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8/7/2019 Payers & Providers California Edition March 17, 2011
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Blue Shield of California had the numbers tosupport its third rate hike on its 194,000individual policyholders in the past sevenmonths, but apparently overwhelming public
disapproval prompted the abrupt cancellationof the last increase this week.
The San Francisco-based insurerannounced Wednesday it would back off therate hike scheduled to go into effect on May 1,and would impose no further rate increases onits individual policyholders in 2011.
"As long-time advocates for universalhealthcare coverage, we are also deeplycommitted to the success of health reform. Thebest way to fulll our mission and makereform work is to keep costs down, said BlueShield Chief Executive Ofer Bruce Bodaken.By agreeing not to raise rates this year, we are
helping to make coverage more affordable forour members during tough economic times.It's a nancial risk for us, but a risk that'sworth taking."
Blue Shield said foregoing the rate hikewould save its individual policyholdersbetween $35 million and $40 million thisyear. However, the insurer claims its losses in2011 from this segment would top the $27million hit it took in 2010, noting thatskyrocketing medical costs are among thereasons for the mounting losses.
Blue Shields latest rate hike was toaverage 6.5%, bringing the cumulative
average increase per policyholder to 30%since last fall.
However, the Los Angeles Times reportedlast week that hundreds of enrollees would
see their premiums climb more 80% or morewhen all three rate hikes were factoredtogether, and nearly a quarter of its customerswould experience increases exceeding 50%.That disclosure was an apparent tipping pointfor Blue Shields decisionmakers, according tosome observers.
There was a lot of public shock that thiscould be happening, said Judy Dugan,research director for Consumer Watchdog, aSanta Monica-based advocacy group thatorganized a protest at Blue Shieldsheadquarters earlier this year over thepremium increases. The group has also been
critical of Blue Shields mushrooming cashreserves, which total about $2.3 billion, upfrom $400 million in 2002.
Dugan said Blue Shields reserves whichare about four times the amount legallyrequired for solvency purposes are not beingused for the purpose of protecting the insurerfrom economic uncertainties or a catastrophicavalanche of medical claims.
it continued to grow even in the deepestpart of the recent economic downturn, shesaid.
8(2/9-*4/(!:-;/)
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Payers & Providers Page 2
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In Brief
Anthem Inks Deal WithApolloMed
Anthem Blue Cross of Californiahas entered into an agreement with
Glendale-based ApolloMed toprovide hospitalist services in LosAngeles County to a new wave ofMedi-Cal enrollees expected toenroll in the plan in mid-year.
The pact with ApolloMed willfocus on the Aged, Blind andDisabled Medi-Cal recipients whowill enroll into managed care plansin June. About 550,000 suchindividuals will be put intomanaged care programs statewide,with about 150,000 in Los AngelesCounty, although they will have theoption of picking among severalmanaged care plans.
ApolloMed, which provides
services at 24 acute care hospitalsin the region, will closely monitorthe ABD Medi-Cal enrollees inorder to ensure they are receivingappropriate care. Hospitalistprograms can reduce hospital costsby up to 20% and average lengthsof hospital stays by as much as30%.
"Anthem understands that ahospitalization can be a worrisomeexperience for our members; wewant to ensure that any time ourmembers require hospitalizationthey have access to comprehensivehealth care and feel confident thatthey will have a successful
discharge and a recovery," saidKevin Hayden, president ofAnthem's State Sponsored Business."Our agreement with ApolloMedwill enhance the quality of care ourmembers receive during theirhospitalization to help improvehealth outcomes."
Terms of the deal were notdisclosed.
Continued on Page 3
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Blue Shield (Continued from Page One)
In addition to the public protest,California Insurance Commissioner DaveJones conrmed that his ofce had receivedmore than 1,000 individual complaints fromconsumers about the rate hikes.
All of this appeared to contribute to BlueShields sudden about-face on the issue aftersteadily insisting for months that the rate hikewould be imposed although it had madesome incremental concessions as to when itwould occur.
At the behest of Jones, Blue Shield agreedto wait 60 days and have outside actuaryAxene Health Partners verify its justicationfor the hike after originally stating it wouldimplement the rate hike and issue refunds to
consumers if Axene found anything amisswith its actuarial data.However, Axene which gained
prominence last year when concluding that arate hike by Anthem Blue Cross was notactuarially justied concurred with BlueShields numbers late last month. As recentlyas last weekend, Blue Shield had issuedpublic statements saying the rate increaseswould be imposed as scheduled.
