Sunday, March 27, 2011

Sunday's Funnies

Fellow Bloggers, before you take the time to read tonight's Sunday's Funnies,  I encourage you to  visit the following website  If there ever was a cause that TSB would encourage you to make a charitable contribution, I implore you to consider donating to this organization.  Considering that TSB has never asked any of our readers for a single dollar, please take the time to visit this website, every dollar will help.  Remember, even the smallest of donations helps, now on to the funnies.

On Friday, the San Francisco Chronicle, reported that Aetna was suing six NJ physicians over medical bills that it called "unconscionable" including $56,980 for a bedside consultation, TSB hopes that at least the patient got a back rub and foot massage, and $59,490 for an ultrasound that usually costs $74.  Yet, before the media and general public pass judgement on these fellers, some clarity must be placed on this alleged chicanery.  The usually public demonization of doctors has already started, David Lansky, the president of the SF based Pacific Business Group on Health has already been quoted as saying, "if these charges are accurate, consumers and purchasers should be outraged!"  Really Mr. Lansky?

Whether the public believes it or not,  the fact remains that physicians have been able to flex their pricing  muscles for years when it comes to out-of network benefits.  And if what Arthur Lebowitz, Chief Medical Officer of Health Advocate Incorporated,  an advisor to the insurance industry states is true, "that out-of-network physicians can charge what they want, and rightfully so,  and that the challenge is coming up with an agreeable and acceptable customary rate is an accepted practice in the industry, what is the big deal?

But before the public castigate these physician culprits, let's take a look at Aetna's history in the Garden State.   In 2007, the company attempted to impose caps on out-of-network payments resulting in a fine of $2.5 million (chicken scratch) because the consumer was being forced to pay balances other than co-pays.  In 2009, Aetna, Wellpoint, Cigna and the United Health Group were accused of underpaying out of network physicians BY MANIPULATING THE DATABASE USED TO CALCULATE PAYMENTS, and paid a total of $90 million in fines to the Empire State without admitting any wrong doing (that's TSB's favorite part of all these settlements).  Of course the insurance industry is crying wolf, because they rarely make any money providing insurance for their subscribers.  The fact remains that AETNA's revenue for 2010 was $34 billion, a decrease of 2% over the prior year, yet, THEIR NET INCOME ROSE TO 38% to $1.77 billion.  What other industry can accomplish this?  Maybe if CEO's at these companies weren't so greedy, the lovefest between insurer and provider could come to a resolve?  Does William McGuire earning $124.8 million dollars and backdating stock bring back any memories in the CalPERS law suit, whereas ol' Billy Boy had to pay back $30 million.

Public records indicate that Aetna's CEO Ron Williams took a 6% pay cut in 2009 and still earned more than $18 million dollars, making his package $5 million dollars more than Wellpoint's Angela Bray, whose compensation in 2009 was a 51% increase.  In 2008, Williams earned $24,300,112 in total compensation with more than half coming in option awards.  Isn't something fundamentally wrong with this picture? But then this poses a larger question, isn't the insurance industry making the rules for the game that physicians play in?  Before the general public expresses its outrage, maybe its time to take the insurance industry to task.  As premiums continue to soar, and people are denied coverage for pre-existing conditions maybe its time that the physicians and the public coalesce and fight the fight together.  Until patients comprehend that they have the right to challenge any denial and threaten public scrutiny of these practices, things will continue as usual.

And what does this say about the POTUS?  Didn't he cut a deal with the insurance industry mandating that Americans have insurance coverage utilizing tax dollars to subsidize their premiums?  Isn't this socialized medicine with a different twist, and the only difference being that tax payer dollars are being funneled directly to the insurance industry?  The fact remains that there aren't too many other industries where someone like Mr. Williams can earn a free-market salary while using the government to corral subscribers and the taxing power of the government to pay for your premiums?  But you know what TSB says, when executives earn more in a day than most teachers do in a year, something is fundamentally wrong with the system?   Considering that physicians are not provided a cost of living increase and are only allowed inflationary adjustments, maybe the time has come to challenge the insurance industry?  But then this will be a challenge considering that most state insurance commissioners are former employees of the insurance industry themselves.  So in closing TSB wants to know what our fellow surgeon bloggers think, is it time to stick it to the insurance industry or is this just a strategic plan to force litigation in order to arrive at an acceptable and agreed upon reimbursement for out of network services?


  1. Strong thread, TSB. 5 hours with no comments.

    I've heard that Nuvasive is working to reduce commissions to their agents and are considering going direct in territories. Rumor is that they have to deliver income which has become challenging as more XLIF knock offs come out every day. Sounds like change may be coming to the purple people!

  2. TSB is right on the money - insurers rule the health roost, and have a bunch of advantages in their financial dealings with those providing services, whether it is hospitals, ASCs, surgeons, therapists or medical device companies. Based on salaries, it looks like it very nice to be an insurer!

  3. Let's start by allowing companies to compete across state lines. Competition is good. POTUS is bad!

  4. "The fact remains that there aren't too many other industries where someone like Mr. Williams can earn a free-market salary while using the government to corral subscribers and the taxing power of the government to pay for your premiums?"

    See Investment banking.

    The ole' revolution inspiring road of privatizing wealth and socializing loss. (Anybody read history anymore? Obscene greed and the concentration of wealth ALWAYS has consequences.)

    Physicians are indeed getting continually squeezed. POD anyone?

    7:51 "Strong thread, TSB. 5 hours with no comments."

    Here's a theory. Mostly reps, and industry insiders read this site. For most, insurance is just this well of money, the dynamics of which they understand about as much as why and how 'Ole' Faithful' spouts water. Get'm started on a the profile of so and so's cervical plate...well, stand back. But how the system works monetarily? I venture a bet just as many could tell you how a particle accelerator works.

    But the ones that do understand, the ones that get it, are just likely pissed THEY'RE not pulling down $24MM.

    Good news, more and more people are going to be getting that bill in the mail for some 'service' and think, WTF! Out of network?! Where am I suppose to come up with $40,000. I thought I had good benefits at this $#@! company?

    Love the call to arms TSB, but seriously, who has the leverage to 'stick it' to the man here? Seems docs are just working big insurance's land.

  5. But that's exactly the problem, everyone is afraid to stand up to the man, what do people think this is Libya, Egypt, Yemen, etc..... I think that's what TSB is attempting to say, we can either fight this together or stand alone. And for those that don't think this affects our industry, you're just fooling yourselves

  6. What commission percentage does Nuvasive pay? Medtronic? Stryker? Depuy? Synthes? Globus?

  7. NUVA....18%/28% growth, MDT....6%/10% emerging products/1-2% inventory control, SYK.....10%/15% growth DIRECT; 25-30% distributor, DPY....18%/25% distributor growth, SYN....12.5% kinda direct bennies, Glob.....20% to 35% distributor depending who you are

  8. This may be some type of logic puzzle I'm failing at, but $16MM is not $5MM more than $24MM (+51%) Which I think is $36MM...

    I think $16MM is $20MM less than $36MM, not $5MM more.

    I wasn't sure the point of this, anyway, so does it matter?

    I don't have a problem with a CEO making <1% of a large company's profits. If he/she were the owner instead of the CEO he'd have made 100%: $1,770MM, not $16MM. Especially when a lot of it is in options. It motivates them to grow their business. Their decisions make or break the company, so you want top people who command top dollar.

    Comparing salaries to school teachs (unionized under collective bargaining) makes no sense. Teachers decided a long time ago they'd rather all be paid the same, regardless if some are better than others. That was their choice for job security. A teacher's salary is just not going to be comparable to the salary of a CEO of a public company. You wouldn't want it to be.

  9. Thanks 8:04am, what about commissions on smaller companies?

  10. You pick 'em.....28% to 50%. It's like crack cocaine you different, think about it.

  11. If the guy increased income 38% with a 2% decrease in revenue, it sounds to me like Aetna gottheir money's worth. That is typical liberal logic tying the CEO's salary to any of the issues in the article, or anything else for that matter. There are scant few people capable of running a company of that scale and getting those results. TSB, you sound like the whining docs that complain about what reps make or vice versa. It is irrelevant what he makes as it pertains to the meat of this blog post.

    I don't care what the docs charges, find out what they actually collected. I can assure you it was not the amount charged. This practice occurs, to a lesser degree, with in network providers as a matter of routine. The last outpatient claim I made was paid at 5% of the charge for an in network doc and hospital.

    TSB is correct that insuarance commissioners primary function is to protect the insurance companies in their states. Along with allowing competition across state lines, consumers should not be "forced" to consume insurance thru an employer. This is the main reason for pre-existing exclusions to be an issue. If there was some competition among companies and consumers could retain the same policy when they change jobs, they would not have gaps in coverage an the options would be better.

    And TSB, the reason for recent premium increases is the portions of the Health care reform that has been enacted. No pre-existing exclusions for children (without the necessary mandate to purchase that makes this provision work), dependents up to 26 staying on parent's policy and the removal of lifetime maximum benefits. All of those provisions mean more payouts for the insurance companies so the premium increase is a natural by product unless you think the insurance companies should just absorb that in a gesture of goodwill.

    Certainly the insurance companies are not perfect, but they do provide products that result from conditions that are present in the market and within the regulations that already exist. They need to have some motivation to provide more consumer friendly products because, right now, they don't have to. I don't think that is their fault, the government is more to blame (that goes for investment bankers too).

  12. Anybody else skim the first couple sentences and then skip to the comments? We all know who the real star of this blog is.

  13. 8:41

    Just confirmation that the readership is mostly reps, a more polite CafePharma if will. The 'real stars' will enjoy disinterest at their own peril. In the same blog on how insurance co.s are reaping huge profits, you have the majority of discussion on who pays the best double digit commissions. No wonder reps look like Rich Sanchez getting tazzered when their best 'bud', their 'homeboy' surgeon rolls 'em and goes POD. Skim away!

    'Me fail english unpossible!'
    Ralph Wiggims

  14. Hey 8:05, TSB can correct me if I'm mistaken, but I think the clarification lies in "more than half coming in option awards" which TSB wasn't counting as "pay".

  15. Would anyone consider a biologics position with Nuvasive?

  16. I wouldn't take a dedicated biologics position with anyone