Tag Archives: health insurance

COVID-19 May Mean Big Changes for LTD

Twenty-six million Americans are out of work, among them a large share of people who can no longer afford to put off applying for disability insurance. Where previously they may have been able to continue working for an accommodating employer or solely rely on their spouse’s income, today, there’s a good chance that’s not so. 

We have seen this happen with disability insurance in just about every recession in our nation’s history, so this shouldn’t come as a complete surprise. However, this downturn isn’t like most. Caused by a global health crisis, the current decline may bring additional changes to the long-term disability (LTD) industry that require strategic alternatives during an evolving economic environment. 

Consider all the cancer screenings that are on hold for two to three months or more. With progressive diseases or conditions like cancer, early detection is key. So, with these nonessential but still incredibly important appointments getting delayed, this means that, when forms of cancer are eventually detected, many could be in advanced stages with limited treatment options. 

This pandemic might also influence people’s thinking about both short-term and long-term disability insurance, including the possibility of more unexpected diseases like COVID-19. Reporting about the current pandemic already refer to prior outbreaks, such as SARS, MERS and the swine flu. These illnesses have been flagged by some researchers as more likely over the coming decades due to climate and environmental changes. As a result, employers and their employees might see even more value in disability protection.

See also: The Messaging Battle on COVID-19: Are Insurers Losing?  

Not only are LTD carriers in a position to see claims rise, they’re also in a position to see an uptick in business inquiries. This can be a positive, but things could quickly get out of control without the right insights and support. According to recent analysis by the Integrated Benefits Institute, costs for sick leave related to COVID-19 may be in the range of $6.1 billion to $23 billion in 2020, and short-term disability claims could go into the millions of workers affected.

To ensure success, LTD carriers are going to have to pay close attention to how much money is being paid in disability claims versus the rate of purchase by employers and their workers; the latter ideally outweighing the former. Third-party service providers may be able to help identify new developments. It can be hard to see emerging trends when you’re in the middle of them. Independent resources may have access and information to spot potentially significant marketplace trends— like COVID-19 survivors reporting long-term health issues—in their early days. 

Early analysis by medical professionals is finding multiple potential long-term health effects from the coronavirus, including conditions that fall under categories of long-term disability such as stroke among individuals under 50, long-lasting lung damage and damage to the heart, kidneys and brain. Research and medical studies are continuously advancing as the virus spreads. 

These developments signal the value and importance of accessing existing benefits such as Social Security Disability Insurance (SSDI), which covers more than 156 million U.S. workers. As more people experience COVID-19, LTD carriers can benefit by partnering with third-party providers capable of monitoring and assessing emerging health impacts. An added benefit is that these providers can help LTD carriers reduce spending by coordinating and assisting former workers to access the SSDI benefits they earned while working.

The LTD industry has long looked to third-party organizations to help them determine if a beneficiary is eligible for SSDI benefits. Steps include walking individuals through the application process and doing everything possible to make sure that person is approved for disability benefits as soon as possible. 

See also: 3 Tips for Improving Customer Loyalty  

This is important because almost two-thirds of SSDI applicants are initially denied during the application process, which lasts three to five months. If a claimant files an appeal, the reconsideration level of review by the Social Security Administration requires an additional four to six months, and only one in 10 claimants will be approved. With a second denial, claimants must file another appeal to the hearing level. This appeal may require another 12 to 24 months—up to two whole years—before an applicant receives a hearing with an administrative law judge, and less than half of these individuals are approved nationwide. 

During this time, LTD carriers can be paying the individual’s disability benefits and providing an important financial backstop for American workers. That reality is significant when coupled with the current environment as the LTD industry enters unprecedented times, and raises the opportunity for LTD carriers to explore and expand their alternatives with third-party service providers. If we’ve learned anything from this crisis, it’s that we’re stronger when we work together.

Health Insurers Must Open Up on Pricing

From one way of looking at it, the big carriers are caught in the middle, between the providers that aggressively raise their prices each year and the employers or individuals who are starting to realize that there’s no bottom to the pit into which they throw their premiums and deductibles each year.

On the other hand, no one in the U.S. healthcare system has been better-positioned to use their combined purchasing power to force delivery organizations to finally focus on the value of the services they provide than those same large carriers. Yet, over and over, they’ve been happy to pass those escalating prices on to the people paying their premiums – with just enough of a markup to ensure their own profits aren’t at risk.

Part of problem is semantics. As Vitalware CEO Kerry Martin recently said, there is an important difference between healthcare “costs”/“charges” and healthcare “prices,” but the lines between them are often blurred. People say, “healthcare costs are increasing” when it’s more accurate to say “healthcare prices are increasing.”

