Will Aetna Cut More Members in the Future – Questions Arise after Recent Contract Announcements
Posted Aug 18 2009 10:29pm
As is being practices by most health insurance companies, premiums are going up and the amount of dollars collected by all that go toward claim payments is under scrutiny too, we have had that in California too with legislators taking a look from time to time. One item mentioned here too is the fact that Aetna never went “deep” into the HMO business over the years, and just by size, they are somewhat of a small carrier compared to some of the competition.
All carriers have been “cherry picking” the least costly patients for a number of years and they do this with revenue/risk projecting software that comes under the name of “business intelligence” as it is hard for any company or hospital for that matter to exist today without it. Aetna is also facing the large class action lawsuit in New Jersey related to the “balance due” billing, by using the Ingenix (the subsidiary of United Healthcare data company).
“The suit accuses Aetna of knowingly using a database created by a United Healthcare Group subsidiary, Ingenix, that was rigged in the company's favor to determine how much money millions of patients and their providers would receive in "usual, customary and reasonable" reimbursements for care performed by out-of-network providers.”
“The northern region contract went to Aetna Inc., which beat incumbent Health Net Inc. For the western region, TriWest Healthcare Alliance in Phoenix got its contract renewed.”
After the awarding of the new Tri-Care contracts, both Humana and Health Net registered complaints, which is not too surprising as that is a big chunk business. What is also very interesting too is that after the awards were announced, United HealthCare came right in and bought a big chunk of the HealthNet business in the northeast, the area where HealthNet lost the bid to Aetna, so it looks like if you get cancelled or your rates go up too high, even as an employer, you might have United there to pick you up, well maybe?
UnitedHealthCare is making more money from their technology these days than they are with selling premiums and then again they mine those exact policies for risk management which ends up in either denying claims in some instances or someone perhaps not qualifying, etc. Of all the health insurance companies, they seem to be the only one blowing off the doors with profits, something to think about, and again, it’s all in the algorithms they run, business intelligence provided by their subsidiary Ingenix. Wendell Potter gets it.
It is the algorithms that do the dirty work, not humans, it is in the code. You don’t have to be a computer expert to understand all the fine tuning, but please be aware that these business models are automated and run like clockwork; however they are designed and they should also be contained to work within the law. A customer service representative looks at his/her screen for their decisions, the screen shows the results of queries being run based on the parameters of the data input into the system. Don’t forget this.
When we do not have an opportunity to inspect and share with other individuals who also know how queries and data bases work, we are at a disadvantage, take heed here as we need more than a “trust me” handshake. Audit trails are needed to keep everyone honest. If you need to compare this to something similar, look at Wall Street, the code runs everything there too. I’m sure Mr. Potter can vouch for this fact. I just wanted to see if I could perhaps convey with another point of view here what this is all about as technology plays even a much larger role than does Congress in the long run as it will do the dirty work 24/7, not Congress or the President (humans don’t work 24/7) and we need a good solid open and fair foundation set forth so everyone operates as they should without profit being the driving force.
In short, the longer we keep distracting ourselves with these Town Hall Meetings that are accomplishing very little, the stronger the algorithms get and we play right into the hands of the health insurance companies to allow little or no meaningful reform to materialize. BD
President Obama was hosting a Nightline special at the White House on health care. Diane Sawyer posed a question to an HMO executive in the audience, Aetna Chief Executive Ronald Williams. With premiums and profits always rising, she asked, is the President right that your industry needs a new government-run public plan to be "kept honest"? Williams smiled and said no. "It's difficult to compete against a player that's also refereeing the game," he said. The President then got his turn and muffed the name. "First of all I want to say that Mr. Walters has been very cooperative," he said, going on to explain why reform must include a public plan.
Not, until now, much of a public persona, Williams, 59, is taking a surprisingly visible role in arguing for change in the health care system. He has met with Obama a half-dozen times (he shrugs off the surname gaffe), has testified four times in front of Senate committees this year and participates in shindigs set up by the many trade groups for which he's a director.
Williams joined Aetna in 2001, recruited by his predecessor, John Rowe. During their run from 2001 to 2006, after which Williams took over, the company went from losing $266 million to earning $1.7 billion. The turnaround was mostly credited to the decision by Williams to dump millions of members who were deemed unprofitable. From 1999 to 2004 membership fell by 8 million. Aetna cost "thousands of workers their jobs and millions of other people their insurance coverage," says Wendell Potter, a former Cigna executive. Williams responds, "We wish we had kept every customer." He says that when Aetna raised its premiums to cover costs, customers left.
In the short term Aetna has bigger problems. The company reported a 28% fall in profit in the second quarter. Aetna's actuaries didn't see a rise in claims and priced coverage too low. Aetna now estimates it will pay out 85 cents in claims for every dollar it receives in premiums. That's 5% higher than last year. Williams says the company is fixing the problem. Barclays HMO analyst Joshua Raskin predicts that by next year Aetna will right the ship--by cutting 600,000 members.