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Pacific Business Group on Health, a coalition of the Bay area's largest companies have begun to offer a non-managed care product. The new product eliminates co-payments and gatekeepers. What is this wonderful idea that will save 10%. It's called a MSA. The employers will place a fixed amount into an account for the employee. The employee decides how to get the most for his/her dollar. When that money is gone, the employee will pay some deductible, usually about $500, and then a catastrophic insurance plan that works like a PPO will kick in. They may go directly to specialists and to a wide range of hospitals. Currently about 75% of the state's physicians take the insurance. The company behind this and the one offering the insurance plan is Definity Health of Minnesota.
In Cleveland QualChoice has cut about 100 physicians. QualChoice is owned by University Hospitals Health System and the fired doctors are part of two groups owned by Lakewood and Fairview Hospitals. These hospitals are part of the competing Cleveland Clinic Health System. About 60 physicians will be asked to rejoin, but they do not admit all their patients to the affected hospitals.
In an interesting article the New England Journal of Medicine states that it makes no significant difference in patient referrals whether or not there is a gatekeeper. This means that either gatekeepers are referring too many patients or that they are not needed at all. The extra visit for the referral is not needed and delays care as well as upsets patients. This may lead to a greater number of law suits. Dr. Lawrence, the CEO of Kaiser, believes that gatekeepers have a great role in coordinating care. This may have true in the past but Kaiser is moving to fully electronic records so that all can access the entire record (with the usual HIPAA restrictions).
Kaiser of Northern California is doubling its premiums for Medicare patients, reducing its prescription benefits from $1600 to $1000 per year and placing a surcharge on ambulance and emergency room service.
Over 6000 employers in Massachusetts are considering direct contracts with hospitals and physicians. This cuts out the unnecessary middle man, the HMO. The employers believe that their costs will go down. This has already happened in Minnesota. The CEO of Harvard Pilgrim HMO stated that if the HMO doesn't do the administration, someone else will need to. My question is why? The only thing that need to be looked at is the appropriateness of the billing. This is not difficult to do. Look at Medicare. They do it every day.
In a related story the LA Times has reported that CALPERS, the largest purchaser of health care in the country outside the federal government, will probably not be going to direct contracting with physicians. The rationale is the start-up costs and the potential for making CALPERS into its own HMO. The California State Treasurer will suggest that the organization re-look at the idea next year when it reevaluates its ongoing strategy.
Indiana pharmacists have filed for the removal of the state human services officials for contempt of court. The court had blocked a payment cut for pharmacists filling Medicaid prescriptions. The drug cut came out of a Medicaid budget shortfall. This will probably lead to less pharmacists being able to be paid and the cutting of hours by the pharmacies in the heavy Medicaid neighborhoods.
Aetna has done it again. The insurance giant has now been fined $1.15 million and ordered to pay physicians and others who they have not promptly paid. Aetna has sixty days to make the payments. If they continue their knowing policy of late payments it is possible to continue to increase the fines and even take away their license to practice in the state. Of course the consumers will pay the fine by having higher payments.
Kaiser has done a first in northern California. It has purchased a 100 physician medical group. The Alameda Medical Group was the top admitters to Alameda Hospital which now will be toast. It will also have an adverse reaction on Summit/Alta Bates System as a tertiary center. This is a way to add physicians when no new physicians are coming to the Bay Area due to the high cost of living. Kaiser is also hoping to have the 20,000 patients associated with the medical group switch to Kaiser insurance.
CHW, a 48 hospital chain, is continuing to lose money but not as fast as before. The net operating loss for the last fiscal year is $119 million down from $$307 million the year prior.
The Denver Post writes about the loss of Medicare HMOs cutting benefits. The slant is that the people that need the care will be it the hardest. I agree but they do not say that there is no right to an HMO. The rights extend only to Medicare itself. HMOs are artificial organizations that were formed to lessen costs and have failed in there only charge. The HMO execs have agreed that their cuts are targeted at those with chronic illness, since they use the system the most and are the costliest. The interesting thing about HMOs is they are focused on only the short term profits. They do not look at how much it will cost to not pay for the drugs and then have the patients visit emergency rooms and be hospitalized at a greater rate.
