An algorithm for the use of medicare claims data to identify women with incident breast cancer
The quality of cancer care in the United States is known to be variable, and factors determining quality of cancer care have been insufficiently studied (Hewitt and Simone 1999). The development of methods for using existing databases to study the quality of cancer care would be a major advance (Hewitt and Simone 2000). Methods to permit the use of Medicare administrative databases to study cancer quality of care would be particularly helpful because about 60 percent of persons diagnosed with cancer are aged 65 and older (Hewitt and Simone 2000), and the Medicare claims data represent a nearly population-based source of data.
With respect to breast cancer specifically, several challenges have been identified in the use of Medicare claims in studying the care provided. The use of inpatient Medicare claims to identify incident breast cancer cases offers excellent specificity but poor sensitivity because 30-40 percent of initial breast cancer operations are done on an outpatient basis (Warren et al. 1999; Warren et al. 1996). Inpatient records are also more likely to identify patients undergoing mastectomy for initial therapy than those undergoing breast-conserving surgery (Warren et al. 1996; Cooper et al. 2000). Compared to inpatient data alone, the use of combined inpatient, outpatient, and physician claims increases sensitivity to 80-90 percent (Freeman et al. 2000; Cooper et al. 1999), but decreases specificity (Warren et al. 1999; Freeman et al. 2000). Because only a small percentage of the female Medicare population develops breast cancer in a given year, even small decreases in specificity lead to large decreases in the positive predictive value.
Our major goal in the development of this algorithm was to identify a cohort of incident breast cancer patients, whose surgical, medical, and follow-up care could be studied over time. Inherent in this goal was a requirement for a high positive predictive value (PPV), ensuring that a high percentage of the cohort was made up of true breast cancer patients. The requirement for a high PPV was considered more important than the algorithm’s sensitivity, particularly for the small percentage (6-7 percent) of women not undergoing initial surgical therapy. However, we also considered important the consistency of the algorithm’s sensitivity across subgroups defined by geographic location, age, and type of initial surgery undergone (breast-conserving surgery [BCS] or mastectomy.)
The prior work of the other investigators cited had adequately demonstrated that a relatively simple algorithm (generally consisting of the identification of a claim with a coincident breast cancer diagnosis and operative procedure) would not permit us to achieve our goal. Our strategy was to use an interaction of clinical rationale and statistical analysis in developing the four-step algorithm presented herein.
The key data source for this study was the linked SEER-Medicare database (SEER-Medicare Linked Database 2003). This database links information from the National Cancer Institute’s Surveillance, Epidemiology, and End Results (SEER) tumor registries and the Centers for Medicare and Medicaid Services (CMS) Medicare claims data. The population-based SEER registries cumulatively represent about 14 percent of the U.S. population, and include information on incident cancer patients, such as demographics, month and year of diagnosis, extent of disease, and initial treatment undergone. The Medicare files required for this study include the Medicare Provider Analysis and Review (MEDPAR) file, which contains inpatient hospital claims; Outpatient file, which contains claims from institutional outpatient providers including hospital ambulatory surgery centers; the Carrier Claims (previously known as Part B Physician/Supplier File), which contains inpatient and outpatient claims from noninstitutional providers such as physicians, as well as stand-alone ambulatory surgical centers; and the Denominator file, which contains beneficiary demographic information and Medicare entitlement and enrollment information. About 94 percent of the SEER registry patients aged 65 and older were successfully linked with their Medicare claims (Potosky et al. 1993). An additional data source was a 5 percent random sample of Medicare beneficiaries residing in the SEER geographic areas, including an indicator for whether the individual linked to the SEER database. When SEER subjects are removed from this sample, it represents nearly a population-based random sample of cancer-free control subjects residing in SEER areas. This study was approved by the Medical College of Wisconsin Human Subjects Research Review Committee.
Training Set: Incident Breast Cancer Cases. A cohort of women aged 65 or older at the time of diagnosis of breast cancer in 1995 (according to SEER) was developed. Cases were excluded if the diagnosis was made only at autopsy or by death certificate. Subjects were required to meet the following criteria for the period from January 1995 to March 1996: eligibility for Medicare Parts A and B, not in a Medicare HMO, and to be alive. Eligibility through the first quarter of 1996 was required to capture Medicare treatment information for patients who were diagnosed near the end of 1995, but treated early in 1996. These criteria resulted in a cohort of 7,700 women, whose 1995 Medicare claims comprised the training set for incident breast cancer cases.
Because all the factors in the model are binary variables, it is not necessary for a user of the algorithm to use the regression equation to classify a case as positive or negative. Once the values of the four variables have been determined, subjects can be ruled in if they have one of three combinations of the variables. These combinations are (1) the “surgery” variable is positive and the other three variables are negative, (2) the “surgery” variable is positive, the “other cancer” variable is positive, and the other two variables are negative, or (3) the “surgery” variable is positive, the “secondary cancer to breast” variable is positive, and the other two variables are negative. With all other combinations, the subject is declared not to be a breast cancer case.
