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Covered California Rates Jump 13% in 2017

July 21, 2016 By Jay Baldauf

Covered California Rising costs

Covered California’s premiums jumped 13.2% for 2017, up from about a 4% increase in each of the past two years. However, most consumers will see a much smaller increase or pay less next year if they switch to another plan. California executive director Peter Lee said, “Shopping will be more important this year…Almost 80% of our consumers will be able to pay less than they are paying now, or see their rates go up by no more than 5% if they shop and buy the lowest-cost plan at their same benefit level.”

While premiums will rise, the subsidies will rise as well. About 90% of Covered California enrollees get help to pay for their premiums. The average subsidy covers roughly 77% of the consumer’s monthly premium. “Even though the average rate increase is larger this year than the Past two years, the three-year average increase is 7% – substantially better than rate trends before the Affordable Care Act was enacted,” Lee said.

Covered CaliforniaPremium increases	2014-2015	2015-2016	2016-2017	3-year average
Average weighted increase	4.2%	4%	13.2%	7%
Lowest price Bronze plan	4.4%	3.3%	3.9%	3.9%
Lowest priced Silver plan	4.8%	1.5%	8.1%	4.8%
Second lowest priced Silver plan	2.6%	1.8%	8.1%	4.1%
If a consumer switches to the lowest priced plan in the same tier	–	-4.5%	-1.2%	–

Lee said the average rate increase reflects the following factors:

A one-year adjustment due to the end of the reinsurance funding mechanism in the Affordable Care Act. The provision was designed to moderate rate increases during the first three years when exchanges were being established. The American Academy of Actuaries estimates that this will add 4% to 7% to premiums for 2017.
Special enrollment by some consumers who sign up only after they become sick or need care, which has had a significant effect on rates for two insurance plans.
The rising cost of health care, especially for specialty drugs.
Pent-up demand for health care among those who were uninsured before the Affordable Care Act.

Lee said, “Covered California is working to address some of these issues on multiple fronts. The exchange is aggressively marketing to attract healthy consumers year-round, and is working to ensure special enrollment is available only to those who meet qualifying circumstances. It is also sampling the special enrollment population to better understand how to make any further improvements needed.”

Covered California is reducing the number of services that are subject to a consumer’s deductible. Starting in 2017, consumers in Silver 70 plans will save as much as $55 on an urgent care visit and $10 on a primary care visit. Consumers in Silver, Gold, and Platinum plans will pay a flat copay for emergency room visits without having to satisfy a deductible, which could save them thousands of dollars.

These improvements build on features already in place that ensure most outpatient services in Silver, Gold and Platinum plans are not subject to a deductible, including primary care visits, specialist visits, lab tests, X-rays and imaging. Some Enhanced Silver plans have little or no deductible and very low copays, such as $3 for an office visit. Consumers in Covered California’s most affordable Bronze plans can see their doctor or a specialist three times before the visits are subject to the deductible.

The contract with health insurers for 2017 ensures that consumers select or are provisionally assigned a primary care physician. Below are the companies selected for the 2017 exchange:

Anthem Blue Cross of California
Molina Healthcare
Blue Shield of California
Oscar Health Plan of California
Chinese Community Health Plan
Sharp Health Plan
Health Net
Valley Health Plan
Kaiser Permanente
Western Health Advantage
A. Care Health Plan

The following carriers are increasing their coverage areas in 2017:

Oscar will be entering the market in San Francisco, Santa Clara, and San Mateo counties.
Molina will expand into Orange County.
Kaiser will be available in Santa Cruz County.

With the expansion of carriers, 93% of consumers will be able to choose from three or more carriers, and all will have at least two to select from. In addition, more than 93% of hospitals in California will be available through at least one Covered California health insurance company in 2017, and 74% will be available in three or more plans. Rate details by pricing regions can be found in Covered California’s Health Insurance Companies and Plan Rates for 2017, posted online at: http://coveredca.com/news/pdfs/CoveredCA-2017-rate-booklet.pdf.

