Posted by: Tony Carson | 9 November, 2007

US Healthcare (only) for the healthy

In another case of ‘If it’s good for stockholders, it’s good for the company,’ a US Health insurer tied bonuses to dropping sick policyholders.

One of the state’s largest health insurers, reports the LA Times, set goals and paid bonuses based in part on how many individual policyholders were dropped and how much money was saved.

Woodland Hills-based Health Net Inc. avoided paying $35.5 million in medical expenses by rescinding about 1,600 policies between 2000 and 2006. During that period, it paid its senior analyst in charge of cancellations more than $20,000 in bonuses based in part on her meeting or exceeding annual targets for revoking policies, documents disclosed Thursday showed.

The revelation that the health plan had cancellation goals and bonuses comes amid a storm of controversy over the industry-wide but long-hidden practice of rescinding coverage after expensive medical treatments have been authorized.

These cancellations have been the recent focus of intense scrutiny by lawmakers, state regulators and consumer advocates. Although these “rescissions” are only a small portion of the companies’ overall business, they typically leave sick patients with crushing medical bills and no way to obtain needed treatment.

Most of the state’s major insurers have cancellation departments or individuals assigned to review coverage applications. They typically pull a policyholder’s records after major medical claims are made to ensure that the client qualified for coverage at the outset.

The documents show that in 2002, the company’s goal for Barbara Fowler, Health Net’s senior analyst in charge of rescission reviews, was 15 cancellations a month. She exceeded that, rescinding 275 policies that year — a monthly average of 22.9.

More recently, her goals were expressed in financial terms. Her supervisor described 2003 as a “banner year” for Fowler because the company avoided about “$6 million in unnecessary health care expenses” through her rescission of 301 policies — one more than her performance goal.

In 2005, her goal was to save Health Net at least $6.5 million. Through nearly 300 rescissions, Fowler ended up saving an estimated $7 million, prompting her supervisor to write: “Barbara’s successful execution of her job responsibilities have been vital to the profitability” of individual and family policies.

State law forbids insurance companies from tying any compensation for claims reviewers to their claims decisions.

Advertisements

Responses

  1. it’s not shocking that these staggering events are occuring. that’s why i work to support AARP who are trying to make Congress make Medicare available to the people who cannot afford it. you should check out their website at http://www.thisissoridiculous.com and sign their online petition and make your voice heard! you can also view videos, email Congress and make donations on the site!

    ~Jessica


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Categories

%d bloggers like this: