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Nev. governor vetoes Medicaid-access-for-all bill

The Nevada State Legislative Building, in Carson City.

In Nevada, Republican Gov. Brian Sandoval  and Democratic legislators have often cooperated in innovative ways to address healthcare issues, whatever the fiercely partisan standoff in Washington, D.C.

But the governor wouldn’t go along when the Democratic-controlled legislature passed a bill to let anyone — regardless of income — sign up for Medicaid on the Affordable Care Act’s insurance marketplace — in a cousin of the universal-healthcare/Medicare-for-all proposals getting increasing attention as the red tape-bound and vastly expensive U.S. healthcare “system” looks worse and worse — including its lowly outcomes.

Mr. Sandoval vetoed the Medicaid-available-for-all bill on Friday night, hours before the deadline, saying that the legislation “could introduce more uncertainty to an already fragile health-care market and ultimately affect patient health care” and that it was being rushed “without factual foundation or adequate understanding of the possible consequences.”

But supporters of Medicaid access-for-all, including the bill’s sponsor, Assemblyman Mike Sprinkle, have argued that  it  cost less than a single-payer plan and that it was needed because “There is an absolute need for states to become more reliant on providing insurance options to its citizens.”

“It’s an innovative approach that might also be of interest to other states,” says Jessica Schubel, senior policy analyst with the Center on Budget and Policy Priorities, told Governing magazine. “but it clearly rests on the base of a strong Medicaid program and robust marketplace subsidies — both of which are in danger.”

The state is pushing hard to shore up its health-insurance offerings. For instance, Governing reports, it has told private insurers   that their “applications for state Medicaid contracts would get preferential treatment if they also sold plans on the marketplace  — and it’s already paying off.

“Nevada is the only state where Aetna is still going to offer coverage in 2018. This fall, Nevadans shopping on the exchanges will have five insurance options. In addition, premiums are expected to be lower than the national average.”

To hear the NPR report, please hit this link.
To read the Governing article, please hit this link.

Aetna bailing out of all ACA exchanges


Aetna will complete its withdrawal from Affordable Care Act state insurance exchanges in 2018. The huge insurer, which overall is very profitable, said that continuing financial losses in the exchanges and uncertainty about the marketplaces’ future led it to decide to leave the last  two states  — Delaware and Nebraska — in which it has been on ACA exchanges. Just last week it said that it would stop offering ACA health plans in Virginia in 2018 and last month it  said it would leave Iowa.

Aetna Chief Executive Mark Bertolini has said that the ACA marketplaces were in a “death spiral,” which the nonpartisan Congressional Budget Office said isn’t true.

The exchanges have been undermined by the fierce opposition to the Affordable Care Act of the Trump administration and Republican politicians in Red States.

Insurers, for their part, complain that their ACA plans attract too few of the young and healthy customers needed to offset the expense of covering older people, who, of course, tend to have more serious  health problems than do younger people.

A major reason is that the financial penalties for people for not buying insurance are far too small.

For example, the penalty for not buying insurance for an adult is $625 per adult and $347.50 per child under 18. So a lot of younger healthy people decide to pay the fine, which is much cheaper than paying insurance premiums. And if they get sick or injured, they can go to a hospital ER, where all or some of the costs will be covered by the hospital, in the form of “charity care” and local, state and federal governments.

It’s all just another example of why  the U.S. healthcare system is near the bottom in medical outcomes and at the top in costs in the Developed World. It’s immensely complicated and contradictory, fee-driven and fueled by the desire of many, perhaps most, clinicians and hospital and insurance executives for maximum personal profit.

To read more, please hit this link.


Reaction to ruling against an Aetna-Humana merger


U.S. District Judge John Bates has backed the Justice Department and blocked  Aetna’s proposed $37 billion takeover of Humana over antitrust concerns. Judge Bates ruled  that Medicare Advantage and traditional Medicare should not be considered the same market. Therefore, the deal would violate antitrust laws as Aetna and Humana would have an “unlawful” Medicare Advantage market share in 364 counties across 21 states and that the deal would be anticompetitive in 17 counties across 3 states.