Filed Under: Doctors, Drugs, Employer Benefits, General Health, Men's Health, Reform, Wellness, Women's Health Tagged With: 2017, ACA, aggressively marketing, anthem, Blue Shield, co-insurance, co-pays, covered California, deductibles, end of, exchange, Funding, Health Net, health plans, Healthy consumers, HHS, jump, Kaiser, LA Care, Molina, obamacare, Oscar, Rates, re-insurance, subsidies

Insurer Obamacare Losses Reach Billions Of Dollars After Two Years

May 30, 2016 By Jay Baldauf

Bruce Japsen ,

CONTRIBUTOR

I write about health care and policies from the president’s hometown

Opinions expressed by Forbes Contributors are their own.

After two years offering uninsured Americans subsidized products on public exchanges, health insurance companies have been hard-pressed to find financial success in this segment of the Affordable Care Act with losses reaching billions of dollars for the industry.

UnitedHealth Group UNH +0.77% lost more than $720 million on its public exchange business last year, and United is a small player in this market compared to Anthem ANTM +0.84%, which operates Blue Cross and Blue Shield plans in 14 states, and said money-losing Obamacare plans caused profits to fall 64% in the fourth quarter. Aetna AET +0.16%, which hopes to finalize its acquisition of Humana HUM -0.29% later this year, said last week individual coverage sold under the health law “remained unprofitable” last year.

The financial performance has come into view in the last two weeks following release of 2015 annual and fourth-quarter earnings.

A demonstrator in support of the Affordable Care Act holds an “ACA is here to stay” sign outside the Supreme Court after justices ruled 6-3 to save Obamacare tax subsidies on June 25, 2015. Photographer: Andrew Harrer/Bloomberg

Other Blue Cross and Blue Shield plans, some nonprofits and others owned by policyholders, are also reporting hundreds of millions in losses on health plans they sell on public exchanges. For example, Blue Cross and Blue Shield of North Carolina has reported losses of more than $400 million through last year and Health Care Service Corp., which owns five Blue Cross plans including those in Illinois and Texas, lost more than $240 million in 2014 and remained unprofitable in its public exchange business last year. Health Care Service has yet to disclose 2015 financials for its nearly 2 million members in its individual business that includes Obamacare enrollment, a company spokesman said.

For insurers, the problem has largely been a major increase in medical expenses from these new patients, who were previously uninsured. From an actuarial standpoint, the health plans say they didn’t know what they would be getting and therefore needed more healthy people to buy premiums to cover the costs of the sick. So far, medical expenses are getting the upper hand. For example,Anthem’s fourth-quarter “benefit expense ratio” was 87% compared to 84.5% in the year-ago period.

But insurers, for the most part, see 2016 as a potential breakout year as they get a handle on pricing and narrow provider networks to better control costs.

Anthem CEO Joe Swedish, who has complained rivals have underpriced their products to get enrollment in the first two years, looks for the public exchange business to rebound following two years of pricing he’s described as “unsustainable.” Analysts say Anthem might even have stronger offerings following its acquisition of Cigna CI -0.04%, should that close later this year.

Filed Under: Doctors, Drugs, Employer Benefits, General Health, Men's Health, Reform, Wellness, Women's Health Tagged With: ACA, aetna, after 2 years, anthem, BCBS, Blue Shield, Carriers, cigna, exchanges, Forbes, health insurance, HHS, Humana, Insurers, losses, obamacare, reach billions, United Healthcare

Medicare Advantage 2016 Spotlight

May 28, 2016 By Jay Baldauf

The number of Medicare beneficiaries enrolled in Medicare Advantage has climbed steadily over the past decade; this trend in enrollment growth continues in 2016. The enrollment growth has occurred despite provisions under the ACA that reduce payments to plans. As of 2016, the payment reductions have been phased in fully in 78% of counties, accounting for 70% of beneficiaries and 68% of Medicare Advantage enrollees, according to a study by the Kaiser Family Foundation. The following are study highlights:

