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Updated: 21 hours 21 min ago

For Millions of Insured Americans, State Health Laws Don’t Apply

November 16, 2017

Let’s say you have health insurance through your employer and live in one of 21 states with laws protecting consumers against surprise medical bills from out-of-network providers.

Ask Emily

Senior Correspondent Emily Bazar’s answers consumers’ questions about California’s changing medical landscape.

Send questions for Emily to AskEmily@kff.org

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Should one of those unwanted bills land in your mailbox, you can turn to your state law and regulators for help, right?

Not necessarily.

If you’re among the millions of Americans with a category of job-based health coverage known as self-funded insurance, most state health care laws do not apply to you.

Plus, if you have an issue with your coverage, you must go through a different appeals process than other state residents with private insurance. You must seek help from a federal regulator that may — or may not — be responsive.

“We have unequal consumer protections for a big chunk of our population,” says Tam Ma, legal and policy director for the advocacy group Health Access California.
For Millions of Insured Americans, State Health Laws Don’t Apply
Nationally, 61 percent of covered workers were in self-funded plans last year, according to the Kaiser Family Foundation. (Kaiser Health News, which produces California Healthline, is an editorially independent program of the foundation.)

In California, about 5.7 million people were enrolled in such plans. Last year, the Golden State’s two health insurance regulators received more than 1,000 requests for help from consumers in self-funded plans. The departments have no authority over those plans and had to refer many of the enrollees to the U.S. Department of Labor, which regulates them.

Businesses that opt for self-funded plans — also called self-insured plans — generally pay the medical bills of their employees directly.

Under a fully insured plan, on the other hand, the employer — or an individual or family — buys coverage from a state-regulated insurance company, which assumes the financial risk. In California, fully insured plans are overseen by the state Department of Managed Health Care or the state Department of Insurance.

Large companies are more likely to self-insure. Among companies with 5,000 or more employees, 94 percent of covered workers were in self-funded plans last year, KFF data show.

More businesses — including smaller ones — are self-insuring because they can save money, says Dean Hoffman, an employee benefits consultant based in Wisconsin who specializes in self-insured plans.

One way they save is by avoiding the cost of complying with state-mandated benefits. For example, Hoffman says, for every premium dollar spent on fully insured plans in Wisconsin, about 11 cents goes toward state-mandated requirements.

“Every time you add a benefit, there’s a price associated with that,” he says.

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It might not be obvious that you’re covered by a self-funded plan. Most businesses contract with health insurance companies to administer them, pay claims and provide access to their provider networks. That means your insurance card will likely have a Cigna, Blue Shield or other familiar logo on it even if your plan is self-funded.

If you’re not sure whether your plan is self-insured, ask your human resources department.

“To the consumer, it feels no different,” says Karen Pollitz, a senior fellow at KFF. “If you work for a big company, it’s a pretty good bet you’re in a self-funded plan.”

If you are, you may feel the difference in coverage, consumer protection and grievance procedures, however. “The only consumer protections available to those folks are just what federal law provides,” Ma says.

Consider state laws relating to surprise medical bills. Among the states that have adopted various protections against such bills, Connecticut, Illinois, New York, Florida, Maryland and California have the strongest and most comprehensive measures.

But even if you live in one of these states, “you still might get hit by large medical bills” if you’re in a self-funded plan, Pollitz says.

Some self-insured businesses, however, voluntarily provide many of the same protections as state law, says Lauren Vela, a senior director at the Pacific Business Group on Health, which represents about 75 companies that self-insure nationwide.

In the case of surprise bills — from out-of-network doctors such as anesthesiologists, for instance — “a lot of employers, not all of them, would have it written into their plan that it would not be considered out-of-network,” Vela says. “No employer wants to have employees get these kinds of surprise bills.”

To handle complaints about coverage, most states have laws allowing consumers in private health plans to appeal to an independent, external reviewer chosen by the state if your plan denies a claim and you disagree, Ma says.

In self-insured plans, you are entitled to external review — but your employer chooses, hires and pays the reviewer, Pollitz says. “It’s not independent in the way that state programs are.”

Plus, your regulator, the U.S. Department of Labor, may be slow to get involved in the grievance process, Ma says.

The department “doesn’t really have the resources or the ability to protect consumers in a timely way,” she says. “It may take them a very long time to get to your case, if they do at all, compared to state-regulated plans.”

So, if you’re in a self-funded plan and disagree with a coverage decision, look at your explanation of benefits, which will describe how to appeal. You can also ask your human resources department for guidance, or your union, if one represents you.

Most experts agree that your first step will likely be to contact the customer service line on your insurance card and request a review.

If your concern isn’t resolved that way, reach out to the Employee Benefits Security Administration (EBSA) through the Department of Labor at 866-444-3272 or www.askebsa.dol.gov.

EBSA “has experts who can help on this,” says Michael Trupo, a spokesman for the department, though he did not answer follow-up questions for more details.

If you don’t get your questions answered, many states have Consumer Assistance Programs that help you navigate insurance problems, including those with self-funded plans. The Department of Managed Care administers California’s program, which can be reached at 888-804-3536.