We performed a sensitivity analysis of the specificity gain associated with examining prior claims in step 4 for differing numbers of years. Of the 48,631 prior breast cancer cases with 1995 claims, only 1,242 were positive after step 2 or 3 of the algorithm. Examining prior claims for one year back in step 4 would have removed 58.6 percent of those cases. Going back two, three, or four years, respectively, removed 69.3 percent, 74.4 percent, and 76.5 percent of the 1,242 cases. The specificity gain from applying step 4, however, is associated with a sensitivity loss (loss of index year true incident cases who met the criteria for removal at step 4). The percentage of true incident cases retained when applying step 4 going back one, two, three, or four years was 95.4 percent, 93.9 percent, 92.7 percent, and 92.3 percent respectively.
Transaction portal cuts costs: New York payers and providers discover that IT collaboration and the sharing of information affords savings that no organization could achieve on its own
Saving more than $2.4 million during the past year two provider organizations emplify how partcipating in a community health portal can result ill a sizable return on their technology investments. These savings are the result of an online portal used by the organizations to access member healthcare information.
One of the members, Buffalo, N.Y.-based Kaleida Health System, is recovering $120,000 a month-$1.44 million annualized–in copays that were previously not collected due to the lack of information about member eligibility and copays, reports Fran Meyer, chief information officer at Kaleida Health System. Also, Catholic Health System in western New York is recovering $82,000 a month-$984,000 annualized–in copays that were previously lost, says Jeffrey Baughan, chief information officer at Catholic Health System.
Kaleida and Catholic Health Systems achieved these benefits by participating in a unique collaboration with four provider organizations and three payer organizations in western New York. The result of the collaboration is Western New York HealtheNet (WNYHealtheNet), an organization with a mission to leverage shared infrastructure, technology and intellectual capital to optimize the delivery of patient information to the healthcare community. Roughly two-thirds of western New York providers are signed up and using WNYHealtheNet, which represents nearly 7,500 provider users on the system.
Payer organizations also benefit from WNYHealtheNet. HealthNow, a WNYHealtheNet payer participant, realized a significant increase in transactions while reducing the amount of calls and costs associated with its call center volume for inquiries by enabling additional access to online information, according to Gary Kerl, chief information officer of HealthNow and BlueCross BlueShield of Western New York.
The improved efficiency of this new system, and the reduced volume that needed to be handled by the call centers, enabled HealthNow to avoid call center costs of nearly $20,000 a month and eliminated the need for $8,600 a month in dial-up lines. Combined, these efforts reduced annual costs to date by more than $340,000.
Independent Health, another WNYHealtheNet payer participant, reduced its cost of handling provider eligibility inquiries by 31 percent.
“Being part of WNYHealtheNet helps its members achieve their missions of delivering care on a communitywide level,” says Robert Krenitsky, chief technical officer of Excellus Health Plans Inc.
Creating for Collaboration
“The impetus behind WNYHealtheNet was to form a collaborative organization that could help all participants comply with the transaction and code set standards mandated by the Health Insurance Portability and Accountability Act (HIPAA). Each of the founding organizations agreed to share knowledge and the costs of development and implementation,” says Deborah Cancilla, chief information officer at Erie County Medical Center Healthcare Network, one of WNY-HealtheNet’s founding organizations. Cancilla also is a member of the WNYHealtheNet steering committee.
“One of the primary goals was to create and adopt consistent transaction standards, which at the time were still being established by the Centers for Medicare and Medicaid Services, so WNYHealtheNet participants could gain access to HIPAA transactions and other healthcare information,” Cancilla adds.
Collaboration on the transaction standards created the foundation of WNYHealtheNet. With the standards in place, information could be shared among the organizations and the financial benefits of online transactions could be realized.
For example, it costs a provider organization from $7 to $12 to file a paper-based claim, but it only costs $1.50 to $3 to file the same claim electronically, according to the white paper, “The Latest on HIPAA Administrative Simplification,” published by First Consulting Group. Traditional customer service inquiries typically cost from $5 to $7 each, while an electronic inquiry costs 5 cents to 25 cents, according to the white paper.
A study funded by WNYHealtheNet estimates that the seven partners combined save upward of $6.3 million a year by sharing the costs associated with salaries, benefits, infrastructure, software licenses and system maintenance. It is estimated that the participating organizations would have spent as much as $17 million to develop their own solutions if they would not have collaborated on the project, says Thomas Unger of healthcare consulting firm GrapeVine Co., Buffalo, N.Y., who serves as the program manager of WNYHealtheNet. In contrast, the seven founding members of WNYHealtheNet have spent slightly less than $5 million to develop the solution.