Medicare Advantage enrollment has increased in virtually all states over the past year. Almost one in three people on Medicare (31% or 17.6 million beneficiaries) is enrolled in a Medicare Advantage plan in 2016. The penetration rate exceeds 40% in five states.
18% of enrollees are in a group plan. Employers and their retirees still favor local PPOs over HMOs.
Enrollment is still highly concentrated. If Aetna acquired Humana with no divestitures in 2016, the combined firm would account for 25% of Medicare Advantage enrollees nationwide. UnitedHealthcare and Humana account for 39% of enrollment in 2016.
Premiums were relatively constant from 2015 to 2016 ($37 a month in 2016 versus $38 a month in 2015), although premiums vary widely across states, counties, and plan types.
In 2016, the average enrollee had an out-of-pocket limit of $5,223, which is nearly $1,000 higher than in 2011.
31% of the Medicare population is enrolled in a Medicare Advantage plan. Total Medicare Advantage enrollment grew 5%, from 2015 to 2016. This reflects the influence of seniors aging on to Medicare and beneficiaries shifting from traditional Medicare to Medicare Advantage.
64% of Medicare Advantage enrollees are in HMOs; 23% are in local PPOs; 7% are in regional PPOs; 1% are in private fee-for-service plans; and 4% are in other types of plans including cost plans and Medicare medical savings accounts.
Enrollment in private fee-for-service plans has declined slowly since the Medicare Improvements for Patients & Providers Act (MIPPA) of 2008. Under the law, in most parts of the country, private fee-for-service plans must have a provider network. About 1% of Medicare Advantage enrollees are in these plans. 26% of enrollees in private fee-for-service plans are in counties in which private fee-for-service plans are exempt from network requirements.

Medicare Advantage enrollment in California grew 6% from 2015 to 2016.
44% of beneficiaries in Los Angeles County, California are enrolled in Medicare Advantage plans compared to only 11% of beneficiaries in Santa Cruz County, California.

The average MA prescription drug enrollee pays a monthly premium of about $37, which is 1% less than in 2015. Actual premiums are $28 a month for HMOs, $63 a month for local PPOs, and $76 a month for private fee-for-service plans. Average Medicare Advantage premiums for HMOs and local PPOs have decreased since the ACA was enacted while average premiums have increased for regional PPOs and private fee-for-service plans.

