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.
The announcement by Kaiser Permanente that it plans to open its own medical school in Southern California has attracted a lot of attention in the healthcare community.
But Kaiser is actually at the trailing edge of a medical-school expansion that has been unmatched since the 1960s and 1970s, say medical education experts. (Kaiser Health News is not affiliated with Kaiser Permanente.) In the past decade alone, according to the Association of American Medical Colleges, 20 new medical schools have opened or been approved.
That’s no coincidence. In 2006, the AAMC called for a 30 percent increase in medical-school graduates by 2015 to meet a growing demand, both through expanded class sizes and newly created medical schools.
“We’re on track to meet that 30 percent increase in the next three or four years,” said Atul Grover, AAMC’s chief public-policy officer. “Enrollment is already up 25 percent since 2002.”
Many of the new schools focus on producing more primary-care physicians — those specializing in pediatrics, family medicine or general internal medicine. In fact, Kaiser Permanente already has a partnership with the University of California at Davis in the northern part of the state on a fast-track training program for primary care.
But Kaiser leaders say their new school (projected to enroll its first class in 2019) is about more than just primary care.
“We need to prepare physicians for the way healthcare is delivered in the future,” said Edward Ellison, M.D., executive medical director for the Southern California Permanente Medical Group. He said students need to learn not just medicine, but about integrated systems of care and how to work in a much different medical environment. “Our advantage is we can start from scratch,” he said.
Another advantage is the HMO’s deep pockets.
“They’ve got huge resources,” said George Thibault, president of the Josiah Macy Jr. Foundation, which focuses on medical education. “This is a grand experiment, but if anybody can do it, Kaiser can.”
Kaiser Permanente is far from the first healthcare provider to launch its own medical school — the Mayo Clinic has had one since 1972 and is about to expand that school from its home base in Minnesota to its satellite campuses in Arizona and Florida.
Thibault said health-provider systems are already heavily involved in the new medical schools, often as partners with degree-granting universities, “which itself is a new trend.” For example, on Long Island, the North Shore-LIJ Health System co-launched a medical school with Hofstra University in 2011.
One big question is whether all these new schools will eventually produce more students than there are residency positions, which are necessary to complete the training. The federal government, which funds the majority of those residencies through the Medicare program, capped the number of residencies it would fund in the 1997 Balanced Budget Act.
Currently there are about 27,000 residency slots available each year, which are filled by students who have earned M.D. or D.O. degrees (doctors of osteopathy) in the U.S., as well as foreign medical-school graduates and U.S. citizens who have graduated from medical schools overseas.
Between the new M.D.-granting schools and a rapid expansion of osteopathic medical schools, AAMC’s Grover said, demand will soon outstrip supply. Residency slots “are growing at about 1 percent per year,” he said (mostly funded by health systems themselves since Medicare will not), “while undergraduate medical education is growing about 3 percent per year.”
But Edward Salsberg of George Washington University, who has spent a career documenting health workforce trends, said any potential conflict is still a long way off.
“When you start with an excess of 7,000 slots” of residencies over graduating U.S. medical students, “it takes a very long time” to consume that excess, he said. By the year 2024, he and others concluded in a recent article in the New England Journal of Medicine, there will still be 4,500 more slots than graduates.
“So yes, U.S. medical students will have a slightly more limited range of specialties to choose from,” said Salsberg, “but still plenty of room.”
There are also questions about whether there even is a physcian shortage that all these new schools are aiming to alleviate.
Grover, whose organization has led the call for more physicians, said the anticipated shortage of primary-care physicians might not be as acute as originally thought. That’s because the U.S. is producing dramatically more nurse practitioners and physician assistants, who also provide primary care.
That’s probably a good thing, at least in supply terms, said Thibault of the Macy Foundation. Because it turns out that many students graduating from new primary-care-focused school’s programs are in fact opting to become specialists instead.
“The career choices in the new schools look remarkably similar to career choices of more traditional schools,” he said. The graduating medical students “are responding to the same set of signals and stimuli” about prestige, income and lifestyle.
Many hospitals, physician groups and health plans seek to expand and diversify to help manage their growing financial risk from new reimbursement contracts that penalize poor quality and high costs.
“The entire healthcare environment is expanding from local geographies to regional geographies and then … national geographies,” Kit Kamholz, managing director at Kaufman Hall and an expert in healthcare transactions, told Modern Healthcare. Kaiser is moving “from being more of a regional player to more of a national player.”
