payers & providers – issue of january 20, 2011

8/8/2019 Payers & Providers Issue of January 20, 2011

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Californias hospitals are already under costpressures ranging from uncompensated care toseismic compliance mandates, but providinghealth coverage to their employees continues

to gain traction as a major concern.A new survey by Torrance-based

insurance brokerage Keenan & Associatesindicates that healthcare coverage costs forhospitals roseby 9%between 2009and 2010 forthose offeringHMO andPPO plans,and 11% forthose offeringpoint-of-

service plans.Although that is generally in line with

premium increases in other industries, thehospitals report enormous pressure on theinstitutions to cost shift or nd other ways tosave money, as providing coverage to a singleemployee approaches $10,000 per year.

The report noted that fewer than half ofthe 94 hospital organizations and 231hospitals in the state represented in the surveywill be able to fully absorb the premiumincreases they expect in 2011.

Theyre under immense pressure, and ifyou look at their cost centers, more than half

is in labor, said Steve Richter, a Keenan

senior vice president. They cannot give asgenerously on the benets side.

Richter added that in addition to the risingemployee healthcare costs, hospitals are also

confronting decreased levels of reimbursemenfrom the Medi-Cal and Medicare programsand commercial payers.

Fifty-four percent of hospitals surveyedoffer fullhealthcarebenets to theiemployees.However, 73%say they intendto increasepayrolldeductions tooffset some of

their cost increases this year, and 66% saythey will increase co-payments anddeductibles.

Healthcare labor leaders conrmed thatmore institutions are looking to haveemployees share the cost burden. About halfof the hospitals surveyed had unionrepresentation.

Were seeing more healthcare costsincreasingly shifted to our people, saidCharles Idelson, spokesman for the CaliforniaNurses Association, which represents about75,000 healthcare employees statewide.

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In Brief

Blue Shield Brings inActuary To Examine

Rate Hikes

Under pressure from regulators andconsumers, San Francisco-based

Blue Shield of California has hiredan independent actuary to study thedata justifying rate increases ashigh as 59% on individualpolicyholders.

Blue Shield hired DavidAxene, a Riverside County-basedindependent actuary whose worklast year on behalf of the CaliforniaDepartment of Insurance provedpivotal in prompting Blue Cross ofCalifornia to scale back rate hikesas high as 39%. Axene haddiscovered errors in Blue Crossactuarial work that prompted itsrate pullback.

Although Insurance

Commissioner Dave Jones hascalled on Blue Shield to delayimplementing its rate hikes untilthey have been actuariallyreviewed, Blue Shield has refusedto do so. The hikes go into effectMarch 1, on top of a previous hikeimplemented between October and

January.However, Blue Shield officials

have said that they would abide byAxenes conclusions, which willfocus on whether Blue Shieldsactuarial calculations are accurate,and whether the rate hikes arediscriminatory, excessive orunjustified.

"If this independent reviewfinds that the rates are not sound,we will hold our members harmlessby refunding the difference withinterest," said Blue Shield ChiefExecutive Officer Bruce Bodaken.

Axenes review is expected totake between 30 and 45 days, andhe is free to confer with theDepartment of Insurance as part ofthe review process, according to astatement issued by Blue Shield.

Continued on Page 3

NEWS

Survey (Continued from Page One)

Joe Lindsay, the CNAs collectivebargaining director, noted that ChildrensHospital of Oakland is currently asking for a

15% employee contribution towardpremiums, which would average about $300per month per employee for family coverage.Maintenance employees at the Alta BatesSummit Medical Center campuses inBerkeley and Oakland recently agreed to asimilar cost-sharing arrangement.

At the University of California hospitalsystem, Lindsay estimated that out-of-pocketcosts for employees have doubled in the pastve years. In an odder twist, he noted someUC employees enrolled in certain Health Netplans had their hospitals omitted from theirprovider network at the start of this year, a

situation conrmed by other well-placedsources. Health Net, which has been toutingnarrower networks as a cost-saving device,declined comment on this matter last year.

However, not every hospital system istrying to cost-shift benets. Lindsay noted thata recent labor agreement between CHA andOakland-based Kaiser Permanente preservedhealthcare benets at their previous levels.He add that Kaisers self-contained systemgives it advantages in controlling healthcare

costs.In addition to the cost-shifting on the

health benets side, other cuts have taken

place. For example, 16% of the hospitalssurveyed in Southern California have recentlyended the match of employee contributionstoward their retirement plans. Ofcials withthe Hospital Association of SoutnernCalifornia were not immediately able tocomment on the phenomenon.

