Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at jsimmons@healthleadersmedia.com.
Adult patients without health insurance admitted to intensive care units in Pennsylvania hospitals had a 21% higher risk of death compared to other patients with private insurance, according to University of Pennsylvania researchers.
The differences in mortality risk were not explained by patient characteristics or differences in the hospitals they were admitted to, suggesting that uninsured patients might be receiving poorer quality care—for a variety of reasons. The findings are being presented this week at the American Thoracic Society 2010 International Conference in New Orleans.
Compared to similar patients with private insurance or Medicaid, the uninsured ICU patients were found to less likely receive various common critical care procedures, such as placement of central venous catheters, tracheostomies, and acute hemodialysis.
"Previous studies suggested that uninsured critically ill patients may have a higher mortality, and may be less likely to receive certain critical care procedures. But we found that these differences are primarily due to differences in quality within hospitals rather than across hospitals," said Sarah Lyon, MD, a pulmonary and critical care fellow at the Hospital of the University of Pennsylvania, in a statement.
The higher mortality for uninsured patients "does not appear to be caused by uninsured patients tending to go to hospitals with poor overall quality," Lyon said. "Instead, we found that even when admitted to the same hospitals, and controlling for other differences between patients, critically ill individuals without insurance are less likely to survive than those with private or Medicaid insurance."
Thirty-day mortality rates and the use of several key ICU procedures were examined among all adult patients under age 65 admitted to Pennsylvania ICUs from 2005 to 2006. They used state hospital discharge data, and categorized the 166,995 patients as having private health insurance (67.7%), Medicaid (28.5%), or being uninsured (3.8%).
When the researchers analyzed mortality at 30 days, they found that uninsured patients were 21% more likely to die than patients with private insurance. Those with Medicaid had a 3% greater risk of death.
While their findings suggested that ICU patients without insurance have a higher risk of death, "expanding and standardizing healthcare coverage through healthcare reform may improve outcomes in critically ill patients," Lyon said.
The researchers also said that differences in survival between the insured and uninsured may be related to critically ill patients without insurance arriving at the hospital in more advanced stages of illness—"perhaps in ways we could not control for in our study." Lyon said.
Those patients without insurance also may have different preferences for intensity of care at the end of life, and may not wish to be kept alive on life support as long as patients with insurance, she said. In the long run, more work will be needed "before we can say with certainty that treatment biases caused these results."
Four new members have been appointed and two members reappointed to the 17-member Medicare Payment Advisory Commission, the General Accountability Office has announced. Their terms will expire in 2013.
The new members are the following:
Scott Armstrong is the president and CEO of Group Health Cooperative, a consumer governed health system with headquarters in Seattle that serves 650,000 enrollees. Armstrong has worked at Group Health since 1986, serving in positions ranging from assistant hospital administrator to chief operating officer; he became president and CEO in 2005.
Katherine Baicker, PhD, is a professor of health economics in the Department of Health Policy and Management at the Harvard School of Public Health, where her research focuses on health insurance finance and the effect of reforms on the distribution and quality of care. She is a research associate at the National Bureau of Economic Research and is on the Congressional Budget Office’s Panel of Health Advisers.
Mary Naylor, PhD, RN, is the Marian S. Ware Professor in Gerontology and director of the New Courtland Center for Transitions and Health at the University of Pennsylvania School of Nursing, Philadelphia. Since 1989, Naylor has led an interdisciplinary program of research designed to improve the quality of care, decrease unnecessary hospitalizations, and reduce healthcare costs for vulnerable community based elders. She is also the national program director for the Robert Wood Johnson Foundation program, Interdisciplinary Nursing Quality Research Initiative, aimed at generating, disseminating, and translating research to understand how nurses contribute to quality patient care.
Cori Uccello is a senior health fellow of the American Academy of Actuaries, serving as the actuarial profession's chief public policy liaison on health issues. Before joining the academy in 2001, she was a senior research associate at the Urban Institute, and previously held positions at the Congressional Budget Office and the John Hancock Mutual Life Insurance Company.
The reappointed members, whose new terms will expire in April 2013, are Thomas M. Dean, MD, a family physician in Wessington Springs, SD; and Herb B. Kuhn, president and CEO of the Missouri Hospital Association.
An estimated 4 million small businesses could be eligible for federal tax credits under the new healthcare reform law that would assist them in covering health insurance costs for their employees, administration officials announced Monday.
