Chad Terhune, Author at ��ýҕ�l Health News

Coverage Denied: Medicaid Patients Suffer As Layers Of Private Companies Profit

Chad Terhune — Thu, 03 Jan 2019 10:00:59 +0000

Marcela Villa isn’t a big name in health care — but she played a crucial role in the lives of thousands of Medicaid patients in California. Her official title: denial nurse.

Each week, dozens of requests for treatment landed on her desk after preliminary rejections. Her job, with the assistance of a part-time medical director, was to conclusively determine whether the care — from doctor visits to cancer treatment — should be covered under the nation’s health insurance program for low-income Americans.

She was drowning in requests, she said, and felt pressed to uphold most of the denials she saw. “If it was a high-dollar case, they tried to deny it,” Villa said. “I told them you can’t deny it just because it’s going to cost $20,000.”

Villa, 32, did not work for the government. She did not even work for an insurer under contract with the government. She worked for a company now called Agilon Health. Owned by a private equity firm, it’s among the legion of private subcontractors looking to profit from Medicaid patients.

California’s Medicaid program, known as Medi-Cal, has determined that the Long Beach company, which was paid to coordinate care for about 400,000 patients, improperly denied or delayed care for at least 1,400 of them, state officials confirmed. The state Department of Managed Health Care is investigating further.

The state findings, along with internal company documents and a whistleblower complaint obtained by Kaiser Health News, shine a light on the potential dangers of outsourcing care for poor people. Government oversight, , fades as taxpayer money filters down through layers of companies eager to seize on Medicaid’s substantial growth under the Affordable Care Act. Medicaid officials say they have authority only over the health plans, not their subcontractors.

In an interview, Agilon chief executive Ron Kuerbitz acknowledged that some patients experienced modest delays in care but disputed that any suffered unjustified denials. He noted that by the company found no evidence of “systemic” denials and that most of the problems existed before Agilon took over another firm, Primary Provider Management Co., in 2016.

“We did the right thing when it was identified,” Kuerbitz said of the problems. “We disclosed it, we investigated it, and we pursued a remedial path.”

Such concerns are not isolated to one company. Last year, KHN reported on similar irregularities at SynerMed, a Medicaid subcontractor that coordinated care for about 650,000 patients in California.

In response to a whistleblower complaint, the state Medicaid program said it found “widespread deficiencies” at SynerMed that put patients “in imminent danger of not receiving medically necessary healthcare services.” The company’s staffers had falsified documents for years to cover up improper denials of care, according to state officials.

Then SynerMed abruptly shut down, and some of its patients moved to Agilon’s medical groups.

Skimping On Services?

Nearly three-quarters of the 73 million low-income Americans on Medicaid are now in managed care, in which states pay health insurers fixed monthly amounts for each enrollee to cover the range of services they need.

Under this system, keeping patients as healthy as possible is one way to make money. Another is to deny or skimp on services.

Increasingly, Medicaid plans outsource the work of managing patients’ health and medical treatment to subcontractors like Agilon — passing along a share of the government money coupled with the financial risk posed by a fixed budget.

These firms can be powerful gatekeepers. They run physician groups, bear responsibility for forming doctor networks and judge whether a request for care is necessary.

Agilon is a big player in California — doing business with insurers such as Molina Healthcare and Blue Shield of California — and it’s now expanding in other states like Texas and Ohio.

. ran several medical groups, including with more than 5,000 physicians across Southern California. By building off PPMC’s base of Medicaid enrollees in California, the New York private equity firm that owns a majority stake in Agilon — Clayton, Dubilier & Rice — sought to coordinate care in Medicaid and Medicare Advantage plans across the country. (CD&R did not respond to interview requests.)

For several years, the problems at PPMC, and then Agilon, went undetected. Then, in early 2018, Agilon disclosed to the California Department of Managed Health Care its discovery that employees had been altering records prepared for auditors, which it said was not known to top management.

, completed in May and obtained by KHN, staffers had been falsifying documents since at least 2014 to pass audits by health plans. Employees were changing dates, for example, to cover up delays or withholding certain files so they couldn’t be reviewed.

That same month, an anonymous whistleblower sent a letter to health plans and government officials, urging them to investigate “illegal, unethical” conduct at the firm. “Senior management delays treatments for cancer patients without any regard of patient’s well-being, to save their dollars,” the whistleblower wrote in a two-page letter reviewed by KHN. “They brag about how profitable we are.”

In response to the allegations raised by the whistleblower and , Agilon opened another internal investigation. That second report, found inadequate staffing to handle the volume of work, various shortcuts and practices outside industry “norms” and improperly denied claims. Both internal reports were released to the state.

A top official Inland Empire Health Plan, one of the largest Medicaid insurers in the country, said the plan also looked into Agilon’s conduct and found instances in which its patients were harmed.

In an interview, Inland Empire CEO Bradley Gilbert said Agilon denied a patient’s transfusions for anemia, causing the person to be hospitalized. It also improperly denied cardiac rehabilitation to a patient recovering from a heart attack, he said. Inland Empire canceled its contract with Agilon’s Vantage Medical Group in August, he said.

A ‘Manager Told Me To Do It’

Agilon’s June report depicts an operation that was often stretched thin: Nurses were handling 120 to 200 requests for care per day, on average, with no full-time medical director to review the findings.

From 2014 until May, the company relied on a family physician who was working 10 to 12 hours a day running his own medical practice, according to the report.

Dr. Reuel Gaskins was busy seeing his own patients at the Hampton Medical Clinic in Riverside, Calif., where a red neon sign flashes “Open” in the front window. In an interview, Gaskins said he reviewed cases during breaks throughout the day and after normal work hours. He said he left Agilon in April.

Ultimately, Agilon’s internal investigation found that patient care may have been denied 439 times since 2014 without a physician’s review of the medical records — a potential violation of state law. Under California law, only a licensed physician or health care professional who is “competent to evaluate the specific clinical issues involved” can determine medical necessity.

Gaskins said he was not aware of allegations that medical decisions were made without his review until he was interviewed by Agilon’s lawyers.

“That’s inappropriate and unacceptable,” he said. “It really bothered me when I heard about it.”

The June report also found that Villa helped alter 20 files at the request of a supervisor in 2014 so her employer could pass an upcoming audit by an insurer.

A “manager told me to do it,” Villa said in an interview. “They were so adamant that everything look perfect for the auditors.”

A few days after the company’s lawyers made that discovery, Agilon sent Villa home on paid leave, the nurse said. She said that when she returned to work in August, she found she had been replaced as denial nurse, and shortly after that, she was fired.

Meanwhile, in recent months, Agilon has mended its relationships with some insurers and won new Medicaid contracts.

Consumer advocates worry that the concerns surrounding Agilon and SynerMed signal a much larger problem in the burgeoning Medicaid managed-care industry.

“These private entities get very little oversight,” said Linda Nguy, a policy advocate at the Western Center on Law & Poverty in Sacramento, “and there’s real harm being done to patients.”

��ýҕ�l Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about .

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Billions In ‘Questionable Payments’ Went To California’s Medicaid Insurers And Providers

Chad Terhune — Thu, 01 Nov 2018 17:25:09 +0000

California’s Medicaid program made at least $4 billion in questionable payments to health insurers and medical providers over a four-year period because as many as 453,000 people were ineligible for the public benefits, according to a state audit released Tuesday.

In one case, the state paid a managed-care plan $383,635 to care for a person in Los Angeles County who had been dead for more than four years, according to California State Auditor Elaine Howle.

