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The Thuggery of Obamacare Czarina Kathleen Sebelius

By Michelle Malkin 5 Comments
Czarina
U.S. Secretary of Health and Human Services Kathleen Sebelius is allergic to the truth. She is the ruthless enforcer of Obamacare’s Jenga tower of lies upon lies upon lies. Now that this fatally flawed government edifice is collapsing, you can expect Sebelius to do what she has done her entire career: blame, bully and pile on more lies.

Three years ago, when insurers and other companies had the audacity to expose Obamacare’s damage to their customers and workers, Sebelius brought out her brass knuckles. Remember? As I reported at the time, the White House coordinated a demonization campaign against Anthem Blue Cross in California for raising rates because of the new mandate’s costs. Obama singled out the company in a “60 Minutes” interview, and Sebelius sent a nasty-gram demanding that Anthem “justify” its rate hikes to the federal government.

A private company trying to survive in the marketplace was forced to “explain” itself to federal bureaucrats and career politicians who have never run a business (successful or otherwise) in their lives. Sebelius went even further. She called on Anthem to provide public disclosure of how the rate increases would be spent — a mandate that no other private companies must follow.

In an even more heavy-handed effort to suppress criticism, Sebelius wrote America’s Health Insurance Plans (AHIP), the national association of health insurers, “calling on their members to stop using scare tactics and misinformation to falsely blame premium increases for 2011 on the patient protections in the Affordable Care Act.” The threatening cease-and-desist letter commanded: “I urge you to inform your members that there will be zero tolerance for this type of misinformation and unjustified rate increases. … Simply stated, we will not stand idly by as insurers blame their premium hikes and increased profits on the requirement that they provide consumers with basic protections.”

The speech-stifling gag order declared war on every opponent of Obamacare who dared to question the administration’s phony claims of cost-savings or expanded access.

When McDonald’s notified the feds that it might have to cancel health insurance plans for 30,000 workers because of Obamacare’s effective prohibition on low-cost plans, Sebelius slammed The Wall Street Journal for reporting the story. She then rushed to issue McDonald’s an Obamacare waiver, the first of thousands to quell criticism and bleeding.

Health care policy analyst Merrill Matthews points out that Sebelius cracked her whip against health insurer Humana even before the law had passed. When the insurer warned seniors that an Obamacare proposal to cut reimbursements could harm their Medicare Advantage benefits and coverage, Sebelius demanded that the company “suspend potentially misleading mailings to beneficiaries about health care and insurance reform.”

The warning, of course, proved true. In September 2010, Harvard Pilgrim Health Care canceled MA policies covering 22,000 seniors precisely because of Obamacare rules on reimbursements and MA-style plans.

Sebelius’ power-mad partner on Capitol Hill, Henry Waxman, targeted companies including Deere, Caterpillar, Verizon and ATT in a brass-knuckled effort to silence companies speaking out about the cost implications and financial burdens of Obamacare. After the firms reported write-downs related to the Obamacare mandate (disclosures that are required by law), Waxman scheduled an inquisition hearing to berate them publicly. After the Democrats’ own congressional staff pointed out that the companies “acted properly and in accordance with accounting standards” in submitting filings that were required by law, Waxman called off the hounds.

It was a temporary reprieve. Caught with their pants down on the Obamacare website abomination and unable to stifle the cries of millions of Americans who are unable to keep the plans and doctors they like, Sebelius and her corrupt company are now blaming insurers, contractors and customers for the Obama administration’s ideological mess. In short: They lied, but for your own good. Culture of Corruption 101.

Medicaid Fraud in the Billions

Written by Bob Adelmann

The response to the admission by Deputy Director for the Centers for Medicare and Medicaid Services, Penny Thompson, made in September before the House Oversight and Government Reform Committee and chaired by Rep. Darrell Issa (R-Calif.), that payments made by the federal government to New York’s state-run development centers were “excessive and unacceptable,” was simple and to the point: those overpayments were “inexcusable” and “exceeded the entire Medicaid budgets of 14 states” and added that “the failure … suggests an institutional failure and a pattern of irresponsible actions that have cost the taxpayers billions.”

The amount, just in New York, is estimated by Issa’s committee to be in excess of $15 billion, equivalent to $1.9 million per patient per year!

