Posts Tagged ‘Aetna’

New Study Reveals Where Healthcare Costs Are Rising

Thursday, May 31st, 2012

Higher prices charged by hospitals, outpatient centers and other providers drove up healthcare spending at twice the rate of inflation during the financial crisis – even as patients sought less medical care, according to the first-ever Health Care Cost and Utilization Report. According to Kaiser Health News, prices rose five times faster than the inflation rate for emergency room visits, outpatient surgery and facility-based mental health care from 2009 to 2010, according to the Health Care Cost Institute (HCCI), a nonpartisan research group funded by insurers.  Prices fell only in nursing home care, which declined by 3.2 percent in the cost per admission.  Rather surprisingly, the fastest growing spending was in children’s medical care.

“The story really does seem to be prices,” said Martin Gaynor, chair of the institute’s governing board and a healthcare economist at Carnegie Mellon University.  One of the most comprehensive analyses at real claim payments made by insurers, the study’s findings raise questions about the nation’s $2.6 trillion annual healthcare bill: Why are medical services costs rising significantly faster than inflation?  Is the fast increase in spending on children a glitch, or a long-standing drift with major implications for future costs?  “If you don’t know what the cause is, you don’t know what the right policy lever is (for a solution),” Gaynor said.

The study’s results are based on nearly three billion claims paid by Aetna, Humana and UnitedHealthcare for 33 million people with employer-based insurance.  The data represent approximately 20 percent of the people with insurance nationally, but do not include spending for people who are on Medicare, Medicaid or those who purchase private policies.

According to the report, people with job-based insurance “are paying more and getting less,” said Chapin White, a senior researcher at the Center for Studying Health System Change, a nonpartisan think tank.  Hospitals and other medical providers “just seem to be able to raise prices faster than general inflation.”

“This is an important study that clearly demonstrates that rising prices for medical services are driving health care cost growth,” said Karen Ignagni, president and CEO of America’s Health Insurance Plans, the industry lobby. “Reducing medical costs is essential to making health care coverage more affordable for individuals, families, and employers.”

Before this treasure trove of data was available, researchers have relied on far smaller surveys of employers or on government claims statistics from Medicare, which primarily covers Americans over age 65.

Healthcare researchers have wondered why, after more than 10 years of startling growth, healthcare spending is now rising more slowly.  The researchers’ numbers lend support to one of the most popular theories: People are using less healthcare.  According to the report, between 2009 and 2010, people with employer-sponsored insurance had 3.3 percent fewer admissions to hospitals and other medical facilities, 3.1 percent fewer “outpatient” visits, and virtually no change in the number of procedures performed at physicians’ offices.  There was a slight increase in procedures performed at medical facilities, which rose by two percent, and use of prescription drugs, which went up by just under one percent.

“People had speculated that there was a decline in utilization, but by analyzing over three billion claims we now know not only the trend but the magnitude of the trend,” said David Newman, the institute’s executive director.  “It’s one thing to believe something, it’s a completely different thing to actually know it.”

If these tendencies continue, Gaynor said, “we may need to think about where we’re directing our policies” to control costs.  That’s because healthcare reform initiatives like accountable care organizations — networks of hospitals and doctors that will work together to coordinate patients’ care and cut out unnecessary services — may not help if they’re still charging more for those services.  Gaynor suggested that it might be worthwhile to keep a closer eye on consolidation in the health care sector — since larger hospitals and health systems might have the leverage to demand higher prices from insurers. He also said it might be more effective to regulate prices or increase the portion of health costs insured people pay so that they demand better deals.

Although the insurers whose data was analyzed provided “seed funding” for the study, they did not limit the questions that researchers can ask and have no control over what they produce, Gaynor said.  The group plans to update the database with more-recent claims and make the information available for further study.  “There’s been an awful lot of consolidation in certain sectors of the healthcare industry, and we know that tends to lead to higher prices, but we can’t draw any conclusions yet,” Gaynor said.

