premiums

Tough challenges on the horizon

Wed, 21 May 2008 06:59:59 -0400

I hate to be a downer, but from where I sit, next year's shaping up to be pretty scary for providers.

For one thing, several leading health plans have vowed to raise premiums in 2009. As we've discussed here previously, this is sure to drive some employers to cut benefits and others to drop health coverage entirely. Ultimately, this means more bills patients can't pay.

Meanwhile, with financial markets still recovering from subprime losses, providers haven't been able to count on investment income this year to cover the gaps in their own income. Next year may not be much better.

Then, there's the gridlock that's likely to take effect after the presidential election for at least the first six months or so, regardless of which party wins the day. Lobbyists are doubtless hoping to get their final licks in now--on critical issues like the planned 10 percent Medicare cut for doctors--but there's only so much they can get done before November.

The only real question mark here, in my view, is whether federal officials will spend more money in the near term to help hospitals and doctors pay for electronic medical records.

They might. After all, the Bush administration is terribly gung-ho on the subject. That could at least provide some welcome capital for a critical, capital-intensive project most hospitals have underway or planned for the near term.

Otherwise, as I see it, this is a time for living on a shoestring for a while if there ever was one. Disagree? Drop me a line and let me know what you think. - Anne

Health plans need new approaches to profitability

Wed, 14 May 2008 06:59:59 -0400

Now I get it. To get back their healthy profits--which have taken a serious plunge of late--all U.S. health plans have to do is a) raise premiums and b) lower reimbursements for providers. Easy as pie! This, at least, is the line being peddled by the likes of WellPoint CEO Angela Braly who, to her credit, probably didn't even laugh once when she briefed investors.

The truth is, though, rebuilding profit margins by pure muscle is something of a pipe dream. Actually, it's something of a wonder that health plans have been so profitable to date.

While some of the forces that have hit health plans' bottom lines are directly within their control, others--such as the investment climate--aren't going to obey their commands.

For example, WellPoint took its a drubbing on medical costs resulting from its Medicare program. Despite Braly's tough talk, the company can't just turn around and demand whatever premiums it wants from the federal government to make up for those losses. Actually, boosting Medicare plan income is a tricky game that involves improving your "risk adjustment factor." Sure, WellPoint may succeed, but not overnight.

What about demanding lower prices from doctors and hospitals? Sure, health plans can and will try to accomplish this, as they always do. No doubt, they'll succeed in some cases.

But while the evidence is fragmentary, some statistics I've seen suggest that very gradually, physicians are dropping managed care contracts when push comes to shove, or at least limiting the percentage of volume managed care represents in their practice. Hospitals are perhaps a bit slower to do so, but they are getting tougher on this front, too.

So, are health plans going to get much juice out of bullying providers? Probably not a lot more than they are from any other hard-nosed contracting sessions.

All told, it seems that health plans will need to try some new tricks--new partnerships with providers, new medical-cost management models (medical homes? chronic-care management programs? telemedicine?) or new investment models (buying up medical real estate? running health IT companies?). What I'm pretty sure of is that squeezing more blood out of provider and employer turnips isn't going to cut it. - Anne

Insurer troubles could mean more bad debt for providers

Wed, 30 Apr 2008 06:59:58 -0400

In recent weeks, health insurers have started announcing financial results, and the news hasn't been good. WellPoint, for example, saw profits fall 25 percent, and UnitedHealth Group recently lowered its 2008 profit outlook by 40 cents per share. With insurers feeling financial pain, they're likely to raise premiums next year. In response, companies are likely to ask employees to carry more healthcare costs, industry watchers say. The net effect of all of this buck-passing is that with consumers facing higher bills, providers are likely to face high levels of bad debt, financial analysts predict. That's the case, in part, because consumers will be facing not only higher bills, but also a tougher economy and challenging job market, both of which further limit their ability to pay down medical debt. Add that to confusion over the use of the National Provider Identifier on Medicare claims--which could slow payments substantially--and 2009 is shaping up to be a very difficult year for providers, especially hospitals, healthcare analysts warn.

To learn more about this trend:
- read this InsideARM piece

Related Articles:
In 2007, bad debt rising for hospitals
HCA sees debt rising until patients get insured

ALSO NOTED: MN health plans post '07 loss; Judge revokes bail for NCFE execs; and much more...

Wed, 23 Apr 2008 06:59:50 -0400

> Minnesota health plans posted a collective loss in 2007, which could mean that their premiums will rise faster in the future. Article

> A judge has revoked bail for three former executives of National Century Financial Enterprises, who were accused of preparing to flee the country if convicted of pending federal conspiracy, fraud and money laundering charges. Article

> Two Tenet hospitals are in a financial spat with Independence Blue Cross, arguing that the health plan wants to pay them less than it pays comparable hospitals. Article

> Louisiana's St. Bernard Parish has gotten $25 million in state money to build a hospital there. Article

And Finally... New research suggests that what an expectant mother eats has an impact on the gender of her child. Article