LG One reason the market is up maybe because bonds are up on
the prospect that the forthcoming budget deficit announcement willÿ
show the surplus to be bigger thanÿ
projected in which case the Treasury would continue the buy backÿ
of the National Debt, 30 year Traesuries, which is bullish.
The problem is that the budget surpluses are being achieved
ÿby spending less on Medicare and leading people to think
that every thing is allright.
I don't want to beat a dead horse ( healthcare ) but peopleÿ
have no idea about the magnitude of the forthcoming Health
Costs explosion. Providers are either withdrawing from and/or
suing intermediaries ( HMOs, Insurance co,etc )thatÿ
administer the Medicare and Medicaid programs.
Hospitals are closing and the number of beds is shrinking.
(Think of it in terms of less supply of oil reserves).
That will allow providers ( Hospitals and Healthcareÿ
providers ) to raise prices. That plus the rising CRB + oil
+ etc , will eventually conspire to prick this bubble.ÿ
Forthcomin electioneering talk by Bush and Gore about promises
to save Medicare amd Healthcare will only further fuel rising
Healthcare costs,
TA
===================
March 16, 2000ÿ
AMA Alleges United HealthCare
ÿ Uses Faulty Data In
ÿ Reimbursements
ÿ By MILO GEYELINÿ
ÿ Staff Reporter of THE WALL STREET JOURNAL
ÿ NEW YORK -- Physicians took an aggressive new role
ÿ in the legal assault against managed health care, as the
ÿ American Medical Association filed a class-action
ÿ lawsuit against United HealthCare Corp.
ÿ The civil suit, filed in state court here, alleged that the
ÿ large Minnesota health-maintenance organization uses
ÿ faulty data to reduce reimbursements to doctors and 10
ÿ million plan members nationwide.
ÿ HMOs in recent months have been hit by a wave of
ÿ class-action suits filed by well-funded plaintiffs'
ÿ lawyers representing tens of millions of patients who say
ÿ they have been deceived and short-changed when
ÿ seeking medical care. Now, the main national
ÿ association of physicians is adding its considerable
ÿ weight to the courtroom offensive.
ÿ The AMA, based in Chicago, said in court papers that its
ÿ suit was filed on behalf of the unspecified fraction of its
ÿ 300,000 members who treat enrollees of United
ÿ HealthCare, which is now known as UnitedHealth
ÿ Group, based in Minnetonka, Minn. Also named as a
ÿ defendant was Metropolitan Life Insurance Co., which
ÿ sold its health-insurance business to UnitedHealth Group
ÿ in 1995.
ÿ Spokespeople for UnitedHealth Group and Met Life said
ÿ they hadn't seen the complaint and had no comment on
ÿ the suit. On another front in the health-care debate,
ÿ UnitedHealth last year said it would no longer require
ÿ doctors to seek approval before ordering tests,
ÿ treatments, referrals or hospitalization.
ÿ The 153-year-old AMA has become increasingly
ÿ litigious in recent years. So far, the association has been
ÿ involved in more than two dozen suits against insurers or
ÿ HMOs nationwide, including a class-action suit filed
ÿ against Aetna U.S. Healthcare Inc. in Georgia last month
ÿ on behalf of doctors in that state alleging illegal payment
ÿ delays. The suit filed Wednesday is the first national
ÿ class-action lawsuit filed by the AMA.
ÿ At issue in the suit against UnitedHealth Group and Met
ÿ Life is tens of millions of dollars that the AMA alleges
ÿ the insurers have pocketed by reimbursing plan members
ÿ and physicians for treatment costs at less than the "usual
ÿ and customary rates" promised by the defendants.
ÿ The general controversy over whether usual and
ÿ customary rates are being paid arises under both
ÿ managed health plans and more traditional insurance
ÿ policies, according to the AMA. Dr. Donald Palmisano,
ÿ an AMA trustee in New Orleans, said in an interview
ÿ that "the case calls into question the entire payment
ÿ mechanism that the insurance companies have used for
ÿ years in paying physicians."