Everybody’s Warming to Telemedicine

Tuesday, May 15th, 2012

Tired of feeling sick but worried about the cost of a doctor’s visit? A rural Minnesota woman recently logged onto an Internet site run by NowClinic Online Care, a subsidiary of health insurer UnitedHealthcare, and “met” with a doctor in Texas.  According to Kaiser Health News, after talking with the physician via text message and by telephone, the woman was diagnosed with an upper-respiratory infection and prescribed an antibiotic.  .The doctor’s “visit” cost just $45.  “I was as suspicious as anyone about getting treated over the computer,” said the woman, who did not have healthcare insurance.  “But I could not have been happier with the service.”

NowClinic, which debuted in 2010 and currently operates in 22 states, is part of the upsurge of Web- and telephone-based medical services that experts believe is transforming the delivery of primary healthcare.  The movement gives consumers easier access to reasonably priced, round-the-clock care for routine problems — often without having to leave home or work.

Insurers such as UnitedHealthcare, Aetna and Cigna, and employers such as General Electric and Delta Air Lines are getting on board, advocating telemedicine as a way to make doctor “visits” cheaper and more easily available.  Proponents also see it as an answer to a deteriorating physician shortage.  Nevertheless some physician and consumer groups worry about the trend.  “Getting medical advice over a computer or telephone is appropriate only when patients already know their doctors,” said Glen Stream, president of the American Academy of Family Physicians.  “Even for a minor illness, I think people are going to be shortchanged.”

Carmen Balber, a spokeswoman for Santa Monica-based Consumer Watchdog, is concerned that lower co-payments will cause people to see doctors or nurses online just to save money.  “People will choose the more economical option, even if it is not the option they want,” she said.

Employers are getting mostly positive reviews.  “Our employees just love the convenience, the low cost and the efficiency,” said Lynn Zonakis, managing director of health strategy and resources at Delta Air Lines, which offers NowClinic for $10 a consultation.

The global telemedicine business is projected to almost triple to $27.3 billion in 2016, according to a report by BBC Research.  “Virtual care is a form of communication whose time has come and can be instrumental in fixing our current state of affairs within the healthcare system,” said Robert L. Smith, a family doctor in Canandaigua, NY, and co-founder of NowDox, a telemedicine consulting firm.  The field developed gradually over four decades as a way to deliver care to geographically isolated patients.  That’s changed over the past 10 years thanks to the development of high-speed communications networks and the push to cut health costs.  “It’s the wave of the future,” said Joe Kvedar, director of the Center for Connected Health, founded by Harvard Medical School.

Just one major hurdle remains: Many state medical boards make it complicated for doctors to practice telemedicine, particularly interstate care, by requiring a prior doctor-patient relationship, according to Gary Capistrant, senior director of public policy at the American Telemedicine Association.  “The situation seems to be getting worse, not better.”  He cited a 2010 ruling by the Texas Medical Board that effectively blocked a physician from treating new patients via telemedicine.  The sole exception is in cases where the patient has been referred by another physician who evaluated him or her in person.  “It’s about accountability,” said Dr. Humayun Chaudhry, CEO of the Federation of State Medical Boards.  State boards insist on licensing doctors treating patients in their states so that if patients are injured, they have a state agency they can go to for help.

“We want to enable telemedicine to flourish, but at the end of the day we want patients protected,” Chaudhry said.

OptumHealth, a UnitedHealth Group subsidiary that operates the NowClinic, said it leaves it to physicians to determine if they can diagnose a patient via computer.  “This is not intended to replace the intimacy of the doctor-patient relationship,” said Chris Stidman, senior vice president.  The company did not reveal the number of people have used the service or how many physicians it employs.

CMS Issues Rules for Health Insurance Co-ops

Monday, August 1st, 2011

The Center for Medicare and Medicaid Services (CMS) has issued rules impacting the creation of co-ops, or private not-for-profit insurers created by Patient Protection and Affordable Care Act.  The co-ops will receive funding via $3.8 billion in government loans.  They will be run by consumers and will qualify for start-up loans if they have a high probability of becoming financially viable.  CMS will determine viability based on evaluations of their legal, operational and business plans, according to Richard Popper, director of the Office of Insurance Programs at the CMS.  Additionally, CMS will offer “solvency” loans to provide insurers with the legally and financially required reserves.  The co-ops are intended as non-commercial alternatives for insurance consumers joining the health insurance exchanges that will begin in 2014.  The rules will require that any co-ops’ profits to go to reducing their customers’ costs or improving their care.  “That’s what really makes these plans different and why Congress chose to include these in the Affordable Care Act,” Popper said.

