medical spending


Audit Of MassHealth Finds Problems With $4M In Spending

A new state audit takes issue with how MassHealth, the state’s health insurance for low-income residents, spent $4 million, WBUR reports.

State Auditor Suzanne Bump says she found problems with how payments for wheelchairs and wheelchair parts were authorized.  “We found that there were not proper authorizations for claims, we also found that nursing homes had submitted duplicative bills,” she said in an interview.

Bump says that more controls need to be put in place to make sure only necessary payments are made. MassHealth, with a budget over $12 billion that accounts for about one-third of the state budget, says it’s implementing new oversight programs to prevent and recoup the excess payments.

Here are more findings, from the state auditor’s news release:

•MassHealth regulations require it pay providers for wheelchairs and component parts at a rate equal to the lowest usual and customary amount the provider accepts from any other insurance carrier. By failing to do so, it spent $1 million more than was necessary during the audit period.

•MassHealth paid $2.9 million in repair claims for wheelchairs and components without proper authorization. Prior authorization is required for claims for wheelchair repairs exceeding $1,000. Because the Prior Authorization Unit improperly calculated total repair costs, including labor and costs, $2.9 million in claims were not properly authorized.

•MassHealth made payments totaling $540,801 for improperly authorized, provided, or billed wheelchair components because the agency’s claims system could not detect when limits and restrictions on equipment had been reached. For example, auditors identified $40,206 in duplicative payments and $158,594 for components or repairs to manual wheelchairs used by members residing in nursing homes.

Correction: An earlier version of this story put the MassHealth budget at “over $12 million” however the correct figure is “over $12 billion.”

Turnbull: On Inequality In Medical Spending And The Cost Hearings

Nancy Turnbull, Harvard School of Public Health

By Nancy Turnbull
Associate Dean of the Harvard School of Public Health

It might be the effects of the thin air here in Colorado, but I am disappointed to be missing the second annual hearings on health care cost trends, which will take place this week. In preparation for the hearings, a flurry of reports, testimony and other material has been issued, all of which is posted on the website of the Division of Health Care Finance and Policy. Lots of interesting early morning reading for someone who hasn’t adjusted to Mountain Time.

Among the most important findings in the new reports is that medical spending is greater for people who live in zip codes with higher incomes than spending in zip codes with lower average income. This correlation was found both in the report of Attorney General Martha Coakley’s office and in one of the reports from the Division of Health Care Finance and Policy. While zip code of residence is not a perfect predictor of any individual’s income, it’s a pretty good proxy, on average.

The fact that average medical spending per person tends to be higher in higher income zip codes than in lower income zip codes, even after correcting for underlying health needs, is actually not really surprising. We know from existing research over many years that there is significant income-related inequality in medical spending in the United States. But these reports are, as far as I know, the first to document these disparities in Massachusetts. And, since the reports look only at people who have private insurance, these spending differences are not due to insurance status. (Lower-income people are more likely to not have any insurance and medical spending is much lower for uninsured people. But these reports consider only insured people with private coverage, and they also adjust spending for health status, two of the factors that would be most likely to account for differences in medical spending by income.)

Income-related inequalities in medical spending are particularly troubling because we know that people with lower incomes have higher health needs. Being a lower income person in the U.S. is bad for your health. So we would expect medical spending to be higher for people with lower incomes. Instead, it’s just the opposite. These inequalities are also cruelly ironic, since the financing of private health insurance is already so regressive: in the individual market and at most employers, the best paid person pays the same premium as the lowest paid person for the same health insurance coverage, which means that lower income people pay a higher proportion of their income for private health insurance. Continue reading

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.