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Insurance lobby that fought Hillarycare and Obamacare now has sturdy bridges to Democrats

Insurance lobby that fought Hillarycare and Obamacare now has sturdy bridges to Democrats

By Alec MacGillis 
Truthout, Aug. 16, 2015

When the former head of the U.S. government’s health insurance programs was hired in July to run a lobby that had spent tens of millions of dollars trying to derail Obamacare, it was more than just another spin of Washington’s revolving door.

Marilyn Tavenner, former administrator of the Centers for Medicare and Medicaid Services, became chief executive of America’s Health Insurance Plans, the industry’s main lobbying group, which is known as AHIP. As the latest of a half-dozen prominent architects and overseers of Obamacare to move into the health industry, her move signified growing ties between health insurers and Democrats despite battles over the Affordable Care Act.

The relationship has long been marked by ambivalence and tension. Tavenner’s predecessor at AHIP, Karen Ignagni, was a former Democratic staffer on Capitol Hill, but the insurance lobby led the way in defeating the Clinton health coverage plan in 1993 and secretly spent about $100 million to attack Obamacare even as it negotiated to make it palatable to the industry. More recently, as the law added millions to the insurance rolls and generated big profits for many companies, they have turned to defending it.

The connections may continue or strengthen if Hillary Clinton wins the Democratic nomination and the presidency. That’s because a Washington firm called the Dewey Square Group, which is closely identified with the Clinton campaign, was at the center of the industry’s efforts to win influence among Democrats — at a time when the two sides were sharply opposed.

Full story: http://www.truth-out.org/news/item/32352-insurance-lobby-that-fought-hillarycare-and-obamacare-now-has-sturdy-bridges-to-democrats#

Alec MacGillis covers politics for ProPublica.

Obama Administration Must Confront Monopoly Practices in the Health Insurance Industry

‘A single payer system is urgently needed to solve this catastrophic crisis for working people’

By Lawrence J. Hanley
The Huffington Post, Aug. 13, 2015

The flurry of recent merger announcements from the handful of remaining national health insurance providers is cause for alarm for all Americans.

The Affordable Care Act (ACA) has taken nearly full effect and it is clear that staggering annual increases in health insurance premium costs are still with us. The skyrocketing costs of health insurance and health care treatment are pushing working American families well past the breaking point. There is a limit to what working people can afford to pay for what should be a human right.

The most recent corporate advances down the road of health insurance monopolization are the announcements that the enormous Aetna intends to absorb rival Humana, and at the same time the Anthem corporate giant — formerly WellPoint — is maneuvering to swallow Cigna.

Should these latest anti-competitive takeover moves go unchallenged by the Obama Justice Department when there is little doubt that the trend of double digit premium increases will accelerate?

In many areas of the country today there are frequently only one or two health insurers available when workers try to grapple with the dramatically rising premiums and costs. Their frequently identical plan offerings and prices raise the obvious suspicion that the insurers have fixed prices and rigged market share somehow.

And while these latest insurance company combinations and practices will be scrutinized by some states, that level of review is uneven and forced on reluctant state insurance departments ill-equipped to deal with such enormous corporations and their armies of legal and lobbying representatives.

Must Confront Corporate Criminality

It is urgent that the Obama Administration act swiftly and decisively to confront corporate criminality.

The Department of Justice (DOJ) has recently awoken from its slumber on the antitrust front, and has begun preliminary moves to investigate the obvious price fixing of the major airlines. They are likewise reviewing the sale of the General Electric appliances division to the European Electrolux corporation. But while both of these are cases are critical to the restoration of some semblance of an antitrust enforcement policy, the potential damage to working people from greater monopolization of the key health insurance sector is incalculable.

Until the United States Congress finds the political will to abolish our costly and badly broken health insurance industry the monopoly racketeers must at least be confronted and restricted from free rein.

A single payer system is urgently needed to solve this catastrophic crisis for working people.

Until then it is imperative that the Obama Administration utilize its full DOJ resources to investigate and stop the trend towards complete monopolization in the health insurance industry. This action takes no act of Congress, but merely requires the political leadership to commit the Justice Department to enforce existing laws on an industry that has demonstrated its intention to defy the law and rob working people in the process.

Lawrence J. Hanley is international president, Amalgamated Transit Union in D.C., and member of the AFL-CIO’s Executive Council.

http://www.huffingtonpost.com/lawrence-j-hanley/obama-administration-must_1_b_7977552.html

Offering equal access for health care?

By Ann Troy, M.D.
Marin (Calif.) Independent Journal, Letters, July 8, 2015

Congress created Medicare 50 years ago to provide seniors with health care, giving them protection against financial ruin, and peace of mind.

All that was needed was proof of age and citizenship (or legal residency). It was so simple and straightforward that all seniors were enrolled in six months, in the pre-computer era — using index cards!

Congress could have and should have extended Medicare to cover all Americans, creating a single-payer system with the free choice of doctors and hospitals that seniors enjoy. Instead, it passed the hopelessly complex Affordable Care Act, with its malfunctioning websites and uneven coverage.

It has kept the wasteful and bureaucratic insurance industry in health care, wreaked havoc on the health care system, left millions uninsured, and millions more with woefully inadequate coverage.

It has also cost far more than simply extending Medicare.

It could be argued that by not extending Medicare to cover all Americans, the government is not providing equal protection under the law.

