Posts Tagged ‘Aetna’

CMS Issues Rules for Health Insurance Co-ops

Monday, August 1st, 2011

The Center for Medicare and Medicaid Services (CMS) has issued rules impacting the creation of co-ops, or private not-for-profit insurers created by Patient Protection and Affordable Care Act.  The co-ops will receive funding via $3.8 billion in government loans.  They will be run by consumers and will qualify for start-up loans if they have a high probability of becoming financially viable.  CMS will determine viability based on evaluations of their legal, operational and business plans, according to Richard Popper, director of the Office of Insurance Programs at the CMS.  Additionally, CMS will offer “solvency” loans to provide insurers with the legally and financially required reserves.  The co-ops are intended as non-commercial alternatives for insurance consumers joining the health insurance exchanges that will begin in 2014.  The rules will require that any co-ops’ profits to go to reducing their customers’ costs or improving their care.  “That’s what really makes these plans different and why Congress chose to include these in the Affordable Care Act,” Popper said.

Anyone who is confused about the status of their state’s insurance exchange can take advantage of two excellent resources for clarification.  One is a primer put out by the non-profit Kaiser Family Foundation which answers many basic questions about the online exchanges, where millions of individuals and small businesses will price and compare insurance plans starting in 2014, in clear-cut terms.  Additionally, the Commonwealth Fund provides its own explanation of how the insurance exchanges will work.

“Co-ops will provide consumers with a wider range of choices, greater plan accountability and help ensure a more competitive insurance market,” said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight.  This “announcement shows how the Affordable Care Act is bringing new choices and giving consumers a voice in insurance markets throughout the nation.”

The co-ops are structured to increase competition in the insurance market and provide additional options for people and small businesses looking for affordable health insurance.  Their organization is similar to that of credit unions: profits are used to benefit members of the co-op, which can include reducing premiums, improving health benefits, improving the quality of care, expanding enrollment or taking other actions to contribute to stabilizing coverage.

“The co-op program also seeks to promote improved models of care. Existing health insurance cooperatives and other business cooperatives provide possible models for the successful development of Co-ops around the country,” noted the proposed rule.  “One major barrier to continued development of this model has been the difficulty of obtaining adequate capitalization for start- up costs and state reserve requirements.  The Co-op program is designed to help overcome this major barrier to new issuer formation by providing funding for these critical activities.”

Writing on Kaiser Health News, Christopher Weaver says that “The rules would steer a total of $3.8 billion in low-interest loans to groups such as The Evergreen Project in Baltimore, seeking to launch the so-called Consumer Oriented and Operated Plans. The health department hopes at least one ‘co-op’ will launch in each state and anticipates funding a total of 57 around the country.  The strategy is that new health plans run by consumers – most board members would also have to be plan members — would find ways to improve care, rather than boost profits. The new plans, made possible by the seed money, would also compete with established insurers to drive prices down.  The Evergreen Project, named after the coffee shop where its founders held initial meetings, is among a small cadre of groups that are laying the groundwork to launch these nonprofit insurers to care for families and individuals who will be required to buy coverage under the health law — but may be hard pressed to afford it.”

Dr. Peter Beilenson, one of the founders, said The Evergreen Project has already raised $315,000 in foundation grants and completed a 16-month feasibility study.  The members are expecting a report from hired actuaries before applying for the loans to move forward.  The key factor: Could the co-op actually cost less than other insurers?  “We actually think we can bring it in” — meaning the plan’s premium prices — “under Aetna and Coventry,” Beilenson said.

Mike Leavitt,  a former Secretary of Health and Human Services and governor of Utah said that governors need to take the lead in creating health insurance exchanges or the federal government will dictate how the exchanges should be run.  “This is a profoundly important moment for states,” Leavitt said.  “States need to lead.  Too often, we have just deferred this to the federal government, and the federal government needs guidance (from the states) to do it.”  Iowa Governor Terry Branstad said Iowans are “confused and, I think, very upset with what’s going on” with healthcare reform implementation.  According to Branstad, consumers must take “ownership” of their health decisions and the costs.