“They’ll help you file your appeal and make inquiries on your behalf,” Pollitz says. “They can be your advocate.”

California Fines Anthem $5 Million For Failing to Address Consumer Grievances

November 15, 2017

California’s managed-care regulator announced Wednesday it has fined insurance giant Anthem Blue Cross $5 million for repeatedly failing to resolve consumer grievances in a timely manner.

The state Department of Managed Health Care criticized Anthem, the nation’s second-largest health insurer, for systemic violations and a long history of flouting the law in regard to consumer complaints.

“Anthem Blue Cross’ failures to comply with the law surrounding grievance and appeals rights are long-standing, ongoing and unacceptable,” said Shelley Rouillard, director of the Department of Managed Health Care. “Anthem knows this is a huge problem, but they haven’t addressed it.”

Before this latest action, California had already fined Anthem more than $6 million collectively for grievance-system violations since 2002.

The state said it identified 245 grievance-system violations during this latest investigation of consumer complaints at Anthem from 2013 to 2016.

Rouillard cited one example in which Anthem denied a submitted claim for an extensive surgical procedure, even though it had issued prior approval for the operation. Twenty-two calls contesting the denial — placed by the patient, the patient’s spouse, the couple’s insurance broker and the medical provider — failed to resolve the complaint. It was not until the patient sought help from the managed-care agency, more than six months after the treatment, that Anthem paid the claim.

Anthem Inc. could not be immediately reached for comment. The company, based in Indianapolis, sells Blue Cross policies in California and 13 other states.

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California is known for having tough consumer protection laws on health coverage and for assisting policyholders when they exhaust their appeals with insurers. In other actions, the state has fined insurers for overstating the extent of their doctor networks and for denying patients timely access to mental health treatment.

Jamie Court, president of Consumer Watchdog, an advocacy group in Santa Monica, Calif., said the regulatory response to these problems varies greatly by state.  He singled out New York, Washington and Kansas as some of the states with good track records of holding health insurers accountable.

“The real problem is when states don’t act there is not a great avenue for the consumer. It’s very hard to bring legal action,” Court said. “Anthem definitely needed a wake-up call. But this will also send a message to other insurers.”

Nationally, consumers continue to express their displeasure with health insurers over a wide range of issues, including denials for treatment, billing disputes and the lack of in-network doctors.

Verified complaints related to health insurance and accident coverage rose 12 percent in 2016 compared to the previous year, totaling 53,680, according to data compiled by the National Association of Insurance Commissioners. The data only includes incidents in which state regulators confirmed there was a violation or error by the insurer involved.

Court and other advocates welcomed the significant fine in California and said this is just the latest example of Anthem’s failure to uphold basic consumer protections.

Overall, state officials said that calls to Anthem’s customer service department often led to repeated transfers and that the company failed to follow up with enrollees.

After previous fines, Anthem has pledged to provide more training to employees and to better track grievances and appeals in order to reduce delays.

“If you look at the history of Anthem and the penalties assessed over the years, they are definitely an outlier compared to other health plans,” Rouillard said.

“All the plans have some issues with grievances, but nothing to the degree we are seeing with Anthem.”

The managed-care department said a health plan’s grievance program is critical, so that consumers know they have the right to pursue an independent medical review or file a complaint with regulators if they are dissatisfied with the insurer’s decision. The grievance system can also help insurers identify systemic problems and improve customer service, state officials said.

The state’s independent medical review program allows consumers to have their case heard by doctors who are not tied to their health plan. The cases often arise when an insurer denies a patient’s request for treatment or a prescription drug.

In 2016, insurance company denials were overturned in nearly 70 percent of medical review cases and patients received the requested treatment, according to state officials.

Some States Roll Back ‘Retroactive Medicaid,’ A Buffer For The Poor — And For Hospitals

November 14, 2017

If you’re poor, uninsured and fall seriously ill, in most states if you qualify for Medicaid — but weren’t enrolled at the time — the program will pay your medical bills going back three months. It protects hospitals, too, from having to absorb the costs of caring for these patients.

But a growing number of states are rescinding this benefit known as “retroactive eligibility.” On Nov. 1, Iowa joined three states that have eliminated retroactive coverage for some groups of Medicaid patients since the Affordable Care Act passed. Each state had to secure approval by the federal government.

Retroactive eligibility has been a feature of Medicaid for decades, reflecting the program’s emphasis on providing a safety net for poor, disabled and other vulnerable people. In contrast to private insurance, determining Medicaid eligibility can be complex and the application process daunting, advocates say. A patient’s medical condition also may keep families from applying promptly for coverage.

Insuring Your Health

KHN contributing columnist Michelle Andrews writes the series Insuring Your Health, which explores health care coverage and costs.

To contact Michelle with a question or comment, click here.

This KHN story can be republished for free (details).

All four states — Arkansas, Indiana and New Hampshire, in addition to Iowa — have expanded Medicaid under the health law, which allowed states to include adults with incomes up to 138 percent of the federal poverty level, or about $16,000 for one person. So, in theory, most adults are required to have insurance under the ACA. In practice, each state still has a significant number of uninsured, ranging from 5 to 8 percent of the population.

