Vet Groups to Appeal Judge's Decision Over VA's Treatment of PTSD Cases

By Jason Leopold | The Public Record | Published in : Nation/World
Saturday, June 28, 2008


A federal Judge has ruled that he lacks the legal authority to force the Department of Veterans Affairs to immediately treat war veterans suffering from post-traumatic stress disorder (PTSD) and could not order the VA to overhaul its internal systems that handle benefits claims and medical services for war veterans.

Two veterans advocacy groups, Veterans for Common Sense (VCS) and Veterans United for Truth, filed a lawsuit seeking class-action status against the VA last year claiming a systematic breakdown at the agency had led to an epidemic of suicides among war veterans.

The lawsuit claimed that some war veterans were turned away from VA hospitals after they sought care for PTSD and later committed suicide. PTSD is a psychiatric disorder that can develop in a person who witnesses, or is confronted with, a traumatic event. Mental health experts have described PTSD as an event of overwhelming magnitude in which a victim's nervous system is afflicted with intense fear, helplessness and horror. The victim shuts down only to re-experience the traumatic event over and over again. Studies have shown that PTSD is the most prevalent mental disorder arising from combat.

Moreover, the complaint alleged, that a massive backlog of benefits claims had led to serious financial hardships among hundreds of thousands of veterans.

Those claims were borne to some extent by evidence that surfaced during the course of a three-week trial earlier this year.

Additionally, the lawsuit exposed the extent to which the VA went to conceal that information from the public. The federal lawsuit resulted in congressional hearings about the issue and led members of Congress to call for the resignation of several top VA officials.

In an 82-page ruling issued on June 25, U.S. District Court Judge Samuel Conti said that while it is “clear to the court” that “the VA may not be meeting all of the needs of the nation’s veterans...the court cannot find systemic violations system-wide that would compel district court intervention.”

Conti wrote that the appropriate parties to address the matter are “Congress, the Secretary of the Department of Veterans Affairs, the adjudication system within the VA, and the Federal Circuit.”

“The remedies sought by Plaintiffs are beyond the power of this Court and would call for a complete overhaul of the VA system, something clearly outside of this Court's jurisdiction,” Conti wrote in his ruling. "VCS plans to appeal the Court’s decision primarily on the grounds that the Judicial Branch must enforce the laws of the Legislative Branch ignored by the Executive Branch."

“The remedies to the problems, deficiencies, delays and inadequacies complained of are not within the jurisdiction of this Court. Congress has bestowed district courts with limited jurisdiction. Congress has specifically precluded district courts from reviewing veterans' benefits decisions and has entrusted decisions regarding veterans' medical care to the discretion of the VA Secretary. The broad injunctive relief that Plaintiffs request is outside the scope of this Court's jurisdiction,” he added.

Paul Sullivan, the executive director of Washington, D.C.-based Veterans for Common Sense, said his organization and Veterans United for Truth would immediately appeal the ruling.

“This ruling will only cause us to redouble our efforts and our pursuit of justice for our nation’s veterans,” Sullivan said. “We will not rest until our job is finished.”

Gordon Erspramer, the lead attorney representing the veterans advocacy groups, said if the decision is upheld on appeal it “would suggest that veterans have no enforceable rights in America, and the Constitution does not apply to veterans.”

“For all Americans, the implications of this decision are profoundly disturbing,” Erspamer said.

Sullivan said that as of June 2008, the VA has diagnosed 75,000 Iraq and Afghanistan war veterans with PTSD, but the agency has only been providing disability benefits covering the diagnosis to 37,000 veterans.

Early warnings ignored, Congress Slow to Act

Prior to the U.S. Invasion of Iraq in March 2003, the VA issued a report to Pentagon and White House officials saying that it expected that the number of U.S. troops who would suffer from PTSD would reach a maximum of about 8,000.

Sullivan, the executive director of Veterans for Common Sense, told lawmakers before the U.S. invasion of Iraq that those estimates were extremely low. He continued to sound early warning alarms about the extent of PTSD cases and the likelihood of veteran suicides during numerous appearances before Congress over the years.

“The scope of PTSD in the long term is enormous and must be taken seriously. When all of our 1.6 million service members eventually return home from Iraq and Afghanistan, based on the current rate of 20 percent, VA may face up 320,000 total new veterans diagnosed with PTSD,” Sullivan told a congressional committee in July 2007. If America fails to act now and overhaul the broken DoD and VA disability systems, there may a social catastrophe among many of our returning Iraq and Afghanistan war veterans. That is why VCS reluctantly filed suit against VA in Federal Court . . . Time is running out.”

Sullivan has urged Congress to enact legislation to overhaul the VA.

“Congress should legislate a presumption of service connection for veterans diagnosed [with] PTSD who deployed to a war zone after 9/11,” Sullivan told lawmakers last year. “A presumption makes it easier for dedicated and hard-working VA employees to process veterans’ claims. This results in faster medical treatment and benefits for our veterans.”

Yet despite Sullivan’s dire predictions and calls for legislative action the issue has not been given priority treatment by lawmakers. Instead, Congress has continued to fund the war in Iraq.

VA’s Backlog

Meanwhile, a backlog of veterans’ benefits claims continues to pile up at the VA.

The VA said it has hired more than 3,000 mental healthcare professionals over the past two years to deal with the increasing number of PTSD cases, but the problems persist.

In opening statements in the federal court case, Richard Lepley, a Justice Department attorney, defended the VA, calling its network of hospitals a “world-class healthcare system.”

But Erspamer, the lead attorney representing the two veterans groups, said the VA has arbitrarily denied coverage to thousands of vets, that it takes nearly a year to decide whether it will provide coverage to veterans suffering from PTSD, and takes as long as four years to address veterans appeals cases.

“Seeking help from the Department of Veterans’ Affairs … involves a two-track system,” according to the plaintiff’s trial brief. “A veteran will go to the Veterans’ Health Administration for diagnosis and medical care; and a veteran goes to the Veterans’ Benefits Administration to apply for service-connection and disability compensation.

“VA is failing these veterans as they move along both of these parallel tracks. They are not receiving the healthcare to which they are entitled (and where they do receive it, it is unreasonably delayed) and they are not able to get timely compensation for their disabilities, which means that they have no safety net.

“These two problems combine to create a perfect storm for PTSD veterans: they receive no treatment, so their symptoms get worse; and they receive no compensation, so they cannot go elsewhere for treatment. The failings of these two separate but interrelated systems are what this action seeks to address.”

The lawsuit alleged that numerous VA practices stemming from a 1998 law violate the constitutional and statutory rights of veterans suffering from PTSD by denying veterans mandated medical care.

Justice Department attorneys had argued in court papers filed in March that Iraq and Afghanistan veterans were not “entitled” to the five years of free healthcare upon their return from combat as mandated by Congress in the “Dignity for Wounded Warriors Act.”

Rather, the VA argued, medical treatment for the war veterans was discretionary based on the level of funding available in the VA’s budget.

Explosive Emails


Two weeks before Conti issued his ruling, he hauled Justice Department attorneys into court to explain why a crucial email written by a VA official was not turned over to the plaintiffs.

The March 20 email was written by Norma Perez, a psychologist and the coordinator of a post-traumatic stress disorder clinical team in Temple, Texas.

“Given that we are having more and more compensation-seeking veterans, I’d like to suggest that you refrain from giving a diagnosis of PTSD straight out,” Perez’s email, titled “Suggestion,” says. “We really don’t or have time to do the extensive testing that should be done to determine PTSD.”

Other internal VA emails obtained by the veterans groups during the discovery phase of the trial also revealed that senior Veterans Health Administration officials covered up the rate of suicides among war veterans.

On Feb. 13, 2008, Ira Katz, the VA’s mental health director, and Ev Chasen, the agency’s chief communications director, exchanged e-mails discussing P.R. strategy for handling this troubling news.