Anyone who is confused about the status of their state’s insurance exchange can take advantage of two excellent resources for clarification.  One is a primer put out by the non-profit Kaiser Family Foundation which answers many basic questions about the online exchanges, where millions of individuals and small businesses will price and compare insurance plans starting in 2014, in clear-cut terms.  Additionally, the Commonwealth Fund provides its own explanation of how the insurance exchanges will work.

Co-ops will provide consumers with a wider range of choices, greater plan accountability and help ensure a more competitive insurance market,” said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight.  This “announcement shows how the Affordable Care Act is bringing new choices and giving consumers a voice in insurance markets throughout the nation.”

The co-ops are structured to increase competition in the insurance market and provide additional options for people and small businesses looking for affordable health insurance.  Their organization is similar to that of credit unions: profits are used to benefit members of the co-op, which can include reducing premiums, improving health benefits, improving the quality of care, expanding enrollment or taking other actions to contribute to stabilizing coverage.

“The co-op program also seeks to promote improved models of care. Existing health insurance cooperatives and other business cooperatives provide possible models for the successful development of Co-ops around the country,” noted the proposed rule.  “One major barrier to continued development of this model has been the difficulty of obtaining adequate capitalization for start- up costs and state reserve requirements.  The Co-op program is designed to help overcome this major barrier to new issuer formation by providing funding for these critical activities.”

Writing on Kaiser Health News, Christopher Weaver says that “The rules would steer a total of $3.8 billion in low-interest loans to groups such as The Evergreen Project in Baltimore, seeking to launch the so-called Consumer Oriented and Operated Plans. The health department hopes at least one ‘co-op’ will launch in each state and anticipates funding a total of 57 around the country.  The strategy is that new health plans run by consumers – most board members would also have to be plan members — would find ways to improve care, rather than boost profits. The new plans, made possible by the seed money, would also compete with established insurers to drive prices down.  The Evergreen Project, named after the coffee shop where its founders held initial meetings, is among a small cadre of groups that are laying the groundwork to launch these nonprofit insurers to care for families and individuals who will be required to buy coverage under the health law — but may be hard pressed to afford it.”

Dr. Peter Beilenson, one of the founders, said The Evergreen Project has already raised $315,000 in foundation grants and completed a 16-month feasibility study.  The members are expecting a report from hired actuaries before applying for the loans to move forward.  The key factor: Could the co-op actually cost less than other insurers?  “We actually think we can bring it in” — meaning the plan’s premium prices — “under Aetna and Coventry,” Beilenson said.

Mike Leavitt,  a former Secretary of Health and Human Services and governor of Utah said that governors need to take the lead in creating health insurance exchanges or the federal government will dictate how the exchanges should be run.  “This is a profoundly important moment for states,” Leavitt said.  “States need to lead.  Too often, we have just deferred this to the federal government, and the federal government needs guidance (from the states) to do it.”  Iowa Governor Terry Branstad said Iowans are “confused and, I think, very upset with what’s going on” with healthcare reform implementation.  According to Branstad, consumers must take “ownership” of their health decisions and the costs.

Healthcare Claims Errors Cost $17 Billion a Year

Monday, July 11th, 2011

A recent American Medical Association (AMA) survey has determined that claims-processing errors by healthcare insurance companies cost the nation $17 billion a year in pointless administrative costs.  The AMA’s study is based on a random sampling of approximately 2.4 million electronic claims submitted in February and March of this year to Aetna, Anthem Blue Cross Blue Shield, CIGNA, Health Care Service Corporation, Humana, the Regence Group, United Healthcare and Medicare.  The claims were filed for more than 400 physician groups in 80 medical specialties in 42 states.