It is well known that people without insurance or with high deductibles wait longer to seek medical care, thus their illnesses or problems become more difficult to treat. They suffer more from injuries and disabilities, resulting in decreased productivity and poorer quality of life.

They face financial hardships or ruin (half of bankruptcies in the United States are due to medical debt). And, sometimes they die because they have no insurance (an estimated 50,000 every year).

Those with Medicare have more protection against the devastating effects of illness and injury, get more help overcoming or living with disabilities, and are protected against financial ruin.

“Equal protection” has been used, with some success, to improve access to education and, now, to allow same-sex couples to marry. It seems that an even stronger case can be made regarding access to health care — which is considered a right in every other developed nation.

http://www.marinij.com/opinion/20150707/marin-ij-readers-forum-for-july-8

Medicare at 50: Successes, shortcomings

By Louis Balizet, M.D.
Pueblo (Colo.) Chieftain, July 30, 2015   

Fifty years ago – on July 30, 1965 – President Lyndon Johnson signed Medicare into law.

Medicare’s 50th birthday seems a good time to reflect on the program’s successes, shortcomings and future.

First, Medicare’s successes:

  1. Medicare insures access to health care for more than 50 million Americans.
  2. Medicare has covered hundreds of millions since 1965.
  3. Medicare is popular – ranking with Social Security as the most valued government service.
  4. Medicare has shielded countless millions from financial ruin due to medical expenses – protection that, outside the Medicare population, 35 million Americans still lack.
  5. Medicare has sparked spectacular growth in hospitals, medical practices, pharmaceutical companies and medical device manufacturers.
  6. Medicare is efficient – it operates with an overhead of 2 percent, compared to 20 percent in private health insurance.
  7. Incidentally, Medicare ended segregation in over a thousand hospitals in the South, since its substantial benefits were withheld from institutions that maintained separate wards based on race.

But Medicare has its shortcomings:

  1. Medicare has become intertwined with the private health insurance industry, making health care overall much more complicated and expensive for its beneficiaries.
  2. Medicare has failed to address adequately the cost of medical care.
  3. Medicare’s benefits are too thin in many instances; people over 65 spend an average of 20 percent of their income on health care expenses.

What is Medicare’s future?

Despite its shortcomings, Medicare is still the best template for delivering health care to all Americans in the future, much more so than the Affordable Care Act:

  1. Medicare’s shortcomings are fixable (as opposed to the ACA’s baked-in problems). Medicare’s benefits can be broadened, eliminating the need for most, if not all, supplemental private insurance. The statutory prohibition against bargaining for drug prices with pharmaceutical companies can be repealed.
  2. Thus modified, Medicare could simply be expanded to cover all Americans, eliminating in the process the ACA, Medicaid, CHIP and private medical insurance. The age for eligibility for Medicare could be lowered from your 65th birthday to the day you are born.
  3. The idea of National Health Insurance is not a crazy or unattainable one. It is the norm in every developed country in the world but ours.

I practiced medical oncology in Pueblo between 1976 and 2013. Over that time, an ever-increasing number of my patients suffered as much from the financial burden of their cancer care as the cancer itself. In fact, 2 percent of all cancer patients file for bankruptcy. 

Thanks to Medicare, people over 65 are largely shielded from the tragedy of financial ruin from illness. Should this protection not be afforded to all Americans, regardless of age? 

Medicare should be improved, streamlined, then expanded to all Americans. By showing us the way out of our present complicated, unfair and exorbitantly expensive medical system, Medicare may yet enjoy its finest hour. 

Dr. Louis Balizet practiced medical oncology in Pueblo between 1976 and his retirement in 2013, first at the Southern Colorado Clinic, then at Rocky Mountain Cancer Centers. He is active in Physicians for a National Health Program, a physician group that advocates for universal single-payer health care.

www.chieftain.com

Do Amy Finkelstein and colleagues show that Medicaid has little value?

The Value of Medicaid: Interpreting Results from the Oregon Health Insurance Experiment

By Amy Finkelstein, Nathaniel Hendren & Erzo F.P. Luttmer
National Bureau of Economic Research, Working Paper 21308, June 2015

Abstract

We develop a set of frameworks for valuing Medicaid and apply them to welfare analysis of the Oregon Health Insurance Experiment, a Medicaid expansion for low-income, uninsured adults that occurred via random assignment. Our baseline estimates of Medicaid’s welfare benefit to recipients per dollar of government spending range from about $0.2 to $0.4, depending on the framework, with at least two-fifths – and as much as four-fifths – of the value of Medicaid coming from a transfer component, as opposed to its ability to move resources across states of the world. In addition, we estimate that Medicaid generates a substantial transfer, of about $0.6 per dollar of government spending, to the providers of implicit insurance for the low-income uninsured. The economic incidence of these transfers is critical for assessing the social value of providing Medicaid to low-income adults relative to alternative redistributive policies.

http://www.nber.org/papers/w21308

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Valuing Medicaid

By Harold Pollack, Bill Gardner & Timothy Jost
The American Prospect, July 26, 2015

How Valuable Is Medicaid?

