Health Insurers Try to Circumvent Reforms: Report

Published: Thursday, 15 Apr 2010 | 3:20 PM ET Text Size
By: Reuters
Some of the largest U.S. health insurers are changing their accounting practices to book administration costs as medical costs in an attempt to circumvent new industry reforms, according to a U.S. Senate panel's report released on Thursday.


Health insurers are shifting administrative and other expenses to inflate spending numbers ahead of the healthcare reforms.

Under the health care law passed in March, insurers must adjust their spending habits to meet new requirements. For example, large group plans must spend at least 85 cents of every premium dollar paid to them on actual medical care as opposed to administrative costs, while individual and small group plans must spend 80 cents.

Wall Street closely watches such spending levels, known as medical-loss ratios, or MLRs, as a sign of potential profits. Major health insurance stock indexes fell after the report.

"The insurance industry is beginning to consider the financial impact of the new federally required (medical) loss ratio requirements, including questionable changes in their accounting practices," the Democratic-led Senate Committee on Commerce, Science and Transportation said in a statement.



For example, WellPoint "has already 'reclassified' more than half a billion dollars of administrative expenses as medical expenses," it said. <snip>


http://www.cnbc.com/id/36557396

Surprise, surprise, surprise!

and why it wasn't health CARE reform at all, but a big handout to Big Insurance.

Really, who cares? Its a win! Woohoo!

x(

we can't let them get away with this sort of crap.

We told you so.

not:sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :banghead: :eyes: :eyes: :eyes:

Health Insurers "CAN and WILL" circumvent reforms.
They wrote them.
Of course they will go around them.
After all, Its "The Uniquely American Solution."

If we had wanted "reform", we would have borrowed one of the 37 Universal Health Care Plans" from the civilized World, or simply expanded our own, Medicare.

No.
This whole charade was about delivering MANDATED "customers" to the For Profit Health Insurance Monopoly.
QED

"By their works, you will know them."

For months I've posted about the abject failure of 15 states to regulate health care costs by attempting to regulate MLRs. Does everyone get it yet?

I'm not surprised.

until they get shortchanged that is ..and those days are coming.,.as they did during the campaign..

I didn't join DU until after the bill had been passed. However, I was one of the folks who wanted it passed even though it had problems. Here's the deal: you were right, the bill is seriously flawed. And we were right: better to get it passed, even though it's poor, because it gets us moving in the right direction. Baby steps, I believe, is the term.

And now we find ourselves motivated to fix the damn bill and get it right this time. We're going to continue to be motivated, too, because the healthcare insurance industry is going to squeeze us for every damn dime they can get before they die, and we're going to be in fact MORE motivated to get it right than ever before.

So were we wrong to put ourselves in this position? I still don't think so, because this position is a little closer to where we want to be than that position. I supported taking the incremental step, but never did I think the job was done. I bet very few people did.

My issue is with countless people here who attacked me relentlessly during the debate over HCR for saying there were no controls to force the premium prices down or to even slow the increases. Many, many, many people here pointed to the MLR in the bill. I, among many others, posted time and again the opinions of noted experts like Wendall Potter and others that this level would mean nothing when the insurers got finished reclassifying 'medical expenses.' We also posted about the absolute failure of the states who enacted MLR regulations to be able to enforce them. It was all denied and dismissed with accusations that we were all just a bunch of haters who wanted thousands of people to keep dying. This, it seems, was a better use of the energy of these people than continuing to pressure our lawmakers to get a better bill before passage.

I am glad to hear you are motivated for improvement in the bill. We still have far too many showing up to defend it and little talk about what a battle we now have ahead of us with the force of law requiring us to do business with this criminal industry. I do hope we see some positive changes in the bill. However, with 30 million new captive customers coming their way, they will have more money than ever to lobby against us.

When nothing is done to fix this piece of shit, I guess I'll have to remind people we were right about THAT, too.

I can't even count how many times I posted that the industry welcomed the 85% MLR as being the level they could most easily manipulate. But, noooo, I was just a 'hater' who wanted thousands of people to keep dying without health care. And, btw, where are all those people who were talking about how we would 'fix' it after it was passed?

And once again -- like with the war, the bailouts, etc -- we warned them. Over and over and over and over and...

Another reason we needed a public option ... *sigh*

That was why there shouldn't be a mandate?

