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Oregon health insurance scandals

By | January 10, 2012

Just a few newsbites for your perusal. Scroll down for sharks in the Medicaid grant-money waters, the punishments to be inflicted on those who eat and/or smoke (and their spouses and kids), and the creative ways that patients save money on health care. Featuring photos of cute kittens to help ameliorate the rage and sadness that may triggered by these news facts.

National: blackmail fails, so insurers forced by law to spend dollars on health care
The National Association of Insurance Commissioners (NAIC) voted unanimously Thursday to finalize new rules requiring insurance companies to dedicate more revenues directly to healthcare costs… The insurance lobby had fought hard to convince commissioners that the draft would harm consumers’ access to coverage.

…Making these rules work will require tough scrutiny of insurance companies’ spending to make sure they don’t use loopholes in the law to pass off overhead costs as health care.

State health insurance exchanges mandated by the health insurance reform law: Who will decide what is covered?
The U.S. Department of Health and Human Services is keeping its hands off what needs to be included in the essential benefit package for state insurance exchanges… The federal department released a bulletin stating that it would not create a prescriptive and detailed list of services that must be included in the package, as states had previously expected. Instead, the department has created four “benchmark plans” that are broad in scope .

…An “essential health benefits package”… includes health benefits and services that fall within ten categories: ambulatory patient services; emergency services; hospitalization; maternity and infant care; prescription drugs; mental health and substance abuse services; laboratory services; preventive services; rehabilitation services and pediatric services.

…The Department of Health and Human Services must create the list of services and benefits offered by the exchange to ensure that health plans being offered are not of lesser value than other options.

…Insurance exchanges are meant to be a one-stop shopping place for uninsured individuals and small businesses to find, compare and purchase affordable health insurance.

So how’s it going?
A nationwide study …closely examines the state laws passed to establish state exchanges set up so far and rates them on four key areas:
How accountable and transparent the exchange will be to the consumers and businesses that rely on it,
how it can negotiate for lower premiums and better quality,
how easy it will be for consumers and business owners to use,
and how stable it will be over time.

Oregon’s exchange earned a B- on the report’s scorecard. Weak points in the current exchange law include… Oregon’s law allows two seats on the exchange board to be filled by health insurance companies and other industry representatives with conflicts of interest. – The exchange is not yet sufficiently protected against the risk of “adverse selection”, in which it covers only less-healthy enrollees and premiums rise unsustainably.

In other news, partial success
Oregon insurance regulators received accolades this week from a U.S. Senate committee… The state stands out for its public involvement, the amount of information it requires insurers to submit and the extent to which it lowered proposed premium increases as a result, according to a recent survey by the General Accounting Office… The $1 million federal grant awarded to Oregon last year has helped lower health insurance premiums by about $25 million or $10 per member per month on average.

…Oregon was only among five states to earn that distinction. The report also found that just 14 states provided consumers with opportunities to be involved in premium rate oversight.

…The state used part of the grant funding to hold a rare public hearing for a proposed 22.1% increase on Regence BlueCross BlueShield individual plan holders in June [2011]. Last week, the Division announced it had reduced the rate increase to 12%.

The Aetna example: how to get fat by eating less
Back when it was the largest private health plan in the country, Aetna downsized its membership by millions but boosted profits… Now it looks to be making a similar – but smaller – move with a planned price increase for many of its customers in 2010.

The company figures it will lose between 600,000 and 650,000 members next year because of the price hikes.

…Simply raising prices probably would not get Aetna what it wants. That actually tends to result in sick people who are more “desperate” for coverage to keep it, and healthier groups to drop it. Instead, Aetna might change benefit designs, scaling back prescription drug coverage, for example, which sicker populations tend to value.

Same thing around here.
March 28, 2011 – Oregon health insurers covered fewer people and made more money [in 2010] than in recent years past… Compared to 2009, Oregon’s top eight health insurance companies covered 1.5 million people [in 2010] – down 14% – and made more than $207 million in net income – more than double what they earned previously.

