I Hope Trustmark Tells HHS to Go Pound Sand

Today, the Department of Health and Human Services announced that, "Trustmark Life Insurance Company has proposed unreasonable health insurance premium increases in five states—Alabama, Arizona, Pennsylvania, Virginia, and Wyoming. The excessive rate hikes would affect nearly 10,000 residents across these five states."

The HHS statement continued, "In these five states, Trustmark has raised rates by 13 percent. For small businesses in Alabama and Arizona, when combined with other rate hikes made over the last 12 months, rates have increased by 27.2 percent and 18.1 percent, respectively. These increases were reviewed by independent experts to determine whether they are reasonable. In this case, HHS determined that the rate increases were unreasonable because the insurer would be spending a low percent of premium dollars on actual medical care and quality improvements, and because the justifications were based on unreasonable assumptions."

I hope Trustmark tells HHS to go pound sand.

Here inside the Beltway, there is this assumption that the health insurance market is not competitive and health insurance consumers--in this case small employers--are helpless without the federal government. From the HHS statement: "Before the Affordable Care Act, consumers were in the dark about their health insurance premiums because there was no nationwide transparency or accountability."

Baloney.

We can all have a vigorous debate about just how well the health insurance market has worked to control health insurance costs and readers of this blog know I haven't exactly been an insurance industry apologist on that score.

But anybody who thinks there is no "transparency" or no "accountability" in the small group market has never been there.

Small group carriers regularly see 30% of their block "churn" in a given year as they lose business to competitors. It is not unheard of for an entire block to turn over every few years. There are tens of thousands of health insurance agents and brokers tripping over each other out in the market--their trade association claims 100,000 members. If the incumbent agent isn't continually "check bidding" for his customers that agent can be sure lots of his competitors will be knocking on that client's door with lower rate quotes.

There is no market in America any more competitive than the small group health insurance market. Does competition work to control costs? That's another story. But a lack of competition is not what ails the small group health insurance market.

I have no idea whether Trustmark's rate increases are reasonable or not, or whether they made mistakes in calculating them. I am certain they know they will lose lots of business if these increases are not competitive.

Is a 27% rate increase justifiable at a time when health insurance cost trend is at historic lows? I don't know--it depends where the rates started. My point is that knowing a carrier's rate increase percentage tells you nothing about whether that rate is reasonable or not. It is the absolute rate that matters. Maybe Trustmark erred in setting these rates in the first place and is now playing catch-up.

What matters to a health insurance buyer is not the rate increase or even the medical loss ratio, what matters is the price--which insurer has the lowest price for the same benefits.

Who will know whether the final price is reasonable or not? The small group customer who, upon getting a 27% rate increase, will demand the business go out to bid--presuming the agent hasn't already done that. It the rate is not competitive, the business will very quickly be moved to another insurer where it is.

This rate increase action by HHS is just political grandstanding as the Obama administration tries to sell a still unpopular law.

But it is dangerous grandstanding.

Let me tell you something you may find counterintuitive about the small group and individual health insurance markets. It is the little and often "inefficient" carrier that keeps the big guys honest. These guys often come in and out of markets necessarily undercutting the dominant players' rate base to get a foothold in the market. And, by the way, Trustmark is a mutual company owned by its policyholders. The big guys would like nothing more than to get rid of these little "pests" that upset the market order. And, HHS appears to be doing its best to comply.

This rate oversight action by HHS amounts to nothing more than the jumbo insurance company full employment act. If HHS thinks an oligopoly in the health insurance market, where only a very few big guys dominate the market, is the way to create competition, they are well on their way.

Unless Trustmark, and the little guys like them, just tell HHS to go pound sand.

Transparency and Accountability: The Door Swings Both Ways--AMA Releases Its "National Health Insurer Report Card"

You have to wonder what they're thinking about over at AHP--the health insurance trade association that called for more transparency and accountability for the provider community a few days ago--now that the American Medical Association's (AMA) detailed report card on insurer claim processing performance is out.

And, it's a fascinating read.

How often do health plans pay at the contracted payment rate?

"On what percentage of records does the payer's allowed amount equal the contracted payment rate?" The AMA says health plans accuracy rates are:

• United Healthcare registered a score of 61.55%
• Cigna scored 66.23%
• Aetna came in at 70.78%
• Anthem (Wellpoint) scored 72.14%
• Humana came in at 84.20%
• Coventry was the best at 86.74%
  

Well, Coventry was the best except for Medicare, which the AMA said scored a 98.12%. So much for the for-profit model doing a better job than all those bureaucrats.

Medicare was the slowest on turnaround time for receiving and responding to a claim (14 days) and had the highest denial rate (6.9%), however.

You can see the entire report and the methodologies on the AMA site. The insurer comparison doc is labeled, National Health Insurer Report Card.

Is the Bush Administration in Favor of Provider Transparency and Accountability or Aren't They?