An important recent paper by Amy Finkelstein, Nathaniel Hendren, and Erzo Luttmer, “The Value of Medicaid,” tries to determine how much it is worth, but in a narrow way whose baseline assumptions understate the value of the program. The authors use data from the Oregon Health Insurance Experiment. The experiment worked like this: Oregon had more poor and uninsured people than they could insure under Medicaid. So they held a lottery for who could apply for Medicaid coverage. Finkelstein and her colleagues realized that this lottery was in effect an experiment that would allow them to study the impact of Medicaid coverage on the previously uninsured.  Following a reasonable — but contestable — economic methodology, Finkelstein and colleagues estimated an equivalent dollar-value to the improved health observed among lottery winners. The authors then explored what happened to a dollar that was spent on providing Medicaid: Who actually benefited and by how much? And would recipients have been willing to pay for their Medicaid benefits if they had to?

The study’s major findings, widely reported in The Wall Street Journal, Vox, Forbes, and many other media outlets, can be summarized as follows:

  1. Uninsured people who get Medicaid only gained from 20 to 40 cents in value from each dollar spent by the government.
  2. A principal reason why the benefit of getting insured was so small is that when uninsured people received care, they typically paid only 20 cents on the dollar for those services. Safety-net providers, state or local government, friends, relatives, or someone else absorbed the remaining costs. When a recipient became insured, Medicaid paid some of these costs at the rate of about 60 cents per dollar.
  3. Because a large fraction of Medicaid expenditures financed care that recipients would have received anyway (for example, by leaving bad debt at hospitals), it is unclear whether recipients themselves would have been willing to pay the full costs of Medicaid.

While the Oregon Health Insurance Experiment was a well-designed study, too few of the study participants experienced serious medical conditions to investigate how Medicaid affected their health or quality of life. In addition, the experiment — and thus Finkelstein, Hendren, and Luttmer’s study — did not examine how Medicaid affected recipients’ families or the health-care institutions that care for low-income uninsured patients. Medicaid’s long-term benefits as an investment in infants and children were also beyond the scope of the Oregon experiment.

But perhaps the most important limitation of the study stems from an assumption that many readers would be unlikely to notice. Finkelstein and her colleagues placed a very low value — $25,000 — on a year of additional life for Medicaid beneficiaries. The typical threshold used in health services research is much larger, in recent studies far above $100,000 per additional year of (healthy) life. Yet because the median income of the Oregon study participants was about one-fourth of the median income in the United States, the researchers chose to value an additional life-year at about one-fourth of the usual threshold. This assumption powerfully frames everything that follows in this analysis. After all, if you start out by assuming that Medicaid beneficiaries’ lives are worth very little, you will find that it is not worth spending much money to prolong them.

Although Finkelstein, Hendren, and Luttmer’s baseline assumptions are methodologically defensible, they have radical implications that are rarely so bluntly applied in other domains of health-policy research. Choices about how to financially value the health of poor people relative to the health of others are inevitably both politically and morally freighted. It strains credulity, for example, to imagine American policymakers using this low a value for life when analyzing mammography, prostate cancer treatment, or implantable cardiac defibrillators for seniors.

The authors are careful not to make any normative statements based on these findings, but others such as Michael Cannon, Tyler Cowen, and John Graham have done so. They make two arguments: First, Medicaid is an inefficient way to benefit the poor. If a Medicaid dollar results in only 20 cents in benefit to a previously uninsured person, wouldn’t it be more efficient to simply give that person a dollar? And, second, Medicaid is actually a subsidy for people other than those it ostensibly helps.

We see matters rather differently. Economists have long understood that poor people would prefer cash to subsidized health insurance (especially if they can still get health care for free). So why does every developed country, including the United States, subsidize health insurance for the poor? Part of the reason is that those countries have broader moral and public-health criteria for thinking about health insurance and poor people’s lives. Universal health care expresses a commitment to the well-being of fellow citizens. Everyone should have access to a decent minimum of care; caring for others in distress is a primary expression of human solidarity.

http://prospect.org/article/valuing-medicaid

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Quotes from conservatives cited above:

Michael Cannon: “The (Finkelstein et al) trio found that Medicaid enrollees receive very little benefit from each dollar spent on Medicaid.”

Tyler Cowan:  “An implication of this is that the poor would be better off getting direct cash transfers.”

John Graham:  “Only 20 to 40 cents of Medicaid spending actually goes towards patients’ welfare.” 

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Comment:

By Don McCanne, MD

This NBER study by Amy Finkelstein and her colleagues on the value of Medicaid is important in that it is being used by conservatives to discredit Medicaid, giving fodder to opponents of this program. For that reason, it is important to understand the limitations of the narrow assumptions used in the study, and that is why the article by Harold Pollack and his colleagues is so important.

The Finkelstein article is challenging for the non-economist, but one assumption stands out as a basis for countering the claims of the conservatives who would use this to diminish support for Medicaid. That assumption in this study is that a year of life is worth about $25,000 for Medicaid beneficiaries when most studies assign a value closer to $125,000 per quality-adjusted life year ($100,000 to $150,000). When private insurance extends life by a year it is worth about five times what that same year of life would be worth for a low-income Medicaid beneficiary, so this study seems to assume. According to Pollack, et al., “… if you start out by assuming that Medicaid beneficiaries’ lives are worth very little, you will find that it is not worth spending much money to prolong them.”

Another bizarre line of reasoning is that much of the Medicaid money does not benefit the patient because it goes to physicians, hospitals, and Medicaid managed care organizations. The assumption seems to be that if the patient was not covered by Medicaid, the care would be provided anyway on a charity basis. Thus the patient does not receive any benefit from Medicaid because charity care and care under Medicaid are supposedly the same (not true), whereas the physicians and hospitals would benefit by receiving Medicaid income for what would otherwise be charity care. Would these conservatives seriously contend that private insurance provides little value for patients since the money goes to the physicians, hospitals and insurers and not to the patient? Of course not. Private insurance funds are used to purchase health care, providing considerable value for the patient. So how can they say that Medicaid funds are simply diverted to the health care delivery system, providing little value for the patient?

