Cutting costs tops PWC list of top 10 healthcare issues for 2010

J Roberts

According to PricewaterhouseCoopers cutting healthcare costs will be a top priority among the industry for 2010.  You don’t need to be a rocket scientist to know that the cost of providing medical care rarely decreases. So lets see what 2010 will bring. The proof will be in the pudding.

Healthcare Finance News

Diana Manos

NEW YORK – Squeezing every penny out of healthcare costs will top the healthcare industry’s focus for 2010, according to PricewaterhouseCoopers.

“Healthcare typically lags trends in the business cycle by a year or more. While flat may be the new growth for other sectors of the U.S. economy, the recession could hit healthcare in 2010,” said David Chin, MD, partner and leader of PricewaterhouseCoopers’ Health Research Institute, in an analysis released Thursday.

“The primary emphasis for all healthcare organizations in the year ahead will be on reducing costs and creating greater value in the health system, a focus that will have a domino effect from one sector to another and redefine roles, responsibilities and relationships,” Chin said.

PricewaterhouseCoopers’ Health Research Institute publishes its list of top healthcare issues annually. According to researchers, the report includes trends affecting insurers, hospitals, physicians and other providers, pharmaceutical and life sciences companies, as well as the growing number of non-traditional market participants converging on the healthcare space.

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NJ hospital bills highest in nation

J Roberts

New Jersey leads the country with the highest charges for health care services. According to the below article, charges by hospitals in New Jersey are four times higher than the actual cost. This a serious matter and New Jersey hospitals are not alone in the practice of pricing procedures based on inflated charges that they assert are a reflection of the market. Read the examples in the article and take warning; if you use a non-participating hospital, or are uninsured or have hospital out-of-pocket expenses – never pay the full charge! Medical Cost Advocate may be able to assist you by negotiating your claim and reducing your bill.

 Star-Ledger – Trenton Bureau

  The pain in Dan Abrams’ leg throbbed so much he could barely stand. 

Still, the 60-year-old Somerville resident, who friends say had just canceled his health insurance because of the tough economy, debated from a hospital emergency room whether he should stay and run up thousands of dollars in debt, or take antibiotics from home and hope they arrested the mysterious infection in his leg.

 Fearing he could lose his home and flooring business, Abrams chose to leave Somerset Medical Center after a hospital physician said staying would “run him a lot of money,” said Connie Dodd, a close friend who drove him to the hospital and heard the conversation. “I begged him to stay. But Dan’s a proud man. Talk of all the bills got him scared.” 

When Connie and her partner, Cindy Weiss, brought Abrams dinner the next night, July 29, they found his lifeless body in bed. Weiss performed CPR but it was too late. “It was a nightmare,” Dodd said.

 For people without health insurance, few things are more intimidating than the arrival of a hospital bill. 

Nowhere is the sticker shock worse in the country than in New Jersey, according to health experts and a new report by the New Jersey Health Care Quality Institute, a prominent health care policy group based in Trenton.

 New Jersey’s hospital “charges” the price list used to negotiate the cost of a bill for the uninsured and for insured people who use a hospital outside their network are four times higher than the actual cost of treating a patient. 

For thousands, the charges mean astronomical bills after a hospital stay. Insurers contend they also force higher premiums for anyone with health insurance.

(more…)

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Paying for health care? Less is more.

J Roberts

The saying “less is more” holds true these days, especially when it comes to health care. Though long, the following article accurately depicts the issues many small employers and individuals face each year when purchasing health insurance. Perhaps you are experiencing the same issues in your annual insurance enrollment.

Philadelphia Inquirer – Online
Stacey Burling

Talk to just a handful of small businesses about buying health insurance over the last few years, and the narrative quickly starts to sound familiar.

It boils down to paying more and more for less and less. Oh, and passing on more of the cost to employees, who aren’t exactly rolling in raises these days.

Increasingly, small businesses have given up, fueling the rise in the ranks of the uninsured and the debate in Washington about how to change health insurance so that more of us can afford it.

Consider Bob & Ron’s World Wide Stereo, which has stores in Montgomeryville and Ardmore. Owner Bob Cole has been providing insurance for 31 years.