The retroactive coverage “can compensate for the sorts of errors and lapses that can so easily occur on the part of both the applicant and the government bureaucracy” that delay applications, said Gordon Bonnyman, staff attorney at the Tennessee Justice Center, a public interest law firm that represents low-income and uninsured residents.

State and federal officials say eliminating the retroactive coverage helps encourage people to sign up for and maintain coverage when they’re healthy rather than waiting until they’re sick to enroll. It also fits into federal officials’ efforts to make Medicaid, the federal-state program that provides health care for low-income adults and children, more like private insurance.

But consumer advocates and health care providers say the shift will saddle patients with hefty medical bills and leave hospitals to absorb more uncompensated care when patients can’t pay. Some worry this could be the start of a trend.

In Iowa, the change applies to just about anyone coming into Medicaid — except for pregnant women and children under age 1. The change will affect up to 40,000 residents annually and save the program more than $36 million a year.

“We’re making it a lot more likely that Medicaid-eligible members are going to incur significant medical debt,” said Mary Nelle Trefz, health policy associate at the Child & Family Policy Center in Des Moines, whose organization opposed the change.

When someone has a traumatic health event, the initial focus is to get them stabilized, not figure out how to pay for it, said MaryBeth Musumeci, associate director of the Program on Medicaid and the Uninsured at the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)

Patients may neglect to apply immediately for Medicaid, leaving them financially responsible for days or months of care they received before they got in their application, even though they may have been eligible for Medicaid all along.

That’s not the only issue, advocates say. Unlike the commercial insurance market where re-enrollment through someone’s employer is routine, Medicaid requires that beneficiaries’ eligibility be reassesed every year.

“People fall through the cracks,” said Andrea Callow, associate director of Medicaid initiatives at Families USA, a consumer advocacy group.

In addition, complications can arise for people who might need Medicaid coverage for long-term care services. “The criteria are complicated. For a layperson to find those criteria and figure out if they’re eligible” is challenging and they may need extra time, said Musumeci. Once patients have secured coverage, they may already have accrued hefty expenses.

Maybe so, but some people argue that a 90-day retroactive eligibility guarantee is counterproductive.

“We’re trying to get people to behave more responsibly, not less responsibly,” said Gail Wilensky, an economist who oversaw the Medicaid and Medicare programs in the early 1990s under President George H.W. Bush. “That is not the signal you’re sending” with three months of retroactive eligibility. A 30-day time frame is more reasonable, Wilensky said.

In contrast to Iowa, the waivers in Arkansas, Indiana and New Hamsphire generally apply only to adults who gained coverage under the law’s Medicaid expansion. (Indiana’s waiver also applies to other groups.)

Kentucky has a request pending that, like Iowa, would eliminate retroactive Medicaid eligibility except for pregnant women and children under 1, according to KFF.

Under federal law, officials can waive some Medicaid coverage rules to give states flexibility to experiment with different approaches to providing services. And retroactive eligibility waivers in Medicaid are hardly new. A few states like Tennessee have had them in place for years. Tennessee officials eliminated retroactive eligibility for all Medicaid beneficiaries in 1994 when the state significantly expanded coverage under TennCare, as Medicaid is known there. At the time, the state even allowed uninsured people to buy into the program who wouldn’t otherwise qualify based on income, said Bonnyman.

“There was no reason for anybody to be uninsured except undocumented immigrants,” said Bonnyman. “It didn’t seem to have the potential for harm.”

But state officials revamped that program after serious financial problems. Eligibility for TennCare has become more restrictive again.

Other states that waived retroactive coverage for at least some Medicaid groups include Delaware, Maryland, Massachusetts and Utah, according to the Kaiser Family Foundation.

Bonnyman said his group frequently works with Medicaid beneficiaries who have medical bills they can’t afford that accumulated during the months before they applied for Medicaid.

“If you’re a moderate- to low-income working family, one or two days in the hospital is enough to ruin you financially,” he said.

Please visit khn.org/columnists to send comments or ideas for future topics for the Insuring Your Health column.

Enriched By The Poor: California Health Insurers Make Billions Through Medicaid

November 06, 2017

Medicaid is rarely associated with getting rich. The patients are poor, the budgets tight and payments to doctors often paltry.

But some insurance companies are reaping spectacular profits off the taxpayer-funded program in California, even when the state finds their patient care is subpar.

A unit of Centene Corp., the largest Medicaid insurer nationwide, raked in $1.1 billion in profits from 2014 to 2016, according to state data obtained and analyzed by Kaiser Health News. Anthem, another industry giant, turned a profit of $549 million from California’s Medicaid program in the same period.

This story also ran in the Los Angeles Times. It can be republished for free (details).

Overall, Medicaid insurers in the Golden State made $5.4 billion in profits from 2014 to 2016, in part because the state paid higher rates during the inaugural years of the nation’s Medicaid expansion under the Affordable Care Act. Last year, they made more money than all Medicaid insurers combined in 34 other states with managed care plans.