In 2016, 81% of Medicare beneficiaries had a choice of at least one zero premium MA prescription drug plan. From 2015 to 2016, the share of enrollees in zero premium MA prescription drug benefits remained relatively unchanged (48% in 2015 versus 49% in 2016). Fifty-nine percent of HMO enrollees are in zero premium plans; 38% are in regional PPOs; and 22% are in local PPOs. No zero premium private fee-for-service plans plans were offered in 2015 or 2016.
The average out-of-pocket limit for a MA prescription drug enrollee is $5,223, up from $5,041 in 2015 and $4,313 in 2011. The share of enrollees in plans with limits above $5,000 has greatly increased across all plan types. Fifty-two percent of enrollees are in plans with limits above $5,000 in 2016 compared to 46% in 2015. Thirty-seven percent of enrollees in 2016 are in plans with limits at the $6,700 maximum, compared to 32% in 2015 and 17% in 2011. Ninety-nine percent of regional PPO enrollees and 62% of local PPO enrollees are in plans with limits above $5,000 in 2016. In comparison, 45% of HMO enrollees are in plans with limits above $5,000 in 2016.
The standard Medicare Part D plan has a $360 drug deductible and 25% coinsurance up to an initial coverage limit of $3,310. That is followed by a coverage gap (the doughnut hole) in which beneficiaries pay a larger share until their total out-of-pocket Part D spending reaches $4,850. After exceeding this catastrophic threshold, beneficiaries pay 5% of the cost of drugs.
95% of Kaiser Permanente’s enrollees are in HMOs. In contrast, enrollment in UnitedHealthcare and Humana plans is mostly in HMOs, but includes significant shares in local and regional PPOs. Humana’s distribution continues the shift from earlier years when a much larger share of Humana’s enrollees was in private fee-for-service plans plans. Enrollment in BCBS plans is split between HMOs (46%) and local PPOs (41%), with the remainder in regional PPOs and other plan types including private fee-for-service plans plans.
Kaiser Permanente’s presence is more geographically focused than other major national employers, with a heavy concentration in California, Colorado, the District of Columbia and Maryland.
Medicare Advantage enrollment could become more concentrated if Aetna’s acquisition of Humana and Anthem’s acquisition of Cigna are approved, particularly if few divestitures are required. If no divestitures are required in Aetna’s acquisition of Humana, the combined company would account for 25% of Medicare Advantage enrollment nationwide. UnitedHealthcare accounts for 21% of enrollment this year.
The Anthem’s acquisition of Cigna would have a less visible affect on the national Medicare Advantage market. Nationwide, Anthem accounts for 3% of Medicare Advantage enrollment and Cigna accounts for another 3%.
For many years, CMS has posted quality ratings for Medicare Advantage plans. In 2016, 68% of plans had four or more stars. In focus groups, seniors have said that they don’t use the star ratings to select a plan. Nonetheless, the star ratings may be correlated with factors that seniors do use to select their plan, including provider networks, and plan benefits and costs, and thus may be correlated with enrollment.
The Congressional Budget Office projects that about 41% of Medicare beneficiaries will be enrolled in Medicare Advantage in 2026. This growth may prompt some to question what it will mean if the preponderance of beneficiaries are in Medicare Advantage plans.

Filed Under: Doctors, Drugs, Employer Benefits, General Health, Medi-Cal, Medicare, Men's Health, Reform, retirement, Senior Health, Wellness, Women's Health Tagged With: ACA, acquisitions, aetna, anthem, Blue Shield, California, cigna, CMS, enrollees, HHS, HMOs, Humana, Kaiser, MA, MAPD, Medicare, Medicare Advantage, MIPPA, Part D plans, PPOs, Premiums, prescription drugs, spotlight, UHC

ACA Participation Boosts Pressure on Blue Plans

April 28, 2016 By Jay Baldauf

Blue Cross Blue Shield (BCBS) plans saw a 75% drop in net income from 2013 to 2015, according to a report by A.M. Best. BCBS plans faced a higher risk population in the ACA exchanges. The drop in earnings can also be blamed on higher costs of generic prescription drugs and expensive new specialty drugs. BCBS plans saw a 35% drop in underwriting earnings in 2015 and a 35% drop in investment income from 2013 to 2015. Also, the ACA health insurer fee resulted in a 1.3% decline in consolidated earnings in 2015. The fee has a greater effect on net income since is not tax-deductible.

High enrollment morbidity in the ACA exchanges has a large negative financial effect on the whole industry, including BCBS companies. Carriers are trying to attract younger and healthier enrollees through active outreach, technology, and customer engagement. BCBS companies are looking to control the cost of care through narrow networks, disease management programs, better care coordination, and increased provider collaborations. These initiatives are particularly important in saving money by providing appropriate quality care for higher-risk individuals. A.M. Best expects the earnings pressure to continue at BCBS companies. The lower earnings and growth in premiums from increased membership may drive down of risk-adjusted capitalization.

Net-premiums grew 14% over the past three years for BCBS companies. The increase has been greater at publicly traded companies, which tend to be more active in Medicaid managed care and Medicare Advantage. Both of these programs have had stronger enrollment growth form the aging U.S. population and Medicaid expansion through the ACA.

Filed Under: Doctors, Drugs, Employer Benefits, General Health, Men's Health, Reform, Wellness, Women's Health Tagged With: ACA, BCBS, blue Cross, Blue Shield, boosts pressure, covered California, earnings, effect, exchange, HHS, higher costs, industry, negative financial, obamacare, participation, specialty drugs

Blue Shield Offers City of Hope Providers

January 10, 2016 By Jay Baldauf

The City of Hope has announced an agreement with Blue Shield of California to participate in the insurer’s individual and family plan products. Combined with an existing agreement with Anthem Blue Cross, the new agreement ensures that a majority of the health exchange’s eligible participants will have access to City of Hope’s cancer care. Patients who are enrolled in a Blue Shield of California individual and family plan through Covered California or directly through Blue Shield were eligible as of November 1 to access City of Hope or its doctors, as an in-network provider. Future Covered California enrollees will be eligible for coverage, which includes access to City of Hope, as follows:

Enrolling in a Blue Shield or Anthem Blue Cross plan for coverage beginning January 1, 2016.
Enrolling from Dec. 16, 2015 to January 15, 2016, for coverage beginning February 1, 2016.
Enrolling from January 16, 2016 to January 31, 2016, for coverage beginning March 1, 2016.

City of Hope also recently renewed agreements for commercial patients who purchase Blue Shield insurance directly through the insurer for five years. An Anthem Blue Cross agreement to provide services at the institution’s medical center to its commercial patients also was renewed.

For more information, visit www.cityofhope.org.

Filed Under: Employer Benefits, General Health, Men's Health, Reform, Wellness, Women's Health Tagged With: Anthem Blue Cross, Blue Shield, city of hope, individual and family plans, network, offers, Providers

California’s Three Largest Health Insurers Among Few to Show Obamacare Profit in 2014

December 17, 2015 By Jay Baldauf

The Los Angeles Times reports that Blue Shield of California led the country with $107 million in profit on Obamacare policies sold to individuals. Kaiser Permanente was second with $66 million, and Anthem Blue Cross ranked seventh nationally with a $9-million surplus in the Covered California exchange. In the first year of the massive coverage expansion, California’s three largest health insurers bucked the national trend of heavy losses and accounted for half of the gains reported under the Affordable Care Act in 2014.

Blue Shield of California led the country with $107 million in profit on Obamacare policies sold to individuals. Kaiser Permanente was second with $66 million, and Anthem Blue Cross ranked seventh nationally with a $9-million surplus in the Covered California exchange.

Nationwide, insurers reported just $362 million in total profit under a federal rate-stabilization program, while most insurers recorded big losses — a total of $2.87 billion.

Critics have seized on the industry losses as a sign that the health law is failing. Those concerns were amplified when the nation’s largest insurer, UnitedHealth, warned that it may quit selling Obamacare policies because the business was so unprofitable. Now some experts point to California’s experience as a sign that this can be an attractive business for insurers — so much so that it has raised questions about whether state officials should have pushed harder for lower rates.

The data show insurers did not do well nationally, said Larry Levitt, a senior vice president at the nonprofit Kaiser Family Foundation. But in parts of the country where things were working smoothly, like California, insurers were making money.

This new federal data offer the most extensive look yet at how insurance companies fared under the new rules of the Affordable Care Act. The figures are part of a risk corridors program designed as a temporary cushion against high medical claims during the first three years of the national healthcare overhaul.

Under the program, insurers that made money were required to send those funds to the federal government to offset the losses of other companies participating in Obamacare. The arrangement means that California insurers won’t keep these 2014 profits.

Neither will the companies that lost money be made whole right away. The losses were so widespread, and the gains so paltry, that the federal government could only cover 13 cents for every dollar the companies lost. Officials have vowed to use money from this year and 2016 to pay what’s already owed.

