Insurance companies

[LivingAlmostLarge]

DH's company switched to a 3rd party company but kept aetna. I'm a little confused how this is a savings. What is the benefit? All I know is that everyone I call keeps telling me they don't take Meridian health now but when I explain it's still aetna they tell me to call and ask about being in network. I am spending a ton of time calling and figuring out whose in network and it's still everyone.

Do most people have the regular insurance like blue cross blue shield? Or do people usually have 3rd party? This is really difficult.

[disneysteve]

My job self-insures through Aetna. So any doctor or facility that is part of our hospital system is tier 1. Then there are tier 2 places that aren't directly part of the system but are affiliated. Then there's everything else. So if we stay in the system, our coverage is fantastic. Tier 2 is good but higher copay.

[TexasHusker]

The vast majority of companies with 50 or more employees are “partially self insured”. Such companies design their own benefit plans custom to their wants, desires, and budget. They then hire an “Administrator” to mind and manage rhe plan. For a fee, these “third party administrators” pay claims with the employer’s checkbook, and act as fiduciary for the self insured plan with case management, large claims negotiation, and utilization review. The Administrator might also, for a fee, provide a managed care network and pharmacy benefit program. The Administrator might also provide stop loss insurance - or reinsurance- to protect the plan against a catastrophic claim, or catastrophic plan year.

Most Fortune 500 companies hire one of the following to act as Administrator: Aetna, Blue Cross, Cigna, or United Health. The average employee of these companies will say “I’ve got Blue Cross” (or Aetna etc), but the real insurance company is the employer.

Smaller employers will often hire a local third party Administrator (TPA), aa local TPAs often are much less expensive than the big boys, and they often have negotiated very competitive reimbursements with local providers, including even their own physician networks.

This was all in my daily wheelhouse before I left hospital administration to buy real estate and open beauty shops.

[LivingAlmostLarge]

Interesting. I had no idea. Our insurance now is supposedly good but I'm still so spoiled by what we used to have I'm finding it a bit hard to navigate. This is a bit different it's some administering aetna. So I can see how aetna, blue cross, cigna are intermediary. But what do we need another intermeriary for?

[TexasHusker]

Interesting. I had no idea. Our insurance now is supposedly good but I'm still so spoiled by what we used to have I'm finding it a bit hard to navigate. This is a bit different it's some administering aetna. So I can see how aetna, blue cross, cigna are intermediary. But what do we need another intermeriary for?

That's a good question. Managing a self-insured health plan is highly complex. Providers are billing plans for thousands of different procedures, services, and prescriptions. It takes a really robust system to handle all of that effectively. Let's take a patient, "John Doe", as an example.

John's doctor says he needs back surgery. The problem is, John's doctor is a neurosurgeon, and a neurosurgeon has been trained to make you better by doing surgery. So his answer is typically going to be "let me operate on you." The plan administrator may require a second opinion before they approve payment for the surgery, to protect John Doe, and of course, the plan. That is called case management. If John has a back surgery, it will run the plan over $100K, and John might or might not be better off for the experience.

Assuming John has the surgery, the hospital bill for this can run $100K or more. So the plan will often step in and attempt to negotiate a deal with a local hospital. This is called large claims management. John can go anywhere he wants for the surgery, but the plan may incentivize him by paying most or all of the bill if he goes to the hospital they have worked a deal with.

The plan will also negotiate with John's surgeon for an appropriate rate, if a pre-determined reimbursement hasn't already been established through a network.

After the surgery, the plan will get bills from all sorts of providers - the surgeon, hospital, anesthesiology, pathology, radiology, physical therapy, pain management. The plan has to sort through all of these bills, review appropriate billing, and determine appropriate reimbursement.

The intermediary also shops for and places reinsurance, determines appropriate premiums to charge employees to adequately fund the plan, and much, much more.

So...it is a big job and an intermediary is essential to have a successful self-insured plan. If Joe Sixpack of the company tried to handle the plan himself, it would soon be broke.

Now, if there were benefit plan changes from moving from Aetna to Blue Cross - changes in deductibles, coinsurances, and other coverages - those were not mandated by the intermediary. They were mandated by the employer. Most employees don't know this, and blame the intermediary. Of course the employer is quite happy that the employee is blaming someone else.

[LivingAlmostLarge]

No it stayed with Aetna but someone else is the the 3rd party and we are still on a PPO with Aetna network. I hate aetna. I don't like the network. I don't like how many less dr there are. It's annoying.

DS is this common?

[TexasHusker]

No it stayed with Aetna but someone else is the the 3rd party and we are still on a PPO with Aetna network. I hate aetna. I don't like the network. I don't like how many less dr there are. It's annoying.

DS is this common?

Aetna would still have to be the administrator, as they do not lease their PPO network to other administrators, and for several reasons. CIGNA is the only administrator that leases out their network to third parties, and that is on a very limited basis.

The best you can do is to have your employer (the benefits department) lean on Aetna to recruit more providers for their network. It is highly likely that if their network is lacking, Aetna is not offering satisfactory reimbursements to the providers. And they will not typically pay more to one provider for the same service as another provider. For one, they cannot successfully administer this, and two, providers talk.

So...let's say Aetna has 50 OB/GYNs in their network in your area, but there are 20 OB/GYNs that do not participate. Aetna looks at it as "we have 70 percent of the providers". To get the other 20, they would likely have to increase their reimbursement schedule for all 70, which would cost your employer a lot of money. So Aetna is very unlikely to capitulate.

[disneysteve]

I hate aetna. I don't like the network. I don't like how many less dr there are. It's annoying.

