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Consumer Watchdog Wants A Probe on WellPoint – Told Investors It Will Game Reform (Adjust Algorithms) for Profit

Posted Mar 31 2010 9:34am

It’s that same old word I mention over and over, it’s the formulas used via software to make the analytical decisions.  The article here says game, but ask any broker on Wall Street, “it’s all about those algos”, that is what drives profit.  They live and die by the numbers as that’s what lines the pockets. image

When the public yells loud enough as well as the government, the algorithms get adjusted to allow some additional claims to go through based on changing the parameters that need to be met with electronic processing.  They all adjust and analyze with algorithmic formulas.  You can read more about the process and how the word “fraud” is the catch all for the analysis process at the link below.   This has been going on for years and when we come to life and realize and accept the impact of technology today we can perhaps work on an intelligent level to help combat this.  This is where the money comes and goes.  As I keep saying, they have technology machine guns and we have technology swords and daggers to battle with, not very well balanced at all.  BD 

WASHINGTON, March 31 /PRNewswire-USNewswire/ -- Consumer Watchdog called on the Obama Administration and the Department of Health and Human Services today to probe insurance giant WellPoint Inc. in light of an electronic message to investors describing how it would simply re-label administrative costs as "medical care" in response to the new health reform law. The message follows revelations that WellPoint, parent company of Anthem Blue Cross, also intentionally padded already huge premium increases in California, just in case regulators demanded reductions.

"WellPoint keeps proving that it will sniff for every loophole and play every game to keep profits high without becoming more efficient or helping control overall medical costs," said Jerry Flanagan, medical policy director of Consumer Watchdog. "This manipulation of how the insurer defines medical costs is what we predicted would happen, but it's surprising that WellPoint acted so swiftly. The Department of Health and Human Services hasn't even issued its definitions of what constitutes a medical expenditure."

"WellPoint's (WLP) medical cost ratio should rise and its overhead-expense ratio decline this year as the insurer reclassifies various types of costs. Disease management, medical management and a nurse hotline, for example, 'are being reclassified because they represent additional benefits provided to our members,' a representative says. They'll now be part of the medical cost ratio, the percentage of premium revenue used to pay members' health-care costs. These are claims-related costs incurred to improve member health and medical outcomes, WLP says. Accounting rules allow the changes, which better align MCR with anticipated health reform guidelines, Stifel Nicolaus says."

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