Medicare Advantage Riding High As New Insurers Flock To Sell To Seniors

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Source: Kaiser Health News

Health care experts widely expected the Affordable Care Act to hobble Medicare Advantage, the government-funded private health plans that millions of seniors have chosen as an alternative to original Medicare.

To pay for expanding coverage to the uninsured, the 2010 law cut billions of dollars in federal payments to the plans. Government budget analysts predicted that would lead to a sharp drop in enrollment as insurers reduced benefits, exited states or left the business altogether.

But the dire projections proved wrong.

Since 2010, enrollment in Medicare Advantage has doubled to more than 20 million enrollees, growing from a quarter of Medicare beneficiaries to more than a third.

“The Affordable Care Act did not kill Medicare Advantage, and the program looks poised to continue to grow quite rapidly,” said Bill Frack, managing director with L.E.K. Consulting, which advises health companies.

And as beneficiaries get set to shop for plans during open enrollment — which runs from Monday through Dec. 7 — they will find a greater choice of insurers.

Fourteen new companies have begun selling Medicare Advantage plans for 2019, several more than a typical year, according to a report out Monday from the Kaiser Family Foundation. (KHN is an editorially independent part of the foundation.)

Overall, Medicare beneficiaries can choose from about 3,700 plans for 2019, or 600 more than this year, according to the federal government’s Centers for Medicare & Medicaid Services.

CMS expects Medicare Advantage enrollment to jump to nearly 23 million people in 2019, a 12 percent increase. Enrollees shopping for new plans this fall will likely find lower or no premiums and improved benefits, CMS officials say.

With about 10,000 baby boomers aging into Medicare range each day, the general view of the insurance industry, said Robert Berenson, a Medicare expert with the nonpartisan Urban Institute, “is that their future is Medicare and it’s crazy not to pursue Medicare enrollees more actively.”

Bright Health, Clover Health and Devoted Health, all for-profit companies, began offering Medicare Advantage plans for 2018 or will do so for 2019.

Mutual of Omaha, a company owned by its policyholders, is also moving into Medicare Advantage for the first time in two decades, providing plans in San Antonio and Cincinnati.

Some nonprofit hospitals are offering Medicare plans for the first time too, such as the BayCare Health system in the Tampa, Fla., area.

While Medicare beneficiaries in most counties have a choice of several plans, enrollment for years had been consolidated into several for-profit companies, primarily UnitedHealthcare, Humana and Aetna, which have accumulated just under half the national enrollment.

These insurance giants are also expanding into new markets for next year. Humana in 2019 will offer its Medicare HMO in 97 new counties in 14 states. UnitedHealthcare is moving into 130 new counties in 13 states, including for the first time Minnesota, its headquarters for the past four decades.

Extra Benefits

Seniors have long been attracted to Advantage plans because they often include benefits not available with government-run Medicare, such as vision and dental coverage. Many private plans save seniors money because their premiums, deductibles and other patient cost sharing are lower than what beneficiaries pay with original Medicare. But there is a trade-off: The private plans usually require seniors to use a restricted network of doctors and hospitals.

The federal government pays the plans to provide coverage for beneficiaries. When drafting the ACA, Democratic lawmakers targeted the Medicare Advantage plans because studies had shown that enrollees in the private plans cost the government 14 percent more than people in the original program.

Medicare plans weathered the billions in funding cuts in part by qualifying for new federal bonus payments available to those that score a “4” or better on a five-notch scale of quality and customer satisfaction.

Health plans also gained extra revenue by identifying illnesses and health risks of members that would entitle the companies to federal “risk-adjustment” payments. That has provided hundreds of billions in extra dollars to Medicare plans, though congressional analysts and federal investigators have raised concerns about insurers exaggerating how sick their members are.

study last year found that those risk adjustments could add more than $200 billion to the cost of Medicare Advantage plans in the next decade, despite no change in enrollees’ health.

For-profit Medicare Advantage insurers made a 5 percent profit margin in 2016 — twice the average of Medicare plans overall, according to the Medicare Payment Advisory Commission, which reports to Congress. That’s slightly better than the health insurance industry’s overall 4 percent margin reported by Standard & Poor’s.

Those profit margins could expand. The Trump administration boosted payments to Medicare Advantage plans by 3.4 percent for 2019, 0.45 percentage points higher than the 2018 increase.

Betsy Seals, chief consulting officer for Gorman Health Group, a Washington company that advises Medicare Advantage plans, said many health plans hesitated to enter that market or expand after President Donald Trump was elected because they weren’t sure the new administration would support the program. But such concerns were erased with the announcement on 2019 reimbursement rates.

“The administration’s support of the Medicare Advantage program is clear,” Seals said. “We have seen the downstream impact of this support with new entrants to the market — a trend we expect to see continue.”

Getting Consumers To Switch

Since the 1960s, Mutual of Omaha has sold Medicare Supplement policies — coverage to help beneficiaries in government-run Medicare pay the portion of costs that program doesn’t pick up. But the company only briefly entered the Medicare Advantage business once — in its home state of Nebraska in the 1990s.

“In the past 10 or 20 years it never seemed quite the right time,” said Amber Rinehart, a senior vice president for the insurer. “The main hindrance was around the political environment and funding for Medicare Advantage.”

Yet after watching Medicare Advantage enrollment soar and government funding increase, the insurer has decided now is the time to act. “We have seen a lot more stability of funding and the political tailwinds are there,” she said.

One challenge for the new insurers will be attracting members from existing companies since beneficiaries tend to stick with the same insurer for many years.

Vivek Garipalli, CEO of Clover Health, said his San Francisco-based company hopes to gain members by offering low-cost plans with a large choice of hospitals and doctors and allowing members to see specialists in its network without prior approval from their primary care doctor. The company is also focused on appealing to blacks and Hispanics who have been less likely to join Medicare Advantage.

“We see a lot of opportunity in markets where there are underserved populations,” Garipalli said.

Clover has received funding from Alphabet Inc., the parent company of Google. Clover sold Medicare plans in New Jersey last year and is expanding for 2019 into El Paso, Texas; Nashville, Tenn.; and Savannah, Ga.

Newton, Mass.-based Devoted Health is moving into Medicare Advantage with plans in South Florida and Central Florida. Minneapolis-based BrightHealth is expanding into several new markets including Phoenix, Nashville, Cincinnati and New York City.

BayCare, based in Clearwater, Fla., is offering a Medicare plan for the first time in 2019.

“We think there is enough market share to be had and we are not afraid to compete,” said Jim Beermann, vice president of insurance strategy for BayCare.

Hospitals are attracted to the Medicare business because it gives them access to more of premium dollars directed to health costs, said Frack of L.E.K. Consulting. “You control more of your destiny,” he added.

DOJ Approves $69B CVS-Aetna Merger with Part D Divestiture

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Source: Fierce Healthcare

The Department of Justice (DOJ) approved a $69 billion CVS-Aetna merger on Wednesday after Aetna agreed to sell off its Part D business.

