Sunday, March 03, 2013

A tale of two Blues

An MIT professor colleague, an expert in computers, writes:

The last couple of months have been very heavy duty bad medical stuff for me.  Horrendous. So, I've been able to see the dysfunctional medical insurance system in action.   Do you understand how Blue Cross/Blue Shield actually works?  Out of, oh, maybe 80 transactions over 2 months -- they managed to get one, as in the number 1, correct.  The rest are mistakes, mis-billings, computer errors, everything one can imagine.  And the only reason I can ever figure it out is because I am dogged and know something.  I can't even begin to imagine the bone-head database that lurks behind all of it, along with inept programming, but whatever it is, the people running the place (sorry if I tread on toes) -- up to and including all the executives, are simply, sorry to say, totally bonkers.  And they are just middlemen. They aren't providing services, just managing to extract rents. Badly.

P.S. BTW, my running statistics on them, is that out of 540 transactions with them over the past 1.8 years, they have gotten two, as in the number 2, correct.   Not a good batting average. Why are they so inept?

Let's see if we can correlate this description with this recent earnings report in the Boston Globe:

The state’s largest health insurer boosted its earnings in 2012, while three other Massachusetts health plans reported net income declines from the previous year as they absorbed a new state assessment to fund initiatives under a cost containment law.

Blue Cross Blue Shield of Massachusetts recorded net income of $163.9 million for the 12 months ending Dec. 31, a gain of 20.4 percent from the $136.1 million it earned in 2011. The better showing was powered by a sharp increase in fourth-quarter earnings and higher operating income in 2012, offsetting a modest drop in investment income for the year and a $65 million accounting charge taken to cover the cost of the new state assessment.

After a $149 million net loss in 2009, financial results at Boston-based Blue Cross have climbed steadily over the past three years as the insurer has focused on strengthening its business and introducing products aimed at slowing the growth in premiums.

“We’ve made a concerted effort to grab hold of our company and get costs in line with revenues,” Blue Cross chief financial officer Allen Maltz said.


wrinkledman said...

So, given that correct billings are an accident at best, does it even matter in a practical sense to the individual patient, or should I say victim in this system? Can any one person do anything about these misbillings and would it make a financial difference? Are they over charging, undercharging, charging for the wrong things, or missing charges? Are there set prices for anything? Does the health care system resemble a market in any way? Does "totally bonkers" translate to mismanagement, or neglect or downright corruption? The insurance companies in this country have contributed more to the morass we find ourselves in than any other group. Is it possible to do away with them? Is there any inclination in government to fix any of this or is it beyond the reach of even the most stalwart politician with good intentions?

Nancy Thomas said...

So true. I remember going through my mother's bills - error upon error upon error. If it weren't for me, with some knowledge of such things, what would the impact to her have been? I think it is the impact that most of us experience, when we truly hit the system with an extended illness. And how many of us choose to just "pay the darned thing" rather than spend hours and hours on the phone, writing appeals, etc? We sing the Blues - and they count on it.

Beverly Rogers said...

From Facebook: I would be interested in his/her calculation as to how many of the errors were in BCBS' favor. If non random, then perhaps their programming is not so stupid after all.......if random, then they must REALLY be charging a lot to overcome that error rate and still make a big profit.

Victoria Haliburton said...

From Facebook: One error in the original statement:L It's not a *system* A system implies planning and organization and functionality, all clearly lacking here. It's an accretion of junk. Understanding that is the first step to fixing things.

Theodore Paradise said...

From FacebookL

Distressing. I've had a few arguments with BCBS over policies (e.g. once covered a child's procedure, but would not cover the few hundred for the anesthetic because it was not their preferred drug, which the Dr said was not appropriate for someone under six. They wouldn't agree.), but this is more distressing. A few years ago, insurance covered much more as a matter of course, and I paid less attention because things were more or less covered. Now there are $1000 up front deductibles for procedures - I'll be paying more attention (or at least trying) to see if it's getting credited in there the right way.

Mitch said...

This is scary in a business that will increasingly rely on technology, IT and data going forward. Is the hospital story similar? I wonder as in a world where everything is going cloud and open source, hospitals are committing to systems like Epic-closed, slow to change, very expensive.

As disintermediation comes in to play it will make today's environment seem like child's play.

e-Patient Dave said...

A quick preliminary response:

As I think you know, Paul, this is something I've been blogging about for the past year. Here's a three-part series about my personal shopping last year, starting with an EOB with NO LINE ITEM DETAIL. The insurance company (NHHP, the New Hampshire high-risk pool) told me THEY DON'T KNOW what the items on the bill are, and after weeks of tenacity I found out that's because a different company has the business relationship with BID, and I'M NOT ALLOW TO TALK TO THEM.

Your colleague will want to read the now-famous article in Health Affairs by famed economist Uwe Reinhardt, The Pricing Of U.S. Hospital Services: Chaos Behind A Veil Of Secrecy. S/he may or may not be shocked at two observations:

1. That article was published in 2006.

2. As s/he saw, not much has changed.

Here's a question for you:

When you were running BIDMC, were you aware of how hard it is to understand the bills?

I know you had a lot on your plate. I also know that every time I called in to talk about a bill, I pretty much got confused disempowered ("nothing I can do") people who were no help in understanding things.

A year ago when I tried to find out what shingles vaccines would cost - for me (on NHHP) and for my wife (on Medicare), that too was a ridiculous mess, with a different answer from every single person I talked to. See the comment stream on the shingles post.