Hospitals are also more aggressively usingresources such as disease management.Nearly three-quarters of respondents say theyhave some form of a disease managementprogram in place, while 70% have employeerisk-assessment programs in place.

Hospital management also expressed

relatively strong antipathy toward theimplementation of the Patient Protection andAffordable Care Act. Fifty-six percent of thosesurveyed say they believe the overall impacton their facility will be negative, and only30% believe it will be benecial. Among theconcerns are further loss of both payer anddisproportionate share revenue.

Hospitals have to do more than in thepast, and they have less reimbursement towork with. Thats reected here, Richter said.

An effort by Californias hospitals to create amedical foundation model to directly employphysicians is moving forward, although thehospital associations that began the effort areno longer involved. Daniel Settlelmayer, a partner in the LosAngeles rm ofLatham & Watkins whorepresents the hospitals involved in themedical foundation project, conrmed that

the Hospital Association of SouthernCalifornia and the Hospital Council ofNorthern and Central California exited theeffort late last year.

Weve completely handed the ball overto the hospitals that are pursuing it, saidHASC President James Barber. Thats alwaysbeen the plan, to get it to the point where thehospitals would form their own board.Barber added that Settlelmayer is workingwith The Camden Group, a hospitalconsulting rm in El Segundo, on forming acohesive organization. A call to that

organization was not returned.Settlelmayer said that a number of

hospitals in both Southern and NorthernCalifornia are now involved in the medicalfoundation effort, but declined to namespecic numbers or institutions. The groupsintent is to form an umbrella organization andname an executive director during the year, headded.

Theyre looking at normal things building up staff and outsourcing somefunctions, Settelmayer said.

A not-for-prot foundation model is seenby some as an effective form of anaccountable care organization, which wouldcontrol costs by streamlining the chain ofcommand between physicians and providerorganizations. ACOs are being pushed as partof the Patient Protection and Affordable CareAct.

Continued on Next Page

New Phase For Medical FoundationHospital Associations Out of Picture As Planned


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Page 3Payers & Providers

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NEWS

In Brief

CMS Lauds IEHP ForPart D Plan

San Bernardino-based InlandEmpire Health Plan was only oneof five Medicare Advantage Part Dplans in the United States and the

only one in California to win thehighest rating from the Centers forMedicare and Medicaid Services.

IEHP, a Medi-Cal managedcare plan that also enrolls dual-eligible individuals who qualify forboth Medi-Cal and Medicare,received a five-star rating fromCMS last month. Only five plansnationwide received such a rating.

CMS reaches its ratings basedon 19 different criteria, includingcustomer service, enrolleecomplaints, pricing and patientsafety.

This great achievement isthe result of our dedicated IEHP

Team Members, the support fromour pharmacies and our pharmacybenefit management administrator,all working diligently together toprovide our Members with a highquality drug plan, said IEHP ChiefExecutive Officer Bradley Gilbert,M.D.

Kaiser Taps NewLeader For Research

Efforts

Elizabeth McGlynn has beenappointed by Oakland-based

Kaiser Permanente as director ofthe organizations Center forEffectiveness and Safety Research.

The center uses data culledfrom Kaisers 8.6 million enrolleesto perform effectiveness of careand safety studies. Its findings werepublished more than 600 times in2010. The center receives fundingfrom the National Institutes ofHealth, the Food and DrugAdministration and the Agency forHealth Research and Quality.

McGlynn formerly held a tophealthcare post at the SantaMonica-based think tank RAND.

Payers & Providers Expands ReachNational, Midwest Editions to Launch This Quarter

A new electronic edition ofPayers &Providers covering the Midwest and a printnational edition will launch on Feb. 15 andMarch 1, respectively.

The Midwest edition will publish everyTuesday and will cover breaking healthcarenews in nine Midwestern states. Based inChicago, the Midwest edition will be editedby J. Duncan Moore, Jr., a veteran ofModernHealthcare, Bloomberg News and the KansasCity Star.

The Midwest edition will be similar instructure to the California edition, with threepages of news and a weekly opinion article.

An editorial board is currently in the processof being convened.The Midwest edition will also publish

quarterly white papers on cutting-edgehealthcare business topics and convenewebinars on subjects relevant to itsreadership. The rst white paper will examhospital CEO compensation in the Midwest.

This expansion is the rst step in a vision

I have toward making Payers & Providers aproducer of healthcare publications ofnational scope, said Ron Shinkman, publishof Payers & Providers.

The national edition of Payers & Providewill be published monthly, both in print andelectronic formats. It will contain an eight-page mixture of news, data and opinionarticles. It will be edited by Shinkman, whocurrently edits the California edition of Paye& Providers.