“Those profits are gigantic — wow,” said Glenn Melnick, a health economist and professor at the University of Southern California.

Alan Sager, a health-policy professor at Boston University, was surprised — and dismayed.

“California is being wildly open handed and excessively generous with insurers,” he said.

Jennifer Kent, California’s Medicaid director, said that health plan profits were higher than anticipated during the ACA expansion. But she said the state expects to recoup a significant amount of money within the next year, once audits are complete and retroactive rate adjustments are made.

“We’re going to be taking a lot of money back. We’re talking billions of dollars,” Kent said in an interview last week. No one should think “these plans just made off like bandits and we’re not going to see them again … We are very mindful we use taxpayer money.”

Health insurers who profited substantially from Medicaid, known as Medi-Cal in California, defend their good fortune. They say these surpluses follow losses in earlier years, and they always run the risk of red ink if medical costs jump.

“The expansion may have been a little rich in the beginning,” said Jeff Myers, chief executive of the Medicaid Health Plans of America, an industry trade group. But “you are starting to see margins come back down.”

More than 1 in 3 Californians, or 13.5 million people, are covered by Medicaid — more than the entire population of Pennsylvania. About 80 percent of those in California’s program are enrolled in a managed-care plan, in which insurers receive a fixed rate per person to handle their medical care. The goal is to control costs and better coordinate care.

In anticipation of the Obamacare rollout, officials in California and elsewhere boosted their payments to managed-care companies because they expected Medicaid costs to increase as newly insured patients rushed to the doctor or emergency room after going years without coverage. But those sharply higher costs didn’t materialize — and insurers pocketed more money as a result.

Moreover, California’s payments keep flowing steadily even when patients fare poorly. Two of the most profitable insurers in California — Centene and Anthem — run some of the worst-performing Medicaid plans, according to medical quality scores and complaints in government records.

“If there is that much extra money sloshing around in California, then it’s worth asking whether you could expect more in terms of performance,” said Andy Schneider, a research professor with Georgetown University’s Center for Children and Families.

California officials acknowledge they need to do a better job of connecting money and quality.

“We are looking at alternative payment methods and those types of things that we can do to help improve and to tie quality to payment,” said Lindy Harrington, a deputy director at the California Department of Health Care Services, which runs Medi-Cal. “But as you can imagine, it’s a difficult ship to turn.”

Medi-Cal Suddenly A Cash Cow

Before the ACA expansion, California’s Medicaid plans collectively were barely in the black, with $226 million of net income for 2012 and 2013 combined. Traditionally, these insurance contracts have yielded slim profit margins of 2 percent to 3 percent. California said it aims for 2 percent when setting rates, based on prior claims experience and projected costs.

Get The Data

Kaiser Health News exclusively obtained five years of financial results for health plans in California’s Medicaid managed-care program, which has more than 10 million enrollees.

Look up revenues, expenses and profits for each plan from 2012 to 2016 here.

But in the years since the health law took effect, many health insurers have posted margins two or three times that benchmark.

Centene’s Health Net unit in California enjoyed a profit margin of 7.2 percent from 2014 to 2016. Centene acquired Health Net for $6.3 billion in March 2016. Anthem’s profit margin in California’s Medicaid program was 8.1 percent for 2014 to 2016.

Investors have cheered those results. Shares in Anthem have more than doubled since January 2014, when the Medicaid expansion began. Centene shares are up 50 percent since the company purchased Health Net last year.

“We have proven our ability to provide high-quality, cost-effective healthcare to state beneficiaries while saving states money and delivering strong returns to our shareholders,” Michael Neidorff, Centene’s chairman and chief executive, told investors in February.

In a statement, Health Net said its profit margins are comparable to other Medi-Cal health plans and the company has made major investments to improve Californians’ health and access to care.

Anthem declined to comment on its financial results. The company said in a statement that it has worked with the state to meet the needs of Medicaid patients by extending clinic hours and helping with transportation to appointments. The company said it’s committed to providing “high quality care to our Medi-Cal members.”

Charles Bacchi, chief executive of the California Association of Health Plans, said they deserve some credit for making the Medicaid expansion work.

“The expansion was an incredible lift and we can’t do it for nothing,” he said. “It would be a shame to look at one snapshot in time and ignore the success of California’s expansion that has helped millions of people.”

Overall, Centene has 7 million Medicaid enrollees across the country, with about 2 million in California. Anthem is close behind with 6.4 million Medicaid members, about 1.3 million in the state.

With so many people’s healthcare at stake, state officials say they did not want to risk having health plans come up short during the expansion.

As it turned out, they need not have worried.

A nationwide study published in September found that average monthly spending on newly eligible Medicaid enrollees was 21 percent less than the amount spent on those who were already eligible. It helped that many of the new enrollees appeared to use fewer medical services than those already on the program, researchers said.

In 34 states and the District of Columbia, Medicaid managed-care profits more than tripled to $3.9 billion in 2015 from $1.1 billion in 2013, according to consulting firm Health Management Associates’ analysis of insurance filings. Those figures don’t include California.

