Such a deal! Insurance companies keep your money and deny you care! How can I get in on that?

How’d you like to have a business that essentially everyone had to buy from, where the price for your service went up every year, where the quantity and quality of your service decreased every year, and more and more of the cost of providing it could be passed directly (as well as indirectly) to your customers?

Sound good? Welcome to the world of health insurance and pharmacy benefit managers (PBMs), often owned by the same companies! You get insurance premiums paid to you by people or their employers (and mostly by both, since the employers rarely pay the full cost anymore), and get to raise them every year, by far more than inflation or certainly your costs, as well as directly shift costs to your end-user customers (i.e., “patients” or “people”, not the employers) through the use of deductibles and copayments! What a deal! And then, even better, your main business activity is not providing service! Yes, while people (and employers) think they are paying for medical insurance so that when they get sick or need hospitalization or surgery it will be paid for, your main activity is finding ways to not pay for it! In fact, that is what you pay your employees to do – find ways to not pay for your customers’ healthcare! You have a whole variety of techniques to utilize for this purpose, and they are kind of “nested” or sequentially algorithmic:

n  Have the initial reviewer, possibly a nurse, or possibly an AI algorithm, just deny coverage.

n  Have the next level reviewer, often a physician, not necessarily (indeed rarely) in the specialty involved, frequently with no recent practice experience, and often not even in the US, deny the claim.

n  Have the next level reviewer (again, amazingly, often AI) deny the claim.

n  Figure that most people won’t appeal the denial. You’re right.

n  If they do appeal, maybe you’ll have to pay. Or you can start the process over!

To be sure, it is not always true that all companies always deny coverage, or that the process of prior authorization is always used even when everyone including the insurance company and their employees know that it is a perfectly appropriate claim being submitted by a perfectly appropriate provider for a perfectly appropriate procedure. But a lot of them do, and do it a lot. In a recent guest post on Wendell Potter’s substack “Health Care Un-Covered”, Rachel Madley (Director of Policy and Advocacy at the Center for Health and Democracy. covers hearings led by Sen. Richard Blumenthal (D-CT) on the practice of insurance companies and PBMs regarding prior authorization, denials, and the use of AI to make these decisions:

[B]etween 2019 and 2022, the prior authorization denial rate for post-acute care in UnitedHealth’s Medicare Advantage plans doubled. The denial rate for long-term acute care hospitals in Humana’s Medicare Advantage plans increased by 54% from 2020 to 2022. During this time, UnitedHealth, CVS/Aetna, and Humana increased their use of artificial intelligence (AI) for prior authorization reviews, often resulting in increasing denial numbers and decreasing (or absent) review time by human beings.

And not just United Health.

The report noted that CVS, which owns Aetna, saved $660 million in 2018 by denying Medicare Advantage patients’ claims for treatment at inpatient facilities. Around the same time, CVS found in its testing of a model to “maximize approvals,” which would be a good thing for patients, that the model jeopardized profits because it would lead to more care being covered. In 2022, CVS “deprioritized” a plan to increase auto-approvals because of the lost “savings” from denying patient care.

 

Great! But so what does this tell us that is new? Well, really, just that it is getting even worse from the execrable, immoral, and anti-human (and anti-decent-business) practice that these enterprises were already using. By the way, if you were thinking that I have made the case that these are good businesses to own and make money from, you’re right, but it is going to be hard to get in unless you are a multi-billionaire since these things are so profitable that they are mostly owned by entities known as private equity. That phrase, “private equity”, sounds kind of bland, but it means groups of people with a lot of money who buy businesses not only for making money from them, but by making money however possible. This includes not only immoral business practice, but also completely destroying the company and selling its assets for, literally or figuratively, scrap. Plus, UnitedHealth, CVS/Aetna, and Humana own so much of the market, there is not room for you.

 

And, of course, after hearings and findings like those of Sen. Blumenthal, we might expect increased regulation of these companies and this business, which could limit the gross ripoff of people’s money that fills the pockets of their investors. Well, not so fast.

The report recommends that the Centers for Medicare and Medicaid Services (CMS) collect additional data, conduct audits of prior authorization processes, and expand regulations on the use of technology in PA reviews.

Hardly draconian penalties! For callously and in pursuit of financial gratification denying health care to millions for years and years, the report recommends that CMS ask for – more data! We really want to know how badly they’re screwing the American people!

Humbly, I would suggest more than that. I would suggest that the federal government not only stop enabling this money grab – after all, through Medicare they are the largest funder of health insurance, and through Medicare Advantage (MA) plans (and more recently through privatized Medicaid programs), directly fund much of the money made by these insurers – they might actually regulate them and make them deliver on the product that they are supposed to! They could go back to being managers of Medicare programs but not owners of MA programs.