Health Net has problems in contracting. They have sent letters to their 31,000 patients in California's Contra Costa county stating they may not have a contract with the Mt. Diablo/John Muir Network by the January 1 deadline. The network consists of the John Muir IPA and a salaried foundation medical group. It looks like the patients in Contra Costa will need to find a new insurer to continues seeing their physician. In another area that could affect 300,000 patients Sutter Health and Health Net have not come to terms. This would affect the 26,000 Medicare HMO patients that currently use the Sutter facilities as well as the 275,000 non-Medicare patients. In all probability Health Net will pay more money to both Sutter and the Network. The physicians and hospitals will still see the patients but through a different insurer.
In a new wrinkle a state has warned its residents not to join a particular Medicare HMO. Wisconsin has warned its residents not to join Medicare Complete HMO, now called PrimeCare Gold and sold by United. The reason given is the high cost of the HMO for the consumers. This is the only HMO available in southeast Wisconsin. The HMO has decrease its premiums $10 per month but has raised the deductible for hospital care to $350 per day up to a maximum of $4,800. A standard Medicare patient would pay only $812 for the same care.
Aetna, the largest medical insurer, lost almost $50 million in the past quarter and will lop off more employees. Aetna also faces a significant membership decline and has been fined millions of dollars for late payments to medical providers. Aetna actually beat the street numbers and made $10 million on its managed care as opposed to a loss of $100 million in the same quarter a year ago.
Look at the numbers. The headline states Michigan HMOs lose $38 million. This puts all in one pot. The real important numbers show that 19 of the states 29 HMOs actually made money. However, all but eight did worse this quarter than a year earlier. One plan, OmniCare, skewed the entire state as it lost $41 million in the quarter. This HMO was seized by the state. The largest HMO in the state, Blue Care lost $18 million.
A Texas HMO is in trouble. It's only physician group in the Arlington area (North Texas Specialty Physicians) has decided not to do new business with AmCare Medicare HMO. The physicians will continue to see the current patients only. The reason is Secure Horizons, AmCare's competitor, scaled back benefits allowing those with more needs to consider going with AmCare to the detriment of the physician group. AmCare agrees with the decision.
The SF Business Times reports that in Pleasanton, California, the Pacific Health Systems, the areas only IPA is shutting as of the first of the year. The 30,000 patients will be transferred to new doctors or new plans. The IPA's 400 physicians hope that the patients will opt for either point of service or the HMOs will direct contract. Top
The California Seismic law states that hospitals be retrofitted for seismic safety by 2008 or completely rebuilt by 2030. After 2008 all hospitals must be able to withstand a major earthquake and remain operational after a major quake by 2030. This unfunded mandate will take about $24 billion from the healthcare system. On top of the seismic problems are the design problems for future unknown medical advances. Also the unknown outpatient versus inpatient management of patients must be considered. Rooms are being designed as patient rooms that may be converted to other type rooms if needed. Top
West Virginia Malpractice Crisis Continues
In West Virginia the crisis continues (please see my last 3-4 articles). Now in a special session the legislature is considering physician owned medical malpractice companies. The legislature also watered down reporting structures that the Governor requested but that St. Paul Insurance stated would make them leave the state now. St. Paul wants to be able to allow contractual increases in rates with groups above the state allowable rate. Legislators do not seem to understand supply and demand and not artificially low or high tariffs. Look at the California energy idiocy. The physicians are not happy now about having their own company, but they will be.
