The ACP Advocate Blog

by Bob Doherty

Monday, November 22, 2010

Insurance companies to spend more $ on patients? Now that’s a reason for thanksgiving.

Today, the Department of Health and Human Services released an interim final rule to require that health insurers spend more money on patients and less on themselves. The rule codifies a provision in the Affordable Care Act, which requires that large insurers spend 85% of the premium collected on patient care - for small insurers, it will be 80% - instead of on their own bureaucracies and profit. Starting in 2012, health plans that aren’t in compliance will have to send a rebate to their enrollees (or the enrollee’s employer) for the difference.

One of the more interesting decisions made by HHS is that quality improvement activities that are “grounded in evidence-based practices, take into account the specific needs of patients and be designed to increase the likelihood of desired health outcome that can be objectively measured” don't count against meeting the 80-85% trigger for a rebate. According to the agency, “Insurers are not required to provide initial evidence in order to designate an activity as quality improving when they first implement it, however to ensure value, the insurer will have to show measurable results stemming from the QI activity in order to continuing to claim that it does in fact improve quality.”

As Joe Biden said in a different context, the new regulations are a big [blankety-blank] deal for patient and physicians. Insurers will have a strong incentive to keep their administrative costs down. This means that more of the premium collected will go for patient care expenses, which can include payments to the physicians who deliver the care.

Physicians and patients also will benefit from HHS’ determination that claims administration and utilization review processes are not “patient care expenses” (as the insurance industry argued) but administrative ones. This will create an incentive for insurers to streamline and eliminate excessive (and costly) claims and utilization review requirements that do not directly result in measurable improvements in quality.

Many pre-certification requirements could very well fall in to the category of an unnecessary administrative expense that insurers may decide to forgo. Today, the American Medical Association released a survey of physicians’ experiences with pre-certification. The AMA reports that its survey of “approximately 2,400 physicians indicates that health insurer requirements to preauthorize care has delayed or interrupted patient care, consumed significant amounts of time, and complicated medical decisions.”

It is conceivable that insurers may try to persuade HHS that pre-certification is a quality improvement activity to protect patients from being subjected to unnecessary (and potentially harmful) tests and procedures. To qualify as a quality improvement activity, though, they would have to show that the pre-certification requirements are based on evidence, and subsequently would have to demonstrate “measurable results stemming from the QI activity in order to continuing to claim that it does in fact improve quality.”

In other words, this would turn the table from physicians having to constantly justify to insurers that the things they do for patients are evidence-based and improve quality, to insurers have to justify that their pre-certification rules are evidence-based and improve quality. Now, that is something to be thankful for!

Today’s questions: Do you think that the new rules to require insurance companies to spend more on patient care and less on administration will benefit physicians and patients? How?

P.S. Speaking of thanks, I will be taking a few days off to celebrate thanksgiving with my family, so you won’t see any more of my blogs until next week. I do want to thank all of you who read (put up with may be a better description!) this blog, and especially those of you who have taken the time to post your comments (yes, including those of you that take strong exception!). Happy Thanksgiving to you and your loved ones.


Blogger PCP said...

This is generally a good thing. However this is something that has come far too late.
I have lately looked at the tone of some of the United healthcare ads. with surprise. I see a tone that they are looking out for their policy holders (presumably against crooks in the system). The whole tone of much of this industry, is anti-physician.
What is mainly at issue here is the buzz of M&A activity over the past 15 yrs. Such that we have the big 4 private insurers covering the majority of privately insured patients. At the same time, small physician practices have been left vulnerable in this marketplace due to these developments.
We have seen similar consolidation amongst hospitals in many parts of the country and are about to witness a wave of that going forward as well.
Already there are fears that larger ACOs with Doctor employees will extract more out of payers and therefore escalate costs.
Though this is a step in the right direction, I think we need to be careful about integrating health care providers. Hospitals in many parts of the country are salivating at the prospect of consolidating and gaining market power. We as physicians tend not to think this way, but you better believe bean counters in the administrative suite do.
We need to encourage competition amongst hospitals.
Obamacare already takes regressive step against physician owned hospitals thereby removing one way in which physicians can organise and fight back against a regional monopolistic unresponsive hospital system.
While dealing with the insurers was needed, one wonders firstly how watered down this will become in due course. Secondly, this sort of thing needs to be replicated against all the involved big lobby powers, the AHA must be told certain truths. If there is a hard time finding the 250 billion fro Medicare B then perhaps it ought to come from a SGR type formula being applied to Medicare A for the next 15 yrs.
There are many more areas that need addressing to reign in this health care juggernaut. Not at the micromanagement level, but more at the level of setting policy. Unfortunately some of it also involves issues within the Medical profession. The RUC must go. IT is destructive to physician unity, and it is killing the profession by skewing physician manpower in ways that are destructive to our health care system.

November 22, 2010 at 9:31 PM  

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Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog

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