An annual subscription for the Midwestand national editions is $99 per year. As witthe California edition, paid subscribers to th

Midwest edition will receive the quarterlywhite papers for free, as well as discounts onwebinars.

Those interested in subscribing to eitherthe Midwest or national editions may call(877) 248-2360, ext. 2, or click here.

Moore may be reached by e-mail [email protected].

Foundation (Continued from Page Two)

California law mostly prohibits the directemployment of physicians except in a medicalfoundation model. In most instances, that is ahospital operating community clinics or large

teaching facilities. A minimum of 40physicians in such a group is required toreceive medical foundation status.

Although the California MedicalAssociation has issued past objections about

medical foundations, expressing fears thatthey would provide greater economic leverato hospitals, Settelmayer noted that thenumber of physicians interested in this proje

now far exceeds that number.The physician component these hospit

represent would provide far beyond thecompliance requirements, he said.

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Payers & Providers Page

Theres been a lot of grumbling from thehospital industry over the years about SB1953 and regulations issued in the early2000s mandating the states acute carefacilities meet certain seismic standardsbetween 2013 and 2030 or shut down.

Although SB 1953 is an unfundedmandate that could cost Californiashospitals more than $90 billion, there havebeen some silver linings. Many hospitalsthat would be otherwise kept operatingwith glue and baling wire have beenreborn. El Camino Hospital, Valley

Presbyterian Medical Center and theRonald Reagan UCLA Medical Centerimmediately come to mind.

The other silver lining is jobs. In a statewhere the unemployment rate is more than12% and the building industry has been putinto a virtual standstill by the housingcrash, building a hospital can generatehundreds, if not thousands, of well-paid construction jobs. And since itcan take a year or more to build ahospital, its the type of job thatsrelatively secure. Moreover, shepherding ahospital through the design and approval

process can take years more, guaranteeingmany white collar jobs as well.So why is the state of California

which was responsible for SB 1953 in thefirst place stymieing such a dynamic job-creation engine?

This is not a wide-ranginggovernmental conspiracy, but rather thefault of the Office of Statewide HealthPlanning and Development, the single mostimportant agency in guaranteeing hospitalsin California are built, and funded entirelyby fees levied on the hospital sector.

Like many other governmental

organizations, OSHPD accomplishes itstasks informed by clock or calendarintermittently at best. Its efficiency hasbeen further hobbled by cuts in staffing andpersonnel furloughs.

It currently takes an average 15 monthsworth of reviews by OSHPD before ahospital construction project reachesgroundbreaking, a timeframe that does noteven include the reviews required on thefederal and local levels. Recent anecdotalevidence shows that the timeframes arestretching even further into the future.

Working with OSHPD has become sochallenging that its ill-advised forarchitectural firms and building contractothat have never worked with the agencybefore to take on a new project. A recentexample of this was Palmdale RegionalMedical Center, whose doors opened morthan a year behind schedule because itsPennsylvania-based parent company primused out-of-state firms, making finalconstruction approvals from OSHPDmaddeningly elusive.

Of course, the demand on the relative

limited number of firms with extensiveexperience in California can delay projecteven further. California law also requiresarchitects and engineers involved in suchprojects be expert in state building standaparticularly the Hospital Facilities SeismicSafety Act.

The Los Angeles County EconomicDevelopment Corp. recently estimathat OSHPDs lengthy deliberationsholding back hospital constructionprojects worth an estimated $23

billion. These projects would generate abo232,000 jobs, pay $15.6 billion in wages

generate nearly $2 billion in state and loctax revenue.OSHPD is taking some steps toward

improving the approval process, by puttinfast-track approval system into place toreview projects valued at less than $100,0and installing Web-based software that wiallow it to track ongoing projects moreefficiently. Of course, it would be helpful the agency could stop furloughing itsemployees and hire new ones as well.

Although these are commendable stepit remains to be seen how they will affect largest projects that create the most jobs. T

slowness in approving and completing theprojects is a drag on Californias economirevitalization. More aggressive steps musttaken to get through its growing backlog oprojects.

OPINION

Is OSPHD An Obstacle To Growth?Its Excess Deliberation Slows Many Hospital Project

By Jim

Lott

Jim Lott is executive vice president of the

Hospital Association of Southern California.

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Op-ed submissions of up to 600 words are

welcomed. Please e-mail proposals to

[email protected],


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MARKETPLACE/EMPLOYMENTPayers & Providers Page 5

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Payers & Providers MARKETPLACE/EMPLOYMENT Page 6

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payers & providers – issue of january 20, 2011

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