The Charleston Daily Mail reports that in view of the malpractice crisis the Charleston Medical Center is planning to halt surgery and close its emergency room by January 1, 2002. The surgeons and anesthesiologist's malpractice insurance stops at that time. The legislature believes that they can solve the problem in the five days left in their emergency session. One of the solutions is to go from indemnity to claims made policies which would require at least five years prior to the physicians having their "tail coverage" paid for. This would lead to many older physicians retiring now. Top
Pennsylvania Orthopods Stop Surgery
The second group of Pennsylvania Orthopods this year have announced their decision to stop performing surgery due to high malpractice rates. Premier Orthopedic of Haverford will stop all surgery as of January 1. The groups malpractice premiums for performing surgery was going from $60,000 to $100,000 per person per year and up to $130,000 the following year. The premiums without surgery is about $20,000. This savings of $100,000 per physician makes fiscal sense. This decision may close the county's trauma center. The group also wants other Orthopedic Surgeons to look at their own finances and hopefully come to the same conclusion. The ultimate idea is to pressure the legislature to continue to go toward more meaningful tort reform. Earlier this year a group in Frankford stopped doing surgery but the hospital agreed to help pay premiums. Top
In the ongoing struggle between Intermountain Health and the orthopedic community, 100 of 130 orthopedic surgeons of the state have joined the Federation of Physician and Dentists which is affiliated with the AFL-CIO. The original action by the Ogden group in withdrawing from IHC was the focal point for this action. IHC says the problem of low payments to physicians is not their fault but is because the employers won't pay more. This move will allow each physician to have a negotiator when they deal with the MCOs. Top
In one of the most egregious privacy snafus the University of Montana has placed on its web site for eight days the psychological files of teenagers and children. There were 400 pages of documents on line. Almost all had personal identification associated with the medical history. The University said a technical employee may have accidentally pushed the wrong button and the electronic medical records magically appeared on line. This goes with the Lilly report of Prozac patients earlier in the year and the last year Kaiser release of wrong information to its members. This may lead to million of dollars in damages against the University for breach of privacy and emotional distress. Some institutions give the psychiatric patient a choice of paper or electronic medical records to protect against this type of problem. Top
The California Medical Association has released a study showing that California emergency rooms lost about $325 million last year. Sixty EDs have closed in the past 10 years of which 10 were in the past year. The study showed that 82% of the emergency rooms lost money in 2000. The primary causes are the seven million uninsured and the insurance companies not paying enough for the care provided. Top
Healdsburg Taxes Itself for Hospital
Healdsburg, California in Sonoma County has passed a referendum by greater than the 2/3 yes votes needed a parcel tax to be collected each year. This tax will provide about $1.8 million per year. At the same time the voters made the hospital into a District Hospital from a non-profit one, governed by a five person board. Healdsburg had dropped the money losing maternity and ICU last year and will probably not bring them back. Last year a similar process happened in Sebastopol, California. Top
South Broward Opens Patient's Mail
In a typical over reaction to the problem with Anthrax in the New York and Washington area, The South Broward Hospital has begun opening all mail sent to patients. This is done with the patient's approval. If the patient does not consent the mail is sent to the patient's home. The South Florida Hospital Association does not believe this is necessary. It should be rescinded as soon as possible. Top
A Stanford cardiovascular surgeon, Simon Stretzer MD, has found a new way to make money for research. He has purchased the last remaining Las Vegas totally nude club that serves alcohol. He invested here since it had the potential for a higher return on his investment than a standard real estate investment. There has been such a backlash from this that the surgeon is selling the three clubs but keeping the land. Top
Independent Surgical Centers v Hospitals
In Syracuse, New York the local physicians have opened their own surgical center. This is allowed under the Stark rules. These centers take the most profitable cases away from the hospitals. There are now eight free standing centers in the County. These free standing centers are more cost efficient and deliver better care with nurses who work specifically with the specialty involved. Most of the time if physicians approach a hospital about doing a joint venture, they are rebuffed either entirely or partially by the hospital requiring the majority share. Piggery leads to bankruptcy or to law suits. In Rome, New York the Rome Ambulatory Surgery Center has sued Rome Memorial Hospital for antitrust two weeks before it was forced to shut down. The suit claims the hospital threatened the physicians with loss of hospital privileges if they used the center. This was reported here many months ago. Also I called the president of the New York Medical Association who stated he was aware of the problem. The Association apparently has no vertebral column since they have not offered to help the physician members. The hospital also negotiated an exclusive contract with the area's largest private insurer. This is not illegal and could have been done by the center as well. Top
DISCLAIMER: Although this article is updated periodically, it reflects the author's point of view at the time of publication. Nothing in this article constitutes legal advice. Readers should consult with their own legal counsel before acting on any of the information presented.