8/6/2019 Payers & Providers California Edition Issue of May 12, 2011

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It costs nearly $20,000 a year for a householdin Los Angeles to obtain healthcare throughjob-based insurance coverage an amountthat has nearly doubled in less than a decade,

according to a new report by Milliman, Inc.Millimans annual Medical Index was

published just as UCLA researchers concludedthat the states uninsured population couldsignifcantly benet from subsidized coverageexpected to be offered on the states healthinsurance exchanges beginning in 2014, aswell as an expansion of the Medi-Calprogram.

The annual healthcare cost for a familyof four in Los Angeles this year was $19,391,just below the nationwide average of $19,393.That is an increase of 6.7% from a year ago,when the cost was $18,098, $24 above the

nationwide average.The cost increase is one of the lowest in

years, but households in Los Angeles andelsewhere remain under tremendous costpressures, according to Milliman ofcials.

"As costs continue to growand even asthe cost trend deceleratesthe total cost ofcare for American families constitutes a largerand larger portion of the household budget,"said Lorraine Mayne, a Milliman principal andconsulting actuary.

Costs in Los Angeles were $13,537 in2006, meaning they have increased more than43% in ve years. Milliman noted in a

statement that nationwide costs stood at

$9,235 nationwide in 2002, meaning theyhave more than doubled in less than a decade

As for California, Milliman Principal ChrisGirod conceded that costs are almost certainly

higher in Northern California, where hospitalstend to be consolidated into chains and oftencharge signicantly more for procedures.

Its a well-known fact that hospital costsin the north tend to be more expensive, Girodsaid, but even in the Los Angeles market youcan see tremendous variations of cost.

Girod was unable to say whether themore than 2 million Californians who havelost their healthcare insurance during therecession have impacted hospital pricingfurther. We look at negotiated prices(between hospital and insurers), which tend tobe tightly controlled due to limitations in

contracts, he said.Physician costs are the largest

component of the nationwide index,representing $6,329, followed closely byhospital inpatient care at $6,068. Outpatientcare and pharmacy are far smallercomponents, representing $3,404 and $745,respectively.

Employees will shell out $8,008 fortheir care, or 41%, of which $4,728 will betheir contribution toward healthcare coverage,while $3,280 will be spent on out-of-pocketcosts such as deductibles and co-payments.

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8/6/2019 Payers & Providers California Edition Issue of May 12, 2011

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Payers & Providers Page 2

Top Placement...Bottomless Potential

Advertise Here

(877) 248-2360, ext. 2

In Brief

Quest DiagnosticsPays $241M To SettleMedi-Cal Billing Suit

Laboratory operator QuestDiagnostics has reached a $241million settlement with the Medi-Cal program regarding a lawsuitaccusing it of overbilling.

Quest had been sued inCalifornia by rival HunterLaboratories. The State ofCalifornia later joined thelitigation.

As part of the settlement,Quest will provide a discount toMedi-Cal for lab services until July2012. It is taking a pre-tax chargeof $236 million in the first quarterof 2011, the company said in astatement.

Long-Term Care MoreExpensive In California

Than Elsewhere

Long-term care costs aresignificantly higher in Californiathan the rest of the nation,according to a new survey byGenworth Financial.

Genworths annual cost o fcare survey concludes that the costof a home health aide to providelong-term care the most popular

option is $21, versus $19 anhour nationally. However, the costof such care has increased 0.8%over the past six years, versus1.4% per year in other parts of thecountry.

A room in a private nursinghome has an annual median rate inCalifornia of $91,250 per year,14.8% higher than the nationalmedian of $77,745.

Continued on Page 3

NEWS

Costs (Continued from Page One)

Employers will shoulder the remaining$11,385.

Meanwhile, new research by the

UCLA Center for Health Policy Studiesconcluded that the statewide insuranceexchange being created as a result of lastyears landmark federal healthcare reform lawand a planned expansion of Medi-Cal couldcover an additional 4.6 million Californians.

Of those, 2.13 million would beeligible for expanded Medi-Cal coverage,while another 2.5 million might obtaincoverage through the exchange, includingmore than 737,000 who already have

individual coverage but mind nd a betterdeal.

