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Health insurers must offer more transparency


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POSTED: Friday, July 10, 2009

House Bill 1525, relating to Medicaid, was designed to create transparency in the operations of both for-profit and nonprofit health insurers to protect the interests of patients and providers of services, such as doctors and hospitals. The insurers, who stand between providers and patients, as they determine who is eligible for insurance coverage, what treatments, procedures and services are covered, and to what extent they are covered, are in the position of manipulating payments to their own financial benefit over those of patients and providers.

The temptation to do so can be irresistible, especially for the for-profit insurers, but the temptation exists even for nonprofits. This is why transparency of the business practices of health insurers of Medicaid is so important, which necessitates the need for the requirements in HB 1525. In Hawaii, where the high cost of living and low Medicaid reimbursements to providers is creating a critical loss of access to care, the public needs financial oversight of this critical public health-care program.

This need for transparency has been driven home especially by the behavior of UnitedHealth Group Inc. (whose Hawaii subsidiary is Evercare) and Wellcare Health Plans Inc. (also known as Ohana Health Plan), the two large for-profit health insurers (HMOs). These two recently contracted by the state Department of Human Services to provide health insurance to the most vulnerable part of our population: the aged, disabled and blind, who need an extensive network of specialists, as well as primary care providers to help coordinate those services. Since Medicaid reimbursement rates are low, the need for profits puts even greater pressure on those reimbursements, increasing the temptation to deny eligibility to patients and reimbursements to providers.

The other investor-driven option is to degrade care. An example of this in the new plan: The for-profit insurers will only prescribe generic drugs, denying patients access to the full range of available medications. The nonprofits feel the same pressures, but for them, it is more a matter of staying in business and not the pressure to make profits for investors.

UnitedHealth Group and WellCare are insurers on a national scale, with United one of the two largest health insurers in the nation. Both have been sued and fined in many states over their operations nationally. WellCare has been banned from enrolling new Medicare clients since March 7 because of refusal to clean up operations. It is said to be teetering on the edge of bankruptcy, which would be a disaster for their local aged, disabled and blind clients and their local employees. While the local subsidiaries Ohana Health Care and Evercare have hired locally and are doing an exemplary job in an efficient transition of the program, their mainland corporate headquarters still continue to have legal, civil and criminal problems.

In January, UnitedHealth Care paid a $300 million settlement to New York state for under-reimbursement of out-of-network Medicare providers. At the same time, it settled for $50 million on an American Medical Association lawsuit over the same problem: a computer payment system that systematically under-reimbursed providers. AMA's president called it a “;rigged system”; but it was also used by other major insurers, including some for-profit Blue Cross/Blue Shield insurers. The $50 million is to be used by a new nonprofit agency to create a fair payment computer system.

This kind of behavior drives home the need for transparency, not only locally, but nationally in the health insurance industry.

If Gov. Linda Lingle carries through on her threat to veto HB1525, the Legislature should override that veto.

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The Rev. Bob Nakata is president of Faith Action for Community Equity (FACE).