Episode 98 Recap – Pulse Check on the Payers: Fines from states and one payer does good

The print version of the FLATLINING Podcast

Quick Recap

Matthew and Ron discussed the potential sale of Blue Cross, Blue Shield of Louisiana to Elevance, and fines related to a state version of the No Surprises Act. They also talked about recent fines imposed on payers by states for improper claim denial and payments, the prevalence of significant fines issued to insurance companies, and the potential benefits of a health plan in Michigan offering free visits with virtual providers through telehealth.

Blue Cross Sale and Market Concentration Discussion

Matthew and Ron discussed the potential sale of Blue Cross, Blue Shield of Louisiana to Elevance. Ron explained that the Blue Cross system operates differently in various states, with some being non-profit and others for-profit. He said that in Louisiana, Blue Cross is a non-profit entity, and selling to Elevance would mean that they would become for-profit, which would require the state department of insurance approval before any sale could go through.  Ron explained that the fact that this sale dissolved was likely because they were not going to get state approval. Ron said the reason Blue Cross plans want to convert to for-profit is because they don’t get lucrative stock options, and there are limits on their profit margins.

Ron pointed out that Louisiana Blue’s CEO Bryan Camerlink stated in the Greater Baton Rouge Business Report they were “going to remain independent as long as we can” saying it sounded as though he was inferring that they were struggling financially. Which Ron said was laughable since Louisiana is the second least competitive insurance market in the U.S. He said “If you can’t make money as the Blue Cross Blue Shield entity in Louisiana, with almost no competition, something is seriously wrong.” Matthew asked Ron how insurance market competitiveness is determined, and Ron explained it is based on the Herfindahl-Herschman Index (HHI) a commonly accepted measure of market concentration. He said the HHI scores run from 0-10,000, 0 being fully competitive and anything over 2500 is considered a problem or highly concentrated and at possible risk of break up due to being a monopoly.  Louisiana’s insurance market is rated at 5300. Ron said the reason it is not broken up is that it is health insurance, and this industry is allowed to be more non-competitive.  Matthew said the new CEO, Bryan Camerlinck, stated that they are not planning to sell, but they want to shift into more Medicaid, Medicare, and self-funded insurance. Which, according to both Ron and Matthew, are more profitable and less risky products for a payer, then explained why that is.  

State and Federal No Surprises Act Fines Discussed

Matthew and Ron discussed recent fines imposed on payers by states for improper claim denial and payment. They highlighted a case where Cigna was fined $600,000 for failing to comply with Texas's State No Surprises Act. Ron explained that the Federal No Surprises Act does not supersede state laws, and only applies where there isn't a state law. He noted that Texas is one of several states with a state law so the Federal law only applies to self-funded businesses in Texas. Ron also said that the Federal government has chosen not to enforce fines under the Federal No Surprises Act, despite known problems with companies adhering to the law.

Discussing Insurance Company Fines and Deterrence

Ron and Matthew discussed the prevalence of significant fines issued to insurance companies for failing to process claims and provide benefits properly. Matthew highlighted a $546,500 fine issued to United Healthcare by Utah for selling unapproved health plans. He asked Ron how this could happen. Ron wasn’t familiar with the details of this case but said most fines are often well earned but occasionally they can seem arbitrary, citing a case when he was at Cigna, where they were fined for false advertising due to their building signage. Cigna paid the fine, but they did not have to change their sign. Ron and Matthew agreed that fines are often not a sufficient deterrent for large insurers given their profit margins. “Four million dollars is not even a rounding error for these companies, it’s really not a deterrent, it’s the cost of doing business,” Ron said. He pointed out that it is hard to think of an industry that has been fined by state and federal governments as frequently as the insurance industry for not doing what they exist to do.  

Free Telehealth Visits for the Uninsured

Matthew and Ron discussed the potential benefits of a health plan in Michigan, Priority Health, offering free visits with virtual providers through telehealth to uninsured Michigan adults. Matthew highlighted this as a possible instance of a payer doing something right, as it could potentially reduce the need for expensive emergency room visits. Ron agreed, noting that this approach aligns with the financial interests of the payer and the greater good of the people. They also discussed the possibility of using telehealth to catch health issues early and assist with public assistance applications, thereby reducing the need for costly hospital visits. Matthew wrapped up by thanking Ron for his insights into the business of the healthcare industry.