Pay Me Now, Or Pay Me Later...

Over at Health Business Blog, proprietor David Williams has an interesting post about an insurer that “tells patients how much insurance will cover and how much is the patient's responsibility --right at the point of care.” Apparently, BX of South Carolina has started doing just that. Is this the wave of the future? Check it out.

Tales From The Trenches 1...

There are days…Case in point: Bill and Loni are a nice older couple who’ve recently lost their jobs. Their old employer, XYZ Boxes, was sold to Acme Bags, which laid off most of XYZ’s workforce (gee, THAT hardly ever happens, hunh), including Bill and Loni. Their termination date was June 14, but the coverage was good through the end of the month. Since there were more than 20 employees working at XYZ, they were subject to COBRA.

In any case, they were told that they needed to send XYZ a check for $870 to cover their July insurance premiums. They were given nothing in writing to indicate how that number was arrived at, nor how much of that was for Bill and how much for Loni. In fact, they had literally nothing in writing to indicate that the check would even be used to pay their insurance premium. Nevertheless, they knew that they needed the coverage, so they sent the check.

I first came into the picture last week, when Loni called me for help and advice. Her sister is one of my clients, who referred Loni and Bill to me [ed: call Ripley’s!]. We spoke on the phone a while, and agreed to meet in person to see about options and recommendations. The appointment was yesterday afternoon.

When they arrived, I met a very handsome, mature couple. Bill is 75 and Loni, 63. Bill has a rather problematic health history, while Loni is in pretty good shape. In fact, we quickly decided that she would qualify for a “regular” major medical plan, and moved on to Bill, who posed a more difficult set of problems. For starters, he had not taken advantage of the “window” at age 65 (which would have made a Medicare supplement guaranteed issue), and at age 75 he probably won’t qualify for a plan that will cover what he wants.

In order to have a complete picture, I asked how much of that $870 monthly premium was attributable to each of them. As I indicated above, they had no clue, nor did they have anything in writing regarding their COBRA rights, costs, etc. That’s really not unusual: companies have a 44 day window from the “qualifying event date” to get this info to their former employees, and the clock had really only started ticking a few weeks ago. What did seem unusual to me was the requirement that they (essentially) pre-pay the COBRA premium, with nothing to indicate the validity of the amount.

So I called the Department of Labor, which oversees and enforces COBRA.

At the DOL, I spoke with a very nice, very knowledgeable young lady named Shari, who shared my concern about the oddity of the premium request. We agreed that the best course of action would be for me to call the folks at XYZ, to try to determine what was going on, and to let Shari know if I needed any help after that.

And so, after finishing the call to DOL, I rang up XYZ Boxes. I explained who I was and why I was calling, and was forwarded to the man ostensibly in charge. Once again, I identified myself and the purpose of my call, which was simply to determine how Bill and Loni’s COBRA options were being handled.

It went downhill from there.

Part 2: “I don’t know, and I don’t care.” Or “Yes, please report my company to the Feds!”

Entrepreneurs Beware...

If you’re filed as an S-Corp, then you’ll want to check out Roth & Co’s new posts on IRS audits. Seems that the Infernal Revenooers have launched a new “Research Program” that could increase your chance of being audited. Read all about it here and here.

Grand Rounds...

is up at Pharyngula. This is a great way to "sample" a lot of interesting medblogs. Recommended.

Risky Business, Part 2...

In the first part of this series we learned about what High Risk Health Pools (HRP) are, what they do, and a little about how they work. The Ohio Department of Insurance commissioned a study [ed: your tax $ at work] to determine how such a plan might work here in the Buckeye State.

Conducted by Leif Associates, the study concluded (ALERT: Shocking Conclusions Follow]:

1. An HRP is a “viable option” for Ohio residents who are uninsurable
2. HRP’s charge high rates, “therefore a high-risk pool does not entirely solve the problem of affordability.”

I suspect most people saw that one coming. According to the report, “many states have adopted discount programs to assist low-income participants.” Isn’t that just a fancy way of saying “raised taxes on everyone to help uninsurable folks buy insurance?”

Will it work? That is to say, will it dramatically reduce the number of uninsureds? Well, according to the report, there are about 1.3 million Ohians currently without health insurance. Some of these folks will be eligible for coverage under an HRP plan, and some of those will be able to afford said coverage. Okay, then, how many people are we talking about here? Well, Leif estimates than less than 3,000 folks will purchase coverage through the HRP in the first year (that’s 2 tenths of 1%, for those of you keeping score at home), growing to almost 13,000 in the fifth year (ooooh, 1% of the estimated total number of uninsured).