The exchange came in the context of how to handle inquiries from CBS News, which was reporting on the surge of suicides among U.S. veterans – reaching an average of 18 per day – with part of that rise attributed to soldiers returning from the wars in Iraq and Afghanistan.

In an e-mail headlined “Not for the CBS News Interview Request,” Katz notified Chasen that the VA had identified some 1,000 suicide attempts per month among war veterans treated by the VA.

“Shh!” Katz wrote to Chasen. “Our suicide prevention coordinators are identifying about 1,000 suicide attempts per month among the veterans we see in our medical facilities. Is this something we should (carefully) address ourselves in some sort of release before someone stumbles on it?”

Chasen responded to Katz with suggestions about how to avoid too much negative attention to the data.

“Is the fact that we’re stopping [suicides] good news, or is the sheer number bad news? And is this more than we’ve ever seen before?” Chasen wrote to Katz, adding:

“It might be something we drop into a general release about our suicide prevention efforts, which (as you know far better than I) prominently include training employees to recognize the warning signs of suicide.”

In testimony to the House Veterans’ Affairs Committee on Dec. 12, 2007 – just two months before the e-mail exchange – Katz had stressed the VA’s successes in treating mental health problems and preventing suicides.

He also disputed that veterans from Iraq and Afghanistan face any special risk of suicide.

“VA’s latest data do not demonstrate an increased risk of suicide among [Afghan and Iraqi theatre] veterans compared to the age and gender matched American population as a whole,” Katz said.

Three days after the testimony, on Dec. 15, Katz painted a grimmer picture in an e-mail to Brig. Gen. Michael J. Kussman, the Veteran Health Administration’s undersecretary for health.

Katz’s e-mail said that from the total population of U.S. veterans from all wars, an average of 18 vets commit suicide each day. Katz said the data, which the VA obtained from the Center for Disease Control, showed that 20 percent of suicides in the United States are identified as war veterans.

“VA’s own data demonstrate 4-5 suicides per day among those who receive care from us,” Katz wrote.

On March 20, 2008, CBS News reported that it had obtained an internal VA study showing that 1,784 vets who received VA services still committed suicide in 2005, an increase from 1,403 such suicides in 2001.

Underscoring just how under-prepared the VA was for the number of PTSD cases that would emerge from the Iraq and Afghanistan wars, documents released to support the veterans’ lawsuit show that prior to the U.S. invasion of Iraq the VA believed it would likely see a maximum of 8,000 cases where veterans showed signs of PTSD.

PTSD Epidemic


In April, the RAND Corporation released a study that said about 300,000 U.S. troops sent to combat in Iraq and Afghanistan are suffering from major depression or PTSD, and 320,000 received traumatic brain injuries.

Since October 2001, about 1.6 million U.S. troops have deployed to the wars in Iraq and Afghanistan. Many soldiers have completed more than two tours of duty meaning they are exposed to prolonged periods of combat-related stress or traumatic events.

“There is a major health crisis facing those men and women who have served our nation in Iraq and Afghanistan,” said Terri Tanielian, a researcher at RAND who worked on the study.

“Unless they receive appropriate and effective care for these mental health conditions, there will be long-term consequences for them and for the nation. Unfortunately, we found there are many barriers preventing them from getting the high-quality treatment they need.”

Soldier’s suicide warnings ignored

Chris Scheuerman, a retired Special Forces masters sergeant, testified before a congressional committee in March and told lawmakers of an urgent need for mental health reform in the military.

Scheuerman said his son, Pfc. Jason Scheuerman, went to see an Army psychologist because he had been suicidal.

The Army psychologist wrote up a report saying Jason Scheuerman “was capable of (faking) mental illness in order to manipulate his command,” according to documents the soldier's father turned over to Congress.

“Jason desperately needed a second opinion after his encounter with the Army psychologist,” Chris Scheuerman testified in mid-March before the Armed Services Committee’s Military Personnel Subcommittee.

“The Army did offer him that option, but at his own expense. How is a PFC (private first class) in the middle of Iraq supposed to get to a civilian mental health care provider at his own expense?” he said. “I believe a soldier should be afforded the opportunity to a second opinion via teleconference with a civilian mental health care provider of their own choice.”

Jason Scheuerman shot himself with a rifle on July 30, 2005. The 20-year-old’s suicide note was nailed to the closet in his barracks. It said, “Maybe now I can get some peace.”

Dr. Arthur Blank, a renowned expert on PTSD who has worked closely with the VA, testified during the federal court hearing in San Francisco last month that multiple deployments are largely responsible for an increase in veterans suicides.

"I think it's because of multiple deployments, which means one is exposed to trauma over and over again," Blank testified.

Last update: Sunday, June 29, 2008

Medical Transcription: Automation is Driving Growth in Speech Recognition

Friday, 27 June 2008, 06:02 CDT | redOrbit News

Healthcare automation is driving growth in speech technology, with the leading vendors providing specialized solutions, according to a new report by Datamonitor. Although use of PC-based speech recognition is not widespread, the technology has found its niche in the healthcare market, where automation and cost savings are key drivers.

Tight budgets and the need for accurate patient records are forcing healthcare providers to automate processes with speech recognition. In order to reduce the error rate in diagnosis and ensure that information is recorded efficiently, healthcare providers are adopting electronic health records (EHRs).

By dictating notes directly into EHRs, using speech recognition with digital dictation systems, doctors can update information faster and with lower error rates. Patient information is gradually becoming digitized in order to deliver test results and records more quickly. By reducing the number of illegible handwritten documents and simplifying processes, providers can eradicate errors in diagnosis.

Speech recognition is also being used for medical transcription, easing pressure on transcriptionists and allowing healthcare providers to save on staffing costs. Medical transcription is estimated to be a multi-billion dollar market and speech recognition vendors are taking advantage of this.

Healthcare currently represents 85% of the PC- and server-based speech recognition market. Datamonitor estimates that the market for speech recognition in healthcare globally is worth an estimated $170m in 2008. Between 2008 and 2013 the market will more than double in size.

Imaging is one area in which speech recognition has seen a significant uptake, as an increasing number of radiologists use the technology to dictate reports. Radiologists work in controlled environments using specialized vocabularies to dictate reports that, as they often use repeated language, are an ideal target for speech recognition vendors.

Healthcare is not the only industry where speech recognition is thriving. Investments in speech technology are expected to grow in the professional services, where it can help with legal transcription. The technology is also likely to be increasingly used to assist with language learning in education. However, healthcare will remain the largest market for speech recognition through 2013.

The introduction of digital dictation and EHRs has given speech recognition new channels to market. Speech technology adoption will increase as it becomes more tightly integrated with these solutions to provide a seamless document production process.

Source: Datamonitor

Obama for tough stance against job outsourcing by companies

Sridhar Krishnaswami
Washington, Jun 28 | Press Trust of India


Taking a tough stand against outsourcing, the presumptive Democratic nominee Senator Barack Obama said that the choice is between giving tax breaks to companies that ship jobs overseas or give benefit to those corporations that keep jobs domestically.

"We can keep giving tax breaks to companies that ship jobs overseas, or we can give tax benefits to companies that invest right here in New Hampshire," Senator Obama said at a joint appearance with Senator Hillary Clinton in Unity, New Hampshire.

"We can have a tax code that rewards wealth and hands out billions of dollars more to big corporations and multimillionaires. Or we can provide a USD 1,000 tax cut to 95 per cent of families in America, start rewarding work and not just wealth, and eliminate income taxes for seniors making USD 50,000 a year or less," Obama said, adding that's an agenda for change that we can believe in. That's the choice that we can make in this election.

