INSURERS COME CLEAN: WE CHOSE, CONSUMERS OBEY

We previously commented on the increasing use of ‘narrow networks’ where insurers basically choose the lowest dollar providers only, and some suspect, without any relation to their quality of care.  Recent reports have had insurance executives publically admitting that their customers should not have choices.

What appears to be new is that narrow networks appear to impact patients’ access to care across all price ranges, not just in low-end plans.

ACCESS TO PRIMARY CARE

Related to the discussion above, many patients/insureds are finding that access to primary care may not be as advertised by insurers.  This may occur whether in the general insurance market, the ACA market or the Medicaid managed care market.  In many cases, primary care providers which are listed as being available for new patients turn out to either not be accepting new patients, or turn out not to be providers for that plan or network at all.

It is likely that fraud suits will be filed soon against insurers and others who represent to patients that primary care doctors are available and are accepting new patients when, in fact, they are not.  How will this be resolved?  Again, it is likely that lawsuits will occur, but it is also likely that legislation will result in both required disclosures of truthful availability of physicians for new patients, and also penalties for insurers who either don’t care about whether their provider lists are accurate, and those who purposefully mislead.

Perhaps the most discouraging part of such poor insurer behavior is that it undermines the public’s belief in the medical care system.  It makes patients believe that all insurers lie, that doctors lie and that the government lies.

KENTUCKY DATA BREACH LAWS

Kentucky will soon join nearly all other states in the United States in having a general data breach notification law applying to all persons or businesses in Kentucky other than those covered by HIPAA.  (Alabama, New Mexico and South Dakota are still holding out).  Kentucky also has a new law which imposes data security requirements, etc. on governmental agencies.  In essence, the data breach laws look much like HIPAA and HITECH, but apply to businesses which are not covered under HIPAA.  Therefore, while personal health information will continue to be covered under, other information about you, including information often contained in medical records may be covered by Kentucky’s new statutes that are similar to those in Indiana and other states.

WANT TOP PAY?  BE AN INSURANCE CEO

As reported in New York Times and other services, the highest personnel costs in healthcare are insurance executives.  Aetna’s CEO had a total comp package of more than $36 Million in 2012 (Yes, $3 Million per month!).  While hospital CEO’s often make more than doctors, the difference is not nearly so great but the gap remains high, and widening.

PRICING TRANSPARENCY

Pricing transparency is here and, despite objections, there will be no successful resistance.  In a remarkably short time, this idea will dramatically change health care pricing

What will take more time is the structuring of information.  Who will be the provider of information as a result of a price transparency?  Will it be a third-party/app. provider?  Will it be the government?  As soon as this issue is resolved, you can expect to see wide spread information about services and procedures from providers and hospitals.  This will have a dramatic effect on prices, and will accelerate the realignment of healthcare delivery.

REFERENCE PRICING

Reference pricing allows third-party payors to  arbitrarily cap payments to providers.  This normally anti-competitive behavior has been okayed by the current administration.  This is a dramatic change from the current/past system in which most insurers paid a negotiated charge.  We had already observed the anti-competitive behavior of insurers in recent negotiations when there simply were no negotiations.  The insurers simply stated what they would pay “take it or leave it”.  Reference pricing is simply an approval of this tactic.

What the current administration has not resolved is when reference pricing is lower than the charges by the hospital, the doctor and others, who will pay or what will be done with the excess?  This is very similar to out-of-network issues which are still being resolved through ACA and other systems to determine whether it is the patient, the hospital, the doctor or the insurer who will pay these amounts.  Reference pricing is merely the insurers’ way of stating that it won’t be the insurance company who pays those excess amounts leaving only the hospital, the doctor and the patient.

This newsletter is edited by Paul Wallace of Jones • Wallace, LLC, a member of the American Bar Association Healthcare Law Section and the American Health Lawyers Association who has been representing physicians and healthcare practices for over 25 years.  Mr. Wallace assists physicians in health practices in contract items, federal legal compliance, creation of practice entities, estate and wealth planning and similar issues.  Please feel free to call if you have any questions on this newsletter or legal matters at (812) 402-1600 or pwallace@joneswallace.com.