The Enabling Technology
The technology driver behind WNYHealtheNet is the Eliginet Healthcare Transaction Portal from APP Design Inc., Itasca, III. Eliginet is a healthcare portal solution that provides a single point of access to information from multiple, disparate data sources. It securely handles clinical and financial transactions to meet HIPAA requirements for data formats and privacy. Although used by WNYHealtheNet as a portal to connect multiple external organizations, it also can be used as a platform for large enterprises to share information within their organizations.
Eliginet’s handling of transactions enables WNYHealtheNet participants to share information while simultaneously maintaining the confidentiality of transactions. Rather than being a repository of membership information, Eliginet functions as a transaction exchange portal. Although the WNYHealtheNet portal functions as a single point of contact for healthcare information, no patient-identifiable information is stored by the Eliginet solution, other than the audit trails that are maintained for each transaction.
Eligibility and other inquiries access the Eliginet portal, which then simultaneously searches multiple data sources in real time to answer the query. The results from the query are passed along to the user via the Web browser.
“All the functionality offered by WNYHealtheNet takes place within a Web-browser environment, so user training is minimal, which is a real benefit to our organization,” Cancilla says.
Online Referrals and Authorizations
WNYHealtheNet is currently expanding its services to offer online referrals and pre-authorizations communitywide, with the initial rollout of these services expected before the end of the year. The online referral solution is integrated in the overall solution and also was developed by APP Design. Some of the participants previously had legacy electronic referral and authorization systems.
WNYHealtheNet anticipates that it will experience similar successes communitywide when it goes online with its referral and pre-authorization solution. As an example, previously handling referral inquiries by phone used to cost $2.50 each, but now costs 50 cents per inquiry when inquiries are handled electronically.
The benefits of online referrals can be demonstrated by an example from one of the participants, Independent Health. Its current solution has processed nearly 10 million transactions, including more than 700,000 referrals in the last three years. The online referral system reduced Independent Health’s rework on referral transactions by 75 percent and has substantially improved provider relationships.
Blame the insurance industry: but not if you know what you’re talking about
WITH President Bush’s reelection in November, the medical-liability crisis was brought into sharper view. Bush had campaigned on liability reform, and in a January speech reiterated his belief that malpractice lawsuits “drive up insurance costs for all doctors . . . even for those who have never had a claim against them.”
To the insurance companies burdened by the skyrocketing cost of medical-liability jury awards, Bush’s stance is presumably a refreshing one. Often the industry is used as a convenient scapegoat, and it has predictably taken hits in the media for its role in the liability mess. Todd A. Smith, president of the Association of Trial Lawyers of America (ATLA), told the New York Times last year that high insurance costs have “everything to do” with greedy insurance companies. But do they?
In Smith’s defense, medical-liability costs are undeniably rising. The question is whether they’re rising owing to insurance-company greed, or to insurance companies’ merely responding to the increasingly bad economics of liability insurance. The growing unwillingness of insurance firms even to underwrite medical-liability insurance suggests something other than greed.
Basic economics tells us that entrepreneurs and companies gravitate toward profitable opportunities, and in doing so bring down costs by offering competition for those profits. We’ve seen this phenomenon in all business sectors, from long-distance phone rates to computers to VCRs. We’ve also seen it in the corporate-insurance market–as a Wall Street Journal editorial reported last October, “the majority of businesses that are due to renew their policies in January 2005 will see decreases” in their premiums.
Competition for profits is working in the corporate-insurance markets, and perhaps unsurprisingly the same kind of competition is having a positive effect on the liability-insurance markets where reforms are occurring: As Mississippi voters began to reject candidates close to the trial bar, and as Mississippi’s supreme court started to reject some of the gaudier jury awards, Mass Mutual and other insurers announced their return to the state. According to American Tort Reform Association (ATRA) president Sherman Joyce, medical-liability insurance rates have since stabilized there.
True, liability rates overall continue to rise–but it appears that they’re rising because insurance companies are increasingly abandoning liability markets owing to their inability to find profit in them. The American College of Emergency Physicians reports that St. Paul Companies, which has insured 42,000 doctors, 5,800 health-care facilities, and 72,000 health-care providers, has stopped offering medical-liability insurance altogether.
Rather than painting a portrait of rampant greed, the actions of companies like St. Paul suggest that insurance companies are merely making economic decisions, avoiding business lines that are unprofitable. Patients appear to be the ultimate victims here, as doctors are understandably loath to practice without liability insurance. ATRA president Joyce wrote in the Wall Street Journal last year that in Illinois’s Madison and St. Clair counties “over half [of the] doctors have been sued in the last four years, even though 85 percent of claims result in no payment to the plaintiff.” Joyce went on to point out that as lawsuits have increasingly become a growth industry in those counties, hospitals have begun to eliminate high-risk practices such as on-call trauma care. The two counties have also lost 161 physicians.