"We can allow millions of Americans to work full-time but still not make enough to support their families, or we can raise the minimum wage, index it to inflation, and ensure that hard work pays off in America," the Illinois Senator said. - PTI

Texas Attorney General Abbott's Medicaid Fraud Control Unit Uncovers $6.1 Million Scheme; 11 Indicted

Eleven Houston suspects face felony Medicaid fraud charges

Texas Attorney General News Release
June 23, 2008


Austin, Texas – Texas Attorney General Greg Abbott’s Medicaid Fraud Control Unit (MFCU) has arrested three Medicaid providers for their involvement in a $6.1 million scheme to defraud Texas taxpayers. Seven other providers also were taken into custody while one fugitive remains at large. Harris County District Attorney Ken Magidson’s office will prosecute the suspects, who face multiple felony charges for participating in organized criminal activity.

The arrests stemmed from MFCU’s investigation into a Humble-based medical billing service, Frazier Medical Marketing, and its owners Dyain Eligha Frazier, 35, and Tajuana Krischell Frazier, 35. According to MFCU investigators, the Fraziers colluded with eight durable medical equipment companies to bill the Texas Medicaid program for supplies that were never delivered to recipients.

“These defendants are charged with orchestrating a complex scheme to bill Texas taxpayers for services not rendered,” Attorney General Abbott said. “The Medicaid program is designed to help the neediest Texans, including children and seniors, with basic health care services. Unfortunately, some Medicaid providers submit false billing records, thereby illegally enriching themselves to the detriment of the taxpayers and patients who depend upon Medicaid for health care.”

Attorney General Abbott added: “Thanks to an outstanding effort by the Medicaid Fraud Control Unit, the Texas Health and Human Services Commission and the Harris County District Attorney’s Office, a multi-million dollar scam to defraud the taxpayers has been shut down. We are grateful to HHSC for bringing this case to our attention and to Harris County District Attorney Ken Magidson for prosecuting the suspects in this case.”

MFCU investigators arrested the Fraziers on June 10 at a luxury automobile dealership in Houston, where the couple was attempting to trade in a 2006 Bentley for a new Mercedes-Benz and cash. The suspects were booked into the Harris County Jail.

The MFCU also arrested Charles Robertson Wickware, 26, on May 30, on charges that he received more than $400,000 in fraudulent reimbursements. On July 12, Mississippi authorities arrested another suspect, Vincent Alan Walker, 38, who operated Dreammakers Medical Supply in Humble. Walker is accused of receiving more than $300,000 in fraudulent Medicaid reimbursements.

Six providers voluntarily surrendered to law enforcement authorities, including:

• Demetria Monique Boston, 34, who operated Anointed Medical Supply in Houston; accused of stealing more than $1.9 million

• Marcus Lee Jefferson, 34, a former contractor with Anointed Medical Supply; accused of supplying illegally obtained Medicaid recipient numbers used to bill the program

• Wilma Perkins Gibson, 42, who operated Perkins Mobility in Houston; accused of stealing more than $300,000

• Christopher Charles Williams, 37, who operated Resource Solutions Medical Supply in Houston; accused of stealing more than $400,000

• Robert Christopher Turner, 38, and Jeffrey Bernard Scales, 37, who operated First American Medical Supplies in Humble; accused of stealing more than $400,000

Jacqueline Ann Briscoe, 41, who operated Briscoe Medical Supply in Houston, is accused of receiving more than $180,000 in illegal Medicaid reimbursements. Briscoe remains a fugitive. Texans with information on her whereabouts should contact the Medicaid Fraud Control Unit at (800) 252-8011.

The cases stemmed from a November 2006 MFCU investigation into 32 Harris County businesses that illegally billed Medicaid for adult diapers, wheelchairs and other medical supplies that were never provided to recipients. Thirty-three people were indicted in a scheme that cost Texas taxpayers more than $7 million. During the 2006 investigation, MFCU personnel conducted more than 1,200 interviews and prepared numerous investigative reports, including evidence against C&M Medical Equipment, which uncovered the Fraziers’ unlawful billing scheme.

In 2006 alone, the costs of the Medicaid program in Texas totaled more than $17 billion. As the state’s chief law enforcement official, Attorney General Abbott has dramatically expanded the Medicaid Fraud Control Unit to save more taxpayer dollars and increase protection for Texas seniors. The Unit has established field offices in Corpus Christi, Dallas, El Paso, Houston, Lubbock, McAllen, San Antonio and Tyler through authorization and funding from the 77th Texas Legislature. Attorney General Abbott’s MFCU works with federal, state and local agencies to identify and prosecute those who defraud Medicaid.

Attorney General Abbott’s MFCU was honored in 2004 by the U.S. Department of Health and Human Services with the Inspector General’s State Fraud Award for effectiveness and efficiency during federal fiscal year 2003 in combating fraud, patient abuse and neglect in the Medicaid program.

To obtain more information about the Attorney General’s efforts to fight Medicaid fraud, access the agency’s Web site at www.texasattorneygeneral.gov.

For Patients: Medical billing advocates can help you steer clear of costly mistakes

12:00 AM CDT on Monday, June 23, 2008
By PAMELA YIP / The Dallas Morning News

If you don't have the energy to deal with high medical bills because you're seriously ill, don't panic. There are professionals who can help you.

A medical billing advocate will comb through your medical bill for errors that cost you more money than you should pay.

Nora Johnson, vice president and director of education and compliance at Medical Billing Advocates of America in Salem, Va., said there are duplicate charges "in almost every [inpatient] bill."

She's also seeing more errors in outpatient bills.

"It's increasing 1,000-fold," Ms. Johnson said.

Billing advocates typically charge a percentage – ranging from 25 percent to 50 percent – of the savings they get for you.

Some charge by the hour or a combination of hourly and percentage rates. It depends on the time required to work on your case.

When you hire a billing advocate, you typically will sign release forms authorizing your health care provider, insurance company and other relevant parties to discuss your case with the advocate.

Before hiring an advocate, ask about his or her background. The person should have experience in medical billing, health insurance or health care administration.

Make sure you feel comfortable with the advocate before hiring. Ask about the advocate's experience and the largest amount saved for a client on a medical bill.

To find a medical billing advocate, visit www.billadvocates.com or call 540-387-5870.

India's march towards knowledge process outsourcing

24th June 2008
By CBR Staff Writer | Computer Business Review
The widespread success of offshoring business process operations has encouraged a growing number of organizations to offshore their high-end knowledge work as well. The underlying expectation for offshoring these processes is that it will result in additional cost savings, improved operational efficiencies and access to talented labor in low-wage offshore countries like India.

The first wave of business process outsourcing (BPO in India began in the late '90s with simple back office services such as transcribing medical records, answering phone calls and data entry. Later, during the second wave of BPO services in 2002 to 2003, outsourcing firms graduated to more complex transactions such as problem solving and decision-making tasks, which included insurance claims processing and contact center customer service. Finally, in 2006 to 2007, the $7.2 billion BPO sector in India began providing knowledge-intensive business process outsourcing services which has since become the third wave of BPO services.

Knowledge intensive business processes require significant domain expertise. Examples include developing structured products for investment banks, patent valuation, legal and engineering analytics, and supply chain and financial analytics. Perhaps the major distinguishing feature of the third wave compared to the others is the fact that companies are now recruiting experts with professional degrees and up to 15 years of experience. As such, they are able to bill at higher rates and increase revenue.

Evolving outsourcing strategies are leading businesses towards offshoring high-end processes to low-wage destinations, a trend referred to as knowledge process outsourcing, or KPO. From a supplier perspective, Indian BPOs are moving towards offering KPO as they face declining profit margins from more basic business processes such as data entry, medical transcription and outbound calls, in addition to facing high agent attrition. Currently, India is in the midst of a major cultural shift in which workers are beginning to disregard a career in BPO as a viable long term option.

In comparison to BPO, KPO delivers higher value to organizations that offshore their domain based processes, thereby enhancing BPO's traditional cost-quality paradigm. The central theme of KPO is to create value for the client by providing business expertise rather than process expertise. Thus, KPO entails the shift from simple execution of 'standardized processes' to processes that demand advanced analytical and technical skills as well as decisive judgment. The key sectors within the KPO industry, for example, include data search, integration and management services, financial and insurance research, supply chain management, biotech and pharmaceutical research and computer-aided simulation and engineering design.

