergence of value based and other applicable newer payment models was the greatest opportunity from a contracting perspective, with 29.6% of respondents answering this way. In 2011, the same percent of respondents agreed that this was the greatest opportunity which was three percentage points greater than in 2010.
The next most prevalent answers to what was the greatest opportunity were advancements in analytics capabilities and increased covered population due to health reform. For both of these options, 18.5% of respondents answered this way. These responses had been the second and third most prevalent answers in 2011 as well, however, advancements in analytics capabilities was chosen by 19.4% of respondents and increased covered populations due to health reform was chosen by 13.9%.
The remaining answers to what were the greatest opportunities from a contracting perspective (not including other which was chosen by 2.5% of respondents) were chosen by a similar percent of respondents, all of which were within one percentage point of 8%.
When broken down by respondent category there were some variations. While those who categorized their organizations as purchaser or vendors/others followed the overall trend of designating the emergence of value based and other applicable newer payment models as the greatest opportunity from a contracting perspective, providers were split on what the greatest opportunity was between the emergence of value based payment models and increased covered population due to health reform both of which garnered 25% of respondents in that category.
The biggest variation among respondent category was on the response to whether advancements in analytics capabilities was the greatest opportunity from a contracting perspective. Overall, 18% of respondents thought that this was the greatest opportunity. Purchasers were the most likely to answer this way with 30.4% of those respondents choosing this as the greatest opportunity. Respondents categorizing themselves as vendor/other were the least likely to respond this way with only 7.1% believing it as the greatest opportunity.
Just as with the greatest opportunity, the respondent’s choice for the greatest challenge carried over a three year trend with a plurality of respondents signaling that cost pressures due to economic downturn was the greatest challenge with 21% of respondents answering this way. This was a much smaller plurality than in previous years and was only 3.7 percentage points greater than the next most common answer for what the greatest challenge was; issues related to new health reform provisions.
The rest of the options for what the greatest challenges are from a contracting perspective are (excluding other) all fell within ten percentage points of each other. 8.6% of respondents chose consumer engagement Initiatives, 13.6% chose continued market consolidation, 7.4% chose ICD-10 transition, 12.3% chose increased complexities of benefit design, and 14.8% chose increased mix of government program vs. commercial covered populations as the greatest challenge.
Looking at responses year over year, most answers ticked slightly up in 2012 compared with 2011 and 2010 with two exceptions; cost pressures due to economic downturn, which dropped 12.3 percentage points from 2011, and increased mix of government program vs. commercial covered populations, which dropped almost 2 percentage points from 2011.
]]>MCOL Silver and Gold members now have the option to designate a Silver Companion e-newsletter subscriber who will also receive the entire package of e-newsletters sent to MCOL paid members.
The MCOL Silver Companion e-newsletter subscription may be offered to a valued colleague, favorite client, or even your home or other personal e-mail address. The recipient of the Silver Companion e-newsletter subscription will be eligible to receive the same MCOL discounts as the MCOL Silver or Gold member, including 50% off HealthcareWebSummit registration fees and 10% off other MCOL products.
To learn more about MCOL Memberships and the Silver Companion e-newsletter subscription value added benefit, visit: http://www.mcol.com/suminfo.htm or call MCOL's at 209.577.4888.
]]>Guy D’ Andrea, Managing Partner at Discern Consulting, was one of the featured speakers in this week’s Contracting Web Summit 2012, and spoke on Shared Savings: Pitfalls and Practical Solutions.
For those who need a refresher in what Shared Savings are all about, Guy summarized these core concepts:
Shared Savings, of course, are a centerpiece of accountable care and medical home initiatives. But stakeholders do run into pitfalls as they try to come to agreement, and implement such arrangements. Before moving on to discuss building a payment model for shared savings with readmissions, Mr. D’Andrea discussed these pitfalls and some general potential solutions.
The prospective payment is a sticking payment. Guy notes that providers will always want the maximum possible prospective payment, since it is “risk-free” revenue. Payers will want to delay payments until savings are achieved.” His solution: “treat prospective payments as an investment, and discount expected savings to present value.”