Here are five reactions collected by Becker’s Hospital Review to the ruling.

1. American Medical Association President Andrew Gurman, M.D., called the “court’s ruling … a notable legal precedent by recognizing Medicare Advantage as a separate and distinct market that does not compete with traditional Medicare. This was a view advocated by the AMA, as well as leading economists. AMA also applauds the decision for protecting competition on the public exchanges.”

2. Matthew Cantor, partner at Constantine Cannon, said he thought whether Medicare Advantage and original Medicare should be considered the same market was never “a real significant dispute.” However, in Becker’s words, “he found it interesting Judge Bates gave little weight to Aetna’s argument that its exit from ACA exchanges in the 17 complaint counties was a business decision.”

Mr. Cantor said while as a matter of law the ruling will be hard to reverse, the “most important part now is how the Trump administration is going to react to this. I would think they would be receptive and listen to what the merging parties have to say, particularly if it scores them political points on the repeal and replacement of the ACA.”

3. Randal Schultz, a partner at Lathrop & Gage and chairman of the firm’s healthcare strategic business planning practice group, said the judge’s ruling was logical and an easy decision. He said should Aetna successfully appeals the deal and if the deal does go through, he hopes that the court makes insurers  “disclose financial information about the actual cost of care. By putting requirements on merged groups to release actual healthcare costs … it opens up a black box [and] people will know what it actually costs to insure a population.” Doing so would push more employers toward self-insuring their workers, he said.

Regarding the looming decision of Indianapolis-based Anthem’s proposed $54 billion acquisition of  Cigna, Mr. Schultz added, “I’ll be shocked if the other case doesn’t come down the same way.”

4. Aetna spokesperson T.J. Crawford said  “We’re reviewing the opinion now and giving serious consideration to an appeal after putting forward a compelling case.”

5. Aetna Chairman and CEO Mark Bertolini and Humana CEO Bruce Broussard said jointly:  “After putting forward a compelling case that addressed each of the Department of Justice concerns, we are disappointed with the court’s decision and will carefully consider all available options. We continue to believe a combined company will create access to higher-quality and more affordable care, and deliver a better overall experience for those we serve.”

To read more, please hit this link.

Insurers may soon lose ACA excuse for their soaring premiums



Ana Mulero, writing in Healthcare Dive, notes that “2016 was a terrible year for insurance costs. Double-digit ACA premium increases were common. Insurance and provider monopolies and near-monopolies look likely to support future increases. But as we go into 2017, it’s reasonable to ask: How long will consumers put up with this?”

After all, “{T}his comes as some payers, including the five largest ones in the U.S., have remained highly profitable. Aetna, Anthem, Cigna, Humana, and Unitedhealth, four of which have multibillion-dollar plans to merge, have collectively profited more than $65.5 billion post-ACA, Public Citizen reported in October.”

Meanwhile salaries for insurance execs continue to surge. Consider, she writes:

”{S}alaries for C-suite executives were raised by 57% last year at Health Care Service Corp. (HCSC), which operates Blue Cross and Blue Shield plans in Illinois, Montana, New Mexico, Oklahoma, and Texas, according to a recent analysis by Modern Healthcare. The top ten company executives saw their combined earnings increase from a total of $36.1 million in 2014 to $56.7 million in 2015.”

And,  “Hospitals and health systems may actually be the ones that have felt the squeeze the most, and they have acted in ways that are {also} pushing up costs.

“Health systems are consolidating at a rapid pace, and many of them say they have done so to have more leverage with insurance companies. This activity has in turn led to monopolies and duopolies on the provider side as well, which results in not only increased prices to consumers, but also a decrease in quality care as competition is significantly reduced.”

“Hospital prices in monopoly markets are more than 15% higher” than in non-monopoly markets,  says Deborah Feinstein, the Federal Trade Commission’s director of the Bureau of Competition.