At the beginning, he said, “I paid for it 100 percent. I did their families. I did everything. Over the years, I’ve cut back that support because of the extraordinary expense.” Cole still provides family coverage for longtime workers, but new ones pay the full cost of dependent coverage.

Over the last five years, the company’s contribution for health insurance has grown from 0.7 percent of total revenue to 1.1 percent. During those years, while the overall inflation rate never rose above 4 percent, the company’s health insurers – first Aetna Inc. and now HealthAmerica – came asking for rate increases of 23 percent, 27 percent, 9 percent, 20 percent, and, this year, 38 percent.

As a result, Bob & Ron’s, which covers 41 employees, has reduced what its health policy covered almost every year. It switched insurers in 2008.

“Every little change you make to save a little money reduces the quality of the coverage your employees get,” said Patrick Moran, director of operations, finance, and human resources.

Insurers say their prices track increases in medical costs, which are rising because of wider use of expensive technology and drugs.

While 98 percent of companies with more than 200 workers still provide insurance for employees, the percentage at smaller firms has fallen, according to the Kaiser Family Foundation. Most of that drop is in the smallest companies, those with fewer than 10 workers. In 2001, 57 percent of them provided insurance. Only 46 percent do now.

Small businesses say cost is their biggest insurance problem. According to Kaiser, small businesses actually pay slightly less per employee for insurance, but the plans often have higher deductibles. In testimony before a Senate committee, MIT economist Jonathan Gruber said small companies paid as much as 20 percent more for comparable plans because of insurers’ higher marketing and administrative costs, including the cost of figuring out how to avoid insuring companies with sick employees. Small firms often pay broker commissions, which amount to 4 percent to 11 percent of premiums. Local brokers said commissions here, which are paid by insurers, were more like 4 percent to 5 percent. Some insurers plan to switch to flat fees.

 Price volatility in the small-business market is what most concerns Randy Rohrbaugh, a Pennsylvania deputy insurance commissioner. Because many insurers base prices on the age and health of employees, one serious illness or a few birthdays can make a big difference in the bill.

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From the Hospital to Bankruptcy Court

J Roberts

It’s not clear how many people nationwide file for bankruptcy due to medical bills, but onething is for certain, the number appears to be rising. Read the following article from The New York Times to learn how people in and around Nashville Tennessee are going bankrupt as a result of costly medical bills.

New York Times – Atlanta Bureau

NASHVILLE — Some of the debtors sitting forlornly in this city’s old stone bankruptcy court have lost a job or gotten divorced. Others have been summoned to face their creditors because they spent mindlessly beyond their means. But all too often these days, they are there merely because they, or their children, got sick.

Wes and Katie Covington, from Smyrna, Tenn., were already in debt from a round of fertility treatments when complications with her pregnancy and surgery on his knee left them with unmanageable bills. For Christine L. Phillips of Nashville, it was a $10,000 trip to the emergency room after a car wreck, on the heels of costly operations to remove a cyst and repair a damaged nerve.

Jodie and Charlie Mullins of Dickson, Tenn., were making ends meet on his patrolman’s salary until she developed debilitating back pain that required spinal surgery and forced her to quit nursing school. As with many medical bankruptcies, they had health insurance but their policy had a $3,000 deductible and, to their surprise, covered only 80 percent of their costs.
“I always promised myself that if I ever got in trouble, I’d work two jobs to get out of it,” said Mr. Mullins, a 16-year veteran of the Dickson police force. “But it gets to the point where two or three or four jobs wouldn’t take care of it. The bills just were out of sight.”

Although statistics are elusive, there is a general sense among bankruptcy lawyers and court officials, in Nashville as elsewhere, that the share of personal bankruptcies caused by illness is growing.