The Part D divestiture was a condition of the merger’s approval, according to the DOJ. Late last month, Aetna agreed to sell its 2.2 million Part D business to WellCare.

Antitrust regulators said the divestiture would “fully resolve the Department’s competitive concerns.” The DOJ along with attorneys general in five states filed a proposed settlement that approves the deal on the condition that Aetna sell off its Part D plans.

“Today’s settlement resolves competition concerns posed by this transaction and preserves competition in the sale of Medicare Part D prescription drug plans for individuals,” Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division said in a statement. “The divestitures required here allow for the creation of an integrated pharmacy and health benefits company that has the potential to generate benefits by improving the quality and lowering the costs of the healthcare services that American consumers can obtain.”

In a complaint filed to U.S. District Court for the District of Columbia, DOJ attorneys argued that without the divestiture, the combined company would cause “anticompetitive effects, including increased prices, inferior customer service, and decreased innovation” in the 22 states where Aetna sells Part D plans. The court must approve the settlement in order for it to move forward.

“DOJ clearance is an important step toward bringing together the strengths and capabilities of our two companies to improve the consumer healthcare experience,” CVS Health President and Chief Executive Officer Larry J. Merlo said in a statement. “We are pleased to have reached an agreement with the DOJ that maintains the strategic benefits and value creation potential of our combination with Aetna. We are now working to complete the remaining state reviews.”

Part D consolidation was the primary issue raised among groups opposing the merger, including the American Medical Association and the California Insurance Commissioner.

Trump Signs New Laws Aimed at Drug Costs and Battles Democrats on Medicare

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Source: New York Times

President Trump signed bipartisan legislation on Wednesday that would free pharmacists to tell consumers when they could actually save money by paying the full cash price for prescription drugs rather than using health insurance with large co-payments, deductibles and other out-of-pocket costs.

The legislation on gag clauses has been praised by lawmakers in both parties, but the signing was nearly eclipsed on Wednesday by a separate health care furor: Mr. Trump asserted in an essay in USA Today that Democrats supporting “Medicare for All” would wreck the program for older Americans, infuriating Democrats who said he was lying to millions of Americans.

“Democrats would gut Medicare with their planned government takeover of American health care,” Mr. Trump said, and he assailed Democrats as “radical socialists.”

The back-and-forth over health care showed how prominent the issue has become in the midterm election campaigns. As the parties were coming together on prescription drug costs and fighting over Medicare, the Senate deadlocked on Wednesday over a Democratic proposal to block the expansion of cheap “short term” health insurance policies that do not have to cover maternity care or pre-existing conditions, a top priority of Mr. Trump’s.

Democrats, hoping to regain control of the Senate, had pushed for the vote to put Republicans on the record as opposing protections for people with pre-existing conditions.

“The Trump administration has expanded junk insurance plans,” said Senator Tammy Baldwin, Democrat of Wisconsin, who led the effort. “These plans are cheap for a reason. They do not have to provide essential health benefits like hospitalization, prescription drugs and maternity care.”

The agreement over ending the gag clauses showed how Congress, despite all the partisan rancor, can still get things done. Pharmacists around the country say they have often been forbidden to share information on drug pricing with customers. The restrictions, they say, have been imposed by companies that manage drug benefits for insurers and employers.

The legislation will “completely end these unjust gag clauses once and for all,” Mr. Trump said.

He signed two bills. One, introduced by Senator Susan Collins, Republican of Maine, bans gag clauses in commercial health insurance, including coverage offered by employers and plans bought by individuals and families on their own.

The other bill, introduced by Senator Debbie Stabenow, Democrat of Michigan, applies to outpatient drug coverage in Medicare, whether provided by the traditional fee-for-service program or by private Medicare Advantage plans.

“Insurance is intended to save consumers money,” Ms. Collins said. “Gag clauses do the opposite. They prevent pharmacists from telling patients how to pay the lowest possible price for their prescription drugs.”

Lawmakers were not so sanguine about the president’s attack on Democrats over Medicare. Senator Bernie Sanders of Vermont, the author of the Medicare for All plan supported by at least 15 Democratic senators and more than 100 House Democrats, said Mr. Trump’s broadside was full of falsehoods.

“Our proposal wouldn’t cut benefits for seniors,” Mr. Sanders said. “In fact, we expand benefits. Millions of seniors today cannot afford the dental care, vision care or hearing aids they desperately need. Our proposal covers them. In addition, Medicare for All would eliminate deductibles and co-pays for seniors and significantly lower the cost of prescription drugs.”

Mr. Trump and members of Congress from both parties have bewailed the high cost of many drugs. But aside from the bills signed Wednesday, Congress has not done much to address the issue this year.

Steven F. Moore, whose family owns Condo Pharmacy in Plattsburgh, N.Y., said the new federal laws would be “a big help.” The restrictions on pharmacists’ ability to discuss prices with patients are “incredibly frustrating,” he said.

The clauses force pharmacists to remain silent as, for example, consumers pay $125 under an insurance plan for an influenza drug that would have cost $100 if purchased with cash.

Representative Earl L. Carter, Republican of Georgia, also hailed approval of the legislation.

“As a pharmacist for more than 30 years, there were many times when I was prevented from telling my patients that there was a cheaper option because of a gag clause,” said Mr. Carter, known as Buddy.

Lobbyists for pharmacy benefit managers did not fight the legislation and suggested that gag clauses were dying out.

Mark Merritt, the president and chief executive of the Pharmaceutical Care Management Association, which represents drug benefit managers, said: “We don’t condone the use of gag clauses. It has occurred on rare occasions, but it’s an outlier practice that we oppose.”

Pharmacists tell a different story. They say gag clauses have been common for years. Hugh Chancy, a pharmacist who owns five community drugstores in southern Georgia, said his company had been reprimanded by a pharmacy benefit manager for telling customers when it would be cheaper to pay for medicines without using insurance.

The legislation signed Wednesday also includes a provision to combat agreements between drug makers that stifle competition by delaying the marketing of lower-cost copycat versions of expensive biotechnology medicines. Such biologic medicines account for a rapidly growing share of drug spending.

Under the new law, manufacturers of the original product and the copy, known as a biosimilar, will have to report such agreements to the Federal Trade Commission, which can challenge them as violations of antitrust laws. The agreements are known as pay-for-delay deals because the branded drug company pays a potential competitor to delay entering the market.

“These agreements are great deals for the drug companies, but bad deals for consumers,” said Representative John Sarbanes, Democrat of Maryland. Until now, he said, officials had “no way of knowing how many of these back-room deals occur between manufacturers of biologic and biosimilar drugs — new, cutting-edge drugs that are often extremely expensive.”

On a separate issue, the Senate allowed the Trump administration on Wednesday to move ahead with its plan to promote the sale of “short term” health insurance policies that do not have to provide all the benefits required by the Affordable Care Act.

