The American Medical Association's Report Card on Health Insurers

If the citizens of Alaska are to engage in a reasonable discussion on health care reform, we must reach out to those Alaskans who still believe that private, for profit, health insurers are managing their heath insurance premiums as efficiently and cost effectively as possible. Tomorrow at a press release, we will gather to listen to a summary of Congress' and the President's plans to reform health care. Opponents of this reform are expected to show up and attempt to disrupt the press conference. I expect their arguments to be shallow, and ill informed, more designed to merely sidetrack the conference, than to educate its participants. Perhaps this article can address some of the possible complaints of the opposition, and provide more information to counter any rational arguments they may (doubtfully) propose.

Opponents of health care reform have argued that any single payer plan or public option run by the government will be wasteful and inefficient!

The following is a link to the American Medical Association's (AMA) latest report card on the performance of private health insurer's.

http://www.ama-assn.org/ama/pub/news/news/health-insurer-report-card.shtml

Here is an excerpt from the report with the AMA's assessment of the private sector health insurer's ability to efficiently manage health care cost in 2008 and 2009.

The inefficient and inconsistent claims process adds as much as $200 billion annually to the health-care system. One recent study estimated physicians spend the equivalent of three weeks annually on health insurer red tape. To keep up with the administrative tasks required by health plans, physicians divert as much as 14 percent of their revenue to ensure accurate payments from insurers.

Key findings from the 2009 National Health Insurer Report Card include:

* Denials. The inconsistency found among health insurers in 2008 continues to be demonstrated in 2009. The wide variation in how often health insurers deny claims, and the reasons used to explain the denials, indicates a serious lack of standardization in the health insurance industry.
* Timeliness. Prompt pay laws continue to appear effective in encouraging insurers to respond to physician electronic claims with relatively quick payment transmittals. Five of eight insurers showed a slight improvement from last year in reducing the median time necessary to respond to a physician claim.
* Accuracy. While there remains room for improvement, health insurers made progress in eliminating unnecessary reporting discrepancies from the payment process. Private health insurers correctly acknowledged the expected contracted rate to physicians upon fee 72 to 93 percent of the time in 2009, compared with 62 to 87 percent of the time in 2008.
* Transparency. Payers have made improvements since 2008 in their efforts to disclose vital policies and information to physicians through their Web sites. Almost every insurer provides physicians with at least some access to a range of payment policies, with the notable exception of policies related to prior-authorization of services.

“The report card results demonstrate an urgent need to minimize billing conflicts and insurance-related administration activities under comprehensive health reform legislation this year,” said Dr. Dolan. “Physicians must be allowed to re-direct their time and resources back to patient care, and away from excessive paperwork.”

The AMA reports that, "the inefficient and inconsistent claims process adds as much as $200 billion annually to the health-care system." This statement is consistent with figures in the financial reports of the various, private health insurers for which I have provided links in previous blog entries.

When my insurance company told me that my rates were raised 21% due to increased costs of medical treatment, I looked up the figures for costs of medical treatment in Alaska during the past two decades. While the cost have increased drastically from 1991 to 2003, they have not increased appreciably since then. Why then have my premiums? The AMA report clearly indicates to me that the increases are not due to the higher cost of actual medical treatment, but the increased cost of administrative expenses. The health insurers have only to blame for those additional costs. What regulations determine how much of those costs can be shifted to the policy holder in the form of premium hikes? The recent credit card reform bill protects credit card holders from having their rates unfairly raised. Why cannot policy holders be equally protected?

Another common complaint raised by opponents of health care reform and particularly of a single payer system rail against the inefficiency of Medicaid and Medicare. "It is wasteful", they say, and the availability of services is greatly diminished compared to that of the private sector.

In rebuttal to that argument, I submit this link to Alaska Department of Health and Social Services. This department oversees the state's Medicaid program for disadvantaged children and the elderly. This is what they had to say about the program's effectiveness in managing costs.