In the campaign to broaden support for the overhaul of American health care, few arguments have packed as much rhetorical punch as the there-but-for-the-grace-of-God notion that average families, through no fault of their own, are going bankrupt because of medical debt. President Obama, in addressing a joint session of Congress in September, called on lawmakers to protect those “who live every day just one accident or illness away from bankruptcy.” He added: “These are not primarily people on welfare. These are middle-class Americans.” The Senate majority leader, Harry Reid of Nevada, made a similar case on Saturday in a floor speech calling for passage of a measure to open debate on his chamber’s health care bill. The legislation moving through Congress would attack the problem in numerous ways. Bills in both houses would expand eligibility for Medicaid and provide health insurance subsidies for those making up to four times the federal poverty level. Insurers would be prohibited from denying coverage to those with pre-existing health conditions. Out-of-pocket medical costs would be capped annually.

How many personal bankruptcies might be avoided is unpredictable, as it is not clear how often medical debt plays a back-breaking role. There were 1.1 million personal bankruptcy filings in 2008, including 12,500 in Nashville, and more are expected this year.  Last summer, Harvard researchers published a headline-grabbing paper that concluded that illness or medical bills contributed to 62 percent of bankruptcies in 2007, up from about half in 2001. More than three-fourths of those with medical debt had health insurance. But the researchers’ methodology has been criticized as defining medical bankruptcy too broadly and for the ideological leanings of its authors, some of whom are outspoken advocates for nationalized health care.

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Recession leads many patients to skip routine care

J Roberts

American Medical News

Another study reveals more Americans are sacrificing needed care due to the troubled economic times.

A North Carolina survey also finds 36% of respondents report buying fewer prescription drugs.

Economic worries appear to be keeping patients in North Carolina from seeking regular physical exams and routine dental visits. Medical tests and operations are being delayed. More time is lapsing between prescription refills, if they are filled at all.

This is true even for some patients who have insurance, according to the results of a survey by BlueCross BlueShield of North Carolina released Oct. 19.

“The recession and rising health care costs are having an impact on preventive health services. … But there’s never a good time to skip preventive health and healthy living,” said Don Bradley, MD, the North Carolina Blues’ senior vice president and chief medical officer.

To gauge the effect of the economy in North Carolina, the insurer commissioned the Durham, N.C.-based market research firm W5 to conduct a survey in April and May, talking to 501 people in the state, including those who were uninsured or covered by other insurers.

Approximately 17% reported skipping a regular physical exam because of cost, and 17% were decreasing their visits to specialists. In addition, 17% were postponing tests or operations and 15% were refusing these procedures outright.

The economic downturn also affected patient willingness to fill prescriptions. About 36% bought fewer prescription drugs, and 31% refilled them less frequently. Fifteen percent were not filling prescriptions given to them, and 21% said they relied more on over-the-counter medications.

These percentages were much higher for those who were uninsured, although a significant proportion of those with insurance were also taking belt-tightening steps.

National surveys have found similar results, suggesting the economic downturn is taking its toll on patients’ ability to access health and the financial viability of medical practices.

An American Academy of Family Physicians survey released in May found 89% of its members were seeing more patients who were expressing concerns about their ability to pay for health care, and 58% of physicians were seeing an uptick in appointment cancellations. The survey is online (www.aafp.org/online/en/home/media/releases/newsreleases-statements-2009/nationalsurvey-familydoctors-recession.html).

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Too little focus on health costs

J Roberts 1 Comment

Concord Monitor – Online

The following editorial describes the one key component that seems to be missing from the national debate on Healthcare reform: Rising costs.

Most people agree that reform of our nation’s health care system is needed. Not everyone is covered by health insurance or covered well, exposing them to financial catastrophe if their health goes awry. Quality of health care varies from region to region, and from provider to provider. And costs are staggering.

A recent study showed health insurance premiums in New Hampshire have increased over 90 percent from 2000 to 2008. By comparison, wages rose just 21 percent over the same period.

Ask business people in New Hampshire to name their top challenges and they’ll tell you that at or very near the top of the list is paying for the rising cost of health care and health insurance for their employees. This has been a constant refrain for years from our members across the state, from every industry type, and from every size enterprise.

It’s remarkable, therefore, that health care reform under consideration by our congressional delegation in our nation’s capitol seems very likely to add to health care costs, not reduce them. What happened to “bending the cost curve” and eventually lowering it?

Pick your source – the Congressional Budget Office, the Lewin Group, the Centers for Medicaid and Medicare Services, and others – they conclude that health care reform legislation under consideration will, incredibly, increase costs, not lower them.