The publication reported that “Acquiring Group Health would let Oakland, Calif.-based Kaiser to expand into an eighth market and absorb Group Health’s more than 590,000 members. Nearly four dozen primary-care and behavioral health clinics, four specialty medical centers and one hospital in Washington and northern Idaho would also be added to Kaiser Permanente’s $56.4 billion operations.”
Kaiser CEO Bernard Tyson said of the Group Health move:
“As part of our ongoing operational improvement work and our efforts to improve the quality of healthcare, we regularly evaluate opportunities to engage with other healthcare organizations. This work can range from informal collaboration around a narrow scope to more broad, structured and cooperative affiliations. Our overall long-term goal is to make our integrated model of high-quality, affordable care and coverage even better, and available to more people, as part of our mission to improve the health of our communities.”
UnitedHealthGroup laid out a litany of reasons Thursday why it might stop selling individual health insurance through federal and state markets in 2017 — a move some see as an effort to compel the Obama administration to ease regulations and make good on promised payments.
Those problems, including low participation by healthy people, have led to financial losses, according to UnitedHealth. If not addressed, similar issues could affect other insurers, causing more to exit the market in the coming years, some Wall Street analysts and policy experts said.
Many said they anticipate the federal government will act to forestall widespread departures, particularly because continued withdrawals could be politically explosive during an election year.
A key piece of the Affordable Care Act, the online marketplaces, also called exchanges, opened in 2014 for people who buy their own insurance because they don’t get it through their jobs. Enrollment, while growing, has fallen short of capturing the share of the eligible uninsured that was anticipated. This year, the marketplaces saw enrollment of more than 9 million customers, although the law’s expansion of Medicaid enrollment in many states has also played a large role in reducing the overall number of uninsured.
Only a month ago, United sounded more optimistic about business on the exchanges. But in its unexpected disclosure Thursday, the insurer said it would cut its earnings forecast and projected hundreds of millions in losses stemming from the policies it sells through the health law’s marketplaces.
The turnaround led some analysts to ask the insurer what had changed.
Stephen Hemsley, UnitedHealth chief executive officer, said too many healthy people dropped coverage and noted slower than expected enrollment. A major factor, he added, was far higher costs for those who signed up for 2015 coverage under special exemptions after the general open enrollment period ended.
Those exemptions included, for example, people who lost their insurance, moved or suffered a hardship, such as an eviction or had their utilities turned off. United said it did not see a similar increase in costs for people who bought policies from private brokers or Web sites instead of the government marketplaces after open enrollment, suggesting that the reason was partly that the company’s eligibility assessments were more thorough.
The firm did not say that it would halt sales in 2017 but warned that it would strongly consider doing so based on what happens in the next few months.
“We cannot sustain these losses,” he told Wall Street analysts. “We can’t subsidize a marketplace that doesn’t appear at the moment to be sustaining itself.”
Although it’s the nation’s largest insurer, United captured only a small percentage of consumers who currently have coverage through the Affordable Care Act marketplace, in part because it sat out the first year of enrollment and really ramped up only for this year’s coverage.
While seen as a serious challenge to the ACA, United’s decision alone doesn’t mark the death knell for the exchanges. In remarks to analysts and press reports on Thursday, Aetna and insurer Kaiser Permanente re-affirmed their commitment to selling through the marketplaces.
HHS Spokesman Ben Wakana defended the government marketplaces, noting that 9 of 10 of policyholders re-enrolling have a choice of three or more insurers for next year. “The reality is we continue to see more people signing up for health insurance and more issuers entering the Marketplaces, and at the end of January, we believe we’ll be looking at another successful open enrollment– just like the last two,” he said. “[Thursday’s] statement by one issuer is not indicative of the Marketplace’s strength and viability.”
But insurers, including Humana, Aetna and some of the large Blue Cross Blue Shield plans, were losing money or barely breaking even on their marketplace business, according to earnings reports.
“If there are no changes, all the large publicly traded companies will end up leaving,” said Ana Gupte, analyst with Leerink Partners. “But I would be very surprised if [the Department of Health and Human Services] doesn’t do something to accommodate their issues.”
Those options would be limited to what the agency could do without congressional action, many analysts said. Still, that could include relaxing some regulations or reconsidering some of the exemptions that allow people to sign up after the open enrollment period.
Consultant and former insurance executive Robert Laszewski said that the administration needs to relax the rules to give insurers more flexibility to design plans that would attract healthier people. He said the costs – including deductibles and premiums – were too high for many people, particularly those with few medical needs.
“Disproportionately, the sick are signing up and the healthy are dropping out,” said Laszewski, adding that alternative plans with fewer benefits but lower costs should be made available.
