Payers & Providers 8/20/09

20 August 2009

PAYERS & PROVIDERS California Edition

Calendar

Recession Pushes Plan Costs Up Consumer Groups Concerned About Remedies

August 29-Sept. 2 Western Angiographic and Interventional Society Annual Meeting Torrey Pines Resort, La Jolla Discusses advances in interventional procedures. Keynote Speaker: Joan Embery. Fee: NA Register online: http://www.westernangio.org/9199.html

September 13-15 California Healthcare Financial Manaement Association Annual Meeting. Hyatt Regency Monterey. Will discuss capital markets and upcoming challenges for CFOs. Fee: $695; $795 for non-members. Register Online: http://www.hfma-cafallconf.org/

September 24 P4P Stakeholders Meeting, Sheraton Gateway, Los Angeles. A forum for California healthcare stakeholders to discuss pay-forperformance efforts. Conducted by the Integrated Healthcare Association. Fee NA.

The recession is driving up costs for officials say it is tied to the state’s higherCalifornia’s health plans on outpatient care, than-average unemployment rate. according to plan officials and earnings “As employers have responded to reports released by the publicly-traded economic conditions, we're finding that insurers earlier this month. The trend has lower utilizing employees are consumer activists concerned the response disproportionately losing or dropping will be higher premiums and more claim coverage, leaving a higher percentage of denials. other employees enrolled in our Overall medical cost ratios among the products,” says Peggy Hinz, an Anthem state’s leading health plans have trended spokesperson for the California market. upward a percentage point or more over Anthem would not release its the past year (see specific medical chart). Those cost data for Medical Cost Ratios, June 30, 2009 vs. June 30, 2008 numbers were California. Kaiser 2009 2008 nationwide, but the Foundation Health 86.8 bulk of enrollment Plan, the state’s 87% for these plans is in biggest insurer, did 86.1 California. not release cost ratio 86% “We had 112,000 data to Payers & 84.7 new members (in Providers. 85% 84.2 84.2 California) and if they Plan officials are…accessing Mediattribute the rising costs 84% 83.3 Cal coverage, there is to a variety of factors, often a lot of pent-up including treating 83% Blue Shield Health Net Molina demand for services,” patients with the H1N1 says Richard Bock, swine flu virus. M.D., Molina’s medical director for However, the consensus is that plan California. enrollees are seeking out care more This was echoed by commercial frequently as a precautionary measure insurers such as Anthem/Blue Cross, whose should they lose their jobs – and cost ratios were down companywide for the insurance – in the near term. second quarter of 2009, yet saw a Additionally, Hinz notes that COBRA significant spike in California. Company Continued on Next Page

Info: http://www.iha.org/2009P4PSM.htm E-Mail [email protected] with the details of your event, or call (877) 248-2360, ext. 3. It will be published in the Calendar section, space permitting.

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In Brief Prospect Projects Profitability for Brotman Buoyed by a major financial restructuring, Los Angeles-based Prospect Medical Holdings sharply narrowed its losses for the third quarter ending June 30. Prospect, which operates five hospitals in Southern California – including the Brotman Medical Center in Culver City – reported a loss of $238,000 on revenues of $114.3 million. That’s compared to a loss of $3.5 million on revenues of $80.9 million for the third quarter of 2008. Company officials say much of the revenue bump was attributable to folding in Brotman’s operations. It also says that Brotman is projected to return to profitability after losing as much as $1 million per month. Prospect had held a minority stake in Brotman since 2005, and acquired majority ownership last spring, just as the hospital emerged from chapter 11 bankruptcy protection. Prospect also announced a July 29th closing of a $160 million senior secured notes offering, which cut the interest rate on its borrowing by 6% per year, and will increase after-tax cash flow by about $12 million per year. The company’s stock fell by about 5%, to $4 a share, in afterhours trading on the American Stock Exchange late Wednesday.

L.A. Supes Vote to Reopen MLK Hospital The Los Angeles County Board of Supervisors voted unanimously on Tuesday to try and reopen the perennially troubled Martin Luther King Jr./UCLA Medical Center while shifting responsibility for its day-to-day operation to the University of California.

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NEWS

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Health Plans

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enrollment is up about 28% companywide compared to the end of 2008. That’s also driving up medical costs, since many enrollees often obtain services before their coverage runs out. To combat this trend, Molina rolled out about a year ago a program that profiles all enrollees. Those patients with chronic conditions, take multiple medications or over-utilize hospital emergency rooms are more closely monitored to ensure they receive costappropriate care. Officials with the commercial plans have also said they would be proactive about addressing costs, particularly as most also reported sagging earnings. But they were less forthcoming than Molina with specifics. “We continue to focus resources on outpatient costs and believe we can effectively manage this trend in the second half of the year,” Health Net Chief Operating Officer Jim Woys told analysts earlier this month. However, a Health Net spokesperson declined to elaborate on Woys’s comments. Hinz notes that Anthem would “continue to price our business for a slight

increase in medical cost trends this year,” and would work for low-cost alternatives, but could not provide specifics. The obliqueness has healthcare consumer activists worried. “Unfortunately, their track record has been to squeeze the patient dry and deny care wherever they can,” says Anthony Wright, executive director of Health Access, a Sacramento-based consumer advocate group. Wright adds that a recent uptick in requests for independent medical reviews filed with the Department of Managed Health Care bears out this notion. Judy Dugan, research director for Consumer Watchdog, an advocacy group in Santa Monica that has sued health plans over coverage issues, is worried that costshifting will occur, particularly among the individual and small group markets. “They’ll raise their rates, and try very hard to make them go away altogether,” Dugan says, adding that most plans will tolerate higher medical costs for large groups because that business segment remains lucrative. She also notes that providers may see delays in claims payment, or extra steps to file and approve claims.