“Requiring more transparency around payers’ operating costs and salaries of their C-suite execs could help address these issues. But with Republicans promising a repeal, the ACA may not be available as cover for high costs much longer.

“Thus, insurance companies looking for whom, or what, to blame for the increases may face an uncomfortable reality soon: For every finger they point, three fingers might point back at them.” And, we might add, at some monopolistic hospital systems, too.

To read her whole article, please hit this link.

Hysteria over Aetna’s partial ACA evacuation needs to be cooled


Jon Kingsdale argues in Health Affairs that news coverage of Aetna’s plan to exit from 11 of the 15 states where it now offers insurance on Affordable Care Act insurance exchanges, and similar actions by some other big insurers, such as Humana and United Healthcare, has contained much hyperbole and that in fact the exits are no big deal.

He writes:

Critics of the ACA are citing these departures as evidence of the law’s fatally flawed design. Even supporters worry about how to staunch the outflow. And the news reverberated in presidential politics, on both sides. What’s really going on here? Are these big insurers bailing because Obamacare is just too risky? Will more such desertions cripple the marketplaces?”

He answers himself: “Not all health insurance companies are the same, nor do they necessarily serve the same customer segments. In fact, most medical insurance companies, unlike Aetna and United, are regional non-profits, such as the state (or smaller) Blue Cross Blue Shield plans, Kaiser Permanente and HIP. These ‘regional’ plans and Medicaid managed care organizations (MCOs) are generally better positioned to compete on the new marketplaces than ‘national’ insurers.”

“By contrast, national firms such as Aetna, United and CIGNA are far better positioned to serve national employers and other large, self-insured groups than to compete for individual households.”

“The vast majority of purchasers on the ACA marketplace are low-to-moderate income households, who are searching for low-priced health plans. As extremely ‘price-sensitive’ buyers, most seem willing to trade access to a broader network in return for lower premiums. Regional health plans and Medicaid MCOs are generally more successful than national ones in negotiating the lowest payment rates with local doctors and hospitals. As a result, the Blue Cross Blue Shield and other regional plans generally—not always—enjoy a cost and premium advantage over national plans and tend to dominate their marketplaces.”

“In fact, United and Aetna, despite their deep penetration of the large-group insurance market, together serve only 15 percent of marketplace enrollees, and their retrenchment will impact only about 10 percent.

“They are leaving many marketplaces, but staying in those where they think they can compete. This is clearly not the same as rejecting ACA marketplaces wholesale because of some fundamental flaw in the law. Presumably, they are being selective about their participation as they see how price-disciplined the marketplaces are and where they enjoy a competitive advantage.”

To read Mr. Kingsdale’s Health Affairs article, please hit this link.



Some things to know about Aetna’s ACA threats


Herewith Becker’s  Hospital  Review looks at “things to know” about Aetna’s plan to withdraw from most Affordable Care Act  state insurance marketplaces:

1. The insurer warned the U. S. Department of Justice on July 5 that it would immediately act to reduce its 2017 ACA exchange footprint if the DOJ sued to stop  its acquisition of Humana.

2. Aetna CEO Mark Bertolini said if its transaction with Humana is blocked, it is “very likely”  that Aetna would exit the ACA exchanges entirely. However, if the deal closes, Mr. Bertolini said, Aetna would look into how it can support “more public exchange coverage over the next few years.”

3. On July 21, the DOJ sued to block the $37 billion Aetna-Humana deal over antitrust concerns. The DOJ is also fighting a merger between Anthem and Cigna.

4. On Aug. 15, in Becker’s words: “Aetna said it will pull out of 11 of its 15 state ACA exchanges next year, citing $430 million in losses on its individual plans since January 2014.”

5. Kevin Counihan, director of the ACA marketplaces, told Politico  that Aetna’s departure placed a greater urgency on HHS’s insurer recruitment. He asserted that losing big insurers like Aetna does not mean the exchanges are broken, but rather it is “the nature of the industry.”

