quinnscommentary

Many employers have worked hard to control health care costs and despite the claims of Safeway have been largely unsuccessful.  In many cases part of that strategy is to offer several options to employees, often including high deductible health plans with or without a Health Savings Account. 

Those options are likely to go away under the health care reform legislation. As currently planned in the House version of reform, employers would not be permitted to offer a plan, even as an option, that does not meet the minimum requirements of the government standard.  It appears (although not certain) that the comparison will be on an equivalent actuarial basis, but it may be on a specific plan provision basis.  So, let’s say your company offers an HMO, a POS and a high deductible plan.  Unless there is a significant employer contribution to an HSA if one accompanies that option, it is unlikely an option with a high deductible will be permitted.  In other words, any health plan offered by an employer must equal or exceed in value the final version of a government essential benefits plan. 

Some employees select a lower value option to save premium dollars, others because they have also has coverage through a spouse’s employer plan, but this could all go away.  Clearly if this provision in the House version of legislation prevails some people will not be able to keep their current coverage even if they like it and it meets their needs. 

On another topic some employers are concerned that health reform will negatively impact ERISA pre-emption.  This comes from a provision that states the ERISA pre-emption is waived if a state enacts a single payer system.  However, in recent discussions with legislative aides drafting this legislation I was assured that there is no intent to tamper with ERISA pre-emption and it appeared the importance of pre-emption was understood?  In addition, there is a reasonable possibility that the current language related to single payer state plans will be eliminated.

While the time frame is still relatively short, we are still a long way from a final version of health care reform.  It appears now that the Senate Finance Committee is the key to getting the most reasonable version for employers.  At this point staffers are waiting to see what the Finance Committee releases.

Ok, so we all know there is a great deal that could be improved starting with our own behavior at times, but there is also something fundamentally wrong with incentives to provide more and more services and to bill in such a way as to maximize reimburement.  Perhaps you have read about the famous Ear Infection on these pages. Following is the text of a memo I am leaving with members of Congress when I meet with them.  Perhaps you will see an idea for providing your own input to the people who would reform our system.  The Explanations of Benefits are not attached. 

_________________________________________________________

Attached are the actual Explanation of Benefits forms from an ear infection episode for an adult woman.  The result was the placement of a drain in the ear similar to what is done with many small children. 

The total charges for this episode were $18,120, including the charges of $13,110 for a ten-minute procedure in an outpatient surgical center. 

Write down CPT 233, 455,320,123,333

This is a good example of what if fundamentally wrong with our health care delivery and reimbursement system.  The costs are too high and the payment system is skewed toward providing more and more services. 

Note that on many occasions of a single office visit there is billing for several separate procedures, on February 27 four procedures for a total of $695 and on April 30 six procedures for a total of $2,005.  Remember, regardless what the EOB says regarding the “type of services” all these services were for an ear infection in one ear.  

According to the surgeon, the placement of the drain took a total of ten minutes, yet the charge for use of the surgical center was over $13,000.  From the time my wife walked into the center for the procedure to the time we left was no more than 90 minutes. 

Interestingly a group of fifty doctors, including the specialist who inserted the drain, owns the surgical center. 

Also, note the difference between billed charges allowed, and accepted charges.  Why should some people pay more and other less for the same procedure?  If a given charge is acceptable for people with coverage why not for all patients? 

This is a large self-insured employer group; the “carrier” does not function as an insurer, but rather a third party claims administrator. 

The fundamental questions are:

Why is one office visit divided into numerous costly procedures? 

Why are physicians allowed to refer to facilities they own? 

Why does it cost over $13,000 to use an outpatient center for 90 minutes? 

Why is a follow up visit following the procedure not included in the fee for the surgical procedure?

Blast that Limbaugh anyway!

The public option under health reform may be in trouble.  An article on Politico says that party leaders are preparing the liberal democrats for compromise on a public option so that there is something completed this year on health care.

I am not a regular listener, but I do occasionally tune in Rush Limbaugh and Sean Hannity, sometimes to my great regret.  I admit to being on the conservative side, but I hope I am also reasonable and have a slight idea of what I am talking about when I write or speak.

When it comes to health care reform, these people are bizarre, firing up their audiences with misleading information, and more importantly presenting no viable alternative to address health care issues other than this country is about liberty.  Recently a small business owner called Limbaugh and said he was told that he would be required to pay 100% of the cost of health insurance for his workers under the proposed legislation.  Limbaugh told him that was correct; it is not.  He then said he heard that if he did not provide coverage he would be taxed at 8% of his payroll, Limbaugh told him that was the minimum; it is not, it is the maximum under the proposal, the minimum is 2%.  Limbaugh told him he could just push his employees into the public option and not provide coverage, which is not correct either. 

Of course we all know about the flap over end of life counseling. The next thing we know the AARP will be complaining that Medicare does not cover such a service.  I heard a woman at a town hall meeting say that the government was going into individual bank accounts under the new health care.  What she was likely talking about was the language dealing with claim payments being automated to providers.