This is yet one more study to come out of the Oregon Health Insurance Experiment. The raw data in these studies are valid but the assumptions made and the interpretations extrapolated from them are being used to make claims such as, “Medicaid enrollees receive very little benefit from each dollar spent on Medicaid.” Medicaid saves lives, reduces suffering, and prevents financial hardship. That has real value.

Is patching ACA the best approach for now?

Next Steps for the Affordable Care Act

By Linda J. Blumberg, John Holahan
Urban Institute, August 12, 2015

While the ACA has already had some very important successes, simply put, there has never been enough funding, given how ambitious the goals of the law were—for example, substantially reducing the number of uninsured, ending discrimination against those with health conditions, and controlling health care costs.

Every effort was made to keep the costs of the law under a trillion dollars over 10 years, which amounted to about 0.7 percent of GDP. This amount was simply not adequate, given the problems the nation faced in the health care sector. In order to allow the ACA to meet and exceed its long-term objectives, additional investments should be made to improve affordable access to care and bolster administrative capacity.

Affordability concerns

Under the ACA, significant strides have been made in increasing the affordability of coverage and reducing the number of uninsured by 15 million people. This was done in an environment with surprisingly moderate premiums in the private nongroup insurance market and prohibitions on discrimination against those with health problems. However, despite these achievements, affordability remains the most often stated reason for remaining uninsured.

  • As it now stands, premium and cost-sharing subsidies are not generous enough to make coverage affordable for large numbers of low-income Americans.
  • Low-income families are often unable to obtain subsidized coverage if one worker in the family receives an offer of affordable single coverage through an employer.
  • Following the Supreme Court decision in 2012, which essentially left Medicaid expansion up to individual states, 21 states still have not expanded eligibility for that program. That leaves a significant gap between those Medicaid eligible prior to the ACA and those eligible for federal subsidies through the marketplaces.

Administrative concerns

In addition to these affordability issues, the significant reforms in the ACA require serious attention to administration. Much of the need for administrative effort is a consequence of building a system around competing private insurers. This requires a complex and flexible IT apparatus, continuing strategies and structures for broad-based education, outreach and enrollment assistance, and effective approaches for oversight and enforcement of insurance regulation.

  • Experience with IT systems has been decidedly mixed, with some state marketplaces working effectively, some moving to the federal HealthCare.gov system, and some moving to well-functioning systems developed for other states. But the most promising systems, including HealthCare.gov, require more funding than they have thus far received.
  • Education, outreach, and enrollment assistance needs are not diminishing, although the current funding approach appears to treat it that way.
  • Regulatory oversight and enforcement resources have yet to be allocated sufficiently.

Our solutions

All of these issues can only be addressed with additional funding, and the amount that is needed is trivial as a share of the economy. We propose the following:

  • Make reductions in the premiums and cost-sharing (deductibles, co-payments, coinsurance) that low-income people pay to purchase coverage through the nongroup marketplaces.
  • Make it possible for families to receive financial assistance for the purchase of marketplace coverage even if a family member has an affordable offer of single coverage through an employer.
  • Make it an option for states to expand Medicaid to those at or below only 100 percent of the federal poverty level to induce more states to step forward.
  • Make permanent a significant federal contribution to administrative costs. This includes IT systems, but also the human support that is needed, like call centers and a permanent cadre of personnel to help individuals get enrolled both during open enrollment and during special enrollment periods. Plus, make a federal investment in ensuring appropriate oversight and enforcement of insurance regulations.

How much these solutions cost

We estimate that our proposed reforms could be done for about 0.2-0.24 percent of GDP. There are many ways to pay for this, including applying rebates used in the Medicaid program to certain Medicare enrollees as well, increasing cigarette and alcohol taxes, and replacing the “Cadillac tax” with a cap on the exclusion of employer contributions to health insurance.

The changes that we propose are not trivial. We recognize that they are not politically feasible in the near term, but we also believe that what is politically feasible at this moment will not do the job that is necessary to make the ACA solve all the problems it is intended to address.

The ACA marks a large step forward for the US health care system, but no country solves its health care problems with one piece of legislation. There is more to do, and doing it is achievable with additional investments that are extremely small relative to our economy and our total level of health care spending.

http://www.urban.org/urban-wire/next-steps-aca

Full report (60 pages): http://www.urban.org/research/publication/after-king-v-burwell-next-steps-affordable-care-act/view/full_report

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Comment:

By Don McCanne, MD

This report is ideal for those who say that we should forget single payer and instead move forward with fixing what we have – the Affordable Care Act. The authors list some of the more obvious problems and provide suggested solutions. Although their contribution to the reform dialogue is commendable, there are two major problems with their approach.

The most important concern is that their recommendations are limited to deficiencies in ACA, but ACA was merely a series of patches to our highly dysfunctional, inequitable, inadequate, overpriced system uniquely characterized by profound administrative inefficiencies. The fundamentally flawed system would remain intact. Though the ACA patches were beneficial, they did not begin to address the profusion of other problems in our system.

The authors are merely proposing patches to the patches. We will still be left with millions without insurance, millions who are underinsured, profound administrative waste, and little means to control our high health care costs. In fact, the authors recommend increasing our spending on health care – additional spending that is appropriate only if you accept the fact that we reject the comprehensive reform that we really need.