Think of it this way: Healthcare costs are what it costs hospitals to perform certain services. These haven’t really gone up over the years, evidenced by the fact that cash prices – what people who forgo insurance and choose to self-pay – have seen few fluctuations.

What has gone up are the prices that carriers negotiate off those costs/charges to turn a profit. Prices are increasing, with no added benefit to beneficiaries. Perhaps, health benefits should be renamed health detriments

It’s a broken system, ripe for disruption by upstarts that can attack the areas of biggest waste, while the incumbents focus on protecting their legacy service bundles.

A recent JAMA study pinpoints those areas with the greatest opportunity for change. The greatest source of wasteful healthcare spending, accounting for $265.6 billion of the estimated $760 billion to $935 billion industry total, came from administrative complexity, defined as “waste that comes when government, accreditation agencies, payers and others create misguided rules.” Complexity by design is the root cause. Thomas Sowell put it well, “People who pride themselves on their ‘complexity’ and deride others for being ‘simplistic’ should realize that the truth is often not very complicated. What gets complex is evading the truth.” 

The second-greatest source of waste, accounting for between $230.7 billion and $240.5 billion, the authors identify as pricing failure, or “waste that comes as prices migrate far from those expected in well-functioning markets, that is, the actual cost of production plus a fair profit.” Essentially, this is waste that comes from the cost versus price loophole carriers, and hospital executes have historically taken advantage with a devastating impact on the working and middle class. There is no bigger contributor to 20 years of wage stagnation and decline than hospital profiteering. 

See also: Pricing Right in Life Insurance  

This gap, historically too opaque for consumers to notice, is now quite salient, thanks to all the news coverage that surprise medical billing got in 2019. Many informed consumers are no longer afraid to give their medical bills a long and hard review, questioning not only why they would pay an arbitrary price, but also the quality of care they’re buying. They’re aware that, despite the high prices they may be paying, there’s often little return on their healthcare investment, and as a result are becoming pickier and picker about the providers they choose.

Some in high-deductible health plans are even going so far as to research what their providers’ cash prices are, and if they’re less than what they’d pay prior to hitting their deductible, are making the conscious decision to ignore insurance. That can be a smart approach.

If carriers don’t change, it’s likely government will soon change them. The Centers for Medicare and Medicaid Services’ (CMS) hospital price transparency final rule, which would require hospitals to “establish, update and make public a list of their standard charges for the items and services that they provide,” comes into effect this time next year. Carriers can continue to keep the prices they negotiate with hospitals secret for now, but not forever.

Being upfront and transparent about how and why they’ve come to agree on certain prices for certain services or procedures isn’t just the right thing to do, it’s the inevitable. And those that get a head start on that now will be the ones to have a leg up on their competitors in the not-too-distant future.

The True Rate of Healthcare Inflation

The chart below compares the government’s Bureau of Labor Statistics’ inflation calculations for Medical Care versus the Kaiser Family Foundation’s research into how much insurance premiums have been increasing. The differences between the two calculations are huge. From 1998 – 2018, the government estimates that health costs have increased by only 107%, but for some reason insurance premiums have increased 288%. In fact, 288% is a material understatement, because that figure does not include the huge increases in deductibles.

One might say, “Well, this means the insurance companies are overcharging!” That is a possibility, but if the insurance commissioners of America are that bad at reviewing rate filings, which I doubt, then all the insurance commissioners and their staffs should be replaced ASAP. Another reason I don’t think the difference can be accounted for by declaring insurance companies are grossly overcharging is that the ACA to some degree limits their profit margin, and a review of their financials finds profit margins that do not suggest massive overcharging.

Another perspective is that government-sponsored healthcare expenses do not increase nearly as much as the costs covered by insurance companies. Medical care is medical care, unless if under government programs patients get materially less care or the insurance companies subsidize government programs by overcharging everyone that buys their own insurance.

A third alternative is the Bureau of Labor Statistics’ numbers are just plain wrong. I trust the Kaiser numbers because they are associated with Kaiser Permanente Insurance, so they know what premiums are being charged. Premiums are easier to verify, too.

See also: The Science That Is Reinventing Healthcare  

In your day-to-day world, what difference does all this make? Maybe none except by adding to your humor or frustrations. Or, perhaps the difference adds to your conspiracy theories. In selling benefits, though, I think seeing the discrepancy helps the intelligent and educated producer sell and advise the educated and intelligent buyer. Understanding the true inflation of medical care will help people make better decisions.