Then the argument comes up that is more difficult for high-performing providers to generate savings, because they tend to get penalized for having already done well, leaving less room for future improvements. His solution: “use a ‘blended’ model, in which the target budget is set using a combination of the provider’s own cost history, and that of the peer group.”
Next comes the concern that a provider’s experience, particularly when the population isn’t large enough to adequately spread the risk, will be influenced more by luck with outliers than factors under the provider’s control. The D’Abdrea solutions: (1) Establish minimum population sizes and savings rates; (2) Tie payments to performance on clinical process measures; and (3) Exclude “random, rare, and expensive” events from cost of care calculations.
Lastly, he addresses the concern of sustainability: he notes that “if savings are a “one-time” event, providers may be worse off financially in the long-run than if they saved nothing (especially for integrated systems).” His solutions: (A) Use a multi-year model that partially credits providers with savings in earlier years; and (B) In the long-term, seek to evolve from shared savings to “two-tailed risk” payment models, such as bundled payment or global capitation.
]]>Concerned about hospital readmissions? On Wednesday this week, Drs. Joe Gifford and Robert Herr from Regence Group and Dr. Brian Wolf from BCBS Rhode Island provide a Medical Director's perspective on aspects of their current approaches to drive accountability by reducing unnecessary hospital readmissions. Understand the critical need to develop the expertise and repository of attributed data tracking for re-hospitalization rates by hospital and provider groups.
On Thursday this week, we’re pleased to host The Third Annual Health Plan Contracting Web Summit which will address how contracting stakeholders should position themselves for 2012 and beyond.
Agenda for Thursday’s (May 10) live webinar (Eastern times):
Pre-Recorded Presentations in Windows Media Video format with audio and synchronized slide advancement:
For these and other upcoming events: http://www.healthwebsummit.com/
]]>In a culture of entitlement there is the belief that one deserves certain rewards, rights and privileges based on tradition or past achievements. In contrast, in a culture of accountability rewards, rights and privileges are only earned based on the merits of one’s current behaviors and actions. The transition from a culture of entitlement to a culture of accountability is a perilous journey for rights and privileges are no longer automatic, the ‘entitled party’ usually feels disappointed, angry, or mistreated.
A culture of entitlement is deeply embedded in the US healthcare system: patients believe they are entitled to state of the art care regardless of their unhealthy lifestyle; physicians believe they are entitled to a high degree of clinical autonomy and historical levels of compensation; hospitals believe they are entitled to be reimbursed at the highest rates in the world regardless of their inefficiencies or the results they produce; and suppliers e.g., insurance and pharmaceutical companies believe they are entitled to high margins regardless of the value they provide to the system.
This culture of entitlement has driven per capita healthcare spending in the US to twice what our “peer countries spend on healthcare (commonwealth fund.) It has driven healthcare costs to a point where neither the public nor private sectors can continue to absorb the historical rate of cost growth. And it has called the question as to whether the U.S. healthcare system is creating sufficient value, i.e., outputs per unit cost.
In recent years, data on the value created by the US healthcare system has become more available and the early numbers are not good. According to McKinsey, “In 2006, the United States spent $2.1 Trillion on healthcare, more than twice what the nation spent on food and more than China’s citizens consumed for all goods and services. In addition, adjusting for economics, health status etc, the US spent $650 Billion more on health care than expected base on comparison to peer countries. Hospital and physician care accounted for almost 85% of the spending above expected levels, with drugs, health administration and insurance comprising the remained components of excess spending.
The primary driver of this excessive cost appears to be the salaries and revenues of providers and suppliers. For example, McKinsey estimates that for inpatient care, “Revenue per equivalent admission” accounts for $54 Billion in excess costs compared to peer countries. This is driven in part by the cost of nurses who are paid 36% more than their peers in other countries. Drug prices are 50% higher in the US than in other developed countries. Based on a multiple of per capita GDP, primary care physicians in the US are paid 46% more than physicians in peer countries and US specialists are paid 67% more than their peers. It is no wonder that the global fee for a normal delivery in the US is twice that of most peer countries (international federation of health plans 2010)
Given the relatively high investment in “input costs” one would expect a commensurate benefit in outcomes; however this does not appear to be the case. According to the Commonwealth Fund Study:
The U.S. health system is the most expensive in the world, but comparative analyses consistently show the United States underperforms relative to other countries on most dimensions of performance.