She said she found “” in Medicaid enrollment in which state and county records didn’t match up from 2014 to 2017, leading to other errors that persisted for years. The bulk of the questionable payments, or $3 billion, went to health plans that contract with the state to care for 80 percent of enrollees in California’s Medicaid program, known as Medi-Cal.

The program for low-income residents is the nation’s largest and funded by both the federal and state governments. The state findings echo similar problems cited by and come at a time when the Trump administration has applied extra scrutiny to California’s spending on Medicaid.

In the report, the state auditor said it’s critical for the state to have accurate information on eligibility “because it pays managed care plans a monthly premium for an increasing number of Medi-Cal beneficiaries regardless of whether beneficiaries receive services.”

(Story continues below.)

California paid a managed-care plan $383,635 to care for a person in Los Angeles County who had been dead for more than four years.

California’s Medicaid program has 13.2 million enrollees, covering about 1 in 3 residents. It has an annual budget of $107 billion, counting federal and state funds. Nearly 11 million of those enrollees are in , in which insurers are paid a monthly fee per enrollee to coordinate care.

The state’s Medicaid enrollment soared by more than 50 percent since 2013 due to the rollout of the Affordable Care Act and the expansion of Medicaid. Enrollment grew from 8.6 million in December 2013 to more than 13 million in December 2017, according to the audit report.

In the case of the dead patient, a family member had notified the county of the enrollee’s death in April 2014. However, the person’s name remained active in the state system, and California officials assigned the patient to a managed-care plan in November of that year.

From then on, the state kept making monthly payments of about $8,300 to the health plan until August 2018, shortly after the auditor alerted officials of the error. Auditors didn’t identify the health plan.

There also were costly mistakes in cases in which Medi-Cal pays doctors and hospitals directly for patient care – a program known as “fee for service.”

For instance, the state auditor found that Medi-Cal paid roughly $1 million in claims for a female patient in Los Angeles County from June 2016 to December 2017 even though the county office had determined in 2016 that she was ineligible.

In a written response to the auditor, the California Department of Health Care Services said it agreed with the findings and vowed to implement the auditor’s recommendations. However, the agency warned it may not meet the auditor’s timeline, which called for the main problems to be addressed by June 2019.

In a statement to California Healthline, the agency said it is implementing a quality control process and “where appropriate, DHCS will recover erroneous payments.”

Early on in 2014, as the ACA rolled out, the state struggled to clear a massive backlog of Medi-Cal applications, which reached about 900,000 at one point. There were widespread computer glitches and consumer complaints amid the increased workload at the county and state level.

In addition to questionable payments for care of ineligible enrollees, Howle and her audit team also discovered some patients who may have been denied benefits improperly. The state auditor identified more than 54,000 people who were deemed eligible by county officials but were not enrolled at the state level. As a result, those people may have had trouble getting medical care.

In February, a estimated that California had signed up 450,000 people under Medicaid expansion who may not have been eligible for coverage.

The inspector general at the U.S. Department of Health and Human Services said California made $1.15 billion in questionable payments during the six-month period it reviewed, from Oct. 1, 2014, to March 31, 2015.

, Seema Verma, administrator of the U.S. Centers for Medicare and Medicaid Services, told a U.S. Senate committee that she was closely tracking California to ensure the state “returns a significant amount of funding owed to the federal government related to the state’s Medicaid expansion.”

Verma expressed concern that states had overpaid managed-care plans during the initial years of Medicaid expansion, resulting in “ for insurance companies.” By year’s end, she said she expects the federal government to recoup about $9.5 billion from California’s Medicaid program, covering overpayments from 2014 to 2016.

Tony Cava, a spokesman for Medi-Cal, said the state has already returned about $6.9 billion to the federal government and expects more than $2 billion more to be sent back by December.

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As Billions In Tax Dollars Flow To Private Medicaid Plans, Who’s Minding The Store?

Chad Terhune — Fri, 19 Oct 2018 09:00:36 +0000

With no insurance through his job, Jose Nuñez relied on Medicaid, the nation’s public insurance program that assists 75 million low-income Americans.

Like most people on Medicaid, the Los Angeles trucker was assigned to a private insurance company that coordinated his medical visits and treatment in exchange for receiving a set fee per month — an arrangement known as managed care.

But in 2016, when Nuñez’s retina became damaged from diabetes, the country’s largest Medicaid insurer, Centene, let him down, he said. After months of denials, delays and erroneous referrals, he claimed in a , the 62-year-old was left nearly blind in one eye. As a result, he lost his driver’s license and his livelihood.

“They betrayed my trust,” Nuñez said, sitting at his kitchen table with his thick forearms folded across his chest.

The current political debate over Medicaid centers on putting patients to work so they can earn their government benefits. Yet some experts say the country would be better served by asking this question instead: Are insurance companies — now receiving hundreds of billions in public money — earning their Medicaid checks?

More than two-thirds of Medicaid recipients are enrolled in such programs, a type of public-private arrangement that has grown rapidly since 2014, boosted by the influx of new beneficiaries under the Affordable Care Act.

States have eagerly tapped into the services of insurers as one way to cope with the expansion of Medicaid under the ACA, which has added 12 million people to the rolls. This fall, voters in three more states may pass ballot measures backing expansion. this public program to insurers has become the preferred method for running Medicaid in 38 states.

Yet the that these contractors improve patient care or save government money. When auditors, lawmakers and regulators bother to look, many conclude that Medicaid insurers fail to account for the dollars spent, deliver necessary care or provide access to a sufficient number of doctors. Oversight is sorely lacking and lawmakers in a number of states have raised alarms even as they continue to shell out money.

“We haven’t been holding plans to the level of scrutiny they need,” said Dr. Andrew Bindman, former director of the federal Agency for Healthcare Research and Quality and now a professor at the University of California-San Francisco. “This system is ripe for profit taking, and there is virtually no penalty for performing badly.”

In return for their fixed fees, the private insurers dole out treatment within a limited network, in theory allowing for more judicious, cheaper care. States contract with health plans as a way to lock in some predictability in their annual budgets.

More than Medicaid recipients are now covered by managed-care plans, up from fewer than 20 million people in 2000. (In traditional Medicaid, states pay doctors and hospitals directly for each visit or procedure — an approach that can encourage unnecessary or excessive treatment.)

Already, states funnel nearly annually to Medicaid insurers. That’s up from $60 billion a decade ago. Today’s spending is approaching what Pentagon awards annually to contractors.

Jose Nuñez says he and daughter Diana Nuñez took turns calling his Medicaid plan and waiting on hold for answers after his eye surgery was canceled twice. He waited three months for his insurer to approve the operation, he says. By that time, his retina had deteriorated and Nuñez was nearly blind in one eye. (Heidi de Marco/KHN)

Medicaid is good for business: The stock price of Nuñez’s insurer, Centene, has soared 400 percent since the ACA expanded Medicaid eligibility. The company’s chief executive took in $25 million last year, the highest pay for any CEO in the health insurance industry. In California, the largest Medicaid managed-care market with nearly 11 million enrollees, Centene and other insurers made $5.4 billion in profits from 2014 to 2016, according to a Kaiser Health News analysis.

Plans get to keep what they don’t spend. That means profits can flow from greater efficiency — or from skimping on care and taking in excess government payments.

“States are just giving insurers the keys to the car and a gas card,” said Dave Mosley, a managing director at Navigant Consulting and former finance director at the North Carolina Medicaid program. “Most states haven’t pressed insurers for the information needed to determine if there’s any return on their investment.”