While growth in BPO was driven by labor arbitrage and leveraging the IT skill sets of engineers and developers, KPO is likely to be driven by factors like breadth and depth of coverage, domain expertise, location advantage, sales and marketing capabilities.

Large IT service companies such as IBM, Wipro and Tata Consultancy Services (TCS) are also looking to enter the KPO space by shifting from traditional IT services to higher level engineering product design. These big players are keen to acquire smaller niche vendors within different vertical spaces to provide their customers with a broad spectrum of BPO, KPO and IT services. In the last few years, the BPO industry has witnessed some consolidation as larger companies look to acquire smaller niche players to gain the scale (volume) and sector specialization which is necessary to maintain margins in a highly competitive environment. The purchase of Indian firm Daksh by IBM in April 2004 is just one example of a major player looking to acquire contact center expertise through an offshore acquisition. Datamonitor expects a similar round of consolidation in the Indian KPO industry in the near future, as presently there are a large number of startup organizations catering to a niche audience. One such example is the acquisition of KPO player Marketics by WNS (one of the biggest BPO firms in India) to enhance their knowledge services business.

According to NASSCOM estimates, the KPO market is expected to grow from $1.2 billion in 2003 to $14-16 billion by 2010, and India is expected to account for 65-70% of this market. Some of the large players in the Indian market include third party vendors like Evalueserve, Genpact, WNS Global Services, Firstsource, McKinsey & Co, Accenture and Pangea3. Other countries such as China, Russia, Poland, the Philippines and Hungary are also looking to take advantage of KPO opportunities and will introduce new services in this market.

Against this backdrop and given the massive potential in the market, the KPO industry in India will witness an increase in the number of KPO players. Some firms will grow KPO services organically while it is expected the larger IT and BPO players will embark on an aggressive acquisition strategy to buy smaller niche players.

As BPO firms redirect their services portfolio toward higher value and higher margin business, more services that fall under the KPO classification will be offered. Services such as legal and business analytics, equity research, clinical trials analysis, drug discovery, pharmaceutical research, and supply chain analytics will emerge as core KPO offerings. This list is not definitive, however: over time, the overall breadth and depth of services in KPO will continue to expand.

Saurabh Virmani

AMA launches campaign to cut waste from chaotic insurance claims process, unveils new health insurer report card

Delayed and inaccurate insurance payments add cost, inefficiency to health care system

June 16, 2008

CHICAGO — To help reduce the substantial administrative burden of ensuring accurate insurance payments for physician services, the American Medical Association (AMA) today launched the Cure for Claims campaign to help heal the ailing system of processing medical claims with health insurers, and unveiled the first AMA National Health Insurer Report Card on claims processing.

"The goal of the AMA campaign is to hold health insurance companies accountable for making claims processing more cost-effective and transparent, and to educate and empower physicians so they are no longer at the mercy of a chaotic payment system that take countless hours away from patient care," said AMA Board Member William A. Dolan, MD.

The inefficient and unpredictable system of processing medical claims adds unnecessary cost to the health care system, estimated as much as $210 billion annually, without creating value. Physicians divert substantial resources, as much as 14 percent of their total revenue, to ensure accurate insurance payments for their services.

"Eliminating the inefficiencies of the billing and collection process would produce significant savings that could be better used to enhance patient care and help reduce overall health care costs," said Dr. Dolan. "To diagnose the areas of greatest concern within the claims processing system, the AMA has developed its first online rating of health insurers."

The AMA's new National Health Insurer Report Card provides physicians and the public with an objective and reliable source of information on the timeliness, transparency and accuracy of claims processing by health insurance companies. Based on a random-sample pulled from more than 5 million electronically billed services, the report card provides an in-depth look at the claims processing performance of Medicare and seven national commercial health insurers: Aetna, Anthem Blue Cross Blue Shield, CIGNA, Coventry Health Care, Health Net, Humana and United Healthcare.

Key findings include:

  • Denials. There is wide variation in how often health insurers pay nothing in response to a physician claim (from less than 3 percent to nearly 7 percent), and in how they explain the reason for the denial. There was no consistency in the application of codes used to explain the denials, making it extremely expensive for physician practices to determine how to respond.
  • Contracted payment rate adherence. Health insurers reported to physicians the correct contracted payment rate only 62 to 87 percent of the time. Additional analysis will be necessary to determine how often these errors were tied to inaccurate payment. When health insurers report an amount that does not adhere to the contracted rate, it adds additional, unnecessary costs to the physician practice to evaluate the inconsistency.
  • Transparency of fees and payment policies. More than half of the health insurers do not provide physicians with the transparency necessary for an efficient claims processing system.
  • Compliance with generally accepted pricing rules. There is extremely wide variation among payers as to how often they apply computer generated edits to reduce payments (from a low of less than .5 percent to a high of over 9 percent). Payers also varied on how often they use proprietary rather than public edits to reduce payments (ranging from zero to as high as nearly 72 percent). The use of undisclosed proprietary edits inhibits the flow of transparent information to physicians, adding additional administrative costs to reconcile claims.
  • Payment timeliness. Prompt pay laws appear to have been effective in ensuring a relatively quick response to physician's electronic claim. Further analysis will be necessary to determine the extent to which this response is accompanied by accurate payment if the claim.

The report card will be available for the first time today on the AMA Web site.

"Physicians want to focus on caring for their patients, not fighting health insurance red tape that may delay, deny or shortchanged payments for their services," said Dr. Dolan. "The report card provides a useful snapshot of how each of the nation's biggest health insurers can improve the process they use to pay their bills."

The report card demonstrates the inconsistency and confusion that results from each health insurer using different rules for processing and paying medical claims. This variability requires physicians to maintain a costly claims management system for each health insurer.

The report card also suggests that both physicians and health insurers can help reduce unnecessary administrative costs if electronic transactions and full transparency are widely adopted. The costs of re-submitting claims can also be reduced if health insurers make better use of voluntary fields and reason and remark codes in electronic transactions to communicate crucial information to physicians about their claims.

The AMA Cure for Claims campaign will empower physicians to create a systematic approach to claims management so they spend less time and resources on payment hassles with health insurers. To help physicians submit timely and accurate claims, the AMA has created the Practice Management Center, an easy-to-use online resource offering physicians and their staff members tools for preparing claims, following their progress and appealing them when necessary.

The Practice Management Center's library of education materials and practical tools are available online.

###

For additional information, please contact:

Robert Mills,
AMA Media Relations
(312) 239-4991 or (312) 464-5970

Last updated: Jun 16, 2008
Content provided by: Media Relations

Keeping healthcare reform on the front burner

NO SINGLE reform would do as much to improve the wealth of our nation and the lives of Americans as a comprehensive overhaul of our healthcare system. But the best chance of swift and major reform may have died with the end of Hillary Clinton's run for the White House.

Senator Clinton kept healthcare on the front burner, promising action in her first term. Healthcare has already slipped as the top domestic concern, a position it held earlier in the campaign for the first time since the last Clinton campaign in 1992. The economy has passed it. But you can't have a healthy economy without a functioning healthcare system.

Unfortunately, there are no easy fixes, no simple wands that can be waved to solve what ails our healthcare delivery system. Also, there are far too many constituents to alienate along the way.

America should be the envy of the world when it comes to delivering healthcare, since we pay more per capita than any other nation, soon nearly 20 percent of our gross domestic product. In many areas of medicine, particularly in research, we are leading the world. But in others, we are not keeping pace.

We have the second-worst newborn mortality rate in the industrialized world, and rank highest in preventable medical errors. Even worse, one in six Americans has no access to high-quality medical care. What we need from the next president is real leadership and a vision for changing what's wrong with our healthcare system.

