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What have been the most significant trends affecting the global cost containment industry over the past 12 months? (E.g. new geographic markets/software developments/healthcare inflation/improper billing/enhanced fraud detection)

There are a number of trends that have emerged in the cost management arena over the past 12-18 months. The most impactful of these is the increased presence of Collection Agencies, working on behalf of providers in the United States and abroad, While some collection agencies have been around for many years, such as OVAG or Global Recoveries, 2012 has seen a dramatic increase in the establishment of new companies, as well as the increased activity of already established firms. Some examples of these are Collect RX, MD Abroad, Global Credit Solutions (GCS), Gallagher's & Associates, 8DM, IQC, and Sunbelt medical billing. The activity of these companies has sharply increased as hospitals are becoming progressively more annoyed with the conduct of some International Insurers and their intermediaries, and are utilizing these collection agencies more and more, in response to the payment abuses and inappropriate treatment they (hospitals) have been subjected to. Recognizing and seizing the opportunity, collection agencies are marketing themselves as solutions for hospitals, with considerable success. Typically, once a patient is identified as "international" (a visitor to the US), many hospitals automatically refer every such account to their apPOinted collection agency. This is irrespective of an Insurance payer nominating a legitimate intermediary (cost containment company) for bill settlements at any point in the episode of care. Once the collection ;igency has jurisdiction over an account, any chance for a meaningful discount becomes nonexistent, as the collection agency earns their fees based on how much they collect in for the hospital. In other words, the lower the discount they (the collection agency) give, the more money they make, and the more the Insurance payer has to pay.

Another significant and concerning issue facing International insurers, is the increase in activity of third party audit companies. Similar to collection agencies as described above, both hospitals themselves internally, as well as independent audit firms, have realized that the majority of discounts obtained by International insurers are disputable. Sourced through some or other layered network, these discounts accessed do not fall within the parameters of the contract being utilized for discounting. Perhaps the most common audit company working within this area is MedAssets, a subsidiary of the DOW listed company, MDX. Since hospitals in the United States have a statute of limitations between 5-7 years, companies like MedAssets have embarked on a campaign to recover as many discounts as they can, and which is proving to be a financial nightmare for almost every International insurance company who utilizes third party or domestic US PPO contracts. Hospitals, lured by the promise of recovering millions in illegitimately obtained discounts, have seized the opportunity, and are allowing audit companies to review their entire book of "zero balances," within the applicable time statute for the state where the hospital is located. The commonest defaults by Internationals accessing US Domestic hospital contracts, so paving the way for the success of audit companies, are: 1. Payment deadline defaults. 2. The inability for steerage of patients to a given fa61ity (discussed more fully below.)

This past year also saw a number of lawsuits being filed by hospitals in the United States against International insurers, for their practice of utilizing domestic Insurance and PPO contracts to discount their bills. While only one of many, the most well known of these was filed by Tenet Florida against a Canadian Insurer, whereby the Insurance company was accused and sued for continuously taking discounts through a restricted domestic network. Such networks, intended for access by domestic US patients, living in the United States, were never envisaged to be used by Internationals visiting the United Stat,es, Based on a number of factors including insurance policy benefit differentials (a method for volume steerage,) the hospitals were successful in proving that these discounts were obtained illegally, and subsequently fil,ed suit against this Canadian Insurer. In its attempts to helve the suit dismissed, based on jurisdiction, arguing that they were a compelny registered in Canada and not the US, the insurance company's request for dismissal was turned down by the courts, since they knowingly insured patient's that were visiting the United States. Indeed they sold policies for this very purpose, and were therefore ordered to defend their actions.

Having one of the most adverse effects on all International insurance entities, is the sharp increase in the demand for up/ront,deposits by hospitals from International patients at the time of admission. Compounding all of the issues mentioned above, is now this increasing demand for upfront patient deposits. As hospitals become increasingly frustrated with the actions of some International insurers and their intermediaries, who oftentimes will knowingly deceive hospitals and even commit fraud in order to garner the lowest possible reimbursement, the providers' have painted all international entities with the same brush. Consequently, their (Insurers) members, the patients, are being required to pay very significant deposits upon their admission to hospital. The demand of deposits from patients is increasingly being recognized by hospitals as the most powerful weapon for payments, and subsequently leave the patient to deal with their insurance companies actions.