Two of California’s most profitable insurers, Centene and Anthem, ran some of California’s worst-performing Medicaid plans, state quality scores and complaints in government records show. California officials have been clawing back billions of dollars from health plans after the fact.

For nearly two decades, federal officials have tried building a national Medicaid database that would track medical care and spending across states and insurers. It’s still , hampered by differing state reporting methods and refusals by some health plans to turn over data they deem trade secrets.

In July, a federal inspector general’s report accused Medicaid insurers of purposefully ignoring fraud and overpayments to doctors because inflated costs can lead to higher rates in the future.

In a report last month, the U.S. Government Accountability Office disclosed that California’s Medicaid program is unable to electronically send records justifying billions of dollars in spending, forcing federal officials to sift through thousands of documents by hand. California said it can’t share key files electronically because it uses 92 separate computer systems to run the program.

“You simply cannot run a program this large when you can’t tell where the money is going and where it has been,” said Carolyn Yocom, a health care director at the GAO.

Today, Medicaid consumes the single-largest share of state budgets nationwide at nearly 30 percent — up from less than 21 percent a decade ago — crowding out funding for education, roads and other key priorities.

“If anything, our results suggest that the shift to Medicaid managed care increased Medicaid spending,” researchers at the Congressional Budget Office and the University of Pennsylvania concluded in 2013, based on a .

Industry officials insist that managed care saves money and improves care. Medicaid Health Plans of America, an industry trade group, points to a showing that health plans nationally saved the Medicaid program $7.1 billion in 2016.

Health plans also say they can help modernize the program, created more than a half century ago, by upgrading technology and adopting fresh approaches to managing complex patients.

Getting it right has big implications for patients and taxpayers alike, but the results in many states aren’t reassuring.

State lawmakers in , both Republicans and Democrats, criticized their Medicaid program last year for ignoring the poor performance of two insurers, UnitedHealthcare and Centene, even as the state awarded the companies new billion-dollar contracts.

In Illinois, the state didn’t properly monitor $7 billion paid to Medicaid plans in 2016, leaving the program unable to determine what percentage of money went to medical care as opposed to administrative costs or profit.

In April, Iowa’s state ombudsman said Medicaid insurers there had denied or reduced services to disabled patients in a “” way. In one case, an insurer had cut a quadriplegic’s in-home care by 71 percent. Without the help of an aide to assist him with bathing, dressing and changing out his catheter he had to move to a nursing home, according to the ombudsman, Kristie Hirschman.

“We are not talking about widgets here,” Hirschman said. “In some cases, we are talking about life-or-death situations.”

Meanwhile, the Trump administration has sent mixed signals on Medicaid oversight. Seema Verma, administrator for the Centers for Medicare & Medicaid Services, has promoted a new, nationwide scorecard and vowed to ramp up audits targeting states and health plans.

“We need to do better,” Verma said in a to the Medicaid managed-care industry. “Medicaid has never developed a cohesive system of accountability that allows the public to easily measure and check our results.”

But consumer advocates also are concerned that Verma’s efforts to roll back “” will weaken accountability overall. Many also disagree with her support of Medicaid work requirements.

Nuñez, the truck driver who lost much of his sight, is suing a unit of Centene for negligence and breach of contract. The company has denied the allegations in and declined to comment further, citing the pending .

Talk of requiring Medicaid recipients to work is hard for him to take. “I need my health to work,” he said. “They took that away from me.”

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Paper Jam: California’s Medicaid Program Hits ‘Print’ When The Feds Need Info

Chad Terhune — Tue, 18 Sep 2018 09:00:59 +0000

In the shadow of Silicon Valley, the hub of the world’s digital revolution, California officials still submit their records to the feds justifying billions in Medicaid spending the old-fashioned way: on paper.

Stacks and stacks of it.

Stuck with decades-old technology, the nation’s largest Medicaid program forces federal officials to sift through thousands of documents by hand rather than sending electronic files. That’s one of the critical findings in a from the federal government’s chief watchdog citing inefficient and lax oversight of Medicaid nationwide.

To illustrate, the U.S. Government Accountability Office published a photo showing piles of records submitted for one three-month period. One folder was placed upright to show the height of the heap.

“It’s really amazing when you look at that picture,” said Carolyn Yocom, a health care director at the GAO who focuses on Medicaid, the federal-state health insurance program for low-income people. “For this type of reporting on expenditures, California really should be able to provide that electronically.”

California, with more than 13 million Medicaid enrollees, said it’s hamstrung because it uses 92 separate computer systems to run its Medicaid program — although it has plans underway to modernize its technology.

“Given system limitations and the magnitude of the supporting documentation, providing it electronically is currently not feasible,” the California Department of Health Care Services said in a statement.

The state’s Medicaid program, known as Medi-Cal, has struggled with technology for years. The state thought it had a solution in 2010 when it awarded a $1.7 billion contract to Xerox, which included $168 million for a new system. But after years of delay, the state scrapped the contract in 2016 and started from scratch, leaving the patchwork system in place a few more years.

Nationwide, despite industry buzz about electronic medical records, smartphone apps and artificial intelligence, a lot of paper is still being pushed across the health care system. Consider all those forms patients repeatedly fill out in the waiting room, the screeching sound of fax machines inside doctors’ offices and the bulging binders of patients’ records in file rooms.

Under Medicaid, states submit data quarterly to the federal government on their spending and include supporting documents such as invoices, cost reports and eligibility records. In California, reports on spending are shared electronically, but the copious supporting documentation required for federal review is not, according to the GAO.

When the Xerox venture failed, the company agreed to pay California more than $123 million as part of a settlement agreement, according to state officials.

Meantime, Conduent, the services unit of Xerox that was spun off into a separate company, was left to keep operating the system and process claims.

Last month, the state to DXC Technology of Tysons, Va., to take over some operations from Conduent. The state said the contract could be worth $698 million over 10 years.

Separately, California’s Medicaid officials are working on plans for a new system that would cost an estimated $500 million. Under the federal-state partnership on Medicaid, the federal government would cover 90 percent of those costs for design and implementation, and the state’s share would be about $50 million.

Pressure has been mounting on California to fix the situation. The Medicaid IT system “needs to be replaced, because it is more than 40 years old, its operations are inefficient, maintaining the system is difficult and there is a high risk of system failure,” state auditor Elaine Howle wrote in to Gov. Jerry Brown and legislative leaders.

In her letter, Howle said the state was paying about $30 million annually to maintain the legacy system.

Overall, Medi-Cal serves 1 in 3 Californians. The annual Medicaid budget in California is about $104 billion, counting federal and state funds.

Beyond California, the GAO criticized the U.S. Centers for Medicare & Medicaid Services (CMS) more broadly. One complaint: Federal officials assign a similar number of staff to states for reviewing case files — even though some states, like California, pose a far bigger risk for enrollment errors and misspent money due to their size and complexity.

For instance, the report’s authors said, CMS reviewed claims for the same number of newly eligible Medicaid enrollees — 30 — in California as it did in Arkansas, even though California had 10 times the number of newly enrolled patients under the Affordable Care Act.

The report also said CMS devoted a similar number of staff to review both California, which represents 15 percent of federal Medicaid spending, and Arkansas, which accounts for 1 percent.

CMS “needs to step back and assess where are the biggest threats and vulnerabilities,” Yocom said. “If you aren’t looking, you don’t know what you aren’t catching.”

Overall, from fiscal years 2014 to 2018, federal Medicaid spending increased by about 31 percent, according to the GAO report. But the full-time staff at CMS dedicated to financial oversight declined by roughly 19 percent over the same period.