Economist Len Nichols cautioned, however, that most of the law’s benefit requirements – taken individually – add little to the cost of a plan. Removing the bigger-ticket requirements, such as coverage for maternity care, would leave consumers without adequate coverage, said Nichols, who directs the George Mason University Center for Health Research and Ethics.
Nichols, Gupte and other analysts agree with the industry’s trade lobby, which says one thing that he administration could do is make good on a promise to pay insurers under a temporary program designed to redistribute profits from some insurers that did especially well to offset losses others experienced in the marketplace plans. That program, however, has paid only about 13 cents on the dollar of what was promised, mainly because fewer insurers than expected made money.
Earlier this month, HHS Secretary Sylvia Burwell said the administration is exploring ways it might be able to help make those payments, although such a move comes too late to save many of the dozen insurance cooperatives that have announced they will pull out of the market in January. The less-than-anticipated payments are often cited as a main factor in the co-ops demise.
The main cause of these better marks is improved plan performance, not CMS changes to cut-points, measures or methodology. “While the report notes that changes to certain individual measures did influence the ratings of some plans, overall the scoring changes largely canceled each other out.”
Other findings from the report, as summarized by FierceHealthPayer, include:
“Although health maintenance organization plans outperformed the market in previous years, preferred provider organization plans ranked highest this year.
“Plans built around integrated delivery networks (in particular, Kaiser Permanente) received a higher weighted average rating than plans offered by commercial carriers or Blues carriers. But commercial and Blues carriers continue to close the gap, the report notes.
“Medicare Advantage plans with more members tended to do better, as the 2016 enrollment-weighted average star ratings are lower for carriers with fewer than 20,000 M.A. members than for carriers with M.A. enrollment between 20,000 and 100,000 or plans with more than 100,000 members.”
Given the close connection between mental- and behavioral-health problems and other, “physical” illness (especially vivid in the throngs of returnees to hospital emergency rooms), Kaiser could end up saving money by hiring these mental-health professionals.
Kaiser officials called the moves “part of the organization’s ongoing efforts to be the leader in providing high-quality mental-health care” and ending the stigma connected with seeking care for mental illness.
Kaiser also plans to spend $115 million “to refresh and remodel” at least 76 mental-health clinics in California and will spend other money to build an unspecified number of new mental-health facilities “as a result of the organization’s increasing membership,” the paper reported.
Electronic Health Records Can Thwart Physician Performance.
But Dr. Pearl points to some organizations, such as the Mayo Clinic, Kaiser Permanente and Geisenger Clinic, that have overcome many of American healthcare’s problems and improved the lives of patients and physicians as a result.
After the State of California fined her employer $4 million in 2013 for violating the legal rights of mental-health patients, Oakland psychologist Melinda Ginne expected her job — and her patients’ lives — to get better.
Instead, she said, things got worse.
Within months, Ginne, a whistleblower in the 2013 case, was back to writing her supervisors at Kaiser Permanente about what she considered unconscionable delays in care. Patients who were debilitated or dying from physical diseases for which they were receiving regular medical treatment had to wait months for psychological help, she said. Some patients, she said, might not live long enough to make the next available appointment.
“I can’t tell a family whose elderly mother is declining that I can’t provide treatment until 2014,” she wrote to her managers at the Kaiser Medical Center in Oakland in September 2013. In February, two years after assessing the second largest fine in its history, the California Department of Managed Health Care stepped in again, finding that Kaiser Foundation Health Plan had improved somewhat but still was short-changing patientson mental health care. The state is considering another fine against the health maintenance organization, which is not affiliated with Kaiser Health News.
“Every time the DMHC has an edict, Kaiser Permanente has a way around it,” said Ginne, who retired in September 2014.
California has taken perhaps the most proactive stance in the nation in enforcing laws to ensure people with mental illnesses have fair and timely access to care. But even in this state, it’s proving difficult to ensure mental patients truly have equal access to treatment. Parity laws, including a sweeping measure passed by the federal government in 2008 and an older California law, require insurers to provide mental health and substance abuse benefits on par with the coverage they offer for other medical care. And a separate state law requires insurers to provide patients with access to mental treatment within a specific timeframe – 48 hours for an urgent visit and 10 business days for a non-urgent one.
After the 2013 fine, Kaiser patients continued to face not just ongoing delays – they faced arbitrary limits on treatment in direct violation of the state’s parity statute, officials found. The law was intended to prevent such things as annual caps on patient visits that would not typically be faced, for instance, by patient with another chronic illness such as diabetes or heart disease. Yet, according to the 2015 report, some Kaiser staffers told mental health patients that they were not entitled to long-term individual therapy — ever.