Several factors helped California health plans outperform the nation, including strong early enrollment and a politically unpopular decision on policy cancellations. Amid a national uproar, Covered California defied the Obama administration and required participating insurers to cancel existing individual policies at the end of 2013.

That move created a healthier, more diverse mix of old and new policyholders at the start of the exchange. About 35 other states allowed consumers to stay longer on health plans that didn’t comply fully with the new law. That decision left many states with a smaller and sicker population signing up for Obamacare. Many new enrollees had been denied coverage previously because of pre-existing conditions.

“Federal data show that California had the healthiest risk pool of all 50 states,” said Mike Beuoy, a vice president and actuary at Blue Shield. But he and other industry officials say it was hard to predict what would happen heading into the first year of Obamacare coverage.

“We were setting rates for 2014 in the absence of any hard information on what the risk pool would look like,” Beuoy said.

Insurers noted that these excess profits represent a small percentage of the $4.6 billion in premiums paid in the Covered California exchange during 2014. Taxpayers paid about 70% of those premiums through federal subsidies that consumers received based on their income, state data show. “In hindsight, the rates we charged in the individual market were higher than they needed to be,” said Mick Diede, chief actuary at Kaiser Permanente, the state’s largest insurer. For 2015, Kaiser cut its rates 1.4%, on average.

“I think the California experience was a bit of an anomaly,” Diede said. We expect it to even out. Other California insurers may have been helped by the fact that many consumers had difficulty finding a doctor or getting care during 2014. That could have reduced medical claims, boosting the bottom line for companies.

Blue Shield and Anthem Inc., in particular, struggled to deal with the surge of applicants early on and then compounded those enrollment glitches with inaccurate provider directories, regulators found. Officials at Covered California and the insurers say they are examining to what extent those barriers reduced claims.

Michael Johnson, a former Blue Shield official and now a company critic, said the San Francisco insurer should issue more refunds to customers. Blue Shield made this huge profit because they hindered access to care, he said. The company already paid rebates worth $62 million to its individual policyholders for 2014 because it didn’t spend a minimum of 80% of premiums on medical care. A spokesman for Blue Shield said its customer service and provider information have both improved since last year.

A recent report underscores how well California health insurers have held the line on spending premium dollars on medical care despite enormous changes in the market. California was one of only three states nationwide in 2014 where insurers paid out less than 80 cents of every dollar in premiums on medical care, according to Urban Institute researchers. The state went from 81.5% in 2010 to 79.8% last year for the individual market.

Last year’s surplus in California might prompt regulators to take a closer look at the rates that individuals and families are paying for Obamacare. Did Covered California push as hard as it could on rates? It’s a legitimate question to ask, said Katherine Hempstead, who studies health insurance issues at the Robert Wood Johnson Foundation. Unlike most other states, California negotiates premiums with health plans and doesn’t allow every insurer into its exchange.

Peter Lee, Covered California’s executive director, said the state has been effective at achieving stable rates that spare most consumers from double-digit increases annually. The average rate increase in Covered California was 4% for both 2015 and 2016.

A few plans in California made a little bit more than they thought they would in 2014, Lee said. This is evidence the California exchange market can work for patients as well as health plans.

Filed Under: Employer Benefits, General Health, Men's Health, Reform, Wellness, Women's Health Tagged With: ACA, among few, anthem, Blue Shield, California, covered California, Health Insurers, HHS, Kaiser, LA Times, obamacare, reports, show profit, three largest

DMHC Approves Blue Shield’s Acquisition of Care 1st

October 16, 2015 By Jay Baldauf

The California Department of Managed Health Care (DMHC) approved Blue Shield of California’s acquisition of Care1st Health Plan. Blue Shield agreed to the following:

Invest $50 million to strengthen the Medi-Cal delivery system through programs that make finding information simpler for consumers and the public. These projects will help streamline information for plans, providers, consumers and the public.
Propose an industry approach to standardize encounter data submissions. Invite all California health plans to participate by December 15, 2016. The project will initially focus on Medi-Cal plans and providers.
Propose an approach to develop a statewide centralized provider directory. It would have a single portal for consumers to access information, for providers to access and update data, and for health plans to meet legal obligations regarding provider directories. Blue Shield will invite all California health plans to participate, including Medi-Cal managed care plans.
Give $140 million to the Blue Shield Foundation or other charitable organizations approved by the DMHC.
Give $10 million to local consumer assistance programs.
Improve its quality of care performance as measured by the Right Care Initiative and the Office of Patient Advocate Quality Report Card. Likewise, Care 1st agrees to improve its quality of care as measured by the Medi-Cal Managed Care Health Care Options Consumer Guide.
Improve the Care 1st network of contracted specialty providers and Care 1st’s enrollees’ access to specialty care. Blue Shield will also help Care 1st develop and maintain the Care 1st Medi-Cal network.

Care 1st agrees to ensure that Medi-Cal encounter data is submitted accurately and in a timely basis. Blue Shield and Care 1st agree to promote health literacy education and will file a plan with the Department specifying the programs for the Department to evaluate and approve prior to the plans initiating their participation.

Blue Shield announced in January 2015 that it had reached a $1.2 billion agreement to purchase Care 1st, a privately-held, for-profit health plan operating mostly Medi-Cal and Medicare business in Los Angeles and San Diego counties. Following the closing, Blue Shield will convert Care1st to a non-profit corporation. “This order brings Blue Shield into the Medi-Cal program and requires the plan to improve quality and access for Medi-Cal beneficiaries,” said DMHC director Shelley Rouillard.

“The Department’s approval includes commitments by Blue Shield that will improve the state’s health care delivery system, benefit consumers, and improve access in the Medi-Cal program. This includes $200 million in investments to strengthen the health care delivery system, particularly in Medi-Cal, and support consumer assistance programs. Blue Shield must also make improvements in the areas of health care quality and access.

“This agreement will provide important tools to standardize information about managed care and improve oversight of managed care services, for Medi-Cal members and all Californians,” said Jennifer Kent, Director of the California Department of Health Care Services (DHCS). DHCS administers the Medi-Cal program, which provides coverage to 12.5 million Californians, largely through managed care plans.

Filed Under: Employer Benefits, General Health, Medi-Cal, Medicare, Men's Health, Reform, retirement, Senior Health, Wellness, Women's Health Tagged With: acquisition, approves, Blue Shield, Care First, DMHC, MAPD, Medi-cal, Medicare, not for profit

Blue Shield Of California Under Pressure

April 10, 2015 By Jay Baldauf

Blue Shield Of California Under Pressure
Blue Shield of California has been in the news lately and not in a good way. The Los Angeles Times originally broke the story that the company has been stripped of its tax-exempt status. Also in the news, the company’s former chief technology officer is suing after being dismissed before collecting on his $450,000 bonus.

Tax authorities stripped Blue Shield of California of its tax-exempt status in California and ordered the company to file returns dating to 2013, potentially costing the company tens of millions of dollars. Insurance commissioner Dave Jones said, “The Franchise Tax Board decision to terminate Blue Shield’s tax-exempt status confirms what I have said for years – that Blue Shield charges excessive rates and acts like a for-profit health insurer. Blue Shield is also dodging the payment of premium taxes by taking advantage of a legal loophole that allows Blue Shield to move its health insurance products from Department of Insurance regulation to Department of Managed Health Care regulation.”

The Department of Insurance collects premium taxes from all for-profit and non-profit health insurers. Jones said that Blue Shield has moved most of its health insurance policies over to the Department of Managed Health Care. “We need to pass AB 1434 by Assembly member Kevin McCarty to close the loophole that allows Blue Shield to move its health insurance products to the Department of Managed Health Care to avoid the strong consumer protection oversight of the Department of Insurance and avoid paying premium taxes,” he said. The Blue Shield loophole costs the state $100 million in premium taxes annually. As a tax-exempt company with surplus of $4.2 billion Blue Shield was able to accumulate an enormous amount of money on which it did not pay state taxes by evading the tax on the premiums it collects, he added.