Brian Klepper has shared an open letter he and Michael Millenson have written to HHS Secretary Leavitt regarding the issue of provider information transparency and the Department of HHS's apparent contradiction with its own policies.

An Open Response To HHS Secretary Michael Leavitt
by Brian Klepper and Michael Millenson

A few months ago, the two of us – both long-time advocates for transparency and accountability – posted separate comments on Secretary Mike Leavitt’s blog. Brian asked Secretary Leavitt to square his support of "Chartered Value Exchanges” with the attempt to block release of physician-specific Medicare claims data to Consumers’ Checkbook, which wants to rate doctors. After a court ruled that the data should be provided to the group, HHS appealed. Michael urged the secretary to go beyond supporting Consumers’ Checkbook and use his “bully pulpit” to promote sophisticated data analysis that could be used to create national quality comparisons.

Secretary Leavitt graciously asked us to consider and comment on the department’s proposed "Medicare trigger legislation" calling for the release of physician performance measures. We are delighted to continue the conversation.

First, let’s give credit where credit is due. We agree that the proposed legislation is a major step in the right direction.

Yet the legislation’s intent seems at odds with the department’s turn-back-the-clock arguments in Consumers’ Checkbook vs. HHS. There, the department asserts that physicians have a right to privacy, and that the quality of medical care they provide in return for taxpayer dollars does not have to be disclosed — despite its importance to consumers and other purchasers of care. Interestingly, this privacy is a privilege hospitals do not enjoy.

In a December 10, 2007 American Medical News article (since revised), the American Medical Association’s board chair gloated that HHS had taken the AMA's “advice” in appealing the original August 22, 2007 District Court ruling for Consumers’ Checkbook. Moreover, as the Los Angeles Times pointed out, while the department proclaims in press releases that it simply wants legal clarification on its authority to release the physician data, the government's legal brief in the case calls for the appeals court to reverse [the August] ruling, leaving the restrictions on the release of data in place.

This is not a partisan issue. Most objective health care experts across the political spectrum believe that transparent pricing and quality information is critical to transforming the current crisis-ridden system into one that is stable and sustainable. Without the kind of information sought by Consumers’ Checkbook, a health care marketplace simply cannot function. President Bush virtually said as much in his August, 2006 executive order.

HHS has said it “recognizes and shares the goals of Consumers’ Checkbook.” If that is so, HHS should match words with deeds. That means dropping its appeal of the Checkbook ruling and challenging purchasers, health plans and individual consumers to use the marketplace to reward doctors and others who provide or contribute to safer, higher quality, more efficient care.

Respectfully,

Brian R. Klepper, PhD
Healthcare Performance, Inc.
Atlantic Beach, FL
904.246.9643o
bklepper@gmail.com

Michael L. Millenson
Health Quality Advisors LLC
Highland Park, IL
847.681.1476
mm@healthqualityadvisors.com


Secretary Leavitt's Original Response to Brian and Michael:

Claims Data from Medicare

The proposal I made last week is also relevant in another way. A couple of commenters asked about a lawsuit involving the use of Medicare claims data by people outside of government.

Brian Klepper said: “On Friday the Memphis Business Journal reported you saying that we ought to have ‘a Travelocity for health care’ that would ‘give a quality grade for doctors and show how much they charge for services.’ I'm wholeheartedly with you on this. But how do you square this proposal with the fact that, though you're the nation's largest payor, you acquiesced to the AMA's interests and then refused to release physician data?

Can you please explain these discrepancies?”

Michael Millenson of Highland Park, IL agreed with Brian. He said, “It's past time for HHS to be an aggressive, whole-hearted mover towards release of more information and more timely information. Meanwhile, one easy, no-cost step would be for Secretary Leavitt to use his bully pulpit to call for states to collect ‘all payer’ data. It sounds like a technical issue, but what it will do is allow valid national comparisons of quality of care, as well as enable better state efforts. A local/nation win-win.”

I want to use Medicare claims data for this purpose. And I have been advocating the states provide their data for this purpose. However, I have a problem. A federal court in Florida, some years ago, prohibited HHS from publicly disclosing certain Medicare claims data. Specifically, HHS was prohibited from disclosing annual Medicare reimbursement rates for individually identifiable physicians.

A few months ago, another federal court — this time in D.C., ruled the opposite — that I must provide the data to a specific party. This leaves me sandwiched between two differing courts.

We are working to develop a solution. However, the real fix will need to be legislative.

In the Medicare trigger legislation I sent to Congress, I have included language that would allow HHS in a thoughtful, consistent way to enhance quality improvement efforts in our Chartered Value Exchanges with physician performance measurement results. This needs to happen. I think there is a potential for bipartisan action on at least this part of the legislation I sent up.

Michael and Brian, take a look at the legislation linked above and tell me what you think.