The more that current
outlays by health insurers fall into the "medical" category, the
easier it will be for them to meet new minimums in the health care overhaul
dictating how much of every premium dollar must go for medical care and
limiting how much can go for profit and administrative expenses.
Insurers are racing to
make the case that things like spending on health information technology and
reducing certain types of medical care that isn’t necessary falls into the
category of "improving the quality of care" and so would qualify as
Consumer activists say,
however, that activities described by insurers as "medical
management" can lead to the unwarranted denial of care. Classifying it as
medical keeps insurers from having to increase their payouts for actual health
care services, they assert.
The overhaul law requires
that 85 percent of premiums in the large group market be spent on medical care.
The minimum medical loss ratio, or "MLR," is 80 percent in the
individual, non-group market–it’s harder to reach and so generally involves
higher marketing and other administrative spending.
The issue is reaching a
critical point with the National Association of Insurance Commissioners due to
make recommendations to federal officials by June 1 on how various types of
insurer outlays and programs should be classified in determining these
"medical loss ratios." In addition, HHS has set a May 14 deadline for
comments by insurers and others on how various types of spending should be
An internal memo by an
official with the America’s Health Insurance Plans (AHIP) says that various
types of insurance company activities could be in jeopardy if regulators aren’t
convinced that they should be designated as medical on the grounds that they
improve quality of care.
"As we approach the
May 14 deadline for submitting comments, it is critically important for you to
explain what you are doing to improve quality of care, reduce readmissions,
eliminate unnecessary procedures, improve safety and reduce fraud and
abuse," says the memo to AHIP member companies from AHIP Senior Vice
President Scott Styles.
"We urge you to
explain how these activities meet the statutory definition of "activities
that improve health care quality" for purposes of calculating MLRs,
"because they improve patient health outcomes and reduce unnecessary and
potentially harmful care."
The memo further advises
that "you… describe your innovative case management, disease management,
and care coordination initiatives including: health risk assessments, including
maternity and neonatal risk assessment," and programs to promote
"wellness" and "nurse advice lines to help patients get the care
they need while reducing the likelihood of adverse health problems."
activists say that some of these programs involve denial of care that harms
patients and that it’s perverse to count them as medical care.
In a recent post on the
website of Consumer Watchdog.org, the group’s research director, Judy Dugan,
took exception to a recent earnings report by United HealthCare that credited
good results in part to "expense management."
management’ refers to the pencil-pushers in the back room whose job is to delay
and deny the care your doctor prescribes," Dugan blogged. "Delay is
almost as profitable as denial. Every day a dollar is not spent is a day it
earns interest for the company. Yet this is one of the functions that insurance
companies are now transferring into the ‘medical care’ column."
administrative jobs into the medical care category, United HealthCare will be
able to meet health reform requirements for medical loss ratios of up to 85%
without sweating, and still make just as much profit," Dugan added.
"A lot of what insurance companies can get away with will depend on how
new regulations to govern the health care reforms are written — and who gets
to write them."
But AHIP spokesman Robert
Zirkelbach said that insurers seek through their management programs to
determine appropriate levels of care, which he said means correcting underuse
of care in some instances and overuse in others that could be dangerous. He
said for example that overuse of medical imaging is hazardous because of
exposure to radiation that can be unsafe.