In which regions or countries of the world is medical cost containment currently most important? Why is this?

The importance of cost containment is generally tied to countries where there is some form of private healthcare, coupled with a significant volume of International t ravel and tourism. While it can certainly be claimed that cost containment should be emphasized in growing travel markets -Asia, India, and countries throughout Europe, the United States of America has been and is expected to remain the focus of the medical cost containment industry.

Although the United States is rivaled by Germany, the United Kingdom, and China for the amount of visitors it attracts, it's healthcare system is entirely different, and requires a hands on approach for any insurance company with members travelling there for both business and pleasure. In contrast to the other countries where the healthcare systems are predominantly socialized (there are of course some limited private facilities as well), medical care in the US is privatized, with huge variances in billed charges from provider to provider. Exacerbated by the lack of federal regulation for healthcar.e pricing, healthcare in the United States has a tremendous impact on an insurers loss ratio and reqryres a reliable, effective, and secure cost containment solution -more so than in any other part of the world.

What are the key business differentiators of global cost containment companies today?

The key business differentiators facing most cost containment companies today are numerous,

  1. The majority of cost containment companies cannot, and will not, provide guarantees for the discounts that they obtain. When asked why, they will skirt around the issue and rationalize their inability to guarantee their results with feeble excuses as to why. This lack of any finite or meaningful response, should in itself raise concern as to why, if indeed such companies were conducting themselves in an ethical and professional manner. The majority of cost containment companies utilize the US Domestic PPO network/US Insurer paradigm, whereby they "piggy back" onto a domestic network (never intended for internationals to access,) in order to obtain the lowest rate of reimbursement possible,

    This is all done without the hospitals knowledge and/or approval, relying on the hospitals lack of resources and complacency to detect the activity_ Invariably, international insurance companies Qlnnot meet the 3 fundamental clauses (steerage, timely payment, and logo identification) as is contained within the contract between the domestic PPO/lnsurer and the hospital (not the cost containment company), and therefore the discounts obtained simply cannot be secure. All that the international insurer can do when engaging in this practice, is hope that they are not billed for the discount that was taken, worsened by the fact that hospitals have between 5-7 years to reclaim the illegitimate discount taken in this way. The issue that differentiates one cost containment company from the other, is the ability to guarantee a settlement, in every sense of the meaning, financially and otherwise.
  2. An Insurer, conducting their business in such a way that their insured clients are welcomed to attend any given facility. By this is meant that while a cost containment company may be able to guarantee their discount, the manner in which the discount was achieved (e.g. Badgering, False information on policy limits, threats of malpractice and litigation) may be so questionable, that the next time an insured member goes into a hospital bearing the same underwritten insurance policy, a substantial deposit is taken up front from the patient because of the listed modus operandi for settlement. Unfortunately there are many cost containment companies in our industry well known for this highly questionable activity.
  3. Relationships with providers are also a key differentiator between cost containment companies todayOnes success with each individual provider will be solely dependent on prior history and interaction with that provider.
  4. Unfortunately, what is stated above has unfortunately tainted the reputation of ALL international insurance companies or their agents.

    A very recent tactic being touted as a means to lure unsuspecting International Insurers, is the propaganda that the State of California has passed a law, that Californian hospitals are now "prohibited from Balance Billing." This occurs where a Medical Provider has been underpaid by a medical insurance company. This type of mis-information is analogous to prior recommendations to Insurers, to simply pay "what you want" to a provider. Indeed. it is also similar to the advice to write on a payment check to a provider, verbiage which reads: "Deposit of this check acknowledges acceptance of payment in full of account # 386280.. ," with the expectation that there to be no repercussions.

    While California has indeed passed a law that providers cannot balance bill PATIENTS, such that any dispute resides between the health insurer vs. the hospital, and that the patient must be left out of the dispute. While the regulation still leaves and acknowledges a balance bill, these changes are in any event not intended to include international patients. According to the State of California, the basis of this regulation, is the unfair payment practices and ways that hospitals have been treated by insurance payers. This is labeled as the root cause.

