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Archive for August, 2010

What is a Prior Approval Law?

Thursday, August 26th, 2010

As the news of expected and enacted premium increases spreads across the country, these state-level legislative measures are receiving more and more attention. Elected officials proudly tout them and insurance companies are already suing states in response to them. Most people, however, don’t know much about prior approval laws.

The term “prior approval law” refers to legislation that grants the officials of a state the power to review and approve health insurance premium increases before they take effect. These laws are passed at the state level and usually give the authority to the State Insurance Department. Without prior approval laws, states are restricted in their ability to regulate premium increases and, de facto or de jure, the insurance industry self-regulates.

Prior approval laws have gained attention as a result of the recent healthcare reform, which affords the federal government limited power to curtail premium increases. Although the federal reform includes provisions such as that which requires insurers to justify “unreasonable” rate increases, much of the power necessary for premium moderation has been left outside the reach of the national government.

Regulating premiums has traditionally been the responsibility of the states, and now, as we continue to see double digit premium increases during this economic crisis, it is more important than ever for states to fulfill this responsibility. It is the disappointing truth that only 19 states currently have prior approval legislation on the books. Of those 19, however, some states are making great progress by enforcing these laws. For example, Oregon officials have modified or dismissed 20 of 71 proffered premium increases in the individual and small group markets since April 2009.

Some consumer advocates and politicians support granting prior approval authority to all states. Doing so would likely end many current lawsuits between insurance companies and states. But the effectiveness of such legislation in suppressing premium increases would depend on politicians’ willingness to resist the influence of the insurance industry.

It is well known that the healthcare insurance industry aggressively lobbies federal officials and helped pen much of the recent healthcare reform. Few realize, however, that the industry exerts significant pressure at the state level as well. Much of that pressure comes from over $42 million in contributions since 2003. Jim Duffett, executive director of the Illinois-based Campaign for Better Health Care, describes the result of excessive lobbying: “State government here has basically been a wholly owned subsidiary of the insurance industry.”

Apparently, insurance companies already know what many of us are just learning; as Washington State Insurance Commissioner Mike Kreidler warns, “The battle has shifted to the states.”

Look for more on this and other healthcare legislation in future posts.

L.A. Times
N.Y. State Government

Fighting Fraud with Pre-Payment Claims Review

Wednesday, August 25th, 2010

Earlier this summer, the U.S. Government Accountability Office (GAO) released a report identifying the challenges that CMS faces in implementing strategies to prevent overpayments and fraud, waste, and abuse — including focusing on pre- and post-payment claims review on the most vulnerable areas.

Our administration has set battling healthcare fraud, waste and abuse as a high priority. A recent study found $835 million in questionable Medicare payments identified by private contractors in 2007.

Some states are following suit for their Medicaid programs. The Illinois Department of Healthcare and Family Services also recently issued a report on the efficiencies and improvements in the Illinois Medicaid program that included measures to prevent Medicaid fraud and overpayments by contracting with third parties to conduct payment and recapture audits. The State of Indiana also recently issued a Request for Services to detect fraud, waste and abuse in its Medicaid program.

It is also important to stop money from going out-the-door in the first place. Preventing inappropriate payments can be easier than “recovering” inappropriate payments after the fact — as evidenced by that fact that perpetrators often “close shop” and move on when they are notified of claim disputes. The GAO calls for Medicare to improve the pre-payment review of claims. As predictive modeling technologies continue to evolve pre-payment claim review will become a critical tool to combating fraud.

The “ethically challenged” understand the amount of money in healthcare – and do not limit their prey to government sponsored programs. It is critical for private payers, plan administrators and self-funded employer plans to follow suit in both pre- and post-claim review.

Rising Healthcare Cost to Employers Passed on to Employees

Thursday, August 19th, 2010

A recent survey by the National Business Group on Health shows that large employers expect their healthcare expenses to increase significantly next year. It also shows that they plan to diffuse the cost increase by extending it to their employees.

Large employers are projecting a healthcare cost hike of 8.9 percent in 2011, a significant leap from the previously projected 7 percent increase for 2010. Healthcare reform was partly, although not entirely, credited with the increase.

The new regulation, which takes effect September 23rd, will affect costs in accordance with each company’s current healthcare practices. About 70 percent of the companies currently have “lifetime cap” or total dollar limits that they will have to eliminate. Around 25 percent will have to end annual limits on benefits. And 13 percent will now have to extend coverage to children suffering from expensive preexisting medical conditions to whom they had previously denied coverage. Many employers reported that they intend to cover these increases by requiring greater employee contribution.

Although the changes might be seen in different places, most employees will be affected by them. 63 percent of employers indicated that they planned to increase employee contribution to premiums. 46 percent of employers intend to increase employee out-of-pocket contributions.

Some companies also report that they plan to reduce costs through other means. Company-directed wellness programs have become more popular. Also on the rise are consumer-directed health plans, which allow employees more say in how they spend their healthcare dollars.

Employers and consultants are hinting –if not warning- that employees should be prepared to pay more for their health insurance in coming years. In fact, employers indicate that they intend to encourage employees to restrict healthcare spending in order to slow these rising costs.

