5 ms·

Why don't the insurance companies get together and blacklist the "bad" rehab facilities? I mean, insurance companies want their patients to get off drugs, so t

Why don't the insurance companies get together and blacklist the "bad" rehab facilities? I mean, insurance companies want their patients to get off drugs, so that they stop costing money, right?

ams6110 9y ago
One would think. So perhaps there is some other incentive working against this? I'm not trying to suggest anything; honest question.
- alexanderstears 9y ago
  There is - Obamacare capped the profit margins of insurance companies. So if you're United Health, you can't really improve your profit margins. And if you cut costs, you can't pass the extra value to shareholders. If you want to give more money to your shareholders, you need more revenue and then more costs and you need to maintain your margin - the extra costs defray the extra money you return to your shareholders. If you spend an extra $65 million on 'rehab' - you get to give more money to your shareholders. Here's what's really bad about it, there's no real expectation that the health care improves. The insurance company doesn't care whether the expensive care is better, it cares that expensive care = more money for shareholders. That's such a perverse incentive it's incredible. Healthcare has become a noose around the neck of America - it's 16% of our GDP and it accounts for about half of all the inflation since 1990. Here's a blog post explaining the mechanism in the ACA: http://thehealthcareblog.com/blog/2012/02/04/does-obamacare-limit-profits-for-health-insurance-companies-in-your-state/ http://thehealthcareblog.com/blog/2012/02/04/does-obamacare-... Here's Martin Shkreli saying that insurance companies make more money off expensive epipens than cheap epipens: http://www.businessinsider.com/martin-shkreli-on-epipen-and-mylan-pricing-2016-8 http://www.businessinsider.com/martin-shkreli-on-epipen-and-...
  - chii 9y ago
    Insurance companies shouldn't be making money on the percentage of healthcare cost! They ought to be making money off their actuarial tables that correctly predict risk and make a small margin off that spread.
    - k_sh 9y ago
      They ought to, but the regulatory climate incentivizes a different outcome. Change the game, not the players.
      - Mtinie 9y ago
        Agreed. In this case it would "change the game to change the player" as the worst offenders would be motivated to shift to better margin industries. An (almost) insurmountable problem with the regulatory climate today is if you look at who (generally) set it up, its the same interests that would would lose the most of the playing field were changed. Counter-lobby groups aren't as well funded so they just can't compete using the same tactics. Can monetary incentives be removed while still motivating people and businesses to work towards the public good (e.g., availability of broad mental health treatments, treating addiction as the disease it is)? In my heart of hearts I hope so, but I'm doubtful that I'll see it in my lifetime. But I remain hopeful and will do what I can within my capacity as a citizen to forward the idea.
      - kurthr 9y ago
        Who's lobbyists do you think brought about the current regulatory climate? Why would the outcome change until the players that get to change the rules change themselves? I think this is more of a political and ethical corruption problem than a healthcare problem. There is no desire within the industry for competition or a market. See the cable industry for another example.
  - Dove 9y ago
    Cost plus percentage of cost (CPPC) contracts are so toxic that my IANAL understanding is that they are illegal for government contractors. I am darkly amused that they have been made mandatory for a public buying healthcare.
    - alexanderstears 9y ago
      Cost-plus contracts are common in the defense industry: https://csis-prod.s3.amazonaws.com/s3fs-public/legacy_files/files/media/csis/pubs/081016_diig_cost_plus.pdf https://csis-prod.s3.amazonaws.com/s3fs-public/legacy_files/... you'll be darkly amused to note that the F-22 wasn't very cost-plus intensive and the F-35 is completely cost-plus. Also note that the F-22 seems to be a more effective weapons platform and at the end of the program, many people thought that we could just kill the F-35 program, fill up our airforce with F-22s and save money.
      - Dove 9y ago
        Yeah, cost plus a fixed fee or an award fee are common. But cost plus percentage is illegal, I believe. While cost plus fixed doesn't encourage the contractor to look for ways to be more efficient, it doesn't reward him for being wasteful, either. But cost plus percentage actually rewards a contractor for wasting money! That's why it's illegal.
  - deleted 9y ago
    [deleted]
Mz 9y ago
Having worked in insurance, my guess is this would be illegal. They do share information via state regulators (insurance commissioner or state department of insurance) regarding actual fraud once it is proven. Proving fraud requires significant investigation. You have to have more going on than a high rate of recidivism for patients wrestling with addiction for them to accuse you of fraud.
- inetknght 9y ago
  So if this fraud is too "low scale" to be worth fighting, imagine how much profitable fraud exists...
  - true_religion 9y ago
    It's not about it being not worthy of a fight. It's about it being difficult to prove because the effects are so small in aggregate.
  - Mz 9y ago
    When I worked at Aflac, they claimed that insurance fraud costs every man, woman and child in the US more than $1000 a year.
- pinebox 9y ago
  This seems incredibly backwards. The actions of healthcare providers should not need to rise to the level of legally provable fraud before insurance companies have the option of reporting them. We should be requiring the insurance companies to provide a constant stream of usable statistical data covering ALL providers to regulators/law enforcement who should in turn be free to investigate anything that looks suspicious to them (the same way they would with a driver weaving in his lane or a congressman flashing around a suitcase full of money). Furthermore: Healthcare providers operating in sectors with low barriers to entry should be constantly subject to random audit/inspection regardless of their stats. Do we wait for a customer to report glass in their food before we inspect a restaurant?
  - 9y ago
deleted 9y ago
[deleted]