A big first step is to start blowing the whistle on it, like this, and doing a Paul Revere with each other. This "chaos behind a veil of secrecy" BS only persists in silence.

A bigger step, though, is if the employers who buy huge quantities of insurance lock elbows and say to irresponsible messy providers "ENOUGH! NO! GET YOUR SH!T TOGETHER! STOP THIS!" and I mean REALLY get ugly in their face, face to face in meetings. The individual at that table may say "I'm not the one who does that," in which case you say "WELL GET ME YOUR MANAGER. THIS IS NOT ACCEPTABLE. DO YOU HEAR ME?"

I think this thread agrees that there are two possible explanations for the mess: either those companies are run by severely disorganized people (who don't know what's going on), which needs to be fixed, or they're run by quite clever people who understand exactly what's going on. In either case my impression is that only the large-scale buyers can stop it - a "consumer revolt" at the big-buyer level.

IBM has begun kicking butt as a buyer who spend $2B on healthcare around the world. I can connect you with their Paul Grundy if anyone wants.

Paul Levy said...

Answer: Yes. My perceived ability to change that from where I sat = 0. In contrast, my ability to help change the culture to improve quality, safety, and transparency of clinical outcomes = large. You pick your battles, and the latter was mine. That saved lives and made the workplace better. But insurance company and Medicare rules? Egad.

Howard said...

I wonder how many of the transactions resulted in underpayments to the provider versus overpayment. Our guess would be the vast majority.

Barry Carol said...

I maintained a spreadsheet that lists every service, test and procedure my wife and I had from 1999, the year of my CABG, to the end of 2011 when I retired and became eligible for Medicare. In looking at the EOB’s, potential errors can fall into the following three categories: (1) billing for something not provided, (2) listing a charge as not covered when it should have been and (3) billing the patient for higher coinsurance than the policy calls for. In over 850 transactions, I don’t ever recall receiving an EOB that included a bill for a service not provided. My main source of errors was being charged full retail price for services that should have been covered by insurance. This almost always involved lab tests and was caused by the prefix letters on my policy not being submitted, submitted incorrectly or sent to the wrong place. There were only a relative handful of those. The insurer for the entire time, by the way, was Highmark Blue Cross.

Since my wife and I became eligible for Medicare, we have only needed relatively routine care so far. EOB’s from Novitas Solutions contained no errors.

BCBS of MA must be either incompetent in this area or they recently implemented major changes to their IT systems and are experiencing lots of problems with its implementation.

wrinkledman said...


Did you also know the price of procedures so that you could verify that you and your insurer were being charged correct amounts? Does any medical provider publish its prices? Who sets those prices? The provider or the insurer? I've heard they vary wildly, which would make shopping a reasonable pursuit, but I know from personal experience that they're virtually impossible to "shop" because providers either don't know or won't tell. As someone who is clearly familiar with the systems, do you think there is any hope of creating a marketplace that rewards the best providers, or in fact any reason to want one, or should we be focusing on something else?

e-Patient Dave said...

For what it's worth, during my billing data fiasco four years ago, there were numerous charges for ridiculous things - or at least numerous ridiculous condition codes.

As one example, during an infusion of Zometa (for a bone metastasis in my leg) I incurred a billing code for non-rheumatoid bicuspid valve disease.

Another example: "705.83 Hidradenitis, armpit or groin cysts, was entered 1/11/07, when I got the abdominal ultrasound where we first saw the tumors in my kidney. Hidradenitis can’t be diagnosed with any form of radiology, not to mention that the ultrasound only touched the belly."

The complete list of follies is here. At the time it was interesting to me that with all the publicity the mess got, my insurance company (not BCBS) never showed the slightest interest in figuring out what erroneous billing might have happened.

Barry Carol said...

wrinkledman –

From 1999 – 2011, I had three surgical procedures that included an inpatient hospital stay but two of those were for only one night. I had two other procedures done on an outpatient basis. In all cases, the hospital was reimbursed on a case rate basis similar to Medicare’s DRG and not for each little thing on an itemized bill. Reimbursement rates to hospitals, doctors and other providers are protected by confidentiality agreements so they can’t disclose them even if they wanted to. This is something I’ve complained about since early 2006 when I started to participate in healthcare blogs.

The obvious solution is to outlaw these confidentiality agreements through legislation if it can’t be done by regulators. In Massachusetts, the Center for Healthcare Information and Analysis has all this information and now has the power to disclose it or require providers and insurers to disclose it. I think that may be starting to happen in MA if it hasn’t already. Laws will probably need to change state by state the Affordable Care Act notwithstanding.

For the doctor and lab charges, my insurer’s allowed payments look reasonable relative to what was billed (list price). I have to assume that Highmark Blue Cross knows what its so-called allowed amount is. If they can’t even get that right, we’re in more trouble than I thought. I also believe that most large insurers now negotiate payments as a percentage of Medicare as opposed to a discount off the chargemaster rate. For Medicare Advantage plans, according to an article in a recent issue of Health Affairs, insurers generally pay within 2%-3% of Medicare and, in some cases, below Medicare. The latter would be to doctors practicing solo or in small groups who have little bargaining power. By the same token managed Medicaid plans generally reimburse providers about in line with Medicaid rates, again according to the Health Affairs article. Ongoing consolidation in the health insurance industry combined with more attention to anti-trust issues in the hospital sector as it tries to continue to consolidate could mitigate the growth rate in hospital charges per service, test or procedure. At least I hope so.