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Insurance and healthcare for dummies, (and I mean you, members of Congress)

Insurance and healthcare for dummies, (and I mean you, members of Congress)

I just can’t stand it anymore, listening to these idiots in Congress talk about insurance and healthcare costs. The more you listen to these people, the more you realize that most of the people representing us don’t have a clue about what insurance is and what’s required to make health insurance and health care more affordable. Either that or they don’t want to or don’t have the political will to do what is necessary to make sure that everyone has decent medical care.

Every time one of them starts talking about “competition in the marketplace” or that people should have the right not to purchase health insurance, or just get catastrophic insurance and pay dramatically less than people who are bigger users of healthcare, I just want to throw something at the TV, because these guys are missing what is obvious to anyone who has given any thought to the issue.

So in order to make this simple enough so that even a congressperson can understand, let me explain it as a parable (that’s a made-up story to make a point).

Someplace far, far away in a distant time in the past, a bunch of people lived in a town. They noticed that every so often, something bad would happen to a few of them. (It doesn’t matter what happened or whether it happened to their person or property.) This bad thing had a devastating effect on the family and ruined their lives. The problem was there was no way to tell for sure to whom this bad thing was going to happen. The only thing people knew was that periodically something bad would happen and when it happened, the family would lose everything they had.

At one of the town meetings, Joe Aetna suggested that each family put two days of wages each month into a common pot, and that the proceeds would be distributed to the one or two families that this bad thing happened to. All the townsfolk thought that was a pretty nifty idea, and because it was his idea, it was decided that Joe Aetna would collect the money, and when necessary, distribute it to the one or two families to whom this bad thing befell.

The system worked pretty well, and the afflicted families no longer became destitute. Eventually Joe had his daughter do the bookkeeping, and as the town expanded, he brought in his son and son-in-law to help with the collection and the processing of the payments to the unfortunate few. The town agreed that that Joe and his family would be given wages for their service which was deducted from the collections.

No one seemed to mind paying two days of wages per month, even though almost none of the townsfolk received any direct benefit in return. But then two things happened: First, instead of one or two families experiencing this bad thing, for several years in a row, it happened to more than a dozen families. Also, because there were so many more people having this bad thing, the cost of fixing the damage resulting from this bad thing doubled.

The first year Joe Aetna didn’t complain, even though he had to go in his own pocket to pay his family members who were working for him because the money he received from the townspeople (what Joe called “premiums”) didn’t cover the money he had to give over to the dozen families who had this bad thing. (For some reason, Joe called the payouts “losses.”)

Indeed, not only did Joe have to pay his family out of his own pocket, there was a shortfall in what was needed to pay the dozen families. As a result, he was forced to do two things which made him and the recipients of the money very unhappy. First, he had to give a big chunk of the wages he received for operating the fund to the unfortunate (he called them “loss payees”). Second, he only gave the current loss payees half of what the prior loss payee families had received. So while the unfortunate didn’t become destitute, they had to pay a painful amount of their own wages which left them with a lot less wages than the other townsfolk. (Joe called the payments the unfortunate had to make to the tradesmen a “deductible”)

At the next town meeting, Joe said he couldn’t do this anymore and told everyone that based on past recent events, everyone was now going to have to pay eight days of wages a month as a premium to ensure against this bad event, because 1. The bad thing was happening to more people, and 2. The tradesman fixing the bad thing were charging a lot more.

To justify the increase, he pulled out a ledger listing all the events for the past years, and how much he paid out, and he did some magic with numbers which sort of predicted what the future might look like. To give his ledger containing his experience more gravitas, he made up a new official sounding term, an “actuarial table.”

Despite the actuarial table, the townsfolk were outraged by the proposed increase. Another thing they started to realize was that there was a certain pattern or characteristics that were sort of associated with this bad thing. It wasn’t a hundred percent correlation, but if a family had these factors or did these things in the past, the bad event was more likely to happen, and hence they were more likely to need the payouts. Joe admitted this to be the case, and because he really liked making-up new terms, he called these things “risk factors” and “preexisting conditions.”