In a July 18 letter to the GAO, the U.S. Department of Health and Human Services agreed with the agency’s recommendations for improving oversight efforts.

HHS wrote that it “will complete a comprehensive national review to assess the risk of Medicaid expenditures reported by states and allocate resources based on risk.”

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As California Hospitals Sweep Up Physician Practices, Patients See Higher Bills

Chad Terhune — Tue, 04 Sep 2018 20:01:53 +0000

Hospitals have gobbled up nearly 40 percent of physician practices in California, leading to higher bills for patients, a new study shows.

Just a quarter of practices were owned by hospitals eight years ago, according to the Tuesday in the journal Health Affairs. That type of rapid industry consolidation was associated with higher prices for primary care visits and treatment from specialists.

In areas with both high levels of consolidation among hospitals and between hospitals and physicians, researchers estimated there was a 12 percent increase in premiums on California’s health insurance exchange from fall 2013 through 2016, beyond the general rise in medical costs.

Acquisitions of physician practices by hospitals tend to be small and typically fly under the radar, said Richard Scheffler, the study’s lead author and professor of health economics and public policy at the University of California-Berkeley.

“But when you add them up, they are having an impact on outpatient prices and Affordable Care Act premiums,” he said. “I call it conglomerate care.”

He said the change in California hospital-physician ownership is more recent compared with the earlier consolidation within the hospital industry and among insurance companies, which also pushed up prices.

(Scheffler et al./Health Affairs)

The percentage of California primary care physicians in practices owned by hospitals increased from 26 percent in 2010 to 38 percent in 2016, the study found. For the same period, the percentage of specialists in such practices jumped from 20 percent to 54 percent. For all physicians, the statewide figure grew from 24 percent to 39 percent, according to the study’s authors.

The steady decline of inpatient admissions has upended the normal business model for hospitals, and big systems are seeking more control over where patients get care outside their walls. The general trend toward buying doctors’ practices had been known, but the findings in the Health Affairs study make clear how big a change it is. Until recently, however, consolidation among insurers or hospital systems has attracted more attention from regulators and lawmakers.

A similar wave of hospital-physician consolidation has occurred nationally. From 2010 to 2016, the national share of office-based physicians who worked in hospital-owned organizations has increased from 30 percent to 48 percent, according to Scheffler and his co-authors.

Hospital and physician groups defend these mergers as good for patients, saying they help coordinate care that is often fragmented, duplicative and wasteful. The deals enable them to deliver care that’s less expensive and to negotiate more effectively with giant insurance companies, they say.

Carmela Coyle, chief executive of the California Hospital Association, said the study has serious flaws, drawing conclusions about supposed cost increases due to consolidation that aren’t supported by the data.

“These authors start from a place where consolidation and market concentration is bad,” Coyle said. “Our experience in health care suggests that bringing providers together can be a very good thing for communities and the patients they serve. It often preserves access and allows physicians to stay in the community.”

But critics of consolidation say that as large health systems gain market power, they can dictate where patients go for expensive tests and procedures. Some hospitals tack on “facility fees” for outpatient care, which boosts costs even further.

“These mega-enterprises are buying up everything and when you sit down to contract with them it’s ridiculously expensive,” said Glenn Melnick, a health care economist at the University of Southern California.

For instance, Northern California, where a few large health systems dominate the market and own many physician practices, has become the in the country to have a baby.

Melnick co-authored a in Health Affairs, also out Tuesday, that described how a steady erosion of competition among hospitals in California has contributed to rising health care costs.

The prices paid by health plans to California hospitals declined by 26 percent from 1995 to 1999, a period when managed care was aggressive at negotiating lower prices. But a consumer backlash against tight controls on care and patient choice ensued, and that trend began to reverse in the early 2000s.

Prices increased by 238 percent from 2001 to 2016 — despite a 10 percent drop in the volume of care for commercially insured patients over that same period.

“Competition was working before, and now that competition has eroded,” Melnick said.

Some health care economists say hospitals and physician groups don’t need to merge in order to collaborate on patient care and that contracting could suffice without diminishing competition through outright acquisitions.

Antitrust enforcers are now giving such consolidation more scrutiny.

In March, California Attorney General Xavier Becerra , accusing the health system of overcharging patients for years and illegally driving out competition in Northern California. Part of that case centers on Sutter’s big medical groups, which are a key source for patient referrals and admissions into Sutter facilities. Overall, the nonprofit chain has 24 hospitals, 36 surgery centers and more than 5,500 physicians in its network.

Sutter denies any anticompetitive behavior and touts the benefits of offering patients a broad array of services. “Our integrated network of high-quality doctors and care centers aims to provide better, more efficient care — and has proven to help lower costs,” Sutter said in a recent statement.

Other states have pursued legal action on this front. Last year, for instance, the Washington state attorney general’s office system to unwind its acquisition of two medical groups, saying those deals violated antitrust law and would harm consumers.

Meantime, California lawmakers have tried to ban certain contracting practices used by large health systems, such as “all or nothing” provisions that force health plans to accept all of their facilities and medical groups systemwide. However, for the second consecutive year, failed to advance amid opposition from the hospital industry.

Of course, the doctor’s office — whether it’s owned by a hospital or not — isn’t the only option for many consumers nowadays. Many people visit clinics run by retailers, such as CVS, or talk to a doctor through an app on their smartphone.

Scheffler said his study didn’t examine whether the quality of care had improved under hospital-controlled physician practices. He said, however, that the evidence of any quality improvement is thin so far, and he challenged providers to make their case.

“We want them to integrate care,” Scheffler said. “But if it’s giving them market power and increasing prices, is it worth it?”

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The $109K Heart Attack Bill Is Down To $332. What About Other Surprise Bills?

Chad Terhune — Fri, 31 Aug 2018 09:05:04 +0000

A Texas hospital that charged a teacher $108,951 for care after a heart attack slashed the bill to $332.29 Thursday — but not before the huge charge sparked a national conversation over what should be done to combat surprise medical bills that afflict a growing number of Americans.

The story of Drew Calver was first reported by Kaiser Health News and NPR on Monday as part of the “Bill of the Month” series, which examines U.S. health care prices and the troubles patients run up against in the $3.5 trillion industry.

In Calver’s case, the 44-year-old father of two had suffered a heart attack in April 2017 and a neighbor rushed him to the nearest emergency room, which was an out-of-network hospital under his school district health plan. His insurance paid the hospital nearly $56,000 for his four-day hospitalization and procedures to clear his blocked “widow-maker” artery.

But the hospital, St. David’s Medical Center in Austin, wasn’t satisfied with that amount and went after the high school history teacher and swim coach for an additional $109,000 in a practice known as “balance billing.”

Within hours of the story publishing, the hospital offered to waive nearly the entire bill and charge him $782.29 instead. By Thursday, St. David’s lowered the amount even further. Calver said he paid it off over the phone, eager to put this stressful saga behind him.

Calver said it’s a relief that his family doesn’t face a six-figure bill and threatening letters from the hospital’s debt collector. But he said he worries about other patients hit with unjust medical bills of $10,000 or $20,000 who don’t catch the media’s attention.

“It feels great that this is over for me and my family. But this isn’t just about my bill,” Calver said in an interview. “I don’t feel any consumer should have to go through this.”

Calver and his wife, Erin, said they were encouraged by the outpouring of support and attention they received. Drew Calver gave local TV interviews after teaching class and his story was featured on CBS This Morning. The couple said they’re hopeful the national conversation that ensued will lead to changes that help other consumers across the country.

