Exposé shows insurers have reason to gloat

April 1, 2008

Predictions come true in far-sighted industry memo brought to light in muckraking coup

I was disappointed the popular media didn't pick up the recent article in The New York Times and Review by reporter/sleuth I. C. Hays. Hays acquired from "an unnamed source" a copy of an internal memo from the president of the Health Insurers of America, the largest trade organization in the field.

The memo, dated April 1, 1999, and now nearly nine years old, outlines the group's plans to help control the rising costs of imaging. Then-president John Walker was apparently summarizing a recent meeting of member executives.

He was surprisingly candid:

"Ideally, we would just collect premiums from customers and never pay for any healthcare. Unfortunately, we do not live in an ideal world. People get sick, and they want us to pay for their care. Our job is to minimize the amount we actually pay and maximize the money in our pockets. We came up with some effective solutions, and I thought it would be useful to summarize them so we are all on the same page as we institute these ideas in our respective companies.

"We are all agreed that blanket denials are the first line of defense. The BC/BS data prove what we all knew: 12.73% of denials don't get appealed, so the bigger the denominator, the more money in that percentage. The surprising thing about these data were the double benefit of using overseas certifying companies. Not only are they cheaper up front, but the language thing was a real boost in keeping future appeals to a minimum. That one tape of the rural doc who kept saying 'What?' like 10,000 times was hilarious. Hell will freeze over before he appeals again. Well done!

"Some of you have encountered claims for after-hours services. We will all agree to ignore these. Who do these guys think they are, plumbers? Ditto for phone consultation charges. It's bad enough that we have to pay our attorneys in 15-minute increments for a phone call. But as long as lawyers control Congress, we know that won't go away. Physicians don't control anything, so we won't budge on these claims.

"Talk about reading studies over the Internet may be a real win-win for us. Once we get a bunch of companies competing for readings, they will drive prices through the floor. As has been pointed out, it is a small mental step from an overseas board-certified reader to just an overseas reader. This is the kind of step many plan administrators would jump at with enough dollar signs in front of them.

"Besides, the numbers don't lie: 90% of x-ray exams are negative. Most of the positives are obvious. We could let monkeys read them and still hit close to 95%. Last time I looked, every school in the country says 95% is an A, so we would still be providing "class A service." A couple of guys off the street in India might hit 97%. We throw in a 3% margin of error in our measurements, and our guys are close to 100% accurate. A good hospital administrator will take "close to 100%" any day of the week, if the price is right."Personally, I think the prize goes to 'outcomes-based medicine.' What a great-sounding concept. We take something that is totally unpredictable and nearly impossible to measure, and then we tie reimbursements to it. Providers will go bonkers trying to figure out how to get paid. Until they figure it out, we just won't pay them. If they talk about refusing to do studies without pay, we'll hit them with the old professionalism/Hippocratic Oath thing until they bleed.

"I think the next decade is going to be very good for us. See you all on the beach in Sri Lanka."