Monday, August 29, 2016

Walmart Decides to Increase Their Pricing and Reduce Their Sales Force

Would Walmart actually thrive if they made their customers pay more and made it less convenient to do so?  Certainly not!  Walmart's success (as do most retailers and businesses) derives from keeping their customers happy.  Walmart does this by offering a wide variety of products at the lowest prices possible and making it easy for customers to buy them.  Their stock price rises and falls based on per customer loyalty and satisfaction which ultimately drive all other financial factors.  Walmart wouldn't survive if they made the radical changes suggested by this headline.

Health insurance companies are perhaps the only industry where consumer satisfaction is not the driving force for success.  Not surprising, the American Consumer Satisfaction Index published a study last year (ACSI Study 2015) showing that consumer satisfaction for health insurance companies is at a 10-year low.

It is no mystery why this is so.  Pretty much everyone is facing higher insurance costs next year with lower benefits.  Deductibles continue to rise, co-pay's increase (my ER copay went from $100 to $250), annual out of pocket maximums are getting higher...all the while, premiums just keep getting more expensive regardless of any rebates that ACA may offer.

Pay more...get less.  That's usually a formula for failure in the business world.  Not so with health insurance.  In fact that is pretty much their modus operandi.  This is why their CEO's are being rewarded with incredibly lucrative compensation packages and why insurer's profits continue to rise.

The main flaw in this equation is that we, as the insured, naively assume that our satisfaction is important to health insurance companies.  It is not.  CEO's are not striving to create happier consumers.  They are not beholden to the people paying the premiums.  Their main concern is to keep the shareholder's happy.   

And apparently, they are doing quite a good job at that.  Unfortunately, it's at our expense.

Saturday, August 27, 2016

Presidential Medical Histories (Some Will Surprise You)

This week there has been a lot of controversy about the medical condition of Donald Trump and Hillary Clinton.  It may surprise you that many of our Presidents have had very serious medical issues many of which were not widely known.

Here's a great website that lists the medical histories of all the Presidents:

Presidential Medical Histories

Friday, August 26, 2016

$7000 CAT Scan (What would Einstein and Franklin do about it?)

"It is the first responsibility of every citizen to question authority"  (Benjamin Franklin)

"The important thing is to never stop questioning.  (Albert Einstein)

This month I received a bill for an ER visit to my local hospital.  The billed charges for the facility (not doctor fees) were $14,876.59 and the amount that I owed was $2082.72! Though I never received an EOB ("explanation of benefits") from Anthem for this, it certainly looked like the insurance company had paid down this bill somehow leaving me with only a measly $2000+ co-insurance amount due.

(Spoiler Alert:  the actual amount that I owed end up being $0.00!)

After recovering from the sticker shock and shot of scotch, I started to think a bit more clearly. Here's what I did:
1)  I called the hospital's billing department and requested a detailed, itemized list of all the charges.  I had to see how a two-hour ER visit ended up costing over $14k considering the fact that we left without needing any treatment or medicine.   
2)  After receiving the itemized bill, I verified that all of the services were actually rendered.  I also noticed that they charged $7000 for a CAT scan (which costs only $550 at our local radiology facility).  They also charged $900 to administer an EKG which took about only 1 minute.  The basic charge for simply stepping into the ER was $2352.  I actually don't find that charge to be so unreasonable. 
3)  Next, I went online to Anthem to find the EOB and see how Anthem had processed this claim since I suspected that something was amiss.  I couldn't find the EOB which is unusual. Anthem's patient portal is pretty good (albeit very, very slow) and it's usually easy to find an EOB. 
4)  So, I called Anthem figuring that maybe the EOB got stuck somewhere and they could look it up.  Guess what?  They couldn't find a claim submitted by the hospital for this DOS at all.    "OK, Anthem, I'll call the billing department at the hospital and see what's what." 
5)  I asked the billing department to explain to me how the $14,876 was paid and reduced so that my co-insurance became $2000.  "I see here that your insurance company is xxxxxx.  Is that right?"  "Huh?  I've heard of that company. My insurance is with Anthem." 
The hospital had never even submitted this claim to Anthem.  Further, it is a complete mystery how the hospital had the correct insurance information to process the doctor's fees but complete bungled their facility bill.  It's also a mystery as to how this unknown insurance company could have discounted or paid anything towards these charges.

I gave them my Anthem information and they will submit the claim.   Once they do, the claim will be paid at 100% because my wife had already reached her annual out of pocket (OOP) maximum before this ER visit.