Just after paying off his hospital bill, Calver walked to the school cafeteria Thursday to grab lunch. One of the cafeteria workers approached him and shared that she, too, was facing a huge medical bill from the same Austin hospital. Calver said he plans to follow up with the woman and assist in any way he can.

“This is the next way I can be of help to others,” he said.

Calver says it’s a relief that his family doesn’t face a six-figure bill and threatening letters from the hospital’s debt collector. (Callie Richmond for KHN)

The hospital system, St. David’s HealthCare, continues to defend its handling of Calver’s bill, saying it “did everything right in this particular situation.” It also pointed out that it informed the family on several occasions that they could apply for a discount through a financial assistance program, based on their household income.

Calver said he didn’t fill out the financial assistance paperwork earlier because he didn’t feel he owed the $108,951 — and had been contesting the validity of the charges all along.

His health plan said the $55,840 it paid the hospital should have satisfied the hospital’s claim. And Calver was already paying $1,400 as coinsurance, which was the out-of-pocket amount calculated by his health plan.

HCA Healthcare, the largest for-profit hospital chain in the country, and two nonprofit foundations own St. David’s.

The chief executive of St. David’s HealthCare, C. David Huffstutler, wrote a memo Monday addressed to his board of governors about Calver’s story. A St. David’s employee shared the memo with Kaiser Health News, and the hospital didn’t dispute its accuracy.

“I realize this is not the type of coverage any of us want for St. David’s HealthCare,” Huffstutler wrote in his Aug. 27 memo. “With this story, we had a number of circumstances that made it difficult to neutralize the coverage — a monthly news segment that seeks to empower patients to challenge their medical bills; a gap in the system that is affecting patients … and, a compelling patient story.”

Huffstutler also wrote that the hospital’s charges of $165,000 were “reasonable and customary.” He said that the school district and its health plan administrator, Aetna, chose to offer a narrow network plan that “can potentially place a heavy financial burden on the patient.”

Consumer advocates said the hospital should have erased the bill completely after putting the family through so much stress for months.

The drastic reduction in the bill “shows that these hospital numbers are just made up,” said Bonnie Sheeren, who runs Houston Health Advocacy and assists consumers with their medical bills. “It should be a zero balance, and the hospital should pay for therapy sessions to help this family recover from the billing ordeal.”

Several states have passed laws or introduced programs to help shield patients from surprise medical bills, particularly those stemming from emergencies.

But those state rules don’t apply to most U.S. workers because they get their health coverage from employers that are self-insured, meaning the companies pay claims out of their own funds. Federal law governs most of those health plans, and it does not include such protections.

Rep. Lloyd Doggett (D-Texas) heard Calver’s story on the radio while driving Monday and immediately wrote the family a letter offering his support. Calver teaches at the high school that Doggett attended.

The lawmaker proposed last year aimed at limiting surprise billing for patients, but he said it hasn’t received a hearing in the current Congress.

“This is a nationwide problem, and we need a nationwide solution,” Doggett said in an interview. “We have a system where the patient, the most vulnerable person of all those involved, is caught between the insurer and the health care provider. … These problems are solvable.”

Zack Cooper, an associate professor of public health and economics at Yale University, has studied hospital billing practices extensively and said the nearly $109,000 bill was no accident.

He noted that St. David’s, like other hospitals, advertises short wait times for its emergency rooms in order to attract out-of-network patients like Calver. Cooper said his case illustrates the need for better regulation of out-of-network billing at the state or federal level.

“The idea that a hospital would send a bill that will probably bankrupt an individual boggles the mind. For me, that is emblematic of a fairly toxic culture,” Cooper said.

“This was a remarkable story, and it has done remarkable good for him,” Cooper added. “But we shouldn’t be in a world where to avoid financial ruin you have to hope your story is featured in the popular press. We can do better than this.”

Bill of the Month is a crowdsourced investigation by Kaiser Health News��Ի��that dissects and explains medical bills.

Ashley Lopez of member station KUT in Austin contributed . “CBS This Morning” featured it on Wednesday.

Do you have a bill you would like us to examine? Submit it here.

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A Jolt To The Jugular! You’re Insured But Still Owe $109K For Your Heart Attack

Chad Terhune — Mon, 27 Aug 2018 09:05:05 +0000

UPDATE: This story has an addendum reflecting the hospital’s latest settlement offer.

Drew Calver took out his trash cans and then waved goodbye to his wife, Erin, as she left for the grocery store the morning that upended his picture-perfect life.

Minutes later, the popular high school history teacher and swim coach in Austin, Texas, collapsed in his bedroom from a heart attack. He pounded his fist on the bed frame, violent chest pains pinning him to the floor.

“I thought I was dying,” the 44-year-old father recalled. He called out to the only other person in the house, his oldest daughter, Eleanor, now 7. Using his voice, he texted his wife, who was at the store with their youngest, Emory, now 6. A neighbor rushed him to the nearby emergency room at St. David’s Medical Center on April 2, 2017.

The ER doctors confirmed the trauma to Calver’s heart and admitted him to the hospital’s cardiac unit. The next day, doctors implanted stents in his clogged “widow-maker” artery.

The heart attack was a shock for Calver, an avid swimmer who had competed in an Ironman triathlon just five months before.

Despite the surprise, even from his hospital bed, Calver asked whether his health insurance would cover all of this, a financial worry that accompanies nearly every American hospital stay. He was concerned because St. David’s is out-of-network on his school district health plan. The hospital told him not to worry and that they would accept his insurance, Calver said.

The hospital charged $164,941 for his surgery and four days in the hospital. Aetna, which administers health benefits for the Austin Independent School District, paid the hospital $55,840, . Despite the difference of more than $100,000, with the hospital’s prior assurance, Calver believed he would not bear much, if any, out-of-pocket payment for his life-threatening emergency and the surgery that saved him.

And then the bills came.

Patient: Drew Calver, 44, a high school history teacher and father of two in Austin, Texas.

Total Bill: $164,941 for a four-day hospital stay, including $42,944 for four stents and $10,920 for room charges. Calver’s insurer paid $55,840. The hospital billed Calver for the unpaid balance of $108,951.31.

Service Provider: St. David’s HealthCare, a large hospital system in central Texas. It’s run by HCA Healthcare, the nation’s largest for-profit hospital chain, and two nonprofit foundations.

Medical Treatment: Emergency room treatment followed by four days in the hospital, most of it spent in the cardiac unit. During surgery, four stents were implanted to clear a blockage in his left anterior descending artery, the source of so-called widow-maker heart attacks, because they are so frequently deadly.

What Gives: St. David’s Medical Center is billing Calver for the $109,000 balance — an amount nearly twice his annual pay as a teacher.

The hospital’s billing company sent a notice June 26, urging him to take advantage of this “”

“They’re going to give me another heart attack stressing over this bill,” Calver said. “I can’t pay this bill on my teacher salary, and I don’t want this to go to a debt collector.”

In the wake of his heart attack, Calver fell victim to twin medical billing practices that increasingly bedevil many Americans, even as legislators have tried to protect them: surprise bills and balance billing.

Surprise bills occur when a patient goes to a hospital in his insurance network but receives treatment from a doctor that does not participate in the network, resulting in a direct bill to the patient. They can also occur in cases like Calver’s, where insurers will pay for needed emergency care at the closest hospital — even if it is out-of-network — but the hospital and the insurer may not agree on a reasonable price. The hospital then demands that patients pay the difference, in a practice called balance billing.