A 2003 article in the Tampa Bay Business Journal reported that seven hospitals in Florida had closed their obstetrics units during that year as a result of insurance concerns. In Orlando alone, the average wait time for women seeking mammography rose from 20 days in 2000 to 150 days in 2002 as numerous radiologists left the business owing to their inability to find or afford insurance. The problems in Illinois and Florida suggest that insurance firms are quite simply unable to put a price on risk in a market badly distorted by frivolous plaintiffs goaded on by unethical trial lawyers.
And medical malpractice is not the only area in which insurance firms appear to have been unjustly demonized. Last fall, New York attorney general Eliot Spitzer kicked up a media storm with his accusations of “bid rigging” and “overcharging” on the part of insurance firms such as Marsh & McLennan in their dealings with corporate clients. Though Spitzer did not offer any explanation of why brutally price-conscious companies like Microsoft would allow themselves to be overcharged, the media were sufficiently intrigued by the concept of rigged markets and turned the story into major news. In an editorial titled “Spitzer Strikes Again,” USA Today lauded Spitzer for showing “just how widespread the culture of fraud is in corporate America.” What wasn’t addressed was how insurance brokers such as Marsh & McLennan had acquired the power to put the squeeze on the Wal-Marts of the world, and were able to trick them into “paying too much for their insurance.”
Agents & brokers at odds: a federal charter goes too far; fix state insurance regulations and we’ll all be better off, a coalition of independent brokers claims
Enactment of financial services modernization, coupled with continuing frustration over the lack of insurance regulatory reform, has sparked new interest in insurance regulation reform. Three options have evolved for achieving reform: work through the National Association of Insurance Commissioners for reform; enact optional federal regulation; or create uniformity and efficiency via adoption of national standards.
Virtually every industry stakeholder–insurance companies, agents and brokers, consumers and regulators–has voiced significant concerns with the current regulatory system, characterizing it as slow, inefficient and a patchwork of different laws and regulations that adds unnecessary expense.
Although the need for greater efficiency and uniformity is clear, IIABA believes optional federal chartering, federal regulation and the creation of a new federal bureaucracy goes too far–the equivalent of throwing the baby out with the bath water.
Rather than a one-size-fits-all scheme, IIABA is advocating a pragmatic middle ground approach that proposes federal legislative tools to fix state insurance regulation by creating a more uniform and streamlined regulatory system.
This approach would overcome state-level impediments to reform and build on, rather than dismantle, the states’ inherent strengths–diversity, geographic uniqueness, innovation and responsiveness to consumers–to meet the challenges of a rapidly changing insurance environment.
The bill would also grant the commission sweeping powers to investigate the organization, business, conduct, practices and management of any person or corporation in the insurance industry, presumably extending to independent agents and brokers.
IIABA believes a variety of federal legislative “tools”–national standards with state enforcement, national reciprocity or multistate uniformity, incentives and pre-emption of certain state laws–can be used on an issue-by-issue basis to achieve reform.
The approach offers the best solution because it will promote more uniform standards and streamlined procedures from state to state, protect consumers and enhance marketplace responsiveness, and emphasize that oversight can best be met by improving the state-based system. The result for all stakeholders would be a more efficient, modern and workable system of state regulation.
IIABA opposes efforts by the U.S. Office of the Comptroller of the Currency to pre-empt state insurance laws and regulations. Via regulatory fiat, the OCC is attempting to free national banks from state insurance oversight. All facets of state law are threatened if the OCC deems that they “significantly interfere” with the ability of national banks to sell insurance.
IIABA supports reform and modernization of state insurance regulation by making the system more uniform and streamlined. IIABA opposes creation of an optional federal chartering system and federal insurance regulation.
IIABA is advocating a pragmatic reform approach to proposed federal legislative tools, such as national standards, that will create a more uniform and streamlined state-based regulatory system.
This piece was adapted from a position statement published by the Independent Insurance Agents & Brokers of America. The IIABA is a national alliance of 300,000 business owners and their employees who otter insurance and financial services products.
At best, there’s something distasteful about insurance brokers accepting payments from “contingency agreements” or “placement service agreements” from insurance companies for placing business
At best, there’s something distasteful about insurance brokers accepting payments from “contingency agreements” or “placement service agreements” from insurance companies for placing business with them. At worst, there’s something fraudulent.
Now New York Attorney General Elliot Spitzer has sent subpoenas to the largest brokers looking for evidence of wrongdoing
What is a “contingent agreement?” It could be seen as a kickback. They encourage “brokers to steer customers to insurers that will profit the broker, but not necessarily benefit the customer,” says the Washington Legal Foundation.
Some brokers characterize the payments as “volume discounts.” Others say the fee covers some of the extra costs involved in placing the business with that insurer. But this sounds hollow, even to many risk managers.
The big brokers under investigation–Marsh, Aon and Willis–insist the agreements are disclosed, often on the web site or to the client. Those disclosures, from my look at the web sites, are not easy to find, nor very specific.