This means that the $2082.72 bill is going to go down to... $0.00.  Yeah!

Key Takeaways:
1.  Never trust that the amount that a provider says you owe is actually the amount you really owe.  Always read and question every bill.  (See the above quotes from Einstein and Franklin.)

2.  Always read your EOB.  If you don't have it, get it.  Then read it.  If you don't understand it, make your insurance explain it clearly or find someone who can.
3.   Realize that billing mistakes occur every day.  Perhaps your bill is accurate.  But chances are good that a bill that seems too high has mistakes in it.  If it walks like a duck...

P.S. - I am not certain what would have been the amount I owed if my wife had not met her OOP maximum.   I estimate that it would have been about $1000 which is still a sizable savings from the original billed amount.

Tuesday, August 23, 2016

The Costs of Not Going to the Gym ($500 Billion)

Most of us know that we should be eating healthier and exercising more.  It's not a complicated formula.  And yet, the statistics on preventable illnesses are staggering.  Here's just a small sampling:
  • Nearly 10% of the US population has diabetes (~30million)
  • Approximately 1.4 million new cases of diabetes reported annually
  • 30% of all Americans are obese
  • Obesity related illnesses account for ~$200b per year in health costs
  • 17% of all Americans over 18 are tobacco smokers
  • Another 16 million Americans live with a smoker.
  • Smoking causes $300b a year in health costs and lost productivity
  • Cigarette smoking is responsible for 480,000 deaths per year and is the leading source of preventable deaths
(sources:  American Diabetes Association and CDC) 

The statistics on exercising are not very good either:
  • 191 million Americans (60%) don't get the recommended amount of weekly exercise
  • 25% don't exercise at all (79 million people)
  • # of gyms in the U.S.:  30,500
  • # of Americans with gym memberships:  58million
  • % that don't use their memberships:  67%
(sources:  CDC and StatisticBrain) 

The average cost of a gym membership is about $60 per month.  That's $720 per year.  Many diabetes medicines cost far more than this.

So let's generously assume that there are ~85million people in the U.S. (27%) with a preventable illness.  If the government spent $720 per person on a gym membership for each of them, the cost would be $61billion per year.  

So the big question is:  could this $61b reduce health care spending by more than that amount?  If ~$500b is being spent on preventable illnesses, that means that it would have to result in 12.2% savings.

I haven't found any conclusive studies one way or the other.  But, personally speaking, I prefer the idea of spending $61b on gym memberships as opposed to the same amount on diabetes medicine.  

Of course, the big problem is how to encourage (or require) that people use their gym memberships?  Any solution would certainly be very controversial (just ask any ACA opponent about the mandate).

Saturday, August 20, 2016

The Golden Triangle of Health Care

I am a big fan of inspirational quotes.  I even have a few of my own; some of them are even original.  One of them (and I don't think I invented it) is:  
"If money can solve it, it's not a problem."  
 [My Mom has a great variation that she swears that I did create:  "If there is a solution, then it's not a problem."  I think she just misquoted me.  But I like her version better than mine.  So, I'll claim ownership.]  

In the health care system, a lot of people and a lot of companies are spending a lot of money to solve its problems. It's not working.

Why?  It's the "Golden Triangle".  It looks like this:

Simply put, the Golden Triangle consists of three options:  Good, Fast, and Cheap.  You get to pick any two.  It often refers to the world of design.  But it can be applied to practically any service being rendered ranging from car repair to restaurants.  Of course, it's not unusual to want all three corners of this triangle. Sometimes you can actually get it.  Usually, not.  More often you get what you paid for.

The major difference between applying the Golden Triangle to health care as opposed to graphic design is that  picking only two corners can end up with undesirable, and sometimes, deadly results.  Fast and inexpensive care would certainly not substitute for getting proper treatment. Nor would excellent care that you could afford but had to wait weeks to receive it.    And yet, when we are sick, we want to receive quality care in a reasonable amount of time and not worry about losing one's savings (or worse) in the process.  These are not unreasonable expectations in my opinion.

Most of the time, patients are more concerned with good and fast.  That is, work on the health issue as quickly and as effectively as possible. Inevitably, that leads to sticker shock when the bill arrives.

Unfortunately, too often, we are only getting one corner of this triangle.  And sometimes, patients get none of the corners.  The latter is often true for challenged populations such as uninsured and low-income patients.  

If you were only allowed two corners of the Golden Triangle for your health care, which ones would you choose?  This certainly will vary from person to person.  And that's why it has been so difficult to make systemic improvements in the health care system.  

Can we solve all three issues at once?  Perhaps not.  So, which corner(s) would you address?  And how would you justify ignoring the other corner(s)?  This is a very difficult decision which providers are wrestling with every day.  

Please let me know your preferred corner.

Wednesday, August 17, 2016

Don't Cry For Me Aetna (and UnitedCare and Anthem)!

(Update:  Aetna may have pulled out of these states because they didn't get Federal approval for their merger with Humana.  See Aetna's DOJ Letter)

Waaah!  Health insurers are crying.  They are losing money and can't carry on insuring all of the new ACA enrollees.  Aetna just announced that it was pulling out of 11 states where it offers ACA plans to individuals due to fabulous losses it incurred: $430million last year.  (CNN)  Other insurers have claimed similar or greater losses.  It kind of makes you feel sad for their financial burden. (Note: Aetna pulled out of California, my home state, after 2014 leaving me high and dry.)

I guess that's why Aetna's CEO saw a paltry pay raise of only $2.2m last year ($15.1m in 2014 to $17.3m in 2015 -  WJS).  UnitedHealth's CEO really suffered when he earned $66m in 2014, a belt-tightening increase of $42m from 2013 - FierceHealthCare).

It's true that a lot of insurers got slammed with a lot of new enrollees incurring more health services than expected.  Perhaps the most controversial part of the ACA was the mandate provision forcing people to buy health insurance.  The reasoning was simple.  How could insurers afford to get rid of all of those fancy restrictions on benefits (e.g., life time caps, pre-existing conditions, etc.) if they only had sick clients.  They needed healthy clients to pay premiums to make up the difference.  

As it turns out, many of the new ACA enrollees are not as healthy as anticipated.  They wound up (heaven forbid) actually using their health insurance policies for (wait for it) care. And now insurers want to stop offering individual policies because they claim that they are bleeding money.

A cursory examination of their woe-is-me claims shows that a loss in the individual health policy business is not actually making much of a dent in the overall profitability of major insurers:
  • UnitedHealth's 2015 net profit: $5.8B (up from $5.62B)  
  • Aetna's 2015 net profit:  $2.4B (up from $2B)
  • Cigna's 2015 net profit: $2.09B (down from $2.1B 2014)
  • Humana's 2015 net profit:  $2.4B (up from $2.2B)
(Note:  all figures taken from the company's own annual financial statements)

Remember, these figures have already accounted for the losses from ACA policies.  So not one of these companies showed a loss due to their ACA business.  They simply made less profit.  Aetna's profit actually increased despite their ACA losses.  

So if the individual policy business is tanking, then where is this profit coming from.  Turns out that most of these profits are coming from you, the taxpayer. Half, or even more, of these profits derive from Medicare, Medicaid and other government related policies. In other words, these companies are profiting from your tax dollars while making it harder for individuals to become insured by them under the ACA exchanges.

That's like paying the mechanic to fix your car and then someone else get's to drive it.  It's not right.

(Stay tuned...Are the insurers really spending more on patients?)

Tuesday, August 16, 2016

Deciphering your hospital bill - Good luck with that!

David Lazarus, a consumer rights columnist for the LA Times, just wrote an excellent article about hospital bills and how complicated they are.  In light of my recent post about this very same subject, I thought I'd repost his article in full (in case you are blocked by which sometimes happens).  

This column is also very relevant to me because like the subject in this piece, I had emergency gall bladder surgery in January 2015.  My hospital charges only came to ~$80,000 thankfully.  :)

(Here's the link to the article:  LA Times)

Denis Robinson wasn’t bothered in the least that he was billed nearly $100,000 by Providence Tarzana Medical Center for the recent removal of his gallbladder.

“What do I care?” he said. “I have Medicare Plan F, the Cadillac of Medicare plans. They covered every dime.”

Actually, Robinson, 69, should care a great deal. Medicare is a taxpayer-funded system, so any claim submitted by a doctor or hospital affects the financial integrity of the entire program. The fact that Medicare paid less than $4,000 for a $97,000 claim — we’ll get back to that in a moment.

What sizzled Robinson’s bacon was the explanation of benefits he received from Blue Shield of California, through which he purchased his supplemental Medicare coverage and which covered about $900 of his massive hospital bill. It features three pages of itemized costs, each listed only as “surgical services.”