The tax credit, which has an effective date of Jan. 1, 2010, can cover up to 35% of the premiums a small business pays to cover its workers; by 2014, that rate will increase to 50%, and small business owners will have the chance to access plans through health insurance exchanges. Firms can claim credit for up to six years—2010 through 2013 and for any two years after that.
Qualifying firms must have less than the equivalent of 25 full time workers (e.g., a firm with fewer than 50 half time workers would be eligible), pay average annual wages below $50,000, and cover at least 50% of the cost of healthcare coverage for their workers.
The value of the credit will phase out as the number of employees and their salaries increase—with the full 35% credit available only to those businesses with fewer than 10 full time workers paying an average salary of less than $25,000. To avoid incentives for choosing a higher cost health plan, an employer’s eligible contribution is limited to the average cost of health insurance for small businesses in that state.
In announcing the credits, Small Business Administrator Karen Mills said that small businesses may receive both state healthcare tax credits and still qualify for the federal tax credit. In addition, dental and vision coverage will qualify for the credit as well.
The new healthcare rules also will prohibit in the future insurance companies from dramatically increasing premiums for a small business just because one worker gets sick, Mills said in a White House blog. Starting in 2014, "community rating" rules will prohibit insurers from charging more to cover small businesses with sicker workers or raising rates when someone gets sick.
But whether the small business community will embrace these provisions remain to be seen. On Friday, Dan Danner, president and CEO of the National Federation of IndependentBusiness, a large organization of American small businesses, issued a statement.
He said that NFIB has a "long history of working on and supporting healthcare reform." However, he added that small business owners were "concerned that the unconstitutional new mandates, countless rules, and new taxes in the healthcare law will devastate their business and their ability to create jobs."
A battle over regulatory interpretation is brewing over the issue of medical loss ratio—a provision included in the new healthcare reform act that will require health insurers to spend at least 80 cents out of every premium dollar in the individual and small group markets on actual medical care and at least 85 cents in the large group market on that care starting Jan. 1, 2011.
In letters received by the May 14 deadline by the National Association of Insurance Commissioners (NAIC) and the Department of Health and Human Services (HHS), provider groups, health insurers, consumer groups, and others had multiple suggestions on what should be used to calculate that ratio—and what specifically should be classified as providing quality medical care. NAIC is preparing to deliver guidance to HHS by June 1 about how to structure the medical loss ratio provision in the law.
The medical loss ratio regulations should "clearly define which activities do and do not improve healthcare quality" and restrict the ability of health insurers to "subjectively make such a determination," said the American Hospital Association (AHA) in May 14 letter.
The AHA recommended that the new regulations require that the activity be performed by a professional who is licensed to perform the service or activity. A decision tree analysis should be used to distinguish between an activity that is "intended to limit services or reduce expenditures," such as utilization management, or to improve health, such as diabetes management program, care coordination, or shared savings programs.
A decision tree analysis might incorporate a series of questions that probe whether the activity is "aimed at reducing cost, utilization, or directs the patient to a lower cost care setting versus whether the activity measurably improves the patient’s health," AHA added.
The Medical Group Management Association (MGMA) said that calculations of insurers’ medical loss ratio should "include—as an element of the insurer’s administrative cost—claims payment administrative expenses incurred by providers." Insurers' failure to adopt "simplified, standardized, automated processes for administrative transactions involved in claims payment" will result in "significant unnecessary administrative costs" to many providers.
In addition, health insurance administrative processes should be standardized "to reflect the provisions included in the recently passed healthcare reform legislation and to free up needed resources for patient care," MGMA said. By including these "onerous administrative costs in the calculation of health plan costs," plans could be pressured to quickly standardize, simplify, and automate many interactions between plans and medical providers.
The list of programs that provide direct benefit to the policyholders is long," AHIP said, but it includes programs that provide "nurse call lines, programs that develop and maintain the availability of centers of or networks of excellence where patients can receive specialized, unique or superior quality services from providers and institutions, case and care management programs that provide coordinated care for individuals with multiple diseases or require disease management."
Also, the loss ratio should reflect "what health plans are doing to improve quality through patient and clinical services and health information technology" in compliance with the goals and objectives laid out earlier in the federal stimulus legislation and HIPAA, the AHIP letter said.
The rules must not allow "administrative work to be defined as medical costs if a category or department has just a partial medical care role, or none at all," said the letter from the consumer group, Consumer Watchdog. For instance, "utilization review administrators whose job it is to deny physician recommended treatments have no role—even a negative role—in improving an individual's healthcare," it said.