There would probably be nothing wrong with these arrangements if brokers passed on the “discounts” to the clients, lowering the price for those insured. If the brokers need to provide special services, then those services should be identified and billed separately. Even that ignores what a broker’s commission is supposed to cover if not the cost of placing insurance. But the risk to brokers isn’t just the loss of income. It is that the issue could explode into a wholesale questioning of broker compensation and the broker-client relationship.
Blow, blow, blow your building down: study unlocks secrets of wind damage
A research project getting under way this fall, dubbed the “Three Little Pigs,” is the first of its kind to analyze in real time how wind–up to Categow-5 hurricane strength–takes apart light-frame structures.
The $7 million research project, carried out by the engineering department at the University of Western Ontario, is significant because it will be the first ever in which a full-sized mock building will be put through simulations of the gustiness and variability of real wind.
“The wind causes pressures, so what we’re doing is replicating those pressures,” said Greg Kopp, research team member and the university’s Canada research chair in wind engineering.
Kopp compared these pressures to those that lift airplanes off runways. These same pressures batter structures in a windstorm.
Kopp suggested that insights from the experiment could impact how real buildings are put together.
“We definitely will have an impact with building codes,” Kopp said. Not only will the engineers test how well the house stands up to wind, but also how wind-driven rain finds its way inside otherwise sealed structures–and how mold subsequently grows.
Researchers will also contemplate how human error in construction affects windstorm performance.
“We think we can also have a big effect with product testing,” Kopp said. “Say it (a building product) passed some standard test. We can actually relate that to what that may mean in terms of real hurricanes and real wind loads.”
The researchers have devised a system of about 100 fans connectable to the surface of the test building, along with a control system that allows researchers to vary the degree and “gustiness” of wind pressure at exact spots on the building. The fans can simulate up to Category-5 winds.
The team modeled how wind would set on the house by using a small-scale replies in a wind tunnel.
Starting this fall, the team will test their fans on single walls and windows. In spring 2007, they will turn the fans on the full-size structure. When sections get destroyed, the engineers will rebuild and retrofit them, and then repeat the razing. They plan to spend two years on the process.
“So we can gain as much possible information as we can from this one structure,” Kopp explained.
The test structure is a two-storied, four-bedroom brick house, complete with a real heating and plumbing system. It’s located in a 13,000-square-foot, sheet-steel hangar at the airport in London, Ontario, which is on the other side of Lake Erie from Cleveland.
As for those simulated Cat-5 winds, Kopp said he expects to use them for specific product tests. But as for the poor house, there might be no amount of retrofitting to help it survive Category 1 through 4.
“I’m not sure if this house will ever get there,” Kopp said.
The project was launched with funding from the Institute for Catastrophic Loss Reduction, a joint venture of the university and insurance companies, and is now funded by the Canada Foundation for Innovation and the Ontario Innovation Trust.
An expensive way to die - criticism of national health insurance
Adopt a system of national health insurance, we are told, and we can have health care more cheaply and more equitably. But we’d never live to see it.
COUNTRIES with national health insurance spend less on health care than the U.S. does. It is all too easy to assume that the U.S. can therefore control health-care costs through national health insurance without any loss of benefits. And this mistake is encouraged by a number of myths. Myth #1: Although the United States spends more on health care per capita than countries with national health insurance, the U.S. does not get better health care for the extra dollars it spends.
This myth rests upon the fact that life expectancy hardly differs among the developed countries and that infant mortality in the U.S. is actually higher than in most other developed countries.
In fact, a population’s general mortality is affected by a great many factors over which doctors and hospitals have little influence. For those diseases and injuries for which modern medicine can affect the outcome, however, which country the patient lives in really matters. Life expectancy is not the same among developed countries for premature babies, for children born with spina bifida, or for people who have cancer, a brain tumor, heart disease, or chronic renal failure. Their chances of survival are best in the United States.
Consider the availability of modern technology in the U.S. and in Canada, a country with comprehensive national health insurance. There are eight times more magnetic-resonance-imaging units (the latest improvement on X-rays), seven times more radiation-therapy units (used in the treatment of cancer), about six times more lithoptripsy units (used for nonsurgical removal of kidney stones), and about three times more open-heart surgery units and cardiac-catheterization units per capita in the United States than in Canada.
It is sometimes argued that countries with national health insurance delay the purchase of expensive technology in order to see if it really works and is cost effective. Even if true, patients will be denied access to life-saving treatment while government bureaucracies evaluate it. For example, during the 1970s, life-saving innovations were made in the fields of renal dialysis, Cat-scan technology, and pacemaker technology. Yet the implant rate of pacemakers in the U.S. during the mid 1970s was more than four times the rate in Britain, and almost twenty times the rate in Canada (see chart, page 31). The availability of CAT scanners in the U.S. was more than three times that in Canada and almost six times that in Britain. The treatment rate of kidney patients in the U.S. was more than 60 per cent greater than in Canada and Britain.