The typical claims-processing error rate was 19.3 percent, a rise of two percent over 2010 and is expected to add $1.5 billion in administrative costs this year.  “A 20 percent error rate among health insurers represents an intolerable level of inefficiency that wastes an estimated $17 billion annually,” said AMA Board Member Barbara L. McAneny, M.D.  “Health insurers must put more effort into paying claims correctly the first time to save precious healthcare dollars and reduce unnecessary administrative tasks that take time and resources away from patient care.”  To promote a more efficient claims payment system, the AMA’s National Health Insurer Report Card provides a yearly check-up for the largest health insurers and benchmarks the systems they use to manage, process and pay claims.

America’s Health Insurance Plan’s (AHIP) spokesman Robert Zirkelbach said insurers and providers must share the responsibility for improving accurate and efficient claims payment.  “According to Zirkelbach, “Health plans are doing their part by collaborating with providers and investing in new technologies to improve the process for submitting claims electronically and receiving payments quickly.  At the same time, more work needs to be done to reduce the number of claims submitted to health plans that are duplicative, inaccurate or delayed.”

Medicare came out ahead of the commercial insurers, with a 96 percent accuracy rate.  The lowest rated firm was Anthem Blue Cross, at 61 percent.  Anthem’s parent company, WellPoint Inc., is expanding electronic claims processing operation to improve accuracy.

The National Health Insurer Report Card is the basis of the AMA’s Heal the Claims Process campaign. Launched in June 2008, the campaign’s goal is to encourage improvements in the industry’s billing process so physicians and patients are no longer at the mercy of a chaotic payment system.  “In spite of notable improvements by insurers in the four years since the AMA introduced the National Health Insurer Report Card, precious healthcare resources are wasted because each insurer uses different rules for processing and paying medical claims, Dr. McAneny said.  “This variability adds no value to the healthcare system and only increases unnecessary administrative costs.”

To help physicians enhance their management of each insurer’s claims-submission requirements, the AMA’s Practice Management Center offers user-friendly online resources for preparing claims, following their progress and appealing them when necessary.  The Practice Management Center’s educational materials and practical tools are available online at

Another of the report’s findings is that physicians were not reimbursed by healthcare insurance companies on almost 23 percent of submitted claims.  The reason usually provided for non-payment are deductible requirements that shift payment responsibility to the patient until a dollar limit is met.

According to AHIP president Karen Ignani,“Administrative simplification that benefits consumers and the physicians who serve them is a top priority for our community.  Recent data from PricewaterhouseCoopers indicate administrative costs have been stable for four decades.  As a result of the move to electronic processing, the cost for each claim has actually declined, enabling insurers to provide value added services to consumers, such as disease management programs, without contributing to rising healthcare costs.  AHIP data indicate that virtually all ‘clean’ claims are processed within 30 days.

“AHIP members have worked collaboratively with physicians to make improvements in processes to promote efficiency and move to real-time payment.  In order for claims to be processed as efficiency and promptly as possible, both insurers and physicians need to strive for accuracy and timeliness.  For example, data show there is often a significant lag time between when services are provided and physician claims are submitted.  Data also indicate that there are a significant number of incomplete and duplicate claims filed.  Reports released last week decried ‘no questions asked’ reimbursement in Medicare and emphasized the need to scrutinize claims to prevent fraud.  In addition, research shows more than $200 billion is spent annually on services that are not in sync with the rigors of medical science, the result of wide variations in practice, overuse, underuse, and misuse of services.  Our view is that discussions of efficiency are important, but that they should be broad discussions of opportunities for improvement by all the responsible stakeholders.”

600,000 Young Adults Already Taking Advantage of Healthcare Reform Law Provision

Tuesday, June 14th, 2011

More than 600,000 young American adults are taking advantage of the healthcare law provision that allows people under 26 to remain on their parents’ health plans, a pace that appears to be faster than the government expected.

WellPoint, which insures 34 million Americans, said the dependent provision was the reason why 280,000 new members were enrolled.  That was approximately one-third of its total enrollment growth in the first three months of the year.  Other large insurers have added thousands of young adults.  Aetna added approximately 100,000; Kaiser Permanente, about 90,000; Highmark Inc., about 72,000; and Health Care Service Corporation, about 82,000.  The Department of Health and Human Services (HHS) believes that about 1.2 million young adults will sign up for coverage in 2011.

