Before getting to the subject of this week’s post, let me first take you in detail through the hell that was the Super Bowl and its immediate aftermath.
I have been a New England Patriots fan my whole life. As a kid, I watched Steve Grogan, John Hannah, Sam “Bam” Cunningham, Stanley Morgan, Mosi Tatupu, and a host of other talented players play on teams that never quite got to the promised land. In 1985-86, led by the less-than-inspiring Tony Eason, the team made the Super Bowl and got destroyed by the Bears in a game that was close for about five minutes.
Only a few months after my accident, in the 1996-97 season, the Parcells-Bledsoe Pats advanced to the big game and got beaten soundly, 35-21 by the Packers, but it wasn’t even that close. I remember that game more for the fact that I couldn’t get over how strange a prosthetic leg looked under Adidas running pants than the specifics of what happened on the field, as it was one of the first times after my amputation that I was at a public event – a friend’s Superbowl party – with a number of people I hadn’t met before.
Then came the turn of the century, and I – and all Boston fans – entered the Golden Age of Boston sports. The Pats won the Superbowl in the 2001-02, 2003-04, and 2004-05 seasons. The Boston Red Sox overcame an 0-3 deficit to beat the Yankees and sweep the World Series in 2004, followed by another championship in 2007. The Celtics won the NBA Championship in the 2007-08 season, and the Bruins even got into the act last year, winning the Stanley Cup.
The only real blemish in the first decade of the 21st century as a Boston sports fan was the Giants victory over the Patriots in 2007, ending a historic run towards an unthinkable perfect season. The 2012 Superbowl was going to be a chance for Tom Brady & Co. to return to the top of the NFL pyramid while exacting revenge for the most painful Patriots loss ever.
With all of that being said, I’m a realist. Despite the Vegas line favoring the Patriots, I told anyone who asked me in the weeks leading up to the game that I thought the Giants had the better of the matchup. While I thought it would be close, I didn’t think the Patriots defense could hold down the Giants when it counted.
While the Pats D played much better than I expected, in the end, either an (a) poorly thrown ball by Brady, and/or (b) a drop by the normally sure-handed Wes Welker led to a second Superbowl in five years for the Giants. As I wrote in my very brief post last week, I had started writing something intended for publication last Monday dealing with the subject of expectations. However, the nature of the Pats’ loss left me with little desire to finish it in the waning hours of Sunday night, and I woke up Monday morning even less inclined to try and knock off the rest of it.
And so, I begged your forgiveness, told you that I planned on finishing it in the near future, and pleaded for leniency as I worked through the seven stages of grief.
That was last Monday.
On Tuesday, I arrived at JFK airport to start a business trip. As I walked from security to the gate, I was assaulted by images on every airport TV showing Giants fans attending the victory parade in downtown Manhattan, only about 8 miles away as the crow flies. Needless to say, this did not make me feel any more inclined to invest emotional energy in finishing my already-late post.
I boarded my flight to Atlanta, and arrived there early. I then made my way to the gate for the next leg of my journey. In what was the highlight of my travel day, I noticed a bilateral above-knee amputee at the gate and introduced myself to him. Turns out, he is a veteran who lost his legs to an IED in Iraq. We chatted for 10 minutes about prosthetic knees, the Wounded Warrior Amputee Softball Team – “Those guys are awesome!”, he said – and prosthetists we had both worked with. We then proceeded down the jetway to our flight. To Indianapolis.
Yes. Only two days after the Super Bowl and I was going to Indy.
We landed and I walked through the airport to catch a cab to the hotel. I passed about 14 different shops still selling Super Bowl paraphanelia, most of it Giants gear. Shortly before exiting the terminal, I came upon a temporary kiosk with tons of Pats Super Bowl clothing on clearance. I pondered getting something cheap for Max and Jackson before deciding that anything that reminded us (or Giants fans where we live) about the events of February 5 wasn’t worth owning.
I walked out, happy to escape (finally) more memories of the ill-fated game and found myself staring at the parking garage across the street, complete with a massive, high-definition banner of the Lombardi Trophy with Superbowl XLVI logo. I sighed, got a taxi, and headed into Indy.
On the way to the hotel, I got to drive right by Lucas Oil Stadium, the site of Sunday’s painful loss. I snapped a photo of the stadium that, blessedly, didn’t come out in the quickly darkening evening, and thanked heaven that I could finally put the pain of the weekend behind me.
And then I drove up to my hotel.