The total bill for Drew Calver’s four-day hospital stay at St. David’s Medical Center in April 2017 was $164,941. (Callie Richmond for KHN)

His insurer paid $55,840, leaving Calver responsible for the unpaid balance of $108,951.31. (Callie Richmond for KHN)

Several states, including Texas (as well as New York, California and New Jersey) have passed laws to help shield consumers from surprise bills and balance billing, particularly for emergency care.

But there’s : Those state-mandated protections typically don’t apply to people, like the Calver family, who get their health coverage from employers that are self-insured, meaning the companies or employers pay claims out of their own funds. Federal law governs most of those health plans — and it does not include such protections.

About of people with employer health benefits are covered by self-insured plans, but many don’t even know it, since employers typically hire an insurer to administer the plan and employees carry a card bearing the name of Blue Cross Blue Shield or another major insurer.

Drew Calver sits with his wife, Erin, and daughters Eleanor (left) and Emory (middle) in their Austin, Texas, home where he had a heart attack on April 2, 2017. (Callie Richmond for KHN)

This case “illustrates the dangers that even insured people face,” said Carol Lucas, an attorney in Los Angeles with experience in health care payment disputes. “The unfairness is especially acute when there is an emergency and the patient, who might ordinarily be completely compliant, has no say about the facility he winds up in.”

In , St. David’s HealthCare defended its handling of Calver’s bill and sought to blame the school district and Aetna for offering such a narrow network.

“While we did everything right in this particular situation, the structure of the patient’s insurance plan as a narrow network product placed a large portion of the financial responsibility directly on the patient because our hospital was not in-network,” the hospital said.

Patients experiencing an emergency are particularly at risk of landing at an out-of-network hospital. St. David’s said once ER patients are deemed stable, it tries to transfer them to an in-network facility. “However, this is not always possible because the patient’s health must come first,” the hospital said.

This case also raises questions about the validity of the hospital’s charges.

Industry analysts and consumer advocates say St. David’s has a reputation for exorbitant billing and for trying to collect big payouts as an out-of-network provider. “This is a well-known, problematic provider. We’ve seen multiple bills from them and they are always highly inflated,” said Dr. Merrit Quarum, chief executive of WellRithms, which scrutinizes medical bills for self-funded employers and other clients nationwide.

WellRithms reviewed Calver’s bill in detail at the request of Kaiser Health News and determined that a reasonable reimbursement would have been $26,985. That’s less than half .

Healthcare Bluebook, which offers cost estimates for medical tests and treatments, arrived at a similar conclusion. It said a fair price for a hospitalization in Austin involving four heart stents would be about $36,800. St. David’s Medical Center charged four times that amount.

Quarum and other analysts who reviewed the bill said several charges stood out, especially on the four stents, which were billed at $42,944. Coronary stents are typically metal mesh tubes implanted in arteries to improve blood flow. Most are coated with drugs to assist in healing.

St. David’s charged $19,708 apiece for two Synergy stents made by device giant Boston Scientific. Two other stents used were far cheaper.

The $20,000 price tag represents a significant markup of what U.S. hospitals typically pay themselves for stents. The median price paid by hospitals for the Synergy stent was $1,153 over the past year, according to the nonprofit research firm ECRI Institute.

“St. David’s charge of over $19,000 for those stents is absolutely outrageous,” Quarum said.

St. David’s declined to comment on its markup for the stents or what it actually paid the manufacturer.

Resolution: For now, Calver still faces a bill for $108,951.31, with none of the parties involved in his treatment or coverage providing significant redress.

In fact, the hospital’s debt collector demanding payment in full.

After a reporter made inquiries, St. David’s said collection efforts were put on hold, and a hospital representative called Calver, offering to help him apply for a discount based on his income.

In a statement, St. David’s said “we work with all patients needing financial assistance to help determine their eligibility for this discount.”

Calver said that approach doesn’t address the balance billing or whether the charges were appropriate.

A spokeswoman for Aetna said “we are actively working to rectify the situation on behalf of the member.” But the health plan hasn’t shared any further details. The Austin school district declined to discuss this specific case.

Calver said the whole ordeal has been incredibly stressful for him and his wife.

“I am stuck in the middle of this convoluted, flawed system,” he said. “I’ve never owed a large amount like this or had credit card debt. What does it mean if this goes on my credit report?”

Drew Calver’s daughters visit him at the hospital in April 2017 after his heart attack and resulting emergency surgery. (Courtesy of the Calver family)

The Takeaway: Faced with a surprise bill or a balance-billing situation, don’t rush to pay any medical bills you receive. First, let the insurance process play out completely so you’re sure what the health plan is paying the hospital and doctors — and what you ultimately might be responsible for, in terms of coinsurance or copayments.

Ask for an itemized bill. Review the charges carefully and talk to your insurer, your employer and the hospital if the prices seem out of line. Arm yourself with estimates you can find online of the average prices charged in your area as you negotiate with all the players.

If the bills keep coming, talk to your employer’s benefits department or the state insurance department about your legal protections. The situation will vary depending on the type of health insurance you have and the state you live in. Tell any debt collection agencies that may contact you that you are contesting the bill.

With any of these entities, you can always appeal to reason, with this argument: You had no choice but to go to an out-of-network hospital in the case of a life-threatening emergency, so the insurer and the hospital should work out payment and hold you harmless from financially crippling bills.

Bill of the Month is a crowdsourced investigation by and that dissects and explains medical bills.

Ashley Lopez, a reporter with NPR member station KUT in Austin, contributed to the audio story in this report.

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A Black Eye For Blue Shield: Consumers Lash Out Over Coverage Lapses

Chad Terhune — Thu, 23 Aug 2018 09:00:02 +0000

Ashley Summers said she got an unpleasant surprise in February when she tried to pick up a prescription for her rheumatoid arthritis: Her pharmacy said her insurance had been canceled, even though her premiums were paid.

Summers called Blue Shield of California and got her policy reinstated — then she said it happened again in March and this time, the lapse in coverage dragged on for three months.

Without insurance to cover her medications and doctor visits, her arthritis and fibromyalgia worsened to the point that she could barely walk, she said. In June, she said, the state granted her permission to switch to another insurer.

“This entire mess has been so incredibly stressful,” said Summers, 49, a personal assistant in Los Angeles who had paid $593 a month in premiums. “For Blue Shield just to pull the plug like this is infuriating.”

Around the state, consumers with individual Blue Shield policies, like Summers, say they have been subject to sudden, erroneous cancellations, especially in recent months, forcing them to go without heart medicine, skip vaccinations for their children and pay hundreds of dollars out-of-pocket for other medical care. On social media, customers have described frantic attempts to get their coverage reinstated.

We apologize for the inconvenience. DM you member ID and a Specialist can look into this for you. – AV
— Team Shield (@TeamShieldBSC)

We apologize for the trouble and would like to look into this. DM us your member ID and contact info and a member of our team will reach out to address this with you. – JN
— Team Shield (@TeamShieldBSC)

We apologize for the frustration. A Specialist will reach out shortly to assist you. – JN
— Team Shield (@TeamShieldBSC)

Blue Shield has acknowledged failures in enrollment and billing for some customers who purchased individual policies since 2014, both inside and outside the Covered California exchange. The company declined to specify how many customers were affected. The problems don’t appear to involve people with employer coverage or enrolled in government health programs.

In a , the San Francisco insurer blamed many of these problems on an outside contractor it had hired in preparation for the launch of the Affordable Care Act in 2014. In a , the contractor, HealthPlan Services, denied the allegations and accused Blue Shield of sharing inaccurate customer data.