A Workplace Wellness Skeptic Lets Loose

This an excerpt from an interview that HIStalk conducted with Al Lewis, JD, the author of several books on healthcare outcomes, the operator of the website, They Said What? Because the Wellness Industry’s Pants Are On Fire, and the founder and CEO of Quizzify. The full interview can be found here

Tell me about yourself and what you do.

I am CEO and quizmeister-in-chief of Quizzify, which is a an employee health literacy company. As we say, wiser employees make healthier decisions. However, I believe we are having this conversation because of my personal blog, which is called, “They Said What?” in which wellness vendors, diabetes vendors and related vendors are critically analyzed to in fact show that they usually don’t achieve what they claim to achieve.

You’re offering $3 million to any company that can convince an impartial panel that its program can save employers money. Do you have concerns about having to pay up?

None whatsoever. The entry fee is $300,000, and, believe me, it’s worth [the risk] with this impartial panel of five judges, of which I only get to appoint one and the burden of proof is on me. They don’t have a chance, which explains why nobody has tried to take me up on it.

Is it lack of knowledge or intentional deception that motivates wellness companies to sell services to employers without having sound science behind them?

Confucius put it very well. He said, and in those days it was all gender-specific, that, “When a man makes a mistake and it’s pointed out to him and he doesn’t correct it, he is telling a lie.” So at this point, these folks know they are lying. They have made the gamble, and it’s a good gamble, that vastly more people are going to read their ads than are going to read my website. So what they do, and they’ve gotten very good at this in the last couple of years, is simply ignore my postings instead of responding to them so as not to create a news cycle and a whole discussion.

Is the available science good enough that they could do it right if they really wanted to?

I would say that, for wellness generally, it is mathematically impossible to save money. There are not enough wellness-sensitive medical events. Even if you were to reduce 100% of them, you could not pay for most wellness programs. I’m not going to say it’s impossible, but it has clinically never even gotten close to that 100%. The typical reduction in risk is 0%, somewhere between minus 2% and plus 2%, while you would need a mathematically impossible 100% to 150% reduction to break even.

Most vendors are counting on the fact that most employers have absolutely no idea how many of their employees go to the hospital every year for diabetes. I could tell you if you like, unless you want to take a guess. Out of 1,000 people under the age of 65, how many go to the hospital with a primary diagnosis of diabetes in the insured population?

I’ll say two.

Actually, that’s very close. It’s more like one. Occasionally, I run health and wellness trivia contests at conferences. How does the radiation in the CT scan compare with the radiation in an X-ray? But I also throw in that specific question. If you added all the diabetes events and all heart attacks together in a typical employer population, what would the rate be per thousand? In fact, it would be two, if you put both of those together. The guesses that I get are usually somewhere between 20 per thousand and 200 per thousand.

What about the perception of the incidence of chronic disease in general?

It’s not my take, it’s the world’s take. Because I do this show of hands thing, I do these trivia contests all the time. The employer benefits community thinks it is between about 20 and 200 of these events per 1,000 employees. Which of course makes no sense whatsoever. This is just what they say because they get bombarded with information talking about all the people who have diabetes and all the expensive chronic disease. Let’s take those two things one at a time.

A lot of people do have diabetes. They may not even know it. It’s not going to become an issue for them for many years after they find out. If in fact an employer intervenes, they may possibly be able to control it. But what the [employer is] doing is saving Medicare money down the road because virtually nobody goes to the hospital with diabetes before the age of 65. Yet employers want to start paying for medication for these folks, so it’s a net increase in cost.

And then your other point of chronic disease. I’ve written extensively on this fallacy that 86% of cost is chronic disease. If you read… carefully, you’ll find that they are saying that 50% of adults have chronic disease. Now if you’re defining chronic disease that broadly, you’re including a whole lot more things besides the things that a wellness vendor can get to. You’re including arthritis. You’re including hypertension. Who doesn’t have hypertension?

If you put all that together and say, “Let’s count every dollar that someone with hypertension spends on healthcare….” So. someone with hypertension breaks [a] leg, you count that. You probably don’t even get to 86%, but most of that is also going to be in the over-65 population. In the under-65 population, the major drivers of costs are birth events and musculoskeletal.

The wellness vendors have done a great job of moving the goalposts. It used to be they would say, “You’re going to get a three-to-one financial return.” Then they started saying, “You’ll get a one-to-one return.” Now they’re saying, “There is really no financial return, but the employees will be healthier.”

If you actually look at the health of the employees … I’m not going to name names, except to say that there are a handful of vendors, generally the ones validated by the Validation Institute, that get more than a trivial improvement in health. There are other vendors — and I don’t mind naming names; Interactive Health and Wellsteps come to mind — where employees actually get worse as a result of these programs.