Using the bureaucratic shuffle which Thompson has no doubt refined in her 20 years as a top-level bureaucrat for Medicare and Medicaid, she admitted:

The growth of the daily Medicaid reimbursement rate for [New York] State’s developmental centers has significantly outpaced those of privately operated developmental centers and New York claimed significantly more for the State-run developmental center services than its actual costs. (emphasis added)

The daily rate for a Medicaid beneficiary to reside in a developmental center grew from $195 per day in 1985 to $4,116 in 2009, vastly outgrowing the Medicaid daily rate for private developmental centers. (emphasis added)

Simply put, bureaucrats in New York have been milking the system for decades, but Thompson claims she just found about it a few months ago. Here’s more from her report to Issa’s committee:

CMS did not begin working with New York to address the situation fully until 2010. Since then, CMS has been working with the State to understand the circumstances around the inflated rate and more fully address this problem.

The problem began back in 1994 when New York State set up the reimbursement rules, with the approval of Thompson’s agency. But there were enough loopholes and undefined parameters to drive a 100-passenger train through, and sure enough, New York took maximum advantage of them. Concluded Thompson:

The Medicaid payments made to New York for the developmental centers were excessive. CMS is working to correct the payments to New York and to improve CMS’ approval and monitoring processes to detect excessive payments more quickly and to prevent excessive payments from being made in the first place.

Issa’s committee was aware that there was massive fraud taking place in the Medicaid program, a federal program financed with taxpayer monies but run by the states. Back in April his staff prepared a report entitled “Uncovering Waste, Fraud and Abuse in the Medicaid Program” which examined three cases of such fraud, New York being just one of them. The numbers are incomprehensibly large:

James Mehmet, a former chief state investigator of Medicaid fraud and abuse in New York City, believes that at least 10% of Medicaid dollars are lost on fraudulent claims, while another 20% to 30% consist of abuse, or services that were delivered but that were unnecessary.

Waste, fraud, and abuse in New York’s Medicaid home-based health services [alone] are rampant. A Department of Health and Human Services Inspector General’s (IG) audit, for example, estimates that between January 2004 and December 2006, New York City improperly claimed over $275 million in Medicaid funds for personal care services. A second IG audit found that New York improperly claimed $207 million for rehabilitative home care services provided between January 2004 and December 2007…

Unfortunately, these three cases demonstrate just a tiny fraction of the instances where daily occurrences of Medicaid waste, fraud, and abuse occur…

In May the Office of Inspector General for the Department of Health and Human Services explained how the scam worked in New York:

Developmental center payment rates are set using a complex methodology detailed in the State’s Medicaid State plan. The rate is currently calculated by using a starting point that the State describes as “total reimbursable operating costs,” which includes the prior year’s total reimbursable operating costs, a volume variance adjustment, and a trend factor increase.

Total reimbursable operating costs do not reflect the State’s actual costs. The rate-setting reimbursement methodology for the developmental centers was originally approved in January 1986, retroactive to April 1984.

And as the scam developed over time, additional changes favoring increased reimbursement demands from the state were developed, and approved, by Thompson’s agency:

Since then, the State has received CMS approval for more than 35 State plan amendments related to this methodology…

Specifically, the growth of the daily Medicaid reimbursement rate for the developmental centers has significantly outpaced those of both State-operated and privately operated ICFs—from $195 per day in SFY 1985 to $4,116 per day in SFY 2009, which is the equivalent of $1.5 million per year for one Medicaid beneficiary. This rate is more than nine times the average rate for all other ICFs for the same period. (emphasis added)

This kind of fraud has been rampant for years, but most of the blame for such “fraud, abuse and waste” has been blamed on everyone BUT the states’ Medicaid administrators. David Murphy, a fraud specialist and professor at Lynchburg College in Virginia, noted in July that everyone had his hand in the honey pot – everyone except the agencies themselves. Fraud involved:

• Billing errors

• Fraudulent claims

• Improper private-pay payments, and

• Counterfeit prescription drugs.

Not one word about the agencies involved, however. Said Murphy, “Medical fraud is committed everywhere, by just about everyone.”

Lawrence Huntoon, MD, a board-certified neurologist from Buffalo, New York, and Editor-in-Chief of the Journal of American Physicians and Surgeons, reviewed the statement made by Thompson and concluded:

Now we have indisputable evidence that government itself is a major source of fraud in government-run medical programs.