Consumers with individual Blue Shield policies, like Ashley Summers, say they have been subject to sudden, erroneous cancellations. (Courtesy of Ashley Summers)

In a , Blue Shield said: “The roll out of the Affordable Care Act was hard on the entire health care system. Our vendor failed to provide the support it promised and we spent millions of dollars to mitigate the impacts to our members.”

On Friday, Summers in Los Angeles County Superior Court, alleging breach of contract and seeking class-action status on behalf of other customers. The insurer couldn’t be reached for comment about the complaint.

Scott Glovsky, a Pasadena, Calif., attorney representing Summers, said Blue Shield has known about these problems for years. “Blue Shield is taking people’s hard-earned dollars and then abandoning them when they’re sick,” he said.

Tina Hoover, 47, a horse trainer in Sherman Oaks, Calif., said Blue Shield canceled her policy twice in two months, even though she’d been paying her premiums faithfully for years.

Blue Shield denied more than $1,000 in doctor visits, saying she’d been terminated. After four calls, inconsistent responses, non-responses and a pointed comment by her husband on Twitter, she finally got her insurance back, she said.

“It was frightening that Blue Shield could be so disorganized on something so important like my health care,” said Hoover, who pays $858 a month in premiums and has been a policyholder with the insurer for 15 years.

All health insurers face complaints, from improper denials of care to annoying customer service. But some experts say these persistent breakdowns in customer service at Blue Shield represent a black eye for California’s third-largest health insurer, which has 460,000 customers on the Covered California exchange and 3.8 million enrollees overall.

“I’ve never seen anything on this scale for such basic insurance operations,” said Paula Wade, an industry analyst at Decision Resources Group in Nashville, Tenn. “Honest to goodness, if you can’t take people’s money and credit their account — that’s incredibly simple.”

We apologize for the frustration. DM us your member ID and a member of our team will look into this. – SS
— Team Shield (@TeamShieldBSC)

We're sorry for the inconvenience. DM us your member ID and a Specialist will look in to this for you. – AV
— Team Shield (@TeamShieldBSC)

Across its plans last year, Blue Shield had the per 10,000 enrollees among the eight largest health insurers statewide, according to the California Department of Managed Health Care. Blue Shield had 7.43 complaints per 10,000 enrollees, followed by Anthem Blue Cross (5.83), UnitedHealthcare (4.72) and Kaiser Permanente (4.6). (Kaiser Health News, which produces California Healthline, is not affiliated with Kaiser Permanente.)

For its individual market plans, Blue Shield chose to outsource sign-ups, billing and payment processing to HealthPlan Services, a major contractor for insurers industrywide. In its breach-of-contract lawsuit against the contractor, Blue Shield said it needed outside help to handle the dramatic overhaul of the individual market in 2014 under the ACA.

By June 2014, Blue Shield said it had formed a team of people “whose sole job was to address the failures in HPS’ services to ensure that Blue Shield’s customers’ interests were not impacted,” according to the lawsuit.

But the glitches persisted, and Blue Shield said in its lawsuit that it has lost tens of millions of dollars due to the contractor’s “egregious” failures on billing, refunds and related matters.

HealthPlan Services’ “data was ever-changing, inconsistent and flat-out incorrect,” Blue Shield said in the 15-page complaint in San Francisco federal court.

In a statement to California Healthline, HealthPlan Services called Blue Shield’s claims “baseless” and said it has a “successful track record of providing quality services to its clients and their members.”

But in court papers, Blue Shield said the problems went beyond the sudden cancellations.

For instance, about 14,000 Blue Shield customers experienced “multiple attempted charges on their bank accounts” over one weekend, according to the insurance company’s lawsuit. About half the time, Blue Shield alleged, its contractor proposed refunds or credits that were excessive or had no basis at all. One time, a $27,000 refund went to the wrong customer, according to the lawsuit.

In April 2017, Blue Shield said, it initiated termination of the vendor’s contract.

In an Aug. 13 , HealthPlan Services said “Blue Shield’s highly unusual data maintenance and transmission methods and business processes resulted in customer-facing errors that were directly attributable to Blue Shield’s conduct.”

In a statement, Blue Shield countered that “HPS’ allegations are unfounded and we look forward to responding to them in the legal proceedings.”

Meantime, San Francisco resident Burcu Sivrikaya, 32, said she found out late last month that Blue Shield had canceled her coverage — effective May 1. She spent hours on the phone talking to seven different company representatives trying to get her policy reinstated, only to be told it would take 30 days, she said. “Are they using pen and paper? Why does it take 30 days? It’s insane.”

Now Sivrikaya, a social media manager, is trying to get Blue Shield to refund the $1,179 she said she paid in premiums for the three months the company withdrew coverage.

The Department of Managed Health Care fined Blue Shield and a subsidiary $557,500 last year for and a variety of . Blue Shield is contesting some of those allegations and penalties, according to the state.

Blue Shield noted that it performed well on certain categories in the state data, such as an extremely low complaint rate among medical providers.

The company also said its customer satisfaction score improved in a recent consumer survey by Forrester Research, increasing by nearly 2 percentage points to 63.6 out of 100. Forrester still labeled Blue Shield’s performance as “poor,” putting it in ninth place out of 17 health insurers that were rated this year.

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Top Trump Health Official Takes Swipes At ACA, Single-Payer In Enemy Territory

Chad Terhune — Thu, 26 Jul 2018 12:05:30 +0000

SAN FRANCISCO — Stepping into the land of the Trump resistance, Seema Verma flatly rejected California’s pursuit of single-payer health care as unworkable and dismissed the Affordable Care Act as too flawed to ever succeed.

Speaking Wednesday at the Commonwealth Club here, the administrator of the Centers for Medicare & Medicaid Services said she supports granting states flexibility on health care but indicated she would not give California the leeway it would need to spend federal money on a single-payer system.

“I think a lot of the analysis has shown it’s unaffordable,” Verma said during a question-and-answer session following her speech. “It doesn’t make sense for us to waste time on something that’s not going to work.”

During her speech, Verma issued a broader warning to advocates pushing for a Medicare-for-all program nationally. She said that “socialized” approach to medicine would endanger the program and the health care it provides for millions of older Americans.

“We don’t want to divert the purpose and focus away from our seniors,” Verma said in the address before more than 200 people. “In essence, Medicare for all would become Medicare for none.”

Single-payer has emerged as a key issue in the California governor’s race this year. The current front-runner for governor, Gavin Newsom, a Democrat and the current lieutenant governor, has vowed to pursue a state-run, single-payer system for all Californians if elected in November. Many California lawmakers have endorsed that idea as the next step toward achieving universal coverage and to tackling rising costs.

California has enthusiastically embraced the Affordable Care Act, and state leaders have struggled with — and even bucked — the Trump administration on a variety of health-policy fronts. The state stands to lose more than any other if the Trump administration is successful in further dismantling the ACA.

About 1.4 million Californians buy coverage through the state’s Obamacare exchange, Covered California, and nearly 4 million have joined Medicaid as a result of the program’s expansion under the law.

Verma wields enormous power as head of CMS, overseeing a $1 trillion budget. The agency sets policy for Medicare, Medicaid and the federal insurance exchanges under the ACA.

The landmark health law, she said, was so flawed it could not work without further action from Congress.

“It wasn’t working when we came into office and it continues not to work,” Verma said, responding to a question from moderator Mark Zitter, founder of the Zetema Project, a nonprofit organization that promotes debate on health care across partisan lines. “The program is not designed to be successful.”

