Tuesday, April 24, 2012

A Master Bait And Switch

To no one's surprise, health insurance companies will rape us for every last cent:

The agreement required the companies to finance an objective database of doctors’ fees that patients and insurers nationally could rely on. Gov. Andrew M. Cuomo, then the attorney general, said it would increase reimbursements by as much as 28 percent.

It has not turned out that way. Though the settlement required the companies to underwrite the new database with $95 million, it did not obligate them to use it. So by the time the database was finally up and running last year, the same companies, across the country, were rapidly shifting to another calculation method, based on Medicare rates, that usually reduces reimbursement substantially. 

“It’s deplorable,” said Chad Glaser, a sales manager for a seafood company near Buffalo, who learned that he was facing hundreds of dollars more in out-of-pocket costs for his son’s checkups with a specialist who had performed a lifesaving liver transplant. “I could get balance-billed hundreds of thousands of dollars, and I have no protection.”

So what started out with good intentions on the part of Governor Andrew Cuomo (D-bag, NY) ends up actually injuring or worse those it was intended to help.

As the opening graf of that clipped quote implies, prior to this settlement insurers were using several arbitrary means of determining who got paid and what. It is certainly fair to say that the primary concern those HMOs and other companies had was their bottom line under the guise of controlling costs, whatever that means.

The idea behind an objective database was that doctors and hospitals nationwide could refer to the database to determine what they might expect as a reimbursement. No surprises. Under the old database, called "Ingenix" and owned by insurance giant United Healthcare, rates were tallied and supposedly adjusted by the term of art "usual and customary rates," (UCR) to reflect regional differences in costs of living and doing business.

In other words, rents in rural Kansas being lower than in midtown Manhattan, Manhattan doctors would receive a higher reimbursement to help keep their practices going.

You can sort of see where this morphs: indeed, even 25 years ago, I was battling my HMO to increase the settlement paid to an orthopedic surgeon based in New York who was paid a ridiculously low fee for surgery he performed on me. I can't imagine it has gotten any better. The insurer would undercut the UCR, and hope no one would notice. Indeed, cottage industries sprung up to appeal insurance decisions on UCRs alone.

Eventually, the insurer would pay out and everyone went about their business. The establishment in 2009 of the FAIR Health database was supposed to cut out the nonsense: One fee, adjusted by a percentage to recognize the UCR (60% to 80% of the UCR fee-- previously, it was 80% of the UCR but the UCR could fluctuate.) The patient is then responsible for payments above and beyond that reimbursement.

$95 million to estalbish this database, and then the insurance companies pull a fast one: they switch to Medicare rate-based reimbursements, using the base Medicare reimbursement and upgrading it by 140% to 250%, which would be fine if the Medicare reimbursement wasn't so damned low in the first place:

[A]t 150 percent of Medicare rates, it fell far short. In the case of a $275 liver checkup, for example, the balance due was $175, almost three times the patient share under FAIR Health’s customary rate, and three and a half times what it was five years ago under Ingenix.

I've known loan sharks who were more generous.