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Healthcare Claims Errors Cost $17 Billion a Year

Monday, July 11th, 2011

A recent American Medical Association (AMA) survey has determined that claims-processing errors by healthcare insurance companies cost the nation $17 billion a year in pointless administrative costs.  The AMA’s study is based on a random sampling of approximately 2.4 million electronic claims submitted in February and March of this year to Aetna, Anthem Blue Cross Blue Shield, CIGNA, Health Care Service Corporation, Humana, the Regence Group, United Healthcare and Medicare.  The claims were filed for more than 400 physician groups in 80 medical specialties in 42 states.

The typical claims-processing error rate was 19.3 percent, a rise of two percent over 2010 and is expected to add $1.5 billion in administrative costs this year.  “A 20 percent error rate among health insurers represents an intolerable level of inefficiency that wastes an estimated $17 billion annually,” said AMA Board Member Barbara L. McAneny, M.D.  “Health insurers must put more effort into paying claims correctly the first time to save precious healthcare dollars and reduce unnecessary administrative tasks that take time and resources away from patient care.”  To promote a more efficient claims payment system, the AMA’s National Health Insurer Report Card provides a yearly check-up for the largest health insurers and benchmarks the systems they use to manage, process and pay claims.

America’s Health Insurance Plan’s (AHIP) spokesman Robert Zirkelbach said insurers and providers must share the responsibility for improving accurate and efficient claims payment.  “According to Zirkelbach, “Health plans are doing their part by collaborating with providers and investing in new technologies to improve the process for submitting claims electronically and receiving payments quickly.  At the same time, more work needs to be done to reduce the number of claims submitted to health plans that are duplicative, inaccurate or delayed.”

Medicare came out ahead of the commercial insurers, with a 96 percent accuracy rate.  The lowest rated firm was Anthem Blue Cross, at 61 percent.  Anthem’s parent company, WellPoint Inc., is expanding electronic claims processing operation to improve accuracy.

The National Health Insurer Report Card is the basis of the AMA’s Heal the Claims Process campaign. Launched in June 2008, the campaign’s goal is to encourage improvements in the industry’s billing process so physicians and patients are no longer at the mercy of a chaotic payment system.  “In spite of notable improvements by insurers in the four years since the AMA introduced the National Health Insurer Report Card, precious healthcare resources are wasted because each insurer uses different rules for processing and paying medical claims, Dr. McAneny said.  “This variability adds no value to the healthcare system and only increases unnecessary administrative costs.”

To help physicians enhance their management of each insurer’s claims-submission requirements, the AMA’s Practice Management Center offers user-friendly online resources for preparing claims, following their progress and appealing them when necessary.  The Practice Management Center’s educational materials and practical tools are available online at www.ama-assn.org/go/pmc.

Another of the report’s findings is that physicians were not reimbursed by healthcare insurance companies on almost 23 percent of submitted claims.  The reason usually provided for non-payment are deductible requirements that shift payment responsibility to the patient until a dollar limit is met.

According to AHIP president Karen Ignani,“Administrative simplification that benefits consumers and the physicians who serve them is a top priority for our community.  Recent data from PricewaterhouseCoopers indicate administrative costs have been stable for four decades.  As a result of the move to electronic processing, the cost for each claim has actually declined, enabling insurers to provide value added services to consumers, such as disease management programs, without contributing to rising healthcare costs.  AHIP data indicate that virtually all ‘clean’ claims are processed within 30 days.

“AHIP members have worked collaboratively with physicians to make improvements in processes to promote efficiency and move to real-time payment.  In order for claims to be processed as efficiency and promptly as possible, both insurers and physicians need to strive for accuracy and timeliness.  For example, data show there is often a significant lag time between when services are provided and physician claims are submitted.  Data also indicate that there are a significant number of incomplete and duplicate claims filed.  Reports released last week decried ‘no questions asked’ reimbursement in Medicare and emphasized the need to scrutinize claims to prevent fraud.  In addition, research shows more than $200 billion is spent annually on services that are not in sync with the rigors of medical science, the result of wide variations in practice, overuse, underuse, and misuse of services.  Our view is that discussions of efficiency are important, but that they should be broad discussions of opportunities for improvement by all the responsible stakeholders.”

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600,000 Young Adults Already Taking Advantage of Healthcare Reform Law Provision

Tuesday, June 14th, 2011

More than 600,000 young American adults are taking advantage of the healthcare law provision that allows people under 26 to remain on their parents’ health plans, a pace that appears to be faster than the government expected.

