payers & providers california edition – issue of january 19, 2012

8/3/2019 Payers & Providers California Edition Issue of January 19, 2012

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Calendar

19 January 2012

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the details of your event, or call(877) 248-2360, ext. 3. It will be

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California Edition

DMHC Orders Retroactive PaymentsAnthem Blue Cross Paid Fine, But Demurs on Claims

Anthem Blue Cross has agreed to pay a stiffne to the Department of Managed HealthCare for not paying claims to its providernetwork in a timely fashion. However, theregulator and health plan may continue to

clash on the issue of whether interest andpenalties should be paid to providers whoreceived late or lowball payments.

The DMHC issued a 54-page order toAnthem Blue Cross last week. The orderinsisted Anthem produce a plan of correctionfor its claims payment system within 30 daysand identify all late claims from which interestand penalties had to be paid dating from June2007 to the present.

Under California law, health plans mustpay healthcare providers, includingdoctors and hospitals, accurately, fairly, andon-time, said DMHC director Brent A.

Barnhart, a longtime Kaiser FoundationHealth Plan executive who came out ofretirement last year to head the agency.Anthems refusal to pay providers for errorscaused by the plans own claims processplaces an unjust burden on healthcareprofessionals and organizations that providecritical healthcare to millions of people.

According to DMHC ofcials, Anthemwill have to sift through about 2.6 millionclaims to arrive at an amount.

The total amount ofremediation...required will depend on the

total number of errors found during the reviewof the 2.6 million claims, the DMHC said inan e-mail correspondence.

Under state law, a managed care plan isrequired to pay interest at the annual rate of

15% for any late or unpaid or underpaidclaims.

Anthem said its payment of the $500,000ne (another $400,000 was suspended) settlesthe matter.

While we acknowledge and respect theDMHCs role in regulating health plans,Anthem Blue Cross and DMHC have alreadysettled the matter in question in a November2010 agreement that fully and completelysettles all matters related to the Departmentsreport, said the plan in a prepared statement.(The) action seeks to reopen a matter inwhich Anthem Blue Cross has already paid a

ne and taken steps to prevent futureoccurrences.

Anthem Blue Cross spokesman Darrel Ngsaid the health plan was examining its optionson taking legal action to ght the order.

Anthem is by far the most penalized entityby the DMHC, having been on the businessend of 728 enforcement actions between2001 and October 2011 more than 40% ofall such actions ever brought by the agencyagainst dozens of health plans. The nes

February 23-24

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In Brief

Federal Oversight ofPrison Healthcare May

Soon End

A U.S. District Court judge has ruledthat signicant progress has been

made in improving healthcare forCalifornias prison inmates and thatfederal oversight of its delivery maysoon end.

Judge Thelton Henderson issueda decision earlier this week that thenearly seven-year federal receivershipoverseeing Californias prisonhealthcare system has made enoughprogress to end in the near future.

The court encourages theparties to attempt to reach agreementon the post-receivership phase of thiscase, which the court currentlycontemplates will consist of a periodof oversight to ensure that defendantscan, in the absence of a receivership,

sustain the progress that has been andwill be achieved, Henderson wrote.Californias prison healthcare

was placed into the receivership in2005 as the result of a lawsuit led onbehalf of prisoners in 2001. Federalcourts agreed with the prisoners thatthe state of affairs violated theconstitutional ban on cruel andunusual punishment.

New facilities have since beenbuilt and more healthcareprofessionals hired at higher salariesthan offered in the past.

Although some prisoners rightsadvocates agree that the healthcareprovided to inmates has improved,

many expressed concern that inmatesstill lack easy access to healthcareservices.

Sutter, Aetna ReachTerms On New

Contract

At a time when health plans andproviders have been bumping heads

Continued on Page 3

NEWS

Providence Health & Servicesjoint hospital-physician venture announced last fall was metwith a highly enthusiastic demand from thephysician community.

When the Providence Partners for Healthinitiative was revealed in October, ofcialswith the not-for-prot hospital operatorestimated 250 physicians would invest in theorganization. A total of 668 physicians agreedto participate.

The model of a limited liabilitycorporation where physicians had a 50%ownership of a structured entity appealed tothem, said Kerry Carmody, Providence

Healths chief operating ofcer for California.It was an opportunity for them to participate

and be an owner, and not Providencedictating something to them.

The initiative focuses between the vehospitals Providence operates in the LosAngeles area and local physicians. It willattempt to smooth out practice variations. Thealliance will share data on quality and focuson standardizing best practices. Physicianswho have joined will have access toProvidences electronic medical records andother information technology.

Partners for Health is not an accountablcare organization, but Carmody and otherhealthcare industry observers suggested it ismodel for moving toward an ACO.

