13 May 2010
California Edition
Calendar A Blueprint For California’s Overhaul
New America Report Proposes 10 Major Changes
May 13-16 A report by the nonpartisan New America concentrating the market power of the
Foundation has offered a 10-point blueprint health insurance exchange that will
for reducing healthcare costs in California become operational in California as a
8(2/9-*4/(!:++-;/(</-4!-9!'3&+/;/(4!=*-1>+6! by $309 billion over the next decade. result of healthcare reform.
:441(2!8-49)*)4;)6!?@A@!B(**/-<<6!'(2C!
D)+)*<@!E)4-F4!(1<3-*G+1*5)-4!:<12! The report, penned by the 35-member Micah Weinberg, a senior research
=(F(40)6!B@D@6!/+!<3)!H)&4-<)!+>)(H)*@! California Task Force for Affordable Care, fellow at New America and the task
IJ##@ noted that healthcare costs in California force’s senior director, observed that
have more than doubled between 2000 and many of the proposals will be
E)5/+<)*!K42/4)L
2009. They are predicted to more than implemented in some fashion or another
3<<>LGGFFF@;(>5@-*5G;-49)*)4;)"#$# double over the next decade to nearly $500 as the result of recently passed federal
billion, a trend that is not supportable. healthcare reform, but that they lack
“This places an increasing and coordination.
unsupportable burden on the budgets of “Here are things that are already in
May 17-20 California’s families, businesses and the progress...and as long as you are doing
state,” said Leif Wellington Haase, director these things, this is a way to direct them
A-*H5*-1>!9-*!R2);<*-4/;!D(<(! of the California program at New America in a way to get better value for medical
S4<)*;3(45)!:441(2!8-49)*)4;)6!T&(<<! and executive director of the task force. spending,” Weinberg said.
E)5)4;&!7(!?-22(@!D/+;1++/-4!-9!3)(2<3;(*)! Haase added that the task force – which The task force members reached for
)U;3(45)!/++1)+@!I$6#VW@ included representatives from the business comment agreed that all or most of the
E)5/+<)*!K42/4)L
community, hospitals, health plans, proposals were feasible.
3<<>LGGFFF@F)0/@-*5G9-*C+GC))</45G healthcare purchasers, consumer advocates “It was the consensus of the task force
B))</45X-*C'1%2/;G./)FY and academics – was guided by the that these were doable deeds, and I was
/0Z[\]\#####"^# principal that most medical care is focused on the side of (stretching to meet) the
on treating rather than preventing illness, goals,” said Steve McDermott, chief
and that the spending on healthcare executive officer of Hill Physicians
services does not match the value of the Medical Group in San Ramon.
May 22 care received. McDermott added that the ability of
The proposals include completely linking Hill’s 3,000 physicians to adjust to
MF)4<&N)/53<!(441(2!-;;1>(</-4(2!(40! reimbursement for care to outcomes, an initiatives such as pay-for-performance,
)4./*-4C)4<(2!C)0/;/4)!+&C>-+/1C@!O8! aggressive program to reduce hospital post-discharge care, bundled payments
D(./+6!P(;*(C)4<-!8(C>1+@!D/+;1++)+! acquired infections, merging portions of the
F-*H>2(;)!3(Q(*0!/++1)+@! state’s insurance bureaucracies and
Continued on Next Page
E)5/+<)*!-42/4)L
THE EMERGENCE OF MEDICAL HOMES
3<<>LGGFFF@1;0C;@1;0(./+@)01G;C)G
;-49)*)4;)+G
A PAYERS & PROVIDERS EXCLUSIVE WHITE PAPER
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the details of your event, or call
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Payers & Providers NEWS Page 2
New America (Continued from Page One)
Top Placement...
Bottomless Potential
and closely collaborating with patients to hospital, the hospital should not be held
craft a course of care suggested to him accountable,” Dauner said.
Advertise that all providers could make the same Aside from drastic changes in the
(877) 248-2360, ext. 2 changes. payment systems, the report proposed
Task force member C. Duane Dauner, merging the medical insurance portion of
president of the California Hospital the California Department of Insurance
Association, believes the recommendation with the Department of Managed
In Brief hospitals focus on reducing the utilization
of imaging and other services was less
Healthcare. The DOI deals primarily with
fee-for-service and preferred provider
realistic. organization health plans, while the
“Hospitals have nothing to do with DMHC focuses on managed care plans.