Nadereh Pourat, a UCLA health

services professor who was lead author for thresearch, believes that many younger andsingle Californians who have gone withoutcoverage are likely to obtain it. Many haveeither been unable to afford the coverage, orbelieved their relative good health made it asuperuous expense, she added.

"Costs will go up but may also bemitigated by the relative youth and health ofthe eligible population," Pourat said.

Continued on Next Page

CDPH Disputes Primes Sepsis ClaimsHospital Operator Billed Often For TreatmentAn investigation by the California Departmentof Public Health concluded that hospitaloperator Prime Healthcare often billedMedicare to treat patients for septicemia whenthe condition likely did not exist.

The ndings were reported by theinvestigative website California Watch earlierthis week and conrmed by Payers &Providers through a CDPH spokesman.

Also known as sepsis, septicemia is a

massive blood infection that can lead to organshutdown and even death. The condition isoften acquired via hospital-inserted cathetersor intravenous central lines, although it canalso be acquired outside of a hospital.

The CDPH's probe of four Prime hospitals San Dimas Community Hospital, DesertValley Hospital, Chino Valley Hospital andWest Anaheim Medical Center found that22 of 120 patients diagnosed with septicemiashowed few symptoms of the condition. AtChino Valley, a patient was diagnosed with thecondition, even though there was no sign ofinfection, according to a CDPH inspection of

hospital records. Seven other patientsdiagnosed with the condition at San Dimasalso had no signs of the condition, the CDconcluded.

Medicare pays a premium of about$6,000 to treat septicemia compared to motypical urinary tract infections, suggesting tinvestigators that hospitals could use such diagnosis to pump up billings. Aninvestigation of Prime by the Service

Employees International Union concludedthat Prime billed Medicare for septicemia athree times the national rate.

CDPH said it began an investigation othe for-prot chains billing practices forsepticemia late last year at the urging ofseveral state lawmakers. The U.S. Departmof Health and Human Services is also probPrime regarding its septicemia billings.

CDPH conducted the investigations inFebruary and asked for corrective actions

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8/6/2019 Payers & Providers California Edition Issue of May 12, 2011

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Page 3Payers & Providers

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*For our ads, not your hospital

NEWS

In Brief

HEALTHCARES BEST ADVERTISING VALU]

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Prime (Continued from Page One)

Citing recovery in the nancial markets,Oakland-based Kaiser Permanente reportedrobust results for the rst quarter of 2011.

Kaiser reported revenue of $12 billion forthe rst quarter ending March 31, comparedto $11 billion for the rst quarter of 2010, anincrease of 8.4%.

Net income for the quarter was $921million, compared to $706 million for the

year-ago quarter, an increase of 23.4%.Kaiser ofcials attributed the growth

partly to an increase in membership of208,000, to slightly more than 8.8 million,along with an improved capital market for itsinvestments.

Its net non-operating income was $291million for the quarter, compared to $225million during the rst quarter of 2010, a22.7% increase.

Operating income for the quarter was$630 million, up 23.7% from the $481 millionreported in the rst quarter of 2010.

L.A. Care Gets RareFine From DMHC

L.A. Care Health Plan, the Medi-Cal managed care payer for Los

Angeles County, has received arare fine from the Department ofManaged Health Care.

The DMHC levied a $2,500fine against L.A. Care for notcommunicating with an enrolleein Spanish. The plan had deniedcoverage in 2009 for atonsillectomy due to a nasalobstruction, claiming that theenrollee had not sufferedsignificant infections to merit sucha procedure. However, itscommunications were in English,even though the enrolleeprimarily spoke Spanish, violatingregulatory requirements that it

provide translations. L.A. Carelater reversed its decision whenthe enrollee requested anindependent medical review withthe DMHC.

Although it has more than750,000 enrollees, L.A. Care hasreceived only four fines in sevenyears from the DMHC. Its last finewas in June 2009. That comparesto dozens of fines levied againstthe agency against similarly-sizedcommercial health plans.

HHS: Few UninsuredCan Pay Hospital Bills

A new report by the U.S.Department of Health andHuman Services concludes that

just 12% of those who lack healthinsurance are able to pay theirhospital bills.

