Bcbs of nd rate hike

[gfhockey]

ibvoisuly you guys all know I could ever think like that

my LAWYER is dang good at what he does

im sure most of you would agree top 5 lawer in ND

[gfhockey]

Cost me $250 for that email and have him dissect this thread

[yzerman19]

For all of you who seem to want to use an ignorant broad brush on this issue please READ yzerman19's posts.

Thanks Mate.

The industry is hard to understand for most people, because it is a mystery of things like coding, actuarial science, and benefits that historically were designed to deter utilization or cost shift to employees.

The other HUGE thing to remember with that maximum 15% gross margin is that I have to fund investment in the future and also (because we are talking fully insured) insulate myself from catastrophic claims. If they price too high, they won't sell policies in a competitive environment. If they price too low, they will not sufficiently manage the risk of high cost claims.

In fact, any surplus (called risk based capital) is often a set large amount required by regulators to ensure the viability of the system in a crisis where no premiums are coming in, but people need services (read: pandemic or gov shutdown or depression)

The question regarding % vs actual margin- it has to be %. Investors think about %.

[Oxbow6]

Why?

Seriously??

This thread was an initial discussion about NDBCBS and a rate hike. yzerman19 gave a thoughtful and educated explanation I thought.

We could turn this political on "subsidies" but don't think that would get us anywhere.

Bottomline is if one doesn't have an educated and informed understanding of healthcare insurance or the ACA this conversation will won't be productive either.

[Oxbow6]

And more and more providers are now being paid on a RVU system...which has little to do with what a hospital and/or clinic is getting paid by insurance companies for those provider services.

[yzerman19]

I appreciate people's passion, and I'd really like to be able to convert that passion into an educated understanding. Not to share my political opinion, but just to understand how the industry works. I'll put my credentials in this space up against anyone- and by anyone, I really mean ANYONE- not trying to boast, just trying to make clear (without posting my resume) that I know what I'm talking about- AND i do not work for Blues of ND

[Oxbow6]

I appreciate people's passion, and I'd really like to be able to convert that passion into an educated understanding. Not to share my political opinion, but just to understand how the industry works. I'll put my credentials in this space up against anyone- and by anyone, I really mean ANYONE- not trying to boast, just trying to make clear (without posting my resume) that I know what I'm talking about- AND i do not work for Blues of ND

I fold...all the chips in the middle are yours!

[Oxbow6]

Ummmmmmm...Kathleen Sebelius just texted me. She wants to talk to you!!

[yzerman19]

And more and more providers are now being paid on a RVU system...which has little to do with what a hospital and/or clinic is getting paid by insurance companies for those provider services.

Methodology is all Rbrvs, but the CF is negotiated.

To those unfamiliar, physician compensation is based on a series of codes called CPT. Codes have a weight tied to them based on the resource intensity of the service they represent (RVU-relative value units). A simple office visit would have little RVUs, a heart bypass will have a lot of RVUs.

The Conversion factor is negotiated. The conversion factor times the RVU nets the payment allowed by contract for the service.

This is called the allowed amount.

[yzerman19]

Ummmmmmm...Kathleen Sebelius just texted me. She wants to talk to you!!

I've spoken with her and Zeke Emmanuel

[Oxbow6]

I've spoken with her and Zeke Emmanuel

I have no doubt you have.

[Oxbow6]

Methodology is all Rbrvs, but the CF is negotiated.

To those unfamiliar, physician compensation is based on a series of codes called CPT. Codes have a weight tied to them based on the resource intensity of the service they represent (RVU-relative value units). A simple office visit would have little RVUs, a heart bypass will have a lot of RVUs.

The Conversion factor is negotiated. The conversion factor times the RVU nets the payment allowed by contract for the service.

This is called the allowed amount.

Well said...but I'll dumb it down. A level 3 established patient office visit (CPT 99213) gets paid from Medicare the same amount whether it is provided by a family practice MD, Neurologist or Ortho surgeon. Yet the CF for the same service level provided is typically greater, and negotiated, for surgeons, then non surgical specialist then primary care providers.

[chicagolandsioux]

Seriously??

This thread was an initial discussion about NDBCBS and a rate hike. yzerman19 gave a thoughtful and educated explanation I thought.

We could turn this political on "subsidies" but don't think that would get us anywhere.