ÿ The data used in determining usual and customary
ÿ reimbursements are unreliable and underestimate actual
ÿ medical costs, Dr. Palmisano said. As a result, the
ÿ AMA's suit contends, patients end up paying the
ÿ difference between the rates doctors charge and the
ÿ amounts the insurer or HMO is willing to reimburse --
ÿ or the doctors themselves simply absorb the difference.
ÿ The suit alleges that UnitedHealth Group derives its
ÿ reimbursement rates from a flawed database that
ÿ eliminates higher charges for certain procedures in some
ÿ areas, lumps together lower charges from other
ÿ geographic areas that aren't comparable and fails to take
ÿ into account a physician's level of skill or experience.
ÿ The New York law firm Pomerantz Haudek Block
ÿ Grossman & Gross, which has filed several national
ÿ class-action suits against managed-care companies
ÿ alleging fraud, is the lead outside counsel for the AMA.
---------------------------------------------------------------------------------------------
March 15, 2000ÿ
ÿÿ
ÿ Editorial Page
ÿ In Boom Times,ÿ
ÿ Managed Care Is a Bust
ÿ By Mark V. Pauly, a professor of health-care systems at
ÿ the University of Pennsylvania's Wharton School.
ÿ Aetna, one of America's biggest for-profit
ÿ health-insurance companies, has been in serious turmoil
ÿ lately. Its CEO was dismissed, its stock price has fallen,
ÿ and its plan to split in two has gotten a chilly reception
ÿ on Wall Street. How did this happen? After all, Aetna
ÿ has been one of the most successful health insurers at
ÿ holding down health spending and monitoring results.
ÿ And doesn't its size and nationwide reach count for
ÿ anything anymore?
ÿ Aetna has company in its
ÿ misery, as virtually all
ÿ health insurers have fallen
ÿ out of favor. The problem is
ÿ not that managed care failed
ÿ to reduce costs. Real
ÿ private insurance premiums
ÿ have barely grown since
ÿ 1994.
ÿÿÿÿhttp://interactive.wsj.com/public/resources/images/edit_illust03152000160413.gifÿÿ
ÿ Despite a recent
ÿ upturn in projected employment-based insurance
ÿ premiums and benefits, real growth rates are still
ÿ probably below those of the late 1980s and early '90s.
ÿ The providers of health-care services are not benefiting
ÿ at insurers' expense. Physicians' incomes are barely
ÿ growing, hospitals (especially flagship teaching
ÿ hospitals) are on the financial ropes, and growing drug
ÿ benefits are still less than 10% of the total.
ÿ Demand Has Dropped
ÿ The problem is that the demand for Aetna's (and other
ÿ insurers') main service has dropped dramatically.
ÿ Insurers like Aetna are good at managing care in a way
ÿ that restrains patients and doctors from ordering and
ÿ using all medical care that could possibly do some good,
ÿ no matter what its cost. They achieve this outcome by
ÿ placing restrictions on the use of care that would
ÿ otherwise appear to the patient to be nearly free. They
ÿ require patients to go to gatekeeper primary-care doctors
ÿ first, they require many new members to switch doctors,
ÿ and they offer physicians incentives to follow guidelines
ÿ for cost-effective treatment.
ÿ This reasonable strategy has been the victim of two
ÿ kinds of success. One is the success of managed care in
ÿ virtually wiping out old-fashioned "indemnity" insurance
ÿ that paid for anything provided by any doctor or
ÿ hospital. Less than 15% of the nonelderly insured remain
ÿ in indemnity plans. As a result, managed-care plans can
ÿ no longer point to indemnity premiums as a benchmark to
ÿ show how expensive things could be. Such plans also
ÿ formerly provided a home for high risks and
ÿ hypochondriacs; now these people have been drawn into
ÿ managed-care plans, raising average benefit costs.
ÿ Blame Dr. Greenspan for managed care's other problem.
ÿ Real incomes have been steadily growing, and people
ÿ who are better off feel less need to be bothered in the
ÿ interest of cost containment.ÿ
ÿÿÿ In the late 1980s and early
ÿ '90s, real total compensation sometimes barely grew,
ÿ and when it did grow, a very large chunk of what might
ÿ otherwise have been raises was eaten up by rising
ÿ health-insurance premiums.
Employers pushed workers
ÿ toward plans that promised to put a lid on spending by
ÿ offering mildly bothersome but less costly insurance.
ÿ People bought coverage of better drugs and more
ÿ accurate tests by agreeing to stop by their gatekeeper
ÿ before proceeding further with care.
ÿ But now, with real incomes booming, employees no
ÿ longer demand frugality. And many health insurers are
ÿ already loosening up. United Healthcare has dropped its
ÿ gatekeeper requirement, and Aetna has taken the lead in
ÿ offering expanded physician networks with a wide
ÿ choice of participating physicians (along with "point of
ÿ service" plans, which offer partial coverage of
ÿ nonnetwork doctors).
ÿ Managed-care insurers' key asset, their ability to hold
ÿ down cost, has dropped in value. Add to these
ÿ fundamentals some ominous rumblings from an unlikely
ÿ alliance of doctors, legislators and lawyers, all bent on
ÿ hastening the transition to a more permissive
ÿ environment in which managed-care insurers (other than
ÿ Oxford Health Plans, which was already in financial
ÿ distress) had little expertise, and it is no wonder that
ÿ Wall Street bailed out.
ÿ What happens next? That depends on what happens to
ÿ the overall economy, and especially to the labor market.
ÿ If the economy remains vibrant, the labor market stays
ÿ tight, and the growth in health-care spending stays within
ÿ reasonable bounds, the future of managed-care plans is
ÿ not bright. Employers eager to attract and retain workers
ÿ will not want to offer health benefits that make their
ÿ employees mad.
ÿ Under these circumstances, the best that insurers can
ÿ hope for is that employers, many of whom are also stuck
ÿ in the old "cost containment" mindset, will permit their
ÿ employees to pay for more choice and more freedom in
ÿ health insurance -- if that is how the workers want to
ÿ spend the rewards from their increased productivity.
ÿ Some employers may go to the logical extreme of getting
ÿ out of the employees' way altogether, following Xerox's
ÿ provocative (but later qualified) forecast of a defined
ÿ contribution approach some time in the future.
ÿ The most optimistic scenario for managed-care insurers
ÿ is a pessimistic one for the rest of us. If the economy
ÿ cools down, and health spending heats up because of
ÿ new technology, the market for their cost-cutting powers
ÿ may re-emerge -- if a jumpy Congress lets it. The
ÿ process will not be helped by the American system of
ÿ tax subsidies to workers to let their employers arrange
ÿ health insurance for them, which isolates them from the
ÿ full cost of insurance, and which seems designed to
ÿ confuse.
ÿ Beloved Fictions
ÿ If the economy stays good, moderate profits will still be
ÿ possible if managed-care companies can make a graceful
ÿ transition into a more genteel style of control. This will
ÿ require jettisoning some beloved fictions -- that costs
ÿ can be contained without sacrifice by drawing down
ÿ "waste" in the system, and that managed care with limits
ÿ can somehow be as good in all dimensions as
ÿ old-fashioned insurance without limits.
ÿ Even in a prosperous economy, many Americans will
ÿ still demand some cost containment; many others will
ÿ not be willing to sacrifice so much of the other good
ÿ things their raises can buy for much better health care.
ÿ Many may still desire an insurance that is not quite as
ÿ good in every dimension but is considerably less
ÿ expensive; others will choose better but more expensive
ÿ plans. Presumably the market will segment, and Aetna
ÿ and its competitors will have to decide which model to
ÿ follow. |
