Wednesday, January 14, 2009

WellPoint Sanctioned

Giant insurance company/ managed care organization WellPoint was just sanctioned by the US government. As reported by the Wall Street Journal,

Federal officials temporarily banned health insurer WellPoint Inc. from marketing or selling Medicare health or drug plans after they said computer problems caused it to deny thousands of seniors coverage for vital medications and cancel their benefits.

The ban, effective late Monday, is one of the toughest penalties levied on a private Medicare plan provider since the introduction of the government program's drug benefit three years ago.

In an unusually terse letter to WellPoint, the government agency that oversees Medicare said the company's 'longstanding and persistent failure to comply with [Medicare] requirements' had begun to pose 'a serious threat to the health and safety' of Medicare beneficiaries.

WellPoint, the country's largest health insurer, is the fourth-largest provider of Medicare drug plans.

The problems at WellPoint stem from computer glitches that began at least six months ago, an issue that Medicare officials had been monitoring and that the company says it had been trying to fix. But the problems surged and became more serious at the start of this year, when WellPoint's systems failed to accurately process some of the new data for its 2009 plans, said the Centers for Medicare and Medicaid or CMS, the agency that runs the health-care program for the elderly.

As a result, thousands of seniors found they couldn't fill or renew prescriptions for drugs to treat chronic heart failure, seizures, asthma and other medications, the agency said. WellPoint also mistakenly dropped coverage for many beneficiaries and overcharged others.

'Furthermore, WellPoint failed to follow through on assurances to CMS that the problem was immediately and fully corrected,' the agency's letter said.

The computer problems are just the latest at WellPoint. Last year, a project to consolidate some claims-processing systems caused it to miscalculate how fast its medical costs rose and to underprice some of its commercial plans, ultimately contributing to a profit warning.

We just posted about how often the antics of the leadership of managed care/ health insurance giant UnitedHealth provide material for Health Care Renewal. Even larger health care insurer/ managed care organization WellPoint has also been a frequent flier on our electronic pages. We most recently posted about financial management issues at WellPoint here, and insurance coverage issues here.

Yet despite evidence of mismanagement and worse leadership problems at large health care organizations, these organizations remain dominant players in our dysfunctional health care system, and the managers and executives who ought to be accountable for these problems continue to blithely collect their tremendous compensation packages.

As we have said until blue in the face, ill-informed, incompetent, conflicted and even corrupt leadership of ever larger and more powerful health care organizations, enabled by opaque, unrepresentative, unaccountable governance not subject to ethical standards, continues as probably the most important cause of health care dysfunction.


MedInformaticsMD said...

Computer "glitches?"


People "glitches" is more appropriate. Hiring of insufficient numbers of people, and/or underqualified people, and/or incompetent people in the name of "cheap." Hired by even more incompetent management. This seems common in the IT sector.

Let's stop blaming the computer and put the blame where it squarely belongs.

On management.

-- SS

Anonymous said...

The human-computer interface is highly complex and leads to bewilderment, isolation, and ostracism of the user. Does anyone think for one minute that WellPoint has a monopoly on "computer glitches"? However, when such "glitches" occur in hospitals, patients get "hospitalitis" and get injured...yes, they even die because of the defective systems so associated.

All readers and HIT users would help determine the magnitude of the problem (covered up, so far) by reporting HIT associated patient events of an untoward nature to CMS, FDA, and The Joint Commission, on their respective websites.

Incidentally, I agree with the first commenter.

Anonymous said...

As a business person I don't see a real financial impact by this government action. People will make nice, promises will be made and not kept, and life will go on.

The computer issue is more interesting. Computers have become the scapegoat for any number of corporate misdeeds. "The computer did it" has become an instant excuse that covers all types of problems. What I have seen, which you will not prove, is some systems are designed to kick out claims, or not make payments, in the hope that the "saved" money will exceed any financial penalty or just be overlooked with the "computer did it" excuse.

We do have an ethical problem in many corporations and when no one person is held accountable, everybody will feel free to push the system for their own gain. As mentioned in MedInformaticsMD post, it all comes down to management.

Steve Lucas

Preston Gorman said...

Didn't this error happen within the financial sector? I think that isolating your criticism to IT misses the point that the computers were simply tools used to perform a failed business function.

Computers are used in processes to speed things up and improve consistency of execution, but whatever is marginally broken will be broken many times over with the use of artificial computation. This characteristic isn't unique to HIT, IT or healthcare.

MedInformaticsMD said...
This comment has been removed by the author.
MedInformaticsMD said...

Dear Mr Gorman,

I agree with you. In fact, that's what my comment says.

In this story, computer "glitches" were cited as a cause of data debacles. "The problems at WellPoint stem from computer glitches that began at least six months ago."

I commented that the problem is not "computer glitches", the problem is "people."

The hiring issues I mentioned do seem all to common in the IT sector and compound the problems others have in data and knowledge management. If the tools are low quality, it's a lot harder to build a sturdy house. In this case, one still can't blame the tools, but one can blame the toolmakers.

Such practices occur in other sectors, too.

One can look at the just released US National Research Council report on HIT as indicating HIT has been grossly mismanaged for decades. HIT has long been the domain of the IT sector, not the medical one.

Preston Gorman said...

Good comments all around. You say that we can blame the toolmakers, but I would go a bit farther and blame the "developers of the neighborhood", the business (and clinical) people far removed from the actual tools who demand greater functionality but withhold the resources needed to assure that the effort has the right tools, people, and materials to assure high quality.

Nice job bringing this discussion forward.

MedInformaticsMD said...

I would go a bit farther and blame the "developers of the neighborhood", the business (and clinical) people far removed from the actual tools who demand greater functionality but withhold the resources needed to assure that the effort has the right tools, people, and materials to assure high quality.

Indeed. IT on the cheap ends up being cheap IT.

The unwise outsourcing of critical functions to foreign companies that undercut domestic experts by massively cooking the books is another symptom of the "cheap dsease."

Mark said...

On top of that, take a look at this latest piece of insurance news, where thousands of patients have to find a new hospital...

Shaun Snapp said...

The "glitches" could simply have been how the computers were programmed. If WellPoint does not get caught nothing is said on the matter. If they do get caught, its a computer error. Let me ask, does the computer error ever go in the opposite direction, say towards approving too many claims? If it never happens, then we can safely assume that the PR for WellPoint is simply lying. Their glitch is how the system was programmed to work.

Anonymous said...

It's sad that the Seniors were the ones that suffered this time with Wellpoint. Wellpoint should get out of the Healthcare business - they don't care about the health of the people they cover, they only care about the Senior Leadership's salaries and bonuses. I used to work for one of the companies that "bought" Wellpoint and retired soon after.

Anonymous said...

If you are having problems with your Wellpoint or Blue Cross claims call

Ivan Ashby, Director of Customer Care at Blue Cross
916-636-2312, direct