ACAA : What this Government Insurance Structure Represents for Puerto Rico's Medical Center, PR Fiscal Plan and Healthcare Economy

Posted August 7th, 2017

Nilza I. Cruz Ruiz

939-644-7683

"The intellect has little to do on the road to discovery. There comes a leap in consciousness, call it intuition or what you will, and the solution comes to you and you don't know how or why."

Albert Einstein

As a continuation of last week's blog, planned for this week was a discussion pertaining to building Complex System Model Simulations. But it was an interview I listened to last Wednesday in which Jay Fonseca interviewed the Executive Director of ACAA [(Administración de Compensaciones por Accidentes de Automóviles) (Administration for Compensation of Accidents of Automobile)];  which motivated me to alter my presentation for this week. 

The trigger? When the Executive Director stated the following as part of the interview:  "ACAA lo cubre todo" ("ACAA covers everything"). This, related to the topic of patients treated in the Puerto Rico Medical Center.

As part of my professional career, I've occupied two VP positions within multinational insurance companies. The first, managing a Life, Property & Casualty portfolios, and the other, Accident & Health lines of business. So, this part of the interview really did strike me! 

Naturally, everything depends on something and we need to present context in addition to the definition of the  perspective or angle in which the discussion will be framed:

I. Context

The Administration of Compensation for Accidents of Automobiles (ACAA) is a public corporation created by  law No. 138 of June 26, 1968, as amended, known as the law of Social protection by automobile accidents, which administers insurance health care and compensation to benefit the victims of motor vehicle accidents and their dependents.

The purpose of this Corporation is to reduce the tragic social and economic effects of road traffic on the family and other dependent victims. The ACAA provides services medical-hospital  and compensation to the victims and to the dependents of deceased victims to avoid  total economic distress.

The ACAA's corporate powers are executed by a Government Board responsible for the Administration and ensure that it enforces the provisions of the Act. The Board appoints the Executive Director responsible for complying with the provisions of the Act, as well as the rules and procedures referred to in this Board.

ACAA is an agile and dynamic institution with all its integrated operational systems, which facilitates efficient, quality services and in the shortest possible time. It has employees trained and committed to excellence in service, targeted to meet the needs of our members and to promote, through education, the prevention of traffic accidents. This is public information obtained from ACAA's website.

The words/phrases I have highlighted in the last paragraph represent the drivers for validation results to be presented and for you to evaluate. The universe of patients for this study consists of ACAA patients* treated at the ASEM Emergency Room and Trauma Hospital within the Puerto Rico Medical Center for the period of 2013-2016.

* ACAA patients are defined as patients for whom claims were submitted to ACAA as the primary insurance because of the nature of the accident (automobile related). It does not imply that the claims were paid by ACAA because coverage was denied as per exclusions stipulated in the ACAA/ASEM (Trauma Hospital is under ASEM governance) contract. In this case, ASEM, a government corporation is a provider of the ACAA Insurer network (another government corporation); i.e; this is a government-government relationship (begin to think about existing government structure and efficiency please!)

