In the ongoing health care debate, it’s difficult to sort out fact from fiction. A lot of fear mongering and truth twisting in recent weeks have resulted in information distortion.
Has that changed Americans’ core belief that health reform is necessary? I don’t think so. We may disagree on details, but we hold on tenaciously to this premise: Health care coverage is vital and reform is necessary because without it everyone is at risk of physical and financial ruin.
Fact: Most working Americans who have health insurance from their employers are one job loss away from losing coverage after exhausting COBRA benefits. Those with pre-existing conditions have a better chance of finding a miraculous cure than of getting an affordable health care policy on the private market.
Fact: Many small businesses, considered the main growth engine of this country’s economy, cannot afford to insure their employees. Of the 46 million uninsured Americans out there, nearly 26 million are small-business owners, their employees or their dependents, according to a recent study by the National Federation of Independent Business.
Fact: Health costs have risen at a rate much higher than inflation. In 2010 costs are projected to rise more than 10 percent, according to two independent surveys, one by The Segal Co. and another by Aon Consulting. More than 70 percent of employers are at least thinking about passing these costs along to workers in the form of higher premiums, deductibles, coinsurance or copays, according to a survey by the International Foundation of Employee Benefit Plans.
Few people say the health care situation is just fine the way it is.
The current health reform proposals on the table would require nearly all Americans to have health insurance, and they stipulate that premium costs cannot be based on how sick or well we are. But a lot of details about the plan — such as how to subsidize the poor, who will ultimately pay for it and how the health plan will be structured — are still up in the air.
Greasing the wheels
Money is a central focus — health lobbying has kicked into high gear. The Center for Responsive Politics reports that the health sector is the biggest spender so far this year at $263 million-plus. That’s money spent by pharmaceutical companies, hospitals, health professionals and service companies in an effort to make themselves heard in the din. In second place is the finance, insurance and real estate sector, which spent nearly $223 million so far this year. Health insurers are a big part of that group.
It must be difficult, if not impossible, to get a handle on what’s best for our citizenry with so much cacophony in the Capitol.
In his illuminating book “Supercapitalism,” Robert Reich explains that our democracy is compromised by lobbyists because they represent the interests of private corporations whose primary motive is to gain competitive advantage.
“Part of the task of lobbying is to provide evidence of the greater wisdom of your point of view, which often requires the work of economists, policy analysts and other data gatherers and number crunchers, as well as wordsmiths able to make almost any decision sound reasonable,” Reich writes. “The predominance of these corporate-financed experts in policymaking, in effect, leads the public to assume the only issues of any importance are those that bear on the welfare of consumers and investors, rather than on the well-being of society or the planet as a whole.”
We can hope and pray that our senators and representatives place the concerns of their constituents above this corporate largesse. Better yet, we can contact them and demand that they do.
What’s wrong with the way things are?
But change is not something to be feared. Those concerned about health reform should take a moment to assess how things work right now. Let’s look at the modus operandi of insurance companies and talk to someone who has spent the bulk of her 25-year career facilitating payments from health insurers to providers and patients. Kathryn Thompson works in Minnesota, which is “one of the very best states when it comes to providing coverage for almost all of its citizens and has some of the very best health care plans found anywhere in the U.S.,” she says.
During most of her career, Thompson, director of operations at Apple Valley Medical Center, in Apple Valley, Minn., worked in physician and facility reimbursement, revenue cycling and collections. Her job was to make sure that health care providers were being reimbursed at the proper rates and that patients’ questions about their health care bills were answered.
“When you work in the revenue cycle and reimbursement areas of a provider’s office, you learn about all of the little ways that insurance companies play games and don’t pay for their portion of a patient’s claim,” she says.
Her story: “I know personally of three HMO/PPO plans in Minnesota who have unspoken quotas of claims that ‘never get received.’ This is very prevalent with paper claims,” she says. “One plan actually made a point of stating to people in their payer department that 30 percent of the paper claims received will not be considered received. Instead, they went directly to the shredder until a new claim was received.
“Why? Because this HMO has a clause in its contracts that states that they must receive claims no later than 90 days from the date of service or the claim will be denied. Since many reimbursement offices don’t have the manpower to follow up on every claim filed within 90 days, the (HMO) knew that most of that 30 percent would likely get refiled after the 90 days.”
Result? The claim could then be rejected as past timely filing. Next, the provider has to appeal and prove the claim had been sent within the 90-day window. The appeals, meanwhile, pile up in some bin while the current claims get processed (or at least a portion of them). Thompson says the appeals are delayed for up to four months.
“By the way, this same HMO has in its contract that they have the right to take back claim money paid that they find to be erroneous for up to seven years. So providers must prove submission of claims within 90 days, but the HMO has seven years to take back money.”
Thompson says that health insurance companies call the shots about how claims get paid. They can pay at the rates they choose. They can use whatever form of explanation of benefits they want. And they suffer no penalties if they don’t pay claims in a timely manner, she says.
“There are absolutely no rules dictating what they must or must not pay or how they should or should not pay,” says Thompson. “Nor are there any regulations dictating the forms they use or how they explain away why they are denying something. In addition, they set their own discounts and even within the same insurance company, there can be 20 to 30 plans that pay at different rates. It’s not published as to what those nuances are.”
Insurance companies to be accountable
Heath reform at the federal level would help to establish guidelines specifying the types of coverage all health plans must offer. Today, only 14 states require insurance companies to provide a minimum standard of health care relative to their revenues, according to the U.S. Public Interest Research Group, or PIRG, Education Fund.
In its study “More Bang for the Health Care Buck,” U.S. PIRG calls for a federal mandate that health plans and insurers spend at least 85 percent of their revenues on health care. Currently health insurers have incentives in place to keep low what they call their “medical loss ratio.”
A medical loss ratio reflects dollars actually spent on medical care as a percentage of revenues. “From the insurers’ point of view, dollars spent on actual medical care are a ‘loss’ to the company. All other things being equal, consumers get the best value when this number is high,” the study says.
Some insurers, notably those that sell plans to individuals and small businesses, have very low medical loss ratios, sometimes spending only “60 percent of premium dollars on health care, devoting the rest to administration, marketing and profit,” according to the study. Profits, of course, can greatly increase an insurance company’s stock value, the study notes.
Profits are also a big reason health care costs go up every year. That goes for every industry in the health sector.
In all fairness, the U.S. PIRG study found that of the 53 health plans they surveyed, 47 percent of them already have medical loss ratios of 85 percent or higher, while 47 percent operate within a range of 75 to 85 percent. Six percent have medical loss ratios of less than 75 percent.
Nevertheless, the need for health reform is as urgent as emergency treatment for a neglected illness gone catastrophic. Change may seem worrisome, but the status quo is much scarier.