Some of the townsfolk started making noises that they weren’t going to pay into the fund anymore and they would just take their chances that the bad thing wouldn’t happen to them, especially the ones who realized that they didn’t have the risk factors or the pre-existing conditions.

One townsperson contacted his cousin in a neighboring village. In that village, Sammy Cigna was doing the same thing Joe Aetna was doing. So the townsperson in Joe’s village invited Sammy to offer a fund which would compete with Joe Aetna’s fund, to try to force Joe to lower the premiums.

The problem was that Sammy was having the same kind of problems as Joe. More of his townsfolk were needing payouts, even more than in Joe’s village, and the cost of fixing the problem had tripled!

In fact, because Sammy had recently told his townsfolk that he was going to have to raise the premiums to 10 days of wages a month, some of the townsfolk in Sammy’s town had contacted Joe Aetna about setting up a competing fund in Sammy’s town.

Both Sammy and Joe gave the same response to each other’s townsfolk. “No way am I going to double my losses.”

The situation in the towns was intolerable. The funds were about to collapse between the townsfolk who were threatening to stop paying and the unfortunate who felt they should be made whole, and Joe and Sammy spending their own wages. So it was decided to consult with the regional wise man. Joe and Sammy and a townsperson from both villages took the journey and laid it all out for the wise man.

The wise man pondered the problem a bit, and said he could tell them what needed to be done, and that it was really quite simple, but that it was going to be their job to get the townsfolk to do it, and that might be the hard part.

So Joe says, “Ok Mr. Wise Man, what do we have to do?

The wise man raises his thumb and says: “First, everyone has to pay into the fund.” “This fund which I’ll call “insurance” works by taking money from many people who won’t use the money, and giving it to the few who need it. If only the people who need it buy “insurance,” it doesn’t work. That’s not insurance. That’s paying for it out of your own pocket.

The wise man then raised his pinky finger and says “Second, the people in the land surrounding villages need to pay into the fund. They are less likely to have the loss, so it will lower the number of days of wages people need to pay in, and there’s always a chance the bad thing will happen to them, so they’ll get some comfort. You need the greatest possible number of people in the fund to lower what you’re calling the premiums.

Joe then asks, “Great, anything else?”

The wise man then raised his index finger and says, “Next, you have to talk to the tradesmen fixing the bad thing, and they’re going to have to reduce their cost by 3 days of wages. Since all their work is coming from the townsfolk, they’ll have to do it.

Sammy then asks, “Are we done?”

“No we’re not grasshopper” says the wise man, as he raises his ring finger and says “Joe and Sammy, you’re going to have to cut back one day of wages per month from what you’re charging; the townsfolk are going to have to pay an extra day’s wage, which is a lot better than the six extra days Joe wanted. And, finally, now that we see what some of the risk factors are, it’s going to be in everyone’s interest to cut back or stop some of that behavior, and if that happens, maybe you’ll be able to move back to the two days of wages premium you had before.”

Joe rubs his chin in skeptical contemplation and says: “I see what you’re saying, but some of the townsfolk insist they have the right not to pay into the fund, and a few of the tradesman say they have the right to charge what they want to fix the bad thing. What do I tell them?”

The wise man raises his middle finger and says, “that’s what you tell them.”

Rick Jaffe, Esq.

A short, mostly first-hand history on insurance reimbursement for CAM

A short, mostly first-hand history on insurance reimbursement for CAM

In litigating criminal and civil CAM (Complementary and Alternative Medicine) cases for three plus decades, I’ve seen a lot, and I have the medals and battle scars to prove it (meaning good and bad court opinions, jury verdicts and prosecutorial decisions). The decades have also given me a perspective on how things have changed, and haven’t.

For CAM insurance reimbursement (including chiropractic), I see one constant dynamic: Insurance carriers don’t like to pay for CAM services, so (some in) the CAM community come up with workarounds to get insurance companies to open-up their wallets. These workarounds work for a while, then they don’t, then there are new workarounds which work until they don’t, and so the dynamic goes.

Let me flush this out, largely based on my experience working on some of the big CAM insurance civil and criminal cases, investigations and medical board actions. Many of these matters were characterized by the government and/or carriers as “insurance fraud.” Fortunately, more often than not, the judge or fact finders didn’t agree, or at least didn’t think the government or carrier met its burden of proof.