II. Key Findings

• Within the distribution of 100% of claims received in ACAA corresponding to medical-hospital services, at least 80% are from the ASEM Emergency Room/ Trauma Hospital Facilities. So, it seems the ACAA structure and operation is focused on it's main provider: The Puerto Rico Medical Center regarding medical-hospital coverage. (ACAA also provides other coverages as for example disability and dismemberment).
• Patients under the effects of drugs or alcohol are denied coverage and ASEM incurs in 100% of treatment costs for these patients.
• The ACAA billing operation is a manual process. Physical claims (in paper) are taken to ACAA Central Office premises and they need to be stamped as received "1 by 1" on the ACAA premises. So, there are ACAA designated employees for this "receive and stamping" function, while another ASEM resources delivers the boxes of claims and waits for them to be "received". Just imagine, one ACAA patient's length of stay in the Trauma Hospital can consist of 90 days before discharge. Services provided to this patient, and billed manually may be equivalent to more than 100 physical papers (which represent services billed).
• The ASEM Trauma Hospitals costs approximately $45 million by fiscal year. This may surpass 20% of ASEM's fiscal year budget.
• The ASEM Trauma Hospital is the only hospital in PR and the Caribbean specialized in Trauma. It serves as a resident facility for Medical Science Campus residents as well.
• While the annual frequency of Trauma patients is low, the severity in terms of costs is significantly high. This is because these patients are "poly traumatized"; implying their health conditions require more services which are highly specialized.
• An average of 1,900 patients by year have been treated at the Trauma Hospital for a nine (9) year period*.
• 22% of these patients have been covered by ACAA while 37% by the government health reform (i.e; government-government) relationships (average 9 years). 59% of Trauma patients rely on government related insurance.
• 22% of ACAA patients have represented an average cost of $23 mm while 37% of health reform patients an average of $26 mm for the same 9 year period). $49 mm in total costs incurred.
• The ratio of average [patient percentage vs costs incurred] = 22% / $23mm for ACAA Patients and 37% / $26mm for government Health Reform patients. There's a $3mm increase for a 68% patient count increase for non-ACAA government health reform patients. This obeys the fact that financial class ACAA patients may be lower in frequency, but with much higher severe health conditions with require more treatment times resulting in longer lengths of stay in the  hospital.

* FY's 2007/2008 - 2015/2016

III. ACAA as a government corporation adopting a Universal Third Party Payer System Model

The following Model presents the interrelationship between the three (3) critical Agents in this study:

ACAA-Insurer 

Patient ( future probable insured/claimant)

ASEM - contracted healthcare provider within ACAA'S provider net

What this Model clearly presents is :

• ACAA administration executes as per Law No 138
• ASEM contracts with ACAA in compliance with Law No 138 which at the same time drives contracted coverage and exclusions in ACAA/ASEM Contract
• Patients/Insureds/Claimants have to comply with Law 138 and ACAA/ASEM Contract. This implies these agents within the system follow two (2) sets of rules (one for each corporation), multiplied by the number of sub-rules that apply for each set. This is not a lean service for ACAA /ASEM patients or people (relatives, family, etc) representing them  in the  process of filing a claim! Especially with the patient (market)  we're servicing as a majority: polytraumatized patients...

In synthesis, when coverage is triggered (i.e; an insured /patient is converted to a claimant), the implementation of the operational process begins. Operational processes include :

• ACAA's cumbersome paper work completion and processing by patient's family, or relatives. This process is by hand, not electronic.
• ACAA issues ASEM a claim number once  paperwork is received by ACAA and ACAA determines if coverage will not be excluded. For example, if the patient is under the effects of drugs or alcohol, coverage will not be provided. In other words, the patient will be treated by the ASEM  emergency room and trauma hospital, but ASEM will not be compensated for incurred health treatment costs (not under the ACAA primary insurance).
• Covered claims will be submitted by ASEM to ACAA in paper! This, because ACAA lacks an electronic billing process (at least to December 2016) .
• Payments will be received by ASEM based on contracted rates, not costs of services. The following represent contracted rates by ASEM up to 2012 (contract was expired and rates had never been modified up to 2013) . Beginning in 2013,   a comprehensive cost analysis was completed by a designated cross-functional team  consisting of excellent existing personnel (doctors, finance, cost, accounting, medical record personnel) facilitated by myself:

                                                                                   ACAA Rate      ASEM per diem (cost study-2013)

"Unidad Aguda"                                                                             $600                       $1,293

"Unidad Aguda-Aislamiento"                                                           625                         1,347

"Telemetria"                                                                                     625                         1,347

"Intensivo Intermedio"                                                                     755                          1,627                                                         

"Intensivo Intermedio-Aislamiento"                                                 780                         1,681

"Intensivo- Critico"                                                                           915                          1,972