New Website Assists On Hospital Bills Joint Effort Helps Patients Navigate System Californians vexed by the seeming finality of their hospital bills have a new Internet-based navigational tool sponsored by a variety of advocacy groups. The website, www.hospitalbillhelp.org, contains advice regarding patients who qualify for bill reductions under AB 774, the Hospital Fair Pricing Act. The site contains a variety of information for patients who are uninsured and underinsured and may qualify for billing discounts. They include sample letters to send to hospitals, as well as articles advising how to

purchase insurance. It also has links to a variety of consumer organizations. The site, which is operated by Sacramento-based consumer advocacy group Health Access, was funded by $250,000 in grants from Community Catalyst and the California HealthCare Foundation. “We worked on this law for five years to help people out who don’t have insurance and a high hospital bill, and this is a way to Continued on Next Page

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In Brief Under the proposal endorsed by the board, Los Angeles County would contribute more than $350 million – including $278 million for seismic upgrades – to reopen the hospital with 120 beds by late 2012. The UC system would operate it on a daily basis as a teaching hospital with 250 medical resident slots. It would be governed by a not-for-profit venture jointly run by the county and UC. Although the UC Board of Regents may vote on the proposal at its next public meeting Sept. 15, Los Angeles County Supervisors Gloria Molina and Mike Antonovich acknowledged that the deal could still unravel. County officials closed the hospital back in August 2007, after the Centers for Medicare and Medicaid Services withdrew funding for repeated lapses in patient care. It has operated as an outpatient clinic since then. County officials have talked with several potential partners – including the University of Southern California and Pacific Hospital of Long Beach – to try and reopen the facility.

John Muir Receives $10 Million Grant The K.H. Hofmann Foundation has made a $10 million grant to the John Muir Foundation to help John Muir Health with an $800 million expansion of its Walnut Creek and Concord campuses. As a result, the planned new patient tower on the Concord campus will be named after benefactors Jean and Ken Hoffman. The Concord-based foundation has made several other grants to John Muir Health in the past to buy medical equipment and to help found the John Muir Cancer Center.

NEWS Website

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communicate that they have options,” says the Western Center on Law and Poverty in Los Health Access Executive Director Anthony Angeles concluded that many hospitals have Wright. yet to comply with the posting requirements of AB 774 was signed into law in 2006 by AB 774, and many others would not furnish Gov. Arnold Schwarzenegger, and requires their discount policies on request. Western hospitals to provide discounts to uninsured Center Staff Attorney Jen Florey says her group or underinsured patients whose income is at is working with the CHA on templates for or below 350% of the federal multi-lingual signage that can be poverty level. Hospitals are also appropriately posted on hospital Survey of 66 Hospitals on required to post the availability premises. Florey’s organization AB 774 Compliance of discounts in conspicuous lent some technical assistance places. in developing the website. 43% The hospital industry was One other issue posed by 35% 30% neutral toward the bill in its the Western Center study was final form, and has no the fact that many patients objections toward the website. who could avail themselves of Only “We’re very supportive of the discounts may lack the Policy not Notice available hospitals implementing AB savvy to use the Internet, available not in on English 774,” says CHA Vice President properly meaning they may not be request posted of External Communications able to use its services. Jan Emerson, although she Wright says several thousand Source: Western Center on Law and Poverty adds hospitals may be dollars of the grant money encountering issues has been earmarked toward regarding full compliance. marketing the site and making it more A study performed earlier this year by accessible.

First 5 Helps Out Healthy Families

Despite Grant, Hospitals Face Potential $680M Tab First Five California, the program that gives an economic and healthcare boost to the state’s preschoolers, has injected $81.4 million into the Healthy Families program to protect it against looming brutal budget cuts. However, the money falls far short of preserving the beleaguered program. The money First Five has put into Healthy Families will keep some 200,000 preschoolers on its rolls. Healthy Families is California’s SCHIP plan. First 5 has put almost $100 million into Healthy Families so far this year. It contributed $16.7 million last February to stabilize the program from budget cuts enacted in this current fiscal year. For 2009-2010, Healthy Families faces a $194 million shortfall and may wind up cutting as many as 669,000 children off the rolls between now and June 2010 – 73% of the program’s total. Since many children in Healthy Families have chronic health conditions, they are in

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great need of complex care. According to Jim Lott, executive vice president of the Hospital Association of Southern California, it’s estimated that roughly 30% of Healthy Family enrollees will be hospitalized over the next two years, at a cost of roughly $9,000 per patient. Even excluding those covered by the First 5 funding, the cost to California’s hospitals would be about $680 million. “We’ve got to eat that cost,” says Lott, who sits on the Payers & Providers Editorial Board. Lott adds that hospitals are already being overburdened by increases in emergency room visits by uninsured patients, with some public institutions seeing a 20% increase over the past year. In the meantime, First 5 is seeking other contributions to keep Healthy Families functioning. “We encourage like-minded partners to come forward with assistance to ensure the program's survival,” says First 5 Executive Director Kris Perry.