Guess what--there will be a mandate for much less than we were promised.

so any changes WellPoint or anyone else makes are premature. HHS on the 12th placed on the Federal Register a request for initial public comment on MLR definitions. IMO your time might be better spent taking part in this rather than getting giddly about telling people 'I told you so' over nothing.

http://www.regulations.gov/search/Regs/home.html#documentDetail?R=0900006480ad7202

AGENCY: Internal Revenue Service, Department of the Treasury; Employee
Benefits Security Administration, Department of Labor; Office of the
Secretary, Department of Health and Human Services.

ACTION: Request for information.

-----------------------------------------------------------------------

<[Page 19298>]

SUMMARY: This document is a request for comments regarding Section 2718
of the Public Health Service Act (PHS Act), which was added by Sections
1001 and 10101 of the Patient Protection and Affordable Care Act
(PPACA), Public Law 111-148, enacted on March 23, 2010. Section 2718 of
the PHS Act, among other provisions, requires health insurance issuers
offering individual or group coverage to submit annual reports to the
Secretary on the percentages of premiums that the coverage spends on
reimbursement for clinical services and activities that improve health
care quality, and to provide rebates to enrollees if this spending does
not meet minimum standards for a given plan year. Section 1562 of PPACA
also added section 715 of the Employee Retirement Income Security Act
of 1974 (ERISA) and section 9815 of the Internal Revenue Code of 1986
(the Code). These two sections effectively incorporate by reference
section 2718 and other amendments to title XXVII of the PHS Act. The
Departments of Health and Human Services (HHS), Labor, and the Treasury
(collectively, the Departments) invite public comments in advance of
future rulemaking.

http://healthreform.gov/newsroom/section2718.html

This section refers to reports they must submit to HHS showing they met this MLR. The insurers are doing exactly what Wendall Potter and several financial advisers, btw, said they would do. They will reclassify items as 'medical expenses' and manipulate the numbers. I am certain Potter was aware of section 2718 as was I. He did not see it as a hindrance to their ability to manipulate these numbers.

What's the deal with defending this? We have a few years to pressure our lawmakers to make changes. We're still out-monied. We need to get a drum beat going way ahead of time if we hope to prevail at all.

and that job is tasked to HHS and the NAIC. This is how you stop them from declaring administrative cost as medical expenses.

C. Uniform Definitions

Section 2718(c) of the PHS Act directs the National Association of Insurance Commissioners (NAIC) to establish uniform definitions of the activities being reported to the Secretary under Section 2718(a), and standardized methodologies for calculating measures of these activities no later than December 31, 2010. Section 2718(c) specifies that NAIC’s responsibilities relating to this provision are to include defining which activities constitute activities that improve quality (under Section 2718(a)(2)). Section 2718(c) also directs that the uniform methodologies that NAIC develops are to be designed to take into account the special circumstances of smaller plans, different types of plans, and newer plans. Finally, Section 2718(c) specifies that the uniform definitions and standardized methodologies that NAIC develops are to be subject to the certification of the Secretary.

http://healthreform.gov/newsroom/section2718.html


HHS Secretary Kathleen Sebelius is calling on state insurance commissioners, health plans and the public to help draw up rules on insurer spending for medical care

The new healthcare reform law requires health plans to spend between 80% and 85% of premium dollars on clinical services and quality, or provide a rebate to members for the difference. Health plans must begin reporting these spending figures—called a medical loss ratio—this year. The consumer rebates start in January 2011. The goal of this rule is to prohibit insurers from overspending on administration, including salaries, overhead and marketing.

In a letter ‪to the National Association of Insurance Commissioners, Sebelius is asking for assistance in defining a medical loss ratio. The HHS is asking for the group’s guidance by June 1, instead of by the end of the year, as outlined in the health reform law.

http://www.medpagetoday.com/Washington-Watch/Reform/19527

States have battled this and found it impossible to enforce. Even if we get good guidelines, the enforcement has been left largely in the hands of the states who are already overwhelmed and can't keep up with the cases before them.

I'd like to see less defense of the bill and more pressuring our lawmakers on all these 'improvements' we heard we could get if we'd just pass the bill.

The state doesn't have enough money to enforce the law. The insurers have money, attorneys, and friends in Congress. Essentially, HCR sold us all into debt bondage.

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