L.A. Care Grants utilization. They do nothing to a patient Weinberg noted that the existence of
$795,000 to 5 unless it is ordered by a doctor,” Dauner two agencies often prompts insurers to
said, adding that laws addressing create products that fall under DOI
Community Clinics economic credentialing and other regulation, which is considered the
potential interference with the medical weaker of the two agencies.
L.A. Care Health Plan has granted
$795,000 to five community clinics judgment of physicians bars hospitals from Anthony Wright, a task force member
in the Los Angeles area in order to having a great deal of say in the matter. who is executive director of Sacramento-
improve their infrastructure. Weinberg questioned that notion. based advocacy group Health Access,
The grants, which range from “You really have to push back against believes the merger would provide
$105,000 to $200,000, are part of stronger regulation of insurers.
the claim that hospital administrators have
L.A. Care’s “Robert E. Tranquada
Safety Net Awards.” They are no control,” he said. “Certain hospitals “It makes no sense to have two
awarded through a competitive have done much better than others in competing regulators the insurers can play
process. California on this issue.” off one another. They cannot chose the
Pomona Community Health Dauner did support a proposal that more lenient regulator,” he said. “We
Center will use its $200,000 grant
to transform a 5,000-square-foot would strive to eliminate hospital need to figure how to better consolidate
space in a former shopping mall acquired infections and penalize providers the oversight so that all insurers play by
into a satellite clinic that will serve for re-hospitalizations, but wanted a all the same high standards for
some 5,600 patients a year. The system in place that assigned blame for a consumers.”
plan will help address a shortfall of The report also proposed that the
re-hospitalization appropriately. As part of
safety net primary care in the
Pomona area, which has only one the healthcare reform package that was insurance exchange mandated by federal
community clinic and a waiting list passed by Congress earlier this year, healthcare reform be the only source of
of up to six weeks to receive Medicare payments to hospitals would be insurance for small businesses and
medical care. reduced if hospitals have to readmit an individuals in California. If not, the risk is
University Muslim Medical
Association, which operates a large excessive number of patients. That high that the exchange will cover only
community clinic in South Los provision kicks in during the fall of 2012. high-risk individuals and make it
Angeles, will use its $200,000 grant “If the patient doesn’t follow post- financially unfeasible in the long-term.
to open a student-based health discharge orders and winds up back in the
center at Fremont High School. The
clinic will focus on general health,
family planning and prenatal
services.
Other recipients included the Report’s Suggestions and Projected Savings Over One Decade
URDC/Bill Moore Clinic in
Pasadena, which received 1. Pay providers for risk-adjusted outcomes
$165,000; Garfield Health Center
in Monterey Park ($125,000); and 2. Hold hospitals accountable for reducing utilization
Cleaver Family Wellness/Our 3. Reduce hospital-acquired infections and hospital readmissions
Saviour Center in El Monte
($105,000).
4. Standardize billing, eligibility and contracting
To date, L.A. Care has awarded 5. Merge portions of the Department of Insurance with the Department of Managed
23 safety net grants totaling $5.2 Health Care
million. L.A. Care officials say the
grants help guarantee the long-term 6. Reduce defensive medicine
sustainability of the clinics and 7. Create a sole-source insurance exchange
their ability to grow in order to
meet the needs of the communities
8. Encourage shared decision-making between physicians and patients
they serve. 9. Impose a tax on calorically-sweetened beverages
10.Encourage walking and use of public transportation
Source: New America Foundation
Continued on Page 3
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Payers & Providers NEWS Page 3
Longer ALOS!* L.A.‘s Healthcare Costs Stable
Advertise Milliman Study Pegs Increase to National Average
(877) 248-2360, ext. 2
The average household cost of healthcare in trends,” said Milliman Principal Lorraine
*For our ads, not your hospital Los Angeles is $18,098 this year, just slightly Mayne.
above the national average of $18,074, Physician costs were the largest. At
according to a new survey by Seattle-based
In Brief
$6,062, they comprise one-third of all costs.
consulting rm Milliman, Inc. Inpatient costs comprised 31% of expenses at
Annual medical spending in a typical U.S. $5,581. Pharmacy costs comprised 15%
household increased 7.2% from 2009. The Outpatient medical care had the largest
total dollar increase was the largest since percentage cost increase, rising 11.6% to
Milliman began tracking costs in the 1990s. $3,094 annually.