The report goes on to claim that as many as 15,000 people could potentially be covered (no real definition of “potentially;” could be in 6 years, or 60). And there’s this:

“All high-risk pools lose money,” says the report, which adds “(a)dditional funding from some source is therefore required.” Didn’t we cover that in the 3rd paragraph? Boiled down, the report posits that these “additional sources” are increased taxes, and assessments on insurers. Although the report doesn’t explicitly say so. these assessments would then be passed along in the form of rate increases.

So, how much does all this cost? Leif estimates that individual premiums will come in around $476 per month. Claims and admin costs are projected to be about $976 per, which leaves the state holding the bag on about $500 a month, or $6,000 a year – per participant. Ouch. But there’s good news: by the 5th year, the premium’s expected to rise to about $800 a month, and the shortfall to almost $11,000 a year.-In all, the HRP plan is expected to cost $20 million it’s first year. To cover maybe 3,000 people. That’s over $6,000 per participant. Seems like a pretty hefty price tag for such a small group of people. On the other hand, the report notes that no HRP has yet become unsolvent, and claims that adequate oversight is the key. I’m not so sure I agree with that conclusion, but the report goes on to acknowledge that “the impact of future increasing costs could be minimized by limiting enrollment…reducing benefits…or increasing cost-sharing [premiums].”

For those who want to read the whole thing for themselves, the report is available (in pdf form) here. Be forewarned, though: it runs 67 pages.

My real dilemna here is that I really do like the idea of an HRP, and I really don’t have a better alternative to suggest for covering the uninsurable. I see the potential high costs of the HRP idea, but I also see the here-and-now costs of the current system.

What do y’all think?

UPDATE: Out of Network Emergency Care...

As you may recall, a few weeks ago I wrote about a carrier’s decision to penalize its insureds who received emergency care from non-participating providers.

My understanding was that this was a no-no, and I began a correspondence with the Ohio Department of Insurance about it.

The carrier in question is Anthem Blue Cross/Blue Shield, and I’ve received this answer from the DOI, which says that Anthem’s position is “kosher:”

“(A)n indemnity insurer licensed to do business under Title 39 of the Ohio Revised Code would not be prohibited under applicable Ohio law from implementing the practice described in Anthem's notification.”

In short, plans such as this are not subject to the limitation on Out of Network (OON) penalties.

Now comes word that Anthem won’t implement this change until the first of next year. They can’t resist the cheap shot, though: “(C)urrently there are only two hospitals that offer emergency services in Ohio, Kentucky and Indiana that are not contracted with Anthem in any network. Those are (the) Premier Health Partners hospitals.” Again, punishing your policyholders for something that is absolutely out of their control.

It may be legal, but it just ain’t right.

Sheesh.

Despicable Insurance Sales Idea...

And no, that’s not redundant. Most agents, and most companies are not inherently evil, although a lot may be shortsighted. According to dictionary.com, despicable means: “worthy only of being despised and rejected.” And to which nasty practice do I refer? This one:

"Dear terrorists, new firman issued. Kill 10, take a branded T-shirt and be best terrorist in the group. Jehad begins from July 18-20 – Osama bin Laden.’’

It is creative minds at work at ICICI-Prudential Insurance Company, exhorting local agents to go for a ‘sales kill’. The new strategy was aptly named ‘MissionJehad’.

In a meeting of the company’s agents on Tuesday night, employees were asked to adopt the “binLaden strategy”, ie, one terrorist killing 10 people.

Here, though, jehad meant sale of insurance policies.

As I said, this is absolutely the most disgusting insurance idea I have EVER seen. And in over 20 years in the biz, I've seen a few.

Now, according to A M Best, the “Prudential” in this case is Prudential plc, a British company, and not “the” Pru. Of course, our own Pru has been accused of its share of questionable sales practices over the years, but nothing that approaches this level of depravity.

Does it matter that this took place in (faraway) India ? No. Some home office “leader” saw and approved this, and it reflects poorly on the industry. In fairness, it’s not a story that’s gotten a lot of play in the press (yet?), but I have no doubt that at least some carriers here know about it. I would certainly hope that it is condemned in the industry press.

What causes a presumably successful company to engage in such a practice? Obviously, we don’t know. But I would hazard a guess that it’s a result of a corporate culture of greed. That is, when sales become more important than integrity, abominable ideas such as this begin to surface. Now, that may mark me as naïve, but it doesn’t change the veracity of the statement.

Interestingly, the carrier is called ICICI-Prudential, and it’s a joint venture between a bank and an insurer. Perhaps that’s the root of the problem.