Data on life expectancy vs. cost by country is further evidence that the outcomes produced by the US healthcare system are not commensurate with the investment.
Finally, the high variability in care raises questions as to whether everyone is getting appropriate care:
The often quoted disparity in the per capita cost of care of Medicare patients in McAllen vs. El Paso has raised many eyebrows. Recent research from Franzini et. Al. shows that while per capita Medicare spending was 86% higher in McAllen than in El Paso, the per capita spending for Blue Cross patients in McAllen was actually 7% less than in McAllen. The authors concluded that their study is “consistent with Gawande’s finding that our healthcare system can create a “culture of money, – increasing the use of profitable Medicare services when there is [unconstrained] diagnostic and procedural discretion and clinical latitude.”
In a recent study of ‘value’ of healthcare services in Massachusetts conducted by the Attorney General, it was found that the difference in prices paid by insurers to its lowest paid physician group vs. highest paid exceeded 145% and the difference in hospital payments exceeded 170%. The Attorney concluded that this wide variation in the payments made by health insurers to providers is not adequately explained by differences in quality, complexity of services or their characteristics that might justify variation in prices. “Instead prices reflect the relative market leverage of health insurers and health care providers.”
In his recent speech to the American College of Surgeons, Senator Mark Kirk (R-Ill) summarized the government’s position on the current healthcare system when he stated that “every group that relies on federal funding should expect a 10% to 20% drop in that funding.” When Dr. L.D. Britt, President of the ACS, warned that such cuts could send some healthcare providers into a "tailspin," Kirk replied that “the tailspin is the U.S. economy. There is a new audience at play," Kirk said, referring to U.S. creditors. "The judgments they render, they are swift and severe.”
Shifts in culture are painful but if not recognized, and managed they can be terminal for an organization. Through the implementation of value based purchasing, reduced reimbursement, data transparency health systems are being steered on a perilous journey from entitlement to accountability. The healthcare literature is overflowing with tactics and strategies that sound great on paper and/or may be working in Cleveland or Chicago or Rochester MN after decades of trial and error, however there is little evidence that these proposed solutions will work in most healthcare communities in a reasonably short time frame. Michael Porter provides excellent advice on how to increase the value of the healthcare. He notes that:
“Improving performance and accountability depends on having shared goals that unite stakeholders
In healthcare, the absence of clarity about goals has led to divergent approaches, gaming the system and slow progress in performance improvement
Rigorous, disciplined measurement is the best way to drive progress”
The following are practical steps that a health system can implement to begin the long journey of transformation.
1) Conduct regular briefings for the board members, physicians, employees and the community on the structural changes in healthcare occurring at the local, state and federal level
2) Designate a group of physician leader to be the clinical transformation task force. Use this group as a sounding board and to lead implementation efforts
3) Develop accountability measures for every specialty and hospital department. Initially this data should be blinded but designate a time in the future when all results will be transparent. Note: the health plans and the government have already begun publishing an ever increasing amount of un-blinded outcome data by hospital and physician.
4) The Chief Medical Officer or his/her should actively manage the performance of hospital-based physicians.
5) Select a few high volume Medicare DRGs and initiate a process for designing care to improve cost and quality and reduce readmissions. Pick a redesign methodology health systems are using LEAN. Consider a bundled payment demonstration if the health system and physicians share a common vision for decreasing cost and improving quality (and probably getting paid less per unit of service than under fee for service)
6) ACO-Caveat Emptor --buyer beware. Webster defines ‘risk’ as “hazard, danger, peril; exposure to loss, injury or destruction.” While it is true that there is a theoretical opportunity to make more money by doing less, we learned in the mid-nineties that organizations that take the financial risk for the health of the population can end up much worse off than if they did nothing. After decades of successfully taking risk in California it is clear that the critical competencies needed to successfully take risk include:
a. Physicians that share a common electronic health record system,
b. A culture focused on reducing utilization of hospitals and high end interventions,
c. A strong base of primary care physicians,
d. Selective use of specialists based on the efficiency of the care they provide, and
e. Robust, mature infrastructure.