By 2016, profits dropped as some states reduced Medicaid rates to insurers to reflect the lower costs incurred during expansion. Kent, the California Medicaid director, said the state’s rates paid to insurers for enrollees in the expanded program have decreased by 38.5 percent since January 2014.

The federal government footed the entire bill for Medicaid expansion during the first three years, instead of taking the usual approach of splitting the costs with states. Now, states have more incentive to rein in spending, as their share of the costs grows to 10 percent by 2020.

Quality Not In The Equation

In the meantime, however, some evidence suggests that in California, richer plans provided care of poorer quality.

The state scores Medi-Cal insurers from zero to 100 percent on how they perform on dozens of measures, such as diabetes testing, cancer screenings and checkups for children. Statewide, the average score was 63 percent for 2016.

For Centene and its Health Net unit, seven of its 10 regional health plans in Medi-Cal scored below average on quality. The company’s San Joaquin health plan ranked last statewide at 31 percent. State officials have ordered the company to improve in areas such as ensuring women get postpartum care and providing routine eye exams and other tests for diabetics.

Among patients, a chief complaint is how hard it is to find a specialized doctor. In a March audit, Medi-Cal said Health Net “did not maintain an adequate number of specialists within its network.” The state found that “member grievances on referral for services and availability of appointments with specialists were among the highest complaints.”

Five months later, after reviewing the company’s corrective actions, the state said Health Net was back in compliance.

Chandra Marshall, a Medicaid patient in Modesto, Calif., said she has suffered from limited access to specialty care.

She said her primary-care doctor in her Health Net plan recently recommended she visit a dermatologist for a biopsy. But she said the only available dermatologist on her plan was 90 miles away in San Francisco.

Worried she might have skin cancer, Marshall agreed to go but still hasn’t heard back about an appointment.

“Why can’t Health Net afford more specialists in the area?” said Marshall, who also suffers from kidney disease. “If Health Net doesn’t provide access to dermatologists and other specialists, people may just risk [not going].”

Her Health Net plan in Stanislaus County scored below 50 percent on quality care measures.

In a statement, Health Net said it is “committed to helping improve the quality and availability of healthcare services for our members that produce enhanced health outcomes. We work diligently with our contracting medical groups to help ensure our members get care that is easy to access.”

In the case of Anthem, eight of its 12 regional Medi-Cal plans scored below average on patient care. The state has told Anthem to do better at providing prenatal care, controlling patients’ high blood pressure and monitoring medications for asthma patients, among other issues.

In a written response to questions, Anthem said its scores have improved over time and two of its plans, in San Francisco and Tulare counties, are among the top 10 statewide.

While not tied directly to payments, California officials said they do reward insurers with higher quality scores by assigning more Medicaid enrollees to those plans.

Profits A Political Hot Button

The profits of managed care plans feed into Republican criticism of the ACA’s costs and its expanded Medicaid rolls. President Donald Trump has called for the law’s repeal, in part, because it enriches health insurers.

“They have made a fortune,” Trump tweeted on Oct. 13.

Sen. Ron Johnson (R-Wis.) has demanded that California and seven other states account for how they spent federal Medicaid expansion dollars. Johnson, chairman of the Senate Homeland Security and Governmental Affairs Committee, asked California officials in a letter Sept. 27 whether they have conducted audits and requested information on insurance company payouts.

In an Oct. 11 response, Kent said the state spent $6,181 per expansion enrollee in 2015, below the national average of $6,365.

“California is a cost efficient Medicaid program,” she wrote.

By one standard measure, the state’s oversight has been less than efficient.

Starting in 2014, the federal government required that 85 percent of Medicaid expansion funding be spent on care and quality improvement efforts, rather than administrative overhead and profits. But three years in, California officials acknowledged they have just started audits to determine whether companies might have to return excess money.

What’s clear is that insurers’ spending on both expansion and traditional Medicaid enrollees often falls short. Eight of California’s 22 Medicaid insurers failed to hit 85 percent in medical spending for the year ending June 30, 2016, according to state data obtained by Kaiser Health News. Anthem ranked lowest at 77 percent; Health Net spent 81 percent of Medicaid premiums on medical care, state records show.

Each percentage point below the threshold can amount to tens of millions of dollars that should have been spent on behalf of patients.

In July, a federal rule went into effect establishing 85 percent as a national benchmark for all Medicaid managed care. Three months later, California Gov. Jerry Brown signed a law mandating that same percentage. But the state requirement doesn’t kick in fully until 2023.

Michael McCue, a professor at Virginia Commonwealth University who studies Medicaid managed care, said the profit margins in California “raise a lot of red flags.” He said government officials owe it to taxpayers and patients to do more to hold insurers accountable.

“You have to make sure you’re getting a bang for your buck,” McCue said. “Right now, [for insurers] California’s Medicaid program is the golden nugget.”

This story was produced by Kaiser Health News, which publishes California Healthline, a service of the California Health Care Foundation.

Health Companies Race To Catch UnitedHealth As Amazon Laces Up

November 03, 2017

As soon as news surfaced last week about the potential merger of CVS Health and Aetna, all eyes turned to the looming threat from Amazon.