Todays news is a welcomedevelopment and certainly a relief for severalhundred thousand of Blue Shieldpolicyholders in California, Jones said at a
hastily arranged press conference onWednesday. But, it reminds us all thatinsurance companies hold all the cards whenit comes to setting rates. Blue Shieldpolicyholders still had to pay the rst two rateincreases. Those with health insurance are atthe mercy of insurance company decisions toraise rates multiple times each year.
Jones said his ofce was sponsoring AB52, legislation that would allow regulation ofrate increases. Authored by AssemblymanMike Feuer, D-Los Angeles, the bill iscurrently in an abbreivated form, but in
general would permit both Jones agency andthe Department of Managed Health Careauthority over hikes in premiums, co-payments and deductibles.
Jones had authored similar bills when heserved in the Assembly until last year, but thelegislation was repeatedly defeated in eithercommittee or by the Legislature.
It remains unclear how Blue Shieldsaction would affect rate increases scheduledbetween April 1 and June 1 for individualpolicyholders who purchase coverage fromAnthem Blue Cross of California, PaciCareand Aetna.
Anthem and Aetna spokespersons saidtheir increases averaging 15% and 2.8%respectively were still pending. A PaciCarespokesperson said it was condent itsincreases, which average about 7.5%, will beapplied.
Anthony Wright, executive director of thadvocacy group Health Access and a membeof the Payers & Providers editorial board, washopeful that Blue Shields decision wouldprompt other insurers to reassess what ratesare justied and reasonable in these tougheconomic times.
Wright also voiced support for Feuersbill.
The insuers should have to go through a
rate review process, and provide justi
cationfor those rates. And what we ultimately needis a regulator willing to inject themself into thprocess if the rates are proven to beunjustied, he said.
Dugan remained skeptical that BlueShields actions would lead to a wholesalestoppage of regular premium increases instead, she observed, it may work more as atrial balloon than at.
They have nothing to lose by putting upthese rate increases and seeing how they y,she said.
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Page 3Payers & Providers
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NEWS
In Brief
Werft Named As CHAChairman
Ronald Werft, chief executiveofficer of the two-hospital CottageHospital System in Santa Barbara,has been elected chairman of the
board of directors for theCalifornia Hospital Association.
Its truly an honor to lead anassociation as respected asCHA...has a well-earned reputationfor effectively advocating on behalfof hospitals and the patients andcommunities we serve. This isespecially important forCalifornias community hospitals inthese very challenging times,Werft said. We must be vigilant inour advocacy efforts to ensure thathospitals are able to meet thegrowing expectations of ourpatients while making health caremore affordable and accessible to
all.Along with Werft, Steven J.
Packer. M.D., CEO of theCommunity Hospital of theMonterey Peninsula; Roger E.Seaver, CEO ofHenry MayoNewhall Memorial Hospital; andPatrick Fry, CEO ofSutter Health,were also elected to the board.
U.S. Uninsured Rose To52 Million
The number of Americans wholacked health insurance coverageat some point last year reached 52million, according to new datafrom The Commonwealth Fund.That compares to 38 millionlacking health coverage at somepoint during 2001.
The non-profit foundation alsoreported that 9 million Americanslost job-based insurance coverageduring the steep recession thatbegan in December 2007.
However, the CommonwealthFund stated that healthcare reformshould guarantee against suchsteep coverage losses in the future.
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L.A. Care Health Plan has earmarked up to$2 million so its provider network maypurchase and implement electronic healthrecord systems.
The Health IT Incentive Program willprovide physicians with a large volume ofpatients with L.A. Care up to $5,000 inincentives to install an EHR, on top ofprevious incentives provided by the Medi-Cal managed care insurer. The funds will beprovided through HITECH-LA, L.A. CaresRegional Extension Center.
Our goal is to minimize the nancial
impact for our network physicians and providecustomized support services to help practicesachieve successful implementations ofcertied EHRs, reach meaningful use, andqualify for federal funding, said RichardSeidman, M.D., L.A. Cares senior medicaldirector.
St. Johns Well Child and Family Centerwas among the rst recipients, getting $17,500for ve qualied physicians.
L.A. Care is the states largest Medi-Calmanaged care insurer, with about 800,000health plan enrollees in Los Angeles County.
