Health Insurance Commissioners Classify Loss Ratios

24 August 2010 |

Health Insurance Commissioners Classify Loss Ratios
An association of health insurance regulators tasked by Congress with defining what types of spending by health insurance companies constitute patient care came to an agreement on Tuesday regarding allowable spending.
The National Association of Insurance Commissioners voted overwhelmingly to adopt restrictive definitions of patient care.
The NAIC’s action has far-reaching consequences, because the Patient Protection and Affordable Care Act, the national health care insurance reform legislation signed into law in March by President Obama, mandates that health insurance companies must spend 85 percent of the premiums they collect from large group plans and 80 percent of premiums from small group plans and individual insurance directly on patient care. These percentages are known as the “loss ratio” of health insurance plans.
The insurance industry lobbied for a broad interpretation of patient care that included programs for improving communications between medical facilities, wellness incentives, and detection of redundant testing and fraud, all of which have a positive impact an patient care.
The insurance commissioners rejected the health insurance industry’s suggestions, leading patient advocacy groups to celebrate. “Today the NAIC took a step toward ending the health insurance companies’ stranglehold on our health care,” exulted Ethan Rome, executive director of Health Care for America Now. “The top state insurance regulators from across the nation voted to put patient care above insurance company profits.”
Insurance industry professionals worried that the strict definitions will hurt patients in the long run. Karen Ignagni, president and CEO of America’s Health Insurance Plans, said that the NAIC’s narrow interpretation of patient care “could have the unintended consequence of turning-back-the-clock on efforts to improve patient safety, enhance the quality of care, and fight fraud.” By forcing private health insurance companies to absorb the cost of wellness incentives, fraud detection, and other programs, the NAIC is constraining innovation, argues Ignagni. “Preserving patients’ access to high-quality health care services is essential if the key goals of health care reform are to be achieved,” she says.

An association of health insurance regulators tasked by Congress with defining what types of spending by health insurance companies constitute patient care came to an agreement on Tuesday regarding allowable spending.

The National Association of Insurance Commissioners voted overwhelmingly to adopt restrictive definitions of patient care.

The NAIC’s action has far-reaching consequences, because the Patient Protection and Affordable Care Act, the national health care insurance reform legislation signed into law in March by President Obama, mandates that health insurance companies must spend 85 percent of the premiums they collect from large group plans and 80 percent of premiums from small group plans and individual insurance directly on patient care. These percentages are known as the “loss ratio” of health insurance plans.

The insurance industry lobbied for a broad interpretation of patient care that included programs for improving communications between medical facilities, wellness incentives, and detection of redundant testing and fraud, all of which have a positive impact an patient care.

The insurance commissioners rejected the health insurance industry’s suggestions, leading patient advocacy groups to celebrate. “Today the NAIC took a step toward ending the health insurance companies’ stranglehold on our health care,” exulted Ethan Rome, executive director of Health Care for America Now. “The top state insurance regulators from across the nation voted to put patient care above insurance company profits.”

Karen Ignagni, president and CEO of America's Health Insurance Plans

Karen Ignagni, president and CEO of America's Health Insurance Plans

Insurance industry professionals worried that the strict definitions will hurt patients in the long run. Karen Ignagni, president and CEO of America’s Health Insurance Plans, said that the NAIC’s narrow interpretation of patient care “could have the unintended consequence of turning-back-the-clock on efforts to improve patient safety, enhance the quality of care, and fight fraud.” By forcing private health insurance companies to absorb the cost of wellness incentives, fraud detection, and other programs, the NAIC is constraining innovation, argues Ignagni. “Preserving patients’ access to high-quality health care services is essential if the key goals of health care reform are to be achieved,” she says.

Health Insurance Savings Tip: Ask Your Doctor for a Discount

4 August 2010 |

Your doctor’s office most likely offers discounts on medical care—all you have to do is ask.

Since many of today’s health insurance consumers have raised their deductibles to keep their premiums low, more people find themselves paying large out-of-pocket medical expenses than ever before. The federal government’s Centers for Disease Control and Prevention states that 20% of American consumers with group health insurance through their employers are in a high-deductible plan, with deductibles of $1,200 for individual coverage and $2,400 for family coverage. That percentage jumps to 47% among those with individual health care insurance coverage.

You don’t have to have a high-deductible health care insurance plan to feel the bite of out-of-pocket expenses. For example, an annual check-up that costs $350 likely will come in lower than the average annual deductible. Do not assume that you have to pay the full amount, however. Before the physical begins, confirm with your doctor that all the tests are absolutely necessary. Many doctors are practicing defensive medicine and do not realize that you will be paying out of pocket. Once they are aware of your situation, they might be able to eliminate one or two routine tests, shaving more than $100 off your bill.

Here are a few other ideas for saving on out-of-pocket medical expenses:

Cash Is King

Cash saves time, and time is money; so many doctor’s offices give discounts when you pay cash. “Some healthcare providers give anywhere from 10 percent to 60 percent off for paying cash,” reports Carrie McLean, a consumer expert with eHealthInsurance.com, an online health insurance broker. “It saves them time in having to bill you or set up a payment plan.”

Take an Interest Your Treatment and Tests

According to the Dartmouth Atlas Project, up to 30% of all medical treatments are not necessary. One reason for the waste: duplication of tests and procedures because of poor communication between physicians. Patients can eliminate the problem by taking a greater interest in their treatments and tests and bringing attention to tests that are being duplicated.

Shop Around

Just because your doctor recommends a test or care at a specific location it does not mean you have to go there. You can call around to find a lower price. Various providers charge various rates, often depending on their size. Larger institutions, such as hospitals, have more negotiating clout, and often are able to obtain higher prices from insurance companies. Smaller offices, such as ambulatory care centers, often charge less.

Compare Apples to Apples

Every procedure and test has a common procedural terminology (CPT) code that is used by health care providers to bill Medicare and health insurance companies. Find out the CPT for the test or procedure you need, and ask for pricing based on that code. That way you can compare apples to apples.

Get It In Writing

If you successfully negotiate a lower price with a healthcare provider, be sure to have them give it to you in writing. Because of time delays in appointments and the large number of people who go through every office, you cannot depend on office staff to remember your individual agreement. In addition, the majority of healthcare providers contract with a medical billing company that will not be aware of your agreement. Having the pricing documented will make it easier to correct any errors that might arise.

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