Tag Archives: patients

All Employers CAN Reduce The Cost Of Health Care

What health plans and brokers don't want you to know….

Sometimes it's humbling to admit what you don't know. It's even worse to realize that you don't know what you don't know (YDKWYDK – pronounced, yidick-widick). Well, last fall I was hit square in the face with an embarrassing case of YDKWYDK. Silly me, I presumed that within certain boundaries, actuarial science is, well, a science. Based on the experience/characteristics of a population, and the design of a plan, there was a narrow range within which premiums would be assessed. Not exactly.

Informed Purchasers Can Get Better Coverage And A Lower Cost
I advise employers about how to manage health care costs. That's what I do for a living. Well, I discovered there is a process for uncovering available savings of which I've been unaware. Let's call it the informed purchaser discount. It turns out if you:

  • Learn more about how rates get set (not necessarily based on actual claims risk), and
  • Discover where fees might be hidden (many places), and
  • Inform yourself on calculations health plans use to forecast cost and protect themselves from exposure (quite conservatively), and
  • Partner with someone who has the data platform and predictable process to uncover available savings, and
  • Design a new plan that aligns patient and provider interests,

You can pay a lot less for coverage.

Why Don't You Already Know About This?
Well, it turns out there are incentives built into the system such that:

  • Most brokers — who are paid by the plans — are reluctant to push back on plans for better prices, and
  • Brokers who do push back may get penalized by the plans with worse quotes or slower service, and
  • The timing of quotes are manipulated to rush decisions and leave less time for deliberations, and
  • Because it's a hassle to price many different designs, the plans and brokers often choose a favorite and don't bother to tailor it to specific client needs, and
  • All plans tend to operate this way, so you won't detect over-charging by simply comparing among them.
  • Thus, benefits managers are left reporting to the executive team, honestly: “This is the best I could find.”

Sigh. In other words, circumstances are stacked against the individual employer, especially small ones that are fully-insured. The traditional industry process is meant to keep us in the dark.

Worse yet, as traditional benefit professionals, we don't know what we don't know. There are many reasons not to rock the boat. Perhaps there is a long-term, trusted relationship with the broker; they've become our friends. Brokers won't tell you that they think you can get a better deal — otherwise you would question why they aren't getting it. Perhaps there is fear that getting a different broker or an outside advisor will be looked upon as a sign that we have made poor choices in the past. Perhaps it is simply easier to do what we always do. Perhaps we assume we will get the best deal through the competitive bidding process. Perhaps we assume that because we are smart and capable in other areas, the same approach applies in health coverage. Whatever the reason, the vast majority of businesses don't have the insight to demand and get the informed purchaser discount.

So, you ask, how much can that discount be? (Are you sitting down?) $1,000 to $3,000 per employee, every year. For a 500 person company, that equates to overpaying between a half a million and 1.5M dollars on health care over the past five years. It's shocking, it's appalling, it's something I would not have believed … but folks, it's real. And you can do something about it.

I have spent my professional benefit career advising employers about plan design, corporate policy, health care quality, and health interventions. All the while, I should have been encouraging them to partner with an experienced purchaser who knows the process and can share understandings of risks and incentives.

Stop Paying A Penalty Simply For NOT Being Informed
The only way to get an informed purchaser discount is to make the process transparent and work with someone who only has a financial incentive to save you money. This doesn't mean you fire your broker (unless you want to), only that you insist on having a broker who will partner with an independent plan reviewer/designer. You want someone who is not threatened by complete transparency — something you will learn is not welcomed by plans or most brokers. (If your broker resists, I can recommend a few who do advocate transparency and are open-minded).

What should the independent party do?

  1. Review your current plan and experience at no charge.
  2. Assess the savings opportunity at no charge.
    Explain your design options and confirm you are comfortable with specific types of changes. The savings should not be solely derived from making the plan less desirable, such as:

    • restricting access to providers
    • shifting large increases in cost to employees
    • design changes that discourage employees from choosing coverage
  3. If savings are not likely, state that fact, shake hands and part ways.
  4. Charge a reasonable fee, most of which is contingent upon meeting a minimum savings (e.g. $1000 per employee).

In other words, there should be no cost or risk to assess your opportunity, and the group who guarantees savings should get paid after the savings are achieved.