Lots of attention is being paid to expanding government programs like Medicaid, or creating new ones like a “public option” insurance plan, to cover more uninsured and underinsured individuals. Unfortunately, the federal government’s long track record of grossly under-funding health care providers for their cost of caring for individuals in existing government programs like Medicaid and Medicare makes many employers understandably concerned about expanding them or creating new ones.

More under-funding from the federal government means more cost-shifting to the business community in the form of higher health insurance premiums. How is this reform?

Too little attention is being paid to moving these massive federal programs away from the current fee-for-service payment structure which often rewards health care providers for providing more care, but not necessarily better care, because they get paid more.

Not enough attention is being paid to rewarding providers for lower utilization and improved health outcomes for patients. Too little attention is being paid to reforming our legal system so doctors move away from practicing defensive medicine in order to lesson the odds of being sued.

Until the great health care reform debate shifts emphasis away from its focus on expanding government health care programs or creating new ones, and toward reforming payment incentives, there will be no bending of the cost curve. The curve will continue to rise, and employers will find it increasingly difficult to provide a critical benefit for their employees, and compete in the global economy.

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Health Costs Are Crushing Small Businesses

J Roberts

WSJ. – The Magazine from the Wall Street Journal

By MARY LANDRIEU

Read about Senator Landrieu and her commitment to small business owners to make health care more affordable to the 27 million small businesses in this country. As a service provider to many small companies, Medical Cost Advocate is all too familiar with the many challenges faced by small businesses in navigating the health care maze. Small business owners should reach out to consumer directed health care service providers as self service allies for their employees.

After years of struggling with costs that were eating into his bottom line, David White, a small business owner in Maine, recently dropped health insurance for himself and his employees. It was a nerve-wracking decision. “I just hope my people or I don’t get sick,” he told a small business advocacy group.

Louise Hardaway wasn’t willing to take the same risk. Health-care costs forced her to close her small business in Tennessee. Factor 4 Life was, ironically, a business that helped people navigate the health-insurance system!

Unfortunately, these stories are not unique. As chairwoman of the Senate Committee on Small Business and Entrepreneurship, I hear about a lot of business owners hit hard by health-care costs. These costs not only eat into profits, they prevent small businesses from hiring more workers.

Small firms, defined as less than 500 employees, pump almost a trillion dollars into the economy each year, create two-thirds of our nation’s new jobs annually, and account for more than half of America’s work force. But too much of their money is going toward high health premiums that are increasing faster than the prices of the products and services they provide—four times faster than the rate of inflation since 2001, according to the Kaiser Family Foundation.

Nationwide, small firms will spend $156 billion on health premiums this year. In place of those high premiums, small business owners could employ 10 million additional workers—the entire state of Michigan—at minimum wage for a year.

Unless something is done, annual health-care costs for small firms over the next 10 years are expected to more than double to reach $339 billion in 2018. As those costs increase, the burden will get heavier and force many of them to lay off workers. The Small Business Majority, an advocacy group, estimates that over the next decade about 943,000 small business jobs will be lost.

Today, there are already 14.9 million people unemployed in America. We don’t need to add to those ranks, instead we need to help small businesses create more jobs. The path we are on now is unacceptable and unsustainable.

Small businesses want to provide health coverage to their workers, but when faced with cutting employees or cutting insurance, the insurance is the first to go. In 1993, 61% of all small companies offered health coverage. Today that number is less than 38%.

Employers who can afford to provide health coverage are providing it because they are competing with big businesses that offer quality health-care choices for top talent. Businesses not offering coverage are often small, low-wage firms that can’t afford it. There are 27 million small businesses in America, 22 million of which are sole proprietorships. And it is often sole proprietors that have trouble affording health insurance.

Insurance premiums for sole-proprietors are up 74% since 2001. This has made health insurance even harder to afford. And while big firms can deduct health premiums on their federal tax returns, under current tax rules sole proprietors often cannot. This forces them, on average, to pay nearly $2,000 more a year in taxes than they otherwise would have to pay. That is money they could use to buy new computer equipment or other things necessary to keep a business running efficiently.