Four of the nation's largest home healthcare agencies were asked in letters sent by the Senate Finance Committee on Thursday to explain the relationship patterns between the number of home health therapy visits they provided and the Medicare reimbursement rates for those visits.
In the letters sent by Committee Chairman Max Baucus (D-MT) and ranking minority member Charles Grassley (R-IA), the companies were questioned about recent reports that allege they changed their business practices to achieve higher reimbursements when the Medicare reimbursement rate for home healthcare changed. In particular, the senators questioned the companies' use of a patient questionnaire that appeared to assist them in targeting Medicare patients for whom they could be reimbursed.
The senators asked Amedisys, Almost Family, Gentiva Health Services, and the LHC Group to provide answers related to their internal policies and guidelines regarding the number of visits provided to each patient after a Wall Street Journal story reported a connection between the number of visits and the rate of Medicare reimbursements.
According to the Journal article, the number of Amedisys patients who received 10 visits was three times the number of patients who received nine visits—after Medicare rates increased for patients receiving more than nine visits. When the basis for Medicare payments then shifted to six, 14 or 20 visits, those Amedisys patients getting 10 visits dropped by 50%, while patients getting 14 visits rose 33% and patients getting 20 visits increased 41%.
The findings in the Journal article "are of great concern to us" because they appear to be confirmed by earlier research by the Medicare Payment Advisory Commission (MedPAC). That research found that changes in utilization of home health services "demonstrates that home health providers can quickly adjust services to payment changes in the therapy visit thresholds."
These findings overall suggest that home health agencies "are basing the number of therapy visits they provide on how much Medicare will pay them instead of what is in the best interests of patients," Baucus and Grassley wrote.
The senators also asked the companies to provide marketing materials and guidelines for patients and physicians—along with the clinical criteria that were used to develop those materials.
Obama administration officials, reporting Thursday that a record $2.5 billion was deposited into the Medicare Trust Fund in fiscal 2009 from anti-fraud efforts, said they will be increasing their efforts under healthcare reform. That means tighter oversight and increased enforcement to detect and stop Medicare and Medicaid fraud.
"Under this new [reform] law, we're going to attack fraud at every stage of the process," said Health and Human Services Secretary Kathleen Sebelius, at a Washington news conference. One of the top areas they are strengthening is screening and background checks for healthcare providers who want to participate in the Medicare and Medicaid programs.
"The days when you could just hang a shingle and start submitting claims are over," she said. There will be "much tighter screening for providers to actually become enrolled in the first place [with] verification that wasn't in place before so people can't just become providers and start billing under false pretenses."
There will be "more opportunity to do face-to-face checks of who is actually setting up shop," she added. This will be accompanied by "more opportunity to look at data systems and find aberrant billing patterns—tracking things much more quickly."
To get providers, as well as Medicare and Medicaid suppliers up to speed with requirements, HHS will be making "resources for us to conduct compliance training programs" in the upcoming year, said HHS Inspector General Daniel Levinson.
"The training will focus on methods to identify fraud risk areas and compliance best practices so providers can strengthen their own compliance efforts and more effectively identify and avoid illegal schemes that may be targeting their communities," Levinson said.
In addition, efforts are being made to "make it easier for law enforcement to see healthcare claims data from different government agencies in one place," Sebelius said. Under the previous system, "police officers in one town weren't talking to the officers in the next town over . . . Giving law enforcement agents access to the big picture will help them identify suspicious patterns in claims data that can indicate fraud."
Also, "to get more boots on the ground to fight fraud in communities across the country," an additional $600 million is going to be used over the next 10 years by HHS and the Justice Department to improve anti fraud programs, Sebelius added.
"For every dollar that we spend preventing healthcare fraud, we're able to return $4 to the U.S. Treasury," said U.S. Attorney General Eric Holder, at the joint press conference. "Over the years, we’ve seen that as long as healthcare fraud pays and goes unpunished, our healthcare system will remain under siege."
The $2.5 billion deposited to the Medicare Trust Fund was $569 million more, or a 29% increase, than the total of $1.9 billion collected the year before, Holder said. In addition to that money, another $441 million in federal Medicaid money also was returned to the Treasury Department, a 28% increase from the previous year.
