Weep Not for UnitedHealth Group

Posted on September 6, 2007
Filed Under Gekkonian Rationing, Wonkonian Rationing |

Vanessa Furhmans of the Wall Street Journal Health Blog reports that a group of state insurance commissioners “plan to announce a multi-state settlement with [UnitedHealth Group] concerning some of its claims-paying systems.” It appears that regulators from four states have been negotiating a settlement with the health insurance giant for years. According to Furhmans, “the settlement aims to improve the accuracy and timeliness [emphasis DrRich’s] of the company’s payment to health-care providers and consumers. The agreement is expected to include a set of performance benchmarks the insurer has agreed to meet.”

But how can this be? DrRich just recently described how the systematic inefficiencies that health insurers have built into their claims processing - the “Chutes and Ladders” paradigm - is a chief component of their business model. Does the pending settlement not strike at the very heart of profitability for UnitedHealth Group and its peers?

The Wonkonians certainly hope so. For, in the grand scheme of things, this new development is just the latest battle in the ongoing struggle between Wonkonians and Gekkonians. Here, the Wonkonian regulators are attempting to take a giant step toward their ultimate goal of pushing the Gekkonian insurance companies into fiscal oblivion.

But it’s way too early to give up on the insurance companies, which have flourished in the face of bigger challenges than this one. In this case several things can mitigate the damage.

First, the insurance companies themselves are the only entities that fully understand their labyrinthine reimbursement schemes; they control the process. In this light it is telling that UnitedHealth Group and the regulators have been “negotiating” the “improved” reimbursement procedures for at least a couple of years. In a culture swimming in seamless electronic processing systems, the puzzle of simplifying claims processing should have been solvable in a couple of weeks.

Second, remember that the Wonkonians themselves, in the guise of Medicare and Medicaid, are also deeply engaged in purposefully mysterious reimbursement schemes. One suspects that there’s a limit to how far they’ll push the insurers toward transparency and simplicity, lest the expectation for similar processes is turned back on them.

Third, when was the last time any regulators have ever been able to simplify anything?

So whatever “improvements” come out of this settlement, it is unlikely to yield a straightforward claims processing system. It would not be a big surprise for claims processing to end up even be more complex than before, what with the regulatory benchmarks that will doubtless be glommed on to the whole mess.

Furthermore, the insurance industry - given that it has been “in negotiation” with regulators for years over their “Chutes and Ladders” reimbursement schemes - has had plenty of time to see the writing on the wall, and to devise new business models to take up the slack. Pay for Performance is one. UnitedHealth Group’s foray into the Medical Home is another. And recently, as pointed out by Dr RW and Retired Doc, the Wonkonians have demonstrated to the insurers yet another method to avoid paying for medical care, namely, Non-Pay for Non-Performance (NP4NP).

The ultimate demise of the big health insurers is by no means imminent. Weep not for UnitedHealth Group.

Comments

One Response to “Weep Not for UnitedHealth Group”

  1. I Sims on September 7th, 2007 1:08 pm

    Imagine if banks and credit card companies had “faulty” MIS systems that made “errors” in billions of transactions in consumer accounts as often as the claims processing systems of UNH and other large HMOs. Would banking regulators give the banks years to improve their systems? Would individual account holders be at the bank doors with pitch forks? Why are health insurance regulators so patient with the HMOs? Where is the (organized)outrage of consumers who, with their employers, pay dearly for the privilege of being ripped off by United and other HMOs?

    And the banking industry has seen more consoliddation than the managed care industry, so United’s plea for time to correct its systems is part of a charade.

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