The additional tax burden that sole proprietors have to pay has not yet been addressed by proposed health-care reforms. To keep our economy healthy we must keep our small businesses healthy, and that begins with stable, affordable health insurance.

I am committed to working with my Senate colleagues and the Obama administration to ensure that the health-care reforms our small businesses desperately need are passed. Small businesses—and all Americans—can’t go another pay check without meaningful reform.

Ms. Landrieu, a Democrat, is a U.S. senator from Louisiana.


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Tired of fighting medical providers? Hire a negotiator

J Roberts

 Check out Aaron Crowe’s recent article about Medical Cost Advocate which recently appeared on WalletPop.com. One thing is for sure, Aaron is right on when he states, “…one of the worst bills to receive is a medical bill.” Medical Cost Advocate is the resource that can assist you in reducing your medical bills.

Aaron Crowe

Of all the bills that arrive in the mail, one of the worst has to be a medical bill.

Whether from your insurance company or medical provider, the expensive bills are difficult to understand and patients don’t know if they’re getting ripped off.

Add in the fact that by a conservative definition, 62% of all bankruptcies in 2007 were because of medical bills, with 92% of those debtors incurring more than $5,000 in unpaid medical bills, and a hospital bill is enough to send you back to the hospital.

With an 80% success rate of getting patients’ bills lowered, Medical Cost Advocate, or MCA, negotiates with medical providers to get lower bills. It’s a service that makes everyone happy, said Derek Fitteron, CEO and founder of MCA. Patients pay less and doctors get paid.

“It’s not a lose situation for the doctor,” Fitteron told me in a telephone interview from his office in New Jersey.

With most of MCA’s negotiators being attorneys, they know how to negotiate a lower bill by providing data showing how much the same procedures cost across the country, and get the doctor paid soon instead of having to send out multiple bills to patients, Fitteron said.

I recently wrote a story for WalletPop about a Web site that lets customers bid for prices on health care before they visit a doctor. MCA turns that around and helps people lower their bills after their care. It’s rare for people to know how much something will cost before walking into a hospital, Fitteron said.

“When you go in for work, or a procedure, you don’t know how much it’s going to cost,” he said.

MCA doesn’t charge upfront fees for its service, but charges 35% of whatever savings it gets. Customers don’t pay if no savings are found. Once a settlement is reached, the customer’s credit card is charged to pay the medical provider and MCA’s 35%.

Here’s an example on the company’s Web site on how the process works:

If you submit a bill for $750 and MCA gets it reduced by $170, you’ll pay the difference, or $580 to your medical provider. MCA’s 35% cut of the $170 savings is $59.50, making your net savings $110.50.

Most bills submitted to MCA are for $1,000 or more, although they can be for as little as $200.

The most typical bills it gets are for elective surgeries, Fitteron said, such as gastric bypass and cosmetic surgeries that out-of-network providers must do because in-network doctors aren’t covered under most insurance. Large surgeries that are known about ahead of time are also popular bills submitted, he said.

Either through deductibles, co-insurance payments or uninsured or partially uninsured medical procedures, the typical family spends $1,500 per year on out-of-pocket medical expenses, Fitteron said. For 10% of Americans, those expenses add up to $14,000, he said. That’s a big enough reason to submit a bill for review.

Fitteron recommends getting a tax deferred health spending account through work to help pay medical bills, and for checking what coverage you have before you have to go to a hospital.

If they have the time before a major operation, for example, people should check how much insurance coverage they have for it, Fitteron recommended. Out-of-network prices are like the first offer a car salesman makes, so it’s worth negotiating.

He cited a recent MCA case that dropped a Florida woman’s hospital bill from $53,000 to $22,000 for knee replacement surgery. She had catastrophic, high deductible medical insurance, and her insurer only paid $3,000 — what it was legally obligated to pay under her insurance plan.

After MCA determined what the “market oriented rate” for a knee surgery was and received some support from the hospital, the bill dropped dramatically.

It’s one less bill to worry about when the mailman arrives.