Seriously. Three pages of individual charges, ranging from $1 to $66,607, and no way to tell what any particular one might be for, or whether there were any errors or instances of double billing, or just the perverse satisfaction of knowing that $100 was paid for a Tylenol.

I pointed to a charge for $49.50. What’s that for? What about this one for $132.04?

“I have no clue,” Robinson replied. “I have no way of knowing.”

He could narrow down the possibilities. Each listing for a surgical service was accompanied by a billing code. A little rooting around online will reveal, for instance, that code 0636 is pharmacy-related. But it’s anyone’s guess what that may be.

This is, to put it mildly, nuts.

How can a hospital charge $97,000 for a procedure that Medicare and Blue Shield say is fairly valued at closer to $4,500, the total Providence received? Why aren’t all costs made clear to patients in their explanations of benefits, which insurers send policyholders ostensibly to shed light on the billing process?

“The way it’s set up, medical billing isn’t at all useful to the patient,” acknowledged Paul Ginsburg, director of public policy at the USC Schaeffer Center for Health Policy and Economics. “It’s not designed to let you understand things.”

A key problem is that almost the entire financial conversation regarding healthcare goes on behind closed doors between insurers on the one hand and doctors and hospitals on the other. The patient, who typically pays only a fraction of the overall cost, is little more than an afterthought.

However, that system was established before the current era of rising deductibles and co-pays, leaving patients responsible for an ever-growing share of medical costs, and before hospitals started defraying overhead expenses by charging $10 for a Band-Aid, say, or $50 for a piece of gauze.

“Hospital spending is so difficult to get under control because the patient has no idea about actual costs,” said Craig Garthwaite, an assistant professor of strategy at Northwestern University who focuses on healthcare.

The explanations of benefits that patients receive typically contain “fictional numbers that have no relation to the economics of what’s going on,” he said.

Clinton McGue, a Blue Shield spokesman, demonstrated the lunacy of medical billing by explaining that even though the insurer receives its own receipt from the hospital for all services rendered, spelling out details of each and every cost, Blue Shield feels no need to share such information with policyholders in its explanations of benefits, or EOBs.

“Blue Shield provides industry-standard EOBs to its members,” he said, in effect admitting that the company denies patients helpful information because everyone else does. McGue said that if people want a proper explanation of benefits, they can request one from the hospital.

I pointed out that since Blue Shield is sending out an explanation of benefits anyway, why not include real information?

“We adhere to an industry standard with EOBs,” McGue reiterated. “We will provide the detail if asked, but we think that it is best for the member to review and discuss the services with the provider.”

Patricia Aidem, a spokeswoman for Providence Health & Services, which runs half a dozen hospitals in Southern California, acknowledged that the billing system can be a challenge for most people.

“This is absolutely something that needs to be fixed and Providence is working to create and implement solutions that will make this easier for patients,” she said.

Well, let’s start with Robinson’s bill. Providence charged $97,000 for his operation and then, according to the explanation of benefits, willingly wrote off more than $90,000 as the “amount saved by using a network provider.” That’s a pretty hefty markup for anyone visiting the hospital on an out-of-network basis.

Aidem declined to elaborate on how the hospital arrived at these figures. She said only that “Medicare pays a preset, non-negotiable rate for diagnoses and procedures” and that “hospitals almost always lose money on Medicare cases.”

The federal Medicare Payment Advisory Commission says the average hospital is paid about 95 cents for every dollar spent treating a Medicare patient. Hospitals recoup some of those losses from the rates they charge private insurers. Hospitals also balance their books by charging uninsured patients about three times, on average, what Medicare allows, according to the journal Health Affairs.

If that sounds like a profit grab, Providence’s initial bill to Robinson — the starting price, presumably, for someone without coverage — was more than 20 times higher than what it received from Medicare and Blue Shield.

“This just shows that the system is crazy and that it’s manipulated by healthcare providers for their benefit,” said Alain Enthoven, a Stanford University health economist.

Here’s a thought: How about a requirement that explanations of benefits truly explain benefits, clearly and precisely?

Or we can just keep things as they are, forcing patients to seek explanations for their explanations.

Sunday, August 14, 2016

What If Your Hotel Bill Was Like A Hospital Bill

Many people are thoroughly confused when they get a detailed bill from a hospital.  How much was that bandage??  Two Tylenol cost $25??  Here's a video that clearly illustrates how idiosyncratic and arbitrary a hospital bill can appear to be:

Healthcare is the only consumer product that we purchase without knowing the cost in advance.  And even if we did know the price of that saline I.V., would we make different decisions about our care?  Maybe that would apply to non-emergent care.  We might opt for a doctor's visit instead of an ER or urgent care facility if we can wait to be seen.  Or we might choose the urgent care verus an ER visit if we had a facility convenient to us.

