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A battle is looming over Health Plans' secret price data

Buddy Robinson

Amid the debates of the 2014 session of the Minnesota Legislature, one item flew below the media’s radar even though hundreds of millions of dollars are at stake. It’s a straightforward question: Should HMOs that contract with the state of Minnesota to deliver Medical Assistance, MinnesotaCare and similar programs have to disclose what they pay hospitals and doctors? The issue pertains to four HMOs, also known as Health Plans, which are Blue Cross/Blue Shield (Blue Plus division), Medica, HealthPartners, and UCare.

Near the session’s close, the topic broke into a fierce debate in the House of Representatives, where a simple bill (HF 2167/SF 1770) was wending its way. In its original form, it required that government contractors have to comply with data disclosure laws, whether their contracts specify it or not.

This is a no-brainer to most people: Of course we should know what services our tax dollars buy, and how much the contractors keep for themselves. However, Minnesota has a tradition, begun in the Gov. Tim Pawlenty years, of not getting this information from the HMOs, not even for the eyes-only of state officials. Call it our own version of “don’t ask, don’t tell.”  After all, these HMOs are nonprofits, so we can trust them to be honest, efficient, and operate with a true public purpose – or so went the conventional wisdom.

At an April 25 hearing, the lobbyist for the Minnesota Council of Health Plans testified that if the HMOs had to disclose what they pay hospitals and doctors, the HMOs would be forced to pay them more money, and in turn the state would have to pay the HMOs more. However, the agency that pays them —  the Dept. of Human Services (DHS) — did not back up their claim, and was neutral on the bill. The Greater Minnesota Health Care Coalition (GMHCC), a health care consumers’ group, sent a rebuttal of the HMOs’ arguments to the legislators.

Nevertheless, the HMOs, who according to state records spend over a million dollars annually lobbying the Legislature, used their extensive clout to pressure the legislators into conceding a one-year delay for disclosure for the HMOs. Despite strong statements against the secret prices by Reps. John Lesch (the bill’s author), Tina Liebling, Carolyn Laine and David Bly, the bill was passed and signed into law with the delay for disclosing the HMOs’ data.

The debate is far from over. The stage is now set for a thorough rematch in the 2015 session. The burden of proof is on the HMOs, who want a permanent exemption from disclosure. However, a growing number of lawmakers no longer blindly trust what they say. DHS might even decide on its own to insist on a data disclosure clause in the contracts it signs with the HMOs, worth billions of dollars a year.

In setting the HMO rates, DHS still doesn’t use the actual payments to hospitals and doctors. We know from the 2013 Segal report, and GMHCC’s research, that the HMOs could have been inflating their price data. If they were, or are, they would be wasting huge amounts of taxpayer dollars. The secret price data also affects the insurance policy rates paid by individuals, families and businesses. Those premiums might be inflated as well.

GMHCC has pursued this issue since 2007. We’ve seen gradual progress in awareness and state action for accountability and transparency. We urged the Dayton administration to crack down on overpayments. A number of steps have been taken, although more must be done.

It behooves everyone – taxpayers, program recipients, medical professionals, business owners, and insurance ratepayers – to keep aware of this issue, and ask your elected officials a question: Where do you stand on secret HMO prices? 

Buddy Robinson is staff director of the Minnesota Citizens Federation NE, and Co-Coordinator of the Greater Minnesota Health Care Coalition. These grass roots organizations work for the economic interest of low- and middle-income people, and especially  for affordable health care for all.

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Comments (4)

There is a poker game called "No Peekee"...

...where you can't look at your own hand. I guess that's the game these HMOs want us to play. They'll deal, using a deck they bring to the game. We'll have to take their word for it that it's 52 cards and that they're not marked.

So they want a subsidy, but don't want us to know how much of that subsidy is turned into profit ?? I smell a rat.

I feel quotes from the rebuttal by the Greater Minnesota Health Care Coalition really ought to be spelled out here:

“There is a huge contradiction in that providers report basically flat increases from the HMOs over many years, while the per-person payment from the state to the HMOs rose dramatically. Price transparency would solve this mystery and allow legislators to know what portion of the money they allocate actually gets spent on hospitals and doctors.”

“Minnesota’s managed care Medicaid program was promised to reduce the cost of health care, but the evidence, especially from the Segal report, shows that the opposite has happened. Note the following paradox: Minnesota has among the lowest Medicare Fee For Service reimbursements in the country, but the per-person amount we pay the HMOs for managed care Medicaid is among the highest. Differences in benefits don’t account for this. It reflects the improper overpayments, which are based on self-reported data which could easily be inflated. That gives a much more logical motive for the HMOs’ desire to keep their payment data secret.”

Also, the rebuttal expresses another concern: “…the intensive federal investigation underway, which is examining the question of the integrity of the HMOs’ reported expenses.”

No brainer? Not at all.

"This is a no-brainer to most people: Of course we should know what services our tax dollars buy, and how much the contractors keep for themselves."

I disagree. We're entitled to know that we're getting what we paid for. Beyond that, it's no one's business where the money goes.

Are insurers paying providers more than Medicaid? Probably so. Are they paying less than workers' compensation insurers? Again, probably so. Between these extremes, they're entitled to cut the best deal they can, just as the providers are.

"We're entitled to know that we're getting what we paid for."

One category we're paying for is expenses of the HMOs in their role of payor. If they are falsifying those expenses, we are not getting what we paid for

He DID say, "...a no-brainer to MOST people..." (my emphasis added)

Another source of information - individual, and not secret.

I'm looking at what amounts to an EOB from one of the insurers who is involved here, documenting what price was demanded by providers and what the insurer actually paid, per procedure and summarized per month and YTD.

Now, most of us are aware that the providers' top-line, retail pricing is a load of crap, vastly out of proportion to what the provider routinely accepts as a profitable payment in full.

Anyway, the YTD billings/settlements ratio is almost exactly 10/1, according to the document. and it's pretty consistent across procedures.

So the providers are routinely billing the HMO for 1000% (10 times) of what they'll actually accept in a profitable transaction. The HMO can disclose this to me, as they have, assuming it's accurate (of which I'm actually not so sure). They just don't want to disclose it to DHS.

The idea that the providers can snub these HMOs in contract negotiations is simply not true. There are business facts that make one negotiated contract different in its terms than another. Both sides know this. The providers won't risk losing the business. The HMOs' claim that all prices will "race to the top" if they are disclosed to the state is nonsense, a hysterical argument. The providers and the HMOs are engaged in a shell game with each other, but the public's money doesn't belong in that shell game.

Our public monies are being shuffled back and forth in an insidious chicanery of phony billings and secret settlements.

If the taxpayer or DHS were a private entity, I'd agree with you. But "it's no one's business where the money goes" is just not right when it comes to public monies.