Bottomline is if one doesn't have an educated and informed understanding of healthcare insurance or the ACA this conversation will won't be productive either.

That is not answering but avoiding. Why are these breaks you are getting not a subsidy?

[Oxbow6]

That is not answering but avoiding. Why are these breaks you are getting not a subsidy?

Breaks are different than handouts and entitlements IMO. If one pays a 1/4 or a 1/3 of their income in federal taxes and someone else pays nothing...zero...into that federal tax pot................

I think we will have to agree to disagree on this so it doesn't go down a political tangent it shouldn't go down.

Back on topic...anything yzerman puts in this space...read it and take the time to understand it.

[UNDfaninMICH]

Thanks Mate.

The industry is hard to understand for most people, because it is a mystery of things like coding, actuarial science, and benefits that historically were designed to deter utilization or cost shift to employees.

The other HUGE thing to remember with that maximum 15% gross margin is that I have to fund investment in the future and also (because we are talking fully insured) insulate myself from catastrophic claims. If they price too high, they won't sell policies in a competitive environment. If they price too low, they will not sufficiently manage the risk of high cost claims.

In fact, any surplus (called risk based capital) is often a set large amount required by regulators to ensure the viability of the system in a crisis where no premiums are coming in, but people need services (read: pandemic or gov shutdown or depression)

The question regarding % vs actual margin- it has to be %. Investors think about %.

I appreciate your understanding of this topic, because it's better than mine. The last part of your statement is the part that I still don't grasp. I understand that investors think about percentages, that's a simple concept. We all want to invest our money in areas that yield the best return.

In the example where you said that by law the payments out have to be at least 85% of the premiums paid, the premiums aren't an investment, it's other people's money. The insurance companies keep a percentage of it to cover their cost of doing business. This is why I think that the "absolute" margin matters. As the insurers add more insured individuals to their plan, their cost of doing business per insured individual should go down. They need to employ people to make a formulary, for example, but once they have a formulary, it is applied to each patient. Sure, they have to employ more people to manage all the payments, denials, questions, etc., as they add more insured individuals, but they also have many costs which are fixed, so that each new patient should increase their revenue. Wouldn't this explain how the CEO of a huge insurer like United Healthcare can be paid $5 million? Did he personally invest $30 million and his return on investment is 15%?

[yzerman19]

I appreciate your understanding of this topic, because it's better than mine. The last part of your statement is the part that I still don't grasp. I understand that investors think about percentages, that's a simple concept. We all want to invest our money in areas that yield the best return.

In the example where you said that by law the payments out have to be at least 85% of the premiums paid, the premiums aren't an investment, it's other people's money. The insurance companies keep a percentage of it to cover their cost of doing business. This is why I think that the "absolute" margin matters. As the insurers add more insured individuals to their plan, their cost of doing business per insured individual should go down. They need to employ people to make a formulary, for example, but once they have a formulary, it is applied to each patient. Sure, they have to employ more people to manage all the payments, denials, questions, etc., as they add more insured individuals, but they also have many costs which are fixed, so that each new patient should increase their revenue. Wouldn't this explain how the CEO of a huge insurer like United Healthcare can be paid $5 million? Did he personally invest $30 million and his return on investment is 15%?

You're referring to economies of scale, which should occur at a large enough level of membership. The problem is those economies of scale just don't come to fruition on anything other than claims processing, which is truly as close to the clerical at you represented.

So, a huge chunk of CEO comp is simply supply and demand on Wall Street. I mean its mostlymstockmoptions and grants that have nothing to do ( other than distantly) from the actual profit margin if the company. Also, united is a big, international conglomerate that makes more margin on non-insurance. Read big data and Optum.

Ever wonder why every health plan is looking at vertical integration with providers or selling health and wellness? It's cause they need to find margin outside of insurance.

[yzerman19]

I fold...all the chips in the middle are yours!

Not my intent. You also seem to be very well versed in the subject matter

[mg2009]

I have a tough time believing that BCBS went from being profitable in 2012 to losing enough money in 2013 to think it needs a 20% premium increase for 2014.

I have a feeling that this is being driving by provider consolidation. Sanford's empire building had a purpose and many speculated (with good reason) that it was to give it more market leverage. I think market consolidation over the last 30~ years is one of the driving forces behind the increase in inequality over that time period, not surprised to see this now.

Hmmmmmmmmmmm...I guess that's one take on this albeit a misinformed and misguided one.

nothing he said is untrue. off topic, perhaps.