6. Aetna had revenue of $15.95 billion in the second quarter of 2016, up 5 percent from the year-earlier period. The insurer recorded net income of $790.8 million, up from the year-earlier  $731.8 million.

To read the Becker’s article, please hit this link.

Feds detail case against huge insurance mergers


U.S. Atty. Gen. Loretta Lynch has discussed in detail why the Feds are rejecting the huge insurance company mergers sought by Anthem and Aetna. Anthem wants to buy Cigna; Aetna wants to buy Humana.

“If allowed to proceed, these mergers would fundamentally reshape the health insurance industry They would leave much of the multitrillion-dollar health industry in the hands of three mammoth insurance companies, restricting competition in key markets,”  she said.

The government says the transactions would “substantially lessen competition in numerous markets around the country,” leading to  “higher prices and reduced benefits” for consumers.

Justice Department officials also worry that the deals would kill most competition in the Affordable Care Act’s insurance marketplaces.

For the full article, please hit this link.

Texas Health, Aetna to create insurer



Aetna and Texas Health Resources, a big nonprofit hospital system serving the Dallas-Forth Worth area, will create a jointly owned heath-insurance company for North Texas to address, among other things, population-health issues.

It will be the first such venture in the region between a major insurer and a major health system and include fully integrated care teams and administrative services to reduce redundancies and streamline the patient experience.

This is Aetna’s second joint venture with a nonprofit health system. The first was its pact with Inova Health System in Northern Virginia, signed in 2014.

The new health plan will combine Aetna’s “coverage expertise, case- management capabilities and analytical insights with Texas Health’s provider network and population-health management tools,’’ HealthcareDive reported.

Ala. handing Medicaid managed care to nonprofits


For Kaiser Health News

Despite having one of the strictest eligibility requirements in the country, Alabama has struggled to control the rising costs of Medicaid, which provides health coverage to more than 1 million residents.

Alabama Gov. Robert Bentley, M.D., a popular two-term Republican governor, and a dermatologist, is offering an unusual cure.

The state last week won federal approval to shift most of its Medicaid recipients into managed-care organizations, which are paid a fixed monthly fee from the state for each person in the plan. It’s a strategy employed by about three dozen states, many for decades, to provide more predictable spending.

Yet, Alabama’s shift to Medicaid managed care has features not typically seen elsewhere. Most notably, the state isn’t relying on big for-profit insurance companies like UnitedHealthcare and Aetna to manage the program. Instead, it’s turning control over to new nonprofit organizations mostly run by the state’s hospitals and other local providers. Oregon has also pulled in healthcare providers to help run its Medicaid program, but that approach, begun in 2012, also included private insurance plans.

Hospital leaders applaud the move, saying they know their communities’ needs and are best positioned to care for the patients. And they hope it’s a step that leads the governor and legislature to expand Medicaid under the Affordable Care Act, which would make an additional 300,000 people eligible. Bentley has said he would not consider expanding Medicaid until his proposed reforms of the program go into effect.

Alabama is one of 19 states, mostly in the South, that have refused to accept the health law’s provision to extend Medicaid to everyone earning less than 138 percent of the federal poverty level, or $16,400 for an individual. The federal government pays the full cost of the expansion through this year and then gradually reduces its share to 90 percent in 2020. Alabama’s Medicaid program is mostly used by children and disabled residents. Parents are only eligible if their income is under 18 percent of the poverty level, or about, $4,000 a year for a family of four.

Courtesy of Huntsville Hospital Health System

Huntsville Hospital Health System is tentatively planning to run two of the new regional care organizations in the northern and western parts of Alabama.

— Photo courtesy of Huntsville Hospital Health System

The state and the federal government split the costs of the program, with the federal share nearly 70 percent in Alabama.

The Obama administration’s decision to approve Alabama’s managed-care system will bring the state an additional $328 million in federal funding over three years — money that will help set up the new entities the state calls Regional Care Organizations. Most of the funding will be used to build information-technology and computer systems to help the hospitals work as insurers. Under the waiver, Alabama could also qualify for an additional $420 million in federal money over a five-year period to further support the transformation.