You know, it doesn’t have to be this way. Or you should know that. And Sen.Blumenthal, and his committee, and CMS should know that. They, are you, should all be aware of it because of the program that covers most seniors, Medicare. Traditional Medicare, not Medicare “Advantage”. Medicare, what I’ll call TM for Traditional Medicare, covers virtually all medically beneficial procedures, tests, and encounters, at virtually all doctors (very few don’t take TM, although many do not take MA). There is NO need for prior authorization with TM, and there are no denials for covered services. There is no review by anyone, doctor, nurse or AI robot, to see if there is a way that they can deny you coverage. They just pay it. They pay the amount that Medicare has authorized for that service.

Admittedly, they do not pay all of the authorized amount; for in-hospital care TM pays only 80% of the authorized amount. This is bad (although not as bad as not getting the service your doctor thinks you need at all!) but it is an entirely separate issue. One is a Medicare policy issue of paying only 80% and the other is an open-ended ability for insurance companies (including MA) to deny payment for your care based on their notions of … what will make them the most money. Indeed, I’m wrong; they are completely different things but not unrelated. They are both the results of policies put in place to try to weaken Medicare and make money for insurance companies through privatization. After all, if TM only pays 80% of the approved charges, and you have to buy a Medigap policy to cover it, this may be an incentive for you to join an MA program and make money for the private insurance industry! Another important difference is how claims are paid; TM pays out money to providers for services that you receive. MA gets all of the money allocated for you in advance, and then makes efforts to hold on to it by not paying for services for you. And, through a variety of tricks, it gets more than TM would allocate for you!

This is not what the federal government should be encouraging. It should not be pushing more people to be covered by private insurance, using Medicare, Medicaid, your employer’s or your own money. It should not be pushing people into programs that make a science of denying them necessary care. What should it do? Two steps:

1.      Put everyone in Medicare. Traditional Medicare. Everyone, birth to death, regardless of age, gender, race, ethnicity, or employment status. Everyone in one program.

2.      Dispense with the limits on what TM pays for. Not just that the current 80% should be 100%, but covering all needed health care services, including mental health, dental, glasses, hearing aids, and long-term care.

Pushing more people into programs where they are the mercy of profit-hungry insurance companies to receive the healthcare they need is the WRONG way to go!

For an easy-to-digest look at how Project 2025, which has been put together by right-wing “thinkers” as a list of what a new Trump administration should do, look at this very well-done comic, https://stopproject2025comic.org/comic/health-care/  You might also want to look at how Project 2025 will address all the other issues that affect your life! Here is one panel: 

PS: I found the other two cartoons above on my Facebook feed, and the creators were not credited. I am sorry for this; creators should always be credited for their work. I would be more than happy to do so if anyone can find who to credit!

Insurers in trouble for the wrong reason: Wall St. wants them to rip you off for even MORE!

There is good news and bad news regarding health/medical insurance. Let’s start with the good:

In his Substack, “Health Care Uncovered” from August 8, 2024, Wendell Potter reports that “Wall St. is disenchanted with Medicare Advantage Plans”. This is good news in the sense that it is good when anyone is disenchanted with these plans, or any aspect of the for-profit health insurance industry. Potter notes that both CVS/Aetna and CIGNA disappointed Wall St. investors with inadequate (from their point of view) profits, compared to a year ago. I also am disenchanted, but for different reasons than Wall St. I am upset that these for-profit insurers continue to rake off such a huge amount of money that was intended, by the workers and employers who paid it, to be spend on actually delivering health care. Investors are upset that these health insurers are not raking in even more.

Potter notes that Aetna president Brian Kane resigned as a result, but appropriately writes:

I am much more concerned about the health and well-being of the 4.3 million people enrolled in CVS’s MA plans and the 6.2 million in Humana’s plans. Sadly, most will find they’re trapped in a circle of hell created by the insurance industry, unable to stay in their current Medicare Advantage plan but also unable to return to traditional Medicare because of what for them will be unaffordable Medicare supplemental policies (most of which are sold by the same big insurers that sell MA plans). Seniors have six months from the date they’re eligible for Medicare to buy a supplemental (Medigap) policy to cover out-of-pocket expenses. If they’ve been enrolled in an MA plan longer than six months, they’ll have to go through medical underwriting. That means that if they’re being treated for much of anything or, God forbid, have a “preexisting condition,” they’ll have to pay an arm and a leg for Medigap policy.