If that’s the case, won’t those companies eventually get fired for failing to deliver?

Some number of them are getting shown the door, but new employers are coming in. The problem is that the vendors have figured out how to measure outcomes fallaciously in such a way that most employers and most consultants aren’t going to catch them. They compare participants [with] non-participants, for example. It’s been proven up, down, sideways, backwards, forwards and eight ways to Sunday that every iota, every dollar of savings in a participant versus a non-participant comparison is due to the mindset of the participants versus the non-participants and not to the program.

How do I know that? There are several data points. Studies have benchmarked those things and found exactly that. But the most dramatic one is a company called HealthFitness Corporation that did a wellness program for a company called Eastman Chemical. They separated the groups into participants and non-participants in Year Zero. But due to a whole bunch of incompetence and delays, they didn’t get the program started until Year Two. By the time they started the programs, the participants had already dramatically outperformed non-participants.

The funny part about that is that my nemesis, the Snidely Whiplash to my Dudley Do-Right or the Lex Luthor to my Superman, was stuck with this, so he moved the goalposts. He said, “Oh, we overlooked that. That was our bad. We weren’t competent enough to realize that the program had actually started in Year Zero, not in Year Two. Therefore, you don’t know whether it’s due to the participants or non-participants.”

That turned out to be a big enough lie. And I don’t mind saying, oh, I’ll say on the record, Ron Goetzel is a liar. He can go ahead and sue me. The difference between him and me is that, if he calls me a liar, I’ll have him in court the next day. [Editor’s Note: We have emailed Goetzel to see if he wants to respond or offer a general defense of the economics of wellness, as he once did via an article we published. If he does so, we will update this article. To our knowledge, he has not yet responded to the original HIStalk article, published last week.]

They put out a graph that shows suddenly that the program started in Year Zero, not Year Two. The people who actually did the program got upset enough with that. If you go back and look at the website now, they have in fact replaced the lie with the truth, which is that the program started in Year Two after dramatic savings had already been found.

You’ve made the case that the simplest way to measure a workplace wellness program’s success is to ask the people who signed up if they participate regularly and see benefit from it. Do most programs fail even that basic test?

There is a tool put out by the Validation Institute that is the most elegant tool for measuring the cost-effectiveness of programs that I’ve ever seen. We are big supporters of it. You ask employees two questions. How much did you use something? You may not even have to ask them that because you already know. Then, did you find it useful? Then you multiply the number of times somebody used something times the usefulness they found. That gives you an engagement score as your Y axis. On the X axis is the cost of the program. You plot the engagement score against the cost of the program and you can tell in a single graph how cost-effective your programs are as viewed by employee use, employee engagement.

For the rest of the interview, click here to go to histalk2.com.

Securing Your Internet of (Medical) Things

Internet of Medical Things is no longer a thing of the future; it can be rightly called a thing of today. Worldwide, a plethora of hospitals, health facilities and labs have adopted IoMT systems of iconnected devices and big data, which allows them to render error-free, personalized and overall superior healthcare services to their patients. On top of that, the demand for digitalized healthcare is growing, especially among younger generations, who are more likely to opt for medical providers offering digital capabilities.

Such a system, however, can actually become a source of security and privacy threats to a medical facility and its patients. This vulnerability is a downside of the rapid emergence of healthcare IoT, which neither the equipment makers nor medical practitioners were prepared for. For now, healthcare institutions and legislative bodies are working hard to catch up and impose medical security practices, yet many facilities remain drastically behind the curve.

In the light of grave consequences for human health and life, as well as possible financial and reputational harm to a medical facility, being ill-prepared for IoMT security violations is off-limits for healthcare executives.

It’s high time you homed in on making your healthcare IoT impregnable, and this article will serve as a guide on this journey. Read on and learn about the most common security threats that an average Internet of Medical Things is susceptible to and, most importantly, the ways to shield your connected healthcare environment against conceivable cybersecurity risks.

What Makes IoMT Vulnerable?

Put into practice, the Internet of Medical Things is a vast and miscellaneous entity, often amounting to thousands of connected devices. On average, between 15 and 20 medical devices for monitoring and treatment are implemented in a single ward in the U.S. This number is only predicted to grow: According to a study by Frost & Sullivan, by 2020 the number of operating appliances – from insulin pumps to pacemakers, from imaging systems to MRI scanners – will reach up to 30 billion globally.