Senators John McCain and Barack Obama have reform plans that take divergent paths, neither of which is as comprehensive as Clinton's. Obama would require that children have health coverage, but not adults. The problem with that is if there is no mandate for adults, the young and the healthy will opt out, leaving the older and sicker in the system. This would likely force premiums up.

Obama takes a page from the Massachusetts health reform law and would require employers to offer "meaningful coverage" or contribute to a new public plan for the uninsured and small businesses. He also says health insurance would be more affordable with lower co-pays and deductibles, and he would require insurers to offer coverage without exclusion for preexisting conditions. He would also allow those without insurance through an employer to buy into plans now available to some federal employees.

McCain's plan follows the Republican playbook, that the answer is to cut costs and inspire all Americans to buy insurance by means of tax incentives. His plan would end the tax deduction that employers get for their share of employees' premiums, thus undercutting the employer base of most families' insurance. Instead, he would give families a $5,000 tax credit toward any coverage they buy.

The McCain camp says the tax credit should encourage insurance companies to develop plans that come in at that price, no easy task in high-cost states like Massachusetts. He would encourage competition by allowing insurance to be sold across state lines.

Both plans fall short, and neither truly promises universal access. McCain's plan is particularly radical in that it would eliminate the "safety net" that employees have come to value and would undoubtedly put more of the cost of healthcare directly on individuals and families. It would likely swell the numbers of uninsured rather than reduce them. Furthermore, individual insurance sold on the open market is inevitably more inefficient for insurers and more expensive for consumers. It may make it harder for those with chronic conditions to get health insurance.

There are three areas the next president must focus on, and all three must be in balance: making sure every American has health insurance, improving the quality of care, and controlling costs. Viable solutions to our nation's healthcare crisis will require a bold plan for action, not rhetoric. We can thank Clinton for driving that point home. Whether her health plan was right or wrong, she was tenacious and brave, and her plan was the most comprehensive and detailed. We should demand the same from McCain and Obama.

Ellen Lutch Bender is president and CEO of Bender Strategies LLC, a Boston-based healthcare consulting firm.

Health Insurance Falling Short for More People

Number of underinsured up 60% last year vs. 2003, study finds

By KRISTEN GERENCHER
June 13, 2008 3:38 p.m

Source: wsj.com - The Wall Street Journal

SAN FRANCISCO (MarketWatch) -- People without health insurance risk potential financial disaster if they should need expensive medical care, but a growing number of underinsured Americans also find themselves on shaky financial ground.

Despite the U.S. economy's growth in the last five years, the number of people with health insurance who face high out-of-pocket medical expenses relative to their incomes has risen sharply since 2003, according to a new study.

More than 25 million working-age Americans were underinsured last year, up 60% from the 16 million who had inadequate coverage in 2003, according to a report from the Commonwealth Fund, a private foundation in New York. The rate of underinsurance nearly tripled among middle- and higher-income families, those with at least $40,000 in family income.

"Lack of insurance is only one part of the problem, as even the insured have serious gaps in coverage," said Karen Davis, president of the Commonwealth Fund. "Insurance coverage is the ticket into the health-care system, but for too many, that ticket doesn't buy financial security or genuine access to care."

The upward trend in the underinsured rate reflects how much rising health-care costs have outpaced wage gains. Premiums for family coverage have jumped 78% since 2001, while wages have risen 19% and general inflation has gone up 17% in that time, according to the Kaiser Family Foundation.

Researchers considered people who had coverage all year long underinsured if they had out-of-pocket medical, prescription, dental and vision expenses that amounted to 10% or more of their total household income, or 5% if they were low income. People who had deductibles equal to or greater than 5% of their income also qualified as underinsured because of their potential financial exposure.

During 2007, 42% of adults, or 75 million people, were either uninsured or underinsured, up from one-third in 2003, according to the study of 2,616 people ages 19 to 64. It was published online Tuesday in the journal Health Affairs.

Similar patterns to uninsured

Employers burdened by rapidly rising health-care costs have been shifting more of those costs to workers or limiting benefits, the study found. The underinsured were more likely to have individual or small-group coverage, and those with employer-based health insurance were more likely to work in low-wage jobs or at small firms than their adequately insured counterparts. What's more, the underinsured were more likely to report paying high deductibles and many paid high annual premiums.

The underinsured often resembled the uninsured more so than the insured in their health-care choices and experiences. More than half of the underinsured -- 53% -- and 68% of the uninsured avoided needed care because of cost, compared with 31% of the adequately insured who went without, the study found. That includes not seeing a doctor when sick, not filling prescriptions and not getting recommended diagnostic tests or treatments.

About 45% of the underinsured reported difficulty paying medical bills, being contacted by collection agencies or changing their way of life to keep up on health-care payments, just shy of the 51% of uninsured who said the same.

In the U.S., even people with health insurance can rack up medical debt or face bankruptcy, said Cathy Schoen, senior vice president of the Commonwealth Fund. "As a nation we are losing ground. We need to move in new directions."

Leon Rousso, a certified financial planner in Ventura, Calif., who sells health insurance as part of his business, said he tries to place moderate-income people in health plans that have a sensible annual out-of-pocket maximum and reasonable coverage for their biggest potential out-of-pocket costs. Sometimes that means moving them to a higher deductible plan in exchange for lower premiums.

Of course, many people have to take whatever their employer offers them, he said.

Insured people "don't really have a lot of clout," Rousso said. "Middle to lower middle class, that's really where the vulnerable spot is. You see a lot of people who don't have a lot of money."

Those who shop for their own plan are wise to look for coverage of big-ticket items. Rousso advised focusing on financial protection for hospitalization charges and prescription drugs.

"Those are the biggest places to lose your fortune," he said. "It's all about protecting your assets."

Many of the underinsured are in scaled-down, more affordable health plans, said Nancy Davenport-Ennis, chief executive of the nonprofit Patient Advocate Foundation in Newport News, Va. The group tries to help people with chronic, debilitating and life-threatening conditions get the care they need, with 78% of its annual cases involving cancer patients.

"We actually found that an underinsured consumer has a tougher time getting to resources than a completely uninsured consumer," she said.

The underinsured are often in plans that have limits such as dollar caps on diagnoses and specific services and restrictions on the number and kind of drugs covered, which can undercut the kind of aggressive care many cancer patients count on, Davenport-Ennis said.

"In affordable plans, it's almost standard to see a cap on the number of radiation visits you can have a year - somewhere between 12 and 15 -- while most cancer therapies that have radiation as part of the treatment protocol historically require six consecutive weeks of daily treatments," she said. "If you're capped at 12, you're going to be a private-pay person for the next 18."

The Patient Advocate Foundation offers free case management for health-insurance issues of the seriously ill. Its hotline is 1-800-532-5274.

Controversy over cost controls

The U.S. spends enough on health care -- 16% of its gross domestic product -- to extend adequate health insurance to all, said Alan Sager, a health policy and management professor at Boston University's School of Public Health.

"It's something everyone wants and deserves, and crafting durably affordable health care is essential to rebuilding the economy," he said.

"If we continue to accelerate toward the cliff, we'll be spending more money on care but will have more uninsured and underinsured people, which means hospitals and doctors will work harder to overserve those of us who still have good insurance."

In Massachusetts, a statewide reform law passed in 2006 that aimed to cover all residents "took an important step" but introduced new tensions, he said, especially around politically palatable cost-control methods. Many of the ones currently in vogue in national politics as well won't do the trick, Sager said.

"The ideas that are under widespread political discussion -- electronic medical records, prevention, chronic-care case management or deinsuring patients so they will be more motivated to shop by price and quality -- none of these things will work to contain costs," Sager said. "They're all being pushed because they offer the shallow political promise of containing costs without actually disrupting business as usual in health care. Business as usual in health care means regular, large infusions of more money every year."

Still, Sager said he's optimistic that the next five years will bring major improvements in the nation's health-care system.

"We all know we're medically vulnerable because none of us is going to live forever, but as more of us realize that we're also financially vulnerable, we'll demand change and [solutions] that work financially, medically, ethically and politically."

