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.
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.
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.
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.”
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.
Herewith an interview with Marilyn Tavenner, the former CMS administrator who last year took over the leadership of America’s Health Insurance Plans, that industry’s leading lobbyist.
She talks about such challenges as getting UnitedHealth Group, the largest health insurer in the nation, and Aetna back into AHIP, as well as expanding Medicare Advantage membership, improving Medicaid managed care, the increasingly hot issue of pharmaceuticals pricing and healthcare delivery-system reform.
“2. Delaware Valley ACO expands partnership with Humana Philadelphia-based Delaware Valley ACO and Humana expanded their accountable care relationship after seeing favorable results in the first year of their partnership.
“4. Lee Memorial, Florida Blue launch ACO Ft. Myers/Cape Coral, Fla.-based Lee Memorial Health System’s affiliated physicians teamed up with Florida Blue to launch an ACO for businesses and individuals with commercial plans.
“5. Aetna, CHOP to collaborate on ACO Aetna has announced a first among its ACOs — It is launching a pediatric accountable care program with The Children’s Hospital of Philadelphia.
“6. Cigna rolls out 2 new collaborative care arrangements in Chicago Cigna is teaming up with two Chicago area physician groups, Alexian Brothers Clinically Integrated Network and Midwest Center for Women’s HealthCare, on collaborative care programs similar to ACOs.”
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.”
The merger plans won’t necessarily go smoothly: The Justice Department is leery of huge concurrent transactions in the managed-care industry. And hospital officials and physician groups, fearing cuts in their revenues because of the new behemoth insurers’ bargaining power, oppose the acquisitions. Further, two congressional committees have scheduled hearings for the fall on the mergers.
As The Wall Street Journal noted, the “Aetna deal would create by far the biggest player in the private-insurer version of Medicare, so concern over market concentration will focus on the companies’ footprint in that business, known as Medicare Advantage. Mr. Bertolini said that the vast majority of Medicare Advantage consumers have at least five options currently, so ‘we don’t see a reduction in competition for consumers’ from the Humana deal.”
“He argues that the merged company will be better positioned to work closely with health-care providers and the federal government to bring down costs and improve quality.”
“About the only thing that’s clear in this latest round of industry consolidation is who the winner will be when it’s all over. That’s going to be Minnetonka, Minn.-based UnitedHealth Group.
“UnitedHealth is going to win a tournament it doesn’t even have to enter. It can jump in if it finds the right deal at a price that generates a good return. But deal or no deal, UnitedHealth will keep its spot at the top of the industry. With its growing Optum group of technology-enabled services, it’s the best positioned for the long haul, too.”
The deal would make Aetna a major player in the surging Medicare Advantage business and would bolster Aetna’s presence in Medicaid and in Tricare coverage for military personnel and their families. But everyone in the healthcare sector would be affected, directly or indirectly, including Federally Qualified Health Centers.
Modern Healthcare noted that Aetna’s announcement came a day after the Medicaid coverage provider Centene said it would buy fellow insurer Health Net to help Centene expand in the California Medicaid market, the nation’s biggest, and give it a Medicare presence in several other western states.
As private-sector-employer-based insurance has shrunken, the big insurers are expanding into public programs at an ever faster clip.