The other problem is political. They acknowledge that their proposals “are not politically feasible in the near term.” But isn’t that what people say about single payer? Is single payer really that much less feasible than patches to the patches? Look at the current political campaigns. One of the most outspoken advocates of single payer Medicare for all is filling stadiums with passionate supporters of his messages. Yet other candidates who advocate for repeal of Obamacare and reducing our spending on Medicare and Medicaid are drawing ridicule from those outside of their narrow camp.

If we are going to work on changing political feasibility, wouldn’t it be far better to join the rising tide in support of replacing bad policy with good policy through single payer, instead of merely trying to patch the bad policies of our highly dysfunctional post-ACA non-system?

NHIS shows ACA is working, but how well?

Health Insurance Coverage: Early Release of Estimates From the National Health Interview Survey, January–March 2015

By Robin A. Cohen, Ph.D. and Michael E. Martinez, M.P.H., M.H.S.A.
National Center for Health Statistics, August, 2015

Highlights

  • The number of uninsured persons continued to decline from 2013. In the first 3 months of 2015, 29 million persons of all ages (9.2%) were uninsured at the time of interview, 7 million fewer persons than in 2014.
  • Among adults aged 18-64, the percentage uninsured decreased from 16.3% in 2014 to 13.0% in the first three months of 2015. There was a corresponding increase in private coverage, from 67.3% to 70.4%.
  • Among children under age 18 years, the percentage with private coverage increased from 52.6% in 2013 to 56.3% in the first 3 months of 2015, reversing a 14-year trend of declining rates of private coverage.
  • Among those under age 65, the percentage with private coverage through the Health Insurance Marketplace or state-based exchanges increased from 2.5% (6.7 million) in the last three months of 2014 to 3.6% (9.7 million) in the first 3 months of 2015.

Estimates of enrollment in HDHPs and CDHPs

In the first 3 months of 2015, 36.0% of persons under age 65 with private health insurance were enrolled in an HDHP, including 13.3% who were enrolled in a CDHP [an HDHP with a health savings account (HSA)] and 22.7% who were enrolled in an HDHP without an HSA. Among those with private insurance, enrollment in an HDHP generally increased since 2010. However, the percentage who were enrolled in an HDHP did not significantly change between 2014 (36.9%) and the first 3 months of 2015 (36.0%).

http://www.cdc.gov/nchs/data/nhis/earlyrelease/insur201508.pdf

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Comment:

By Don McCanne, MD

The National Health Interview Survey (NHIS) shows the success of implementation of the Affordable Care Act (ACA) in reducing the number of uninsured in the United States – down to 29.0 million, from a 2014 level of 36.0 million. Although it is great news to know that so many gained coverage, it is disappointing that 29 million will still remain uninsured. 

There is a bit of news in this report that could be significant. The rise in enrollment in high-deductible health plans (HDHPs) has been of concern because they create financial barriers to care and result in personal financial hardships. This year the enrollment stayed flat – at 36.0% compared to 36.9% in 2014 – a statistically insignificant decline in the percentage. Although health savings accounts (HSAs) have been heavily promoted to help cover higher out-of-pocket expenses associated with HDHPs, 63% of those with private HDHPs did not have an HSA to help with those expenses. It is the deductible, not the savings account, that is the primary operative.

One of the more serious flaws of ACA is the increased use of HDHPs as a trade-off to keep insurance premiums more affordable. These HDHPs have been unpopular because of the medical bills patients are facing, but they have been selected anyway because of the lower premiums.

It will take more time to see if this flattening of the growth in HDHPs actually represents an increasing resistance to these plans or if it is just a random variation. Even if it does represent the early onset of a rebellion, individuals will still be faced with trying to balance premiums with out-of-pocket expenses – a dilemma inherent in the lower actuarial values of today’s typical private plans. A single payer system would eliminate this problem, not to mention that it would bring the percentage of uninsured down to zero.

Medicare Advantage plans padded charges on home visits, whistleblower says

Texas case latest in series of allegations against privately-run health plans

By Fred Schulte
Center for Public Integrity, August 12, 2015

A new whistleblower case accuses a Texas medical consulting firm and more than two dozen health plans for the elderly of ripping off Medicare by conducting in-home patient exams that allegedly overstated how much the plans should be paid.

The Texas litigation is just the latest of at least a half dozen whistleblower cases that have been filed in the past five years alleging billing fraud and lax government oversight of privately-run Medicare Advantage plans that have proven increasingly popular with senior citizens.    

The latest lawsuit was filed in federal court in Dallas by Becky Ramsey-Ledesma, a medical billing coder, against her former employer, CenseoHealth, LLC. The Dallas-based firm has contracted with  thousands of doctors who visit elderly people in their homes and evaluate their health on behalf of Medicare Advantage plans.

But the health assessments exaggerated how ill patients were, which in turn inflated Medicare payments to the health plans, according to the allegations in the suit. The suit names 30 Medicare Advantage plans in 15 states, including several Blue Cross plans and other industry stalwarts, such as Humana Inc. Humana has more than three million Medicare members.

The private insurance plans offer seniors an alternative to standard Medicare, which pays doctors for each service they render. Medicare Advantage plans receive a set fee monthly for each patient based on a risk score that pays higher rates for sicker people and less for those in good health. Medicare essentially trusts health plans to report these risk scores accurately. The Medicare Advantage plans have grown rapidly in recent years, and now cover almost 17 million people.