This legislation says I am required to wear only briefs as a health precaution

It is not hard to understand how misinformation gets out there especially when nobody knows at this point, what any final bill will look like.

For those of us who have some knowledge of what is going on, there is enough to worry about regardless of your position on reform; we do not need anyone stimulating the exchange of false information to boost their ratings.

I doubt many people have read every page of HR 3200 the House version of health care reform and considering there is nothing comparable from the Senate yet, it is hard to believe there are many informed people.  I have talked with many congressional aides working on this legislation and even they give conflicting interpretations of the same language.  And isn’t that one of the points of this debate, can we afford to enact such a massive and complicated piece of legislation without full understanding what what is happening both in 2010, but also the impact in 2025. 

Social Security was never intended to be as it is today.  Successive Congresses have changed it repeatedly until we now have to figure out how to change it again so that it can be a viable program for future generations.  The same can be said for Medicare. That is one of the dangers of too much federal involvement in health care. 

The politicians do not help the debate either with their message that essentially nothing will change, we will control costs and health care will be affordable with coverage for all Americans.  You see, you cannot do all that; it is not possible.  Some things will change, costs will rise sharply at first and continue to rise with health care inflation, and “affordable” is in the eye of the beholder. Does affordability mean affordable premiums, affordable out of pocket costs; affordable increases in future premiums, etc.?  Some people believe what we are about to enact means affordable in all these things, but that too is impossible.

To give some insight on why we seem to be talking around ourselves, here is what an excerpt from the summary of HR 3200 prepared by the House of Representatives says (I added the bold highlights):

“Government is responsible for ensuring affordability of insurance through new affordability credits, insurance market and delivery system reforms and oversight of insurance companies…” 

“Improves low-income subsidy programs to ensure Medicare is truly affordable and accessible for those with lower incomes;”

From the legislative perspective, “affordability” means that someone else is going to subsidize the cost of the health insurance coverage; it does not mean that the underlying claim costs will be affordable.  That is the major flaw in this entire reform process.  When you hear the President talk about paying for the reform, he and others are talking about paying the increased costs to be incurred by the government for all types of subsidies and for certain types of research.  What you are not hearing is that costs for people who already have health insurance and for employers who provide group coverage are going to increase for at least the next ten years, likely more. There is nothing that will happen to influence the rate of health care inflation, which means that to sustain “affordability,” government costs will go up significantly above general inflation as well.

The debate is not over, but we are coming close to enacting massive legislation that will change this country significantly.  Let’s hope we do so based on realistic and achievable goals and focused on the real problems and not the concerns of special interests on either side.  That is not the case now.

On August 19th I am in Washington DC to meet with a number of legislative aides for members of Congress who are working on health care reform.

What would you like me to tell them?

If you have been reading my posts here you have an idea where I stand, how about your views? What are your main concerns and expectations?

Post a comment or e-mail me. Rquinn63@comcast.net

If there is any doubt where federal intervention in the design of health benefits will lead, let me present a recent minor example.  The question is not whether the changes are necessarily good or bad, but rather that they add more costs to the already strained health care system.  The fact is we cannot continue to deal with health insurance in this way.  The temptation is great and the rationalization is easy, but there is no way to have “affordable” health care under these circumstances.  Here we are talking about one state, but multiply that by 50 and then consider what 535 members of Congress each with his or her own cause and constituent pressure to please will be able to do. 

On August 13^th New Jersey Gov. Jon Corzine signed legislation to make New Jersey the 14th state to require insurers to cover treatments for autism and other developmental disabilities. The law requires health insurance companies to cover the cost of autism treatment deemed medically necessary, including speech and occupational therapy, with an annual cap of $36,000. It also mandates coverage for behavioral therapy, which includes exercises to help autistic children do everyday activities like making a sandwich. 

Under the legislation, A-2238/S-1561, insurance companies will be required to provide  early intervention for all patients with autism, and with other developmental disabilities, who are under 21 years of age. 

Now we are set up for more “medically necessary” debates, but what is most interesting is that the legislation is not limited to children with autism.  Providing speech and occupational therapy for developmental needs has long been a bone of contention.  Some children simply do not develop as quickly as others and have more trouble with speech development than others (which is why in NJ local school boards must provide this treatment once a child reaches age 3).  This legislation, like so many others sets us up for more disputes and more potential abuse regarding medically necessary definitions.  What parent will not want speech and occupational therapy for a child who is behind his or her peers?  What physician will not help build the case for medically necessary?

Gov. Jon Corzine also signed legislation to improve a woman’s access to health insurance coverage for maternity services by ensuring timely reimbursement to health providers. The bill, A-2539 /S-1125, requires health care insurance carriers to reimburse physicians in instalment payments for maternity services provided over the term of a woman’s pregnancy, rather than after the birth of the child. Covered payments will occur on an on-going basis and include office visits, other pre-natal care, as well as the delivery of a baby.