DS is this common?

This is very much a regional thing. Aetna (or any other company) might have a huge network in one area and a very small network in another. It is somewhat influenced, I suspect, by how large their patient population is in that area. The bigger their footprint, the more important it is for providers to sign on if they want to capture those patients. In my practice, we took almost everything but there were a few plans we didn't take because their reimbursement wasn't very good and they weren't big players in the area. By not signing a contract with them, we weren't really sacrificing anything.

[LivingAlmostLarge]

Interesting how it all works. I wonder how much more transparency can be had under this non-socialized system?

[TexasHusker]

Interesting how it all works. I wonder how much more transparency can be had under this non-socialized system?

Things used to be fairly transparent in the pre-Medicare days. You went to the doctor, you paid your bill. Just like going to the grocery or a local restaurant. But when Medicare came into being, a gigantic "third party payor" injected itself into what was once a free-market economy. Instead of the patient paying their doctor bill, Medicare decided that IT would pay the doctor directly, and in that process, they would establish their own fixed fee schedule for all providers. That sounds really good on paper, but the fee schedules were (and are) woefully inadequate. Yet the providers (most of them) had to take Medicare because it represents so many patients.

So, providers did what any other business person would do: They raised their rates to all of their OTHER patients to make up the difference. This is called "cost shifting", but in reality, it is "charge shifting." In the hospital system I used to work for, Medicare patients accounted for 65% of their business, but only about 18% of their revenue. So to make up the difference, the other 35% of the patients are charged 3-4-5 times what they should be.

And in response to that, insurance companies eventually said "hey wait a minute, you're screwing us and our insureds" (and that would be true). So the insurance companies then developed THEIR OWN fee schedules for the providers to protect their insureds.

Was Medicare a bad idea? On the cover, no. Senior citizens need some sort of medical care safety net. But it should have been more of a "major medical" insurance that covers hospital stays and perhaps prescriptions over a certain annual dollar amount. Not dissimilar to your homeowners insurance. When Medicare decided to get involved in routine doctor visits and prescription medications, the entirety of health care finance in the U.S. changed, and it hasn't been for the better.

Generally, when the government inserts itself as a guarantor or payor of a massive amount of a segment of our economy - home loan guarantees, college loan guarantees and grants, and health care - the markets eventually get completely out of balance and things unravel: The housing crash of 2008 was in fact due to loose lending - zero down mortgages, etc. - but the dirty little secret is the Congress actually legislated various initiatives years earlier to loosen home loan requirements, and in fact REQUIRED lenders to follow along.

College costs are skyrocketing because there is a market imbalance created by Uncle Sam: The government, through its various grants and loans, has removed the student from the payor equation. Uncle Sam IS the payor (at least for the 4 years of school). So the universities are saying "fine then, no one knows what it should cost, and no one cares...let's increase tuition by 10% and build a new stadium." Fast forward 4 years, and you've got a bachelors degree with $100K in debt, and no real way to pay it back.

[creditcardfree]

Things used to be fairly transparent in the pre-Medicare days. You went to the doctor, you paid your bill. Just like going to the grocery or a local restaurant. But when Medicare came into being, a gigantic "third party payor" injected itself into what was once a free-market economy. Instead of the patient paying their doctor bill, Medicare decided that IT would pay the doctor directly, and in that process, they would establish their own fixed fee schedule for all providers. That sounds really good on paper, but the fee schedules were (and are) woefully inadequate. Yet the providers (most of them) had to take Medicare because it represents so many patients.

So, providers did what any other business person would do: They raised their rates to all of their OTHER patients to make up the difference. This is called "cost shifting", but in reality, it is "charge shifting." In the hospital system I used to work for, Medicare patients accounted for 65% of their business, but only about 18% of their revenue. So to make up the difference, the other 35% of the patients are charged 3-4-5 times what they should be.

And in response to that, insurance companies eventually said "hey wait a minute, you're screwing us and our insureds" (and that would be true). So the insurance companies then developed THEIR OWN fee schedules for the providers to protect their insureds.

Was Medicare a bad idea? On the cover, no. Senior citizens need some sort of medical care safety net. But it should have been more of a "major medical" insurance that covers hospital stays and perhaps prescriptions over a certain annual dollar amount. Not dissimilar to your homeowners insurance. When Medicare decided to get involved in routine doctor visits and prescription medications, the entirety of health care finance in the U.S. changed, and it hasn't been for the better.

Generally, when the government inserts itself as a guarantor or payor of a massive amount of a segment of our economy - home loan guarantees, college loan guarantees and grants, and health care - the markets eventually get completely out of balance and things unravel: The housing crash of 2008 was in fact due to loose lending - zero down mortgages, etc. - but the dirty little secret is the Congress actually legislated various initiatives years earlier to loosen home loan requirements, and in fact REQUIRED lenders to follow along.

College costs are skyrocketing because there is a market imbalance created by Uncle Sam: The government, through its various grants and loans, has removed the student from the payor equation. Uncle Sam IS the payor (at least for the 4 years of school). So the universities are saying "fine then, no one knows what it should cost, and no one cares...let's increase tuition by 10% and build a new stadium." Fast forward 4 years, and you've got a bachelors degree with $100K in debt, and no real way to pay it back.

Well said. Those wanting single payer just don't understand the influence the government, and the laws they enact, has on various programs in this country that in the end actually cost all of us more money. I was just explaining the student loan issue to my daughter the other day.

[LivingAlmostLarge]

Maybe but it's definitely cheaper than the way the US system works now.

[Radshaw8]

My most favorite insurance company is Liberty.