There are times in your life where you wonder whether a higher power is testing you. After I lost my leg, I often asked myself why I found myself in that intersection at that exact moment. I would think about how many things in my life had to happen exactly the way they did for my body to wind up behind one car and then crushed between two in a split second. I always banished this line of thinking from my head as quickly as I could, concluding that it would drive me insane if I went down that particular mental rabbit hole. I dismissed the possibility that “everything happens for a reason”, that “there are no coincidences” – no higher power put me in that intersection in December, 1996.
But on Tuesday, February 7, 2012, I drove up to the hotel, emerged from the taxi, and the first thing I heard from the three people waiting to clamber into the vehicle I had just vacated was, “Isn’t it so cool? The Giants stayed here!”
I looked in horror at the building I was about to walk into and saw two massive banners still on its facade, each showing a 50-foot tall Giants player.
There are lots of weeks in the year. There are lots of hotels in Indianapolis. There are lots of football teams in the NFL. The fact that I found myself in the city that hosted the Super Bowl, in the Giants hotel, only two days after they had defeated the Patriots proves beyond a shadow of a doubt that I have somehow angered the gods. I will try and atone for my sins in the coming months.
But that, dear readers, is why less is more did not contain its normal, scintillating brand of commentary last week.
With that sordid history behind us, let us now turn to this week’s topic, which isn’t what I thought it would be until I stumbled across an article yesterday that supplanted my previous post topic – “expectations”. Rather, I want to now focus on how an important shift in how insurance companies pay for claims may have a profound impact on the limb loss community.
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A February 8 news article that was probably read by only .0003% of the U.S. population highlights a critically important trend in how private insurance companies reimburse claims.
Every private insurance company has a fee schedule. For every code that a prosthetist submitted to describe a part of a prosthesis, those insurers historically paid their “UCR” (usual and customary rate). An insurer’s UCR was based on a variety of factors, but an important element of it was what other practitioners in the same geographic area submitted for the same codes. When submitting claims to private insurance companies – particularly out-of-network claims – prosthetists’ fees (a) can be highly variable, and (b) are often higher than Medicare’s fee schedule.
For illustrative purposes, assume that we have two patients, Zeus and Athena (in keeping with the “angry gods” theme, above). Both are below-knee amputees who will be fit with exactly the same prosthetic components from the same prosthetist: Haphaestus. Zeus has Medicare. Athena has WorldBest Insurance, a private plan through her employer.
Haphaestus submits Zeus’s claim to Medicare. As part of that process – like many prosthetists in the U.S. – he agrees to accept Medicare payment as payment in full for his services to Zeus. He bills Medicare the applicable fees for the codes comprising Zeus’s prosthesis – let’s say they total $15,000 – and Medicare pays 80% of those fees. (Under Medicare regulations, Medicare pays only 80% of its own fee schedule. If the patient has what’s called “Medigap” insurance or a secondary policy, that additional layer of insurance may pick up the 20% balance.) Zeus, being a cheap and arrogant god, decided to skimp on the monthly premium payment for secondary insurance, and thus, is responsible for $3,000 (20%) of the $15,000. Haphaestus collects the $12,000 from Medicare and $3,000 from Zeus.
Haphaestus also submits a claim to WorldBest for Athena. Haphaestus doesn’t participate in WorldBest’s network of providers, so he’s “out of network”. He therefore bills WorldBest his “private fee”. His private fee is 1.5 x higher than Medicare’s fee schedule.* So the exact same prosthesis that he billed Medicare $15,000 for gets charged to WorldBest for $22,5o0. Let’s further assume that Haphaestus’s private fee is generally in line with what other prosthetists in his area – Poseidon, Hades, and Hermes – charge their patients. So WorldBest’s computers whizz and whirr and spit out a UCR of $22,500 for the codes making up Athena’s claim. Haphaestus gets a check for that amount, less her coinsurance and deductible.
This example shows how the world of private insurance worked until relatively recently. But ironically, a multi-state judicial effort to prevent insurers from avoiding their financial responsibilities has led private insurers to increasingly abandon their UCR’s for amounts that are often less than the Medicare fee schedule. That is the second part of this story. If that part had a name, it would be called, “Ingenix”.
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UnitedHealth Group is the largest insurer in the United States. Until 2011, Ingenix was a $1.7 billion part of UnitedHealth. Ingenix included a database that tracked, among other things, billing information submitted by health care professionals. UnitedHealth and several other major private insurers built their UCR’s on the back of Ingenix’s database.