Health Net has reported a potential databreach that could affect nearly a million of itsmembers in California, prompting probes bytwo regulatory agencies.
The Woodland Hills-based insurerannounced earlier this week that several ofits server drives used at its data center inRancho Cordova were unaccounted for.
The drives contain information andpossibly Social Security numbers connected to1.9 million current and past enrollees inCalifornia and other states, as well that ofemployees and providers, according to stateofcials.
Health Net said it had launched aninvestigation into the matter, and would notifythe individuals whose names are on the harddrives. It is also offering free credit reportmonitoring for two years, fraud resolutionsupport and restoration of credit services.
Health Nets disclosure on Mondayprompted separate probes by theDepartment of Managed Health Care andThe California Department of Insurance.
Insurance Commissioner Dave Jonessaid his department would investigatewhether Health Net did everything possibleto prevent the loss of data.
"With identify theft crimes on the rise, is more important than ever to actimmediately and comprehensively inaddressing a privacy breach, Jones said.
DMHC ofcials said nothing about thescope of their investigation, other than to
disclose that the missing data containedabout 622,000 Health Net HMO enrolleesand about 223,000 enrollees in PPOs andother products overseen by the Departmentof Insurance.
Health Net Reports Data BreachLoss of Hard Drives Prompts Two State Probes
L.A. Care Allots $2M For EHRsMoney Through HITEC-LA Will go to Providers
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Payers & Providers Page
For low-income Californians who rely onthe government for their long-term careneeds (two-thirds of elders in skillednursing homes receive assistance fromMedi-Cal) theres a trio of disturbingfinancial proposals that threaten patientsafety and the delivery ofquality care.!!On the federal level,the Obamaadministration will endthe unprecedentedamount of economic
stimulus funding thatsbeen flowing toCalifornia and otherstates since 2008 as partof the American Recoveryand Reinvestment Act.!Of the $51 billion thathas been awarded to thestate so far, $13 billionhas been dedicated tofunding CaliforniasMedi-Cal program. InJune, the stimulus moneywill disappear even as the recession
continues to ravage the state. !In addition, in his $3.7 trillionbudget for FY 2012, President Obamawould squeeze healthcare providers bylowering Medicaid payments to states by$1.8 billion a year for the next decade.Ironically, Medicaid programs in statesacross the country already underfundnursing homes to the tune of $5.6 billion.
Put another way, Medicaid programspay facilities an average of $7.17 per hourper patient less than the minimum wage.Finally, in his proposed budget, Gov. JerryBrown wants to slash $1.7 billion from the
states Medi-Cal program, resulting in a10% across-the-board cut for nursing homeproviders and operators of smallcommunity-based six-bed homes for thedevelopmentally disabled. !
The continued underfunding of Medi-Cal will have a traumatic impact on poorand elderly seniors. Last year, skillednursing providers were paid 93% of theirprojected costs. With a 10% cut they wouldbe paid 84 cents on the dollar. For a typical99 bed facility, a loss of $17 per patient daywould translate into a revenue reduction of
$336,000 a year.! Strict regulations must sbe met.! Cost components like food, andpatient supplies must be purchased.! Rentto be paid. Twenty-four hour care mustcontinue, but since labor represents 70% facility costs, the options for providers wi
to reduce wages or cutjobs.!
Both choices areonerous. Wage reductiwould have a negativeimpact on those on thefront lines of patient c
certified nursingassistants who areresponsible for bathinggrooming, feeding andproviding important sointeraction and emotiosupport for patients.Worse, job eliminationwould cut intoimprovements made indirect-care staffing ratwhich have brought mworkers into facilities o
the past decade. If an average 99-b
skilled nursing facility chose to abthe 10% cut by shrinking itsworkforce, the jobs of 9 full-time direct-castaffers out of 55 would be eliminated
Taken together, these reductions will significant consequences for the typicalnursing home resident an 86-year-oldwidow just released from the hospital whorequires multiple medications, skilled nurcare and continuous professional oversightreat an assortment of medical and behaviissues.
This is an unacceptable state of affairsmembers of the Greatest Generation. Time
are tough and providers are willing to dotheir part, but they already carry more thafair share of the burden. !
OPINION
Seniors To Be Hit Hard By Budget CutState And Federal Plans Would Hurt Nursing Facilitie
By Jim
Gomez
Jim Gomez is CEO/President of the Californ
Association of Health Facilities.
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