Unveiling the Truth: Why Insurance Companies Delay Payments and the Reality of Blue Shield of California's Announcement

Ben H.

Ben H.

Nov 24, 20233 min read

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Unveiling the Truth: Why Insurance Companies Delay Payments and the Reality of Blue Shield of California's Announcement

Introduction:

The healthcare industry in the United States is plagued by exorbitant costs, with the country spending a staggering $4.3 trillion on healthcare. Surprisingly, five health insurance companies alone rake in over $851 million, accounting for 20% of the total expenditure. However, what may seem like a significant sum is actually cash received but not yet paid out. Insurance companies strategically delay payments to maximize their profits, leaving individuals without timely access to essential healthcare services. Additionally, it's crucial to redefine the role of insurers as "processors" rather than "payors" since it's the individuals who bear the financial burden.

The Delayed Payments Game:

The longer an insurance company can delay paying out claims, the more money it can make. This practice leads to detrimental consequences for patients who are denied necessary medical treatments, surgeries, medications, and even diagnostic tests like MRIs. Denials for the sake of delay are a common occurrence, highlighting the profit-driven motives of insurance companies. While patients may owe the money, insurers exploit the delay to grow their own profits rather than prioritize the well-being of their policyholders.

Blue Shield of California's Announcement:

Blue Shield of California recently made headlines with its announcement to transform the purchasing and supply of medications. However, upon closer examination, the touted disruption appears less novel than advertised. Blue Shield will essentially act as a general contractor for a subset of pharmacy benefit management (PBM) services, relying on the largest PBMs in the industry. The announcement raises questions about whether this move truly simplifies the system and cuts unnecessary costs as claimed.

The Role of Amazon Pharmacy and Mark Cuban Cost Plus Drug Company:

Amazon Pharmacy, often hailed as a disrupter in various industries, seems to be reduced to an in-network mail pharmacy within Blue Shield's network. The availability of Amazon Prime subscription pricing, akin to the popular GoodRx option, still remains uncertain within Blue Shield's benefit structure. Similarly, Mark Cuban Cost Plus Drug Company's role is limited to setting retail prescription prices, which may not compete with the offerings of Amazon's mail pharmacy or retail discount card. The hope seems to be that beneficiaries won't explore alternative pricing options available online.

The Involvement of Abarca, Prime Therapeutics, and CVS Caremark:

Abarca, the cloud-based PBM platform, will process claims for Blue Shield of California. This partnership will significantly increase Abarca's activity level, considering Blue Shield's substantial number of covered lives. Prime Therapeutics, responsible for negotiating rebates, currently sources formulary rebates via Ascent Health Services, owned by Cigna's Evernorth business. It remains uncertain if Blue Shield's regional plan will receive better deals from manufacturers. Surprisingly, despite firing CVS Health's Caremark business, Blue Shield will still utilize CVS Caremark's specialty pharmacy services, which represents a significant source of profit for large PBMs.

Conclusion:

Blue Shield of California's attempt to unbundle the PBM business model is commendable, but the reality appears to be less disruptive than anticipated. The reliance on industry giants raises questions about the promised cost savings and improved beneficiary experience. Exploring partnerships with smaller, more transparent PBMs could potentially offer a more efficient and cost-effective solution.

Actionable Advice:

  • 1. Advocate for Transparent PBMs: Support the use of smaller, more transparent PBMs that prioritize patient well-being and cost savings over opaque profit-generating practices.
  • 2. Compare Pricing Options: Take advantage of online resources like Amazon Pharmacy and other mail pharmacies to compare prescription prices and ensure you're getting the best deal.
  • 3. Demand Accountability: Hold insurance companies accountable for timely payments and access to necessary healthcare services. Challenge denials and seek alternative options if your insurer is delaying payment for medically necessary treatments.

By understanding the motivations behind insurance companies' delayed payments and critically analyzing announcements like Blue Shield of California's, individuals can navigate the healthcare system more effectively and advocate for their own well-being.

Resource:

  1. "The Healthcare Breakdown No. 023 - Breaking down why insurance companies hate paying for your healthcare", https://www.thehealthcarebreakdown.com/p/the-healthcare-breakdown-no-023-breaking?utm_source=substack&utm_medium=email (Glasp)
  2. "A Reality Check on That Blue Shield of California Announcement", https://www.drugchannels.net/2023/08/a-reality-check-on-that-blue-shield-of.html (Glasp)

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