Managed Care - October 2008 - (Page 8) NEWS AND COMMENTARY Wall Street Turmoil Makes Accessing Capital Difficult for Managed Care he nation’s financial crisis is leaving no industry unscathed, and managed care is no exception. Although most companies are believed to have relatively little exposure to the Wall Street companies that were at the center of the turmoil, there are still several ramifications. John Gorman, who heads the Gorman Health Group, a consulting company, offers a view of the situation. Managed Care: To what extent, if any, are managed care companies hurt by the crisis? Gorman: It’s really pretty straightforward. The good news is they’re not a particularly capital-intensive business. And with a few exceptions, they don’t have much exposure to the firms that took a beating on Wall Street. The flip side, though, is that, like everybody else, they have a restricted ability to access capital, especially the publicly traded companies. And of course, their stocks are in the tank. Several got downgraded, Universal American, for instance. MC: What about smaller plans? Gorman: Yes, the tough spots will be small privately held plans, which will find themselves in a bind because of a lack of liquidity in the market and difficulty accessing investment capital. And companies heavily invested in the Medicare business need to be making some substantial investments in things like IT and other infrastructure, given a big increase in regulation of that program. So capital will be harder to access and more expensive. MC: So where do they go for capital? Gorman: There’s an opportunity for reinsurance carriers to rethink what they do for these health plans and be able to provide some of these services as alternatives to investment capital. They can help cover some or all the plans’ statutory reserves by basically swapping in reinsurer money for health plan statutory reserves. In effect, they’d be buying up their risk, which frees up capital the plan had in reserve and can use as operating capital. MC: How will all this affect health care reform? Gorman: It will have a negative impact on the prospects for health reform if the market stays in turmoil for an extended period. Health reform is really something the insurance industry is hoping will happen as a way of opening new markets on the 47 million uninsured, and if it looks like the government is bled dry because of a bailout or lingering economic crisis, the prospects for getting that done become questionable. — Ed Silverman T changes is unworkable. “Rushing the process will result in a major meltdown in the health care industry including — unavoidably — inaccurate and delayed payments to providers and consumers, an inability to detect fraud and abuse, and unnecessarily higher total costs of implementation because of the accelerated time line,” says Scott P. Serota, president and CEO of the association. Last month, HHS plotted a time line for insurers, physicians, and hospitals participating in federal health programs to adopt a new set of codes by Oct. 1, 2011. The new codes will increase the number of codes in use for the past 27 years (24,000) to 150,000. HHS, insurers, and providers acknowledge that there is a need to revamp the system — as health care moves forward in the digital age it will require fundamental changes in how information is stored and transferred. BCBSA recommends that the agency adopt the timeline proposed by the National Committee for Vital and Health Statistics (NCVHS), which advises HHS on HIPAA issues. BCBSA Asks HHS To Slow Down At least one private insurer is telling the Department of Health and Human Services (HHS) that it is going too fast when it comes to implementing the changes proposed for ICD-10, the coding system used to identify diagnosis and treatment of millions of patients. The Blue Cross & Blue Shield Association says the proposed time frame for insurers and providers to implement the massive Retail Clinic Savings Disappoint Despite saving the patient some money, retail clinics have not reduced total medical costs, according to a study published in Health Affairs. And while their convenience, quick service, lower cost, and transparent pricing have won over consumers who use them, researchers from HealthPartners who reviewed utilization trends, patient mix, and cost per episode of care for the five conditions most frequently treated at a retail clinic chain in the Minneapolis-St. Paul area 8 MANAGED CARE / OCTOBER 2008
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