“The cost of group insurance continues to Miami had the largest per-household
Southwest Healthcare increase at a historically-consistent pace, medical costs, at $22,089, followed by New
Close to Settlement even with reform now the law of the land. York City, at $21,477. Phoenix was the least
With CMS While there will be short-term cost expensive major city, with medical costs of
implications, especially for particular $16,071, followed by Seattle, at $17,007.
employees and certain employers, this year
Southwest Healthcare System, reects a continuation of the prevailing cost
which has been under fire by
regulators for lax patient care
standards, said this week it is close
to a settlement with the Centers for
Medicare and Medicaid Services to
allow it continue to receive federal
RAND: P4P Could Hurt Some Patients
funding for care.
CMS announced last month
Study Suggests Medically Vulnerable Put At Risk
that Southwest would be barred
from participating in the Medicare
and Medi-Cal programs on June 1 Pay-for-performance programs have the associate natural scientist at RAND. “If you
due to operational issues dating to potential to exacerbate healthcare disparities don't watch where the money goes, pay-for-
2007 that threaten patient safety. if used to treat certain populations of performance programs have the potential to
The California Department of medically vulnerable patients, according to a make disparities worse.”
Public Health also said it would
move to revoke Southwest’s new study by Santa Monica-based RAND. Friedberg suggested that pay-for-
operating license. The CDPH has The study focused on 438 primary care performance programs should be structured
issued six administrative penalties practices throughout Massachusetts. The data to provide grants for physicians who treat
against Southwest since 2007, suggested that a medical practice engaged in medically vulnerable populations, which
including three that were issued
a P4P program serving medically vulnerable would remove an incentive to not provide
last month.
“We are continuing to work communities could suffer an annual loss of appropriate care.
with CMS on an agreement and income of as much as $7,100. The loss could "We found that practices that treat
hope to have something completed rise even further if the P4P program focused vulnerable populations have room for
soon,” read a statement issued by on long-term goals over several years. performance improvement, so it's important
Southwest on Tuesday.
A source close to CMS said “Paying for performance may have the to preserve the incentive to improve quality
the agency would likely allow unintended effect of diverting medical of care while taking steps to prevent an
Southwest to continue to operate resources away from the communities that increase in disparities," Friedberg said.
under an extensive and very need these resources the most,” said Mark The study was published in this month’s
closely monitored plan of
Friedberg, the study's lead author and an issue of the journal Health Affairs.
correction. A CMS spokesman
declined to comment on the
matter.
Southwest, which is owned by
for-profit operator Universal
Health Services, operates Inland
Valley Medical Center and Rancho
Springs Medical Center in the
Riverside County communities of Expert Healthcare Communications
Wildomar and Murrieta. Its chief
executive officer resigned late last
month in the wake of the !White Papers !Media Campaigns !Newsletters
continuing regulatory issues.
(818) 848-8510 www.rfsconsult.com
!!!"#$#!%&!'(&)*+!,!'*-./0)*+!'1%2/+3/456!778
Payers & Providers OPINION Page 4
9-21:)!"6!;++1)!$< Anthem, Reform and The New Reality
Premium Hikes Without End Will No Longer Work
'(&)*+!,!'*-./0)*+!/+!
=1%2/+3)0!).)*&!>31*+0(&!%&!
'(&)*+!,!'*-./0)*+!'1%2/+3/456! A wealthy friend tipped me off about the Nonetheless, Anthem and other health
778?!@4!(441(2!/40/./01(2! future of healthcare insurers. insurers continue to cluck about the huge
+1%+A*/=B/-4!/+!C<<!(!&)(*! He’s a profligate spender (by my premium increases they say will occur in the
DC$E<!/4!%12FG?!;B!/+!0)2/.)*)0! standards), but he longer wishes to spend coming years.
%&!)H:(/2!(+!(!'IJ! money on health insurance. He’s offended All those for-profit insurers need to face
(BB(A3:)4B6!-*!(+!(4!)2)AB*-4/A! by premiums that have passed the $700-a- facts: the environment that permitted it to
4)K+2)BB)*? month mark. He bought a pared-down post billions in earnings is drawing to a close.
policy instead, and may eventually go Now that healthcare reform requires
@22!(0.)*B/+/456!+1%+A*/%)*!(40! bare altogether. individual accountability, corporate
)0/B-*/(2!/4L1/*/)+M Now, if someone who just plunked accountability must inevitably follow.
down some 60 grand to buy a Which answers my original question:
DNOOG!"ENH"PQ# hydrogen fuel cell for his mansion By the millions of Americans who buy
/4R-S=(&)*+(40=*-./0)*+2?A-: doesn’t believe he’s getting value for Ron their own coverage – wealthy or not –
the pocket change he lays out for Shinkman will no longer do so. They’ll pay the tax
T(/2/45!(00*)++M
health insurance, why would someone penalty and do without, or they’ll
N$N!U?!V-22&K--0!W(&6!X1/B)!Y of more modest means be willing to purchase insurance only when they
Y1*%(4F6!8@!<$Z#Z pay $8,000, $10,000 or even $20,000 a become sick after pre-existing conditions are
year for the same product? phased out.