Aaron Crowe is a freelance journalist in the San Francisco Bay Area. Reach him at www.AaronCrowe.net

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How to curb runaway medical costs

J Roberts

Here’s an article that details some of the factors behind the ever increasing costs of healthcare in the US.

Ken Alltucker

A good doctor can help guide us to a healthy lifestyle. A hip or knee replacement can ensure mobility and relief from pain. A well-run hospital can be the difference between life and death.

But physicians, medical devices and drugs cost a lot. Americans will spend $2.4 trillion on health care this year.

Hospital and doctor bills, especially for the uninsured or those without enough coverage, already can be devastating.

Without a health-care overhaul, the price tag is projected to grow, particularly as Baby Boomers swell Medicare enrollment.

Beware errors in your bill

One way for consumers to take charge of their own medical costs is by scrutinizing doctor and hospital bills, patient-advocacy groups say.

Medical Billing Advocates of America, a Virginia-based consultant, estimates that 80 percent of hospital and medical bills it reviews have some type of error. And those errors can be costly, inflating bills 17 to 49 percent more than they should be, according to Chief Operating Officer Christie Hudson.

Medical Billing Advocates has found a wide swing in pricing among hospitals and doctors nationwide.

For example, one hospital charged $15 per dose of Tylenol or $10 for use of a disposable cup. The hospital charged a patient twice for items such as gloves, swab alcohol, a warming blanket and a daily charge for an IV pump.

To monitor their costs, Hudson said customers should request a line-item bill from a doctor or hospital. She said coding errors are common. So is double billing – for example, charging for a hospital gown when it should already be covered in a hospital’s room fee.

Also, she said patients should make sure a doctor gets prior authorization from an insurance company before conducting a procedure. (more…)

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Too Little on What Controls Costs

J Roberts

Robert Reich’s comment stating the President’s speech should have been clearer about how his plan will contain future costs was right on the mark. See his blog posting below.

More than a week after the Presidential speech to Congress there still has not been any indication or revelation on how the administration intends to reign in the high cost of care that continues to grow at an unacceptable level.  While President Obama wasted no time bashing insurance companies for their unjust practice of dropping coverage for preexisting conditions or other catastrophic illnesses, he failed to touch upon or address the crux of healthcare reform: containing cost.

At no point was there mention concerning the myriad of components that contribute to the rise in health care costs such as physicians, hospitals, pharmaceutical companies and other entities all entrenched in our current health care system. It is true that insurance bureaucracies contribute to the rise in health care costs, they themselves are not the lone culprit. The fact is, there are so many moving parts to this byzantine system, all of which contribute to rise in costs. This is a fact that can’t be ignored by the Administration, Congress or anyone wanting to promote real change to the system. Without controlling the increasing rise in costs, any plan is doomed for failure.

Robert Reich, a professor at the Goldman School of Public Policy at the University of California at Berkeley, was secretary of labor in the Clinton administration. He is the author, most recently, of “Supercapitalism,” and he blogs at Robert Reich’s Blog.

The president’s rebuttal of the fear-mongers was strong and he made a compelling case for preventing insurers from denying coverage because of pre-existing conditions or dropping coverage because of a serious illness and for requiring all Americans to have health insurance. He clarified his goal of full coverage and his support for a public insurance option.

He should have been clearer about how he intends to pay for the coverage of Americans who can’t otherwise afford it.

But I thought he should have been clearer about how he intends to pay for the coverage of Americans who can’t otherwise afford it, and how he’ll contain future costs. A commission to look at health outcomes is a fine idea but how are its findings to be used and enforced?

Taxing high-cost insurance plans is worthwhile but won’t raise much money or dramatically reduce future costs. An optional public insurance plan that’s open to all would put competitive pressure on private plans to reduce costs while also pressuring drug companies and providers to do the same, but his version of a public option would be available only to a relatively small number of Americans who lack employer-provided care.

The proposed health care exchange could generate real savings if the federal government acts as gatekeeper and limits access only to private insurers that offer low prices and high quality, but he didn’t explain the government’s role.

Still, he recaptured the initiative on health care and provided some cover for conservative and Blue Dog Democrats who need it in order to vote for the plan — which, I assume, were his most immediate political goals.

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