Write to Kristen Gerencher at kgerencher@dowjones.com

Medical Fraud a Growing Problem

Medicare Pays Most Claims Without Review

By Carrie Johnson
Washington Post Staff Writer
Friday, June 13, 2008; A01

MIAMI -- All it took to bilk the federal government out of $105 million was a laptop computer.

From her Mediterranean-style townhouse, a high school dropout named Rita Campos Ramirez orchestrated what prosecutors call the largest health-care fraud by one person. Over nearly four years, she electronically submitted more than 140,000 Medicare claims for unnecessary equipment and services. She used the proceeds to finance big-ticket purchases, including two condominiums and a Mercedes-Benz.

Health-care experts say the simplicity of Campos Ramirez's scheme underscores the scope of the growing fraud problem and the need to devote more resources to theft prevention. Law enforcement authorities estimate that health-care fraud costs taxpayers more than $60 billion each year.

A critical aspect of the problem is that Medicare, the health program for the elderly and the disabled, automatically pays the vast majority of the bills it receives from companies that possess federally issued supplier numbers. Computer and audit systems now in place to detect problems generally focus on overbilling and unorthodox medical treatment rather than fraud, scholars say.

"You should be able to spot emerging problems quickly and address them before they do much harm," said Malcolm Sparrow, a Harvard professor and author of "License to Steal," a book about health-care fraud that advocates for greater federal vigilance. "It's a miserable pattern, a cycle of neglect followed by a painful and dramatic intervention."

Fallout from the Campos Ramirez case continues. After pleading guilty to filing false claims, she has helped authorities win indictments against more than half a dozen doctors and patients who allegedly accepted kickbacks for pretending to receive costly HIV drug therapy. With cooperation from Campos Ramirez, FBI agents this week arrested three Miami-area men who, the government alleges, financed sham clinics that billed the government more than $100 million.

Daniel R. Levinson, the inspector general of the Department of Health and Human Services, has warned repeatedly that the Medicare program is "highly vulnerable" to fraud, particularly in South Florida, where schemes center on expensive, infusion-based HIV medications and on equipment such as wheelchairs, walkers, canes and hospital beds.

Officials from the Centers for Medicare and Medicaid Services (CMS), which oversees federally funded health programs, say they have stepped up their efforts to combat fraud over the past year by working closely with investigators, removing the requisite billing numbers of nearly 900 companies and imposing new standards in high-fraud areas that would prevent people convicted of felonies from ever receiving a Medicare number.

"There's always more fraud than we have resources to combat," said Kimberly L. Brandt, director of program integrity at CMS. "We have done a much better job of realigning our resources to attack this problem."

Investigators and prosecutors trained their focus on Miami after noticing two troubling patterns:

· HHS investigators discovered that nearly half of 1,581 medical equipment companies they visited in the Miami area did not comply with basic Medicare requirements to be open during scheduled hours and to have a telephone number. The inspector general and the Government Accountability Office have flagged weak oversight of these kinds of suppliers for a dozen years, according to congressional testimony.

· The South Florida region bills Medicare more than $2 billion each year for injectable HIV medications. That figure is 22 times as high as the amount of similar claims in the rest of the country, and is far out of line with demographic data in a population of 2 million people in Miami-Dade County, HHS statistics show.

Justice Department officials moved to freeze money in suspicious bank accounts controlled by medical equipment company owners and they created a Washington-based strike force to handle the issue. The strike force, in concert with a small group of U.S. attorney's offices, has in the past year opened nearly 900 criminal investigations and convicted 560 defendants in health-care fraud offenses throughout the country.

Authorities say the strategy is working. They point to a $1.75 billion drop in Medicare claims in Miami since the operation began a year ago. But even government officials hope for a more comprehensive solution.

Christopher Dennis, the special agent in charge of the HHS inspector general's office in Miami, said fraudulent medical equipment companies appear to have shifted gears since the strike force arrived. After a crackdown in South Florida, at least some corporate owners moved to the north, he said. Investigators dubbed one initiative "Operation Whack-a-Mole," after the carnival game in which a creature pops up in different places after being hit with a hammer.

"The sheer number of zeroes following the dollar sign is irresistible to crooks and con men," Attorney General Michael B. Mukasey said last month during a Miami visit. "For every crooked company we bust, there is another one to replace it before the ink on the indictment is dry. . . . The money and the temptation are simply too big."

The strike force recently established a base in Los Angeles, another area rife with fraud. Prosecutors announced criminal charges last month against two medical equipment company owners who are accused of falsely billing Medicare more than $2 million. Plans call for a similar rollout this fall in Houston, another potential fraud hot spot.

"You can see how these frauds spread through communities," said Kirk Ogrosky, who is deputy chief in the Justice Department's fraud section and helps lead the strike force. "Family members and friends just get sucked into it. It's really rags to riches on the backs of the American taxpayer."

Officials who oversee the Medicare program say they are vigilant despite time pressure and limited resources. Employees review fewer than 5 percent of the nearly 1 billion claims filed each year. The vast majority of claims shuttle through computer systems that are tweaked when authorities notice fraud patterns. This year, CMS is working to finalize a rule that would prevent convicted felons from obtaining Medicare billing numbers. At present, that regulation applies only in a few high-fraud regions.

"It's a big volume," Brandt said. "No matter how hard we try to get people trained, there's always going to be a margin of error."

Sentenced to 10 years, Campos Ramirez, 60, may yet reduce her prison term by helping authorities unwind "the large web of medical clinics, doctors, nurses, money laundering companies and HIV clinic financiers who participated in this massive fraud," prosecutors wrote earlier this year in court papers. Her lawyer did not return calls seeking comment.

By many accounts, Campos Ramirez was unusually successful. Prosecutors say that corrupt medical clinic owners anticipate that Medicare will cover a quarter of their phony claims. But Campos Ramirez persuaded authorities to cover 60 percent of all the bills she submitted on behalf of 75 HIV clinics in South Florida, according to court filings.

As the owner of R and I Medical Billing, Campos Ramirez advised clinic owners how to justify the costly HIV treatments and manipulated Medicare claims to make sham clinics appear to be legitimate health-care facilities, prosecutors said. She personally collected more than $5 million with which she bought property and luxury items. Over the past year, however, Campos Ramirez has met repeatedly with law enforcement agents to unravel the scheme, which ran from 2002 to 2006.

At the time of her sentencing in March, Campos Ramirez had amassed a net worth of $1.5 million, including one of the condominiums where her son, an employee of her billing company, had lived.

Don't just blame odd hours for BPO attrition

10 Jun, 2008, 1407 hrs IST, Jayashree Bhosale, ET Bureau

PUNE: Anand (name changed) is a Senior Executive in a big BPO company. After going through a stressful life, now in a rocky third marriage, he finally decided to seek help. "There was an overlap between my personal and professional life. I had challenges in my personal life regarding relationships outside my marriage. I faced problems at the workplace too.

Today’s capitalist culture tries to push people beyond a point," said Anand. Anand is just one example of the booming outsourcing industry which has been facing the challenge of a high attrition rate which is close to 60%. Studies have attributed this to factors like a stressful job environment in the BPO industry, including odd working hours. However, a study conducted at a BPO by psycho-therapist Dimple Shah, who heads Revival Life, revealed that a majority of the problems of these employees are not work-related . They are more related to personal life and family.

"Work-related stress in BPOs is hugely hyped. The measures that the companies take to reduce stress are also hyped. Measures like out-ofcountry vacations, good canteens, etc do not go to the root of the problem, which originates from their personal lives and requires counselling, either individually or in a group," she said.

The Revival Life study covered the period from December 2006 to June 2007, covering nearly 100 people at one Mumbai BPO. Ms Shah said the stress levels at this BPO were low since they did not handle inbound calls. "We found that 50% employees were normal , 40% had anxiety, 27% had depression and only 10 % had stress. The proportion of those suffering simultaneously from all, that is stress, anxiety and depression was 20 %," Ms Shah remarked , adding, "These 20% people need therapeutic solutions, which takes a longer time."