Under a rule that took effect this month, it will be much easier for insurers to issue and renew such plans. The maximum duration, including any extensions, would be 36 months.

An attempt by Democrats to overturn the rule failed in the Senate on a tie vote of 50 to 50. Ms. Collins was the only Republican who voted for the resolution of disapproval.

Mr. Trump said such short-term policies would be available for “just a fraction of the cost of Obamacare — much less money.”

Why Proposition 8 Is One of the Most Contentious, and Confusing, Ballot Measures in Play

Rich Pedroncelli / AP Photo

Source: Capital Public Radio

Roughly 140,000 Californians spend the equivalent of a part-time job — 12 to 20 hours a week — in a dialysis clinic, where a machine functioning as a kidney filters waste out of their blood.

It’s a tricky procedure — and right now it’s at the center of a heated political battle between labor unions and dialysis companies.

Californians will vote in November on Proposition 8, which would regulate dialysis clinic spending. It’s a move that could either improve patient conditions or degrade them, depending on who you ask.

So far, it’s the most expensive proposition on the ballot, with supporters putting in $20 million and opponents fighting back with $99 million as of October 11.

The measure would cap what clinics can spend on overhead and administrative costs, versus actual care.

One of the largest health care labor groups on the West Coast — Service Employees International Union – United Healthcare Workers West — put it on the ballot. Their members say clinic owners are overcharging for low-quality care, and that Prop. 8 will force dialysis companies to spend more on patients, including hiring additional staff.

The opposition campaign, backed by two of the state’s largest dialysis companies, argues that spending limitations could make it harder for clinics to stay afloat.

Los Angeles resident Tangi Foster, who’s working with the “Yes on 8” campaign, said she’s visited multiple dialysis clinics over the last decade and that employees seem overwhelmed and exhausted. She says this makes her feel unsafe.

“These people have to save our lives,” she said. “ I don’t think it’s fair to them, nor is it fair to us as patients, for them to carry this kind of workload.”

Opponents of the measure argue it is a power-play by labor groups trying to unionize dialysis workers.

They also worry that, if the measure passes, funding for certain positions would be in jeopardy. That’s because it would create two categories for dialysis company spending: “allowable” and “other” costs. Anything that goes over the limit in the other category would have to be paid back to insurance companies.

“These things are going to result in the closure of clinics, and they are going to result in less access for patients,” said Dr. Luis Alvarez, a practicing physician and board member for a dialysis clinic group called Satellite Healthcare. “To me, that is really a terrible, terrible thing.”

The allowable category would include “non-managerial” staff that provide direct care to dialysis patients. Opponents say jobs that are key to delivering patient care, such as medical director or nurse manager, could be excluded and face a funding cut.

Prop. 8 would also require clinic operators to report spending to the state, and forbid them from turning away patients based on their insurance payer.

The California Department of Public Health received 577 complaints about dialysis clinics and found 370 deficiencies during a two-and-a-half-year period between 2014 and 2017 — roughly 18 complaints and 12 deficiencies per month, according to an analysis by nonprofit journalism site CalMatters.

Those included complaints that patients’ vital signs weren’t checked by staff every 30 minutes, as required by law, and that translation services were not provided to non-English-speaking patients.

One grievance accused staff members of failing to check the connection between a patient and machine, even though blood was inappropriately oozing from the patient’s medical port, according to the CalMatters story.

DaVita, one of two major dialysis companies in California, has faced multiple lawsuits in recent years from the families of patients who died at their clinics.

If the measure passes, the decision on how clinics can spend their budgets will fall to the state and to the courts. The nonpartisan Legislative Analyst’s Office said in its assessment that the measure’s vague language makes its fiscal impact difficult to determine.

“If the measure is ultimately interpreted to have a narrower, more restrictive definition of allowable costs, the amount of rebates chronic dialysis clinic owners and operators are required to pay would be greater,” the office wrote in the California voter guide.

The office said clinic groups might need to “scale back operations in the state.”

Ken Jacobs at the UC Berkeley Center for Labor Research and Education pointed out that just two dialysis companies control 70 percent of all clinics in California. And because very few laws require them to be transparent about their costs, prices will just continue to climb.

“I think we’re going to see a lot more attention on these issues in the future,” he said. “The ballot initiative specifically addresses [market consolidation] in a particularly profitable industry in terms of the dialysis centers. But the issues its raising are issues that go well beyond this particular case.”

Opponents feel the measure is too drastic and doesn’t belong on the ballot. Supporters have tried legislation before — bills to require staffing ratios in dialysis clinics and impose a revenue cap on clinic operators failed in prior legislative sessions.

Still, much of the Prop. 8 debate brings into question whether the voters should be the ones to decide how to fix these problems.

Medicare Advantage Plans Shift Their Financial Risk to Doctors

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Source: Modern Healthcare

Dr. Christopher Rao jumped out of his office chair. He’d just learned an elderly patient at high risk of falling was resisting his advice to go to an inpatient rehabilitation facility following a hip fracture.

He strode into the exam room where Priscilla Finamore was crying about having to leave her home and husband, Freddy.

“Look, I would feel the same way if I was you and did not want to go to a nursing home, to a strange place,” Rao told her in September, holding her hand. “But the reality is, if you slip at home even a little, it could end up in a bad, bad way.”

After a few minutes of coaxing, Finamore, 89, relented and agreed to go into rehab.

Keeping patients healthy and out of the hospital is a goal for any physician. For Rao, a family doctor in this retiree-rich city 100 miles north of Miami, it’s also a wise financial strategy.

Rao works for WellMed, a physician-management company whose doctors treat more than 350,000 Medicare patients at primary care clinics in Florida and Texas. Instead of being reimbursed for each patient visit, WellMed gets a fixed monthly payment from private Medicare Advantage plans to cover virtually all of their members’ health needs, including drugs and physician, hospital, mental health and rehabilitation services.

If they can stay under budget, the physician companies profit. If not, they lose money.

This model — known as “full-risk” or “global risk” — is increasingly used by Medicare plans such as Humana and UnitedHealthcare to shift their financial exposure from costly patients to WellMed and other physician-management companies. It gives the doctors’ groups more money upfront and control over patient care.As a result, they go to extraordinary lengths to keep their members healthy and avoid expensive hospital stays.

WellMed, along with similar fast-growing companies such as Miami-based ChenMed, Boston-based Iora Health and Chicago-based Oak Street Health, say they provide patients significantly more time with their doctors, same-day or next-day appointments and health coaches. These doctors generally work on salary.

ChenMed doctors encourage their Medicare patients to visit their clinic every month — for no charge and with free door-to-door transportation — to stay on top of preventive care and better manage chronic conditions. If patients are not feeling well after-hours, ChenMed even will send a paramedic to their home.

“We can be much more creative in how we meet patient needs,” said Iora CEO Rushika Fernandopulle. “By taking risk, we never have to ask … ‘Do we get paid for this or not?’”