Does such an organization exist? Yes. It's not a brokerage, but a small, independent consulting group called Incenta, that is saving its clients a lot of money. Do I work for them? No, but I am introducing them to my clients because it feels bad not to. Will I be partnering with them in the future to bring this solution to more employers? Absolutely.

What Now?
This article is a stark departure from my usual analytical or policy-oriented discussion. Readers who know me know that I investigate topics thoroughly and thoughtfully. Despite this, all of us encounter situations where yidick-widick, and we discover new solutions to old problems. It's not a sin to find out we didn't know — but I've decided it's inexcusable to ignore it now that I do know.

Never have I been more convinced that a different sort of expert is needed. Plus, in this case it happens to be very low risk — no cost to assess potential savings, and the vast majority of fees contingent upon achieving $1000 to $3000 of savings per employee.

So, I encourage every benefits manager to become one of the (few) informed purchasers. Don't wait until your renewal is approaching. And don't be afraid to admit YDKWYDK — better to learn this now than continue paying the penalty for remaining uninformed. Call or email me or the others listed at the bottom of this article. Become informed. Your bottom line, and your company executives will thank you.

For those interested in following up, talking it though, or getting started toward a better process of getting health care coverage, feel free to contact:

Wendy Lynch
Send Email to Wendy

Dennis Kelly
Send Email to Dennis

Dave Dias (one of the transparency-advocating brokers I know)
Send Email to Dave

Medical Identity Theft And Fraud

Medical identity theft (MIDT) is a crime that has profound consequences for patients, insurance providers, and health care providers. The definition of medical identity theft is the fraudulent use of an individual’s personally identifiable information (PII), such as name, Social Security number, and/or medical insurance identity number to obtain medical goods or services, or to fraudulently bill for medical goods or services using an unlawfully obtained medical identity. Unfortunately, the definition of medical identity theft and the consequences that are associated with the crime are not common knowledge to the general public.

A recent study conducted by Harris Interactive on behalf of Nationwide Insurance found that only one in six (~15%) of insured adults say they are familiar or very familiar with the term “medical identity theft.” Of the 15% that professed familiarity with the term, only 38% could correctly define what a medical identity was (Medical ID Theft Study 4). Unfortunately, this lack of widespread understanding of medical identity theft by consumers is part of the problem and it is costing consumers, insurers, and healthcare providers alike.

According to the most recent Ponemon Institute Research Report, 1.85 million Americans were affected by medical identity theft in 2012. This is a dramatic increase from the 1.49 million affected by medical identity theft in 2011, amounting to an almost 25% increase in just one year (Third Annual Survey 1). This rate of growth has the potential to explode due to several reasons. First, The Affordable Care Act is estimated to reduce the number of uninsured by approximately 30 million (Insurance Coverage Provisions 13), drastically increasing the number of insurers and insured patients that are targets for medical identity theft. Second, HIPAA policies and new rules under HITECH are increasing the use of electronic health records (EHRs) which can be vulnerable to data hackers. And lastly, the data hackers themselves are more sophisticated and cognizant of ways to profit off of personal data than ever before. All these factors combined pose a very serious dilemma in controlling the rate of growth for medical identity theft. Ponemon estimates that the cost of medical identity theft to consumers in 2012 was approximately $41 billion (Third Annual Survey 1). This does not include the untold cost borne by healthcare and insurance providers. We cannot afford the cost of letting this crime grow.

In order to minimize the effects of medical identity theft we must better understand the nature of medical identity theft. The Identity Theft Resource Center (ITRC) knows it is important to assess how consumers’ identities are stolen, how they find out they have fallen victim to this crime, and how difficult it is to resolve once discovered. The Identity Theft Resource Center believes this information can be used to educate and make aware the general public as to what medical identity theft is and how they can minimize their risk or mitigate the cost once they become a victim.

Looking at how medical identity theft victims discover they have fallen victim to this crime is crucial in determining what can be done to discover medical identity theft sooner to avoid increased expenses and instances of fraud. The 2012 Ponemon report found that the most common way (39%) people discover they have become victims of identity theft is by receiving collection letters for delinquent bills. This is bad news as this means the costs for the fraudulent services worked their way through the providers’ billing systems and languished there until they were forwarded to collection departments or agencies. In the time it took for the bill to make it to the collection department or agency, the imposter could have committed many more instances of fraud in different locations. The second most common method of discovery (32%) was by noticing mistakes in their health records, tipping them off to the medical identity theft. This is also bad news as mistakes in health records can have catastrophic consequences which can be fatal.

