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Nursing-home companies entering insurance business


For Kaiser Health News

Around the country, a handful of nursing-home companies have begun selling their own private Medicare insurance policies, pledging close coordination and promising to give clinicians more authority to decide what treatments they will cover for each patient.

These plans are recent additions to the Medicare Advantage market, where private plans have become an increasingly popular alternative to traditional fee-for-service coverage. Unlike other plans, these policies offered by long-term care companies often place a nurse in the skilled-nursing facility or retirement village, where they can talk directly to staff and assess patients’ conditions. Some provide primary-care doctors and nurses to residents in the homes or in affiliated assisted living facilities or retirement villages with the aim of staving off hospitalizations.

“The traditional model is making decisions based on paper, and in our model, these decisions are being made by clinicians who are really talking to the staff and seeing the patient,” said Angie Tolbert, a vice president of quality at PruittHealth, which began offering its plan to residents in 10 of its nursing homes in Georgia last year. “It’s a big shift in mindset.”).

Not everyone finds such plans superior. Some patients who are in disputes with the insurers have faulted the nursing home staff — who work for the same company — for not helping challenge decisions about coverage. They complain that the company holds an unfair advantage over Medicare beneficiaries.

“There’s a conflict there,” said Toby Edelman, a senior attorney with the Center for Medicare Advocacy.

In an Erickson Living retirement village in Silver Spring, Md., Faith Daiak signed up for an Erickson Advantage plan sold by a nurse whose office was in the main village building, according to her son, J.J. Daiak. After a bout with the flu last February weakened her enough to need a 10-day hospitalization, she was sent to her village’s skilled-nursing facility. There, the insurer repeatedly tried to cut short her stay.

Erickson Advantage first said it would stop paying for Daiak, 88, because she wasn’t getting healthier in the nursing facility. Her son appealed by pointing out that Medicare explicitly said as part of the 2014 settlement of a class-action lawsuit that patients do not have to be improving to qualify for skilled-nursing care.

Daiak’s appeal was denied, but the issue was sidelined in March when her rapid weight loss in the nursing home sent her back to the hospital, he said.

After Daiak returned to the nursing home with a feeding tube in her stomach, the insurer again tried to curtail her time there, saying she did not need that level of care. The family successfully appealed that decision after noting that Medicare’s manual said feeding-tube maintenance required the skilled care of a nursing facility.

In April, Erickson Advantage again said it would not continue paying for Daiak’s stay. It reversed that decision after Kaiser Health News asked the company about the case, J.J. Daiak said. He said the plan did not explain its turnaround.

Dolphine Williams (left) and Rita Coopersmith visit Faith Daiak in the Riderwood-ArborRidge Skilled Nursing Facility in Silver Spring, Md., on May 12, 2017. (Courtesy of the Daiak family)

While this Medicare Advantage plan touts its “team that knows you personally and wants to help,” J.J. Daiak said he found the registered nurse at Erickson’s Silver Spring community not helpful. “All I see is her trying to get Erickson out of having to pay for the nursing home,” he said. He subsequently switched his mother to traditional Medicare coverage with a supplemental Medigap policy, which she had until this year.

Erickson Living, the parent company of the nursing home and insurer, declined to discuss individual cases but noted that Medicare has given its insurance plans the best quality rating of five stars. In a written statement, the company said that “medical service determinations for Erickson Advantage members are based on reviews by licensed clinical staff and clinical guideline criteria. Our primary focus is always on ensuring that the healthcare being provided for our residents matches a patient’s needs and established clinical treatment protocols.”

Edelman said the dispute was particularly troubling because Erickson’s retirement villages are marketed on the promise that the company will care for seniors in all stages of aging. “They don’t tell you what they won’t pay for,” she said.

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There are nearly 18 million enrollees in the overall Medicare Advantage market. Medicare pays private insurers a set amount to care for each beneficiary. In theory, this payment method gives the insurers motivation to keep patients from needing costly medical services such as hospitalizations.

A subset of Medicare Advantage plans are designed exclusively for people who either require or are expected to require at least 90 days of skilled services from nursing homes, assisted living facilities or other long-term care institutions. UnitedHealthcare directly offers three-quarters of these plans with about 40,000 enrollees, far more than those offered by nursing-home companies. Matthew Burns, a UnitedHealth spokesman, said the majority of the company’s plans are rated four stars or better on Medicare’s five-star quality scale.