There is considerable evidence that cost effectiveness is not what drives the bias against modern medical technology abroad. Cat-scan technology was invented in Britain, and until recently Britain exported about half the CAT scanners used in the world. Yet the British government has purchased only a handful of CAT scanners for use in the National Health Service. Brittish scientists also co-developed kidney dialysis. Yet Britain has one of the lowest dialysis rates in all of Europe, and as many as nine thousand British kidney patients per year are denied the treatment. In the United States we pay more for health care. But we also get more. And what we get saves lives.
In Britain and New Zealand, hospital services are completely paid for by government. Yet both countries have long waiting lists for hospital surgery. In Britain, with a population of about 55 million, the number of people waiting for surgery is almost eight hundred thousand. In New Zealand, with a population of three million, the waiting list is about fifty thousand. In both countries, elderly patients in need of a hip replacement can wait in pain for years. Patients waiting for heart surgery are often at risk of their lives.
In response to rationing by waiting, both Britain and New Zealand have witnessed a growing market in private health insurance-where citizens willingly pay for prompt private surgery, rather than wait for “free” surgery in public hospitals. In Britain, the number of people with private insurance has more than doubled in the last ten years, to about 12 per cent of the population. In New Zealand, one-third of the population has private health insurance, and private hospitals now perform 25 per cent of all surgical procedures.
Canada has had a national-health program for only a few decades. But because the demand for health care has proved insatiable, and because the Canadian government has resolutely refused to increase spending beyond about 8.5 per cent of GNP, the waiting lines have been growing. In Newfoundland the wait for a hip replacement is about six to ten months, the wait for cataract surgery is two months, for pap smears up to five months, for “urgent” pap smears two months (see chart, page 32). All over Canada, heart patients must wait for coronary bypass surgery, and the Canadian press frequently reports episodes of heart patients dying while on the waiting list. Unlike Britain and New Zealand, however, Canada does not allow patients to turn to the private sector, although Canadian patients who can afford to do so sometimes travel to the U.S. for medical services they cannot get in their own country.
The elderly have the most to lose from the adoption of national health insurance. Take chronic kidney failure. Across Europe generally, in the late 1970s, 22 per cent of dialysis centers reported that they refused to treat patients over 55 years of age. In Britain in 1978, 35 per cent of the dialysis centers refused to treat patients over the age of 55: 45 per cent refused to treat patients over the age of 65; and patients over the age of 75 rarely received treatment at. all for this disease.
How pervasive is denial of life-saving medical technology to elderly patients in other countries? Lacking hard data., one can only speculate. However, a white 65year-old male in the U.S. can expect to live 1.3 years longer than a 65-year-old British male. A white 65.year-old female in the U.S. can expect to live 1.4 years longer than a 65-year-old British female. For middleaged males, U.S. mortality rates are higher than European ones. During the retirement years, however, when medical intervention can make much more of a difference, the U.S. mortality rate is significantly below that of European countries.
Why are elderly and poor patients discriminated against in the rationing of acute care under national health insurance? Because national health insurance is always and everywhere a middle-class phenomenon. Prior to the introduction of national health insurance, every country had some government-funded program to meet the health-care needs of the poor. The middleclass working population not only had to pay for its own health care, but it was also paying taxes to fund health care for the poor. National insurance extends the “free ride” to the middle-class working population, and it is designed to serve the interests of this population.
Why do national-health-insurance schemes skimp on expensive services to the seriously ill while providing a multitude of inexpensive services to those who are only marginally ill? Because numerous services provided to the marginally ill create benefits for millions of people (read: millions of voters), while acute and intensive care services concentrate large amounts of money on a handful of patients (read: small number of voters). Democratic political pressures dictate the redistribution of resources from the few to the many.
Why are sensitive rationing decisions left to the hospital bureaucracies? Because the alternative is politically impossible. As a practical matter, no government can afford to make it a national policy that nine thousand people every year will be denied treatment for chronic kidney failure and die. Nor can any government announce that some people must wait for surgery so that elderly patients can use hospitals as surrogate nursing homes, or that elderly patients must be moved so that surgery can proceed. Budgetary decisions made by politicians and administrators are transformed into clinical decisions made by doctors. Myth #7: Since national health insurance is very popular in other countries, it would also be popular in the Unites States.
About my shots, Tennessee style
Okay, so now I have been diagnosed with multiple sclerosis, or as my grandson Justin says, “Grammy caught multiple celerosis.” Here is where my life becomes really interesting because I get to meet all these people: neurologists, neuroopthalmalogists (yeah, I did not know there was such a thing either), speech pathologists (as if they can do anything about thay-at!)–well, lots of people.
Also, instead of working, I am very busy fighting with insurance companies, lying in what I am sure are very expensive machines, and either sticking myself or letting someone else stick me with needles full of medicine. Now, how’s that?
About those training videos you have to watch to learn how to give what they call “injections”: What they show you is this really pretty person, all coifed and polished, who comes into a really nice kitchen with really clean countertops, lays out supplies and with a determined, but still pleasant, look on her face, injects herself. I tried this for awhile. I would prepare all day for my injection, take a shower, put on makeup, fix my hair, have the kitchen all clean–but I could not get that look right.
