Yesterday’s Wall Street Journal an article written by Janet Adamy deals with the rise in health insurance premiums. As insurers start to assess the costs associated with the additional benefits mandated under PPACA we are seeing the beginning of what many people predicted: higher premiums. We all know that premiums were rising before the passage of PPACA and again I believe health reform is needed but what we are now seeing is how insurers are starting to assess the additional costs for the mandates provided under PPACA and this is where we get “unintended consequences.” The article highlights the premium increases for individual plans. Over the next few weeks we will have a clearer picture of what the landscape looks like for group plans. Between 65-75% of group plans renew January 1 so the renewal rates are now being shared with employers. It is again anticipated we will have double digit increases for group plans and when you include the likely repeal of the Bush tax cuts for 2011, employers will have to make some very serious decisions on how they will remain competitive in the marketplace.
I encourage you to watch and listen to the video above. Ron Williams, CEO of Aetna, is interviewed by Alan Murray of the Wall Street Journal, and Mr. Williams makes some excellent points regarding cost and quality in today’s healthcare environment. If we are to have true reform, we must have a rational payment system that us fully transparent to all parties. The time is now.
In the recent Bloomberg Businessweek magazine the above headline caught my attention. Reading the article highlighted the problems the healthcare industry is faced with in the coming years. In this article it shared the pricing disparity for services performed at a Sutter facility vs. other facilities in the area. The example given was a simple MRI. At the Sutter California Pacific Medical Center an MRI brain scan had a charge of $3,484 while the same type of brain scan performed at Seton Medical Center had a charge of $1,150. Why such a huge difference in charges? As the article shares, Sutter Health, a non-profit healthcare organization owns nearly a third of the medical-care market in the region going from San Francisco to Sacramento. Charges typically are 40 to 70 percent more than competing hospitals.
If you were working on a network agreement or trying to negotiate with their facilities you would be trying to negotiate from a starting point that is nearly double of their competitors. Typical negotiation is working off a billed charge (that is already higher than surrounding markets) and trying to work down from this. A losing proposition.
We must look at a rational payment approach that looks at payments in a fully transparent fashion. This includes looking at what the facilities true costs are to deliver care and do a comparison of like facilities and what costs their structures look like. From this a rational margin is applied to insure profitability. If we are to continue to pay or try to negotiate from a “billed charge” basis, we are headed for an unsustainable payment environment. This article highlights the environment we are dealing with. Providers must make money, but employers must be able to afford it. This is only achieved when we bring a fully transparent and rational payment approach to the market. Read the full article.
I hope all of you are looking forward to the upcoming holiday weekend. The dog days of summer have come and gone and now we are entering the last phase of 2010. It’s hard to believe we only have around 80 business days left in 2010. With the struggling economy, uncertainty of healthcare and what will happen with taxes in the upcoming year, we all could use a little motivational boost to get us through the remainder of the year. For some, this is achieved by reading motivational books. I’ve come across a little video that may help keep you motivated as we move into September (well at least through the weekend).
Enjoy the weekend!
Yesterday I blogged about the webinar I attended sponsored by HHS. One of the key items I took away from this webinar was the challenges states will face in trying to put together an IT infrastructure to handle the many requirements to support the insurance exchanges that need to be in place by 2014. After I posted my thoughts, I came across this article that I thought I would share for your review. This article appeared on Civsource Online, a site that focuses on items of interest for state and federal agencies.
Read the article:
Nation’s health care infrastructure a point of concern for states
Over the next few years there will be a mad scramble to put into place all the necessary pieces for states to support PPACA. With states burdened by a decreasing tax base and increase in overall program costs, finding additional dollars to put in place a system and infrastructure to support the insurance exchange will be very challenging. Stay tuned.
This week I listened in on a webinar sponsored by HHS. This was a day-long session where a number of people spoke about the implementation of PPACA and some of the barriers that need to be addressed in order for the regulations to be fully implemented. One key area that I did not give much thought to prior to hearing this webinar was the state’s ability to implement the required healthcare exchanges with its current IT infrastructure. We all know how challenging it is in the private sector to implement a major strategy shift within our own business and the need to line up the appropriate IT resources and structure to handle the changes. Multiply this exponentially when the public sector is involved. Some of the speakers were from states that are responsible for IT. All agreed that most states will need tremendous resources (people and money) to get their systems up to speed to handle insurance exchanges.
I remember back to the times when the state and federal governments required a substantial amount of additional funding just to get computer systems to be Y2K compliant. Think back to that time and remember how many consultants, new IT infrastructure and dollars were required by each state and federal agency to get their systems to recognize the year 2000 correctly.
Now fast forward to where we are today and each state will have to create a system that will be able to handle enrollment, family change status, billing, online tools, customer service, etc. This is to be done within the next three years. Oh yeah, we still don’t know what the final regulations look like. I thought getting through Y2K was a challenge. States…get ready.
Well its Friday and it’s time for our weekly Friday funny. I’m grateful that here in Texas we have a break in the scorching heat we have been experiencing for the last few weeks. I’m looking forward to experiencing this same type of weather over the weekend.