PERM Medicaid Review

This past year, Medicaid paid approximately $1 billion in medical costs for low-income and ulnerable Alaskans. From children’s dental care to elders’ medical care, the joint state and federal medical assistance program provides all kinds of needed equipment and services.

Payment Error Rate Measurement, or PERM,is a review of how accurately providers in all 50 states are billing Medicaid. This will let state and federal lawmakers know whether Medicaid payments are being made properly.

Alaska is in the midst of its PERM review, which examines Medicaid and State Children’s Health Insurance Program (SCHIP) claims paid between October 1, 2007 and September 30, 2008.

Providers are doing an OUTSTANDING job of providing requested information!

Many PERM errors are simply from documents not being submitted on time. Our provider community is helping to keep Alaska’s error rate low by providing medical record information promptly. Thank you and keep up the good work!

Medical records have been requested for most of the selected Medicaid and SCHIP claims already, but providers may see requests for clarification as well as requests for medical records on new claims.

Please contact us if you have questions about your PERM submittals, at 907-269-0399

After the PERM review is completed, in the fall of 2009, CMS will calculate state-specific and national error rates.

Each state will be required to write a corrective action plan to address PERM findings. The plans will be due by the end of 2009.

Whereas Alaska spends 1 billion into its Medicaid program, the AMA reports that private health insurers have cost the health care system over $200 billion. These are powerful numbers to refer to when someone starts bashing Medicaid or Medicare.

While doctors in this state may find it difficult to recoup the full amount of reimbursement from bills generated by Medicaid patients, the same problem exists for doctors who treat patients with HMO and PPO type plans. A gentlemen commented to my previous blog yesterday, and made reference to the common practice of private health insurers to discount medical expenses, then pay only a percentage of the discounted portion. I have no concrete figures yet on the percentage of reimbursements recouped by doctors for claims of patients with private health insurance policies, but based on comments in editorials and various blogs by doctors themselves, this does seem to be a problem for doctors practicing in this state.

Opponents of health care reform will also present the argument that tort reform will do more to reform health care than adopting a public option or single payer system. These opponents blame the increased cost of medical treatment on the prevalence of malpractice suits, and the ever increasing cost of malpractice insurance. Once again, there is a growing body of evidence to refute this claim.

Here is the link to a blog submitted on InjuryBoard.com:

http://anchorage.injuryboard.com/medical-malpractice/medical-malpractice-insurance-companies-mislead-the-public.aspx?googleid=219540

In an excerpt from this blog, Jane Schneider states,

medical malpractice insurers have been price-gouging doctors through inflated and excessive premiums and needlessly contributing to the higher costs of healthcare. The study was written by former Missouri Insurance Commissioner Jay Angoff and was based on annual reports from the top 15 medical malpractice insurance companies rated by A.M. Best. These insurers artificially raised doctors' malpractice premiums misleading the public by asserting that a so-called "malpractice crisis" exists.

Once again, the focus for health care reform returns the the health insurance industry. It would appear this industry through intense lobbying efforts has managed to insert itself deeply into our health care system, and its influence has led to the establishment of an overly complex and inefficient method of managing health care costs both for the public and the doctors who treat them.

In closing, I leave you with a final quote from the AMA report.

"The report card results demonstrate an urgent need to minimize billing conflicts and insurance-related administration activities under comprehensive health reform legislation this year," said Dr. Dolan. "Physicians must be allowed to re-direct their time and resources back to patient care, and away from excessive paperwork."

Please, if you are able, I encourage you to attend as many events related to health care reform as possible. Our representatives need to hear our voices, and see our numbers. The pressure on them to maintain the status quo on health care, and many other items of government reform must be tremendous. I am not cynical enough to believe that our Congress cannot hear us, nor do I believe that they are incapable of rising to the occasion and acting ethically and compassionately on behalf of their constituency. I truly believe that heroic acts of representation will transpire in the coming year, but without our support in the form of an educated and united voice of the citizens of this state, only the echoes of the footsteps of lobbyist will prevail. This is the rally cry we need to raise, and the message we wish to convey to our Congress.