Health insurance administration: From pragmatic haggling to preposterous hilarity

There was a time when people paid their MD with chickens or apple pie. It was a bartering economy that made sense between the participants.

For many years doctors resisted governmental efforts for universal health care and insurance companies did not want any part of trying to develop risk models that would make health insurance a money-making product. Houses were easy to make insurance models for - but no one wanted to deal with the vast complication of risk assessment for human health.

Lots of things happened throughout the 1920s and 1930s that pushed insurance companies into the health insurance market: the Flexner report called for and prompted improved standards in medical education, small union groups began negotiating fixed-cost hospital coverage plans, and demand for medical services increased as medical technology improved and large populations of people moved from rural to urban centers.

Health insurance grew through the 1960s and then government entitlement programs were established (Medicare and Medicaid). This leads up to today where many people are viewing universal health care as a right. The systems are so large and complex now that the insurance companies themselves don't even want to administer them, so they farm out the administration to separate corporate entities. This all adds to the cost of health care.

What prompts this little history review is a funny letter I received from NGS which is a Wellpoint subsidiary that was recently awarded the Medicare administration contract for NY. The letter was so hilarious I will just reprint it in whole here:

Per Centers for Medicare & Medicaid Services (CMS) regulations, when Medicare contractors send an overpayment second demand letter to a provider, they are required to attach a copy of the overpayment initial demand letter. Prior to January 5, 2009, contractors were responsible for attaching the initial demand letter to the second demand letter and had their own processes for doing so. With the publication of CMS Change Request 5986, this is now a system-automated process. With the implementation of this change on January 5, 2009, the system will now automatically print and attach the first letter created on the case. However, it has come to the attention of National Government Services that the first letter generated to a provider is not always an overpayment initial demand letter. Another type of communication, such as a redetermination letter, may be the first letter generated through the system, and therefore may be attached to the second demand letter.

Providers need to be aware that when they receive an overpayment second demand letter and a letter other than the overpayment initial demand letter is attached, they should ignore the attached letter, as it may no longer be accurate. However, in these situations, the second demand letter is valid, and offsets will begin for the provider if the overpayment is not repaid within the mandated time frame (41 days from the date of the initial demand letter which had been mailed previously). Providers who have questions regarding the overpayment second demand letter can contact the Provider Contact Center for assistance. Provider Contact Center telephone numbers are located in the Resources section of the National Government Services Web site at www.NGSMedicare.com.

We are continuing to work with Electronic Data Systems (EDS) to determine the date this issue will be corrected.


Thank you,
National Government Services, Inc.
Corporate Communications

Would Doc Baker be able to make any sense out of the crazy system that we have today?