The online retailer’s flirtation with the pharmacy business is a factor, no doubt. But many industry experts say CVS and Aetna have another huge competitor on their minds: UnitedHealth Group.

UnitedHealth is best known as the nation’s largest health insurer, with more than 45 million members in the U.S. But behind the scenes, it has extended its reach deep into America’s medicine cabinets, operating rooms and doctor offices.

Its Optum unit fills more than 100 million prescriptions per month as a pharmacy benefit manager, poaching big customers from rivals CVS and Express Scripts. UnitedHealth owns more than 400 surgery centers and urgent-care clinics and runs medical practices for about 22,000 physicians across the country.

This story also ran in the Los Angeles Times. It can be republished for free (details).

“People have gotten carried away with Amazon,” said Ana Gupte, a health care analyst at Leerink Partners. “CVS and Aetna is an Optum wannabe. UnitedHealth is the winning business model, and Optum is showing the way.”

UnitedHealth’s expansion into dispensing prescription drugs and treating patients has put the company on track to reach $200 billion in annual revenue this year and profits for the first nine months of 2017 already topped $7 billion.

UnitedHeath is admired on Wall Street for its dependable results and diverse stable of businesses, which helps insulate it from rough patches in the insurance sector. However, the prospect of further industry consolidation alarms some consumer advocates and health policy experts. And they say UnitedHealth hasn’t always been a good role model.

In 2009, U.S. Senate investigators said the company built an industrywide database that deliberately understated what insurers should pay for out-of-network care, exposing consumers nationwide to hundreds of millions of dollars in extra charges.

More recently, patients have accused the company’s prescription drug business, OptumRx, of overcharging for routine medications in order to pocket a pharmacy “clawback” that boosts profits. The company has denied any wrongdoing in response to lawsuits over the drug pricing.

Employers, lawmakers and consumer groups accuse the three largest pharmacy middlemen — Express Scripts, CVS and UnitedHealth — of keeping drug prices high and pocketing too many of the discounts they negotiate with pharmaceutical companies.

Consumer advocates also are concerned about the prospect of companies mining a vast supply of consumer data to maximize profits rather than improve care.

“It is hard to find instances where these very large companies used their market power for the good of consumers, rather than for their shareholders,” said Lynn Quincy, a consumer advocate and director of the Healthcare Value Hub at the Altarum Institute, a nonprofit think tank. “The lack of transparency at these really large companies is appalling. That’s why we’re skeptical it will make things better.”

In a statement, UnitedHealth said it’s committed to “helping people live healthier lives” and its Optum unit is trying to make the entire health system work better.

In the past, company executives have said they’re fighting on behalf of employers and consumers against high costs, as well as poor outcomes and mind-boggling complexity. Before the merger news, executives at Aetna and CVS had already hinted at working together to tackle many of the same issues through the retailer’s vast network of stores.

Last week, The Wall Street Journal broke the news about the potential merger between CVS and Aetna, which could be worth more than $66 billion. CVS and Aetna say they won’t comment on market rumors or speculation.

In general, these companies are trying to address problems familiar to most Americans: poor coordination of care. Doctors rarely talk to each other. It’s incredibly hard to share medical records among providers or even with patients. Despite a lot of talk about linking pay to performance, a surprising amount of medical care is still reimbursed under the old-fashioned fee-for-service model that rewards quantity over quality.

For some experts, CVS and Aetna are well-positioned to fix many of those issues and that might make their deal more likely to pass muster with antitrust officials.

UnitedHealth, which has reached into everything from home health care to billing technology, has won praise for some of its efforts. One 2015 study published in Health Affairs found that the company’s use of house calls helped reduce costly hospital admissions for Medicare patients by 14 percent.

“One of the big failures of the U.S. health care system has been fragmentation, and these vertical mergers are trying to cure that problem,” said Thomas Greaney, a former federal antitrust lawyer and now a professor at the University of California’s Hastings College of the Law in San Francisco.

“You want to encourage efficiencies and integration that helps promote better care and lower costs. But you don’t want that to turn into a local monopoly,” he added.

Farzad Mostashari, a former official in the Obama administration who has studied health care competition, said it’s too soon to tell whether a CVS-Aetna deal would be good or bad for consumers. But Mostashari, who now heads Aledade, a tech start-up that works with doctors, said it warrants intense scrutiny of the more subtle ways it could put rivals at a disadvantage.

“These vertical mergers can create competitive challenges where you use your dominant market position to tip the ball to yourself in another area,” he said.

This story was produced by Kaiser Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation

KHN’s coverage of prescription drug development, costs and pricing is supported in part by the Laura and John Arnold Foundation.

Postcard From Canada: In The Land Of Single-Payer, Bernie Sanders Gets Hero’s Welcome

October 30, 2017

TORONTO — Sen. Bernie Sanders (I-Vt.) wasn’t scheduled to come onstage to talk health care until after 11 a.m. But college students started lining up as early as 5 a.m. — the Sunday morning of Halloween weekend, no less — in the hopes of scoring what appeared to be the weekend’s hot ticket.