Here is my reality: I haul myself out of bed in the same sweats I went to bed in the day before, schlep into the kitchen, shove aside a stack of dishes to make room for supplies, the cat jumps up on the counter thinking I’m making some interesting sandwich, I curse a lot while trying to prepare for the shot, I close my eyes and try over and over and over until finally my shot is given, after which I say, “Weeellllll, now, that wasn’t so bad. I did good!”
When I first started, I tried to be more like the woman in the video. When my cat jumped up on the counter, I said, “Jasmine, it’s my injection!” She jumped down and looked at me over her shoulder with complete disdain, as if to say “Hey, if you are going to deal with this, you are going to have to get down and call it like it is.” From that point on, I did not use the word injection. Now, I yell, “Jazzy, it’s my shot!”
Let me tell you about autoinjectors. They have a kick that most southerners would be proud of in a shotgun. What you do is place one on the “injection site,” press a button, and watch these bars drop in this window. It’s amazing.
Of course, someone who cannot see those little bars, much less the window, has a little problem that is easily overcome by counting. What they didn’t take into account is cultural dialect. They told me that since I could not “readily” see the little bars in the window, I should count to ten. I tried this the way they said. They said to count 10 seconds as “one thousand and one, one thousand and two,” etc. In Southeast Tennessee dialect, that translates to “ooonaa thowuhsend aannd ooonaa, ooonaa thowuhssend and twwooo …” By the time I got to 10, I had an indention on my leg that took oona thowuhsend and tuhreeee days to go away. I checked. It takes me 15.3 minutes to count that way.
Now, I have my own self-devised way of timing. I yell. And when I quit, it’s over. Hey, it works.
Oh, about those “injection sites”? You are told to alternate thighs, arms, hips, and abdomen. Tell the truth. Can you even imagine giving yourself a shot in the stomach? Fortunately, I had a little practice when I had my heart attacks. They gave me shots practically everywhere, but they seemed to prefer my stomach, which was totally appalling to me when it first happened. Then I found that it doesn’t really hurt like it sounds. I thought at first it was just because I was in Kentucky and didn’t know the customs here. Thank the Lord I knew this before I had to do it myself for my MS.
I now track the days for my shots on a calendar, which I place on my pillow each morning when I make my bed. I’m astonished to discover that the fear of doing it is being replaced by a sense of strength. I can do this! Each time I do, I’m doing something to modify the course of my MS. So, until someone develops the “magic wand” of a cure, I’ll keep on doing it.
Jeanne Clem was diagnosed with MS in 2005. She currently lives in Kentucky.
Have You Secured Your Unauthorized Reinsurance Obligations?
Credit for reinsurance has been making the news lately, particularly in light of the “Notice of Proposed Action” issued by the California Department of Insurance with respect to reinsurance and insurance company accounting practices.1 With all of the “cat” activity in 2005 making its way through the reinsurance and retrocessional marketplace, and with ongoing issues regarding solvency, both reinsurers and ceding companies can expect enhanced scrutiny by regulators in 2006. Moreover, as everyone is painfully aware, Sarbanes Oxley (”SOX”) imposes greater reporting requirements upon chief financial officers, including certification of corporate financial statements. As a result, the importance of accurately reporting the credit for reinsurance has never been greater. Outlined below is a basic overview of the credit for reinsurance issue. Also provided is a tabular summary regarding the credit for reinsurance under the National Association of Insurance Commissioners Credit for Reinsurance Model Act.
The credit for reinsurance operates similar to an accounts receivable for a manufacturing enterprise. Reinsurance recoverables are reported as an admitted asset on the cedent’s balance sheet.3 This amount is ultimately reflected in the cedent’s underwriting income as a credit to losses or loss adjustment expenses. Reinsurance recoverables on unpaid, incurred but not reported losses (”IBNR”) and loss adjustment expenses (”LAE”) are netted against the liability for gross losses and LAE.4 Only cedents with authorized5 or accredited6 reinsurance can use this favorable accounting treatment. This accounting treatment is favorable because reinsurance recoverables directly improve the cedent’s underwriting results. The reinsurance recoverables also appear as an asset on the financial statements, thereby enhancing the cedent’s surplus as well.