A way to ‘provide less care’

Some patient advocates, pointing to similar experiments that failed in the 1990s, fear “global risk” could lead doctors to skimp on care — particularly for expensive services such as CT tests and surgical procedures.“At the end of the day, this is a way to keep costs down and provide less care,” said Judith Stein, executive director of the Center for Medicare Advocacy.

Dr. Brant Mittler, a Texas cardiologist and trial attorney who has followed the issue, said Medicare Advantage members should be suspicious.

“Patients don’t know that decisions made on their behalf are often financially based. There may be pressure on doctors to cut corners to save money and that may not be in the best interests of a patient’s health,” he said.

The insurers and physician groups disagree. They said limiting necessary care would only exacerbate a patient’s health problems and cost the doctors’ group more money.

Noting that Medicare members stay with Humana an average of eight years, Roy Beveridge, the insurer’s chief medical officer, said the plan would be unwise to skimp on care because that would eventually leave the company with sicker patients and longer hospitalizations.

“It makes even less sense for physicians at financial risk to skimp on care because patients are typically with their physicians much longer than they are with a health plan,” he said.

A study that examined care at ChenMed, published last month in the American Journal of Managed Care, found health costs were 28 percent lower among patients who had more than double the number of typical visits with their primary physician. The study was conducted by researchers at ChenMed and the University of Miami.

To offer more personal care, ChenMed doctors typically see only about a dozen patients per day — about half as many as is usual for a doctor who gets paid for each individual service.

Medicare beneficiaries, who can choose a private health plan during the open-enrollment period that runs from Oct. 15 to Dec. 7, generally have no idea if their health plan has ceded control of their care to these large doctors’ groups.

After choosing a Medicare Advantage plan, they generally sign up for a medical group that is part of their health plan’s network, often because doctors are close to where they live or because the doctors offer extra benefits such as free transportation to appointments.

Eloy Gonzalez, 71, of Miami, said that before switching to ChenMed a couple of years ago his doctors always seemed to be in a hurry when he saw them. He’s happy with his ChenMed physicians.

On a recent visit, he spent nearly 20 minutes with Dr. Juana Sofia Recabarren-Velarde talking about keeping his blood pressure and lung condition under control. She also showed him exercises to manage back and shoulder pain.

“If she thinks she needs to see me once a month to monitor my blood pressure and see if anything else is happening, it’s OK with me,” said Gonzalez, who pays nothing for the office visits or generic drugs under his Humana Medicare Advantage plan with ChenMed.

A growth spurt

Nearly one-third of the 57 million Medicare beneficiaries are covered by private Medicare Advantage plans — an alternative to government-run Medicare — and federal officials have estimated that the proportion will rise to 41 percent over the next decade. The government pays these plans to provide medical services to their members.The “global risk” system has been used in South Florida and Southern California since the late 1990s and nearly half of Medicare Advantage members in those regions get care in the model. The use has spread further in the past two years as large physician companies have become more common, and about 10 percent of Medicare Advantage plan members across the nation are in them now, health consultants say.

In addition, new information technology allows these groups to better track their patients. With mixed results, Medicare Advantage insurers for years offered doctors bonuses to meet certain quality care standards, such as getting members vaccinated against the flu or controlling diabetes and other chronic diseases.

Under the “global risk” arrangements, the health plans give the physician companies the bulk of their Medicare funding when they take on the mantle of being financially responsible for all patient care.

For the doctors’ groups, the arrangement means they get paid a large amount of money upfront for patient care and don’t have to worry about billing or having to get insurers to always preapprove treatments.

Because the “global risk” arrangements are designed to reduce plans’ costs, they potentially allow the companies to lower premiums and attract more customers, said Mark Fendrick, director of the University of Michigan’s Center for Value-Based Insurance Design.

“I see this trend continuing to grow as clinicians will be accountable for the first time for the care they provide,” he said.

Historical lessons

But Ana Gupte, a securities analyst with Leerink Partners in New York, noted providers can also lose money if not successful.That’s what happened in the late 1990s when some physician-management companies such as FPA Medical Management and PhyMatrix took on financial risk from insurers only to later go bankrupt, interrupting care to thousands of patients.

Health insurers say they now trust only doctors’ groups that have shown they can handle the financial risk. They also retain varying levels of control. Insurers set benefits, handle member complaints and review which doctors are allowed in its network.

Martin Graf, a partner with consulting firm Oliver Wyman, said the old financial arrangements failed because provider groups did not manage the risks facing their patients.

“Now they know physician groups must be vigilant about their patients — whether they are in the office or not,” he said. “Everyone is aware of the failure of the past.”

Feds Settle Huge Whistleblower Suit Over Medicare Advantage Fraud

Image result for Feds Settle Huge Whistleblower Suit Over Medicare Advantage Fraud images

Source: Kaiser Health News

One of the nation’s largest dialysis providers will pay $270 million to settle a whistleblower’s allegation that it helped Medicare Advantage insurance plans cheat the government for several years.

The settlement by HealthCare Partners Holdings LLC, part of giant dialysis company DaVita Inc., is believed to be the largest to date involving allegations that some Medicare Advantage plans exaggerate how sick their patients are to inflate government payments. DaVita, which is headquartered in El Segundo, Calif., did not admit fault.

“This settlement demonstrates our tireless commitment to rooting out fraud that drains too many taxpayer dollars from public health programs like Medicare,” said U.S. Attorney Nick Hanna in announcing the settlement Monday.

Medicare Advantage plans, which now enroll more than 1 in 3 seniors nationwide, have faced growing government scrutiny in recent years over their billing practices. At least a half-dozen whistleblowers have filed lawsuits accusing the insurers of boosting payments by overstating how sick patients are. In May 2017, two Florida Medicare Advantage insurers agreed to pay nearly $32 million to settle a similar lawsuit.

The DaVita settlement cites improper medical coding by HealthCare Partners from early 2007 through the end of 2014. The company, according to the settlement agreement, submitted “unsupported” diagnostic codes that allowed the health plans to receive higher payments than they were due. Officials did not identify the health plans that overcharged as a result.

One such “unsupported” code was for a spinal condition known as spinal enthesopathy that was improperly diagnosed in patients in Florida, Nevada and California from Nov. 1, 2011, to Dec. 31, 2014, according to the settlement. The agreement did not say how much health plans took in from the unsupported codes.

The company also contracted with a Nevada firm from 2010 through January 2016 that sent health care providers to visit patients in their homes, a controversial practice that critics have long held is done largely to inflate Medicare payments. These house calls also generated “unsupported or undocumented” diagnostic codes, according to the settlement.

Officials said that DaVita disclosed the practices to the government. It acquired HealthCare Partners, a large California-based doctors’ group, in 2012. They said the government agreed to a “favorable resolution” of the allegations payment because of the self-disclosure.