The invention of the “high five” has taken on a life of itself. Today, when someone gives a high five it usually means that something positive has just happened. I rarely see someone giving a high five when they just wrecked their car or made an accounting error. The high five signals a positive emotion.
Wouldn’t it be great if we could start off every morning with getting a high five? Well click on the video below and you will see what happens in a New York train station by a random group of people.
Enjoy the weekend!
I came across a white paper produced by Dan Rickard a consultant at McGriff, Seibels and Williams, entitled “Throwing out the baby and the bath water.” Dan does an excellent job outlining the challenges that exist within the healthcare environment and how our current structure is not sustainable. Thanks Dan for producing a thought-provoking paper. Nice job.
Article: Throwing Out the Baby and the Bath Water
Recently, Hewitt did a survey of more than 450 U.S. companies representing nearly 6.9 million employees to gauge how the recently-passed health reform bill will affect their grandfathered status. Bottom line, from the employers’ perspective, most anticipate losing their grandfathered status.
What is interesting about the results of this survey is that nearly half of the respondents indicated any cost increases would be passed along to the employees. Only 9% of the respondents said they would absorb the cost increases. As the renewal season for most employer plans is upon us, it will be interesting to see if these percentages hold up in the coming months. If so, additional cost containment measures will be necessary in order to make plans affordable for the employees and employers.
Follow this link to see complete results of survey.
Well it’s Friday, and we made it through another 100+ degree week here in Texas. During the dog days of summer many of you try to find ways to occupy your time during those few and far between downtimes of life. Well I came across this video and thought you would enjoy seeing how to entertain yourself utilizing a simple business card.
If you are like me, you have accumulated a number of cards over the years. Here’s how to put them to good use. Enjoy the weekend!
Over the last few months, CNN's senior medical correspondent Elizabeth Cohen has been doing a series of reports on abuses within the healthcare delivery system. One report dealt with the value of shopping around for healthcare services, showing how much money an individual can save just by asking questions and comparing services from different facilities. In her latest series she dealt with billing abuses. Some of the examples she gives in the video below are such things as $1,000 toothbrush:
Cohen reports that for every dollar we spend on healthcare, fifty cents is wasted. Think about that for a minute. In my last post I shared the need for consumers who are having to share more of the cost of healthcare to ask questions and shop around. There is one additional step the consumer needs to do, and that is review their bills. I know this can be mind numbing but the consumer is the only one who can verify if the charges listed were actually performed. As good as audit software is today, the ultimate audit professional is the consumer. In the past, once the consumer showed their insurance ID card and paid a small $10 copayment that was the only time the consumer had much interaction regarding payment. Rarely did they receive an itemized bill after the services were performed and even if they did, that was the insurance company’s problem.
Let’s use an analogy. If I need my car fixed, I go to a mechanic; one that’s in my PMN network (Preferred Mechanic Network). I walk in and say, my car doesn’t work and I need it fixed. I’m handed a clip board as I hand over my ID card, and I'm asked to fill out a few forms about what is wrong with my car. I fill out the questions on the slightly worn and greasy clipboard and hand it back to the mechanic who looks at it and takes a deep breath and sighs not saying anything. After a few awkward moments he picks up the phone and calls the number on the back of my ID card and discusses what he needs to do with my car. I can overhear him talk about such things as timing belts, struts, and other things I have no idea what he’s talking about. After he hangs up he says he was getting certification from the number listed on the back of my id card. He then says all I need to do is sign a few more forms and pay my $50 copay. As I’m pulling out my wallet to pay him I ask when the work will be completed, and he said it would be done sometime tomorrow. When I placed the two $20 bills and a new $10 bill on the counter I asked if I would need to pay anymore. His comment was, “No, I just file my claim with the PMN and everything is taken care of.” Wow, that sounds great! I don’t need to know about struts, timing belts, etc.; all I needed to do is show up, present an id card and pay this copay.
When I returned the next day to pick up my car I was greeted by the same mechanic and he shared that there were a few other items he identified that needed to be fixed but not to worry, he will just add this to the paperwork he would be filling. When I asked if I needed to pay any more for the additional services he said “No, your mechanics insurance program will take care of it.” Wow, they sure are nice to do that, and I didn’t even have to understand what struts, timing belts , etc meant or even cost to repair. With that he handed my keys and walked me to my car door and said thanks. As I got in my car I asked if there was a “bill or anything” (sounding as if I have had my car repaired many times and knew how this who process worked). “No,” he replied, “You’ll get something from the mechanics insurance program in a few weeks letting you know what they paid. As I drove off from the lot and waved goodbye to my friendly mechanic, I thought to myself, “wow, that was easy,” I didn’t have to know what struts or timing belts or whatever he was saying meant. I just knew my car worked and I was going home.
As I was driving home I noticed a sign in the window of the local NAPA Auto Parts store. In bold letters it said, “Today’s special: timing belts $2,000, struts only $800.” When I saw that I thought, “Wow, they call that a special?” Who would every buy those items at that price….wait a minute!!!!
The story above is fictitious. The $1,000 toothbrush story was not. Look at your bills.