“No one ever sees a therapist once a week in the Kaiser Health Plan,” according to a 2014 email a Kaiser psychologist sent to a patient, which was cited in the state’s most recent report. “Not a covered benefit for the past 20-something years and will not be a benefit in the future.”
Dr. Mason Turner, Kaiser Permanente’s associate director of regional mental health for Northern California, said that the organization has fixed the problems identified by the state. “Between the time the DMHC made their [initial] findings and now, we’ve made substantial improvements, hired many more staff, and really put into place a lot of mechanisms to address the initial concerns that were brought up,” Turner said in April.
The access problems, he said, were caused by an increase in demand, which rose in part because of the influx of new enrollees under the Affordable Care Act. In response, he said, Kaiser increased the ranks of therapists by 25 percent and arranged to contract with outside therapists when necessary.
The actions against Kaiser highlight both how far California has come in ensuring equal treatment for mental health patients and how far it has yet to go. On one hand, after many years of “abysmal” enforcement, “now we have regulators who seem to be enthusiastic,” said Randall Hagar, director of government relations for the California Psychiatric Association. Hagar gives credit to managed-healthcare department director Shelley Rouillard, who spent 20 years in consumer advocacy before joining the department in 2011 and becoming director in 2013.
On the other hand, critics say, Rouillard and her staff are making slow progress at best.
“This is one of the ‘pace car’ states, and it’s still slow going,” said Carol McDaid, who runs the Parity Implementation Coalition, an advocacy group made up of addiction and mental health consumer and provider organizations.
Holding Insurers Accountable
In challenging Kaiser Permanente in 2013, the state’s managed-care department took on one of the largest not-for-profit health plans in the country. It is a huge player in the California market, with almost 7.5 million members in the state and a net income nationally of $3.1 billion last year.
But officials soon realized the problems with unequal coverage of mental health were much broader.
For years, California, like most states and the federal government, relied on consumers to bring complaints alleging that their rights had been violated under parity laws. State regulators grew concerned that the approach was too passive — few consumers were complaining, perhaps because of the stigma attached to mental illness. So as a first step, the department last year began requiring insurers under its watch to show — at least on paper – that they were complying with federal parity law.
The results were not encouraging: Of 26 managed-care insurers, from Aetna to Western Health Advantage, zero were able to prove that they were fully in compliance. Most filed incomplete or flawed documents, state officials said.
“It is rather shocking,” Rouillard said.
Part of the problem, Rouillard said, is that the federal government did not release the final regulations dictating how its parity law should be enforced until November 2013 – five years after the law was passed.
In their review of documents, her department’s analysts found it hard to even compare mental and general healthcare because of simple errors in the way insurers documented them, such as putting data in the wrong fields, Rouillard said. But she said they also found insurers trying to control costs in ways that could be discriminatory — for example, by limiting the number of days a patient could receive inpatient care for a mental health condition.
“Mental-health services are still sort of a second class benefit as far as the health plans are concerned,” Rouillard said.
At this point, Rouillard says the managed-care plans she regulates are in varying stages of compliance with the federal parity law. Just one plan, Health Net, has so far been able to prove on paper that its benefits fully comply. Rouillard says she expects the other plans to follow suit by the end of the year, and in 2016, the department plans a more intensive review.
Charles Bacchi, President and CEO of the California Association of Health Plans, disputed that insurers see mental health as a second-tier benefit. “We’re committed to providing this coverage for our enrollees. It’s very important, and it’s something that we’re working hard to do,” he said.
But the law poses a huge challenge for health plans, he said, in part because the science underpinning diagnosis and treatment of mental illness is constantly evolving. In addition, health plans are trying to adapt not just to parity law but to the implementation of the Affordable Care Act, which has transformed the national insurance landscape.
Even so, he said, “I think by the end of this year, all the plans will have filed the right documents and will have approval from the department, and this will be something that’s in the rearview mirror.”
‘Your Hands Are Tied’
In her psychiatry department, Ginne felt she was in a good position to compare patients’ access to mental-health treatment with other care. Many of them suffer from neurological or terminal diseases with psychological components – Alzheimer’s, for instance, or Parkinson’s.
“I could see from their medical charts that they were receiving all the medical care that they needed,” Ginne said. “We couldn’t do that in psychiatry because we were so severely under-staffed.”
Finding that her situation did not improve even after the first investigation and fine, Ginne made a request of her managers — copied to Rouillard – in December 2013. She asked that six of her sickest patients be transferred to other providers who could see them more frequently. One of them, an elderly man with dementia and depression, was hallucinating “fully-formed humans,” Ginne said in an interview.