In Washington, D.C., Sanders is often portrayed as a radical, a politician on the fringe. The popularity of his 2017 campaign for the Democratic presidential nomination caught party insiders off-guard and much of the political establishment views his signature single-payer health plan as unworkable or impractical.

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But here at the University of Toronto’s Convocation Hall, flanked by Ontario’s premier, Kathleen Wynne, and leadership from Canada’s left-wing New Democratic Party (NDP), Sanders received a celebrity’s welcome.

“He’s a bit of a folk hero up here,” said Dr. James Sugiyama, a Toronto-based family physician, who, after failing to procure a ticket to Sunday’s lecture, watched the event with friends on a web-based livestream at a restaurant down the street. “We’re staunch supporters and believers that what Bernie is talking about is the right thing to do.”

Canada’s universal health care system, which dates to 1968, is beloved by much of its citizenry — it’s a point of pride, many locals say.

Thank you, Toronto. I’m proud to join with you in the global fight for universal health care. pic.twitter.com/lx8MnbsGmX

— Bernie Sanders (@SenSanders) October 29, 2017

Sanders’ speech capped off a weekend trip to Toronto, which included hospital visits and roundtables, and which his office framed as an educational tour of the Canadian health care system — an example of the single-payer approach that Sanders often cites in speeches on his home turf. The lecture was the one public component of the trip, which also grabbed headlines from the Canadian Broadcasting Corp. and other local outlets.

Tickets were snapped up well in advance, though the 5 a.m. college students eventually made it off the waitlist. Organizers estimated about 1,700 tickets were available, which sold out in about 30 seconds, according to Sanders’ office.

The lecture took on the tenor of a practiced American rally — albeit, one where the crowd was warmed up by a string quartet — featuring Sanders’ familiar talking points, repurposed for a new audience.

James Sugiyama, a Toronto-based doctor, watched Sanders’ speech on a livestream from a restaurant down the street. The Vermont senator is viewed as a “folk hero” by many Canadians, he said. (Shefali Luthra/KHN)

Sanders’ comments went well beyond universal health insurance, touching on the importance of a $15 minimum wage and combating climate change. And there were the standard critiques of Obamacare repeal efforts in Washington, of income inequality and of the influence of so-called special interests.

The audience — which included left-leaning doctors, politicians and college students — was there to experience the Sanders’ magic, to “feel the Bern” firsthand. They snapped photos and burst frequently into claps, cheers and whistles, even for policies that more obviously affected their American neighbors to the south. They gave more than one standing ovation.

“Our mission is to have the courage to ask the questions … to take on the incredible special interests who have so much power in my country, your country and all over the world,” he said.

Beyond The Shattered Lives And Bodies, Money Worries Weigh On Las Vegas Victims

October 27, 2017

Listen here to Anna Gorman’s radio version of this story, as it ran on Here & Now.

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LAS VEGAS — Kurt Fowler and his wife, Trina, were celebrating their 18th wedding anniversary at a country music festival when the shooting started. Fowler, 41, knew he’d been hit in the ankle and couldn’t run. He hid under the stage until the gunfire ended.

“I knew my foot was completely useless,” said Fowler, a firefighter from Lake Havasu City, Ariz., and a father of three. He underwent surgery, spent nearly two weeks in the hospital and still may need another operation. He also will need rehabilitation and follow-up visits with a specialist.

Fowler has a Blue Cross Blue Shield PPO through his job, but he said he doesn’t know how much he will have to pay out of his own pocket for the care he is receiving. In an era of higher deductibles and limited choice of in-network doctors, however, he knows he could face significant medical bills.

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His insurance card says his individual deductible is $5,000 and his coinsurance 20 percent. He said he didn’t know how much his health plan would cover for out-of-state care.

“Medical expenses are astronomical these days,” Fowler said from his bed at Sunrise Hospital & Medical Center here. “It’s a mountain that just doesn’t seem like it’s gonna be climbable, but we are gonna do our best.”

As hundreds of survivors struggle to recover emotionally and physically from the Oct. 1 attack, they are beginning to come to terms with the financial toll of the violence perpetrated against them. Even those who are insured could face untold costs in a city they were only visiting.

The total costs of medical care alone could reach into the tens of millions of dollars, said Garen Wintemute, who researches gun violence at the University of California-Davis. And that is just the beginning. Many survivors will be out of work for months, if they are able to return at all.

“We really don’t have a good handle on the intangible costs of something like this … the ripple effects on family and friends and neighborhoods when a large number of people have been shot,” Wintemute said.

Fowler has health insurance through his job as a firefighter from Lake Havasu City, Ariz. But he doesn’t know what out-of-pocket medical costs he may face from the shooting. “Medical expenses are astronomical these days,” he said from a hospital bed at Sunrise Hospital & Medical Center. (Anna Gorman/KHN)

More than 100,000 people are shot every year in the U.S., according to the Centers for Disease Control and Prevention. That generates about $2.8 billion per year in emergency room and inpatient charges alone, according to a recent study in Health Affairs. The average emergency room bill for an individual gunshot victim is $5,254 and the average inpatient charge is $95,887, according to the study.