Why don't the insurance companies get together and blacklist the "bad" rehab facilities? I mean, insurance companies want their patients to get off drugs, so that they stop costing money, right?

ams6110 9y ago

One would think. So perhaps there is some other incentive working against this? I'm not trying to suggest anything; honest question.

alexanderstears 9y ago
There is - Obamacare capped the profit margins of insurance companies. So if you're United Health, you can't really improve your profit margins. And if you cut costs, you can't pass the extra value to shareholders. If you want to give more money to your shareholders, you need more revenue and then more costs and you need to maintain your margin - the extra costs defray the extra money you return to your shareholders. If you spend an extra $65 million on 'rehab' - you get to give more money to your shareholders. Here's what's really bad about it, there's no real expectation that the health care improves. The insurance company doesn't care whether the expensive care is better, it cares that expensive care = more money for shareholders. That's such a perverse incentive it's incredible. Healthcare has become a noose around the neck of America - it's 16% of our GDP and it accounts for about half of all the inflation since 1990. Here's a blog post explaining the mechanism in the ACA: http://thehealthcareblog.com/blog/2012/02/04/does-obamacare-limit-profits-for-health-insurance-companies-in-your-state/ http://thehealthcareblog.com/blog/2012/02/04/does-obamacare-... Here's Martin Shkreli saying that insurance companies make more money off expensive epipens than cheap epipens: http://www.businessinsider.com/martin-shkreli-on-epipen-and-mylan-pricing-2016-8 http://www.businessinsider.com/martin-shkreli-on-epipen-and-...
- chii 9y ago
  Insurance companies shouldn't be making money on the percentage of healthcare cost! They ought to be making money off their actuarial tables that correctly predict risk and make a small margin off that spread.
  - k_sh 9y ago
    They ought to, but the regulatory climate incentivizes a different outcome. Change the game, not the players.
    - Mtinie 9y ago
      Agreed. In this case it would "change the game to change the player" as the worst offenders would be motivated to shift to better margin industries. An (almost) insurmountable problem with the regulatory climate today is if you look at who (generally) set it up, its the same interests that would would lose the most of the playing field were changed. Counter-lobby groups aren't as well funded so they just can't compete using the same tactics. Can monetary incentives be removed while still motivating people and businesses to work towards the public good (e.g., availability of broad mental health treatments, treating addiction as the disease it is)? In my heart of hearts I hope so, but I'm doubtful that I'll see it in my lifetime. But I remain hopeful and will do what I can within my capacity as a citizen to forward the idea.
    - kurthr 9y ago
      Who's lobbyists do you think brought about the current regulatory climate? Why would the outcome change until the players that get to change the rules change themselves? I think this is more of a political and ethical corruption problem than a healthcare problem. There is no desire within the industry for competition or a market. See the cable industry for another example.
- Dove 9y ago
  Cost plus percentage of cost (CPPC) contracts are so toxic that my IANAL understanding is that they are illegal for government contractors. I am darkly amused that they have been made mandatory for a public buying healthcare.
  - alexanderstears 9y ago
    Cost-plus contracts are common in the defense industry: https://csis-prod.s3.amazonaws.com/s3fs-public/legacy_files/files/media/csis/pubs/081016_diig_cost_plus.pdf https://csis-prod.s3.amazonaws.com/s3fs-public/legacy_files/... you'll be darkly amused to note that the F-22 wasn't very cost-plus intensive and the F-35 is completely cost-plus. Also note that the F-22 seems to be a more effective weapons platform and at the end of the program, many people thought that we could just kill the F-35 program, fill up our airforce with F-22s and save money.
    - Dove 9y ago
      Yeah, cost plus a fixed fee or an award fee are common. But cost plus percentage is illegal, I believe. While cost plus fixed doesn't encourage the contractor to look for ways to be more efficient, it doesn't reward him for being wasteful, either. But cost plus percentage actually rewards a contractor for wasting money! That's why it's illegal.
- deleted 9y ago
  [deleted]

Mz 9y ago

Having worked in insurance, my guess is this would be illegal. They do share information via state regulators (insurance commissioner or state department of insurance) regarding actual fraud once it is proven. Proving fraud requires significant investigation. You have to have more going on than a high rate of recidivism for patients wrestling with addiction for them to accuse you of fraud.

inetknght 9y ago
So if this fraud is too "low scale" to be worth fighting, imagine how much profitable fraud exists...
- true_religion 9y ago
  It's not about it being not worthy of a fight. It's about it being difficult to prove because the effects are so small in aggregate.
- Mz 9y ago
  When I worked at Aflac, they claimed that insurance fraud costs every man, woman and child in the US more than $1000 a year.
pinebox 9y ago
This seems incredibly backwards. The actions of healthcare providers should not need to rise to the level of legally provable fraud before insurance companies have the option of reporting them. We should be requiring the insurance companies to provide a constant stream of usable statistical data covering ALL providers to regulators/law enforcement who should in turn be free to investigate anything that looks suspicious to them (the same way they would with a driver weaving in his lane or a congressman flashing around a suitcase full of money). Furthermore: Healthcare providers operating in sectors with low barriers to entry should be constantly subject to random audit/inspection regardless of their stats. Do we wait for a customer to report glass in their food before we inspect a restaurant?
- 9y ago

deleted 9y ago

[deleted]