In a statement, DaVita said the settlement “reflects close cooperation with the government to address practices largely originating with HealthCare Partners.” DaVita said the settlement will be paid with escrow funds set aside by the former owners.

“This case involved illegal conduct in which patients’ medical conditions were improperly reported and were not corrected after further review — all for the purpose of boosting the bottom line,” reads the government’s statement.

The settlement also resolves allegations made by whistleblower James Swoben that HealthCare Partners knew that many of the diagnostic codes were unsupported, but failed to report them. The company reported only cases in which it deserved higher reimbursement, while ignoring codes that would slash payments, a practice known as “one-way” chart reviews.

Swoben, a former employee of a company that did business with DaVita, will receive just over $10 million for the settlement of the “one-way” allegations, under the federal False Claims Act, which rewards whistleblowers who expose fraud.

The Remedy For Surprise Medical Bills May Lie In Stitching Up Federal Law

Image result for The Remedy For Surprise Medical Bills May Lie In Stitching Up Federal Law imagesSource: Kaiser Health News

When Drew Calver had a heart attack last year, his health plan paid nearly $56,000 for the 44-year-old’s four-day emergency hospital stay at St. David’s Medical Center in Austin, Texas, a hospital that was not in his insurance network. But the hospital charged Calver another $109,000. That sum — a so-called balance bill — was the difference between what the hospital and his insurer thought his care was worth.

Though in-network hospitals must accept pre-contracted rates from health plans, out-of-network hospitals can try to bill as they like.

Calver’s bill eventually was reduced to $332 after Kaiser Health News and NPR published a story about it last month. Yet his experience shines a light on an unintended consequence of a wide-ranging federal law, which potentially blindsides millions of consumers.

The federal law — called ERISA, for the Employee Retirement Income Security Act of 1974 — regulates company and union health plans that are “self-funded,” like Calver’s. That means they pay claims out of their own funds, even though they may be administered by a major insurer such as Cigna or Aetna. And while states increasingly pass laws to protect patients from balance bills as more hospitals and doctors go after patients to collect, ERISA law does not prohibit balance billing.

Although Texas is one of nearly two dozen states that provide consumers with some degree of protection against surprise balance bills, those state laws don’t apply to self-funded plans.

It’s a fairly common problem. About 60 percent of workers who get coverage through their job have self-insured plans, and 18 percent of people with coverage through a large employer who were admitted to the hospital in 2016 received at least one bill from an out-of-network provider, according to an analysis by the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)

Health researchers and advocates have identified a number of potential solutions that could tackle the problem at the federal or state level. The courts are another option. Yet whether these efforts are politically feasible when health care is in play as a partisan football is another matter.

Polarized views on appropriate reimbursement levels for medical services “limit stakeholders at both the federal and state level from making progress,” said Kevin Lucia, a research professor at Georgetown’s Center on Health Insurance Reforms, who has analyzed state laws that restrict balance billing.

A look at options that experts say might address the problem:

Change Federal Law

The simplest way to stop surprise bills would be through restrictions imposed by federal legislation that would apply to both state-regulated policies sold by insurers and employer-sponsored self-funded health plans, which are federally regulated.

There’s a precedent for this. The Affordable Care Act added provisions that apply to both types of plans. That law requires plans that cover dependents to allow children to stay on their parents’ plans until they turn 26, for example, and cover preventive benefits without charging patients anything out-of-pocket.

New legislation could plug a big loophole in the ACA. The health law offered some consumer protections for out-of-network emergency care, one of the biggest trouble spots for balance billing. Not only do people sometimes wind up at out-of-network hospitals when they have an emergency, but even if they visit an in-network hospital, the emergency physicians, specialists and other providers such as pathologists and labs may not be in their health plan’s network.

The ACA limited a patient’s cost sharing for emergency services to what they would face if they were at an in-network facility. It also established standards for how much health plans have to pay the hospital or doctors for that care.

But the law didn’t prohibit out-of-network emergency doctors, hospitals and other providers, such as ambulance services, from balance billing consumers for the amounts their health plan didn’t pay.

Federal legislation could close that loophole by prohibiting balance billing for emergency services, as well as hospital admissions related to that emergency care.

Analysts at the University of Southern California-Brookings Schaeffer Initiative for Health Policy, who have suggested such a remedy, say the federal law could apply to any doctors and hospitals that participate in the Medicare program, as most do, to ensure that the effect would be widespread.

They also propose prohibiting balance billing in non-emergency situations when someone visits an in-network facility but receives care from out-of-network doctors or is referred for outpatient lab or diagnostic imaging that is outside of the person’s health plan network.

Still, the deep political scars left by the health law battles would seem to preclude any bipartisan efforts in Washington to change it.

“I’d love to see any kind of federal action,” said Loren Adler, associate director at the USC center, who co-authored the proposal. “It’s just hard to be super optimistic about anything happening in the near future.”

Revise Federal Regulations

The federal executive branch could also weigh in on fixing the problem for self-insured coverage. The Department of Labor could, for example, issue a ruling that clarifies that states can regulate provider payment, or require self-funded plans to participate in state dispute-resolution programs.

But experts say relying on regulatory changes to fix surprise bills may also be a nonstarter in this political climate.

“I don’t foresee the administration taking a hard look at the limits of its powers under the ACA,” said Sara Rosenbaum, professor of health law and policy at George Washington University.

Look To The States

More than 20 states have laws protecting consumers to some degree from surprise bills from out-of-network emergency providers or in-network hospitals if they’re covered by a state-regulated insurance policy, according to an analysis by Georgetown researchers published by the Commonwealth Fund.

State laws vary. Texas, for example, requires that consumers in HMO plans be held harmless from balance billing in out-of-network emergency and in-network situations, but consumers in PPO plans can be balance-billed.

New York’s law is more comprehensive, covering both types of plans and settings. New York protects consumers from liability for out-of-network emergency and other surprise bills, requires plans to disclose how they determine a reasonable provider payment and has a binding independent dispute-resolution process.

These laws typically don’t apply to self-funded plans, however. But that could change. A New Jersey law that went into effect last month allows self-funded plans to opt in to the state’s balance billing dispute-resolution process. If a federally regulated plan decides to participate in the state program, doctors, hospitals and labs would be prohibited from balance-billing those consumers, and any disputes will be handled through a binding arbitration process.

For self-funded employers, especially those who choose to pay their employees’ surprise bills, “this provides for a more formal structure and some relief,” said Wardell Sanders, president of the New Jersey Association of Health Plans.

There are other possibilities for addressing surprise bills at the state level, policy experts say. While states can’t regulate self-funded health plans, they do regulate doctors and hospitals and other providers.

States could simply cap the amount that providers can charge for out-of-network care, for example, or prohibit practitioners like radiologists and pathologists, who don’t deal directly with patients, from billing them for services, said Adler.

“As long as providers can charge whatever they please, the problem won’t go away,” said Adler.

Will The Courts Weigh In?