WellPoint, which insures 34 million Americans, said the dependent provision was the reason why 280,000 new members were enrolled.  That was approximately one-third of its total enrollment growth in the first three months of the year.  Other large insurers have added thousands of young adults.  Aetna added approximately 100,000; Kaiser Permanente, about 90,000; Highmark Inc., about 72,000; and Health Care Service Corporation, about 82,000.  The Department of Health and Human Services (HHS) believes that about 1.2 million young adults will sign up for coverage in 2011.

“The (college) coverage will probably end in August, but students should check the date,” said Aaron Smith, co-founder and executive director of the Young Invincibles,  a Washington-based non-profit healthcare advocacy group for young adults.  “It’s an important piece of information.  They could have a gap in coverage.”  The group has created guidelines to help new grads understand their health insurance options.  Thanks to the ACA, young adults can remain on their parents’ health insurance until their 26th birthday, even if they’re in school, financially independent and even if they’re married.  The sole exception is if they have health coverage through their own employer.  In those situations — even if the policy is bad — they can’t remain on their parents’ plan.  Young adults have one of the lowest coverage rates, estimated at as much as 30 percent.  The healthcare reform overhaul has helped make a dent in that figure.

Adding young adult coverage increases the average family premium by approximately one percent, according to federal estimates.  Unfortunately, graduating students who are currently uninsured don’t get a special enrollment opportunity under the law, says Smith, and must wait until the next annual enrollment period to sign on with their parents’ plan.

Not surprisingly, some employers are concerned about having to pay for additional coverage for their employees’ offspring.  Helen Darling, CEO of the National Business Group on Health, which represents more than 300 large employers, said employers generally don’t like adding anything to their health costs.  “I don’t think anyone is eager to spend more money,” Darling said.  “This is not something employers would have done on their own.”

According to insurers, the growth in young-adult enrollment comes as the industry began reporting 1st quarter earnings shows better than expected profits.  Carl McDonald, a Citigroup analyst, said that the higher profits aren’t related to the new enrollees but rather because most of the increase in young people’s enrollment has occurred among self-insured employers; in those firms, insurers act as administrators and assume no financial risk.  McDonald said the majority of insurers’ profit increases is due to their customers using fewer health services, particularly hospital care.

“We are pleased to see the embrace of this key provision of the Affordable Care Act,” said Jessica Santillo, a spokeswoman for HHS.  “Young adults are more than twice as likely to be uninsured than older adults, making it harder to get the health care they need, and putting them at risk of going into debt from high medical bills.”

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House Panel Finds Many Individual Healthcare Policies Do Not Cover Pregnancy

Wednesday, December 1st, 2010

A recent investigation by the House of Representatives’ Committee on Energy and Commerce has found that many individual health insurance policies do not cover maternity care. The news is no surprise for women who are covered by these policies and experienced a rude awakening when they became pregnant. The four largest for-profit health insurers – Aetna, Humana, UnitedHealth Group and WellPoint – don’t cover normal deliveries for their members who have individual policies. The committee’s report confirms a 2009 report by the National Women’s Law Center (NWLC) that scrutinized 3,600 individual policies and determined that just 13 percent provide maternity coverage. For women with these policies, it gets even worse should they become pregnant. At that point, if they apply for coverage in the individual market, insurers typically determine that pregnancy is a pre-existing medical condition and deny coverage on that basis. Maternity riders are offered on some policies, but they are extremely expensive, provide very limited coverage and might take as long as a year to become effective, according to the NWLC. The average cost of maternity care – nine months of prenatal care, three months of post-partum care and a delivery without complications – averaged $10,652 in 2007, a March of Dimes study reported. The Pregnancy Discrimination Act of 1978 exempts companies with less than 15 employees and individual policies from providing maternity coverage, although some states maintain stricter requirements. This year, 12 states mandate maternity coverage in the individual insurance market and 17 in the small-group market, according to statehealthfacts.org, a project of the Kaiser Family Foundation. Thanks to the Patient Protection and Affordable Care Act, this coverage gap will cease to exist in 2014.