A similar piece of good news is not particularly about Medicare Advantage plans, but the overall health insurance industry/scam, in a story about data-analytics firm MultiPlan (‘Revenues Down and Stock Battered as Data Firm Faces Scrutiny’, NY Times, August 16, 2024). This one is a little harder to understand than the CVS/Aetna and CIGNA stories. They are about the fact that while they are making beaucoup bucks, it is not as much as investors would like. In the MultiPlan case, we have a company that worked for insurers to get reimbursements down (that is, to pay doctors and other healthcare providers less) and made money from it. For example, if a doctor billed $100 and MultiPlan told the insurer to only pay $50, that’s more money for the insurer (and MultiPlan), and the patient can be on the hook for the other $50. (Of course, it’s never only $100, or $50.) Since they do this mainly for “out of network” care the amount that you (the patient) can get stuck with having to pay can be – a great deal. (This can happen even when you choose an “in-network” doctor and hospital, since other doctors – like in the ER, or radiology, or even the “assistant surgeon” – can be out of network. And the ambulance almost always is).

This article was a follow-up to an earlier exposé in the NY Times ‘Insurers Reap Hidden Fees by Slashing Payments. You May Get the Bill.,’ April 24, 2024, in which the amount the patient could get stuck having to pay was as much as $100,000 – or more. The good result of this first article was a lot of opprobrium aimed at MultiPlan, resulting in some insurers being more reluctant to use them (because of the bad publicity, not because they save them money; apparently they can use other less-notorious data analytics firms to save them money), so MultiPlan is in trouble as the more recent NY Times article documents. Good. I love to see them in trouble.

The bad news is that it is likely to be you and other regular people who are screwed. There is already evidence that the pressure from investors to go back to making not just great but obscene profit margins is affecting CIGNA, CVS/Aetna, and other insurers, who are denying more claims, making it even harder to get the care that you need. Potter notes that

Humana said last week it planned to jettison “a few hundred thousand” of its Medicare Advantage enrollees that have become unprofitable. CVS says it will get rid of about 10% of its MA enrollment, which would be around 430,000 of America’s seniors and disabled people.

That’s a lot of seniors who will lose their medical coverage. I have often been critical of Medicare Advantage plans (sometimes called, more accurately, Medicare Dis-Advantage), which are NOT Medicare but are private insurance plans, usually HMOs or PPOs, paid for by Medicare funds. One of the major reasons for my criticism is that because they are private insurance, they can (and often do) deny coverage for care even when the care is approved by Medicare. Recent legislation has required these MA plans to cover Medicare-approved care, but in fact they still often deny claims. Indeed, it is often the modus operandi for these companies. They may approve the claim if you appeal, but the vast majority of clients do not appeal, and probably don’t even know that they can. If fined by the Center for Medicare and Medicaid Services (CMS) it becomes a “cost of doing business.”

But the “jettisoning” of hundreds of thousands that Potter refers to illustrates another big problem with MA. As with all insurance – not just medical – companies make money by collecting premiums and paying as few claims as possible (although medical insurance companies seem to have taken this to the extreme). One effective way to do this for healthcare is to insure healthy people. They, or their (usually former, if they’re on Medicare) employer pay the premiums but they don’t cost much money in claims. And they love getting free eyeglasses and hearing aids and gym memberships, which cost the insurance companies very little. The problem is that sometimes previously healthy people get sick, and this becomes more and more common as they age. Remember that in any given year approximately 5% of the people account for about 50% of healthcare costs, but they are not necessarily the same people the next year. Some folks get better, some folks get worse, and some really sick people die. MA plans have long “encouraged” their sickest (= most costly) patients to consider switching to traditional Medicare. Now they will be more than encouraging; they’ll drop those high-cost “losers”. Maybe you.

The MultiPlan case got good (that is, bad) coverage from the original April NY Times investigation, which resulted in it losing business as reported by that newspaper in August. But the insurers will get another data analytics firm to try to screw doctors and other providers, and the patient, you, will still be caught on the hook for many of those dollars. The system is not set up to help or protect you, and it has relatively few sanctions against companies whose business model is to find any way to screw you that will make them more money, and to use that money to hire lawyers and others to find the loopholes and to pay the politicians to ensure that they are not closed too tightly.

It’s kind of like a sport where one team able and willing to bring in ringers, violate the rules, commit all sorts of fouls and infractions, and at worst get a slap on the wrist for it. Not a fair game, but heck, that team’s owners are paying off the referees and the league.

There’s another way to do it. Absolutely strict regulation to ensure the interests of patients are the ones that are protected, and protecting the profits of the insurers is given zero weight. Penalties that are strictly enforced, and draconian and include going out of business. Even better: prohibiting profit making in any healthcare endeavor. In some countries, like Switzerland, there are private insurers, but they all have to offer the same comprehensive product, charge the same rates, and be non-profit. So how do they compete? Customer service, can you imagine!?

I like that approach!