CAM doesn’t get insurance reimbursement

In the 80’s, when CAM really started to take off, the carriers had short and vague exclusions in their policies about not paying for experimental or unconventional treatments/services. Even without specific definitions, those general policy exclusions were usually enough to stop most practitioners from filing claims or receiving reimbursement. Since most CAM treatments do not involve big money, individual patients and clinics did not litigate denials of claims for CAM treatments.

CAM figures out how to open the carriers’ wallets

A couple things happened in mid to late 80’s up until the early to mid-90’s which changed the CAM insurance payment landscape.

First, a few creative billing companies developed coding techniques to create some confusion about the nature of the services provided by CAM practitioners. One highly successful company made tens of millions of dollars for CAM clinics, and even obtained insurance payments for patients treated at Mexican CAM cancer clinics. They did this by creating chemo sounding acronyms for the treatments, and established a California based foundation for billing purposes which disguised the fact that the treatments were given in Mexico.

On the chiropractic front, a few chiropractor-turned consultants popularized the MD/DC business model, whereby chiropractic services were magically transformed into medical care. This regulatory alchemy was based on an obscure Medicare concept called “incident to” billing, the effect of which was to circumvent the severe limitations which most carriers placed of chiropractic care. These rules were also used to bill services of unlicensed people giving advice about “activities of daily living” as incident to services rendered by or under the MD’s provider number. Because of the efforts of these billing companies and consultants, tens of thousands of patients received care paid for by carriers which would have otherwise been denied by the greedy and heartless insurers. (I might not be unbiased.)
From the government’s and carriers’ point of view, it was all insurance fraud. It was relatively hard to prosecute insurance fraud back then, federally at least. Most of the victims were private carriers. There wasn’t much of a federal budget for these prosecutions, except for the most high profile or unlucky cases. (I worked on one of the big cases involving an unlucky and high profile doc.)

In addition, there were some impressive legal victories wherein carriers were forced to pay-out big judgments (including punitive damage awards) for denying expensive investigational or CAM cancer treatments. These judgement caused some shock waves in the health insurance industry and led to some very significant changes in the legal/regulatory/enforcement landscape.

The carriers and feds fight back hard

The carriers figured out that they were not paying for reimbursable conventional care, but rather, excluded CAM care. They were not happy and some started filing lawsuits against the practitioners and even the consultants and billing companies. The carriers also got the feds involved.
Federal prosecutions of insurance fraud became easier and more frequent because of a provision in the 1996 HIPAA law which made health care fraud against a private carrier a federal crime. (18 USC 1347, for those who care). The new law even made medically unnecessary testing and services prosecutable under the federal insurance fraud statute. With the change in the law came some significant federal money to fund federal insurance fraud prosecutions.

I worked on some of the major health insurance civil and criminal health care fraud cases in the 90’s. Mostly the results for my clients were good, but even so, as they say in criminal defense, “You can beat the rap, but you can’t beat the ride.” These cases were brutal and draining for the docs. And when the doc loses, he loses big; his/her medical license and freedom for a time. So the stakes in these cases are huge.

Civil lawsuits against health insurance carriers for non-payment of arguably experimental or unapproved care virtually ended in the 90’s once the carriers figured out that they could use ERISA (employment law) to make these cases unattractive and almost unwinnable by plaintiffs’ attorneys. (In short, ERISA law makes the carriers’ payment decision judicially reviewed under an extremely high abuse of discretion standard. Also, there are no punitive damages in ERISA, thereby removing a big incentive for the plaintiffs’ bar to file these cases.)
On the MD/DC front, the carriers and the feds fought back hard. Aetna went after one of the main MD/DC consultants and the MD/rubber stamp of 50 of the MD/DC clinics in the northeast.

The feds started prosecuting many of the chiropractor owners of the MD/DC clinics and their MD and DC employees. In the early 2000’s, the feds went after the most visible MD/DC consultant and one of his client-clinics in northern West Virginia. The chiro clinic owner got wind of the investigation and fled the country, but the MD, the two employee chiropractors, the office manager and the consultant who set the operation and told them how to bill the carriers were all indicted for insurance fraud.