Since most of the health systems do not possess these competencies they should limit their exposure to risk and test these competencies on the employee population of the health system. If a health system wants to be in the Medicare risk business consider joint venturing a Medicare Advantage Plan with a local payer.
7) Finally, every journey requires a roadmap and every health system needs to define its strategic direction, a.k.a. “true north.” To maximize performance under the traditional model most health systems strategic behavior can be characterized as:
Operating a financially strong health system by maximizing revenues through pricing and volume growth, the provision of a broad range of services and meeting the individual clinical and financial needs of each physician
The new “true north” is clear:
To operate a financially strong, high functioning health system that consistently achieves optimal measureable value, i.e., outcomes/cost, for every patient.
Define your ‘true north,’ and begin the journey by taking practical, incremental steps described above. Enjoy the ride!
]]>The May 2012 edition of MCOL Monthly is now available for MCOL paid members. MCOL Monthly is an e-magazine in Adobe Acrobat format with easy to print and read MCOL authored articles and features from the past month's e-newsletters and web site. The table of contents for the May edition of MCOL Monthly is provided below for a quick peek at this months’ edition:
Trends... CBO Medicare Expenditure and Enrollment Projections, 2011-2020
Data-Map...Estimated Total Annual Rebate for Exceeding Minimum MLR
Thought-Leaders...Decline in patient utilization metrics since onset of recession
Tips.... In getting the most out of your MCOL membership
Blog...Guest Blog from Sander Domaszewicz on Decline in Utilization Metrics
Blog...The Price Is (Not) Right
Blog...DME: A Modest Proposal
Blog...Preparing for the End of the Healthcare Bubble
Blog...A Different Way to Fix Medicare
Blog...Changing Economics in an Era of Healthcare Reform
Tidbits...Medicare Annual Trustees Report: Some Data Snapshots
Tidbits...Healthcare Social Media is Too Tiny says PwC
Tidbits...Employers and Behavioral Health Management
Tidbits...Prescriptions Drugs in 2011
Factoids...Selected Factoids
HealthSprocket...Selected Lists
Announcements
Quoted
Learn more about MCOL memberships at: http://www.mcol.com/online.htm.
]]>Sander Domaszewicz is a Principal with Mercer well-versed in employer and employee health benefit issues, and is a noted national speaker on topics related to this arena. Recently, MCOL’s ThoughtLeaders publication asked it’s panel about the recently observed trends regarding a dip in various utilization metrics. We didn’t connect with Sander in time to ask him this question for the current issue of ThoughtLeaders, but I asked him if he wouldn’t mind doing a short guest blog with his thoughts on the issue.
Question: A number of recent studies have indicated a modest decline in several key patient utilization metrics since the onset of the great recession. Will a long-term change result, or will utilization increase as the economy improves – and what are the implications?
Sander Domaszewicz, Principal, Mercer:
Many of the plan sponsors we work with are busy moving forward with strategies that will right-size utilization now and in the future, making sure that their workforce gets the care they need at a good value, and no more. Some of the most powerful efforts in this area started to blossom during the great recession, and our expectation is that long-term change will result.
Employers' focus has shifted to almost equal attention now being given to both the Demand-side and the Supply-side of the care consumption equation. On the Demand-side, employers are investing in keeping healthy folks healthy and keeping illnesses well-managed for those that have chronic conditions. This Demand-side aligns with "wellness" or "health management" initiatives and is trying to reduce the demand for health care services in the first place. If the Demand-side of the intervention breaks down, employers are also addressing the Supply-side of the care utilization equation. So if people do need to seek health care services, let's make sure we get them the right care, at the right time, from the right provider, for the right price, with the right outcome. In other words, how can we get the most total value for the health dollar spent. Consumer-directed health plans, centers of excellence, narrow networks, patient-centered medical homes, ACOs, medical travel, telemedicine, retail/onsite clinics, and other interventions all have Supply-side impact.