Each physician invested $1,000 apiece,with matching funds provided by ProvidencWith some $1.3 million to launch, ProvidenPartners has hired three full-time executiveswho report to Carmody and has convened aquality committee and other advisory bodieIt has identied three quality initiatives that will embark on shortly, according to Carmod

Providence Partners chairman JohnArmato, M.D., an internal physician who

practices in Redondo Beach, said that bothsides trusted one anothers intent.We are...building a collaboration amo

entities that are really perfectly matched toleverage their unique capabilities, he said.

Amato declined to say what the initiativare, noting that they have yet to have fullinternal approval.

Theyre not a mystery (in terms of focusThey will answer how we preventreadmissions in certain disease categories,how we can improve patient care, and howcan we provide this more effective care whiimproving its price, he said.

Providence Initiative Is StampededNearly 700 Physicians Apply For Pre-ACO Venture

DMHC (Continued from Page One)

accompanying Anthems enforcement actionstotal in the millions of dollars.

The DMHC was particularly active

against Anthem last year, issuing more than200 enforcement actions. In one day lastMarch, the DMHC levied a one-day record175 separate enforcement actions againstAnthem, primarily for failures to respond to

enrollee grievances. Each was accompaniedby a $3,000 ne $525,000 in total.

Anthem has likely been subject to

additional enforcement actions since the fall.A DMHC spokesman said the agencyswebsite in in the middle of a redesign and as aresult has not publicly posted any enforcemenactions since Oct. 13.

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Page 3Payers & Providers

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NEWS

In Brief

regarding ongoing agreements, SutterHealth and Aetna have come to termson a new two-year contract.

Terms of the pact were notdisclosed, but both Sutter and Aetnasaid in a joint statement that Aetnaenrollees will receive covered benetsat in-network rates at all Sutter

hospitals.We were able to come to termson a new agreement that preservesaccess for our members in NorthernCalifornia without disruption, saidBrendhan Green, Aetnas vicepresident of network operations forNorthern California.

The Sacrmento-based Sutteroperates 29 hospitals in the region.

By contrast, San Francisco-basedBlue Shield of California and theUniversity of California hospitals haveyet to come to terms on a newcontract, driving up costs for planenrollees who seek care at the UCproviders.

Kaiser Program For At-Risk Moms Cuts Costs

Kaiser Permanentes interventionprogram for women at risk for abusingdrugs while pregnant could save up to$2 billion a year if implementednationwide, according to an in-housestudy.

The study of Kaisers Early Startprogram concluded that it reducesneonatal health conditions andstillbirths. It examined 49,261pregnant women in NorthernCalifornia screened for substance

abuse and comparing the healthcarecosts for women in similar groups.Early Start was linked directly to $5.9million in savings.

Now, were able to showeveryone that not only is it the rightthing to do, we will save money, saidNancy C. Goler, M.D., a Kaiserobstetrician who practices in Vallejoand was the lead author for the study.This program is a very low-technology intervention that has anenormous net cost savings.

The studys ndings werepublished in the journal Obstetricsand Gynecology.

New CMS Rule May Affect DSHHospital Association Unenthusiastic About Change

The University of California at San Franciscohas entered into a $3.1 million pact with NewJersey-based pharmaceutical giant Sanotojointly focus on diabetes research and develop

new therapies to treat the disease.Diabetes has become an epidemic in theUnited States, with some 19 million Americansdiagnosed with the disease, and an estimated 7million others who have the disease but arentaware of it yet. Moreover, another 79 millionAmericans exhibit pre-diabetes symptoms.Diabetes care costs the U.S. $116 billion a year,and continues to drive up the costs of treatingrelated ailments in a variety of ways.

Sano and UCSF will focus on testing ofabout 100,000 molecules that help to turn offvarious genes in the human body. The team willalso study whether Sanos stock of compounds

are effective in turning those genes on and off.

The combined expertise of the university athe company will focus specically on howcontrol beta cells, which produce insulin.Theyre destroyed by type one diabetes and

their insulin production is hampered by typtwo diabetes, which usually occurs inadulthood and is often related to the patienweight and eating habits.

UCSF is known for its deepunderstanding of the underlying biologyof diabetes, while Sano has great expertisscreening compounds, identifying whichmolecules have potential, and moving themalong to develop a new drug, said MatthiHebrok, director of the UCSF Diabetes CenSuch an endeavor is almost impossible toaccomplish in a single academic laboratoryThus, both partners prot from the expertis

the other group."

The Centers for Medicare and Medicaid

Services is seeking a denition of the termuninsured that may affect the pool ofdisproportionate share payments Californiashospitals receive.