Cedents with unauthorized, unsecured reinsurance cannot take advantage of the foregoing favorable accounting treatment because although they may report their reinsurance recoverables as an asset, they must separately record a liability to the extent it is unsecured.7 Excessive unauthorized reinsurance can attract regulatory scrutiny or rating agency attention, since regulators view unauthorized reinsurers as having higher financial risk.8 Accordingly, cedents using unauthorized, unsecured reinsurance must reflect this higher risk (of potential default) by recording a liability on their financial statements. In turn, the cedent’s underwriting results and surplus do not benefit as much from unauthorized reinsurance as compared to authorized reinsurance.9
But cedents can have their cake and eat it too! Cedents can obtain the more favorable accounting treatment, if the unauthorized reinsurer fully secures its reinsurance obligations. This requires the reinsurer to establish one or all of the following: (a) a funds on deposit account;10 (b) a security trust account (”Trust”); or (c) a letter of credit (”LOC”). Both the Trust and the LOC must comply with state insurance regulations. Therefore, we recommend that every cedent perform a review, even a cursory one, of its unauthorized reinsurance portfolio. At a minimum, every cedent should ascertain that its Trusts and LOCs are regulator compliant and fully secured.
THE REGULATORY FRAMEWORK
Every state has adopted the Model Act or a version of it. Under the Model Act, a cedent may claim the credit for reinsurance if any of the following apply:
A. The reinsurer and cedent are from the same domiciliary state and the reinsurer is a licensed reinsurer;
B. The reinsurer is accredited by the domiciliary state of the cedent;
C. The reinsurer’s domiciliary state has a substantially similar credit for reinsurance law as the cedent’s domiciliary state, and the reinsurer has at least $20 million in policyholder surplus;
D. The reinsurer maintains a Trust of not less than $20 million in a qualified U.S. financial institution;
E. The cedent withholds funds on deposit from the reinsurer; or
F. The cedent holds security such as a Trust or a LOC.
The following table” summarizes this information in tabular form:
Thus, in addition to placing funds on deposit under the Model Act, an unauthorized reinsurer may post a Trust or LOC, securing its reinsurance debt. When employing such methodology, the reinsurer’s collateral must equal one hundred percent (100%) of the loss;12 otherwise the cedent receives a penalty for the unauthorized reinsurance. In contrast, domestic reinsurers who are authorized or accredited in the cedent’s domiciliary state do not need to collateralize their obligations to the cedent.
insurance problems? How insurance companies use your credit report - Consumers & Insurance
You’ve just bought the home of your dreams. The next stop is to protect your purchase with insurance but, to your amazement, the insurance company has turned you down. You consider yourself a good risk: your new home, complete with an impressive security system, is located in a safe neighborhood. So why were you denied coverage? A poor credit report could be the culprit.
An increasing number of property and casualty insurers are using credit reports when deciding whether to grant a policy, renew an existing one or offer a preferred rate. Some insurers use credit reports as their sole deciding factor. These companies say that credit information helps them Spot insurance risks, allowing them to write more insurance than they would in the absence of credit reports. However, consumers who’ve never had a car accident or made a claim on their homeowner’s policy could have a poor–or an erroneous–credit history used against them.
Credit reports contain identifying data (name, addresses, Social Security number and date of birth); trade lines (detailed information on credit cards and loans); inquiries (requests for credit history); and collection items (judgments, liens, collections and bankruptcies). Under the Fair Credit Reporting Act, credit reports can be ordered for: insurance underwriting, credit transactions, hiring (with your written permission), license eligibility or for a legitimate business purpose, such as verifying the credit worthiness of a potential business partner. Insurance companies don’t have set standards for determining when to order a report. What one insurance company considers a bad credit report another might find acceptable. Other insurers use “scoring” models from Fair, Isaac & Co., a San Rafael, California, firm that reduces the data on a credit report to a single score.
The National Association of Insurance Commissioners, which wants this practice monitored, recently issued a white paper suggesting that insurers not be allowed to deny policies based solely on credit reports. It also recommends that the industry develop objective, verifiable guidelines for ordering credit reports.
How is a credit report used? Allstate, for example, uses credit reports in most states as one of their deciding factors. The insurer, which doesn’t use income as a factor, orders reports for all new business, auto and property applicants. It denies an applicant only if there is serious evidence of financial instability within the past five years. It does not consider paid collections and accounts. “Unless there was some major financial trauma [i.e., bankruptcy or foreclosure] in a potential insuree’s background, we will still consider their application,” says spokesperson Raleigh Floyd.
If you suspect that your credit may lead to denied insurance, take the following steps:
1. Ask the insurer if it uses credit reports as a determining factor. If it does, order a copy of yours before you apply by calling the three credit reporting agencies: Equifax Credit Information Services (800-685-1111), Transunion Corp. (800-916-8800) and Experian (formerly TRW) 800-682-7654. The reports are free if you were recently denied credit.
2. When your report arrives, make sure it’s accurate. If you find a mistake, request a correction from the credit bureau. The Fair Credit Reporting Act requires credit bureaus to resolve a consumer’s dispute within 30 days.
3. If you’ve been denied insurance, appeal. If that too is unsatisfactory, ask the insurer to pUt the reason in writing. If you think you’ve been denied unjustly, complain to the state insurance department.
4. Improve your credit report. Some credit unions and banks offer free or low-cost credit counseling. The government issues two free brochures: Build A Better Credit Record and Solving Credit Problems.