The Texas suit was filed last year, but stayed under court seal until mid-June. It is the second whistleblower action to target Medicare Advantage home visits, which account for billions of dollars in annual revenues for health plans.

A 2014 Center for Public Integrity investigation found that home visits skyrocketed as federal officials struggled to prevent health plans from overcharging Medicare by tens of billions of dollars every year. Federal officials as early as 2013 were concerned the home visits could be a factor in jacking up risk scores improperly and wasting tax dollars. But they backed off a proposal to limit their use when the industry objected, the investigation found.

CenseoHealth’s home visits collect data on the health status of patients, which the private health plans then use to bill Medicare. The company had no comment on the lawsuit.

The Centers for Medicare and Medicaid Services press office declined to answer written questions seeking comment on its home visit policy. The agency instead issued a statement that said the home exams can have “significant value.” That opinion is shared by the health insurance industry trade group, America’s Health Insurance Plans. A spokesperson for AHIP called the visits “an important component of disease management activities.”

Medicare Advantage is enjoying robust growth and firm political support in Congress. The industry has beaten back several attempts by the Obama administration to cut its rates as enrollment has grown to encompass about one in three people on Medicare. In June, the House passed a bill sponsored by Rep. Vern Buchanan, R-Florida,  that appears to prevent federal officials from halting the home health assessments.

At the same time, the Centers for Medicare and Medicaid Services is drawing scrutiny over top manager Andy Slavitt’s former ties to UnitedHealth Group, which runs the nation’s biggest Medicare Advantage plan. Senate Finance Chairman Orrin Hatch criticized Slavitt’s “conflicted history” in a statement issued after President Obama nominated him for the top CMS job in July.

Bringing Back House Calls

CenseoHealth has emerged as a leader in a growing market for in-home health assessments.

Formed in 2009 by two Texans, CenseoHealth grew from four employees to 325 workers by 2013, according to its website. It has built a network of nearly 5,000 doctors whom it says are “uniquely qualified to identify and diagnose health conditions.” CenseoHealth-affiliated doctors have done more than a million home visits, and in 2013 forecast revenue would reach $120 million, according to its website.

CenseoHealth’s investors include private equity firm Health Evolution Partners, headed by David Brailer, a physician and former health information technology czar under President George W. Bush. In March, Brailer was named chairman of CenseoHealth’s board of directors. Brailer could not be reached for comment.

According to the suit, CenseoHealth used an algorithm to identify patients who might have undetected medical conditions that could raise their risk scores. The company uses marketers to contact patients and schedule doctor visits to their homes.

The suit alleges that the doctors don’t provide any medical treatment. Other than taking vital signs and weight, listening to heart and lungs and checking reflexes, no physical exam in involved and no lab tests are performed, according to the suit. The doctors ask the patient a series of questions on a checklist during the visit, which takes about an hour.

“In other words, the conditions reflected on the evaluation forms are not medical diagnoses derived from a medical examination, but instead, are self-reported conditions captured from the medical history and verbally confirmed” by the patient, according to the suit.

Some of the doctors lacked medical licenses, according to the suit, and others were assigned as many as ten visits a day for a flat fee of $100 each. Some faked results, according to the suit. The suit cited a test for Alzheimer’s disease in which each patient was asked to draw hands on a clock to indicate the correct time of day. “In some cases it was obvious that the same person had drawn the clock on multiple forms,” according to the suit.

Some of the diagnoses could not be made reliably through a home visit, according to the suit. Others were based on medications patients took, even when those medications could be taken for more than one condition, according to the suit.

These practices inflated risk scores, according to the suit, triggering “substantial overpayments” to the health plans.

Ramsey-Ledesma claims she was fired in August 2013, the day after she objected to the practices. According to the suit, her manager told her, “we can no longer trust you.”

The other whistleblower case that targeted home visits was unsealed in 2014. It was filed by Anita Silingo, a former compliance officer for Mobile Medical Examination Services, Inc., or MedXM.  The company, based in Santa Ana, Ca., has denied the allegations. The case is pending.

The Department of Justice declined to join either case, which may make it more difficult for the whistleblowers to proceed with their cases and collect a large award. However, lawyers who handle these cases say more of them are moving ahead without the government.

Other whistleblower cases involving Medicare Advantage have been filed in the past five years in California, Florida and South Carolina, among other locales. These cases also allege that Medicare Advantage plans inflated risk scores and as a result were overpaid by Medicare.

Friends in High Places

As early as 2013, CMS officials said they suspected home visits improperly raise risk scores and waste tax dollars. But as the visits became standard procedure for more and more health plans, CMS lost its appetite for tightening oversight.

CMS officials wrote in February 2013 that they were concerned that the primary objective of the visits was to raise risk scores and revenues “without follow up care or treatment being provided.”

In April 2013 though, officials bowed to industry pressure and backed off their proposal to collect data on the home visits with an eye to excluding their use in setting rates.

The following year, CMS again backed down from a proposal to exclude the visits after meeting with the industry. That decision came even though CMS said “there appears to be little evidence” that the visits led to any improvement in patient care. The insurance industry estimated that cutting out the visits would have cost Medicare Advantage plans nearly $3 billion a year.

