WSJ: Health policy caps mean catastrophic coverage may not be there when needed

Yesterday's WSJ ran a story that highlights the plight of the insured middle-class in this country: It's possible to max out a health policy with a $1.5 million cap in the metaphorical blink of an eye. The story is here (though it may require a paid subscription to read it).

When hospice patients don't die quickly enough, Medicare comes knocking

Some years ago, the Medicare program proposed to recoup hospice payments if a patient didn't die within 6 months, which was the probable life-expectancy that a physician had to certify for a patient to receive the Medicare hospice benefit. As I recall, that proposal was met with howls of protest and dropped.

What Medicare couldn't do directly, however, it is now doing indirectly, as described in an article in today's New York Times. With an annual cap on total hospice payments ($21,470 [slightly less than six months of daily payments of $135] x the total number of hospice patients served in a year), Medicare can recoup "excess" payments from any hospice that received reimbursement from the program above the annual cap. In some cases, the amount of recoupment is in the high six figures. The hardship on hospice programs is palpable -- most don't have the kind of profit margins that allow them to pay back to Medicare a year or more after the money has been spent on salaries, supplies, and other overhead.

Part of the problem for some hospices may be bad patient mix (i.e., not enough terminal cancer patients with more predictably short life expectancies), and there may be management issues, as well. But shouldn't there be a better solution to this problem than penalizing hospices whose patients don't die fast enough to satisfy federal regulations? As one physician is quoted in the article, "Doing this for 40-something years, every time I think somebody is going to die tomorrow, damned if they don’t live for a year and a half." Do we really want to have a federal policy that regards that result as a failure?

Krugman: Health Care Excuses

Okay, I know he's a liberal (Exh. 1: "The Conscience of a Liberal"), and so am I, so there are times when I suppose Paul Krugman's arguments seem irresistible when they're not. But today's column strikes me as just plain common-sensical.

Krugman offers up four common excuses often used to argue against health reform and then refutes them. It is worth a read. Here are the excuses:

• Excuse No. 1: No insurance, no problem.


• Excuse No. 2: It’s the cheeseburgers.


• Excuse No. 3: 2007 is better than 1950.


• Excuse No. 4: Socialized medicine! Socialized medicine!

And, by the way, a big shout out to the managers at The New York Times who have stopped putting the good stuff where only subscribers could get to it. I don't know what their new business plan is, or how they can afford it, but I am grateful for total Web access (i.e., the same as The Washington Post). As a subscriber, I've always had it, but as a blogger it was frustrating not being able to share so much as a link. Those days are now blissfully over!

Insurer misconduct alleged in California

From today's Modern Healthcare:

Calif. insurance chief probes report of cancellations

California’s insurance commissioner is investigating a report that Health Net rewarded an analyst more than $20,000 in bonuses tied to canceling individual health insurance policies, thereby saving the company millions in medical expenses.

“We certainly view this as a serious breach,” said Byron Tucker, spokesman for state Insurance Commissioner Steve Poizner.

The Los Angeles Times reported that Health Net revoked 1,600 policies between 2000 and 2005, saving the Woodland Hills, Calif.-based insurer $35.5 million in medical payments. The company set policy rescission targets, which the senior analyst in charge of cancellations regularly exceeded, earning her praise and monetary rewards, according to the newspaper.

Tying compensation of claims reviewers to their actions is illegal under state law.

“The characterization of our compensation programs is inaccurate and misleading,” Health Net said in a written statement.

The bonuses were disclosed during an arbitration hearing on a $6 million lawsuit brought by a 51-year-old hairdresser from the Los Angeles area whose Health Net policy was revoked during her chemotherapy treatments for breast cancer. The Times’ lawyers intervened to have the documents unsealed, according to the newspaper.

Here's a link to the LA Times article that broke the story. The picture quality is pretty bad, but you can see from copies of the insurance analyst's performance review (above) that she was being evaluated, at least in part, on the basis of the number of rescissions she produced and the corresponding contribution she made to the company's bottom line.