If this is true for big businesses, are small businesses or the self-employed doing any better? As it turns out, no. No one, it seems, is able to dodge the rising healthcare costs. New legislation has raised costs to insurance companies who are ready and willing to pass those costs onto consumers via huge increases (sometimes 50%!) in premiums. Although some states are fighting back, the federal government and most states are helpless to perturb premium increases. Look for a future post about the changing healthcare costs that are being felt by those employed at small companies and the self-employed. Until then, look here for further reading.

The National Business Group on Health represents large employers’ health policy interests. The NBGH surveyed 72 companies, each with over 5,000 employees. These companies provide their own health insurance and hire a health insurer to administer the coverage.


Counterfeit drugs and their effect on health & healthcare

Tuesday, August 17th, 2010

Counterfeit drugs are killing or greatly harming patients that are desperate for medical care. Estimates state that nearly 700,000 people are killed each year after ingesting counterfeit malaria and tuberculosis drugs.

The World Health Organization (WHO) estimates that up to 30% of medication on the market in developing countries in Africa are counterfeit and have found that nearly 50% of the drugs sold in Angola, Burundi, and the Congo are of poor quality. Furthermore, nearly two-thirds of anti-malaria drugs in Laos, Myanmar, Cambodia, and Vietnam contain insufficient active ingredients.

A 2003 Interpol survey on the quality of drugs available in Lagos, sub-Saharan Africa’s most populous city concluded that 80% of the drugs available were fakes. In 2008, more than 80 children in Nigeria died after being given medicine that looked, smelled, and tasted like the real thing, but was laced with antifreeze.

Why are the numbers so high? Jacqueline Sawyer, Liaison Officer at WHO’s Prequalification of Medicines Programme, told MediaGlobal “The problem of counterfeit medicines is more prevalent in countries where medicine regulation is ineffective, smuggling of medicines is rampant, secret manufacturing exists, sanctions are absent or very weak, and there is high corruption.”

Do not think counterfeit or tampered drugs only exist in developing countries. An estimated 1% of all medicines dispensed in developed countries are counterfeit. Medicines containing boric acid and other lethal substances have been found recently in certain medications.

To be sure that your drug is safe to use, check the FDA’s website. They announce drugs that might have been tampered with and also have correct packaging and dosage information.
Recent FDA Headlines:
FDA Warns About Fraudulent Tamiflu
Warning: Counterfeit Alli
FDA Issues Warning on Counterfeit Surgical Mesh

Full article here.
FDA here.

Your Money Matters – Rebecca Busch with Tips for Getting Your Personal Healthcare Portfolio In Shape

Tuesday, August 10th, 2010

On July 26, 2010 Medical Business Associates’ CEO Rebecca Busch was featured on Chicago’s own WGN Midday News with Steve Sanders. During the segment, Your Money Matters, Rebecca provided tips for getting your personal healthcare records portfolio in shape.

Rebecca’s appearance highlighted her latest book, Personal Healthcare Portfolio: Your Personal Health & Wellness Record. During the segment she offered viewers valuable time and money saving techniques when it comes to healthcare records and finances.

Tips for Your Personal Healthcare Records

Here are some tips she provided during the interview:

1. Get your records organized and separate medical from financial.

2. Learn the reimbursement lingo in healthcare — start asking your doctor “What CPT codes are you billing me for?” That is a procedure code — patients never see this. Did you know doctors charge in increments of 15/20/45/60 minutes procedure codes? This is why you have to ask what code they are charging.

3. Ask your doctor “What diagnosis code are they billing in MY name?”

4. Ask for itemized copies of your bills as you receive your care.

5. Make sure you collect your health records as you receive your care — or obtain them once per year (ask your provider what their policy is on retention of records).

6. If your insurance company provides you an EOB (explanation of benefits) without procedure codes — ask them annually to print a claim file with the information. This is the best way to avoid being a victim of medical identity theft.

7. Be vigilant — although we have a healthcare crisis there is lots of money floating around.

To view the entire interview please visit WGN’s site here.

New Fraud Opportunities with Healthcare Reform

Wednesday, August 4th, 2010

While much of the focus of the public discussion surrounding healthcare reform has centered on the expansion of coverage to the uninsured, we are all aware that the reform will also have a major effect on both fully-insured and self-insured employer sponsored plans. By now, employers should know that failing to meet government mandates for coverage and affordability will result in monetary penalties.

But a seldom discussed impact of healthcare reform on employers is their increased exposure to fraud, waste and abuse. For example,

1) No lifetime or annual limits: If plans have ineligible members or dependents on their plan… now there is no limit to how much employers could be inappropriately paying for coverage of ineligible members.

2) Extension of dependent coverage: Now that employers must allow dependent coverage to continue for an adult up to age 26, plans will have an influx of new dependents… that means more potential ineligible dependents.

3) Waiting periods limited: Employers will have to provide coverage within no more than 90 days… that means employers face the risk of paying for ineligible dependents sooner.

Employers that do not regularly conduct eligibility audits, to ensure that they are not extending coverage to ineligible members and dependents, will face a significant increase in risk due to employee abuse (intentional or not) of benefit coverage. Eligibility audits are a simple way stop inappropriate healthcare expenditures. The reality is that when rules change, “the ethically challenged” will find new ways to capitalize.

For more information on the impact of healthcare reform, check out McGuireWoods Healthcare Reform Guide: Installment No. 8.