Also in fiscal 2009, the Justice Department's Criminal Division and the U.S. Attorneys' Offices opened 1,014 new criminal healthcare fraud investigations and had 1,621 healthcare fraud criminal investigations pending, Holder said.
"We reached an all time high in the number of healthcare fraud defendants charged, with more than 800 indictments in nearly 500 cases and close to 600 convictions," Holder said. The Justice Department’s Civil Division opened nearly 900 new civil healthcare fraud investigations and had more than 1,100 pending cases.
Holder also announced that the Medicare Fraud Strike Forces prosecutors, working as part of the joint HHS-Justice Department Health Care Fraud Prevention & Enforcement Action Team (HEAT) announced last May, have sought approximately $500 million in court ordered restitution to the Medicare program in nearly 300 healthcare fraud cases involving more than 560 defendants. The strike forces now cover seven regions of the country—from South Florida to Detroit to Houston.
Sebelius also commented on criminal schemes that have popped up with the passage of healthcare reform legislation. "In states like Delaware and Wyoming, we've heard that scam artists are calling up seniors and telling them they need to share their Medicare ID numbers in order to get the law's new benefits," she said.
In other states, seniors have been asked for personal information in order to get their "new Medicare ID cards," which don't exist.
"These are old crimes with a new spin," she said. "My message to them today is this: there has never been a worse time to try to steal Americans' healthcare dollars."
You don't have to go very far to hear about new bonuses or incentives being planned or implemented for providers and hospital chiefs to promote quality care. Rewards and bonuses always get our attention. But what happens when those incentives go away? Will that quality remain—or go away as well?
Writing in an article that appears this week in the British Medical Journal, British researchers found a dearth of information on the topic. They wanted to know because in April 2011, eight clinical indicators will be removed from the United Kingdom's Quality and Outcomes Framework, which has used pay-for-performance for primary care since 2004 to incentivize providers for various procedures.
Under the framework, providers receive bonus points—worth about $189 each in American currency—for using quality clinical care related to such areas as diabetes care, cervical cancer screening, and consultation length. Providers can get up to 1,000 points a year—which could mean a very nice annual bonus.
But to promote care in new and different clinical areas using limited funding, British officials have decided to remove some of the older indicators from the pay-for-performance framework. But what will happen to those indicators when the bonus plug is pulled is unclear, and little empirical studies seemed to be available, according to the researchers.
Their quest for answers eventually brought them to Kaiser Permanente Northern California. They looked at four clinical indicators Kaiser has used to rate quality of care in the plan’s adult population between 1999 and 2007: two indicators (diabetes glycemic control and hypertension control) continued to receive bonuses and two (screening for diabetic retinopathy and for cervical cancer) had been discontinued.
The researchers noted that the types of incentives used at Kaiser Permanente differed from the British system. For achieving target goals on a select list of clinical quality indicators, incentives would be awarded to the plan's facilities rather than individual physicians and providers.
This bonus money could be used to fund core facility operations, staffing, and quality improvement. And while incentives were at an organizational level (and not individual level), "this created alignment of leadership and engagement in performance improvement and also resulted in major investments in redesign," the researchers noted.
Some of the indicators were removed by Kaiser Permanente because rates of usage were relatively high, incentives did not seem to be leading to further increases, and it was thought that there were better opportunities to improve care, such as greater focus on cardiovascular risk reduction, according to the researchers.
For two of the conditions for which bonus payments were retained, the results were good. When incentives were used for glycemic control among diabetic patients, those adults achieving good control rose from about 41% in 2001 to almost 70% in 2007. For control of hypertension, the proportion of those reaching their goals (systolic blood pressure below 140 mm Hg) rose from 59% to 70% during that period.
During the five consecutive years (1999-2003) that screening for diabetic retinopathy received a bonus, screening increased from 85% to 88%; when the bonuses were dropped, though, it went to 80% in 2007.
Similarly, during the initial two years when financial incentives were attached for cervical cancer screening (1999 2000), screening rates rose slightly from 77% to 78%. During the next five years when no financial incentives were attached, rates fell to 74%. When incentives were then reattached for two more years (2006 7), screening rates increased again.
So put simply, after incentives were removed, screenings for diabetic retinopathy declined on average by about 3% per year and for cervical cancer by an average of 2% per year.
In their study, the researchers acknowledge that their study area is small. However, the questions they ask are big: what eventually happens when you remove payment incentives? Should payment incentives be used like training wheels—to get a certain clinical practice up and running and to promote quality care?