Both the private and the public sector purchasers of health services are working diligently to optimize necessary utilization and prevent unnecessary utilization, so better control over time may be more achievable now than at any time in the past.
]]>I noticed several recent articles and studies about some of the problems caused by the crazy ways we price care in our health system. If they made a reality show about it, it’d be less The Price Is Right than it would be Survivor.
Let’s start with a study published in the Archives of Internal Medicine, titled “Health Care as a Market Good? Appendicitis as a Case Study.” The authors studied costs for treatment of acute appendicitis, looking at data in California hospitals. One might assume a fairly small range of cost for this, given that the treatment options are not wide. They found that costs varied from $1,500 to $183,000; the patient who cost $183,000 admittedly had cancer, but received no treatment for cancer for the stay in question. Dr. Renee Hsia, the lead researcher, told The New York Times, “There’s no rhyme or reason for how patients are charged or how hospitals come up with charges. There’s no other industry where you get charged 100 times the same amount, or 121 times, for the same product.”
Indeed.
Of course, when patients have insurance and go in-network, they usually don’t get exposed to most of the impact of this variation, although increased cost-sharing even for in-network services still makes this an issue. For uninsured patients, or patients who go out-of-network, it can be much worse. The Minnesota Department of Health recently alleged consumer protection abuses of a company – Accretive Health -- hired by hospitals to ensure patient bill collection. According to the report, the company used “boiler-room-style sales atmospheres'' at Fairview's seven hospitals using collection quotas, cash inducements and in-house competitions to squeeze cash from patients before they were treated.” The practices addressed deductible, coinsurance or other patient responsibilities, either from the current services (yet to be rendered) or from prior unpaid bills. I wonder if they at least were specific about how much the patients would owe. I also wonder if they add treatment for the high blood pressure or twisted arms caused by the strong-arming to the list of services.
Not surprisingly, this problem isn’t limited to Minnesota or to Accretive Health. For example, the Charlotte Observer and the News and Observer of Raleigh investigated how area hospitals were suing patients to collect debts. The newspapers found North Carolina hospitals filed such suits over 40,000 times for the five years ending in 2010. The majority of lawsuits came from two systems, both of which are non-profit. The investigation notes that some of the hospitals in question made sizeable earnings over the same period, despite their non-profit status, and found numerous instances where the hospitals did a poor job of determining if the patients qualified for programs that would assist with their bills. It’s tough to get sick, especially when your health care provider slaps a lien on your house for charges that you had no way of predicting in advance.
Then there is what has happened with Fair Health. This is the database that was set up to settle New York’s 2009 dispute with Ingenix about how that company established “usual and customary” charges, as used by many health insurers around the country to set payment limits on out-of-network services. It seems that many insurers have decided to adopt a different methodology to calculate out-of-network liabilities, based on a percentage above the Medicare payment levels. New York regulators believe that many New Yorkers are ending up owing more under the new methodology, even though insurers pay anywhere from 140 to 285 percent of Medicare rates. It’s not entirely surprising that insurers have adopted the new approach, given that Fair Health wasn’t actually up and running until last year and the Medicare rates are much more predictable than the approach based on “usual and customary.” I suppose it is possible that Medicare payment levels truly are that low, or that some providers truly deserve payment levels several multiples over what Medicare would pay, but both seem doubtful. One would think that, say, 200 percent of Medicare payment rates would be sufficient as a payment level, but maybe the patient is getting an appendectomy in California.
It boils down to some usual culprits:
Perhaps they should make a health care version of The Price Is Right after all. It might be amusing to watch various participants in the health care system try to guess how much things cost. Then, again, it might just prove boring, because I doubt anyone would “win.”
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