With the high attrition rates, the human resource (HR) department is busy fire fighting, occupied in recruitment and training, with not much time to spare for counselling activity. "The HR department tends to use motivational and communication programmes for solving employees problems of the employees. However, such measures are useful for only about 20% of the workforce. The real solution lies somewhere else," said Ms Shah.

‘BPO space has huge scope, needs new biz paradigm'

Tuesday, 10 June , 2008 | Business Line | Sify.com

Bangalore: ‘BPO’ may be a good catch phrase, but the industry is past the era of mere offshoring; today it is all about globalisation of services and achieving domain expertise and efficiency, said Pramod Bhasin, Vice-Chairman, Nasscom (National Association of Software and Services Companies), and President and Chief Executive Officer, Genpact.

“The term ‘BPO’ has outlived its use. It doesn’t represent the full depth and capacity of the industry and the types of services it offers. Today, it is important to build full scale services and an ecosystem around processes. The industry requires a combination of technology and process expertise. India one day will be known for delivering process and re-engineering expertise. There are unprecedented growth opportunities in this,” said Bhasin, at the two-day Nasscom BPO Strategy Summit held in the city on Monday.

Revenue watch

The Indian IT-BPO revenue is set to grow by 33 per cent in the fiscal year 2008. Exports are expected to cross $40 billion, while the domestic market will clock over $23 billion.

The BPO industry alone is estimated to touch $12.5 billion in 2008 and has the potential to grow five-fold by 2012. The industry today employs two million people directly and indirect job creation is seven-eight million. But shortage of adequate employable manpower is still a cause for concern. “We need about 200,000 more employable graduates in the industry. We also need to fight attrition,” cautioned Bhasin.

All this can be done only if the country “puts its act together in education reforms and infrastructure initiatives,” urged Bhasin. A private-public partnership is required to achieve this, he added.

In his address, Ganesh Natarajan, Chairman, Nasscom, and Deputy Chairman and Chief Executive Officer, Zensar Technologies, listed out the BPO industry agenda on hand. The industry must look at harnessing opportunities in rural India, encourage reverse migration and adopt green IT practices, nurture creativity and provide opportunities for women to take up leadership roles.

Jainder Singh, Secretary, Department of Information Technology, Ministry of Communications and Information Technology, stressed the need to create investment regions and the importance of moving up the value chain to stay globally competitive.

Operation locations

At a press meet in the sidelines of the summit, Som Mittal, President, Nasscom, said the industry body has, in a study conducted along with AT Kearney, identified 50 potential locations in the country that are attractive centres for BPO operations.

Apart from the seven main centres of Bangalore, Chennai, Hyderabad, Pune, Mumbai, Kolkata and NCR, the study has identified 43 more centres with varying degrees of attractiveness and advantages. They include Ahmedabad, Bhubaneshwar, Chandigarh (Challengers); Aurangabad, Bhopal, Goa (Followers); and Allahabad, Dehradun and Patna (Aspirants).

Nasscom is in the process of talking to State Governments and other parties concerned to develop these regions as BPO centres of excellence, said Mittal.

It is also looking at international partners for the adoption of Green IT.

State proposes ban on HMO billing practice

June 1, 2008 | By LORA HINES | The Press-Enterprise

State officials, hospitals and doctors are locked in a dispute over whether some patients can be charged if they are taken to an emergency room outside of their health care network. For some, that bill can be a couple of hundred dollars, but for others it can reach into the thousands.

The ban proposed by the California Department of Managed Health Care would affect members of HMOs, such as Kaiser Permanente, not members of other kinds of insurance plans. The department only regulates HMOs. Administrators and hospital-based doctors say the state should be targeting insurance companies.

Statewide, thousands of people get pressed for payment by doctors and hospitals, typically after they are taken to an emergency room outside their insurance plan. Doctors and hospitals that think health care plans and insurance companies have shortchanged them on payment for treatment then try to make up the difference by going after patients who already paid their share. It's called balance billing.

Karla and William Gledhill, of Chino Hills, understand the practice well.

The couple got hit with a $53,000 bill from Arrowhead Regional Medical Center in Colton after their insurance company, Anthem Blue Cross, paid about $25,000. Their 16-year-old son, Ryan, was flown to the hospital after a serious dirt bike crash in Lucerne Valley.

Karla Gledhill said she racked up late-payment fees and bill-collection threats as she repeatedly wrote letters and made telephone calls to the hospital and insurance company. Last week, the insurance company agreed to pay the bill.

Gledhill said she thought she would have to hire an attorney, which sometimes is a patient's only recourse, hospital officials say.

The hospital and insurance company said privacy laws prevented them from commenting on the family's claim.

"You don't know anything about balance billing until you're stuck in the middle, trying to hammer out what's right," Gledhill said.

Balance Billing

More than 1.75 million insured Californians who visited emergency rooms in the past two years were asked to pay more, even after their co-payments and deductibles, according to the California Association of Health Plans. The professional organization represents 40 health care plans that cover an estimated 21 million Californians.

The average balance bill was $300, which added up to about $528 million that patients spent in addition to their co-payments and deductibles, the association said. More than half of the patients who were balance billed paid.

"The practice needs to be banned, period," said association spokeswoman Nicole Kasabian Evans. "The patient shouldn't be placed in the middle. That's what the insurance companies and health care providers are doing."

In July 2006, Gov. Schwarzenegger ordered an end to balance billing after he realized many residents were being charged for medical expenses they didn't owe, said Cindy Ehnes, director of the state Managed Health Care Department. But the department couldn't come up with a suitable solution to HMOs and providers, she said. So, the department decided to merely ban the practice.

"We have tried many other approaches to solve this problem," Ehnes said. "We have decided to go back to our first job, which is to protect consumers."

Ehnes said she had hoped lawmakers would have passed legislation regulating balance billing. At least seven states have balance billing laws, including Colorado and Florida. Meanwhile, state Sens. Don Perata, D-Oakland, and Leland Yee, D-San Francisco, have introduced balance billing legislation.

HMO Vs. Hospital

The ban comes as Kaiser, the state's largest HMO, got a temporary restraining order earlier this month from Los Angeles County Superior Court against Prime Healthcare Services Inc., of Victorville, to stop it from collecting money from thousands of Kaiser patients or reporting them to credit agencies. A hearing is set for Thursday.

"This has been an ongoing dispute for a year or year and a half," said Dr. Ben Chu, president of Kaiser's Southern California region. "... They threatened to trash their credit ratings if they didn't pay."

Earlier this year, Prime Healthcare sued Kaiser, claiming that Kaiser owes $25 million for its patients who were treated at eight of Prime Healthcare's hospitals, including Desert Valley Hospital in Victorville, Chino Valley Medical Center and Montclair Medical Center.

Prime Healthcare attorney Michael Sarrao couldn't be reached for comment.

Prime Healthcare has accused Kaiser of delaying payments by repeatedly demanding patient medical records, claiming that care provided was unnecessary and requiring transfer of members to Kaiser hospitals.

Chu disputed the claims.

"It's not about delaying payment," he said. "It's about substantiating claims."

Calculating Health Cost

Dr. Richard Frankenstein, president of the California Medical Association, said the organization, which represents 35,000 doctors, will fight the state Managed Health Care Department's ban.

"They ought to be regulating the insurance companies, not the doctors, which it does not have the authority to do," he said. "We see this as a $500 million transfer from patients to insurance companies, and the insurance companies aren't paying the bill."

On average, Frankenstein said, insurance companies pay all but about $30 of a doctor's bill.

"If that doctor sees 50 to 60 patients, that $30 does add up," he said.

Some specialists may not work on-call emergencies if insurance companies refuse to pay and they can't bill patients, Frankenstein said.