These billing disputes rarely end up in court, mainly because attorneys are hesitant to take them since there are no guaranteed attorney’s fees.

A recent Colorado case was a rare success for a patient. A jury in June sided with Lisa French, a clerk at a trucking company, who was stunned by a $229,000 balance bill for spinal fusion surgery. Saying the charges were unreasonable, the jury knocked down her share of that bill to just $766.74.

The hospital was paid nearly $75,000 by her health coverage, an amount her insurer felt built in a fair profit margin, but the hospital claimed fell short.

That raises the question at the heart of many disputes over balance billing: What is a fair price?

Hospitals argue they should get whatever amount they set as charges on their master list of prices. Attorneys for patients, however, argue that a fair price should be closer to those discounted rates hospitals accept in their contracts with insurers.

Hospitals generally refuse to disclose those discounted rates, leaving patients fighting surprise bills little information about what other people pay.

Several recent court cases — including state Supreme Court rulings in Georgia and Texas — required hospitals to provide those discounted rates, although the rulings did not say those discounted prices are ultimately what patients would owe.

Proposed site-neutral payment policy sets the stage for battle royale between CMS, hospitals

Image result for Proposed site-neutral payment policy sets the stage for battle royale between CMS, hospitals images

Source: Modern Healthcare

As the CMS charts a path to level pay for outpatient services, it’s also leading toward a head-to-head battle with powerful hospital lobbying groups as some providers win and lose with site-neutral payments.

If the agency’s 2019 proposal to pay the same rate for services delivered at off-campus hospital outpatient departments and independent doctors’ offices is finalized, the CMS said it would save Medicare $610 million and patients about $150 million via lower co-payments. That represents about 1% of the around $75 billion hospitals receive a year from the CMS for outpatient services.

But hospitals argue that their higher reimbursement rates are needed to pay for expensive overhead costs. Without that payment flow, they contend, many hospitals would likely close as their margins thin. Providers also changed their business strategies with the current rate system in mind.

This is a continuation of the CMS’ aim to reduce payment disparities for virtually identical procedures, said Fred Bentley, a vice president at Avalere Health.

Hospital executives have seen this coming, but that doesn’t mean they won’t put up a big fight, he said.

“There has been a recognition that this disparity was not justified and that it was a matter of time until this gap would be addressed,” Bentley said. “The CMS is starting to come to terms with the task at hand in terms of keeping Medicare solvent. Admittedly, they are going against a powerful lobby.”

The CMS estimates that it was paying $75 to $85 more for the same services in hospital outpatient settings versus physician offices. Patients footed about 20% of that.

“This has a very real human impact, and it is part of the story,” said Dr. Farzad Mostashari, CEO and founder of Aledade, which helps establish physician-led ACOs. “The phenomenon of surprise billing doesn’t conform with reasonable consumer expectations.”

The CMS outlined some winners and losers among health systems if the rule is finalized. Cleveland Clinic would take the biggest hit, losing $22 million of reimbursement for outpatient services from 2018 to 2019. Mayo Clinic would receive $11.3 million less, Eisenhower Medical Center would take an $8 million hit and the University of Michigan Health System, the University of Wisconsin Hospitals & Clinics Authority and the University of Virginia Medical Center would each receive about $7 million less.

On the other hand, Cedars-Sinai Medical Center stands to receive $7.7 million more from the CMS under the proposed rule. Hartford Hospital would get a $7.6 million bump, Ronald Reagan UCLA Medical Center would receive $6.6 million more, and St. Francis Hospital and Medical Center and Lehigh Valley Hospital would each receive about an additional $4.5 million.

Large physician groups also stand to benefit if they are reimbursed at the same level as hospital-employed physicians, Bentley said.

The agency also proposes freezing higher payments for “grandfathered” outpatient sites. In 2016, the CMS passed a site-neutral rule that paid hospital off-campus facilities less than hospital-based outpatient departments if they started billing Medicare after Nov. 2, 2015.

Health systems responded by hiring physicians and placing them in the grandfathered facilities to capture higher reimbursement. Now, the CMS aims to limit how off-campus facilities that were billing Medicare before November 2015 can expand their clinical services.

“There are issues about whether Medicare inpatient payment rates are just getting to be too low with the years of subtractions,” said Paul Ginsburg, director of the Center for Health Policy at the Brookings Institution and director of public policy at the USC Schaeffer Center for Health Policy and Economics. “I am not saying hospitals are OK, but I think they would be much better off to pay hospitals appropriate amounts and avoid this real impediment to a competitive physician market.”

The CMS pays more for the same type of service delivered in a hospital outpatient department setting versus a physician’s office. The agency has been looking to change this dynamic for years, in part because clinic visits are the most common service billed under the outpatient pay rule.

The different payment rates were initially set to account for hospital’s higher overhead costs, since they must maintain emergency services and invest in unique, expensive equipment.

Yet, over time, that premise became distorted, critics of the payment disparities argued. Health systems bought more physicians and physician groups to take advantage of the higher reimbursement rates, which were still doled out even if the hospital-owned clinic didn’t look or operate any differently than a community-based doctor’s office.

“When hospitals started hiring all kinds of physicians who typically practiced in the community, and often did not move their office, it’s clear that that rationale did not apply,” Ginsburg said.

Outpatient care has come a long way since the site-of-service rules were implemented, said Martin Gaynor, professor of economics and health policy at Carnegie Mellon University.

“Even with hospitals’ overhead costs, if they can’t do the same care as cheaply as a physician office, why should patients and the American taxpayers pay more than they need to?” Gaynor asked.

Additional facility fees are paid for a wide range of physician services that do not draw on specialized hospital overhead and are commonly provided outside of hospitals, Ginsburg, Gaynor and Mostashari pointed out in a 2017 white paper. As hospitals bought more physicians, they could also negotiate higher rates with payers.

Higher payment rates give hospitals an extra cushion to pay physicians more, which accelerates the decline of the independent practice and reduces competition, according to the paper.

Medicare’s payments shot up while beneficiaries received surprise bills for separate hospital fees.

Also, hospital-owned practices have incentives to refer patients within their network, even if it isn’t the most effective option, ultimately harming competition, Ginsburg said.

“It also undermines some of the efforts to get physician-led alternative payment arrangements such as accountable care organizations or bundled payments if there are so few independent physicians left in the market,” he said.

Also, if a hospital-owned outpatient department has inflated costs, that could hurt them on value-based arrangements like ACOs, bundled payments, reference pricing and narrow-network plans, Mostashari said.

“I am sure the hospitals will not see this as a great gift, but I would argue that as they are truly thinking of embracing the future, this will be a short-term hit that will yield long-term benefits,” he said.

The CMS also wants to expand last year’s cuts to 340B drug discountsgiven to outpatient facilities that care for a disproportionate share of low-income patients. If that proposal is finalized, the CMS estimates that Medicare and its beneficiaries would save approximately $48.5 million.