What to do the day after ObamaCare is gone

by Joel McDurmon on Apr 7, 2012

Prof. John Cochrane writes for the Wall Street Journal:

Last week, the Supreme Court heard arguments on the constitutionality of the administration’s health law, aka ObamaCare. Opponents are giddy with the possibility that the law might be struck down.
But what then? Millions of uninsured, both those who choose not to purchase coverage and those who can’t due to pre-existing conditions, will still be with us. The rising costs and inefficient delivery of health care will still be with us.

The country can have a vibrant market for individual health insurance. Insurance proper is what pays for unplanned large expenses, not for regular, predictable expenses. Insurance policies should be “guaranteed renewable”: The policy should include a right to purchase insurance in the future, no matter if you get sick. And insurance should follow you from job to job, and if you move across state lines.

Why don’t we have such markets? Because the government has regulated them out of existence. . . .
Most pathologies in the current system are creatures of previous laws and regulations. Solicitor General Donald Verrilli explained as much in his opening statement to the Supreme Court: “The individual market does not provide affordable health insurance,” he noted, “because the multibillion dollar subsidies that are available” for the “employer market are not available in the individual market.”

Start with the tax deduction employers can take for their contributions to group health-insurance policies—but which they cannot take for making contributions to employees for individual, portable insurance policies. This is why you have insurance only so long as you stay with one employer, and why you face pre-existing conditions exclusions if you change jobs.

Continue with the endless mandates (both state and federal) on insurance companies to provide all sorts of benefits people would otherwise not choose to buy. It sounds great to “make insurance companies pay” for acupuncture. But that raises the premiums, and then people choose not to buy the insurance. Instead of these mandates, at least allow people to buy insurance that only covers the big expenses.
What about Medicare and Medicaid? Two words: premium support. The underlying point of premium support is simple. If insurance costs $5,000 and the government gives an individual a $4,500 voucher, that individual will still feel the correct economic signal to shop for cost-efficient health insurance and health care.

The main argument for a mandate before the Supreme Court was that people of modest means can fail to buy insurance, and then rely on charity care in emergency rooms, shifting the cost to the rest of us. But the expenses of emergency room treatment for indigent uninsured people are not health-care’s central cost problem. Costs are rising because people who do have insurance, and their doctors, overuse health services and don’t shop on price, and because regulations have salted insurance with ever more coverage for them to overuse.

If we had a deregulated, competitive market in individual catastrophic insurance, that market would be so much cheaper than what’s offered today that we would likely not even need the mandate.
Meanwhile, staggeringly inefficient markets for health care itself need a thorough, competition-focused deregulation. Americans will know there’s a healthy market when hospitals post prices on their websites, and when new hospital and health-care businesses routinely enter to challenge the old ones. Here too regulations keep competition at bay.

The number of new doctors is still restricted, thanks to Congress and the American Medical Association. Congress caps the number of residencies, the AMA has fought the expansion of medical schools, state tests make it difficult for foreign doctors to work here, and on and on.

There are hundreds of government impediments to competition. New hospitals? In my home state of Illinois, every new hospital, expansion of an existing facility or major equipment purchase must obtain a “certificate of need” from the Illinois Health Facilities Planning Board. The board does a great job of insulating existing hospitals from competition if they are well connected politically. Imagine the joy United Airlines would feel if Southwest had to get a “certificate of need” before moving in to a new city—or the pleasure Sears would have if Wal-Mart had to do so—and all it took was a small contribution to a well-connected official.

The result is a monstrous system in which insurance patients are gouged to subsidize Medicare, and cash patients are gouged most of all. Here’s Mr. Verrilli again: “Insurance has become the predominant means of paying for health care in this country.” Yes, the cash market has been badly damaged. Whose fault is that? Shouldn’t we bring it back?

Group health plans in today’s system may appear reasonable enough—they seem to resemble “buyers’ clubs,” where people pool together to get good deals from providers. But in a real buyer’s club, each buyer still pays his own bill—you don’t go into a Sam’s Club and haul off whatever you can with only a fixed $20 copayment. And real buyer’s clubs don’t depend on where you work. Real buyers’ clubs for health services could be a useful way to get competition going and revive the cash-and-carry market for individuals.

A deregulated health-care and health-insurance market can work. We can at least start by removing the obvious elephants in the room: all the legislation, regulation and interventions that needlessly keep prices up, keep competition and innovation out, shelter people from the economic consequences of their decisions, and prevent the emergence of real insurance that follows you from job to job and from health to illness and back.

Mr. Cochrane is a professor of finance at the University of Chicago Booth School of Business and an adjunct scholar at the Cato Institute.

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