Earlier this year, CMS handed the industry a major victory and ruled out excluding the home visits. Instead, CMS urged the industry to adopt a set of “best practices” for the visits. The new policy “enhances the value of in-home assessments so they are used to support care planning and care coordination and improve enrollee health outcomes.”

The press release quoted then-CMS deputy administrator Slavitt saying the proposals “would reward providers of high quality, consumer-friendly care” for Medicare Advantage.

Slavitt is a former executive of  Optum, a subsidiary of UnitedHealth Group. In July, President Obama nominated him to take over CMS permanently.

CMS officials declined to answer questions about Slavitt’s role in the decision making process for home assessments, but said:

 “CMS believes that in-home assessments can have significant value as care planning and care coordination tools. In the home setting, the provider has access to more information than is available in a clinical setting.” 

http://www.publicintegrity.org/2015/08/12/17815/medicare-advantage-plans-padded-charges-home-visits-whistleblower-says

‘End the devastating austerity drive against Greece’: U.S. doctors group

Troika-imposed policies causing widespread suffering and death, physicians say

FOR IMMEDIATE RELEASE
August 12, 2015

Contact:
Physicians for a National Health Program, (312) 782-6006, info@pnhp.org

The following statement was released today by Physicians for a National Health Program.

The 19,000 members of Physicians for a National Health Program call upon the European Union, European Central Bank and International Monetary Fund – the so-called troika – to cease imposing harsh austerity policies on the Greek people that have gravely damaged the Greek health care system and have caused unnecessary death and suffering.

Our Greek colleagues in medicine and public health have documented a tragic deterioration in the quality and availability of care.

In the past, Greece’s national health system provided universal access to care. Now, millions of people are unable to obtain the services they need. The barriers to care in Greece increasingly resemble the barriers our patients face in the United States, where tens of millions remain uninsured despite the Affordable Care Act.

Today in Greece, vital health institutions are being starved of resources or privatized, and despite the heroic efforts of many Greek physicians and nurses, care is increasingly reserved for the wealthy few.

A convincing body of research, including some by our own members, has demonstrated the ill effects of these policies. Even before the latest round of austerity imposed by the Eurozone, a study in the American Journal of Public Health found that key public health indicators deteriorated as austerity policies reduced public services:

  • Suicides and homicides increased.
  • Rates of mental disorders, substance abuse, and infectious diseases rose.
  • Despite deteriorating health conditions, austerity policies forced cutbacks in public health services.
  • Already overstretched public inpatient and primary care services were inundated with additional patients who were unable to afford private facilities because of unemployment and income loss.

Other important research also has found devastating health effects of austerity policies in Greece and elsewhere, leading to the conclusion that “Austerity Kills.”

Although the economic justifications for austerity policies are weak, the devastating health effects of these policies are well documented.

The troika’s continued pursuit of policies that inflict mass punishment on the people of Greece cannot be justified.

IG report on problems with eligibility determinations in exchange plans

Not All of the Federally Facilitated Marketplace’s Internal Controls Were Effective in Ensuring That Individuals Were Properly Determined Eligible for Qualified Health Plans and Insurance Affordability Programs

Department of Health and Human Services, Office of the Inspector General, August 2015

Our objective was to determine whether the Federal marketplace’s internal controls were effective in ensuring that individuals were determined eligible for enrollment in QHPs (qualified health plans) and eligible for insurance affordability programs according to Federal requirements.

DEFICIENCIES RELATED TO VERIFYING APPLICANTS’ ELIGIBILITY

Social Security Numbers Were Not Always Validated Through the Social Security Administration

Citizenship Was Not Always Verified Properly

Annual Household Income Was Not Always Verified Properly

Family Size Was Not Always Determined Correctly

DEFICIENCIES RELATED TO RESOLVING AND EXPIRING INCONSISTENCIES

Inconsistencies Related to Certain Eligibility Requirements Were Not Always Resolved Properly

Inconsistencies Related to Certain Eligibility Requirements Were Not Always Expired Properly

Applicant Data and Documentation Related to Resolving Inconsistencies Were Not Always Maintained Properly

https://oig.hhs.gov/oas/reports/region9/91401011.pdf

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Comment:

By Don McCanne, MD

Considering the administrative complexities of the Federally Facilitated Marketplace (insurance exchanges) established by the Affordable Care Act, these deficiencies in determining eligibility for the exchange health plans and for the premium tax credits and cost-sharing reductions do not really demonstrate bureaucratic incompetence but rather would be expected based on the complex program design authorized by the legislation.

This was totally unnecessary. By design, in a single payer system everyone is eligible and automatically enrolled. There is no need for premium tax credits since there are no premiums. The program is funded through equitable taxes instead. There also is no need for cost-sharing reductions since there are no deductibles or coinsurance. It is a prepaid program.

Instead of reading the news reports and merely tisk-tisking the incompetence of the administration, we need to give more thought as to why the administrative boondoggles exist and redirect the blame to the fact that we are implementing a highly flawed model of health care financing. That should then lead us to advocating for a model that really does work well – a single payer national health program.

Can we celebrate the decline in the numbers of uninsured?

In U.S., Uninsured Rates Continue to Drop in Most States

By Dan Witters
Gallup, August 10, 2015

The marketplace exchanges opened on Oct. 1, 2013, with new insurance plans purchased during the last quarter of that year typically starting on Jan. 1, 2014. Medicaid expansion among initially participating states also began with the onset of 2014. As such, 2013 serves as a benchmark year for uninsured rates as they existed prior to the enactment of the two major mechanisms of the healthcare law.