But in 2000, the American Medical Association commenced a class action lawsuit against UnitedHealth/Ingenix, claiming that they had colluded to underpay out-of-network physicians. Eight years later, then-New York State Attorney General Andrew Cuomo added New York State as a plaintiff, charging that UnitedHealth/Ingenix had engaged in fraud by deleting higher-cost doctors’ charges from Ingenix in order to deflate the “average” charge billed by physicians. This, NY argued, reduced the UCR’s that UnitedHealth and other major insurers paid to health care providers, depriving those physicians and prosthetists of money they should have been paid.
In late 2009, shortly after NY’s entry into the litigation, UnitedHealth settled the lawsuit for $350 million dollars. As part of the settlement, UnitedHealth also agreed to replace Ingenix with a new database that would be managed by Syracuse University.
If the story ended there, you’d think the bad guys lost. UnitedHealth and other players in the industry could no longer rely on a flawed database that artificially deflated the UCR. The American Medical Association and Andrew Cuomo proclaimed victory. The tyranny of Ingenix had ended, and a better payment world would result.
In fact, just the opposite may be happening.
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Without Ingenix, insurance companies needed to find a new basis for determining what to pay for different medical procedures and devices. Increasingly, they are turning to the Medicare fee schedule as a new baseline.
“What’s wrong with that?” you might ask. If Medicare is the Government’s payment benchmark, why shouldn’t it also be relevant in the private insurance industry? There are two separate but related reasons why this shift has such a profound impact on consumers.
First, even with the alleged gaming of Ingenix’s database numbers by UnitedHealth, the UCR for private insurance companies still tended to be higher than the Medicare fee schedule, at least with respect to prosthetic billing codes. So as shown in the example above, when Haphaestus billed WorldBest for Athena, he received a higher payment for her claim than for Zeus’s, despite the fact that the Ingenix database numbers may have been manipulated. Taking away Ingenix and replacing it with Medicare actually saves private insurers money, while increasing the difference between the prosthetist’s private fee and the amount he got paid.
Second, the private insurance industry and employers have persistently shifted costs towards consumers over the last decade. When I owned my own prosthetic facility, most out-of-network plans had 80/20 coinsurance and deductibles of $1,000 or $1,500. Today, more and more plans have 7o/30, 60/40, or even 50/50 coinsurance with deductibles of $3,000 or higher.
So, let’s turn back to Haphaestus and Athena. Haphaestus continues to bill WorldBest $22,500 as his private fee for her prosthesis. WorldBest’s UCR, which used to be $22,500 because it relied on Ingenix, is now $15,000 because WorldBest has decided that the Medicare fee schedule will be its new benchmark. (We will ignore the reality that some private insurers will adopt Medicare as the benchmark, and then set the UCR as some percentage below that fee schedule, since that’s even more depressing for me to contemplate than the recent football result discussed at the beginning of this post. However, that does go on.) In the earlier example, Athena’s financial liability was limited just to coinsurance and deductible. Now you have to add onto that amount a huge difference in the overall level of reimbursement by WorldBest.
And with the move towards increased consumer cost-sharing that Athena’s employer, Gods of Olympus, Inc., has embraced as a way to keep premiums from climbing even higher than they already are, Athena’s coinsurance and deductible are now substantially higher than they were in the first example, above. Bottom line for Athena: the difference between what Haphaestus billed and what he got paid by WorldBest is substantially larger than before, and Athena is the person who has to make up that difference. Where Athena might have previously owed $1,500 or $2,000 in coinsurance/deductible costs, now she could owe $6,000-$7,000 plus the much larger remainder left over from the delta between Haphaestus’s private fee and WorldBest’s reimbursement.
To top it all off, Athena really wouldn’t have any way of knowing this was going to hit her checkbook, because insurance companies aren’t in the habit of publishing their reimbursement rates for medical device codes. So Athena isn’t even aware that WorldBest’s UCR may have dropped 20% or 30% year over year, leaving her with sudden and completely unexpected greater financial exposure to Haphaestus.
Unless Athena read less is more. Which would teach her that (a) the Giants are better than the Patriots right now, and (b) insurance victories often aren’t at all what they seem.
*It is a normal business practice for out of network physicians and prosthetists to bill private payers more than they bill Medicare for the same service/device, so if you’re questioning whether that’s sinister or illegal, it’s not. It’s simply a reality of the health care market.