One of the most enduringmyths is that people withouthealth insurance can get care withlittle or no problem, said HHSSecretary Kathleen Sebelius, whoreiterated her support for thePatient Protection and AffordableCare Act.

regarding infection control protocols at someof the facilities, but did not issue any nes.

In addition to its billings for septicemia,Prime was also found by California Watch tohave extensive Medicare billings for amalnutrition condition called kwashiorkor,which is typically seen among children indeveloping countries.

Although California Watch hasexamined both the septicemia andmalnutrition issues in depth, both wereoriginally disclosed by the ServiceEmployees International Union, whichanalyzed Primes billing records.

Prime has contended its billings areaccurate, and that the SEIU is using its probesas leverage in contract negotiations. Itcontends that the ndings by CDPH willeventually be reversed.

Contrary to the well-established practiceof medicine and national coding guidelines,CDPH's surveyors falsely assumed that bloodcultures have to be positive in order todiagnose septicemia...and CDPH's surveyorswere not knowledgeable about the diagnosisand coding principals related to septicemia,the company said in a prepared statement.

Kaiser Reports First Quarter EarningsAttributes Growth In Part To Market Recovery

Our strong membership growth andconsistent performance, coupled withimprovement in the nancial markets,contributed to our overall net income, saidKathy Lancaster, Kaisers executive vicepresident and chiefnancial ofcer. We arepleased that our nancial performance allowus to continue to invest in technology andfacilities, and support high-quality, affordabl

healthcare.Capital spending for the quarter was $62

million, up 26.5% from the $458 millionearmarked for capital spending during theyear-ago quarter.

We continue to reinvest in our peopleand technology to deliver the right care at thright time, said Kaiser Chief Executive OfcGeorge Halvorson. Our integrated modelallows us to meet the evolving needs of ourmembers and the communities we serve in achanging health care environment,consistently delivering patient and family-centered care.

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8/6/2019 Payers & Providers California Edition Issue of May 12, 2011

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Payers & Providers PageOPINION

A Gold Watchs Ceaseless TickingPayout May Stress Salinas Valley For Years to Com

Ron Shinkman is the publisher of Payers &

Providers.

9-21:)!;6!1%2/+3)0!).)*&!?31*+0(&!%&!'(&)*+!,!'*-./0)*+!'1%2/+3/456!

778@!A4!(441(2!/40/./01(2!+1%+B*/>C/-4!/+!D==!(!&)(*!

ED$F=!/4!%12G!1>!C-!$#!+1%+B*/%)*+H@!^-++!]-20%)*56!(&)*+(40>*-./0)*+@B-: Op-ed submissions of up to 600 words are

welcomed. Please e-mail proposals to

editor@payersandproviders.com,

Former Salinas Valley Hospital Chief ExecutiveOfcer Samuel Downing began his retirementlast month under a cloud.

The Los Angeles Times reported on $4million in lump-sum retirement payoutsDowning took from the hospital, which is partof a public healthcare district. That's on top ofhis $150,000 annual pension.

Should he live into his 80s, Downingcould receive about $7 million from ataxpayer-subsidized hospital in hisretirement likely as much as hereceived for 39 years of work forthe district.

Downing's payouts camefrom multiple hospital accountsas an end-run around IRSregulations regarding inurement--excessive payments to executivesof not-for-prot organizations.

On top of that, Downing wasalso paid more than $668,000 in2009, nearly triple the statewideaverage for a hospital district CEOin California.

"I think I've earned it,"Downing told the Los AngelesTimes about his pay and payouts. "I worked for

this institution and gave them my heart andsoul."

At least Salinas Valley was spreading thewealth: The hospital spent more than $1,678per adjusted patient day on staff salaries in2008--about 60% higher than the averageCalifornia hospital, according to data from theOfce of Statewide Health Planning andDevelopment.

Meanwhile, nearly a quarter of Salinasresidents live in poverty also about 60%higher than the statewide average.

This is borne out by some of SalinasValley's other bottom-line stats. It spent more

than $14 million on charity anduncompensated care in 2008, about ve timesthe average California hospital. And while itreported a surplus in that year, it lost about $64million treating Medicare patients.

