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Insurance Cuts, Costs: Who's Responsible?
By Ralph W. Nobbe, CPO I recently went through the rather painful process of reviewing
our company health insurance benefits and obtaining quotes for
replacement (cheaper/less expensive) policies. We just got hit with
the third double-digit premium increase in the past 18 months.
Several interesting things came to light during the process
concerning the benefit changes being made by the insurance
companies that will adversely impact our patients, clients,
employees, and businesses.
All plans available and offered to us as a small group employer
in California have an annual cap on the DME and O&P benefit.
This cap is most frequently either $2,000 or $5,000 per annum with
co-pays ranging from 20-50 percent. Our broker happens to be a good
personal friend and has always been able to find us good
competitive rates and benefits. He further researched this on my
behalf. He found that major insurers--in the states where it is
legal to do so--are limiting their DME/PO benefits in this manner.
This is most common in the renewals for small group employer
benefit packages. This seems to reek of some insurance
collusion.
Unpleasant Surprises
At the time of writing this, we are currently in the "open
renewal" season. Benefits and plan switches are being made by
employees of large group employer policy holders. Since October 31,
several established patients have come in who have had their
benefits reduced to these same limits on their existing plans. They
did not read the fine print prior to reenrollment. Several of these
patients have gotten a very rude surprise when they were told they
now had a VERY limited benefit--and that they have a significant
financial responsibility. Previously many of these same patients
had full coverage with a co-pay but no predetermined cap. Any costs
over the cap are patients' responsibility, typically at your
contracted, discounted rates.
Nationwide Trend
This trend appears to be occurring nationwide. It appears to be
in direct response to the high unit cost of P&O devices
(microprocessors, energy-storing feet, and vacuum suspension
systems come to mind). These services are utilized by a VERY small
percentage of the beneficiary populations, but the per-unit cost is
very high. The recent trend by several private insurers to
specifically exclude high-cost prosthetic systems
(microprocessor-controlled knees) seems to run contrary to the idea
of catastrophic insurance coverage. If amputation is not a
catastrophic event in a person's life, health, and well-being, what
is?
California Trends
There are numerous changes/reductions pending in MediCal, our
state Medicaid system. In brief, MediCal has eliminated several
benefit categories and has reduced reimbursements on the remaining
categories by 5 percent, effective January 1, 2004--this despite an
already low level of reimbursement. California's governor has
proposed an additional 10 percent reduction to all provider
categories. The California Orthotic and Prosthetic Association
(COPA), in conjunction with other provider groups, has successfully
prevented implementation of these cuts--for now. The possibility
exists that California will eliminate all O&P benefits from
MediCal.
There are several reimbursement areas where our "hard costs" are
below the reimbursements. Most notably, MediCal reimburses less
than our cost for upper-limb TDs, prosthetic stump socks, and
suspension sleeves, to name a few. Can/should an O&P business
continue to provide services/devices below hard costs?
Why Is This Happening?
My thoughts are:
1) The insurance industry has acted in a collusive manner to
reduce costs of benefits. (Are you listening, AOPA?)
2) Cuts in coverage are targeting a population that has the most
difficulty accessing care due to disability. (Are you listening,
support groups, Barr Foundation, United Cerebral Palsy (UCP), and
others? Seems discriminatory to me.
3) It is in direct response to the high unit costs of O&P.
(Pay attention, manufacturers.)
4) This is a direct response to the abuse in DME.
My recommendation is that everyone pay attention and scrutinize
the benefits you are being offered in your own health plans and the
benefits available to you as a patient, employee, or employer. One
has to consider whether or not there is any business value in
continuing contracted discounted business agreements with insurance
payers.
Coming Attractions:Proactive Legal
Protection,Disabled Ghanian Aids Countrymen,VR:
Pantom Pain Relief Ralph W. Nobbe, CPO, is president of Nobbe Orthopedic Inc., Santa Barbara, California, and a board member of COPA. He also has served as president of Independent Orthotic and Prosthetic Provider Network (IOPPN). 
Table Of Contents - April 2004
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