…Mark Ganz, president and CEO of Regence BlueCross BlueShield, was the state’s highest paid health insurance executive. He earned… $1.38 million in total compensation. Ganz also earns a salary as head of the Regence plans in Utah and Idaho, however those financial records are not available to the public.

…Andrew McCulloch, regional president for Kaiser, earned more than $800,000, increasing his salary by 56 percent, while Jack Friedman, CEO of Providence Health Plans, was the third highest paid executive, taking home $678,013, representing a 33 percent increase.

…LifeWise was the only insurer to end the year in the red. It reported a $4 million deficit. LifeWise President Majd Fowzi El-Azma earned more than $400,000 in total compensation last year.

Regence gets fat
When state regulators approved a 12.8% rate increase for Regence BlueCross BlueShield earlier this year, they were aware that the insurer had dipped into its surplus account and given a $56 million dividend to its holding company just five months earlier. But they may not have known that some of those investment dollars were intended to develop a subsidiary company for Regence – known as Sprig Health… which is available to people without health insurance [and] allows them to book a medical appointment online, and pay using their credit card.

[...Regence’s holding company... recently changed its name from The Regence Group to Cambia Health Solutions.]

…It’s unknown whether any of the $56 million was used to bail out Kinetix Living Corporation, a customized fitness and nutrition company purchased by The Regence Group in March 2010 for $15 million – while its fair market value was assessed at $8.5 million. Then, the company spent another $4.3 million trying to keep it alive. Recently, Regence announced it was shutting down Kinetix because it didn’t generate enough sales.

…[In 2011,] Regence’s surplus actually grew to its highest level since 1998.

Regence eats less and gets fatter
Small businesses in Oregon will find themselves paying more for health insurance if a 4.5% rate request by Regence BlueCross BlueShield is approved by the Oregon Insurance Division.

…Regence has lost more than 11% of its enrollment since its last rate increase was approved in March 2011 that impacted when its enrollment reached 54,299 members.
Earlier this year, Regence asked small businesses to pay 10.8% in higher rates, but the Insurance Division reduced that request to 9.1%, which took effect in July.
The proposed increase could be as high as 8.5% or a decrease as much as 6.6%.

…Since April, Regence took in $229,643,974 in premiums and paid claims of $184,458,183 – and contributed $5,970,743, to its surplus… “The missing pieces include the cost of administration,overhead, premium taxes, portability charges, and assessments for the Oregon Medical Insurance Pool,” according to the filing. However, the specific costs of those expenses were not delineated in the filing, nor does the document say how much money went into Regence’s reserve account.

Details of Regence metabolism
The commissioner’s office learned that Regence BlueShield had been withdrawing insurance premiums from the wrong bank accounts, and, in some cases, those accounts actually belonged to people who weren’t even Regence members. Thousands of claims weren’t being paid on time, particularly for retirees who were members of the state’s Public Employees Benefit Board.
Regence had also caused distress among members who were scheduled for a surgical procedure within 72 hours, but learned the insurer had changed its mind and decided it would no longer pay for the operation .

Medicaid: Sharks start circling
States increasingly rely on private, managed care companies to cover Medicaid patients. With the health reform law expected to expand Medicaid to 16 million more Americans, insurers see a “potential bonanza.”

…The National Bureau of Economic Research published this month the first national report on Medicaid managed care and cost savings. Its verdict: moving Medicaid recipients into managed care “did not lead to lower Medicaid spending during the 1991 to 2003 period.”

…Seventy percent of Medicaid patients now receive coverage through a managed care plan, up from 11% in 1991. That there’s been so little academic work into whether this approach has delivered on its assumed goal startled me… You’d think we’d want to ask, have we been saving money?

Changes in the Oregon Health Plan (Medicaid) – What are “Coordinated Care Organizations”? Note that State employees will be sucked into them as well. View from a spokes.
Oregon has long been a health reform pioneer. In 1989, the state established the Oregon Health Plan (OHP), a way to expand Medicaid coverage by explicitly prioritizing certain conditions while providing fewer services.

Earlier this year, Gov. John Kitzhaber (himself a physician) and the Legislature approved another groundbreaking round of reforms. House Bill 3650 will move nearly one million OHP enrollees, teachers and government employees into so-called coordinated care organizations (CCOs).