Without the waiver, Alabama hospitals feared the state would have cut Medicaid benefits and reimbursements to the hospitals. Alabama’s total Medicaid spending has increased from $5.2 billion to $5.8 billion in the past four years as enrollment rose more than 15 percent.

Hospitals say the money they will receive through managing the regional care collaborations will give them incentives to keep people healthy. That’s quite different from the traditional fee-for-service Medicaid system in which hospitals get paid more money by providing the most expensive health services.

The effort will allow hospitals to change their mission from treating disease to improving the health of the population — and share in the savings, said Frederick Isasi, director of the health division of the National Governors Association, which worked with the state on the waiver. “Alabama is creating a more efficient system,” he said.

The Regional Care Organizations, or RCOs, will be rewarded for keeping spending on budget and they will have their care rated by a doctor-controlled state board that will look at dozens of quality and customer service measures. The RCOs will work to help people with chronic diseases such as diabetes and asthma so they can avoid costly hospital stays.

Hospitals say they are happy they won’t have for-profit managed care companies dictating their Medicaid reimbursement and can have more control over how the program’s dollars are spent.

“Anyone who realizes where health care is going in the country knows you want to be high up on the hierarchy where the premium dollars are being paid,” said Burr Ingram, spokesman for Huntsville Hospital Health System, which is tentatively planning to run two of the RCOs in the northern and western parts of the state.

Some health insurers will still provide a supporting role for the program, such as providing back office support or helping hospitals meet their financial requirements.

Insurers say the state is wasting money having hospitals and other providers learn how to operate as managed care companies when insurers have been doing that elsewhere for years.

“The state bought half a loaf,” said Jeff Myers, CEO of the Medicaid Health Plans of America, a trade group of large insurers. He applauds Alabama for moving to managed care, but he said it could have saved money using experienced insurers that know how to build provider networks, pay claims and manage risk.

The state has tentatively contracted with at least two regional care organizations in each of five regions of the state. Each RCO will set up its own provider networks, which Medicaid recipients must use to get the cost of their care covered. The program expects to enroll 650,000 Medicaid patients. Nursing home patients are excluded.

“We see this as a huge milestone,” Danne Howard, executive vice president for the Alabama Hospital Association, said of the federal waiver approval. “We hope this will pave the way for more serious discussion of expansion.”

While the managed care strategy is a victory for hospitals, the Medicaid expansion would have helped them even more by reducing their uncompensated care. “Having a bigger pie would be better to carve up,” said Meredith Kilgore, chair of the healthcare organization and policy department at the University of Alabama at Birmingham. “But that would be seen as caving into Obamacare.”

Study: Providers dominant among new MA groups


Modern Healthcare reports that an Aetna-funded study by Avalere, a consulting firm, showed that providers represented almost 60 percent of  new Medicare Advantage organizations in 2016. The growth of provider-based Advantage plans has been most pronounced in the past decade,  said the study.

Avalere said it had full control of the research and that the data were based on CMS reports. But Modern Healthcare noted that “it’s likely no coincidence that Aetna is backing research that reinforces one of its arguments in favor of its $37 billion Humana acquisition.”

The publication reported that “{h}ospitals and health systems have undoubtedly raced to start their own Medicare Advantage products. Providers, especially those that have tinkered with Medicare’s Accountable Care Organizations, have become emboldened to take more risk. Becoming a Medicare Advantage insurer offers providers the biggest risk and potentially a bigger financial reward.

“But the latest Avalere study also shows that provider-based plans are still really small players so far in Medicare Advantage. The top 10 provider-based insurers by enrollment represent only 12 percent of Medicare Advantage’s nearly 18 million members—and most of those are enrolled in the dominant Kaiser Permanente system. Aetna and Humana, meanwhile, control a quarter of Medicare Advantage membership,” the publication reported.


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