Zitter billed the event as a rare chance for Californians to hear directly from a top Trump administration official, although Verma’s remarks broke little new ground, he said.

Trump health care policies figure into many of California’s congressional races this fall in which incumbent Republicans are fending off Democratic challengers. And in court, California Attorney General is leading a coalition of attorneys general who are defending the constitutionality of the ACA in a Texas case with national implications.

The Trump administration has sided with the officials waging the lawsuit, choosing not to defend the health law’s protections for people with preexisting conditions. Separately, the administration has backed work requirements for many people on Medicaid.

California’s state Senate passed a law in May banning such requirements as a condition for eligibility in Medi-Cal, the state’s Medicaid program. The bill is pending in the state Assembly.

“Making health insurance coverage contingent on work requirements goes against all we’ve worked for here in California,” state Sen. Ed Hernandez (D-West Covina), author of , said in May.

State lawmakers also are considering bills that would limit the GOP-backed sale of short-term health policies and prevent people from joining association health plans that don’t have robust consumer protections.

In an interview after the speech, Verma criticized those legislative efforts in California because they would limit consumer choice.

“Any efforts to thwart choice and competition and letting Americans make decisions about their health care is bad health policy,” she said.

Peter Lee, executive director of Covered California, the state’s ACA marketplace, has criticized the Trump administration for promoting those cheaper, skimpier policies as an alternative to ACA-compliant plans. He said he fears consumers will be harmed by “bait-and-switch products” that don’t provide comprehensive benefits.

“There have been a series of policies from Washington that have the effect of raising costs, particularly for middle-class Americans, and pricing them out of coverage,” Lee said in an interview last week. “This is not a failure of the ACA. This is entirely happening since the new administration.”

Most of Verma’s speech in San Francisco focused on Medicare. She outlined a number of initiatives designed to strengthen the program and protect taxpayers from ballooning costs. After the speech, CMS announced proposed changes to Medicare payment policies for outpatient care that could yield savings for the government and patients.

In her remarks, Verma reiterated the Trump administration’s efforts to reduce prescription drug prices, improve patients’ access to their own medical records and eliminate burdensome regulations on doctors and other medical providers.

Verma received a polite round of applause at the beginning and end of her appearance.

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California’s ACA Rates To Rise 8.7% Next Year

Chad Terhune — Thu, 19 Jul 2018 18:51:03 +0000

Premiums in California’s health insurance exchange will rise by an average of 8.7 percent next year, marking a return to more modest increases despite ongoing threats to the Affordable Care Act.

The state marketplace, Covered California, said the rate increase for 2019 would have been closer to 5 percent if the federal penalty for going without health coverage had not been repealed in last year’s Republican tax bill.

The average increase in California is smaller than the double-digit hikes expected around the nation, due largely to a healthier mix of enrollees and more competition in its marketplace. Still, health insurance prices keep growing faster than wages and general inflation as a result of rising medical costs overall, squeezing many middle-class families who are struggling to pay their household bills.

The 8.7 percent increase in California ends two consecutive years of double-digit rate increases for the state marketplace.

“It’s not great that health care costs are still increasing that much, but the individual market is not sticking out like a sore thumb like it has in other years,” said Kathy Hempstead, senior adviser at the Robert Wood Johnson Foundation. “It’s falling back to earth.”

The future may be less bright. An estimated 262,000 Californians, or about 10 percent of individual policyholders in and outside the exchange, are expected to drop their coverage next year because the ACA fines were eliminated, according to the state. Peter Lee, executive director of Covered California, warned that the exodus of healthier consumers will drive up insurance costs beyond 2019 — not just for individual policyholders but for California employers and their workers.

“We are paying, in essence, a surcharge for federal policies that are making coverage more expensive than it should be,” Lee said in an interview. “There will be more of the uninsured and more uncompensated costs passed along to all of us.”

Critics of the Affordable Care Act say it has failed to contain medical costs and left consumers and taxpayers with heavy tabs . Nearly 90 percent of Covered California’s 1.4 million enrollees qualify for federal subsidies to help them afford coverage.

Foiled in its attempt to repeal Obamacare outright, the Trump administration has taken to rolling back key parts of the law and has slashed federal marketing dollars intended to boost enrollment. Instead, the administration backs cheaper alternatives, such as short-term coverage or association health plans, which don’t comply fully with ACA rules and tend to offer skimpier benefits with fewer consumer protections.

Taken together, those moves are likely to draw healthier, less expensive customers out of the ACA exchanges and leave sicker ones behind.

Nationally, 2019 premiums for silver plans — the second-cheapest and most popular plans offered — are expected to jump by 15 percent, on average, according to an of 10 states and the District of Columbia by the Avalere consulting firm. across the country, however. Decreases are expected in Minnesota while insurers in Maryland are seeking increases.

In California, exchange officials emphasized, consumers who shop around could pay the same rate as this year, or even a little less.

Christy McConville of Arcadia already spends about $1,800 a month on a Blue Shield plan for her family of four, opting for “platinum” coverage, the most expensive type. Her family doesn’t qualify for federal subsidies in Covered California.

She’s worried about further increases and doesn’t want to switch plans and risk losing access to the doctors she trusts. “We’re getting right up to the limit,” McConville said.

Amanda Malachesky, a nutrition coach in the Northern California town of Petrolia, said the elimination of the penalty for being uninsured makes dropping coverage more palatable. Her family of four pays almost $400 a month for a highly subsidized Anthem Blue Cross plan that has a $5,000 deductible.

“I’ve wanted to opt out of the insurance model forever just because they provide so little value for the exorbitant amount of money that we pay,” said Malachesky, who recently paid several hundred dollars out-of-pocket for a mammogram. “I’m probably going to disenroll … and not give any more money to these big bad insurance companies.”

Covered California is aiming to stem any enrollment losses by spending more than $100 million on advertising and outreach in the coming year. In contrast, the Trump administration spent only $10 million last year for advertising the federal exchange across the 34 states that use it.

Also, California lawmakers are looking at ways to fortify the state exchange. State legislators are considering bills that would limit the sale of short-term insurance and prevent people from joining association health plans that don’t have robust consumer protections.

However, California hasn’t pursued an insurance mandate and penalty at the state level, which both health plans and consumer advocates support. New Jersey and Vermont have enacted such measures.

Lee said it’s up to lawmakers to decide whether a state mandate makes sense.

David Panush, a Sacramento health care consultant and a former Covered California official, said some lawmakers may be reluctant to push the idea, even in deep-blue California.

“The individual mandate has always been the least popular piece of the Affordable Care Act,” he said.

Despite the constant uncertainty surrounding the health law, many insurers nationally are posting profits from their ACA business and some plans are looking to expand further on the exchanges.

In California, the same 11 insurers are returning, led by Kaiser Permanente and Blue Shield of California. Together, those two insurers control two-thirds of exchange enrollment. (Kaiser Health News, which publishes California Healthline, is not affiliated with Kaiser Permanente.)

The Covered California rate increases are fairly uniform across the state. Premiums are climbing 9 percent across most of Southern California as well as in San Francisco. Monterey, San Benito and Santa Cruz counties faced the highest increase at 16 percent, on average.

The rates are subject to state regulatory review but are unlikely to change significantly. Open enrollment on the exchange starts Oct. 15.

The ACA’s expansion of coverage has dramatically cut the number of uninsured Californians. The proportion of Californians lacking health insurance fell to 6.8 percent at the end of last year, down from 17 percent in 2013, federal data show.

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