…In the Oregon Health Plan today, we have roughly 40 managed care plans. Some provide physical health services; some are dental; some are mental health. The problem is we have very little, if any, coordination between them. You could have a Medicaid client who’s on all of those, maybe receiving some chemical dependency services through a county and then potentially be receiving what we call “open card” or “fee for service” insurance through the state. There’s no alignment right now… We’re also thinking about how we are going to develop a global budget and what outcomes and quality metrics we’re going to be looking at.

…If we were to set up a system that actually decreased emergency department use or decreased utilization in general, some may see that as cost savings. Others are going to see that as a revenue cut.

What we’re talking about is a bigger picture around managed care. We’ve got to bring all of this under one umbrella and work within a global budget.

More sharks circling.
Three of the state’s largest health plans that deliver care to the Oregon Health Plan population don’t want to be left in the cold when coordinated care organizations (CCOs) take over next July.

…Dr. Bob Dannenhoffer, CEO of Douglas County Independent Physician Association (DCIPA)… is confident his health plan, DCIPA, will become one of Oregon’s first coordinated care organizations… “We don’t see any way that there will be savings in the short run,” Dannenhoffer said. “We think the costs will increase.”

The massive overhaul of Oregon’s healthcare system under way is the result of House Bill 3650, approved earlier this year. It called for the creation of coordinated care organizations, which will integrate physical, mental and dental services for more than 600,000 Oregon Health Plan members starting next July.

More sharks.
Hospital representatives… want the opportunity to create coordinated care organizations (CCOs) that will transform the way Oregon Health Plan members receive health services. And, they don’t want that role left solely in the hands of the current managed care organizations (MCOs) delivering such services. .. However, some are saying that MCOs may be the best organization to organize and lead CCOs.

Is it mean to call them sharks? There are just so many of them, and they’re coming in so fast.
Provider groups worried they’ll be left out of the coordinated care organizations (CCOs) took their case to the Oregon Health Policy Board… The policy board is responsible for creating a business plan for the CCOs that will be presented to the Legislature in February, along with draft legislation that would allow the Oregon Health Authority to move forward with making CCOs operational throughout the state.

Entities displaying shark-like behavior who are not technically sharks
Public health officials are questioning how they’ll fit into the new healthcare delivery model for the Oregon Health Plan. …the CCOs… will be responsible for coordinating the physical, mental and dental health care of the Oregon Health Plan population in geographic regions throughout the state.

Not everybody wants a bite of the OHP – Regence is simply stuffed
Regence BlueShield is pulling out of the Medicaid market in Washington, after deciding not to bid on a new contract that takes effect in July… In the late 1990s, Regence BlueCross BlueShield withdrew from the Oregon Health Plan, saying it was no longer financially viable to participate.

…Regence’s decision came after the Health Care Authority announced new bid proposals for 2012… Under the new contracts, the number of people covered by managed care will increase to 737,000 lives (the current program covers approximately 700,000 people)… Under the new contracts, insurers cannot cap their Medicaid enrollments.

…In other news about Regence BlueShield, in 2010 it had the highest number of complaints among health insurers, according to a report released by the Washington Insurance Commissioner. There were 249 complaints, which reflected 25.12% of the market and represented $2 billion in premium dollars.

“Saving money”: anything goes.
Members of the Medicaid Advisory Committee vehemently voiced their concerns Wednesday about the state’s proposed cost-saving reductions to covered services for Oregon Health Plan patients… which would eliminate existing coverage for everything from incontinence to cochlear implants for children.

…”It’s not that something will go wholly untreated; [Medicaid doctors] will just find a more effective type of treatment for it,” [said a spokesperson for the state].

Some kinds of fat are unacceptable. (Primary care doctors are now obliged to submit written plans to prevent patients being penalized – at least that’s been my experience so far. Insurance companies excel at making doctors their enforcers.)
The Public Employees Benefit Board (PEBB) is on the verge of creating a health plan designed to encourage people to take greater responsibility for their health. The plan will be available to 150,000 state employees and their dependents… They may have to enroll in a smoking cessation or weight management program… Those who don’t follow through with the program’s requirements will be forced to leave and face higher out-of-pocket costs for their healthcare.