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Editorial Board Steven T. Valentine, President, The Camden Group Ross Goldberg, Chairman of the Board, Los Robles Hospital & Medical Center Jim Lott, Executive Vice President, Hospital Association of Southern California Elaine Batchlor, M.D., Chief Medical Officer, L.A. Care Health Plan Keith Richman, M.D., Executive Vice President, Lakeside Community Healthcare

Publisher Ron Shinkman [email protected]

OPINION

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Preserving The Community Benefit Despite Financial Environment, Hospitals Must Soldier On As healthcare reform is debated and the Amidst a slumping economy, where current economic crisis continues to boil, will these dollars come from? California’s hospitals find themselves California’s hospitals are seeing fewer increasingly challenged to balance social elective cases, providing more charity care, and moral responsibilities absorbing more bad debts and with an economic sanity that caring for an increasing ensures long-term survival. number of patients who cannot Not-for-profit hospitals pay their bills. This puts an play in a particularly complex added burden on not-for-profit sandbox given our added hospitals and helps explain obligation of “giving back to why about half of our state’s the community” in ways that community hospitals are are both measurable and currently losing money. meaningful. And while there In times like these, not-fordoes not currently exist any profit hospitals must do more uniform standard as to the than grouse, groan and grind percentage of revenues which their teeth in deep frustration. must be reinvested back into They must operate with peak the community in exchange efficiency and, more than ever, for a hospital’s not-for-profit look to the generosity of status, the American Hospital donors to help supplement lost Association has called upon income. Trouble is, donors are hospitals to “voluntarily, publicly feeling harsh economic realities By and proactively report to their themselves, and the needle for Jane communities the full value of Haderlein charitable giving is moving in the benefits” provided. wrong direction. In the most recent Community benefit falls into three accounting, 38 percent of hospitals categories. One is charity care, which reported a decrease in philanthropic giving, includes providing services to patients thus adding to the chamber of horrors not-forwho meet specific criteria and simply profits currently face. cannot afford to pay. It also means Despite these obstacles, California’s notabsorbing the differences between the for-profit hospitals must not shrink from their actual cost of care and government responsibilities, duty and heritage. It is reimbursement for Medi-Cal. Second is precisely when society needs us the most that health research and education, training we must continue to focus on providing the both tomorrow’s medical leaders while best care possible and in reinvesting back assuring that current staff remains state of into our communities to ensure that those the art in their knowledge and day-to-day served have access to the right care at the practice. Third are benefits directed at right place at the right time. Doing so is part vulnerable populations and the community of our industry’s collective mission and at large, such as Type Two diabetes quantifying in dollars and cents the screening, asthma programs, cultural community benefit we bring is required. But outreach initiatives, etc. far more important, it is simply the right thing All of these programs look great on a to do. blackboard, but it takes dollars to make them possible. In the case of Huntington Jane Haderlein is vice president of Hospital, that amounts to about $44.7 philanthropy and public affairs at Huntington million (or 11% of our revenue) in Memorial Hospital in Pasadena. recognized community benefit and a total “giving back to the community” of $128 Op-ed submissions of up to 550 words million annually. That includes such are welcomed. Please e-mail proposals locally “unduplicated programs” as trauma to [email protected], or care, geriatric psychiatric services and a call (877) 248-2360, ext. 3. level three neo-natal intensive care unit.

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EMPLOYMENT/MARKETPLACE

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Compliance Advisor - Coordinates and drives the development and implementation of L.A. Care’s policy approval process and leads the Policy & Procedure Review Committee (PPRC); actively manages the Anti-Fraud, Waste & Abuse Program, including investigation of fraud allegations and annual reporting to the Department of Managed Health Care (DMHC), as well as is the Team Leader for the Special Investigation Unit (SIU); assists with the implementation of new legislation; and champions L.A. Care's Code of Conduct. This position is also responsible for ensuring that fraud, waste, and abuse compliance education programs are developed, maintained, and facilitated for staff and providers. Additionally manages the Fraud Hotline complaints and related follow-up. For complete job description, qualifications/ requirements, visit our website: www.lacare.org To apply, email resume with salary history/ requirement to: [email protected], referencing “Payers & Providers Ad”

It costs up to $27,000 to fill a healthcare job.* We’ll do it for a lot less. Employment listings starting @ $1.65 a word Advertise: (877) 248-2360, ext. 2 Or: www.payersandproviders.com We Accept All Major Credit Cards *New England Journal of Medicine, May-June 2001

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