'Insurance' Archive
A front-page article in the Wall Street Journal yesterday highlights the common practice among US hospitals of requiring up-front payments from uninsured or under-insured patients before they’ll provide treatment.
The story describes the plight of Lisa Kelly, a Lousiana woman diagnosed with leukemia and referred to cancer hospital M.D. Anderson for care. Though insured under a limited-benefit plan sold by AARP and underwritten by UnitedHealth, she wasn’t able to get treatment at Anderson unless she agreed to pay big sums of money ($45,000, $60,000) beforehand.
The practice isn’t new, nor is it limited to M.D. Anderson. (For-profit operators HCA and Tenet follow the practice, as do not-for-profits and state-supported providers.) Hospitals have for years been plagued by bad debt, or the unpaid medical bills left by uninsured or underinsured patients. And they have found a number of ways to deal with the problem — policies that have led in part to a financial rebound in the industry. Among those new methods are better case-management practices that identify patients who can be enrolled in Medicaid. Requiring prepayment is another tactic, since it’s much harder to collect on bills after a patient has left the hospital or finished treatment.
Prepayment requirements are reserved for people who theoretically can pay, since care for indigent patients can be written off as charity care. And though Mrs. Kelly was insured, she had an insurance policy that wasn’t up to the kind of catastrophic costs she was facing.
Called a limited-benefit or mini-medical plan, her policy was likely good for covering doctors’ visits and minor costs, but probably had a relatively low annual cap and may have excluded certain services altogether. Such plans are popular for individuals not covered by their employers and businesses who employ lots of part-timers, but they’ve also become increasingly common offerings for the full-time employees of smaller businesses. Unfortunately, individuals purchasing the policies don’t always understand that they’re not good for handling major medical emergencies. And some peddlers of the products, including a Texas company called HealthMarkets, have come under fire for not adequately explaining the risks to their customers.
At any rate, Anderson wouldn’t accept Mrs. Kelly’s plan; as a de facto uninsured patient responsible for paying her own medical bills, she was forced to make payments up front. And though the practice may be common, the Journal article still manages to shock because of the personal story attached to it, which throws into stark relief the indignities such practices force on patients already under great strain from dealing with critical illness. (In one reported episode, for example, the hospital sent a bill collector into Kelly’s exam room to discuss payment before proceeding.)
Like almost everything related to the American health care system, this one’s a thorny issue. Hospitals provide services and, of course, ought to be compensated. But surely, surely we can do better than this.
Bizmology fans who read my post on pharmaceutical contamination of water supplies last month may recall the suggestion that health care facilities and individuals take unused prescriptions to collection centers to help prevent the buildup of chemicals in drinking water.
A recent Associated Press article outlines the rise of state programs that recycle prescriptions with two additional benefits in mind — redistributing the medications to those who can’t afford it and, in turn, battling skyrocketing medical costs. With the number of uninsured patients (and drug prices) steadily rising, the idea is worth examining. While the recycling programs require the extra effort of sorting and verifying drug types and checking for safety (as opposed to collection centers simply destroying the meds), ultimately I think the programs could have a significant impact.
According to the article, more than 30 states are running or exploring drug recycling programs. The goal is to provide prescriptions to those who wouldn’t be able to get them otherwise, thus improving their health and avoiding future ER visits or hospital stays. This is an especially timely issue as many hospitals are facing the financial burden of treating uninsured patients who can’t afford primary care. (Some hospitals are also trying to cut costs by recycling medical devices.)
While the results are small to date, facilitators are optimistic that the programs could have a larger impact on medical costs and patient health over the long term. This will likely not happen, however, unless there is an increase in publicity of the programs and an expansion of programs into additional areas.
I doubt many of us know where to find a local pharmaceutical recycling center or if our doctor’s office participates in such a program. Some state programs are only open to facility donations, but the programs could excel if they were convenient for everyone to participate. While drug makers like Pfizer and Merck probably wouldn’t jump for joy at missing out on the possible sales, it would be difficult to argue with the need for alternatives to high health care costs.
The Department of Justice approved UnitedHealth’s acquisition of Nevada insurer Sierra Health Tuesday, allowing the top
The closing of the deal is contingent on UnitedHealth divesting its individual Medicare Advantage plan policies in the Las Vegas area, where it and Sierra Health together control more than 90% of the Medicare alternative plan market. The assets will go to Humana with hopes that the provider will bolster competition. Whether the divestiture will be enough for parties that avidly protested the deal and ultimately delayed its closing is yet to be seen.
UnitedHealth has been on an acquisition rampage for most of this decade, and concerned parties have worried not only over unfair market shares but also over the possibility that Nevada health care customers would suffer as a result of the merger, much as customers in California have suffered from UnitedHealth’s $9 billion acquisition of PacifiCare two years ago.
UnitedHealth effectively swallowed PacifiCare’s operations and parceled them out to various other business units, but in the process created a mountain of administrative errors. The company is facing fines from California regulators over mishandled claims (its practices are being scrutinized in other markets as well), and many fear that the latest acquisition could result in a similar customer service downfall.