The U.S. senators representing Nevada, Dean Heller and Catherine Cortez Masto, wrote a letter to America’s Health Insurance Plans, an industry trade group, and CEO Scott Serota of Blue Cross Blue Shield requesting help with out-of-network bills, copayments and deductibles for the Las Vegas shooting victims. Many of the people who were shot had traveled from other states, including California, Iowa and Tennessee.

California and some states protect consumers from such bills, but Nevada is not one of them, said Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms. But Corlette said most insurers allow patients to request exceptions based on the circumstances. “In this situation, I imagine most insurers are going to want to be compassionate and work something out,” she said.

The victims and their families aren’t the only ones who will be affected financially by the mass shooting. Taxpayers, too, pick up much of the tab for the health care costs associated with gun violence because many patients are covered by Medicaid and Medicare, two government insurance programs.

And hospitals will also be on the hook for some of the care for patients who don’t have insurance. Hospitals in Las Vegas quickly mobilized to treat the hundreds of victims who were streaming in that night, and they don’t know yet how much of the care will be reimbursed.

At Sunrise Hospital & Medical Center, staff treated more than 200 patients. Sunrise plans to file insurance claims and will “be extremely sensitive to the financial status” of patients when considering their out-of-pocket portions, a spokeswoman said.

Valley Hospital Medical Center is encouraging patients to complete paperwork for a state program called Nevada Victims of Violent Crime, which would pay their balances. And Dignity Health’s St. Rose Dominican said it will bill insurers and accept donations but will not require payment from victims.

California victims can also get help with medical expenses and income loss from the California Victim Compensation Board.

In addition, a GoFundMe account started by a Clark County commissioner has raised $11 million thus far. And many survivors have individual GoFundMe accounts.

Kurt Fowler’s GoFundMe page has raised about $39,000. Fowler said he doesn’t have disability insurance so he will rely on the funds to help cover his expenses while he is recovering and missing work.

Michael Caster, 41, who lives in Indio, Calif., has a GoFundMe account that has raised about $26,000 so far. He’s paralyzed from the waist down after a bullet lodged in his spine.

Michael Caster, from Indio, Calif., was shot as he ran from the Route 91 Harvest festival in Las Vegas. Now, he is paralyzed from the waist down. He spent about two weeks at Sunrise Hospital & Medical Center before being transferred to a rehab center for people with spinal cord injuries. Fowler’s mom, Patricia, was also at the festival and said she fears how expensive his medical care may be. But she said, “Whatever expenses come down the road, we’ll handle it somehow.” (Anna Gorman/KHN)

At Sunrise Hospital, doctors drained the blood from Caster’s lungs and removed some of the bullet fragments. Sitting in a hospital bed 11 days after the shooting, Caster said he didn’t know how much of his care would be covered by his health insurance.

He works in human resources at a California hospital and has a job-sponsored policy with Anthem Blue Cross. “I’ve never really dealt with injury,” he said. “I don’t want to be stuck with a bunch of bills.”

His bills could rise further: That day, he was scheduled to be flown to a rehabilitation center in Colorado for people with spinal cord injuries.

Mary Moreland, whose daughter Tina Frost was shot during the country music festival, said that at first she didn’t understand why so many families were setting up fundraisers. Then, the severe financial strain the shooting would take started to dawn on her.

Now, Moreland said she’s grateful for the $580,000-plus raised through GoFundMe.

A screenshot from a GoFundMe page set up for Tina Frost, who was shot at the country music festival in Las Vegas. Frost was at Sunrise Hospital & Medical Center for two weeks and was recently flown to a hospital near her mother’s home in Maryland. (Courtesy of GoFundMe)

Mary Moreland gets an update on her daughter from neurosurgeon Keith Blum at Sunrise Hospital & Medical Center. Moreland’s daughter, Tina Frost, was shot in the eye and was in a medically induced coma for two weeks. Frost has insurance through her job as an accountant in San Diego, but her mother said she knows it won’t cover everything. (Anna Gorman/KHN)

Frost, a resident of San Diego, had emergency brain surgery the night of the shooting. A bullet had pierced her eye and exploded in her brain. As she lay in ICU earlier this month, her mother said small improvements were major milestones. “Today she squeezed my hands,” Moreland said.

The next night, Frost came out of a medically induced coma and was later flown to Johns Hopkins Hospital in Baltimore, near her mother’s home. Over the next weeks and months, she will need multiple operations and a slew of specialists, including neurosurgeons, plastic surgeons, occupational therapists and mental health counselors.

Moreland said she cannot even begin to imagine what her daughter’s care will cost. Frost has Blue Cross insurance through her job at Ernst & Young in San Diego, but Moreland said she doesn’t know what the deductible and copayments are.

“Being realistic, knowing what I know about costs of health care, it’s scary,” Moreland said. “But she’s alive. She’s not one of the 58 other people.”

KHN’s coverage in California is funded in part by Blue Shield of California Foundation.

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