States Tighten Rules on Insurance Industry Spending

State regulators decided that insurers must now spend more money on consumers.

Here’s a nice roundup from Kaiser Health News on negotiations between state regulators, insurers and consumer groups about rules governing exactly how much the insurance industry is supposed to spend on medical-related items vs. administrative costs (like marketing.)

Here’s what Politico had to say:

Some cost items, such as doctor’s bills, were clearly identified from the outset as medical spending. Insurers’ advertising and overhead were quickly put in the administrative category. But many other items, such as nurses’ hotlines, some federal taxes, insurance agents’ commissions and programs to improve care coordination, fell into a grey area and were subject to hours of debate. Under the final regulation, insurers can categorize a number of health-spending activities as ‘quality improvements.’ Spending to reduce hospital re-admissions, improve patient safety, reduce medical errors and certain health information technology investments all made the final cut. But regulators counted other costs, such as programs to prevent fraud, as administrative costs despite some protest from the insurance industry.

Dreyfus On Tough Love For Hospitals, Skewed Incentives And Happy Doctors

Andrew Dreyfus, the newly appointed CEO of Blue Cross Blue Shield Massachusetts, the state’s largest insurer, spoke about health care costs and how to control them on WBUR’s Radio Boston today.

Here are the interview’s top 3 nuggets:

1. The new CEO said he’s willing to “tangle” with hospitals who resist payment reform and might even drop certain hospital systems (Read: Partners) from the network if they don’t get on the global payment bandwagon.

2. He says some doctors are actually happier being paid one lump “global” fee per patient, rather than reimbursed for each individual procedure. (Really? Show me a cardiologist who’d prefer doling out dieting tips to inserting a stent?)

3. His salary? Well, we know it won’t be peanuts, given his predecessors earned between $2 and $4 million annually (yes, it’s still a non-profit). But Dreyfus said the Board hasn’t decided his compensation. Still, he added: “You’ll see different numbers than you’ve seen in the past.”

If you crave more from Dreyfus, here’s a longer talk he gave earlier this year on transforming the payment system: