17 March 2011
California Edition
Calendar
March 22
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March 24-25
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April 8-10
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E-Mail
info@payersandproviders.com with
the details of your event, or call
(877) 248-2360, ext. 3. It will be
published in the Calendar section,
space permitting.
Blue Shield Cancels Pending Hike
Insurer Was Under Pressure To Moderate Stance
Blue Shield of California had the numbers to
support its third rate hike on its 194,000
individual policyholders in the past seven
months, but apparently overwhelming public
disapproval prompted the abrupt cancellation
of the last increase this week.
The San Francisco-based insurer
announced Wednesday it would back off the
rate hike scheduled to go into effect on May 1,
and would impose no further rate increases on
its individual policyholders in 2011.
"As long-time advocates for universal
healthcare coverage, we are also deeply
committed to the success of health reform. The
best way to fulll our mission and make
reform work is to keep costs down,” said Blue
Shield Chief Executive Ofer Bruce Bodaken.
“By agreeing not to raise rates this year, we are
helping to make coverage more affordable for
our members during tough economic times.
It's a nancial risk for us, but a risk that's
worth taking."
Blue Shield said foregoing the rate hike
would save its individual policyholders
between $35 million and $40 million this
year. However, the insurer claims its losses in
2011 from this segment would top the $27
million hit it took in 2010, noting that
skyrocketing medical costs are among the
reasons for the mounting losses.
Blue Shield’s latest rate hike was to
average 6.5%, bringing the cumulative
!!!"#$$!%&!'(&)*+!,!'*-./0)*+!'1%2/+3/456!778
average increase per policyholder to 30%
since last fall.
However, the Los Angeles Times reported
last week that hundreds of enrollees would
see their premiums climb more 80% or more
when all three rate hikes were factored
together, and nearly a quarter of its customers
would experience increases exceeding 50%.
That disclosure was an apparent tipping point
for Blue Shield’s decisionmakers, according to
some observers.
“There was a lot of public shock that this
could be happening,” said Judy Dugan,
research director for Consumer Watchdog, a
Santa Monica-based advocacy group that
organized a protest at Blue Shield’s
headquarters earlier this year over the
premium increases. The group has also been
critical of Blue Shield’s mushrooming cash
reserves, which total about $2.3 billion, up
from $400 million in 2002.
Dugan said Blue Shield’s reserves – which
are about four times the amount legally
required for solvency purposes – are not being
used for the purpose of protecting the insurer
from economic uncertainties or a catastrophic
avalanche of medical claims.
“it continued to grow even in the deepest
part of the recent economic downturn,” she
said.
Continued on Next Page
 Payers & Providers
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In Brief
Anthem Inks Deal With
ApolloMed
Anthem Blue Cross of California
has entered into an agreement with
Glendale-based ApolloMed to
provide hospitalist services in Los
Angeles County to a new wave of
Medi-Cal enrollees expected to
enroll in the plan in mid-year.
The pact with ApolloMed will
focus on the Aged, Blind and
Disabled Medi-Cal recipients who
will enroll into managed care plans
in June. About 550,000 such
individuals will be put into
managed care programs statewide,
with about 150,000 in Los Angeles
County, although they will have the
option of picking among several
managed care plans.
ApolloMed, which provides
services at 24 acute care hospitals
in the region, will closely monitor
the ABD Medi-Cal enrollees in
order to ensure they are receiving
appropriate care. Hospitalist
programs can reduce hospital costs
by up to 20% and average lengths
of hospital stays by as much as
30%.
"Anthem understands that a
hospitalization can be a worrisome
experience for our members; we
want to ensure that any time our
members require hospitalization
they have access to comprehensive
health care and feel confident that
they will have a successful
discharge and a recovery," said
Kevin Hayden, president of
Anthem's State Sponsored Business.
"Our agreement with ApolloMed
will enhance the quality of care our
members receive during their
hospitalization to help improve
health outcomes."
Terms of the deal were not
disclosed.
Continued on Page 3
NEWS
Blue Shield (Continued from Page One)
In addition to the public protest,
California Insurance Commissioner Dave
Jones conrmed that his ofce had received
more than 1,000 individual complaints from
consumers about the rate hikes.
All of this appeared to contribute to Blue
Shield’s sudden about-face on the issue after
steadily insisting for months that the rate hike
would be imposed – although it had made
some incremental concessions as to when it
would occur.
At the behest of Jones, Blue Shield agreed
to wait 60 days and have outside actuary
Axene Health Partners verify its justication
for the hike – after originally stating it would
implement the rate hike and issue refunds to
consumers if Axene found anything amiss
with its actuarial data.
However, Axene – which gained
prominence last year when concluding that a
rate hike by Anthem Blue Cross was not
actuarially justied – concurred with Blue
Shield’s numbers late last month. As recently
as last weekend, Blue Shield had issued
public statements saying the rate increases
would be imposed as scheduled.
“Today’s news is a welcome
development and certainly a relief for several
hundred thousand of Blue Shield
policyholders in California,” Jones said at a
hastily arranged press conference on
Wednesday. “But, it reminds us all that
insurance companies hold all the cards when
it comes to setting rates. Blue Shield
policyholders still had to pay the rst two rate
increases. Those with health insurance are at
the mercy of insurance company decisions to
raise rates multiple times each year.”
Jones said his ofce was sponsoring AB
52, legislation that would allow regulation of
rate increases. Authored by Assemblyman
Mike Feuer, D-Los Angeles, the bill is
currently in an abbreivated form, but in
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Page 2
general would permit both Jones’ agency and
the Department of Managed Health Care
authority over hikes in premiums, co-
payments and deductibles.
Jones had authored similar bills when he
served in the Assembly until last year, but the
legislation was repeatedly defeated in either
committee or by the Legislature.
It remains unclear how Blue Shield’s
action would affect rate increases scheduled
between April 1 and June 1 for individual
policyholders who purchase coverage from
Anthem Blue Cross of California, PaciCare
and Aetna.
Anthem and Aetna spokespersons said
their increases – averaging 15% and 2.8%
respectively – were still pending. A PaciCare
spokesperson said it was condent its
increases, which average about 7.5%, will be
applied.
Anthony Wright, executive director of the
advocacy group Health Access and a member
of the Payers & Providers editorial board, was
hopeful that Blue Shield’s decision would
prompt other insurers to “reassess what rates
are justied and reasonable in these tough
economic times.”
Wright also voiced support for Feuer’s
bill.
“The insuers should have to go through a
rate review process, and provide justication
for those rates. And what we ultimately need
is a regulator willing to inject themself into the
process if the rates are proven to be
unjustied,” he said.
Dugan remained skeptical that Blue
Shield’s actions would lead to a wholesale
stoppage of regular premium increases –
instead, she observed, it may work more as a
trial balloon than at.
“They have nothing to lose by putting up
these rate increases and seeing how they y,”
she said.
Payers & Providers
Longer ALOS!*
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*For our ads, not your hospital
In Brief
Werft Named As CHA
Chairman
Ronald Werft, chief executive
officer of the two-hospital Cottage
Hospital System in Santa Barbara,
has been elected chairman of the
board of directors for the
California Hospital Association.
“It’s truly an honor to lead an
association as respected as
CHA...has a well-earned reputation
for effectively advocating on behalf
of hospitals and the patients and
communities we serve. This is
especially important for
California’s community hospitals in
these very challenging times,”
Werft said. “We must be vigilant in
our advocacy efforts to ensure that
hospitals are able to meet the
growing expectations of our
patients while making health care
more affordable and accessible to
all.”
Along with Werft, Steven J.
Packer. M.D., CEO of the
Community Hospital of the
Monterey Peninsula; Roger E.
Seaver, CEO of Henry Mayo
Newhall Memorial Hospital; and
Patrick Fry, CEO of Sutter Health,
were also elected to the board.
U.S. Uninsured Rose To
52 Million
The number of Americans who
lacked health insurance coverage
at some point last year reached 52
million, according to new data
from The Commonwealth Fund.
That compares to 38 million
lacking health coverage at some
point during 2001.
The non-profit foundation also
reported that 9 million Americans
lost job-based insurance coverage
during the steep recession that
began in December 2007.
However, the Commonwealth
Fund stated that healthcare reform
should guarantee against such
steep coverage losses in the future.
NEWS
Health Net Reports Data Breach
Loss of Hard Drives Prompts Two State Probes
Health Net has reported a potential data
breach that could affect nearly a million of its
members in California, prompting probes by
two regulatory agencies.
The Woodland Hills-based insurer
announced earlier this week that “several” of
its server drives used at its data center in
Rancho Cordova were unaccounted for.
The drives contain information and
possibly Social Security numbers connected to
1.9 million current and past enrollees in
California and other states, as well that of
employees and providers, according to state
ofcials.
Health Net said it had launched an
investigation into the matter, and would notify
the individuals whose names are on the hard
drives. It is also offering free credit report
monitoring for two years, fraud resolution
support and restoration of credit services.
L.A. Care Allots $2M For EHRs
Money Through HITEC-LA Will go to Providers
L.A. Care Health Plan has earmarked up to
$2 million so its provider network may
purchase and implement electronic health
record systems.
The Health IT Incentive Program will
provide physicians with a large volume of
patients with L.A. Care up to $5,000 in
incentives to install an EHR, on top of
previous incentives provided by the Medi-
Cal managed care insurer. The funds will be
provided through HITECH-LA, L.A. Care’s
Regional Extension Center.
