Health Insurers Behaving Badly
Denials of service, price gouging, profiteering on government programs. Organized crime? “No” say auditors, providers and plaintiffs, just commercial health insurers.
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The Big Story
Denials of service, price gouging, profiteering on government programs. Organized crime? “No” say auditors, providers and plaintiffs, just commercial health insurers.
HHS’ Inspector General finds fault (here) with Medicaid “managed care,” and with States that are not watching the store. “High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns About Access to Care in Medicaid Managed Care,” is the report title, also explored (here) in The New York Times (“Insurers Deny Medical Care for the Poor at High Rates”).
Says the Times, “Medicaid, the federal-state health insurance program for the poor that covers nearly 87 million people, contracts with companies to reimburse hospitals and doctors for treatment and to manage an individual’s medical care. About three-quarters of people enrolled in Medicaid receive health services through private companies, which are typically paid a fixed amount per patient rather than for each procedure or visit,” adding “The for-profit insurance companies, including Aetna, Elevance Health, Molina Healthcare and UnitedHealthcare, operated some Medicaid plans that denied medical care under requests for prior authorization of services by rates that were greater than 25 percent in 2019.”
CIGNA is sued (Complaint here) over algorithms allegedly used in a wholesale manner to deny claims. “This action arises from Cigna’s illegal scheme to systematically, wrongfully, and automatically deny its insureds the thorough, individualized physician review of claims guaranteed to them by California law and, ultimately, the payments for necessary medical procedures owed to them under Cigna’s health insurance policies.” The class action suit alleges that Cigna rejected more than 300,000 payment claims in two months last year, relying on a computer algorithm that rejected claims on medical grounds without ever opening patient files. Modern Healthcare reports (here) that the claim may be the first of many involving algorithmic denials of care or payment or both.
The Schaeffer Center at USC publishes (here) a paper on MA plans profiteering with risk adjustment, and oncologists complain in JAMA (here) about routine denial of approval for ordinary cancer drugs, through “prior authorization.”
No nut without a wrench: Hospital Pricing Specialists (here) offers a service to providers to fight back: “Recovering claims underpayments on zero balance claims should be a top priority among every revenue cycle department.”
DOCTORS, NURSES AND OTHER HEALTH PROFESSIONALS
Physician Turnover (Moving, Leaving) Increases
The annual physician turnover rate increased by 43 percent between 2010 and 2018, according to research by Casalino and colleagues published in the Annals of Internal Medicine. Becker’s Physician Leadership (here) reports that “Physician turnover was defined as physicians moving to a new practice or leaving the practice of medicine and experienced the greatest increase from 2010 to 2014 when it rose from 5.3 to 7.2 percent.”
The report also found that younger physicians were more likely to move to a new practice, with 5.6 percent of physicians between 35 and 44 years old moving in a given year. Meanwhile, only 2.6 percent of physicians 65 years old or older did the same. Physicians in rural areas were also more likely to move practices, with a 5.1 percent turnover rate compared to a 3.9 percent rate from their urban counterparts. They were also more likely to leave medicine all together at a 3.3 percent rate, compared to 2.7 percent of urban physicians.
Among specialties, hospitalists had the highest annual moving and leaving rate at 5.4 percent and 3.6 percent, respectively. Meanwhile, obstetrician-gynecologists had the lowest moving rate at 3.5 percent, and medical specialists had the lowest leaving rate at 2 percent.
Government Payment Policy and Physician Supply: “The Earnings and Labor Supply of U.S. Physicians”
Economists at Chicago’s Becker-Friedman Institute report (summary here, complete working paper here) on a study of physician income, physician supply and government payment policy. “Government payment rules play a key role in valuing and allocating one of society’s most expensive assets: physicians’ human capital. Taken together, the results here suggest that policies subsidizing surgery will increase surgeons’ incomes and allocate more top talent to surgical specialties, improving surgery for a generation. Subsidizing primary care will instead increase these physicians’ incomes and allocate top talent to primary care, improving primary care for a generation.”
They add, “Physicians earn 6% of public money spent on insurance expansions. We find that these policies in turn affect the type and quantity of medical care physicians supply in the short run; retirement timing in the medium run; and earnings affect specialty choice in the long run.”
HOSPITALS, ASCs, SKILLED NURSING AND OTHER HEALTH CARE FACILITIES
Trauma Center Lite
Trauma centers, designated by the American College of Surgeons, are more likely to be established in areas with lesser need when they are established by for-profit hospitals. So concludes a study (here) in JAMA Surgery.
“Between 2014 and 2018, compared with not-for-profit hospitals, for-profit hospitals gained trauma center designation in regions with lower injury-related mortality burden and in proximity to existing trauma centers.” The study added, “Trauma centers can be profitable and financial incentives may motivate trauma center designation. A recent study found for-profit centers charge higher trauma activation fees. Proliferation of trauma centers within one region could dilute trauma care volume at any individual center . . . associated with worse outcomes for injured patients.”
Rural Hospitals at Immediate Risk of Closure; Solution Lies in Commercial Health Insurance Payment
More than 300 rural hospitals are at immediate risk of closure because of the severity of their financial problems, according to a July 2023 report from the Center for Healthcare Quality and Payment Reform (here). “Hospitals at immediate risk of closure have lost money on patient services for multiple years, excluding 2020 during the pandemic, and are not likely to receive sufficient funds to cover the losses with public assistance ending.”
CHQPR contends that “The biggest problem facing small rural hospitals is inadequate payments from private health plans. Most ‘solutions’ for rural hospitals have focused on increasing Medicare or Medicaid payments or expanding Medicaid eligibility due to a mistaken belief that most rural patients are insured by Medicare and Medicaid or are uninsured. In reality, about half of the services at the average rural hospital are delivered to patients with private insurance (both employer-sponsored insurance and Medicare Advantage plans). In most cases, the amounts these private plans pay, not Medicare or Medicaid payments, determine whether a rural hospital loses money.”
The Center proposes standby cost reimbursement for the fixed costs of providing services, analogous to the cost of police or fire services, as opposed to paying per fire or per arrest. “Having health insurance that pays fees for ED visits, laboratory tests, or treatments is of little value if there is no Emergency Department, laboratory, or treatment capability available in the community for the resident to use.”
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Notes to Fred Hyde, MD, JD, MBA, news@dcmedicalnews.org
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