With the changes to outpatient payment rules and 340B, it could make physician practices a less attractive acquisition target. But there are still incentives to those deals, said Matt Fiedler, a fellow at the USC-Brookings Schaeffer Initiative on Health Policy.

“This is a useful step in the right direction,” he said. “But I think this proposal is only getting at a portion of the broader site-of-service payment differential problems. There are many other on-campus outpatient departments that are very similar to physician offices.”

The proposed rule didn’t address payment discrepancies related to on-campus outpatient facilities, ambulatory surgery centers, or non-clinic visits at pre-existing off-campus facilities.

The CMS indicated in its comments section that it could be interested in expanding the site-neutral policy.

“There are reasons to believe that hospital ownership of a physician practice is a less efficient way of organizing care than through independent practices,” Fiedler said. “I don’t think we should view an aggressive site-neutral payment plan as a silver bullet to consolidation, but it’s not going to hurt.”

Many rural hospitals and academic medical centers have survived through higher payment rates, experts argue.

Outside of facility fees, rural providers have reaped significant revenue through laboratory services, a practice that has drawn lawsuits and congressional inquiry.

Rural hospitals can bill Medicare for lab tests performed on patients from other facilities and by outside labs. This has helped them stay afloat because insurers pay rural hospitals much more for the tests than they would for large labs like Quest Diagnostics or LabCorp.

“It does raise the question—if there are more direct or rational ways to subsidize rural facilities or others getting hammered by this rule as opposed to using the disparity in payment models as an indirect way to subsidize health systems,” Bentley asked.

America’s Essential Hospitals, which represents safety-net providers, said the “draconian” cuts would limit healthcare access for millions of Americans.

“The CMS frames its proposals as empowering patients and providing more affordable choices and options,” Dr. Bruce Siegel, president and CEO of the trade group, said in a statement. “But we believe these proposals only would create roadblocks to care in communities across the country—communities that already struggle with care shortages and severe economic and social challenges.”

The additional cuts to 340B payments coupled with the site-neutral payment proposal would drain already stretched providers, Siegel said.

Premier, the group purchasing and consulting organization, shared America’s Essential Hospitals’ concern, arguing that provider-based outpatient services support an overall reduction in healthcare spending and improve care coordination and quality.

“The CMS’ proposal fails to recognize the substantial differences between physician practices and provider-based outpatient clinics that translate into higher overhead expenses for provider-based outpatient clinics,” Blair Childs, senior vice president of public affairs for Premier, said in a statement.

Hospitals adapted their operations based on the expectation they would receive higher reimbursement rates, and abruptly changing that dynamic isn’t fair, said Paul Hughes-Cromwick, co-director of sustainable health spending strategies at Altarum.

The CMS indicated that its legal argument lies in Section 4523 of the Balanced Budget Act of 1997, requiring a limit on unnecessary increases in the volume of covered outpatient services.

Considering the significant increase in outpatient versus inpatient costs, it may have a case, Mostashari said.

The Trump administration also proposed another change that didn’t sit well with providers—that they must share patient information when they are discharged as a condition to participate in Medicare.

Mostashari gave credit to the current administration for taking site-neutral payment, and other controversial measures, head on.

“The conventional wisdom is that the hospital lobby is too powerful, but this administration may turn that on its head,” he said.

Work in Health Care? Keep An Eye On These Five California Bills That Could Become Law

Image result for Work in Health Care? Keep An Eye On These Five California Bills That Could Become Law images

Source: Sacramento Bee

Among the hundreds of bills on the Legislature’s agenda for August are ones that would make key changes in the lives of California health care workers. Here are five to watch.

Guaranteeing enough nurses are on the job

Backed by nurses’ unions and other health care worker labor organizations, Senate Bill 1288 would require the state Department of Public Health to conduct unannounced inspections of hospitals to make sure they are complying with minimum nurse-patient ratios.

The bill, introduced by Sen. Connie Leyva, D-Chino, sets progressive fines for each violation. It is opposed by the California Hospital Association and the Association of California Healthcare Districts. The bill passed the Senate in late May and is in the Assembly Appropriations Committee.

More duties for paramedics

Senate Bill 944 allows cities to expand paramedic services under supervision from health care workers.

Firefighter paramedics could perform services such as home visits, tuberculosis therapy and transportation to mental health or sobering centers rather than to emergency rooms. Opponents of the bill, mainly nurses’ and doctors’ groups, argue that while paramedics are trained in pre-hospital care, they don’t have enough training to perform the medical exams typically performed in hospitals.

The bill, introduced by Sen. Bob Hertzberg, D-Los Angeles, is sponsored by the the California Professional Firefighters and has additional support from the American Civil Liberties Union and other firefighting groups. The Senate passed the bill late last May. It is currently awaiting action in the Assembly Committee on Appropriations.

Rules for dialysis patients

A federal lawsuit last year accused dialysis provider DaVita of directing low-income patients to apply for commercial insurance plans over Medicare or Medi-Cal to maximize profits.

Senate Bill 1156, introduced by Sen. Connie Leyva, D-Chino, would limit reimbursement rates for financially interested groups that help low-income patients pay for health care premiums.

The bill is backed by insurance companies and health care unions. It is opposed by dialysis and patient advocacy groups, who said they fear that directing recipients to use Medi-Cal or Medicaid may not provide the best coverage for individual patients and that it could force underfunded clinics to close. Under SB 1156, these financially interested groups would have to disclose their financial relationships with health care providers and help patients solely based on financial need. The bill is now in the Assembly Committee on Appropriations.

The right to know, the necessity to disclose

Senate Bill 1448, introduced by Sen. Jerry Hill, D-San Mateo, requires doctors on probation for egregious reasons to inform their patients.

Physicians and surgeons disciplined for sexual misconduct, drug abuse, criminal conviction and inappropriate prescribing that can harm patients must ask patients to sign a form that lists details about the doctor’s probation and provides information on how to find out more.

It has support from consumer and public interest organizations. Two of Sen. Hill’s bills about patient disclosure failed in previous years due to intense lobbying form physicians’ associations. The bill still faces heavy opposition from the California Medical Association, which argues the bill essentially suspends a physician without due process. It is currently in the Assembly Committee on Appropriations.

New work for medical lab techs?

About half of clinical laboratory scientists are expected to retire this decade, leaving a shortage of people who are cleared to perform their work.

Assembly Bill 2281, introduced by Assemblywoman Jacqui Irwin, D-Thousand Oaks, would let medical laboratory technicians perform procedures currently handled by clinical laboratory scientists, who have more training, such as certain blood tests and urine analysis.

The bill is supported by hospital groups and insurance companies, who argue that it would let a declining population of clinical laboratory scientists focus on tests of higher complexity. Opponents include labor organizations, who contend that the plan would let hospitals choose a cheaper option without considering patient health risks. The bill is currently in the Senate Committee on Appropriations.