But in the hospital environment, we have no choice.  We can't ask for a lower-cost I.V. option or to have fewer bandages used.  We trust that all of the treatment and procedures given in a hospital are reasoned and necessary even if they are not.

The best advice that I can give when reviewing a detailed hospital bill is to look for services that were billed more than once or services that you suspect were never rendered.

Why examine your bill if you have insurance?  One word:  co-insurance.  If you owe a portion of your bill (after they reduce it per contractual discounts), then any amount which can be eliminated from the bill will save you on your co-insurance.  Let's say your co-insurance is 20% and you find a $1000 procedure (the contractual rate) that was scheduled but never performed.  Eliminating that charge would save you $200!

In most cases, the hospital won't even send you a detailed bill unless you request one.  Even if you can't find any errors, it is always good to review your bill because it will increase your health care literacy.  This will make finding mistakes easier the next time you have to review a bill.  

Wednesday, August 10, 2016

A Sincere Apology (A 5-Step Guide)

Nothing rings quite as hollow as an insincere apology. We hear them all the time in politics and the corporate world. They usually sound like: “I’m sorry if you were offended…” or “If my actions caused you any distress…” These are not true apologies since they generally try to deflect responsibility and often engage in victim-blaming (i.e., “it’s not my fault if you have such thin skin that were offended by something that I said”).

There are many great examples of non-apologies which we have all heard :

“I’m sorry you feel this way.” (avoids responsibility)
“I apologize to everyone who may have been hurt.” (apologies need to be specific and not general)
“I’m sorry that your _____ is not ready today. Please come back tomorrow.” (Deflects the apology from the person themselves to the desired outcome. Again avoiding responsibility).
“I’m sorry. There’s nothing that I can do.” (no contrition here)
“I just feel awful.” (misdirects the attention from the harmed party)
“Alright, I’m sorry. OK?” (completely insincere)

The list is practically endless. Even many of us who feel that we are sincere apologizers probably have used some of these false apologies without even realizing it.

So what makes an apology meaningful and sincere? A true apology is one that has these five components:

  1.  Responsibility: There should be no qualifier or condition to the apology. There is no “but” or other explanation attached to the apology. In other words, a sincere apologizer should accept responsibility for their action and not try to minimize it.
  2. Contrition: This may seem axiomatic. However, many apologies reflect a sense of regret as opposed to contrition. The apologizer often is more upset at being caught than at the repercussions of their actions. [This often happens with social media gaffs.] A true apology should demonstrate that the person is indeed sorry that the incident happened – not because they were caught. But because it was objectively the wrong thing to do.
  3. Awareness: A key element in a successful apology is being aware of the repercussions or damages that transpired. Acknowledging the harmful effects of one’s action proves that you are empathetic and understand the other side of the equation.
  4. Growth: Ideally, the apology should indicate that the person is treating the event as a learning or growth experience. It is not enough to be contrite and accept responsibility. The ultimate goal is to learn from one’s mistakes and prevent a reoccurrence of the triggering event.
  5. Forgiveness: Requesting forgiveness is inviting the harmed party to continue a dialogue. One is expressing your willingness to reestablish a relationship instead of merely espousing empty rhetoric. The act of forgiveness allows both parties to engage with each other and work towards a solution to the problem.

Apologies may be perceived as a vulnerability, unfortunately. Too frequently, fear and ego prevent a person from displaying any signs of weakness. Further, in the business world, there may also be financial implications.  Doctors are shy to admitting liability for fear of a malpractice lawsuits. Likewise, CEO’s can be nervous about accepting responsibility for bad business decision that affect their company’s stock prices. The desire for self-preservation affects the quality of an apology.

However, just as there is nothing less comforting than an insincere apology, there is nothing quite so reassuring as meaningful one. Many times a good apology can instantly defuse an emotional situation or negotiation. It humanizes the participants engaged in any stressful situation. 

Much like death and taxes, it is practically inevitable that you will be in a situation that requires a thoughtful and sincere apology. Think about the above components when it is time to do so and take note of the recipient’s reaction. You will be pleasantly surprised.

(just found this funny cartoon and thought it was perfect for this article)