W)%+/B) One might think that same question is Meanwhile, better products will no doubt
KKK?=(&)*+(40=*-./0)*+?A-: finally being bandied about by the be introduced by competitors looking to cater
J(A)%--F corporate captains at Anthem Blue Cross to those dissatisfied customers. Hospitals and
KKK?R(A)%--F?A-:[=(&)*+=*-./0)*+ of California. medical groups may start marketing directly
>K/BB)* Anthem’s tone-deaf attempt earlier this to patients, for example.
KKK?BK/BB)*?A-:[=(&)*+=*-./0)*+ year to increase its individual If you don’t think such a downfall can
policyholder by as much 39% created a occur to corporate behemoths, think again.
crucial opening for the Obama The Big 3 spent 15 years pooh-poohing the
\0/B-*/(2!Y-(*0 Administration. A healthcare reform bill little cars manufactured by Japan, while doing
that had been declared moribund absolutely nothing to improve their own
XB).)4!>?!9(2)4B/4)6!'*)+/0)4B6!
>3)!8(:0)4!]*-1= suddenly sprang back to life. products. The 1973 Arab oil embargo became
Not only did Anthem and its their “aha” moment.
^-++!]-20%)*56!83(/*:(4!-R!B3)! Indianapolis-based parent company Yet Incredibly, after another 35 years of
Y-(*06!7-+!^-%2)+!V-+=/B(2!,! WellPoint, Inc. single-handedly revive taking their lumps (and now a couple of
T)0/A(2!8)4B)* healthcare reform, they have since been bankruptcies to boot), the Big 3 remain
put on their heels by Congressional uncompetitive. Their cars drive like a lot of
_/:!7-BB6!\`)A1B/.)!9/A)!'*)+/0)4B6! hearings, relentless criticism in the media, health insurance policies: just enough effort
V-+=/B(2!@++-A/(B/-4!-R!X-1B3)*4! and an embarrassing rejection of its to get by, take it or leave it.
8(2/R-*4/( proposed rate increases by California Anthem and the other insurers may sneer
Insurance Commissioner Steve Poizner. at such prognostications; after all, it took
\2(/4)!Y(BA32-*6!T?I?6!83/)R!
T)0/A(2!aRR/A)*6!7?@?!8(*)!V)(2B3! The latter incident suggested Anthem’s decades to humble the U.S. auto industry. But
'2(4! actuaries were either incompetent, or check back in 30 years. The actuaries say
cooked their numbers. there’s a decent chance I’ll still be here. But I
b)/B3!^/A3:(46!T?I?6!\`)A1B/.)! Anthem has been cutting back am certain the Anthems, Aetnas and Humanas
9/A)!'*)+/0)4B6!7(F)+/0)! coverage while demanding – and of the world will be by necessity much
8-::14/B&!V)(2B3A(*) receiving – double-digit hikes for years different companies. Or perhaps they won’t
now. However, it never did so during a be here at all.
V)4*&!7-1%)B6!83/)R!XB*(B)5&! year when the healthcare reform debate
aRR/A)*6!b))4(4!,!@++-A/(B)+ raged so loudly, or when the head of the Ron Shinkman is the publisher of Payers &
department that grants such increases was Providers.
'1%2/+3)*[\0/B-*H/4H83/)R running for governor. Anthem’s
^-4!X3/4F:(4 management – more than a dozen of
Op-ed submissions of up to 600 words are
)0/B-*S=(&)*+(40=*-./0)*+?A-: whom earn seven-figure salaries – was so
welcomed. Please e-mail proposals to
used to getting its way that it ignored
[email protected], or call
obvious political headwinds.
(877) 248-2360, ext. 3.
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Payers & Providers MARKETPLACE/EMPLOYMENT Page 6
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Payers & Providers MARKETPLACE/EMPLOYMENT Page 7
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