The researchers correctly note that if their findings are confirmed across a wider range of indicators, providers will need to be aware that if financial incentives are removed, their focus may change—and "they may need to think proactively about how to maintain previous levels of patient care."
But in the long run, healthcare policymakers need to think about what will happen when they remove—for whatever reason—financially incentivized clinical indicators. Rather than a blanket removal, maybe consider a stepwise reduction of payments against indicators, as the researchers suggest.
But what we need is something that has gotten very little attention when it comes to pay for performance: a good exit strategy.
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The Food and Drug Administration, in regulating drugs, medical devices, foods, and nutritional supplements, needs to coordinate with other federal agencies and improve its surveillance systems to gain better understanding of the use of biomarkers, according to a new Institute of Medicine report released Wednesday.
Since companies may find it difficult to test their products against actual clinical outcomes to find out if they cure or reduce the risk of disease, these companies often conduct studies measuring the effects of biomarkers. Biomarkers, sometimes described as "biological yardsticks," are factors such as temperature, blood pressure, or cholesterol that can be used as substitutes when reviewing clinical outcomes.
As an example, a tumor size is used as a biomarker when it is used to measure a cancer drug's effectiveness. In addition, blood levels of low density lipoprotein (LDL) cholesterol are often used as a biomarker for the risk of heart disease. Based on these cholesterol levels, drug and food companies make claims about heart health benefits—even if the products have not been shown to actually lower heart disease, according to the report, Evaluation of Biomarkers and Surrogate Endpoints in Chronic Disease.
The report calls on Congress to boost the agency's authority to require further studies of drugs and devices—after they are approved—if their approval is based on studies using biomarkers as surrogate clinical outcomes.
The committee called for a new framework that entails validating a biomarker so it could be accurately measured, ensuring that it is associated with the clinical outcome of concern, and confirming that it is appropriate for the proposed use.
Also, the IOM committee observed that no scientific grounds exist now for using different standards of evidence to evaluate the health benefits of food ingredients or medications—given that both can have "significant impacts on individuals' well being," said the committee.
Foods and drugs are regulated differently by the FDA. When the FDA reviews drugs, the safety and efficacy of the entire product is considered; however, when the agency considers foods, the safety of individual ingredients is evaluated rather than the food as a whole, the committee noted.
Despite the common perception that foods present fewer risks to consumers than drugs, food based public health interventions—for example, supplementing milk with vitamin D and fortifying cereal with iron—may pose greater risks than many drugs because the reach of food is so vast. Even minor risks are significant when the majority of the population is exposed to them, the committee said.
FDA has been hampered in its ability to assess the number of health claims being made by food and supplement manufacturers in part because it lacks a process broadly accepted across the regulatory, food, and medical communities to evaluate biomarkers as valid and appropriate measurements to substitute for clinical outcomes, the report noted.
"Many people naturally assume that the claims made for foods and nutritional supplements have the same degree of scientific grounding as those for medications, and this committee thinks that should in fact be the case," said committee chair John Ball, who is executive vice president of the American Society for Clinical Pathology, Chicago.
While most hospitals have focused on promoting quality care at their facilities to help decrease costs, quality care will take on a somewhat different meaning under the new healthcare reform law: Hospitals will feel the pressure to maintain continuous quality improvement or risk being penalized under reform incentives scheduled over the next several years, according to a PricewaterhouseCoopers' Health Research Institute report titled "Health Reform: Prospering in a Post-Reform World."
According to the report, the new law can be expected to impact hospitals in three main areas:
Hospital readmissions. Starting in October 2012, hospitals will be financially penalized by Medicare if they demonstrate "excess" readmissions within a 30-day period when compared to the "expected" risk-adjusted levels of readmissions. The readmissions are based on the measures for acute myocardial infarction, heart failure, and pneumonia.
Hospital payments based on value based purchasing (VBP). Starting in 2013, hospitals will be paid according to a Medicare VBP program schedule, in which payments will be made based on hospitals' quality measure outcomes. VBP will measure hospital efficiency, patient satisfaction, and quality of care. These outcomes will be collected beginning October 2012.
Penalties for hospital acquired conditions (HACs). Beginning in 2015, 1% of payments will be subtracted from hospitals with the highest rates of HACs—essentially those falling into the bottom quartile of hospitals when compared to the national average. This could result in a nationwide reduction of $1.5 billion in payments over the next 10 years.
