The Maze – Pt 6
The Nigerian Health Care Plan

This is a continuation of a series on medical coding, billing, and reimbursement.

Previous posts are here:

See no evil
OK, I have a business deal to offer you:



With due regards, I take the liberty to contact you for an urgent business transaction which will be of immense benefit to all parties concerned. I am Mr Kingsley Chiugo, the Chairman of the contract Tenders Board of Nigeria National Petroleum Corporation, (NNPC).

My committee has the responsibility for the recommendation and award of contracts and supplies for the NNPC. In the course of our assignment, we did over-inflate the contracts for some supplies to the NNPC as a result of which the sum of USD $25.8m (Twenty five million, Eight Hundred Thousand United States Dollars only) is now outstanding. The original contractors who executed the jobs have since been fully paid off, leaving this outstanding sum. Unfortunately, we as civil servants are not allowed to own or operate a foreign account and it is also not possible for us to withdraw the money here locally.

We therefore need your kind assistance to transfer this outstanding sum of USD $25.8m to your account anywhere very safe. We shall compensate you with 25% of the funds for your assistance after the transfer. We the officials here shall have 65% while 10% will be set aside for any incidental expenses.

Oh, wait–you know about that one, and you’re not interested… OK, so here’s another–and this one’s for real:



I have an urgent business transaction which will be of immense benefit to one party involved. I wish to contract with your medical practice to provide services for my clients, who pay me handsomely for insurance policies we tender for their health care. We have over-inflated these contracts, and need your kind assistance to increase our already immense profitability. The terms, I am confident, you will find to be most agreeable:

  • We will not disclose the amount which you will be paid for your services to our clients.
  • When we pay you for services, we will do so on our own timetable, delaying as long as possible to maximize our revenues.
  • When you provide more than one service at a time to our clients, we will bundle them together into a single service which pays less.
  • We will not disclose to you why we have refused to pay for such services.
  • We will not abide by the federal rules dictating under what circumstances (such diagnosis, edits, and multiple services) you will be paid.
  • We will not disclose the internal rules which we use to make exceptions to these federal regulations.
  • We reserve the right to change your submitted invoices, substituting other, less costly services for those which you have submitted to us.

You need to send us urgently the particulars of your practice or company bank account from which your funds will be removed (please do not expect any funds to be deposited). As soon as we receive this, we shall commence the process and it is expected to take 50 working days for the complete transfer to be effected. Of course, confidentiality is important in a matter as sensitive as this one. Send your response to my e-mail address above and include your private tel/fax number for ease of communication.

Yours sincerely,

Kingsley Chiugo, Managed Care Inc. CEO

Now if an e-mail like this arrived in your in-box, you’d hit delete faster than a Kung Fu fighter kicks your lights out. But out here in the health care world, this scam isn’t a sucker’s come-on–it’s the normal course of business between health care providers and health insurance carriers who pay them. Welcome to the wacky world of health insurance reimbursements.

Whoa, Nellie!! you say–surely no sane businessman or doctor with an IQ above room temperature would fall for such an offer? Yup, we docs do, all the time–in fact, there’s little choice in the matter. So how did we get into this mess?

Back in the old days, when men were men and doctors took care of patients, life was pretty simple: you saw the doctor, he charged you a (usually small) fee, you paid his bill, and submitted the claim to your insurance company, who reimbursed you for it in whole or part. Then, due to rising health care costs from a host of factors–more expensive technology and drugs, the introduction of federal health insurance with increased access, an aging population–and yes, over-utilization by physicians (for many reasons: greed, defensive medicine against lawsuits, easy availability of expensive technologies), etc., we stumbled upon the idea of managed care: the insurance company would contract with the physician, and pay them directly, monitoring and controlling their utilization of expensive health services while fixing their reimbursement rates contractually. So why would any sane physician sign up for this? Because an increasing high percentage of patients were covered under such plans, and had strong financial incentives to see only such contracted physicians. So Miss Demeanor might see grumpy, marginally-competent Dr. Jones, a provider in the insurance network, and get reimbursed for 90% of her bill–or see that very nice Dr. Smith–he’s cute and very smart, you know–but sadly, out of network, and get reimbursed for 40 or 60% of the care. Guess who she’ll see? Nice ol’ Smitty gonna be sittin’ in his office wondering where all his loyal, admiring patients went.

As these large insurance networks became dominant–driven by their lower health insurance premiums for managed care–large numbers of patients made choices about their health care based on their insurance coverage (generally employer-dictated, and therefore chosen by price, not service) rather than by personal preference–and a large insurance company could bankrupt a medical practice by cutting them out of a network. As the smaller insurers dropped out of markets due to the economics, it became common for a big player to insure 20, 30, 40%–or more–of a practice’s patient base. This kind of market dominance left physicians with little choice but to sign up with managed care plans with godawful contracts. And of course, physicians were prevented from collective bargaining with the insurers for better contracts–because that would be anti-competitive and price-fixing. The insurers promised increased patient volume to physicians in return for modest reduction in reimbursement, but delivered no extra patients for lots less money–and often money with loads of gnarly strings attached.

