Health insurers' anti-fraud bid seeks to ease profit-limit rule

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Health insurance executives who met at the White House Thursday to mark their contributions to fighting fraud told the Obama administration that the cost of those efforts shouldn’t be counted toward profit limits that were imposed under the 2010 U.S. health-care overhaul.

Under the Affordable Care Act, insurers can keep 20 percent of revenue from customer premiums for profit and administrative costs. The rest must be spent on medical care or rebated.

The Obama administration Thursday announced a partnership with the industry in which WellPoint Inc., UnitedHealth Group Inc. and other insurers may try to share more billing data with the government to root out fraud.

But the government should change the rules so the companies’ anti-fraud efforts can be classed as medical costs, said Richard Migliori, executive vice president of health services at UnitedHealth, the largest publicly traded U.S. health insurer.

Changing the rule “would make it easier for the industry to do the most that they can,” Migliori said in a telephone interview after leaving the meeting in Washington, D.C. “Anything we do to prevent fraud counts as administrative costs.”

Activities to fight fraud, such as investigating suspicious billing claims or checking doctors’ address changes to make sure they are legitimate, have become a greater focus of regulators seeking to rein in unnecessary costs.

A White House spokesman, Nick Papas, declined to comment on the industry’s request for a change to the profit limit.

The government shouldn’t change the profit rule, said Ethan Rome, executive director of Health Care for America Now!, an activist group critical of insurers.

Raising the issue at the White House meeting was “classic bad-faith,” he said by phone. “There’s lots of things that insurance companies can do to improve the delivery of care and to reduce the cost of care. But those things should not be counted as medical care.”

Insurers, including UnitedHealth, have previously asked the administration to change the way their anti-fraud efforts are accounted for under the profit rule. Money that insurers recover from fraud that is discovered can be deducted from administrative costs when calculating whether they exceeded the profit limit. The companies can only deduct as much as they spend on their anti-fraud activities.

The rule discourages investment in anti-fraud efforts or attempting innovative fraud programs that risk failing, said Alissa Fox, who oversees lobbying and policy at the Blue Cross Blue Shield Association in Washington. The president and CEO of the association, Scott Serota, attended the White House meeting.

“You don’t want to have a disincentive for people to allocate appropriate resources on fraud,” Fox said. “You don’t know how much you’re going to recover until you recover it.”

The Justice Department estimates that Medicare, the health program for the elderly and disabled, and Medicaid, the program for the poor, are plagued by at least $60 billion in fraud a year.

“We know that fraud’s taking place across the health care system with many private insurance companies facing the same challenges that we do,” Health and Human Services Secretary Kathleen Sebelius said at the meeting with insurers.

The government recovered about $4.1 billion in 2011 from fraud against federal health programs that was discovered, Attorney General Eric Holder said.


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  1. Now if he'd just stay there...

  2. Daniel - what about the many US citizens who do NOT follow what the Bible teaches? The Hindus, Jews, Muslims and others who are all American citizens entitled to all rights as Americans?? This issue has NOTHING to do with "What the Bible says..." Keep all Churches separate from State! Pence's ongoing idiocy continues to make Indiana look like a backwards, homophobic state in the eyes of our nation. Can't we move on to bigger issues - like educating our kids?

  3. 1. IBJ should link to the referenced report. We are in the age of electronic media...not sharing information is lazy. Here is a link http://www.in.gov/gov/files/Blue_Ribbon_Panel_Report_July_9_2014.pdf 2. The article should provide more clarity about the make-up of this panel. The commenters are making this item out to be partisan, it does not appear the panel is partisan. Here is a list of the panel which appears to be balanced with different SME to add different perspectives http://www.in.gov/activecalendar/EventList.aspx?view=EventDetails&eventidn=138116?formation_id=189603 3. It suggests a by-pass, I do not see where this report suggests another "loop". 4. Henry, based on your kneejerk reaction, we would be better off if you moved to another state unless your post was meant as sarcasm in which case I say Well Done. 5. The article and report actually indicates need to improve rail and port infrastructure in direct contradiction to Shayla commentary. Specifically, recommendation is to consider passenger rail projects... 6. People have a voice with their elected officials. These are suggestions and do not represent "crony capitalism", etc. The report needs to be analyzed and the legislature can decide on priorities and spending. Don't like it, then vote in a new legislature but quit artificially creating issues where there are none! People need to sift through the politics and provide constructive criticism to the process rather than making uninformed comments in a public forum based on misinformation. IBJ should work harder to correct the record in these forums when blatant errors or misrepresentations are made.

  4. Joe ... Marriage is defined in the Bible ... it is mentioned in the Bible often. Marriage is not mentioned once in the US or Indiana Constitution ...

  5. Daniel - Educate me please: what does the Bible have to do with laws? If the government wasn't in the business of marriage to begin with, then it wouldn't have to "define" marriage at all. Marriage could be left as a personal, religious, or otherwise unregulated action, with no ties to taxes, legal status, etc. Then people could marry whomever they want, and all this silliness would go away. Remember to vote Libertarian in November.