The MD and office manager plead-out and did some time. The two chiros and the consultant went to trial, but all were convicted. The consultant was also convicted on money laundering charges, which is a very nasty crime because it imposes an unusually harsh sentence, far greater than mere insurance fraud. Despite three appeals, the consultant received a very lengthy prison sentence, and there’s no parole in federal time. This was the worst result I ever received in a case. The government would say that this person was responsible for many millions of dollars of insurance fraud and that he was fairly punished. (The chiro clinic owner who fled the country beat the government’s extradition efforts and continues to live in Ireland.)

This and the other prosecutions reduced the popularity of that MD/DC clinic model. One of the big CAM billing companies was eventually indicted, but the case was ultimately settled and charges dropped. A few docs were eventually indicted and there were some convictions, but nothing like in the MD/DC field.
In the mid 2000’s, there were still some MD/DC clinics but most were operating below the radar screen, and didn’t engaged in the most controversial forms of billing that the prior chiropractic consultants advocated.
Some CAM physicians continued to engage in the obfuscation techniques taught by the CAM billing consultants, but for whatever reason, there wasn’t much activity on the federal criminal front. I worked on an investigation of an autism clinic which used a billing technique to circumvent the carriers’ pathway edits for unconventional autism treatment. Eventually, the carries figured it out and contacted the feds which opened up a grand jury investigation. All I’ll say is that it’s a case you’ve never heard of because there was no indictment. But the clinic did close its doors once the carriers figured out what it was up to.

Also, starting in the mid- 2000’s there began to be a movement in the CAM community to produce specific codes for CAM services. It was called ABC billing (Alternative Billing Concepts). The idea was to create HCPCS type codes which could be used in billing insurance companies for CAM services. My take is that it’s had some success, but not for the primary therapy types of CAM like chelation therapy, environmental therapy treatments, and such.
The problem with the ABC endeavor is that it misunderstands the main reason why CAM practitioners aren’t getting paid for the CAM primary therapy. It’s not because, there is not a specific enough CPT or HCPCS code which is what the ABC codes try to solve. Rather, it’s because most carriers have a policy against paying for treatments not generally accepted by the conventional medical community.

To be fair, carriers do pay for some CAM therapies like acupuncture, chiropractic and even nutrition counseling (given by a properly credentialed provider), but 1. The reimbursement rates for these services are low and 2. That doesn’t help the integrative practitioner who uses a wide variety of primary therapeutic CAM modalities which are not payable under the plans.
So however laudable the ABC coding effort is, it won’t solve the CAM practitioners’ main problem, which is insurance policy exclusion of most or all primary CAM treatment modalities.

What comes around and goes, comes around again

In the last few years, a new billing and coding model has been promoted to the CAM community by various CAM coding companies. It involves use of an arcane Medicare concept, the “incident to” rules, which turn services of NPP (non physician practitioners) and chiropractors into physician services in order to 1. Obtain 100% physician reimbursement rates, rather than the 85% rate of NPP’s, 2. To circumvent the limitations of chiropratic in Medicare and third party pay plans, and 3. To bill people without any health care license or certification under as services of the MD provider. What a novel approach!
In the old days, Medicare had more rigorous and restrictive payment practices than all private carriers, so following Medicare’s rules was in effect, a safe-harbor or guaranty of compliance with the rules of the private pay carriers. However, those days are gone. Some private health insurance have stricter rules than Medicare and/or don’t follow all of Medicare’s rules. So the Medicare safe harbor concept doesn’t necessarily work anymore.
These new CAM billing companies also have some novel interpretations of various other codes, which, it is claimed, obtains insurance reimbursement for primary CAM therapies such as chelation therapy for heart conditions and even detox. You can probably guess some of the ways they achieve these results.

If you are following the advice of one these billing companies, keep this in mind; just because the carriers’ payment computer programs are spitting-out checks to you for CAM treatments doesn’t mean the carriers actually know what they are paying for, or that they won’t ask for their money back, if and when they ever figure out what’s going on.
And on it goes.

Rick Jaffe, Esq.