Nationwide, the uninsured rate fell from 17.3% in full-year 2013 to 11.7% in the first half of 2015.

Collectively, the uninsured rate in states that have chosen to expand Medicaid and set up their own state exchanges or partnerships in the health insurance marketplace has declined significantly more since 2013 than the rate in states that did not take these steps. The uninsured rate declined 7.1 points in the 22 states that implemented both of these measures by Dec. 31, 2014, compared with a 5.3-point drop across the 28 states that had implemented only one or neither of these actions.

Although the 22 states that implemented both mechanisms before Jan. 1, 2015, had a lower uninsured rate to begin with, the 7.1-point drop is larger than what is reported among the other 28 states, and represents a 44% decline since 2013 in the uninsured rate among adults residing there. The 5.3-point drop in the 28 states that have implemented one or neither of the mechanisms represents a 28% decline in uninsured rates. Still, the difference in the rate of decline in uninsured rates between the two groups of states has now leveled off, and is unchanged relative to the same 1.8-point gap in the rate of decline measured in midyear 2014.

http://www.gallup.com/poll/184514/uninsured-rates-continue-drop-states.aspx

***

Comment:

By Don McCanne, MD

Although supporters of the Affordable Care Act (ACA) celebrate the reductions in the numbers of uninsured into the second year of plan enrollment, those of us who believe that everyone should be covered certainly do not have cause to celebrate.

Nationally, the rate of uninsured fell from 17.3% before ACA expansions were implemented to 11.7% after the second annual enrollment period. That is a decline in the uninsured of only 32%. Two-thirds of the numbers previously uninsured still remain uninsured.

Even in those states that cooperated with ACA by both expanding Medicaid and by establishing exchanges themselves or partnering with the federal government to establish exchanges still saw reductions in the uninsured of only 44% – less than half (a decline from 16.0% to 8.9%). Thus even the optimal results are disappointing. States that failed to cooperate saw even less of a decline in the uninsured – 28% (from 18.7% to 13.4%).

With two seasons of ACA implementation, the low fruit has been picked. With increasing penalties for remaining uninsured, a few more enrollees should trickle into the exchanges. Also some states missing in action will likely reluctantly expand their Medicaid programs. But even with optimistic estimates of the increases in participation, it is quite clear that far too many will remain uninsured.

The defect is in the design of the Affordable Care Act – an administratively complex, fragmented system that could never result in truly universal coverage, not to mention all of the inequities that it perpetuates. In contrast, a single payer system automatically enrolls everyone, while reducing inequities. That’s the design that we need.

Many confused by tax filing requirements could lose their ACA tax credits

Tax Filing Problems Could Jeopardize Health Law Aid for 1.8M

By Ricardo Alonso-Zaldivar
Associated Press, August 4, 2015

About 1.8 million households that got financial help for health insurance under President Barack Obama’s law now have issues with their tax returns that could jeopardize their subsidies next year.

Consumers who got health care tax credits are required to file tax returns that properly account for them, even if they are unaccustomed to filing because their incomes are low. Unless they follow through, “they will not be able to receive tax credits to help lower the cost of their health insurance for 2016,” Lodes explained (Lori Lodes, communications director for the Centers for Medicare and Medicaid Services).

Treasury officials said 1.8 million households are at risk of losing subsidies for next year, and that number breaks down as follows:

  • About 710,000 households that have not filed a 2014 tax return, although they were legally required to account for health insurance tax credits that they received.
  • Some 360,000 households that got tax credits and requested an extension to file their returns. They have until Oct. 15.
  • About 760,000 households that got tax credits and filed their tax returns omitted a new form that is the key to accounting for the subsidies. Called Form 8962, it was new for this year’s tax filing season.

The 1.8 million households with tax issues represent 40 percent of 4.5 million households that had tax credits provided on their behalf and must account for them.

“What the IRS is doing here is sending these people a not-so-gentle reminder that they need to file or they will put their subsidy at risk,” said Mark Ciaramitaro, vice president for tax and health care at H&R Block, the tax preparation company. He cautioned that many consumers will find the process cumbersome, so they should waste no time getting started.

http://hosted.ap.org/dynamic/stories/U/US_HEALTH_OVERHAUL_TAX_CONFUSION

***

Comment:

By Don McCanne, MD

Forty percent of the 4.5 million households that received tax credits in 2014 for the health plans offered in the ACA exchanges have failed to complete the tax filing requirements for these credits and thus will be ineligible for tax credits for 2016, unless they follow through with their delayed filings.

In a health care system already heavily burdened with administrative excesses, it is unfortunate that the Affordable Care Act significantly increases the administrative burden. In this instance, the additional hassle of the tax filing requirements for those receiving subsidies under ACA may be confusing enough that many may fail to file correctly, and thus they may become disqualified for tax credits to which they are entitled and which many need just to be able to afford the premiums for the exchange plans.

Many of ACA’s provisions and regulations apply specifically to individuals and families, creating sometimes complex administrative requirements in each individual case. In contrast, a single payer system requires simple registration only once in a lifetime, and the financing requires nothing more than compliance with the existing tax system, with rates set based on ability to pay.

For the individual, a single payer system is hassle-free, whereas for the entire nation, single payer frees up enough administrative waste to pay for the care that people are not currently receiving but should be.

When we have a financing system requiring IRS rules that can threaten individuals with loss of their health care, we know that the system needs to be changed. Time for an improved Medicare for all.