The message hospitals need to pay attention to is "don't get stuck in the bottom quartile, and work towards continuous quality improvement," according to the report. The bottom quartile will change from year to year as the quality performance of hospitals change. However, at least 1,000 hospitals will end up in the bottom quartile—regardless of the quality provided.
Beginning in 2013, high scoring hospitals under VBP will receive a higher payment of 1%—which rises to 2% in 2017 and beyond. In addition to the direct financial impact, the reform law will require that an organization's quality metrics be publicly available and accessible.
In addition to the direct financial impact, hospitals also could feel the impact of consumerism. For years, healthcare has lagged behind in making information easily accessible to consumers, but this has been changing.
According to a 2009 PricewaterhouseCoopers consumer survey, individuals are using the Internet as a source for making decisions. Online content was found to edge out physicians as an information source: For instance, 48% of consumers said they use health websites to find information to make decisions about their healthcare.
Within this consumer realm, hospital quality information will move "beyond the organization and government websites" to health websites and consumer advocacy sites, the researchers note.
In addition, making more quality information available to consumers could impact a system's perception in the community and payers' contracting strategies with them. More informed decisions by patients could lead them away from organizations listed as "poor performers"—or those in the bottom quartile of hospitals.
For the typical hospital, being on the bottom quartile in terms of quality could mean millions of dollars lost annually. For instance, for a 300-bed community hospital with $50 million in Medicare inpatient net revenue, failure to improve on hospital readmissions (a loss of about $96,780), failure with VBP (a loss of $750,000), and ending up in the lowest quartile for HAC ($500,000), would create a drop of $1.35 million in income.
In addition to Medicare, hospitals also will have to learn to live with cuts in Medicaid. Hospitals that care for high numbers of uninsured and Medicaid patients currently receive extra funding from Medicare and Medicaid under the disproportionate share program. But in 2014, Medicare DSH will be reduced 75%—the same year that the insurance exchanges and individual and employer mandates go into effect.
Some health insurers are "mounting an all-out effort to weaken" the new healthcare reform provision that establishes minimum medical loss ratios in the commercial health insurance market, according to Sen. Jay Rockefeller (D-WV), chairman of the Senate Commerce, Science, and Transportation Committee.
Under the new healthcare reform law, health insurers are being required to spend at least 80 cents out of every premium dollar in the individual and small group markets on actual medical care and at least 85 cents in the large group market on that care starting Jan. 1, 2011. But the committee reported the medical loss ratio data—when aggregated at the national or multi-state level—are not capturing the "diversity of consumer experiences."
For instance, committee staffers found that small businesses purchasing group health insurance in Virginia from Anthem Health Plans were subject to a medical loss ratio of 66.6%, while small business owners in nearby Kentucky with coverage from Anthem Health had a medical loss ratio of 80.9%—which exceeds the minimum loss ratio set in the reform law.
And, WellPoint customers in New Hampshire purchasing individual health insurance policies had a plan with a low medical loss ratio (62.9%), while customers purchasing health insurance in Maine from WellPoint had a plan with a much higher medical-loss ratio (95.2%)
However, aggregating state data with high medical loss ratios with other multistate or nationwide data makes it difficult for regulators "to identify harmed consumers"—such as Virginia small businesses and New Hampshire individuals, the letters said. These entities under the law should be entitled to rebates—the difference between the actual medical loss ratio and the amount specified under the law, Rockefeller said.
Depending on which way the data is aggregated, these medical loss ratios are not clear to consumers—or hidden with other data. Rockefeller called for HHS and NAIC to consider requiring insurers to report their medical loss ratio data "at a level of aggregation that would allow consumers living in a particular state or other definable geographic region to determine how insurers are spending their healthcare dollars."
Also, medical loss ratios are appearing better than they should among some insurers because they are "reclassifying" certain expenses by taking items traditionally classified as administrative and placing them under medical care. They include areas such nurse hotlines, disease management, and clinical health policy.
By reclassifying certain expenses as "quality improvement expenses," one company—WellPoint—was able to increase its medical loss ratio by 1.7% in 2010. This means the company converted more than half a billion dollars of 2010 administrative expenses into medical expenses, the committee said.
Rockefeller is asking HHS and NAIC to clarify what is meant by "activities that improve healthcare quality." Once evidence-based definitions are established, insurance companies then should "consistently apply them to their balance sheets," he wrote.