“Our plans offer members quality and peace of mind — and they are considered above average to excellent by CMS quality and performance standards,” he said in a statement.

United also underwrites Erickson’s policies, which have around 200 enrollees, and were the first Advantage plans offered by a long-term care operator. Under the arrangement, Erickson Advantage decides when a nursing home stay is covered.

Nick Williams, PruittHealth’s care integration officer, said its Medicare insurance plan has resulted in 30 percent fewer hospitalizations among residents since it began last year. The company intends to expand the insurance coverage to residents at 42 of its other nursing homes in Georgia. Other nursing-home chains are experimenting with this model in Missouri, South Carolina, Virginia and elsewhere.

Anne Tumlinson, a Washington healthcare industry consultant who specializes in long-term care, said that when a nursing home’s company is on the hook for the cost of hospitalizations of their patients, it is more likely to make efforts to prevent them.

“It gets them out of hospitalizing people at the drop of the hat,” she said. “If you live in a nursing home or are living in assisted living and they have one of these plans going, they’re going to be investing heavily in 24/7 access to primary care.”

She said big insurers have so many different types of enrollees that they are less focused on the particular needs of nursing-home patients. “They’re too big, they’re bureaucratic, and they are insurers, not providers,” she said.

The Costs Patients Face

In Hingham, Mass., Suzanne Carmick has been frustrated with the Erickson plan’s unwillingness to pay for most of her mother’s prolonged stay. Last October, 98-year-old Lorraine Carmick went into Erickson’s nursing home after a hospitalization. Eleven days later, Erickson Advantage notified Suzanne Carmick it would stop paying for the facility because it said her mother was strong enough to move with the help of a rolling walker. Under Medicare’s rules, nursing home stays are not covered if a patient does not need daily physical therapy. Erickson said two or three days was sufficient for Carmick.

Suzanne Carmick appealed the decision, saying Erickson exaggerated her mother’s recovery, noting that she had dementia, an infection and was wearing two stiff leg braces. She said getting therapy five days a week provided in the nursing home would help her mother recover faster.

“She still cannot stand up or sit down or go anywhere … without an aide helping her by pulling her up or setting her in a chair,” Carmick wrote. “She is improving but is now supposed to stop or decrease PT [physical therapy], and she must start paying out-of-pocket?”

After a week’s extension, the nursing home began billing her mother at its daily rate of $463, which rose to $483 this year as Lorraine Carmick remained in the nursing home. A Medicare appeals judge subsequently ruled Erickson’s action was justified, based on the testimony from the nursing-home staff — all Erickson employees. If the insurer had covered a maximum stay, Carmick would have avoided more than $30,000 in bills she now owes. Suzanne Carmick said her mother has been on a wait list for six months for a bed on a less expensive floor in the nursing facility.

“It is a closed system where the skilled-nursing facility, physicians and Medicare Advantage plan are all one and the same,” she said. “The Erickson Advantage plan is turning out to be quite a disadvantage at this point.”


Reality check for innovative Oscar Insurance Corp.


Oscar Insurance Corp., the startup that has  touted itself  as a consumer- and technology-focused new  healthcare approach, has had to turn to the same strategy as many traditional insurers by reducing  Affordable Care Act insurance-marketplace participation for 2017.

It will stop offering plans in the Dallas–Fort Worth, Texas market and in New Jersey  starting Jan. 1. It will continue to sell plans in New York; San Antonio, Texas; Los Angeles and Orange County, Calif.; and it will expand to San Francisco.

The company blamed the ACA’s individual market, saying that  it “isn’t working as intended and there are weaknesses in the way it’s been set up,” CEO Mario Schlosser told Bloomberg.

HealthcareDive reported that the announcement is part of the company’s efforts to “re-strategize after suffering continued marketplace losses, including its recently announced losses from the first half of 2017 which included $52.2 million in New York state, $17.9 million in Texas and $12.9 million in California.”

The news service added: “Oscar has also followed industry trends in narrowing its networks and in seeking a major rate increase in New York of 26.8 percent, which was reduced by regulators to 11.5 percent.”

Mr. Schlosser said Oscar is leaving New Jersey because it didn’t have a narrow network there to contain costs, and Dallas-Fort Worth because its market  there has been too unpredictable.