Given the combination of California'swoeful economy and aging population, thosestats have virtually no chance of improvementfor the foreseeable future. In fact, Salinas Valleyhad to eliminate about 600 staff positions over

the past year. Downing's payout could havebeen used to save scores of those jobs.

Im not a hospital CFO, nor do I pretend be one. But Salinas Valleys payroll appears oof whack with its demographics. The hospitahas two vice presidents ofnance, who are pmore than $630,000 a year combined. Id likthink they are aware of this fact.

I'd also like to say that hospitals like SaliValley--where the compensation practices are

iffy as the patient demographicsare a rare exception, but they'not.

Payers & Providerssister

edition in the Midwest will bereporting this summer on hospCEO compensation in the regi a followup to the work thispublication published in 2010

Payers & Providers andresearchers at MCOL examinethe pay of nearly 2,000 CEOs,CFOs and COOs of not-for-prohospitals in the Midwest over tpast year, and there are dozensthat have received seven-gureretirement payouts. Some even

received millions more than Downing.

Virtually all of those hospitals are facing same demographic and funding time bombs Salinas Valley, but they have all convincedthemselves that they must earmark signicanamounts of their revenue to attract what isdeemed the best talent possible. This may getthem veteran hospital executives, but it alsoserves to drive up their pay demands creatipotential future shortfalls and PR fallout.

Downing is entitled to a solid pension, bthe extra money purposely set aside for his exwill be sorely missed by his former employerhis successor believes it has set a precedent,even more millions will be taken out of that

system.That inevitably will make it hard for Salin

Valley to live up to its motto: "Neighbors WhCare."

By Ron

Shinkman

8/6/2019 Payers & Providers California Edition Issue of May 12, 2011

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MARKETPLACE/EMPLOYMENTPayers & Providers Page 5

It costs up to $27,000 to fill a healthcare job*

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HEALTH PLAN MEDICAL DIRECTOR (Los Angeles)

Physician licensed by the State of California, with board certication in primary care or medical subspecialty.Have ve (5) years of Medical Director experience in a managed care setting, such as a HMO or IPA/Medical Group.Medical oversight and physician liaison in the areas of: Utilization review, credentialing, quality improvement, peer review, casemanagement, and disease management.

Works under the direction of the CMO to ensure the delivery of high quality and efcient care for all members. ProvideAdministrative Management of patient care with specic responsibility to provide direction and assistance in achieving optimal

medical performance in an ef

cient manner. To participate and lead in the review of all inpatient admissions. Direct and reviewall inpatient utilization activity at hospitals by interfacing with the clinicians and UR nurses. Oversee the review process of priorauthorization (medical and pharmacy) requests in a timely manner. All denials must be individually reviewed and signed by theMedical Director or physician reviewer.

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HEALTH PLAN, MANAGER, MEDICAL MANAGEMENT (So. California)

Graduate from an accredited RN program with three or more years of recent acute hospital nursing experienceThree or more years of recent managed care utilization management and case management experienceThree or more years of staff supervision/management experience. The Manager of Utilization and Case Management is responsibfor the day to day operations of the utilization and case management department, including the Medi-Cal and Medicare Programstaff. The Manager of UM /CM collaborates with the Director of UM/CM and the Team Leader and with the staff Medi-Cal WaiveCase Management Programs to promote continuity between programs, teamwork and collaboration.

Maintains effective administration of UM and CM functions. Coordinates staff schedule to assure effective coverage of UM andCM functions, including after hours, weekends and holiday coverage by Nurse Advice. Trains, implements and evaluates UM anCM policies and procedures, guidelines and action plans. Monitors and evaluates through monthly quality assessments theperformance of the Case Management and Utilization Management staff against established productivity and quality guidelines.

Provides timely educational feedback to staff on performance Assists the Director of UM/CM to ensure the programs are compliato DHCS contractual and regulatory requirements for Medi-Cal and to CMS regulations for Medicare.

Please Contact:Executive Search & Placement

Sonia Varian at 818.707.7118, or espsonia@pacbell.net

8/6/2019 Payers & Providers California Edition Issue of May 12, 2011

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