As insurers increasingly got the upper hand, their business practices became ever more egregious, secretive, and nefarious. Ever striving for efficiency, they moved from individual personal claim review–the insurance clerk simply tossing your filed claim in the trash, then telling you it got lost–to computerized screens and edits, codifying their intrusive, capricious, and often unethical policies behind a digital ski mask. So while they bent, folded, and mutilated the health care reimbursement system beyond recognition, they reaped a windfall of company profits while premiums soared, physicians’ reimbursements hemorrhaged, and claims hassles for physicians and patients multiplied like guppies. State insurance commissioners and attorneys general had neither the manpower nor the motivation to respond to the countless complaints from providers about unethical insurance practices, so the carriers quickly found themselves above the law, and acted accordingly.

Now, you may be thinking: “This is just a disgruntled physician griping because he can no longer buy a new Lexus every year.” Well, not really (never owned a Lexus, BTW)–and even if I were, there’s one small problem with this theory: the insurance carriers got busted, big time, for these very abuses.

In 2000, a huge class action lawsuit–one of the largest ever filed–was brought by individual providers and numerous state professional health care organizations against a group of major managed care companies, including Aetna, Anthem, CIGNA, Coventry Health Care, Health Net, Humana, PacifiCare, Prudential Insurance, United Health Care, and Wellpoint Health Networks. In the class action lawsuit,

… plaintiffs allege that in various time periods from 1990 to the present, [the carriers] improperly denied, delayed and/or reduced payment to healthcare providers by engaging in several types of allegedly improper conduct, including:

  • Misrepresenting and/or failing to disclose the use of edits to unilaterally “bundle,” “downcode” and/or reject claims for medically necessary covered services;
  • Failing and/or refusing to recognize CPT modifiers;
  • Concealing and/or misrepresenting the use of improper guidelines and criteria to deny, delay, and/or reduce payment for medically necessary covered services;
  • Misrepresenting and/or refusing to disclose applicable fee schedules;
  • Failing to pay claims for medically necessary covered services within the required statutory and/or contractual time periods; and
  • Misrepresenting and/or failing to disclose the use of inappropriate or unsound criteria to calculate payments due to Healthcare Providers compensated under a capitation system or payments due to Non-Participating Healthcare Providers based on usual and customary rates.

In addition, the … complaints allege that [the carriers] listed above conspired to engage in this conduct [can you say “RICO“, boys and girls?-Ed.]. Plaintiffs claim that the conduct violated state and federal statutes, and they also seek recovery on common law theories, including breach of contract.

Well, now–maybe there is something to this, after all…

The managed care companies, as expected, denied all wrongdoing, and some fretted that the use of the class-action lawsuit against the health insurance industry would spell the end of the health care as we know it (one could only wish…). Last time I checked, however, the industry appears to be alive and well–and most of the big boys settled, forking over some serious cash to avoid having to open their laundry bag in court and display some really dirty diapers:

Just to name a few.

Part of the settlement was carrier reforms designed to eliminate some of the most egregious practices, such as automatic downcoding, bundling several services into a single, less expensive service for payment, more transparency on fee schedules and edits, etc. As is the typical calculus for class action lawsuits, the aggrieved plaintiffs received chump change (less than $100 per physician in most cases) while a few attorneys won’t have to worry about paying their health insurance premiums for a long, long time–having reaped millions of bucks in attorney fees. Sigh.

But of course, the settlement left one critical thing unchanged: the fox still guards the hen house. There is no effective recourse–short of more class-action suits–against the big managed care companies, to prevent them from resorting to all the same tricks they did before the settlement. The fix is in, and the big carriers still control the non-federal health care market. The industry continues to reap huge profits out of health insurance, as exemplified by UnitedHealth CEO William McGuire, who last year had to struggle by on a mere $1.8 billion in salary, bonuses, and stock options. Tough to lower insurance premiums when you’re shelling out that kind of dough for executive payroll.

I–and every physician dealing with the managed care industry–could go on for hours about abuses such as these, and far more: straightforward appeals denied; endless waits on hold to find the status of unpaid claims; surgeries authorized before they are performed then denied payment afterward; claims denied as improperly filed when meeting the company’s explicit guidelines on their forms or electronic submissions; claims “lost” after submission, then denied when resubmitted for reasons of–you got it: duplicate submission; payment checks “accidentally” mailed to the wrong address; letters to patients describing your care as “medically unnecessary”; physicans dropped from health care networks, their patients notified of the reason as being “poor quality providers”–when their only sin was not providing care cheaply enough; the list is nearly endless.

The simple concept of health insurance as spreading medical financial risk over large numbers of people is long gone. It has become an aggressive, active network, working hard to undermine the delivery and affordability of health care, reducing true competition and financial transparency, and manipulating health care decisions in countless–virtually always detrimental–ways.

If you think that Nigerian Petroleum deal is starting to look better–well, you may just be on to something.

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