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A petabyte of health insurance prices per month

blog.turquoise.health

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Re: A petabyte of health insurance prices per month

#131

Post by amluto »

thedougd wrote: post #118
izzydata wrote: post #116

Earlier quoted context omitted.

Aren't there laws that require insurance companies and utility companies to have specific margins? They could in theory just print infinite money so they need to be reigned in by governments.

Yes. https://www.healthcare.gov/health-care-law-protections/rate-... .

And this is a bad law.

What do you think happens when a company has limited margins? Hint: almost all companies try to make a profit (which is fine). If the margins are unrestricted, the company can cut costs to increase profit, which is a good thing. If the margins are limited, the company must raise revenue to increase profit. For an insurance company (or a utility, and California has exactly the same broken rule for private utilities), this means raising rates or premiums.

It gets worse. If an insurer raises rates, they are required to spend 80% of that money! They are required to be inefficient! If the insurer reduces their outflows by 5% by doing a good job, they lose 5% of their profits by law. So they are basically required to do a bad job.

Re: A petabyte of health insurance prices per month

#132

Post by m_0x »

thomascgalvin wrote: post #15

There are separate charge codes for everything , and all of those codes need to be reflected in the pricing data. There's a price to slap on a bandaid. There's a price to give someone a Tylenol. Hell, W61.61XA is the medical code for "Bitten by duck, initial encounter." Presumably, this means there's also a code for "Bitten by duck, again." Medical billing is broken , and it's no surprise that the amount of data is o…

I remember a comment (not sure if here at HN or at Reddit)

Whenever a hospital staff gives you a medicine they put it first in your table then give it to you because that way they can bill you twice.

Take it in a grain of salt because I can't verify it and I can be misremembering details.

Re: A petabyte of health insurance prices per month

#133

Post by paulddraper »

thomascgalvin wrote: post #15

There are separate charge codes for everything , and all of those codes need to be reflected in the pricing data. There's a price to slap on a bandaid. There's a price to give someone a Tylenol. Hell, W61.61XA is the medical code for "Bitten by duck, initial encounter." Presumably, this means there's also a code for "Bitten by duck, again." Medical billing is broken , and it's no surprise that the amount of data is o…

Co-founder of rivethealth.com here.

Take however complicated you think medical billing is and multiply 5x. For starters.

---

You are using a bit of a mixed example with bandaids, aspirin, and duck bite.

The simplest billing is FFS (fee for service). This associates a fee for each procedure/drug/product using a 5-digit CPT/HCPC code.

For example, 29877 would be Arthroscopy, knee, surgical; debridement/shaving of articular cartilage (chrondroplasty). Add a 50 modifier to make it bilateral (both knees). Add an AS modifier if billing for an assistant surgeon. Add a 26 if the bill is only for the professional (human services) portion. And so on.

The in-network price will be based on the health organization (9-digit tax ID), the rendering physician (10-digit NPI), the insurance plan/network (no standardized format), and the place of service (2-digit code, e.g. 24 Ambulatory Surgery Center).

The price is further modified by a variety of adjustments, such as MPPR (multiple-procedure price reduction), MACRA, etc.

W61.61XA (Bitten by duck, initial encounter) is a ICD10 diagnosis code. That is, a diagnosis of a condition, not a service. While you will always have a diagnosis, it's not relevant for FFS pricing. This is used in a whole other set of billing called DRG (diagnosis-related groups) typically used for inpatient care.

And of course there are even more billing methods.

---

This is all very, very complicated.

A lot of it is essential complexity -- modern medicine is indeed very complex.

And a lot of it is incidental complexity.

Not unlike a certain software industry. /:

Re: A petabyte of health insurance prices per month

#134

Post by [deleted] »

ochoseis wrote: post #122
izzydata wrote: post #116

Earlier quoted context omitted.

Aren't there laws that require insurance companies and utility companies to have specific margins? They could in theory just print infinite money so they need to be reigned in by governments.