Fortunately, the third most common method (26%) of discovering identity theft was by victims noticing suspicious postings to a statement or invoice, such as an Explanation of Benefits statement. This is very good news as this usually means the victim is discovering their medical identity theft as early as possible. The earlier the victim notices the crime, the more likely they may avoid damage to their credit score, stop future abuse of their medical identity, and reduce the amount of time and money spent to rectify the issue. This statistic is even more interesting when compared to the previous two years of the Ponemon study, where only 9% of participants indicated that they discovered their medical identity theft via suspicious statements of invoices. This is a promising example of how educating and making consumers aware of medical identity theft can make a big difference in helping reduce the incidence of medical identity theft and its costs as a whole.

Looking into the mitigation process victims are confronted with after they discover their medical identity theft reveals the costs and trouble they have to go through to clear their names. There are two distinct objectives when mitigating medical identity theft. First, the victim must deal with an individual incident such as a thief receiving medical care under the victim’s name and the associated fiscal impact the crime imposes. Second, the victim must now deal with the task of “curing” themselves of medical identity theft, insuring that their medical identity is not abused again in the future. This second objective is extremely difficult and contributes to the devastating nature of medical identity theft.

Regarding the first objective, the process for rectifying an individual incident of medical identity theft is complicated and drawn out. The victim must immediately contact the medical records and billing departments of the healthcare provider that provided the services to the imposter, request their medical records, and inform the provider that they are not responsible for the fraudulent bills. Upon learning that there may be fraudulent information in the victim’s medical record, the healthcare provider may deny the victim access to their medical record for fear of violating the Health Insurance Portability and Accountability Act (HIPAA). HIPAA protects the privacy of patients’ medical records making healthcare providers worry that they may be violating the imposter’s privacy rights by releasing the medical record to the victim. Oftentimes, the healthcare provider does not know for a fact that the fraudulent information in the medical record was a result of medical identity theft and cannot rule out that it may simply have been an accidental mixing of two patients’ records. Regardless of the situation, the healthcare provider is afraid of incurring liability under HIPAA for releasing confidential medical information even if it is under the victim’s name. The victim may have to appeal the decision in order to be able to view their records.

In one case, a medical identity theft victim was charged for bills related to the alleged amputation of one of her feet. Luckily, this was easily refutable as she would simply show the hospital billing department that she still has her two feet. Unfortunately, the imposter also had diabetes which prompted a physician, during a subsequent hospitalization, to ask the victim what medications she was taking to treat her diabetes. Note, the victim has never had the disease (Menn). This case demonstrates how frustrating correcting medical records can be and reminds us how dangerous medical identity theft is to the victim.

It is also recommended that victims file a police report and submit a copy of the report to healthcare providers as it will usually help streamline the process. It is important for victims to note that medical identity theft, like any other form of identity theft, is a crime police are required to provide a police report for in most states. Once the incorrect information is identified, the victim must request that the healthcare provider either remove the information or at least flag it should the provider be reluctant to permanently remove it. After correcting the records at the location the imposter received medical services, the victim will then have to request an accounting of disclosures listing all the entities to which the healthcare provider sent the victim’s fraudulent records. The victim must repeat this procedure at each location that has their fraudulent medical record. All of this creates mountains of work for healthcare providers, insurers, and the victims themselves which increases costs in the medical industry for everyone involved.

The second and more difficult objective, “curing” oneself of medical identity theft, does not have a set solution. The problem stems from the decentralized structure of the medical data system. Every healthcare provider, pharmacy, and insurer has its own records and records system. In contrast, the financial industry has three major credit reporting agencies through which almost all financial credit information is processed. Therefore, when you have suffered financial identity theft, a great way to mitigate future instances of fraud is to place a credit freeze with all three credit reporting agencies so that identity thieves cannot abuse your credit again. There is no such central medical record agency for medical records. Thus, it is possible for a medical identity thief to commit fraud with the same medical identity over and over again in multiple locations around the country. The victim will have to go through the individual incident mitigation process every time and just hope that the identity thief will stop using their medical identity.