The (college) coverage will probably end in August, but students should check the date,” said Aaron Smith, co-founder and executive director of the Young Invincibles,  a Washington-based non-profit healthcare advocacy group for young adults.  “It’s an important piece of information.  They could have a gap in coverage.”  The group has created guidelines to help new grads understand their health insurance options.  Thanks to the ACA, young adults can remain on their parents’ health insurance until their 26th birthday, even if they’re in school, financially independent and even if they’re married.  The sole exception is if they have health coverage through their own employer.  In those situations — even if the policy is bad — they can’t remain on their parents’ plan.  Young adults have one of the lowest coverage rates, estimated at as much as 30 percent.  The healthcare reform overhaul has helped make a dent in that figure.

Adding young adult coverage increases the average family premium by approximately one percent, according to federal estimates.  Unfortunately, graduating students who are currently uninsured don’t get a special enrollment opportunity under the law, says Smith, and must wait until the next annual enrollment period to sign on with their parents’ plan.

Not surprisingly, some employers are concerned about having to pay for additional coverage for their employees’ offspring.  Helen Darling, CEO of the National Business Group on Health, which represents more than 300 large employers, said employers generally don’t like adding anything to their health costs.  “I don’t think anyone is eager to spend more money,” Darling said.  “This is not something employers would have done on their own.”

According to insurers, the growth in young-adult enrollment comes as the industry began reporting 1st quarter earnings shows better than expected profits.  Carl McDonald, a Citigroup analyst, said that the higher profits aren’t related to the new enrollees but rather because most of the increase in young people’s enrollment has occurred among self-insured employers; in those firms, insurers act as administrators and assume no financial risk.  McDonald said the majority of insurers’ profit increases is due to their customers using fewer health services, particularly hospital care.

“We are pleased to see the embrace of this key provision of the Affordable Care Act,” said Jessica Santillo, a spokeswoman for HHS.  “Young adults are more than twice as likely to be uninsured than older adults, making it harder to get the health care they need, and putting them at risk of going into debt from high medical bills.”

House Panel Finds Many Individual Healthcare Policies Do Not Cover Pregnancy

Wednesday, December 1st, 2010

A recent investigation by the House of Representatives’ Committee on Energy and Commerce has found that many individual health insurance policies do not cover maternity care. The news is no surprise for women who are covered by these policies and experienced a rude awakening when they became pregnant. The four largest for-profit health insurers – Aetna, Humana, UnitedHealth Group and WellPoint – don’t cover normal deliveries for their members who have individual policies. The committee’s report confirms a 2009 report by the National Women’s Law Center (NWLC) that scrutinized 3,600 individual policies and determined that just 13 percent provide maternity coverage. For women with these policies, it gets even worse should they become pregnant. At that point, if they apply for coverage in the individual market, insurers typically determine that pregnancy is a pre-existing medical condition and deny coverage on that basis. Maternity riders are offered on some policies, but they are extremely expensive, provide very limited coverage and might take as long as a year to become effective, according to the NWLC. The average cost of maternity care – nine months of prenatal care, three months of post-partum care and a delivery without complications – averaged $10,652 in 2007, a March of Dimes study reported. The Pregnancy Discrimination Act of 1978 exempts companies with less than 15 employees and individual policies from providing maternity coverage, although some states maintain stricter requirements. This year, 12 states mandate maternity coverage in the individual insurance market and 17 in the small-group market, according to, a project of the Kaiser Family Foundation. Thanks to the Patient Protection and Affordable Care Act, this coverage gap will cease to exist in 2014.

Some Healthcare Insurers Refuse to Sell Child-Only Policies

Monday, October 4th, 2010

Insurers who refuse to sell child-only policies are creating a political firestorm.  Some of the nation’s largest insurers are in open rebellion against a provision contained in the new healthcare reform law that is already in effect.  The shot across the White House’s bow is a decision by several insurers to stop selling child-only policies instead of complying with the law that blocks them from turning away kids with pre-existing conditions.  Anthem Blue Cross, Aetna, Inc., and others are refusing to sell the policies in states such as California, Illinois, Florida and Connecticut – even though the law requires that insurers cover children under 19 even if they have a history of illness.  Approximately 500,000 children nationally are impacted by this action.

