Of course, September 30 was the end of the 2012 federal fiscal year. In the wake of that auspicious day, OPM has released its performance and accountability report for the last federal fiscal year and the agency's Inspector General has released his semi-annual report to Congress for the six months ended September 30. The PAR includes the agency's audited financial statements and both the PAR and the Inspector General's report provide interesting agency perspectives on the FEHBP. For instance the PAR discloses that OPM's FEHB Program wide claims database will become operational in the current federal fiscal year.
More fallout from the medical community's legal assault on the Ingenix unusual reasonable and customary ("UCR") database occurred on Friday. Insurers used the UCR database to help price out-of-network claims. The medical community claimed a conflict of interest between Ingenix and its corporate owner United Healthcare, which is the nation's second largest health insurer. The medical community also complained about the way that the database was compiled and applied.
In January 2009, UHC and Ingenix after fighting a legal battle for nearly a decade with the American Medical Association and later the NY Attorney General and Consumer Reports reached a global settlement under which it agreed to give the database to a non-profit approved by the AG which is Fair Health and to pay $300 million to the doctors (who proceeded to fight over the settlement proceeds among themselves for another year or two). Several other insurers including Aetna, the nation's third health insurer, agreed to submit claims data to Fair Health.
On Friday Aetna further agreed to settle a class action in New Jersey involving insureds and doctors who complained about Aetna's use of the Ingenix database to price out-of-network claims. According to Reuters, "The accord calls for Aetna to pay $60 million into a general settlement fund, plus as much as $60 million more, depending on how many people submit claims." Insurers stopped using the Ingenix database back in 2009. Nevertheless, cost curve up.
Speaking of the cost curve and out of network pricing which is part of fee for service health insurance, Kaiser Health News reports on a recent United Healthcare report concerning a survey of doctors:
A survey of doctors by Harris Interactive finds that 59 percent of physicians believe that the fee-for-service system encourages them to provide “an appropriate level of care.” Only 15 percent disagreed. Although 37 percent of doctors thought such a system encourages the use of more care or expensive care, 38 percent also said that a fee-for-service system encourages coordination of care. Not surprisingly, the 400 U.S.-based primary care physicians and 600 U.S.-based specialists surveyed, did not favor the idea of a global capitation payment—or a fixed payment per month for all medical services. Nearly 60 percent of the doctors surveyed said that capitation put too much risk on the provider.
Furthermore, “physicians’ views did not differ substantially based on the size of their practice, even though doctors in larger practices would be less exposed to insurance risk under capitation.” Doctors also estimated that their practices get up to 68 percent of their revenue from fee-for-service payments.Unfortunately for the doctors, the ACA seeks to put the kibosh on fee for service health insurance in favor of global rates through for example accountable care organizations. Cost curve down? We'll have to wait and see. The medical community and its legal eagles do not roll over when confronted by things they don't like such as the Ingenix UCR database or global pricing. In fairness to the doctors, the medical community did get clobbered financially by global pricing arrangements in the 1990s.