Since there is no way to get ahead of the thief and prevent the medical fraud from occurring, the best way to mitigate the costs and effects of medical identity theft is for the victim to be vigilant and confront each instance of fraud as soon as possible in order to reduce the amount of wasted time and costs. This repetitive cycle is exhausting and costly for the victim as well as healthcare providers and insurers. In all three years Ponemon has conducted this survey, the number of victims who said they had completely resolved their medical identity theft never exceeded 11% (Third Annual Survey 11). This is an ongoing problem that does not yet have a solution, but it is imperative for all stakeholders to be involved.

All of this information points us to the realization that medical identity theft is a costly and potentially dangerous crime that is incredibly difficult to resolve. To make matters worse, medical identity theft often goes undiscovered for long periods of time and only becomes more detrimental and difficult to resolve the longer it goes undetected.

The Identity Theft Resource Center proposes that one of the best methods of reducing medical identity theft and the costs associated with it is an educated and aware consumer population. To make this point, it is useful to separate out the causes of identity theft listed in the Ponemon report into two groups. The first group includes causes of identity theft that victims have no control over: healthcare provider used identification to conduct fraudulent billing (22%), malicious employee in the health provider’s office stole health information (7%), and the healthcare provider, insurer or other related organization had a data breach (6%). In total, 35% of the causes of identity theft cannot be affected by actions of the consumer. The second group consists of causes of identity theft that a consumer does have a degree of control over: family member took personal identification credentials without my knowledge (35%), mailed statement or invoice was intercepted by the criminal (6%), lost a wallet containing personal identification credentials (5%), and a phishing attack by criminal who obtained personal identification credentials (4%). Thus, the total of causes of medical identity theft that can be affected by actions of the consumer is 50%. It should be noted that 15% of the participants still did not know how they had their medical identity stolen.

Looking at the numbers above, it is clear that the consumers themselves can have the largest impact in reducing the number of medical identity theft cases and the severity of the cases that still occur. Not only do the consumers themselves have the best ability to reduce the risk of medical identity theft happening to them, they are the only people that can reduce the severity of the crime when it does happen. The Identity Theft Resource Center has long understood the ramifications of medical identity theft on the consumer population as well as the medical industry itself. We know that educating the consumer population can be cost-effective and powerful.

The Identity Theft Resource Center is a founding organization of the Medical Identity Fraud Alliance, the first public/private sector-coordinated effort with a focused agenda that unites all the stakeholders to jointly develop solutions and best practices for medical identity fraud. We encourage all industry stakeholders to join so that we can work together in galvanizing the consumer population into becoming the most effective weapon yet against medical identity theft.

How Consumers Can Minimize Their Risk Of Medical Identity Theft

  • Review Explanation of Benefit statements as soon as you receive them as they may detail medical services that you never received.
  • Review your credit reports multiple times a year to see if any fraudulent accounts have been opened in your name, or if any medical bills have been reported as unpaid.
  • Be aware of phishing emails. These emails are designed to look like they are official communications from either a healthcare provider or insurer and ask for personal information such as a Social Security number, insurance policy number, or other information used to commit medical fraud in your name.
  • Do not open attachments in emails from people you are not familiar with as it may have a virus or program to steal information from your computer.
  • Use a Virtual Private Network when using the Internet outside of your home as this will encrypt your signal from your mobile device or laptop.
  • Do not carry your Medicare card, Social Security card, or certain military identification as these have your Social Security number on them. Should you lose your wallet or purse or have it stolen, this information would be extremely valuable to a medical identity thief.
  • Shred or safeguard any documents with personally identifiable information by either locking them in a safe hidden in the home or by storing them on an encrypted thumb drive and deleting them off your computer. Sensitive documents with PII include:
    • Tax preparation papers
    • Explanation of Benefits statements
    • Medical Bills or Records
    • Bank Statements
    • Passport
    • Medicare, Social Security, or military identification card

References
Nationwide Mutual Insurance Company. “Medical ID Theft Study Results.” March 2012. Print.

Ponemon Institute. “Third Annual Survey on Medical Identity Theft.” June 2012. Print.

Congressional Budget Office. Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision. U.S. Government Printing Office. July 2012. 13 December 2012. http://www.cbo.gov/sites/default/files/cbofiles/attachments/43472-07-24-2012-CoverageEstimates.pdf

Menn, Joseph. “ID Theft Infects Medical Records.” Los Angeles Times. 25 Sept. 2006. N.pag. Web. 20 Dec. 2012