On May 24 the New York Times had an editorial on loss ratio calculations for health insurance companies. These loss ratios are important because the health care reform law limits the allowable ratio for insurance companies. For example, an insurer must spend 80 to 85% of premium dollars on other than general administration, profit, advertising, etc. So now the question becomes, what is counted and not counted as part of medical claim costs.
The NYT view is that setting up networks and programs to root out fraud should not count, and pre-certification processes are out as well. The logic is that these activities have a primary purpose of reducing costs for the insurer. Here is a thought, reducing unnecessary utilization and negotiating good networks are both primary in managing health care costs. Despite political rhetoric, health care claims and the failure to manage them are what drives premiums…really.
The NYT also says programs that review whether doctor-recommended services are covered should not count as part of health care costs. Gee, just like Medicare where according to the CBO, claims are processed as presented. How’s that affordable health care working out?
I wonder why major self- insured plans (covering about 70 million Americans) spend money on these activities and more like them? Certainly there is no insurance company profit motive, but there sure is a motive to manage claim costs.
The disconnect some people display in understanding that every penny spent on health care, legitimate or not is what drives premiums and makes health insurance unaffordable is bizarre. The Administration continues to claim it will make health insurance more affordable, but what it really means is government will subsidize unaffordable premiums so they appear affordable to some people, mainly those with family incomes below $88,000. Where does that get you in the long run (other than re-elected)?
Here is the bottom line, each procedure performed and each hospital stay multiplied by the unit price for each service provided equals the cost of health care. If you don’t manage all of that, including close review of claims, good negotiating of fees, close scrutiny for medical necessity and for fraud, you don’t have affordable health care. Shouldn’t we be encouraging (even incentivize) those activities?
blogsurfer.us
QUINNSCOMMENTARY 
If you are a citizen and have no health insurance, the mind must go to the emergency room in case of illness can disturb you.
LikeLike
You say:
“Here is the bottom line, each procedure performed and each hospital stay multiplied by the unit price for each service provided equals the cost of health care.”
Agreed.
You continue:
“If you don’t manage all of that, including close review of claims, good negotiating of fees, close scrutiny for medical necessity and for fraud, you don’t have affordable health care.”
Medical necessity should be determined by doctors, NOT insurance companies. Insurance companies cannot be trusted with this. Match claims amounts to Medicare and let the government set reasonable amounts for Medicare. Year after yearit comes up that Medicare fees are set to automaticly decrease (how much sense does that make?) and Congress has to act to stop the implementation of their own Frankenstein’s monster to keep doctors from dropping Medicare, TRICARE, and MEDICAID and other government patients. Fees should be fairly and reasonably set. Monitorins for fraud should be done by a third party.
You may get the impression that I do not trust the Health Insurance Companies. That’s because I don’t. They haven’t earned anyone’s trust.
LikeLike
Forty-eight years managing health benefits for a group of 40,000, hearing appeals, negotiating with doctors, etc tells me something different. Doctors have no concept of what things costs and have an incentive to provide more not the most efficient care. Medical necessity is highly subjective in many cases and we probably need more not less review.
I do agree we need a new system of setting fees and eliminate the crazy so-called discount network system where one doctor may participate with five plans and accept five different fees. But that is health care reform, all we got was insurance reform.
LikeLike