The CMS issued a proposed rule lastweek that would dene the "uninsured" tohelp calculate the disproportionate sharehospital (DSH) payment limit.

Hospitals could count as uncompensatedcare the cost of medically necessary servicesexcluded by their insurance coverage, or haveexhausted their benets or are up againstlifetime caps for coverage. Hospitals alsocould include some of the care provided to

individuals covered by the Indian HealthService as uncompensated.

About 100 hospitals in California qualify

for DSH payments, which totaled about $160million annually in 2006, according to aGovernment Accountability Ofce report.That same year, state regulators began merginDSH payments into supplemental non-DSHpayments.

Given the relatively small amount of DSHpayments, the states acute care providerswould not expect a signicant bump due toany rule changes, according to the CaliforniaHospital Association.

This proposal is not expected to have animpact on the DSH payments received byhospitals...because of the severe underfundin

in the Medi-Cal program, said CHAspokesperson Jan Emerson-Shea.

UCSF Enters Into Deal With Sanofi$3.1M Pact Will Focus on Expanding Diabetes Car

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Payers & Providers PageOPINION

Risk Shifting Could Harm MedicareThe Equivalent of Private Pension Gutting Could Occ

Jason Andrew is the owner/operator of St

Meadow Benefits and Insurance Associat

Redwood City. Email:[email protected]

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A7$%05"&)!@6/"0/!D"66!GPQQI*=PJ*?R+BOp-ed submissions of up to 600 words ar

welcomed. Please e-mail proposals to

[email protected]

The Republican House Budget Chairman PaulRyans plan for reforming Medicare has beenthe subject of much rancor and argument, andno wonder: The proposal would change theprogram so fundamentally as to no longer berightfully called Medicare.

Ryans plan would be a continuation ofwhat one academic called The Great RiskShift: Big corporations have methodicallyshifted much of the risk of providing benetsfrom the employer to employees. Ryans planwould accelerate the trend and take it furtherby gradually shifting much of the nancialobligation of paying for benets from the

government to Medicare beneciaries. UnderRyans blueprint, the governmentwould be doing just what bigcorporations have been doing forseveral years now: off-loading risk.

This is similar to the phasing outof traditional pension plans and thesubstitution of 401(k) plans.

In the early part of my fatherscareer, 401(k)s had not yet beeninvented. Soon after he was hired asa shift worker at a Tennessee glassfactory, he was enrolled in hisemployers pension plan. When heretired more than 25 years later,he began receiving apredetermined pension benetevery month.

By contrast, when I went towork for CIGNA in 1993,pensions were an endangered species. CIGNAstill offered one, but the company changed thestructure soon after I was hired, which meantthat I would get less each month uponretirement than colleagues who had joined thecompany a few years earlier.

Aetna also had a nancial services divisionback then. So two of the biggest healthinsurance rms in the country, Aetna andCIGNA, played key roles in the early years ofthe great risk shift by ushering in the era of401(k)s and bringing the pension era to anend. Employers began phasing out pensions inthe 1990s as rapidly as they began jettisoningindemnity health insurance plans in favor ofHMOs and other managed care plans.

Transitioning from pensions to 401(k)smeant that employers would have much moremoney available to reward shareholdersbecause they would be paying less in

revenues over time to retired employees. Twinners consequently have been the wealtindividuals and institutions who own todaycorporations, while the losers have been thones who work for them.

Instead of being dened benets planlike pensions, 401(k)s are referred to asdened contribution plans. That means tworkers enrolled in such plans no longer gcertain amount of money every month whthey retire as my father did, but instead wiget whatever is in their 401(k) balances, mof which they contributed themselves.

Highly compensated employees, includ

CEOs, are pleased with the shift because thave the means to sock away mmoney in their 401(k)s than therank and le. And the money thsock away is tax-deferred, so401(k)s have become a favorite shelter for the well-to-do.

Ryans Medicare scheme woreplicate what 401(k)s have donthe rank and le. The vouchers government would providebeneciaries are the equivalent dened contribution. And thevouchers invariably would becoless valuable over time as the coof insurance increased. The weaamong us wouldnt be nearly asdisadvantaged as low- and middincome earners who would havedig deeper into their own pocket

buy health care coverage from privateinsurers. And undoubtedly, they would nthat the only plans they could afford wouldthose with high deductibles.If backers of Ryans plan would drop the wMedicare and name it something with abunch of numbers and a letter or two inparenthesis, that would be far more honestthan calling it Medicare. At least theproponents of the great risk shift didnt havthe audacity to call 401(k)s pensions. Theyentirely different creations.

By

Wendell Potter


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payers & providers california edition – issue of january 19, 2012

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