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Some Healthcare Insurers Refuse to Sell Child-Only Policies

Monday, October 4th, 2010

Insurers who refuse to sell child-only policies are creating a political firestorm. Some of the nation’s largest insurers are in open rebellion against a provision contained in the new healthcare reform law that is already in effect.  The shot across the White House’s bow is a decision by several insurers to stop selling child-only policies instead of complying with the law that blocks them from turning away kids with pre-existing conditions.  Anthem Blue Cross, Aetna, Inc., and others are refusing to sell the policies in states such as California, Illinois, Florida and Connecticut – even though the law requires that insurers cover children under 19 even if they have a history of illness.  Approximately 500,000 children nationally are impacted by this action.

The insurers claim that the new requirement will result in unforeseen costs related to covering eligible children.  The scenario they envision is that parents might buy policies for their children only after they get sick, creating a surplus of kids who suddenly need insurance coverage.  The decision by some of the big insurers to abandon this niche marketplace means that just a few firms will be forced to share what could be an enormous financial burden.  The good news is that relatively few child-only policies are sold.

The Obama administration immediately denounced the action.  White House Press Secretary Robert Gibbs told reporters “It’s obviously very unfortunate that insurance companies continue to make decisions on the backs of children and families that need their help.”

The stakes are especially high in California.  Legislation awaiting Governor Arnold Schwarzenegger’s approval would ban companies that refuse to sell child-only policies from selling insurance in the profitable individual market for five years.  Assemblyman Mike Feuer (D-Los Angeles), who wrote the bill, said “At a time when we are launching a national approach to ensure that all children have access to healthcare, Anthem’s actions represent a step backwards.  By threatening to drop child-only policies in California, the company jeopardizes the health of families and children.  I call on Anthem to reconsider its plan.”

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Healthcare: Saving Lives or Prolonging Suffering?

Thursday, August 12th, 2010

There is a cacophony of voices in the media talking about healthcare reform, but it’s more heat than light.  That why Atul Gawande’s most recent article in The New Yorker is so important. Boston-based Brigham and Women’s Hospital general and endocrine surgeon Gawande examines how the trend to prolonging life is one of the reasons behind soaring healthcare costs.Is healthcare saving lives or prolonging suffering? Everyone needs to read this.

According to Dr. Gawande in Letting Go, “Twenty-five percent of all Medicare spending is for the five percent of patients who are in the final year of life, and most of that money goes for care in their last couple of months which is of little apparent benefit.  Medical spending for a breast-cancer survivor, for example, averaged an estimated $54,000 in 2003, the vast majority of it for the initial diagnostic testing, surgery, and, where necessary, radiation and chemotherapy.  For a patient with a fatal version of the disease, though, the cost curve is U-shaped, rising again toward the end – to an average of $63,000 during the last six months of life with incurable breast cancer.

The big question Gawande poses is thus:  What are we getting in return?  “Patients who were put on a mechanical ventilator,” Dr. Gawande continues, “given electrical defibrillation or chest compressions, or admitted, near death, to intensive care, had a substantially worse quality of life in their last week than those who received no such interventions.  And, six months after their death, their caregivers were three times as likely to suffer major depression.”

Dr. Gawande notes that in one study, “Researchers followed 4,493 Medicare patients with either terminal cancer or congestive heart failure.  Surprisingly, they found no difference in survival time between hospice and non-hospice patients with breast cancer, prostate cancer, and colon cancer.  Curiously, hospice care seemed to extend survival for some patients; those with pancreatic cancer gained an average of three weeks, those with lung cancer gained six weeks, and those with congestive heart failure gained three months.  The lesson seems almost Zen:  you live longer only when you stop trying to live longer.”

In one case Dr. Gawande describes, “Aetna decided to let a group of policy-holders with a life expectancy of less than one year receive hospice services without forgoing other treatments.  A patient like Sara Monopoli (who was diagnosed with terminal lung cancer at the age of 34) could continue to try chemotherapy and radiation, and go to the hospital when she wished – but also have a hospice team at home focusing on what she needed for the best possible life now and for that morning when she might wake up unable to breathe.  A two-year study of this ‘concurrent care’ program found that enrolled patients were more likely to use hospice:  the figure leaped from 26 percent to 70 percent.  That was no surprise, since they weren’t forced to give up anything.  The surprising result was that they did give up things.  They visited the emergency room almost half as often as the control patients did.  Their use of hospitals and I.C.U.s dropped by more than two-thirds.  Overall costs fell by almost a quarter.”

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