So, on the face of it, detecting vulnerabilities in such a system is similar to looking for a needle in a haystack. In fact, there is a definite pattern of security flaws that most healthcare IoTs are susceptible to, and being aware of them is a stepping stone to rendering the system invincible.

See also: Why Medical Records Are Easy to Hack  

Let’s go over the most common weak spots of an average IoMT infrastructure.

Legacy Systems

IoMT emerged surprisingly swiftly and in a sense caught medical authorities off guard. Healthcare facilities were unable to build designated environments from scratch due to monetary or time constraints, so the majority established their medical IoT on their legacy systems.

These systems were flawed and outdated more often than not, lacked crucial cybersecurity controls or all of the above. With time, a small share of organizations revamped their legacy systems, while the majority, according to a Forescout report, still operate on the Windows versions that are to expire by 2020, which would leave them unsupported and highly vulnerable to cybersecurity breaches.

Outdated Medical Devices

Medical devices used to be designed with no or few security considerations, and this used to suffice, as they were standalone, and threats were close to zero. Now, healthcare IoT requires medical devices to be connected within a single network, making outdated hardware a potential source of critical data exfiltration.

Apart from this, a fair share of older medical devices are not in line with the cybersecurity guidelines of the Food and Drug Administration (FDA), require manually implemented patches or are beyond repair, which makes them exposed to all kinds of internal and external security threats.

System Sprawl

The undeniably positive trend toward increasing the number of connected medical devices has a downside: It expands the attack surface. The vaster the medical network becomes, the more foothold cybercriminals gain for infiltration. Besides, the devices commonly come from a variety of vendors, which complicates compatibility between the tools and hinders unified security measures.

Best Practices to Mitigate IoMT Security Risks

Network Segmentation

When you have a vast IoMT legacy system that you do not plan to shift away from anytime soon, limit the potential attack surface by segmenting your medical IoT.

The segmentation principle rests on individual needs and priorities: You can separate vulnerable devices only from the main network or segregate them based on their function or user types. Also, the FDA guidelines insist on separating unpatchable devices from the rest of the network and minimizing the traffic to them.

Applying this unsophisticated measure, one can successfully isolate potentially vulnerable tools from sensitive data and more secure devices, and prevent a possible malware infection from spreading across the network. Segmentation also facilitates supervision of the disparate IoMT environment.

Regular Updating and Patching

Thorough updating and security patching can become an effective preemptive measure against data breaches. However, because the medical IoT system consists of software and hardware from miscellaneous vendors, expect patch and update releases to be numerous and irregular.

This can be managed in two ways: by appointing a dedicated team to implement new versions and bug fixes as soon as they come out or automatically streamlining this process, which will require elaborate development.

Another challenge of updates in medical facilities, especially in intensive care wards and such, is that a great many life-sustaining devices cannot become inoperative even for several seconds.

Data Encryption

Protected health information (PHI) is a coveted prize for cybercriminals who target healthcare facilities, and, in a medical IoT environment, data is more ubiquitous than ever. There is a constant flow of patients’ information within the network of devices, and a fair amount of critical information is stored on servers and devices – all an easy target unless protected.

Encryption is a baseline measure for securing the integrity of PHI. The encryption process involves using a specific algorithm to render data incomprehensible, decipherable only with a confidential key. Encryption keys should also be properly secured, and access to them should be limited to select people. Therefore, in the worst-case scenario when PHI does get stolen, a threat actor could hardly access the data or assign any meaning to it.

See also: Insurance and the Internet of Things  

Machine Learning

Machine learning (ML) can help diminish security concerns related to the Internet of Medical Things. It can serve as an extra-sensitive risk detector, recognizing suspicious activities across all the network’s devices and endpoints in real time. Beyond that, ML can monitor data exchange within the facility as well as with external entities and detect anomalies in the data flow. The technology can also be leveraged for predicting system vulnerabilities, analyzing the facility’s big data and recommending corresponding security measures.

Still, for the time being, machine learning is too young as a technology to be left to its own devices, so considerable human supervision and correction is still required.

With IoMT, It’s Better Safe Than Sorry

Internet of Things has proven to be a disruptive technology for healthcare, used to diagnose more accurately, monitor treatment progression closely and perform sophisticated procedures, to name but a few applications. At the same time, the IoMT environment is very complex, demands financial investment and upkeep and, among all things, can be the loophole for a security breach or a data loss.

Still, it is better to prevent than to treat problems, and health professionals know this like nobody else. Do not wait for the worst to happen – instead, be aggressive and implement relevant security measures to keep your facility and patients from harm. After all, with so much at stake – money, reputation, health and even lives – inaction is inexcusable.