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.

Sources:
EconomicCollapseBlog
L.A. Times
N.Y. State Government

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.

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 increasing cost of health insurance. 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.

Sources:
businessgrouphealth.org
theeconomiccollapseblog.com
ibnlive.in.com
kiplinger.com
msnbc.msn.com

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.

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.

Rebecca highlighted the fact that a good foundation based on fraud risk assessments needs to be established to fight fraud. She also points out that insurers and providers need to regularly audit all network activity to assess risk and potential vulnerabilities where holes might be found.

Her opinion on Healthcare Reform – it might lead to an increase in insurance fraud in the short term as information systems are adjusted and new rules are implemented but should eventually decrease fraud, as more individuals will receive health coverage.

The answer is surprisingly simply ­ it hits your wallet first. Insurance premiums are increasing at a staggering rate ­ 33% in the last five years. If this continues, most individuals will not be able to afford any type of insurance, costing taxpayers even more because they will be the ones footing the bill for the uninsured.

Insurance premium increases hit the employer even harder. Many times employers (especially small businesses) are forced to reduce their workforce to accommodate the rising costs or even cut healthcare benefits entirely.

Prescription drugs are an area that is greatly affected by fraud. Fraudsters are fans of selling counterfeit medication. Consumers ingesting this medication (many times laced with poison ­boric acid for example) can end up in the emergency room with complications costing thousands.

The recent passage of Healthcare Reform is also proving to be good news for fraudsters. Many consumers have little to no knowledge of the bill and scammers have found multiple ways to cheat the innocent out of their money.

Fraudsters prey on the fear and confusion brought about by the bill. Going door-to-door selling fake insurance, scammers advertise an “ObamaCare” plan and insisting consumers better act fast due to a “limited enrollment” period. These scams bilk consumers out of thousands of dollars and leave them without any real insurance, so if a medical emergency where to occur, they would be left footing the bill.

So, what can the consumer do to help combat healthcare fraud? First, understand exactly what you’re being charged for and always ask for clarification on any charges for services that you do not recognize. Second, know where your medical identification is and alert proper authorities when your insurance card has been stolen ­ medical identity theft crimes can leave you sorting out medical bills for the rest of your life. Finally, be a conscientious healthcare consumer. Be aware of current fraud schemes and check out the Food & Drug Administration website to ensure your medication is not on the counterfeit list.

In a recent RAND report “Is Better Patient Safety Associated with Less Malpractice Activity? Evidence from California” it was found that there is a correlation between the frequency of adverse events and malpractice claims. “On average, a county that shows a decrease of 10 adverse events in a given year would also see a decrease of 3.7 malpractice claims.” What this is telling us is that there is a link between patient safety and malpractice claims. While that might not necessarily be news to some, it does put some light on the “frivolous” lawsuits. If hospitals were to concentrate on patient safety and patient education the malpractice lawsuits will (according to this report) most likely decrease.

Another article by the Wall Street Journal titled “New Focus on Averting Errors: Hospital Culture” highlights the fact that errors made by healthcare professionals cause 44,000 to 98,000 deaths per year. To combat this number hospitals are taking a surprising approach: “Not only are they trying to improve safety and reduce malpractice claims, they’re also coming up with procedures for handling – and even consoling – staffers who make inadvertent mistakes.” Hospitals are taking a proactive approach to patient safety and staffer guidance instead of waiting for a bad event to occur and then reacting.

And now just a little information regarding Personal Health Records (PHRs) and their useful for patient safety. Having a PHR can certainly save you time and help with all the cumbersome paperwork, but having one can also save your life. Patient data is lost/mixed up etc. daily and having your own record of your health will help keep you safe. The state of California has the largest PHR adoption rate. Here is a look at the numbers:
1. 7% of adults had used a Personal Health Record (PHR)
2. California leads the nation in PHR use, at 15%
3. 58% of PHR users with two or more chronic conditions say they know more about their health care as a result, compared to 44% of those with only one or no chronic conditions
4. 48% of caregivers are interested in using a PHR for the person they care for
5. 75% worry about the privacy of PHR information
6. 40% of those who do not have a PHR express interest in using one

The article explains that many small businesses will be faced with numerous choices due to the passage of healthcare reform.

Rebecca asserts that education is important when understanding healthcare reform and how it will affect your business. “The one thing you can control is educating the individual. We spend too much on healthcare not be educating the frontline.”

At the end of the article Rebecca also offers some tips about going about acquiring healthcare. Here is a highlight of what she had to say.
1. Watch out for fraudulent billing, counterfeit medication and medical identity theft. Interesting fact: Americans spend an average of $6,400 every second in healthcare fraud, waste and abuse compared with the estimated $3,400 per second the new legislation is expected to cost.
2. Ask about your bills – overbilling by healthcare providers contributes to the high cost of treatment. Make sure you understand what you are being charged AND for what you are being charged. Example a doctor might bill with a code that says you were at the office for 60 minutes when you only actually saw the doctor for 10.
3. Make sure you are buying insurance from a legitimate insurance provider. Rebecca states, “One of the fastest-growing areas is selling fake insurance.” Research a company before you buy insurance from them. Just remember the adage – if it looks to good to be true, it probably is.

Read full article here.

1. Pfizer whistleblower earns $51.5 million reward – with Pfizer having to pay $2.3 billion in penalties.
2. $2 million awarded to two New Yorkers for speaking out against their former nursing home employer – $24 million was paid back to the state.
3. A registered nurse received $4.9 million for her help in a Medicare fraud case that netted the U.S. Government $24 million.

However a recent Supreme Court ruling could change the nature of whistleblower lawsuits and the big individual payouts. The court has placed limits on existing whistleblower lawsuits claiming that local governments have misused federal money. The court voted 7 – 2 to hold that a technical, though important aspect of the federal whistleblower law applies to local governments. There is a section of the law that prohibits whistleblower lawsuits when public disclosure occurs through a court hearing, a news report or congressional/administrative audit. Read full article here.

It makes sense that once allegations are disclosed publicly, lawsuits are harder to file. If that wasn’t the case, people could hear about something on the news and head to the courthouse to file a claim. On the other hand, we need to make sure that people are still willing to file these claims against current or former employers who are guilty of wrongdoing. A previous post discussing two Texas nurses who are on trial for bringing claims against a doctor is a perfect example of what we are doing to NOT encourage people to stand up for what is right.