Comment:
I do not believe you mentioned the new out of pocket deductibles employees will be paying. $250 per person ! New Rx out of pocket $50 per person. Not to mention the Health premiums. Pebb’s quoted savings are at our expense.

Comment:
I believe this article omits the fee under PEBB’s plan that charges an additional surcharge to men with larger than a 40-inch waist. So it’s not just that you “have to try”, you’re going to pay every month until you get that skinny waist. Nor does it mention the fees if you don’t complete online classes on time. This plan is going to get you one way or another. It’s not a cost-saver, it’s a money generator.

Comment:
When you do not receive a pay increase for several years and then are confronted with the threat of a penalty that would more exceed the tiny cost of living adjustment finally conceded, the extorted response is very clear. Participate or suffer another financial hit. In that environment the rate of participation is clearly not reflective of satisfaction among those on which this has been imposed.

Response is overwhelmingly in favor of not going broke or being terminated
Close to 85% of state employees have chosen to participate in the Public Employees’ Benefit Board’s new health engagement model despite concern that the wellness program would tell people how to manage their health and invade their medical privacy.

…220 people chose not to enroll in a medical plan this year. That number jumped by 407%… many of the retirees that PEBB covers often choose not to have a medical plan.

…Nearly 9% of employees who smoke will pay a new $25 tobacco surcharge ($50 if their dependent smokes). About 8% percent of members will be charged a new $50 surcharge for covering their dependents.

Comment:
The way the email sounded at OHSU (Oregon Health and Sciences University), a lot of us thought we would be kicked off and have no health insurance if we didn’t participate. No one mentioned that we would merely be paying 20-35 dollars a month more to prevent insurance companies from looking at our health data.

Saving money the easy way: how patients reduce health care costs
A struggling economy, higher insurance deductibles, and the efforts by health plans and others to reduce utilization have altered patient patterns, perhaps permanently. Patients now often seek office visits – or any interaction with the health system – only when a problem can’t be ignored.

…A report… released Oct. 12… showed an 8% decline in office visits per full-time equivalent physician for September 2011 compared with a year earlier. It was the third consecutive month of declines compared with the same months in 2010, and the fourth decline in five months. Primary care was especially hard hit… We’re now up to nine consecutive quarters of physician office visits declining.

…Robert Kaufmann, MD, a solo Atlanta internist, said he has not seen a drop in patient volume… He sees about 40 patients a day… But Dr. Kaufmann has noticed that his patients are sicker when they come to him. They often have avoided visits because they still are paying their deductibles… “Sometimes they’ll get mad at me and say, ‘I wouldn’t have had this test if I had known that,’ but I say, ‘Listen, I can barely keep up with my own personal insurance – I’ve got a $10,000 deductible. I’ll trade with you.’ ”

Wrapup: cost shifting in health insurance
Patients, even those with insurance, avoiding spending cash on health care they think can be put off. “Patients are paying more, and they are getting less… We see people for economic reasons deferring important screening procedures or coming in less often for chronic conditions such as diabetes.” [ -President of the American Academy of Family Physicians]

…The number of uninsured grew by nearly 1 million in 2010, to 49.9 million, with 1.5 million losing employer-based coverage, according to the U.S. Census.

…Those who had employer-based insurance were paying more of their money for coverage and care.

…The insured are taking on larger deductibles.

…Consumers’ insurance and deductible costs are far outstripping wages. Insurance costs have doubled since 2001 while wages have gone up only 34%…The Census Bureau reported that wages are on the decline, with the median household income down $1,100 to $49,445 in 2010.

…Consumers are cutting back on care. A Consumer Reports study released Sept. 27 found that 48% of prescription drug users said they put off doctors’ visits or medical procedures, declined tests or ordered less expensive drugs from outside the United States.

…Health insurers are revising downward their health spending projections.

…People in the lowest 20% of income cut both insurance spending and care, while those in the second-highest 20% paid more for insurance but sliced out-of-pocket spending on care. The only income bracket to spend more on both was the top 20%.

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