Doctors, Nurses and Insurers Are Spending Big To Determine How You’ll Get Your Health Care

Image result for Doctors, Nurses and Insurers Are Spending Big To Determine How You’ll Get Your Health Care images

Source: Sacramento Bee

Insurers, doctors and nurses are spending millions on lobbying and donations to lawmakers’ campaigns in the current legislative session, battling over costly large-scale changes as they await Gov. Jerry Brown’s successor.

Major health industry groups have spent more than $18 million on lobbying, according to an analysis by The Sacramento Bee, in an effort to kill or water down bills proposed to rein in rising health care costs and impose new regulatory requirements for insurers and health plans.

The spending, similar to levels in the prior legislative session, foreshadows a costly and thorny political debate in the years ahead. Democrats are seeking to protect coverage gains made under Obamacare, expand access to care for the low-income and undocumented, lower premium costs and blunt broader changes to the health care landscape pushed by the Trump administration that they see as a threat to their long-term goal of universal coverage.

Brown has resisted spending the money it would take to implement the changes. Assembly Democrats proposed 16 major health care bills after the leader of the Assembly shelved a bill out of the Senate that sought to create the nation’s first single-payer health care system, leading to a bruising political fight among lawmakers and health care groups. The budget Brown signed this month doesn’t include funding for the most far-reaching, high-dollar ideas.

But their agenda sets the stage for another push under a new governor, one aimed at undertaking major reductions in the overall cost of health care, imposing industry price controls, creating new government subsidies, improving the affordability of coverage and expanding access to those currently uninsured.

Lt. Gov. Gavin Newsom, the frontrunner in the governor’s race, has teed up his own prescription for what he sees as today’s most pressing problem in health care: rising costs. He has called for a new system that covers everyone regardless of immigration status or ability to pay, and for the state to begin analyzing whether a single-payer system would work to lower costs in the nation’s largest state.

“These are the makings of a big health care debate in Sacramento next year, with groups lined up on all sides of these issues, and a likely new governor who has taken a very public position,” said Larry Levitt, senior vice president of the Kaiser Family Foundation, a nonprofit health research organization not affiliated with Kaiser Permanente.

Should Newsom win, as polling suggests is likely in the heavily Democratic state, he will also contend with these forces. He has endorsements from the California Nurses Association and the California Medical Association, often on warring sides of the health care debate.

“In the last couple years, there’s been a lot of talk about dramatically remaking the health care system in California, so it certainly won’t be a surprise to see industry groups ramping up their advocacy and lobbying efforts,” Levitt said. “These are very big and powerful industries, including hospitals and providers and drug manufacturers and insurance companies.”

The six Democrats who this year put forward major proposals out of the Assembly have accepted sizable, and in some cases maxed-out, campaign contributions from health care industry groups opposed to major changes, according to a campaign finance analysis by The Bee and MapLight, a nonprofit research organization that tracks money in politics.

Assemblyman Joaquin Arambula, D-Fresno, and Assemblyman Jim Wood, D-Healdsburg, who led efforts in the Assembly to craft an alternative to the single-payer bill, accepted the largest amount in campaign contributions from health insurers, doctor and hospital groups and the pharmaceutical industry.

Arambula has taken more than $48,000 into his 2018 campaign account through the end of June, and Wood has accepted $45,000, according to the analysis.

The four other lawmakers — Assemblywoman Autumn Burke, D-Marina Del Rey, Assemblyman Ash Kalra, D-San Jose, Assemblyman David Chiu, D-San Francisco, and Assemblywoman Laura Friedman, D-Glendale — accepted $32,900, $18,800, $18,500 and $9,600, respectively.

The practice is common, and is one measure of the industry’s effort to influence California politicians. Health care activists complained that their proposals were too conservative and piecemeal. The lawmakers said they weren’t swayed by the money.

In fact, all six lawmakers also accepted campaign contributions from the California Nurses Association, which has denounced anything short of a government-run, taxpayer-financed single-payer system as an ineffective, incremental approach.

The nurses association, the chief sponsor of the single-payer bill, also ratcheted up its lobbying spending this session, funneling $2.5 million into efforts to shape the debate, compared to roughly $485,000 in the last legislative session.

Anger over Assembly Speaker Anthony Rendon’s decision to shelve universal health care legislation in California boiled over into aggressive protests against the Democratic leader by the California Nurses Association.

Most of the proposals are still moving through committees, but supporters question whether there is the political appetite to advance them to the governor’s desk this year — especially those that would incur ongoing costs to the state. Many are expected to be held in appropriations committees due to cost concerns. Assembly Democrats sought $1 billion to pay for their highest priorities as part of this year’s budget.

“We recognize that this is more about having policies ready for a new governor rather than the current governor,” said Anthony Wright, executive director of Health Access California, a Sacramento-based health consumer advocacy group that backed the proposals. “Anything that costs money that wasn’t included in the budget is not likely to happen this year.”

Brown did agree to spend $65 million on two measures. One requires by 2020 the state to maintain a database tracking payments to health care providers for patient treatments and procedures. Another will develop a “road-map” to a future single-payer-type system in California. It calls for a plan giving the Legislature and governor options by October 2021 for moving California toward a “unified financing system for all Californians.”

The most influential and well-funded health industry groups, among 20 that spent money lobbying on the 16 bills, are the California Medical Association and the California Hospital Association. They spent $5.7 million, according to the latest filings.

Much of their energy was aimed at fighting Assembly Bill 3087, by Kalra, which sought to control rising health care costs by giving the state more power to regulate prices. It drew out in full force the lobbying muscle of the industry, which stands to gain from higher prices.

“There is incredible resistance among those in the health care industry to give government more control over their prices…They will fight government price controls tooth-and-nail,” Levitt said. “They’re looking to protect their profits.”

In an interview at the Capitol last month, Kalra said he proposed the bill because he didn’t think the other measures put forward after Assembly Speaker Anthony Rendon shelved the single-payer bill went far enough.

“It’s critically important that we do something about cost containment,” Kalra said. “This issue is not going anywhere. Costs aren’t going down, and those that have benefited from the rise in health care costs have to come to the table to be part of the conversation, so we can achieve a sustainable system.”

Janus Norman, chief lobbyist for the California Medical Association, said killing the bill was the association’s main objective this year. He said the bill would have done little to lower overall health care costs and posed a threat to the ability of California to attract medical professionals in a state already experiencing a physician shortage.

“It would have been devastating,” Norman said. “It was our No. 1 priority this year.”

Kalra said he’ll push forward and won’t be affected by campaign money he gets from groups opposed to cost controls. He called the industry groups’ opposition a “badge of honor.”

But he also acknowledged their ability to influence decision-making in Sacramento, calling them “very powerful and very influential.”

“If they don’t want to see something happen, it’s unlikely to happen,” Kalra said. “My message to them is if we don’t create a sustainable system, it’s not going to be good for them or for Californians.”

Last Updated 11/07/2018

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