“The stability of our healthcare systems is of utmost concerns to all Americans,” Corzine said at a bill-signing ceremony at the Newark Community Health Center. “This bill that I am signing represents our continued attention toward the delivery of quality health cares services, equally focusing on the patient, and those that provide these vital services.”

“This bill is a strong step forward, and will enhance a woman’s right to choose the best doctors and medical professionals offering prenatal care in New Jersey,” said Sen. Nia H. Gil (D-Essex). “Under the previous reimbursement rules, maternity care specialists would have to provide months and thousands of dollars worth of care to their patients before seeing one penny of reimbursement from the patient’s insurance provider. By switching to instalment payments, we can make sure medical professionals receive payment for services rendered, and expecting moms get the best care they can in the Garden State.”

“Asking medical professionals to go for almost a year without getting paid borders on the absurd,” said Assemblywoman Caridad Rodriguez (D-Hudson). “Allowing them to be paid on an ongoing basis is a much more equitable and fair way to handle maternity services coverage.”

For at least 50 years physicians have been reimbursed at the end of a pregnancy, just as they are at the end of heart surgery.  One could argue that periodic payments are fair, but one could also argue that they will lead to unbundling services and increased cost and they will definitely increase administrative costs for insurers.  This is a cash flow issue plain and simple and has nothing to do with providing quality health care.

What is most interesting is how our politicians are able to ring our bell and equate the payment of a claim, essentially a financial transaction with access to the best doctors, best care and quality health care services. It is this mentality that we should be most concerned about going forward as the federal government becomes more and more involved in determining health care coverage. 

Americans are burdened by the mindset that there should be no limits when it comes to health care and that personal responsibility means only that their insurance should pay for anything and everything.  That’s okay as long as you apply the unlimited part of the equation to the cost as well.

If you plan to attend as town hall meeting, ask just one question, how will any aspects of the proposed legislation lower costs for all participants in the system and manage the rate of increase in the future?

Paying for health care reform, that is, mostly paying to subsidize the uninsured is necessary for any legislation to pass.  I will not dwell on the probability of the CBO or any other government agency correctly estimating what the true cost will be within the next ten years or the fact that the problem with expanding coverage before finding a real way to manage health care and its cost comes after the first ten years.  After all, I am sure that you know the track record of the federal government estimating the cost of anything be it Social Security, Medicare or a new jet for Ms Pelosi. 

Nevertheless, there are several ideas floating around to raise this needed money, ok I will say it “tax” several ideas to raise taxes.  One of them comes from the Senate Finance Committee and that is to tax so-called Cadillac benefit programs. These rich programs cost too much to receive the full subsidy of a tax-free benefit, so the employer or insurance company will be taxed for providing generous benefits. No doubt many of you are blessed with such employer generosity and equally certain is the fact that your company intentionally provides these generous benefits merely because they are tax free – especially for retirees.  Of course, in no case do unions have any part in this. Yeah, I am being a smart a – -, but we are dealing with politicians after all, so what can you do? 

The final version of all this is not decided, at least when I talked with someone working for the Committee this morning.  What we are told is that the threshold would be set at an annual cost of $25,000 for a family. What is not clear is whether the $25,000 or whatever number it becomes includes only health benefits or health, dental, vision and the amount placed in the FSA.  That of course raises another question, are we talking about a unique calculation for each employee or each group of employees in each option offered by the employer, who knows? 

This afternoon I received an e-mail from the U.S. Chamber of Commerce that said the latest they were hearing from the Senate Finance Committee is that their proposed tax on insurance companies and self-insured employers will raise about $190 billion. The tax would be 35%, on individual plans worth more than $8,350 and family plans worth more than $21,160. 

But here is the interesting point, whatever the number finally is (assuming it survives to the final legislation), it does not begin to be indexed until 2013 so if the number is fixed in 2010 we have three years to catch up and help fund health care reform.  Of course, at this point only a small fraction of employers offer such a plan and in true horror story fashion we are told that executives at a New York investment firm have benefits worth $40,000 a year.  However, not to worry, if we are reforming health care and making it “affordable”, why should we worry that over the next three years the cost of health care will rise any faster than general inflation (he said sarcastically). 

Take two and see me in 2013

Here is the first irony, the largest segment of employers that will likely be affected by this tax should it become law are public employers, like states and municipalities because they offer very generous benefit programs.  So now, the citizens of these jurisdictions get to pay for the generous benefits and the tax on the generous benefits as well.  Who said there was no cost-shifting going on? 

But wait, we all know that the design of the benefit program is not the only factor in determining costs, the age of the covered population, the morbidity of the workforce, the geographic area and more all play a part in the ultimate cost.   Get ready for this argument. 

And the second irony is that to avoid this tax, employers will naturally lower the value of the benefits package thereby raising deductibles, co-payment and thereby make health care less affordable for the plan participants.  You have to love this stuff.  Wouldn’t it be great if the final minimum benefits package required under the law had a value of $25,001?

There is an interesting discussion going on under the comments section of the post related to the cost of an ear infection   You might want to take a look and join in.