This is not the only acquisition on UnitedHealth’s buffet table — it recently scarfed down Fiserv’s health businesses, and it has a deal in the works to add Midwest provider Unison Health. It would seem that perhaps the company cannot get enough of growth and has little care for customer concerns over whether it can effectively manage such a large mass of combined policies.
UnitedHealth has admitted its blunder during the PacifiCare integration, and one would hope that the health care giant has learned its lesson and will proceed with care in its present and future business combinations. A statement on the Sierra Health web site outlines that while the acquisition is a done deal, its integration will be held off until UnitedHealth divests its Las Vegas ops. I’m betting that UnitedHealth won’t be able to keep its finger out of the Sierra Health pie for long though.
That imp Warren Buffett is at it again. America’s favorite financial guru (and the mastermind behind legendary Berkshire Hathaway) has offered a helping hand to that most mundane and arcane of sectors, the bond insurers. The companies no one hears about until something goes wrong — and things are going quite wrong. Admit it, you probably were only vaguely aware of the existence of the likes of Ambac, FGIC, and MBIA before they started waving earnings red flags and politicos started testifying to Congress about their travails. Yes, the subprime mortgage tsunami has crashed upon their shores, rending into junk billions of dollars worth of mortgage-related investments. At stake not only are the bond insurers’ sterling AAA credit ratings, but their chief executives’ jobs and the companies’ very existence.
So here comes Mr. Buffett astride his white steed to their rescue. Except he isn’t offering to assume the risk of all those festering mortgage bonds. Instead, he is proposing to reinsure some $800 billion of policies from Ambac, FGIC, and MBIA that guarantee the principal payments and interest on municipal bonds, which are much, much more stable investments. The bond insurers would still be saddled with their deteriorating mortgage investments, but would gain billions in liquidity. Cynics suggest that Buffett is trying to weaken the competition so he can corner the lucrative municipal bond insurance market. Indeed, in December a new Berkshire Hathaway unit received the regulatory green light to insure mortgage bonds in New York and is seeking similar licenses in other states. And reportedly, the man himself has even jokingly confessed that his supposed bailout of the bond insurers isn’t going to get him into heaven.
FGIC isn’t falling for it. The Wall Street Journal reported Friday that the company would rather cleave itself in two than be bamboozled by the Oracle of Omaha. Ambac has also rebuffed him, and MBIA says it’ll do just fine on its own, thank you. Trouble is, if the bond insurers can’t get their own houses in order, insurance regulators might step in and impose on them a deal similar to the one Buffett has proffered.
If you’ve been reading Bizmology for a while, you might remember a story about the efforts of Indiana health system Clarian Health Partners to reduce its health care costs by docking workers’ paychecks for unhealthy behaviors. If you don’t, here’s a refresher: In June of last year, the organization announced a wellness program designed to encourage its employees to stop smoking, get fit, and lower their cholesterol.
So far, nothing out of the ordinary in the employer-sponsored health care world. The twist with Clarian’s program was that it used sticks rather than carrots to ensure employee compliance. Where other companies might gently encourage participation, or offer incentives like reduced premiums or extra money in their health savings accounts, Clarian opted for the more, ahem, rigorous approach of fining its employees for being smokers, or struggling with weight, or having high cholesterol.
At the time, I posed several questions about the feasibility of such an approach:
… it remains to be seen how well it will work or what the legal ramifications will be. How will it affect nurse recruitment during a nurse shortage? Is it fair to the company’s lowest earners, who are hurt disproportionately by the fees? And will people unwilling to let the government control their personal choices allow their employer to do so?
Turns out the answer to that last question is a resounding NO. According to a story in the Chicago Tribune, Clarian was forced to scrap the program before it even started because of widespread resentment among its 13,000 workers. It has replaced it with a rewards-based system that offers monetary awards to employees who meet certain health standards.
In explaining the failure of the program, Clarian’s human resources exec Sheriee Ladd placed the blame squarely on the shoulders of the employees: “Some of them quite frankly didn’t get the essence of what we were trying to do,” the Tribune quotes her as saying. Gee, if only they had understood. Now see, to me, it seems like they understood exactly what was being done and just didn’t like it. But maybe that’s just me.
Not that it’s fair to pick on Ms. Ladd or Clarian too much. Clarian’s not the only company experimenting with such punitive programs (the Tribune article admits that the Tribune Company itself penalizes smokers). And Clarian did, at least, figure out pretty quickly that it had an unworkable plan on its hands.
More than anything, the Clarian episode is yet another indicator of a strained health care system that places too much burden on employers to pay for care. Experimentation like the Clarian program is inevitable in such a situation, where companies want to cover their workers but are struggling with the rising cost of doing so. I’m hoping a better solution comes along; and in the meantime, I’m glad at least one employer figured out that punishing people for their health problems isn’t the right way to go.