The insurers claim that the new requirement will result in unforeseen costs related to covering eligible children.  The scenario they envision is that parents might buy policies for their children only after they get sick, creating a surplus of kids who suddenly need insurance coverage.  The decision by some of the big insurers to abandon this niche marketplace means that just a few firms will be forced to share what could be an enormous financial burden.  The good news is that relatively few child-only policies are sold.

The Obama administration immediately denounced the action.  White House Press Secretary Robert Gibbs told reporters “It’s obviously very unfortunate that insurance companies continue to make decisions on the backs of children and families that need their help.”

The stakes are especially high in California.  Legislation awaiting Governor Arnold Schwarzenegger’s approval would ban companies that refuse to sell child-only policies from selling insurance in the profitable individual market for five years.  Assemblyman Mike Feuer (D-Los Angeles), who wrote the bill, said “At a time when we are launching a national approach to ensure that all children have access to healthcare, Anthem’s actions represent a step backwards.  By threatening to drop child-only policies in California, the company jeopardizes the health of families and children.  I call on Anthem to reconsider its plan.”

Healthcare: Saving Lives or Prolonging Suffering?

Thursday, August 12th, 2010

There is a cacophony of voices in the media talking about healthcare reform, but it’s more heat than light.  That why Atul Gawande’s most recent article in The New Yorker is so important. Boston-based Brigham and Women’s Hospital general and endocrine surgeon Gawande examines how the trend to prolonging life is one of the reasons behind soaring healthcare costs.Is healthcare saving lives or prolonging suffering?  Everyone needs to read this.

According to Dr. Gawande in Letting Go, “Twenty-five percent of all Medicare spending is for the five percent of patients who are in the final year of life, and most of that money goes for care in their last couple of months which is of little apparent benefit.  Medical spending for a breast-cancer survivor, for example, averaged an estimated $54,000 in 2003, the vast majority of it for the initial diagnostic testing, surgery, and, where necessary, radiation and chemotherapy.  For a patient with a fatal version of the disease, though, the cost curve is U-shaped, rising again toward the end – to an average of $63,000 during the last six months of life with incurable breast cancer.

The big question Gawande poses is thus:  What are we getting in return?  “Patients who were put on a mechanical ventilator,” Dr. Gawande continues, “given electrical defibrillation or chest compressions, or admitted, near death, to intensive care, had a substantially worse quality of life in their last week than those who received no such interventions.  And, six months after their death, their caregivers were three times as likely to suffer major depression.”

Dr. Gawande notes that in one study, “Researchers followed 4,493 Medicare patients with either terminal cancer or congestive heart failure.  Surprisingly, they found no difference in survival time between hospice and non-hospice patients with breast cancer, prostate cancer, and colon cancer.  Curiously, hospice care seemed to extend survival for some patients; those with pancreatic cancer gained an average of three weeks, those with lung cancer gained six weeks, and those with congestive heart failure gained three months.  The lesson seems almost Zen:  you live longer only when you stop trying to live longer.”

In one case Dr. Gawande describes, “Aetna decided to let a group of policy-holders with a life expectancy of less than one year receive hospice services without forgoing other treatments.  A patient like Sara Monopoli (who was diagnosed with terminal lung cancer at the age of 34) could continue to try chemotherapy and radiation, and go to the hospital when she wished – but also have a hospice team at home focusing on what she needed for the best possible life now and for that morning when she might wake up unable to breathe.  A two-year study of this ‘concurrent care’ program found that enrolled patients were more likely to use hospice:  the figure leaped from 26 percent to 70 percent.  That was no surprise, since they weren’t forced to give up anything.  The surprising result was that they did give up things.  They visited the emergency room almost half as often as the control patients did.  Their use of hospitals and I.C.U.s dropped by more than two-thirds.  Overall costs fell by almost a quarter.”