Insurers' IT innovations shift costs to patients
Probe Targets Health Insurers On Payments
By Vanessa Fuhrmans and Theo Francis
The Wall Street Journal
February 14, 2008
The New York attorney general said his office plans to sue UnitedHealth Group Inc. as part of a broader investigation into the way the health-insurance industry sets payment rates for hospitals and doctors outside of their networks.
The move takes aim at a common practice among health insurers that can result in higher medical-bill payments for many consumers. While insurers typically pay in-network hospitals and physicians a negotiated fee for medical claims, out-of-network providers are reimbursed “usual and customary” or “reasonable” charges. These charges are set according to what insurers have determined is the going rate for a given procedure or service in a specific area.
When the usual and customary payment is much lower than what the provider charged, patients are often billed for the difference. Doctors and hospitals have long complained that the methodology is opaque and sets reimbursement artificially low.
As part of the probe, Andrew Cuomo, the New York attorney general, issued subpoenas to 16 health insurers, including Aetna Inc., Cigna Corp. and Wellpoint Inc.’s Empire Blue Cross Blue Shield unit. UnitedHealth is at the center because it owns, through its unit Ingenix, the database that much of the rest of the industry uses to determine usual and customary charges.
Called the Prevailing Healthcare Charges System, the database contains price information from more than one billion medical claims collected from more than 100 health plans nationwide. Health insurers typically compare out-of-network claims against the database and automatically reduce the bill to a “reasonable” size before reimbursing the patient or doctor.
Linda Lacewell, who heads Mr. Cuomo’s health-care industry task force, characterized the Ingenix database as “garbage in, garbage out,” with insurers sometimes manipulating data and knocking out price information from doctors with higher charges.
“We believe there was an industrywide scheme perpetrated by some of the nation’s largest health insurance companies to defraud consumers,” Mr. Cuomo said at a news conference. He said he plans to sue UnitedHealth and Ingenix within five days. He added that the health insurer’s ownership of the billing-data provider was “a gross conflict of interest.”
“Real people get stuck with excessive bills and are less likely to seek the care they need,” Mr. Cuomo said.
http://online.wsj.com/article/SB120292255343965679.html.html
And…
Payment Integrity: Harnessing the power of technology to detect and deter fraudulent, erroneous and abusive claims
Ingenix
Executive Briefing
…Compounding the damage, health plans also spend millions of dollars annually on erroneous and abusive claims that do not reach the level of fraud.
Effectively utilizing advanced fraud management technology and services is the best option for striking back against those who abuse the system.
Critical Elements for Success
Claims editing software is a Web-enabled, rules-based application that allows health plans to edit professional and facility claims while responding to dynamically changing guidelines and regulations in the health care marketplace. Claims editing software is typically focused on editing professional claims.
Health care claims billing is a complex process that is highly codified. While codification promotes automation, the breadth of relationships between the many different types of billing codes adds complexity. Therefore, effective fraud and abuse management programs must address the complexity of the health care claims billing process in order to successfully reduce cost.
Health Plan Return on Investment
With an effective application of fraud and abuse detection technologies, an April 2005 Gartner report estimates that health care payers will see a return on investment of at least 5-to-1. Framed another way, research by Reden & Anders, an Ingenix company, indicates that an anti-fraud program that saves even 1 percent of medical expense can increase the profitability of a typical health plan by up to 16.7 percent.
http://www.ingenix.com/content/attachments/06-10221%20PI%20Exec%20Briefing.pdf
Comment:
By Don McCanne, MD
To better understand the out-of-network benefits of insurance products being offered, I looked up, as an example, an application form for UnitedHealthcare in California, specifically PacifiCare SignatureValue. It states, “To be considered for reimbursement, expenses must qualify as covered expenses. Expenses are also subject to usual and customary limits, unless you use a network…”
The plan brochure states, “Usual and Customary Charges (U&C) – means charges for medical services or supplies for which PacifiCare is legally liable and which do not exceed the average charged rate charged for the same or similar services or supplies in the geographic region where the services or supplies are received. Usual and Customary Charges are determined by referencing the 80th percentile of the most current survey published by Medical Data Research (MDR) for such services or supplies. The MDR survey is a product of Ingenix, Inc., formerly known as Medicode.”
Thus it appears that most of the time, the full fee for out-of-network providers should be authorized, yet hardly anyone has had that experience. This lawsuit will determine the extent to which the insurers have violated their contracts with the patients to provide full payment for usual and customary charges. Since out-of-network providers have no contracts with the insurers, the patients are responsible for the full amount denied by the insurers.
Most current proposals for reform call for an expansion of IT (information technology) services to help control health care costs. Ingenix is demonstrating just how the private insurance industry adapts IT innovations to our health care system. It is using IT to shift more costs to patients while “increasing the profitability of a typical health plan by up to 16.7 percent.”
Gad. The private insurance industry really is about profits, not patients. And all of the leading politicians want us to have more of this?