“Our goal is to minimize the nancial
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Page 3
Health Net’s disclosure on Monday
prompted separate probes by the
Department of Managed Health Care and
The California Department of Insurance.
Insurance Commissioner Dave Jones
said his department would investigate
whether Health Net did everything possible
to prevent the loss of data.
"With identify theft crimes on the rise, it
is more important than ever to act
immediately and comprehensively in
addressing a privacy breach,” Jones said.
DMHC ofcials said nothing about the
scope of their investigation, other than to
disclose that the missing data contained
about 622,000 Health Net HMO enrollees
and about 223,000 enrollees in PPOs and
other products overseen by the Department
of Insurance.
impact for our network physicians and provide
customized support services to help practices
achieve successful implementations of
certied EHRs, reach meaningful use, and
qualify for federal funding,” said Richard
Seidman, M.D., L.A. Care’s senior medical
director.
St. John’s Well Child and Family Center
was among the rst recipients, getting $17,500
for ve qualied physicians.
L.A. Care is the state’s largest Medi-Cal
managed care insurer, with about 800,000
health plan enrollees in Los Angeles County.
]
Payers & Providers
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OPINION
Seniors To Be Hit Hard By Budget Cuts
State And Federal Plans Would Hurt Nursing Facilities
For low-income Californians who rely on
the government for their long-term care
needs (two-thirds of elders in skilled
nursing homes receive assistance from
Medi-Cal) there’s a trio of disturbing
financial proposals that threaten patient
safety and the delivery of
quality care.!
!On the federal level,
the Obama
administration will end
the unprecedented
amount of economic
stimulus funding that’s
been flowing to
California and other
states since 2008 as part
of the American Recovery
and Reinvestment Act.!
Of the $51 billion that
has been awarded to the
state so far, $13 billion
has been dedicated to
funding California’s
Medi-Cal program. In
June, the stimulus money
will disappear even as the recession By Jim the past decade. If an average 99-bed
continues to ravage the state. ! Gomez skilled nursing facility chose to absorb
In addition, in his $3.7 trillion
budget for FY 2012, President Obama
would squeeze healthcare providers by
lowering Medicaid payments to states by
$1.8 billion a year for the next decade.
Ironically, Medicaid programs in states
across the country already underfund
nursing homes to the tune of $5.6 billion.
Put another way, Medicaid programs
pay facilities an average of $7.17 per hour
per patient – less than the minimum wage.
Finally, in his proposed budget, Gov. Jerry
Brown wants to slash $1.7 billion from the
state’s Medi-Cal program, resulting in a
10% across-the-board cut for nursing home their part, but they already carry more than a
providers and operators of small
community-based six-bed homes for the
developmentally disabled. !
The continued underfunding of Medi-
Cal will have a traumatic impact on poor
and elderly seniors. Last year, skilled
nursing providers were paid 93% of their
projected costs. With a 10% cut they would
be paid 84 cents on the dollar. For a typical
99 bed facility, a loss of $17 per patient day
would translate into a revenue reduction of
!!!"#$$!%&!'(&)*+!,!'*-./0)*+!'1%2/+3/456!778
Page 4
$336,000 a year.! Strict regulations must still
be met.! Cost components like food, and
patient supplies must be purchased.! Rent has
to be paid. Twenty-four hour care must
continue, but since labor represents 70% of
facility costs, the options for providers will be
to reduce wages or cut
jobs.!
Both choices are
onerous. Wage reductions
would have a negative
impact on those on the
front lines of patient care
– certified nursing
assistants – who are
responsible for bathing,
grooming, feeding and
providing important social
interaction and emotional
support for patients.
Worse, job eliminations
would cut into
improvements made in
direct-care staffing ratios
which have brought more
workers into facilities over
the 10% cut by shrinking its
workforce, the jobs of 9 full-time direct-care
staffers – out of 55 – would be eliminated.!
Taken together, these reductions will have
significant consequences for the typical
nursing home resident – an 86-year-old
widow just released from the hospital who
requires multiple medications, skilled nursing
care and continuous professional oversight to
treat an assortment of medical and behavioral
issues.
This is an unacceptable state of affairs for
members of the Greatest Generation. Times
are tough and providers are willing to do
fair share of the burden. !
Jim Gomez is CEO/President of the California
Association of Health Facilities.
Op-ed submissions of up to 600 words are
welcomed. Please e-mail proposals to
editor@payersandproviders.com,
Payers & Providers MARKETPLACE/EMPLOYMENT Page 5

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! !

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*New England Journal of Medicine, 2004.

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Payers & Providers MARKETPLACE/EMPLOYMENT Page 6

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