    Essentially, the entire reimbursement system is under scrutiny, with the fraud and deceit being committed by some, shortly to be universally exposed.

    Whatever criticisms and negative publicity is leveled at hospitals, the live issue is that hospitals have been defrauded out of millions of dollars. and which has resulted in many patients being subjected to balance billing. All that this new law means (in California,) is that the patient per 5e, is now taken out of the picture. and the insurer gets the balance bill. Informing the patients of the bill that re-mains outstanding by their insurance company is still legal, and most hospitals will still send a letter to the patient informing of their Insurers' actions. The law is not yet clear on whether this applies to international patients or not.

What are the three most valuable tools for any cost containment company today?

We believe that the three most valuable tools (all 3 together and inextricably entwined with one dependant on the other,) for any cost containment company today are:

  1. The ability to provide an unconditional guarantee that your discounts are secure against any deferred liabilities -"The Guarantee."
  2. The complete elimination of balance billing -"No deferred Liabilities."
  3. The welcome return of an insured member back to any given facility -"Your relationships with hospital providers."

Where will the major cost centers for global cost containment companies be over the next three years?

We believe that the major cost centers for global cost containment remain the United States, for reasons stated in Question 2 above.

What is the difference between an international cost containment network and a PPO?

This is a most important question, the answer to which has been misconstrued, and is being misrepresented in the market today.

Preferred Provider Organization (PPO)
A Preferred Provider Organization (PPO), comparable to a Health Management Organization (HMO) is a domestic network that is designed to help local medical service providers and local insurance companies coexist in a cost effective environment. Local insurance companies agree to direct and or use "steerage" (insuring patient volumes) so that insured people receive care at specifically agreed hospitals, and that bills are paid within a given time frame (usually 30-45 days) from date of billing. This modality of utilization as described, is labeled as "domestic" and for a number of reasons, is very different from the travel insurance or "international market".

International Networks
The international travel insurance market is based on the premise that those who travel require affordable health insurance to cover the expenses of emergency medical care at a foreign destination. While domestic insured persons are usually treated in a hospital within a geographical area based on their insurance benefits, international insured persons often receive care in an emergency situation, and are taken to the closest available facility that is equipped to treat the patient. Little or no direction to any specific facility occurs with international patients.

Is it acceptable for international accounts to be processed through domestic PPO's?

Although this frequently occurs in today's marketplace, healthcare providers are starting to oppose international accounts being processed through domestic networks. Healthcare providers are refusing discounts attempted through such avenues, and are even seeking retribution for old international accounts that were illegitimately discounted through domestic networks.

Are the depth of discounts related to volume steerage to medical providers?

Steerage of patients (i.e. volume of work) only occurs in certain domestic markets. In the context of travel insurance, steerage is non existent. A person, collapsed in their hotel room or RV park, does not call up their insurer to ask them which hospital they should go to so the insurer gets the best rate.

Will my discounts be audited, and will the discounted amount be demanded back by the provider of service?

Another scare tactic used by some unscrupulous discount providers to coerce your business in their direction. A legitimate discount, obtained in a legitimate way, is a legal contract. If indeed an audit by the provider is sought, it should be your discount provider's responsibility. Check the wording of what you signed in your contract, and remove the inclusion by your discount provider of exonerating themselves of this responsibility. This is after all why you are paying the access fee for having obtained the discount in the first place.

Is selecting a Network/Discount Provider, based on average returns on discounts obtained, reliable?

Average returns have very little basis on which to rely for your selection process of cost containment services. Certain states, e.g. Maryland, give miniscule discounts due to state regulation. If your exposure mostly resides in Maryland, your average will consequently be low. Conversely, one discount provider returning a 3% average and another returning a 15% average, are both very low. However, the second provider at 15% is 500% greater than it's rival. In reality, it is what YOUR year end underwriting results (loss ratio) show, and which should be used to evaluate the success or failure of your discount provider.

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