The company says it is protecting nursing home residents by curbing unnecessary hospital transfers. Whistleblowers allege cost-cutting tactics have endangered the elderly
Yeah but I mean overall, the larger system, and the point of delaying, denying, and defending. If the motive is profit, I’m trying to figure out the means.
The point of delaying and denying is so that they can collect the insurance money but never pay out. For someone in a retirement home who needs hospital services, their insurance would pay for this… But if the retirement home just simply doesn’t take them to the hospital… Then the insurance company will give the retirement home a small bonus that is significantly less than the overall hospital bill would have been.
I do not think any of us are surprised to hear which particular insurance company is being accused of doing this…
In arrangements like this, an insurer (often through Medicare Advantage) pays nursing homes a fixed monthly amount per resident, then layers on incentives tied to cost and utilization: (1) bonus payments if the facility meets targets such as lower hospital transfer rates or quality scores, (2) shared-savings payouts where the nursing home gets a portion of the medical cost savings if overall spending drops, (3) sometimes penalties or clawbacks if targets are missed, and (4) care-management support (e.g., insurer-employed clinicians embedded in the facility) that influences how care is delivered and measured — the controversy arises when these financial incentives may unintentionally discourage medically necessary hospital transfers.
Okay, so I think I follow – if the nursing home keeps patients there instead of transfering them to a hospital, the insurance company pays them more, so the nursing homes are incentivized to keep patients there, even at their detriment.
Yes. So, they are dying of a heart attack and the nursing home says, “old man, you have heartburn, go back to bed” and then they keep their bonus check.
And this is on top of all the horrible things that nursing homes do even without insurance companies giving kickbacks and bonus checks
The entire purpose of health insurance is that the patient doesn’t pay for their care entirely out-of-pocket. If the balance owed by the insurer for treatment costs more than their premiums, then the insurer is losing money on that patient. If the insurer arranges for the patient to die, then they stop losing money on that patient.
I literally just told you. Also, I have no clue what you’re imagining with this nonexistent rebate scheme. The patient won’t be paying any more premiums after they’re dead, but they won’t be costing anything, either. Insurance doesn’t have to give back any previously paid premiums.
Scenario A: The company takes in $1B in premiums. They spend $800M of it on healthcare costs. They pocket $200M.
Scenario B: The company takes in $1B in premiums. They deny coverage for $100M. They spend $700M of it on healthcare costs. They rebate their subscribers $100M. They pocket $200M.
How did those denials put more in their pocket? It’s 20% no matter how you slice it.
Because instead of a physician deciding whether or not someone is transferred to a hospital for treatment - which the insurance company is liable for - the insurers decide who goes or doesn’t go. Seems mostly doesn’t go is their first option, no matter the need.
For that one person, yes. But I’m asking how the whole “delay, deny, defend” tactic allows them to pocket additional profit that they don’t otherwise have to pay out in healthcare or rebates.
What are the actual methods and tricky accounting that go into something like this?
The exact same thing works for multiple people, especially when averaged out. If they avoid spending a bunch of money on 10 people the average spending overall goes down. Even if they have a limit on how much they can profit, doing this pretty much guarantees a profit while sending them to the hospital every time it is necessary means less likelihood of making a profit because it costs them more both in payments and the internal costs of processing the payments.
It isn’t accounting trickery, it is basic math.
Is the concept of spending less means they get to keep more of what they collect too complicated?
So how does the scheme work. Do they approve more smaller claims and delay or deny larger ones?
Hospitalizations cost money. Don’t send them to the hospital.
Yeah but I mean overall, the larger system, and the point of delaying, denying, and defending. If the motive is profit, I’m trying to figure out the means.
The point of delaying and denying is so that they can collect the insurance money but never pay out. For someone in a retirement home who needs hospital services, their insurance would pay for this… But if the retirement home just simply doesn’t take them to the hospital… Then the insurance company will give the retirement home a small bonus that is significantly less than the overall hospital bill would have been.
I do not think any of us are surprised to hear which particular insurance company is being accused of doing this…
But how do they finesse the “never pay out” part? How do they avoid paying out through healthcare or rebates?
In arrangements like this, an insurer (often through Medicare Advantage) pays nursing homes a fixed monthly amount per resident, then layers on incentives tied to cost and utilization: (1) bonus payments if the facility meets targets such as lower hospital transfer rates or quality scores, (2) shared-savings payouts where the nursing home gets a portion of the medical cost savings if overall spending drops, (3) sometimes penalties or clawbacks if targets are missed, and (4) care-management support (e.g., insurer-employed clinicians embedded in the facility) that influences how care is delivered and measured — the controversy arises when these financial incentives may unintentionally discourage medically necessary hospital transfers.
Okay, so I think I follow – if the nursing home keeps patients there instead of transfering them to a hospital, the insurance company pays them more, so the nursing homes are incentivized to keep patients there, even at their detriment.
Do I have that right?
Yes. So, they are dying of a heart attack and the nursing home says, “old man, you have heartburn, go back to bed” and then they keep their bonus check.
And this is on top of all the horrible things that nursing homes do even without insurance companies giving kickbacks and bonus checks
Okay, I’m with you so far. Go on.
It’s cheaper for them to kill the insured than to provide them treatment.
For that patient, probably, but how does that lead to their profits increasing overall, is what I’m asking
The entire purpose of health insurance is that the patient doesn’t pay for their care entirely out-of-pocket. If the balance owed by the insurer for treatment costs more than their premiums, then the insurer is losing money on that patient. If the insurer arranges for the patient to die, then they stop losing money on that patient.
But then they have to rebate the remaining balance from the premiums they didn’t spend on healthcare costs.
How does that make them more money overall is what I’m trying to understand?
I literally just told you. Also, I have no clue what you’re imagining with this nonexistent rebate scheme. The patient won’t be paying any more premiums after they’re dead, but they won’t be costing anything, either. Insurance doesn’t have to give back any previously paid premiums.
Scenario A: The company takes in $1B in premiums. They spend $800M of it on healthcare costs. They pocket $200M.
Scenario B: The company takes in $1B in premiums. They deny coverage for $100M. They spend $700M of it on healthcare costs. They rebate their subscribers $100M. They pocket $200M.
How did those denials put more in their pocket? It’s 20% no matter how you slice it.
Because instead of a physician deciding whether or not someone is transferred to a hospital for treatment - which the insurance company is liable for - the insurers decide who goes or doesn’t go. Seems mostly doesn’t go is their first option, no matter the need.
Okay, but I’m asking how they profit from that
They take in the same amount of money and pay less because the person doesn’t go to the hospital.
For that one person, yes. But I’m asking how the whole “delay, deny, defend” tactic allows them to pocket additional profit that they don’t otherwise have to pay out in healthcare or rebates.
What are the actual methods and tricky accounting that go into something like this?
The exact same thing works for multiple people, especially when averaged out. If they avoid spending a bunch of money on 10 people the average spending overall goes down. Even if they have a limit on how much they can profit, doing this pretty much guarantees a profit while sending them to the hospital every time it is necessary means less likelihood of making a profit because it costs them more both in payments and the internal costs of processing the payments.
It isn’t accounting trickery, it is basic math.
Is the concept of spending less means they get to keep more of what they collect too complicated?
I see you’ve downvoted all my comments here, so you know I’ve already laid out how the math works for each scenario.