"Intensivo-Aislamiento"                                                                    940                          2,026

IV. ACAA DOES NOT COVER EVERTHING!

So, the statement that " ACAA covers everything" is not only misleading, but FALSE. Patients are under this belief until the time of the accident. While it is true that it is our responsibility to prevent drunk driving or under the influence of drugs; ACAA needs to be more aggressive in this matter. Treated patients not covered by ACAA because of drugs or alcohol cost the commonwealth millions. Yet, they are discharged from the Medical Center and their licenses are renewed!! I do hope ACAA Administration is on the road to legislation regarding actions taken amongst irresponsible drivers. It's not only their lives at stake, but other innocent people as well.
For example, gasoline stations are at their peak selling alcohol related products.

V. Actions Taken and Recommendations

In 2013, ACAA had a debt with ASEM regarding outstanding claims ascending to $6 million. In addition, ACAA would pay ASEM an aggregate of $500,000 by fiscal year. Effective 2014, a contract was negotiated (ACAA/ASEM) which included the payment of $6mm of the outstanding debt (which as paid off) and an the annual aggregate increased to $700,000 by fiscal year distributed by equivalent payments on a monthly basis. Fixed amounts were transferred electronically into ASEM's account before the 10th of each month.  This, to alleviate ASEM cash and liquidity constraints. 

An ASEM/ACAA committee was established and met on a monthly basis. This, to revise core standards pertaining to the operational processes that were developed. Action Plans with designated responsible personnel from both parties and deadlines were agreed and implemented. Corrective and preventive actions as well. Both parties had a better understanding of how each part operated. Why? Because patient service is the utmost common goal for each party. But the existing structure is indeed challenging and complex for patients, ACAA and ASEM personnel, in addition to related agents within the system.

Although the cost incurred by the Medical Center for ACAA patients (under the influence of alcohol or drugs) is still not covered, there was/is an acknowledgement by ACAA and ASEM top management and personnel that even though they are part of two different sub-systems represented by 2 separate corporations, both parts are really components of one (1) same system - the healthcare system. The problem is really structural. Existing separate structures do not promote lean patient service and the fiscal results for the ASEM Corporation, and the government as a macro, are unsustainable. In addition, legislation can be addressed for irresponsible drivers in order to prevent accidents. 

Let's not be blindsided by the fact that ACAA's financial statement may have positive outputs. It's the mere existence of it's actual medical-hospital structure; not the mission it represents, that should be carefully evaluated. This structure represents a $94mm budget within PR's existing financial crisis. It's almost the sole (more than 80% of it's claims are from the PR Medical Center) insurer (Automobile Accident related) for the Medical Center. So, I recommend the creation of a revised ACAA structure (not necessarily a corporation) be created  (including, a raise in the existing annual rate of $35 dollars); and have the Medical Center be auto insured for automobile related claims. (a transformation for the PR Medical Center Structure is recommended as well in a previous blog. it includes revision of relationships between ACAA/ASES/PR Medical Center).

The new ACAA structure could assign ASEM and the rest of the Medical Center components fixed monthly amounts according to cost structure and claims experience. Of course, within an audit structure for continuous revisions of services provided, costs incurred, and payments. ACAA, and the Government Health Reform existing structures, can follow similar landscapes regarding their government-government-government (ACAA-ASES-PR Medical Center) with the medical center. The government structure does not need to have 2 insurers representing $2.9 billion in it's budget. Especially if more than 70% of each of these programs insureds, are treated by the governments health facility structure: The Puerto Rico Medical Center. Patients will be better served.

The transformation of the Puerto Rico Medical Center , ACAA and ASES existing structures will represent the initial steps towards establishing new landscapes for identifying and eliminating the underlying factors causing existing and deteriorating financial constraints in the government healthcare component. Also, impacting the existing PR Fiscal Plan by depending less on the PR general fund and integrating alternate models preparing for the scenario of receiving less federal funds.

Next week we'll continue with Agent based Models and Complexity