Breaks are different than handouts and entitlements IMO. If one pays a 1/4 or a 1/3 of their income in federal taxes and someone else pays nothing...zero...into that federal tax pot................

a subsidy is a subsidy is a subsidy. The method of disbursement really doesn't make a difference, it will still cause the exact same distortion. You get more money for picking an arbitrary course of action. That's a subsidy.

[yzerman19]

I have no doubt you have.

The trouble with the talking heads is that they are very, very smart, but they have a single outcome in mind. They seek not construction from industry experts, but rather validation of their beliefs. My interactions with policy makers has been that they ask your opinion, listen, talk it through, appear to grasp it, then ignore it in their final report and simply state that as part of their due diligence they had thought leaders from industry. Implying a consensus, when none was reached.

[yzerman19]

I have a tough time believing that BCBS went from being profitable in 2012 to losing enough money in 2013 to think it needs a 20% premium increase for 2014.

I have a feeling that this is being driving by provider consolidation. Sanford's empire building had a purpose and many speculated (with good reason) that it was to give it more market leverage. I think market consolidation over the last 30~ years is one of the driving forces behind the increase in inequality over that time period, not surprised to see this now.

nothing he said is untrue. off topic, perhaps.

a subsidy is a subsidy is a subsidy. The method of disbursement really doesn't make a difference, it will still cause the exact same distortion. You get more money for picking an arbitrary course of action. That's a subsidy.

Provider consolidation certainly plays a role. There are many, many drivers. Deteriorating population health. Better care, extending life and quality of life, but at extra expense, supporting small independent rural providers in order to ensure access.

ACA benefit requirements do also play a role

[Oxbow6]

 

a subsidy is a subsidy is a subsidy.

This is where we see it differently.

Any idea how many millions people with be put into the state's Medicaid systems if the ACA moves forward as planned? Any concept on what the "subsidies" are for those in those programs? And at the cost to whom will all these millions get their "subsidies" from?

And you want to equate the tax break someone gets on mortgage interest as apples to apples?

[yzerman19]

Subsidy equals a redistribution, no?

[mg2009]

You're referring to economies of scale, which should occur at a large enough level of membership. The problem is those economies of scale just don't come to fruition on anything other than claims processing, which is truly as close to the clerical at you represented.

In this case the driver behind size isn't returns to scale, which likely occur early in the scale process, but again the negotiating leverage it gives insurers against hospitals. The bigger you are, the bigger a discount you can get. Similarly the bigger and better your hospital, the more you can get your provider to pay. The premium increases seem to have been worst in the smallest markets, where there is bound to be the least competition.

Anyway Sanford wants to build a monster new hospital and Altru has been thinking about the same, so the price gets passed on because no one can say no. The ACA isn't nearly perfect (oh no some people lost their crappy plans) but it fixed the worst parts.

[Oxbow6]

The trouble with the talking heads is that they are very, very smart, but they have a single outcome in mind. They seek not construction from industry experts, but rather validation of their beliefs. My interactions with policy makers has been that they ask your opinion, listen, talk it through, appear to grasp it, then ignore it in their final report and simply state that as part of their due diligence they had thought leaders from industry. Implying a consensus, when none was reached.

Been in on some of those conversation albeit probably not at nearly high a level as you but I agree with your take above.

[UNDfaninMICH]

You're referring to economies of scale, which should occur at a large enough level of membership. The problem is those economies of scale just don't come to fruition on anything other than claims processing, which is truly as close to the clerical at you represented.

So, a huge chunk of CEO comp is simply supply and demand on Wall Street. I mean its mostlymstockmoptions and grants that have nothing to do ( other than distantly) from the actual profit margin if the company. Also, united is a big, international conglomerate that makes more margin on non-insurance. Read big data and Optum.

Ever wonder why every health plan is looking at vertical integration with providers or selling health and wellness? It's cause they need to find margin outside of insurance.

I think the above gets me back to my discomfort with healthcare as a business to be invested in. It's a commodity that pretty much everybody needs, like public education, or police and fire protection. Maybe that makes me the ultimate socialist, but as I said before, socialism in medicine has been around for a long time, it's just disguised in that the money shunts through insurance companies rather than the government. Or in the case of Medicare and Medicaid, it shunts through government, then to insurers, and then to providers of healthcare.