Blue Shield of California issued the following statement in response: Blue Shield of California is a mission-driven not-for-profit health plan with a demonstrated commitment to the community. A longtime supporter of healthcare reform, we limit our net income to 2% of revenue and have contributed $325 million to our foundation’s efforts to improve the health safety net and address domestic violence. We pay federal income taxes, state gross premium tax and Affordable Care Act taxes and fees. We believe we meet the requirements for a state income tax exemption and have challenged the California Franchise Tax Board’s finding to revoke our tax exempt status. We filed California state income tax returns beginning in the 2013 tax year. The FTB decision has no bearing on our ability to continue to meet the needs of our members and community and we remain in strong financial health. Regardless of whether we prevail in our tax dispute, we will remain a not-for-profit.

Filed Under: Employer Benefits, General Health, Men's Health, Reform, Wellness, Women's Health Tagged With: Blue Shield, California, commissioner, Dave Jones, DMHC, DOI, file taxes, LA Times, not for profit, tax exempt status, Under pressure

Target & Kaiser Team Up for Onsite Clinics

November 29, 2014 By Jay Baldauf

Target Corp. and Kaiser Permanente are teaming up to launch four Target Clinics in Southern California in November and December. Target customers will have access to a wide array of primary health care services and expanded services that are not typically available in retail clinics. Expanded health services include pediatric and adolescent care, well-woman care, family planning, and management of chronic conditions like diabetes and high blood pressure. Through this collaboration, Kaiser Permanente will provide care to Kaiser Permanente members and non-members.

Kaiser Permanente will staff the new clinics with licensed nurse practitioners, licensed vocational nurses, and will have physicians available by telemedicine consultations, giving local Target guests access to Kaiser Permanente’s high-quality affordable health care services. The clinics will be located within Target stores and will provide walk-in care, along with the convenience of the Target Pharmacy.

Target Clinic has 79 locations in seven states. Target Clinics are also in the process of contracting with Medicare, MediCal, and with Blue Shield of California and other leading health insurance plans in the area for certain services. This access will provide greater, more affordable access to the world-class medical care that Kaiser Permanente delivers.

Kaiser Permanente-staffed clinics at Target locations open November 17 in Vista, San Diego, and Fontana, and a fourth clinic in West Fullerton will open on December 6.

Filed Under: Employer Benefits, General Health, Men's Health, Reform, Wellness, Women's Health Tagged With: ACA, Blue Shield, HHS, Kaiser, onsite clinics, target, Target Clinics, Target pharmacy, team up

Court Decides on Mental Health Parity

June 21, 2014 By Jay Baldauf

On June 10, the California Court of Appeals issued its decision in Marissa Rea v. Blue Shield of California. The Court held that the California Mental Health Parity Act requires Blue Shield to provide medically necessary treatment for people suffering from severe mental illnesses, including anorexia and bulimia. The case involved Blue Shield’s denial of residential treatment for the plaintiffs’ eating disorders. Blue Shield argued that all the Parity Act required was equality of treatment between mental and physical illnesses and, since its policy did not cover residential treatment for physical illnesses, it did not have to provide residential treatment for severe mental illnesses. “This decision confirms that residential treatment is one of the most effective treatments for eating disorders, and must be available to California insureds who need this treatment,” said Lisa Kantor, who argued the case to the Court of Appeals. For more information, visit http://www.kantorlaw.net/Eating_Disorder_Blog.aspx.

Filed Under: Employer Benefits, General Health, Men's Health, Reform, Wellness, Women's Health Tagged With: ACA, Blue Shield, California, California Court of Appeals, Court, decides, HHS, Mental Health, parity