“One major difference currently between Oscar and its mainstream competitors such as UnitedHealth, Humana, and Aetna, which are also pulling back for 2017, is that it doesn’t have other business beyond its individual policies to fall back on — but it plans to change that by offering small group insurance across most of its 2017 markets,” Healthcare Dive reported.

To read the news service’s full article, please hit this link.



UnitedHealth bailing out of Calif. insurance exchange



For Kaiser Health News

UnitedHealth Group Inc. is leaving California’s insurance exchange at the end of this year, state officials confirmed May 31.

The nation’s largest health insurer announced in April it was dropping out of all but a handful of 34 health insurance marketplaces it participated in. But the company had not discussed its plans in California.

UnitedHealth’s pullout also affects individual policies sold outside the Covered California exchange, which will remain in effect until the end of December.

“United is pulling out of California’s individual market including Covered California in 2017,” said Amy Palmer, a spokeswoman for the state exchange.

It’s expected that UnitedHealth will continue offering coverage to employers in California and to government workers and their families through the California Public Employees’ Retirement System.

Representatives of UnitedHealth didn’t immediately respond to a request for comment Tuesday. In April, UnitedHealth’s Chief Executive Stephen Hemsley said the company was unwilling to keep losing money on the exchange business overall.

“The smaller overall market size and shorter term, higher-risk profile within this market segment continue to suggest we cannot broadly serve it on an effective and sustained basis,” Hemsley said in a conference call with investors in April.

UnitedHealth just joined the California exchange this year, and it only had about 1,200 enrollees so the immediate impact on overall coverage numbers is minimal. The number of individual policyholders outside the state exchange wasn’t immediately known.

Palmer said UnitedHealth policyholders will know their options for 2017 coverage when health plans and rates for next year are announced in July.

Critics of the Affordable Care Act have seized on the company’s exit, state by state, as further evidence that the health-law insurance exchanges aren’t sustainable financially and that premiums will rise even higher for consumers.

The Obama administration has countered that the number of health plans offering exchange policies has increased since the 2014 launch, and that it expects the individual market will continue to stabilize as adjustments are made.

Many consumer groups welcomed UnitedHealth’s arrival in Covered California in order to give people more choice and inject more competition into the market. The top four insurers in the exchange, led by Blue Shield of California and Anthem Inc., control more than 90 percent of Covered California enrollment.

The state exchange had limited UnitedHealth to selling exchange plans in several smaller markets for 2016 because it didn’t participate the first two years. Those areas are predominantly rural counties in Northern California, but they also include Santa Barbara, Ventura and San Luis Obispo counties.

In February, Covered California’s executive director, Peter Lee, criticized UnitedHealth for blaming the federal health law for its heavy losses instead of taking responsibility for its own business mistakes.

Lee said UnitedHealth made a series of blunders on rates and networks that led to steep losses on individual policies across the country.

“Instead of saying, ‘We screwed up,’ they said, ‘Obamacare is the problem and we may not play anymore,’” Lee said in a February interview with California Healthline. “It was giving an excuse to Wall Street and throwing the Affordable Care Act under the bus.”

Lee had also previously knocked UnitedHealth for sitting out the first two years of Covered California before joining in 2016.

In April, UnitedHealth said it had nearly 800,000 enrollees on exchange plans across the country. It expected that number to fall to about 650,000 by December as people drop off coverage or find other insurance.

New York and Nevada have said that UnitedHealth will participate in the individual markets there and the company has filed plans to sell similar plans in Virginia.



UnitedHealth quitting ACA marketplaces in at least 16 states


UnitedHealth Group Inc.  says it will will get out of the  health-insurance marketplaces created by the Affordable Care Act in at least 16 states as the huge company tries to stem losses from participating in the program. It’s not clear how much this will affect hospital and physician-practice finances in those states.

Bloomberg News reported that UnitedHealth hasn’t yet listed the markets it’s leaving, and “confirmations of the company’s withdrawals have been trickling in from regulators in the 34 states where the company sold plans for this year. The insurer won’t sell individual ACA plans for 2017 in states including Texas, North Carolina and Maryland. UnitedHealth also is withdrawing from some related state insurance markets for small businesses.”

Chief Executive Officer Stephen Hemsley said that the company will be selling ACA plans in “only a handful of states” next year, saying that the exchange market is proving to be smaller and riskier than UnitedHealth expected.”We cannot broadly serve it on an effective and sustained basis,” he told investors.

UnitedHealth warning a call for Obama action?



For Kaiser Health News

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.

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