Frank Arambula, Arrowhead Regional Medical Center's chief financial officer, said the hospital compares its costs to those of other facilities, which are reported to the California Office of Statewide Health Planning and Development. The data are posted on the agency's Web site.

"We set our rates based on market-driven prices," he said. "We think it's a fair assignment and the payer is going to pay those charges."

Conversely, insurance companies rarely show patients and health care providers how they determine what to pay for service, Arambula said.

In a written statement, Anthem Blue Cross spokeswoman Peggy Hinz said the company reimburses out-of-network hospitals for what it considers reasonable and customary costs. It is changing its reimbursement policy to protect members who require emergency care, she wrote.

"It was not the intent of our reimbursement policy to increase out of pocket expenses for our members, who do not have a choice in selecting the place where health care services are performed, such as in the case of an emergency," Hinz wrote.

Anthem Blue Cross bases its reimbursement rates on factors including submitted charges for payment, comparisons of charges for services offered at other hospitals, and service costs that are reported to the state, Hinz wrote.

Fighting the Bill

The Gledhills didn't care whether Arrowhead Regional Medical Center was in their Anthem Blue Cross preferred provider organization network. Their son needed surgery on his pancreas.

"Worst case, we thought we would owe $6,000," said Karla Gledhill, whose husband owns a small Anaheim business.

Anthem Blue Cross first determined the Gledhills owed the hospital $53,273.17 after it paid $25,121.28, according to a claim recap. It paid another $12,606.15 after Karla Gledhill complained to the California Department of Insurance.

The Gledhills still faced a $40,667.12 bill and no explanation of how Anthem Blue Cross determined what it would pay.

"How could I fight a fair fight if I didn't have all the information?" Karla Gledhill asked. "I didn't think Arrowhead's charges were exorbitant for the care my son received."

On May 21, Anthem agreed to pay the rest of Ryan Gledhill's hospital bill after the company "made a one time administrative decision to remit payment," according to the letter the Gledhills received.

The letter did not include further explanation, and Hinz said privacy laws prevented her from offering one.

Reach Lora Hines at 951-368-9444 or lhines@PE.com


Online Help

California Office of Statewide Health Planning and Development: www.oshpd.ca.gov

California Department for Managed Health Care: www.hmohelp.ca.gov

California Department of Insurance: www.insurance.ca.gov

Inside Politics: Insurance law will bring monthly premiums back up

Rebecca Boyle | The Tribune
June 8, 2008

Colorado motorists who are unfortunate enough to be injured in a crash will have one less thing to worry about thanks to a bill signed by Gov. Bill Ritter late last week.

Or they'll have one more thing to worry about. It depends on your perspective.

Ritter signed Senate Bill 11, which will require every auto insurance policy issued in Colorado to have $5,000 of medical payments coverage, known as "med pay." It has an opt-out clause, too, so people who determine they don't need the extra coverage don't have to get it if they don't want it. But now they will have to have the option.

The law will help motorists, especially those who don't have health insurance, by offering enough money to cover the cost of a typical ambulance ride, for instance. Those who do have health insurance could use the med pay to cover their deductible or out-of-pocket expenses.

But the new system also is likely to increase the cost of insuring your car.

Colorado ended its long-standing no-fault auto insurance program in 2003 and switched to an at-fault system. Under the old system, a driver injured in a crash would have his medical expenses covered by his own insurance, even if it wasn't the driver's fault. Under the newer system, the at-fault driver is responsible for payment, and before payment can be made, someone has to determine whose fault it was.

Medical payments coverage became optional under the new system, and many motorists either thought they didn't need it or decided to save money on premiums by going without it.

But some drivers who don't know about that or don't buy enough coverage can't afford their medical bills. They can sue the at-fault driver, but that might not matter if the person at fault doesn't have much money.

That has meant trauma care providers are often unpaid because the injured motorist can't afford to pay.

The Trauma Care Preservation Coalition, a group of ambulance companies, hospitals and other emergency services providers that formed to address the problem, said the system has cost hospitals and ambulance companies millions of dollars in unpaid bills, and that translates to higher costs for patients who can afford to pay.

In 2002, under the old system, hospitals were reimbursed for about 60 percent of the care they provided to motor vehicle accident patients, according to a report commissioned by Ritter's office in February. By 2006, that number had dropped to 36 percent, the report found.

Reverting back to a mandatory med-pay system will ensure that more of those expenses are covered -- $5,000 worth, at least.

Ritter said the bill would help consumers and emergency services providers.

"Almost everyone has out-of-pocket medical expenses, such as co-pays and deductibles, which could be paid for by medical coverage in the event of an accident," he said in a statement. "Senate Bill 11 will help ensure that every Coloradan has the coverage that he or she needs and that ambulances, physicians and hospitals are paid for the critical care that they provide."

But that comes at a price.

Mandatory extra coverage will likely drive up insurance premiums, said Alan Miller, assistant public affairs manager for State Farm Insurance, based in Greeley.

"We were opposed to SB11 from the standpoint of, as much as we are happy to sell people our products, we don't feel people should be forced to buy additional insurance that they may not need, want or, frankly, be able to afford," he said. "This bill will require people to buy additional insurance."

Though they can opt out, Miller said many people don't, not only because they think they have no choice but because that option requires a written declination of the coverage. That will result in higher costs for everyone, as insurers are forced to carry more policies.

Since the at-fault system went in place, auto insurance premiums decreased throughout the state, up to 35 percent, he noted.

"That's really what moving away from no-fault was designed to do. With no-fault, it was so out of control; there were so many things that had been added on that, that it was becoming so expensive. It was just skyrocketing," he said.

Industry representatives said things like massages and even aquariums were covered under the old system, because they were considered rehabilitative. While SB11 won't reintroduce those kinds of problems, rates will likely creep skyward, Miller said.

"I think we've hit the bottom, and because of these legislative mandates, we're going to be seeing rates go up," he said.

* * *

« School's out for summer ... and it will look different when you get back

Across-the-board tuition increases approved in the past week mean that students will have to pay even more next year to attend schools like Colorado State University and the University of Northern Colorado. But they can take comfort in one area: The campuses will look prettier.

Northern Colorado lawmakers were instrumental in finagling new ways to find extra money for projects at CSU, UNC and Front Range Community College, among others.

Gov. Bill Ritter signed a bill last week that will allow UNC to proceed with renovations to Butler-Hancock Hall, home to the athletics department.

Nate Haas, spokesman for UNC, said the money will pay for renovations to academic areas, including a classroom addition, upgraded electrical wiring and reconfiguring locker rooms to maximize space. The building will also get air conditioning, which does not currently exist throughout.

"The hope was that the facility would be more marketable for private users, and of course for the community who attend events there," he said.

He said the renovations had been on UNC's master plan for a couple years.

It was the first project on the state's list and will cost $11.591 million.

State Rep. Jim Riesberg, D-Greeley, is on the powerful Capital Development Committee and helped push for the legislation that allows the extra spending.

Two Fort Collins institutions will also see funding under the bill. Front Range's Larimer campus will get a hefty $14.81 million to pay for a science classroom addition and renovations.

CSU's monstrous Clark building didn't make out with as much -- just around $2 million -- but it'll be enough for "revitalization," which could mean fresh paint and carpeting.

The money will be available thanks to Senate Bill 218, a bipartisan measure sponsored by Western Slope lawmakers that alters the way Federal Mineral Lease revenues and bonus payments are allocated. According to Ritter's office, the measure creates two new funds to support higher education, one for construction and another for maintenance. Existing FML beneficiaries, including K-12 education, local communities impacted by oil and gas drilling and the Colorado Water Conservation Board, will also reap millions of dollars under the new law.

Last month, Ritter signed a companion measure, Senate Bill 233, which allows the state to issue certificates of participation backed by SB218's new revenue streams. Those certificates, which are similar to bonds, will amp up funding for more than a dozen higher-education construction projects around Colorado.