The ACA caps insurer profitability at 20% by requiring 80% of premiums to go towards healthcare costs. Administrative / operational / marketing costs and profit come out of the remaining 20%. So, if you’re an insurer who wants to increase nominal profits, then you’re ok with spiraling healthcare costs. https://www.healthcare.gov/health-care-law-protections/rate-...

[deleted]

Re: A petabyte of health insurance prices per month

#135

Post by AnthonyMouse »

lotsofpulp wrote: post #127
AnthonyMouse wrote: post #123

Earlier quoted context omitted.

> So, if you’re an insurer who wants to increase nominal profits, then you’re ok with spiraling healthcare costs. Not just okay, but actively incentivized to cause it, because then you get 20% of a bigger number. Laws like that are some of the most expensive of the perverse incentives created by naive idealists (or cynical opportunists, since the lobbyists for the medical providers know exactly what that would do).

In reality, there is sufficient competition such that the 7 largest publicly listed health insurance companies have 4% or less profit margins, and one has 6%. I always find it funny when people on this forum act like a certain business is so powerful when it can only earn low single digit profit margins, yet tech company employees work for companies so powerful they can earn 20%+ and 30%+ profit margins for years and…

That's their profit margin, not including the administrative overhead that counts against the 20%.

Re: A petabyte of health insurance prices per month

#136

Post by lotsofpulp »

amluto wrote: post #131
thedougd wrote: post #118

Earlier quoted context omitted.

Yes. https://www.healthcare.gov/health-care-law-protections/rate-... .

And this is a bad law . What do you think happens when a company has limited margins? Hint: almost all companies try to make a profit (which is fine). If the margins are unrestricted, the company can cut costs to increase profit, which is a good thing. If the margins are limited, the company must raise revenue to increase profit. For an insurance company (or a utility, and California has exactly the same broken rule…

Or a competing insurer takes their customers by offering lower premiums. There is a reason the health insurance business earns anemic profit margins, even though they can legally earn more.

Re: A petabyte of health insurance prices per month

#137

Post by 6510 »

I always find it amusing what excuses people come/came up with when they hate on new ideas or inventions. Usually a few decades into the project/revolution the real issues appear. No one would have argued against computers back in the day because it will cause petabytes worth of important nonsense. It would have sounded unbelievable.

Re: A petabyte of health insurance prices per month

#138

Post by lotsofpulp »

jmole wrote: post #124
thedougd wrote: post #118

Earlier quoted context omitted.

Yes. https://www.healthcare.gov/health-care-law-protections/rate-... .

So the only way to grow profits is by increasing the base cost of service.

An insurance company can also increase the number of customers.

Re: A petabyte of health insurance prices per month

#139

Post by lotsofpulp »

AnthonyMouse wrote: post #135
lotsofpulp wrote: post #127

Earlier quoted context omitted.

In reality, there is sufficient competition such that the 7 largest publicly listed health insurance companies have 4% or less profit margins, and one has 6%. I always find it funny when people on this forum act like a certain business is so powerful when it can only earn low single digit profit margins, yet tech company employees work for companies so powerful they can earn 20%+ and 30%+ profit margins for years and…

That's their profit margin, not including the administrative overhead that counts against the 20%.

I do not think health insurance company shareholders are interested in paying employees extra for no reason and earning less profit for themselves.

Re: A petabyte of health insurance prices per month

#140

Post by ADuckOnQuack »

lotsofpulp wrote: post #106
Sevii wrote: post #49

There is so much data because of insurance. Insurers are in the business of declining claims. They have discovered that the best way to decline claims is to create byzantine rules while offloading all the work to comply with those rules to healthcare providers. The only way to fix it at this point is to nationalize the system or to exclude all routine care from the insurance system. Something like a legal ban on dedu…

Per federal law (ACA), health insurers in the US are required to spend 80% to 85% of revenues on healthcare expenses. Their profit margins are 2% to 6%. Therefore, the higher the revenue, the higher the profit. Where is the incentive to deny legitimate claims?

The incentive is probably to get their profit margin up to the maximum 15-20% https://www.propublica.org/article/cigna-pxdx-medical-health...
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