One day, he wandered down the block at 5 am in his pajamas, panicked, and flagged down a truck driver who called the police.
“He was a danger to himself,” Ginne said.
According to Ginne, the backup in appointments meant she could see him for individual therapy only once every few months. The man had been assigned to regular group therapy, she said.
But because Kaiser did not have a session for dementia patients, he was in a depression group, which Ginne felt was inappropriate for his condition.
When her supervisors did not transfer the man to another individual therapy provider, Ginne reported the case to Adult Protective Services, because she said she believed him to be imminent danger.
It was “such a bad solution,” she said, shaking her head. Ultimately, he and his wife decided to quit therapy entirely.
“It does something to your spirit to realize your hands are tied, that you are completely unable to do the work you’re dedicated and trained to do,” Ginne said.
The follow-up report released by the DMHC in February 2015 found Kaiser had improved its tracking of mental health patients but still had serious problems in the area of access to care. In one case, a sexual assault victim diagnosed with post-traumatic stress disorder and major depression tried to schedule both individual and group therapy visits, but her psychiatrist told her to seek private therapy in the community at her own expense.
According to the doctor, “weekly individual therapy was not available in the Plan, and Plan group therapy did not address sexual assault.” The patient was eventually able to schedule an appointment with a Kaiser therapist — five months after her initial visit, the report said.
In another case cited by the report, a child with aggressive and sexualized behaviors at both home and school was brought in by her family in crisis. After an initial intake visit, the child was not seen for therapy until seven weeks later, though the medical chart indicated that the family had pleaded for treatment.
Rouillard said that many insurers have a long way to go to ensure fair and equal access to mental health care for Californians. But she also said there’s only so much her department can do. Access to care at companies such as Kaiser is also an issue of capacity – and that’s not within the department’s purview, she said.
“There just aren’t enough therapists to see everyone who needs help,” she said. “It isn’t just a plan problem; it’s a societal problem. And that is really the crux of the matter. We’re trying to address a problem that is beyond our ability to fix, and that is a challenge.”
As a Wall Street Journal article notes: “Managing those people’s health care is often difficult. Integrated health systems, such as Kaiser Permanente and Mayo Clinic, aim to ensure that treatment for one condition doesn’t interfere with care the patient is receiving for other diseases. Often, however, the responsibility of coordinating treatments falls on the patients themselves.”
Trying to avoid serious complications from taking different medications and dealing with the fact that too often physicians of a patient with multiple chronic illnesses don’t talk with each other about the patient’s case are among the biggest challenges.
Maybe it will help that the U.S. Department of Health and Human Services (HHS) has issued a curriculum for training healthcare professionals and others in caring for patients with multiple chronic conditions.
HHS has taken other steps to help patients with multiple chronic conditions. The Centers for Medicare and Medicaid Services, a HHS agency, now reimburse providers for time spent coordinating chronically ill patients’ care outside of regular office visits.
Obviously, many experts hope that electronic health records will increasingly help physicians keep track of their chronically ill patients.
One recommendation is that patients create their own medical records by, for example, keeping updated lists of medicines that they are taking and bringing them to all visits to physicians.
It’s Zoom+, a clinic network now selling insurance for the first time with a unique — indeed, anti-establishment — low-price model.
Founder Dave Sanders, M.D., likes to describe his firm as aiming “to deliver twice the health, at half the cost and 10 times the delight.”
“At 28 neighborhood clinics and ‘advanced care studios’ in Portland, Vancouver, Wash., and Seattle, Zoom patients get team-based care from MDs, NDs, NPs, and PAs, with same day appointments, telemedicine, health coaching, food and exercise counseling, parenting help, mental health treatment and basic dental services, which will all come as part of the health plans.”
“Over the past nine years, Zoom has evolved into a kind of 3.0 version of Group Health Cooperative, HealthPartners or Kaiser Permanente. It might also be compared to direct primary care networks like Qliance or Iora Health, as well the new health insurer Oscar.”
Sanders said: “As physicians, what we all know to be true are that food and movement are the soul of human health, along with relationships, stress and sleep. For some reason, our medical schools and system perpetuate the myth that health relies in laboratories, and imaging and medicine.”
“Zoom offers those condition management services, but the goal is to spread a ‘culture and ethos’ of ‘food and movement as medicine’—clinics that offer personalized activity training, diet counseling and smoothies.”
Healthcare Payer News says: “If Zoom can serve those populations and win converts from the third segment, while nurturing a strong brand and experience, Sanders said they could expand to other regions and patient populations.” But Zoom does not yet accept Medicaid or Medicare.
