Health Plan

Retail clinics get high marks in cost savings study

Anne Zieger — Mon, 15 Sep 2008 20:37:23 -0400

According to a new study, retail clinics are cheaper for patients than going to a primary care physician's office. The study, published in the journal Health Affairs and conducted by Dr. Lief Solberg of health plan HealthPartners, found that the theory that many patients go to a retail clinic first and then to their primary care physicians for follow up afterward does not hold up. By tracking visits of HealthPartners members to MinuteClinics, researchers found that a patient treated at the retail clinic for one of five basic illnesses was $51 cheaper on average than a patient treated at an emergency room, and $55 cheaper than a patient treated by a primary care physician. Pharmacy costs were also reportedly some what less expensive.

What made this study different than some studies of retail care is that it looked at the total cost of an episode of illness, rather than a single visit. It found that 14.5 percent of MinuteClinic patients ended up needing follow-up visits in the study, a very comparable number to the 14.2 percent of traditional clinic patients who needed follow-up treatment.

To learn more about the study:
- read this Pioneer Press article

Related Articles:
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Start-up closes 23 Wal-Mart retail clinics
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Wal-Mart plans 2,000 retail clinics

WellPoint pushes stock prices up, but not profits, by raising premiums

Anne Zieger — Wed, 10 Sep 2008 01:34:30 -0400

Five months ago, Angela Braly, the CEO of health plan giant WellPoint, told investors that the plan could turn around falling profits by raising premiums and squeezing providers harder on fees. (OK, she didn't say "squeeze," but that was the idea.) At the time, Braly was struggling to calm Wall Street after missing its first-quarter profit estimates by a wide margin. Your editor suggested that this just wasn't going to happen the way she described, since raising premiums in the current environment can make a lot of enemies.

Well, Ms. Braly, my apologies for being so skeptical--you've delivered on at least part of what you promised. Since that conference call, Braly has indeed overseen some premium hikes--in some cases fairly substantial ones. Unfortunately, the rest of the plan hasn't gone as hoped. According to the Wall Street Journal, WellPoint has lost a substantial 189,000 members in its individual and business plans, and expects to shed 150,000 more members by December. Some of these defections were from customers who'd bought an allegedly cheaper high-deductible plan, only to find that premiums for some jumped 30 percent or more.

Worse, despite having taken such a beating to please investors--who've rewarded WellPoint by boosting its share price back to better levels--the price is still off by about 40 percent this year. Now, WellPoint is really against the wall since it appears that it simply can't please both investors and employers. The fourth quarter of this year could be a bloodbath if WellPoint doesn't find a way to squeeze savings out of internal operations rather than expanding prices to its customers (which are, of course, what premiums are).

Now, the company is working to both get a better handle on medical costs and speed the consolidation of old claims-processing systems with newer technology. The process, execs say, created some information backlogs that led to artificially low premiums they're now correcting. Hmm...good luck selling that one, folks.

To learn more about WellPoint's struggles:
- read this Wall Street Journal piece (sub. req.)

Related Articles:
Health plans to boost premiums, squeeze providers
Fear and trembling in health plan land
Insurer troubles could mean more bad debt for providers
WellPoint profits fall 25 percent during first quarter

Amerigroup's $225M fine may not benefit providers

Anne Zieger — Wed, 20 Aug 2008 11:37:30 -0400

Last week, Medicaid health plan Amerigroup agreed to pay $225 million to settle charges that it excluded pregnant women and sick members to avoid paying their bills. Among the victims of Amerigroup's alleged bad conduct were providers, who ended up not getting even the pittance that Medicaid would otherwise have provided to them. In theory, it would be great if hospitals and physicians were given some of the proceeds of the settlement, as they probably suffered significant losses. However, as things stand, it doesn't seem that this will happen.

While $56.25 million of the fund has been set aside for Cleveland Tyson, a former company executive who gets the money as his reward for serving as a whistleblower, the U.S. Department of Justice and Illinois Attorney General's office will split the remainder of the funds. The state will provide some of the money to the state police and AG's office, both of which will get about $16.6 million, and pass on $67 million to the general revenue fund, although none has been earmarked for providers.

It's not as though such funds aren't needed, however. Illinois hospitals, for example, averaged roughly $1 billion per year in bad debt expense over the last several years, and provided around $400 million worth of charity care, according to a spokesperson for the Illinois Hospital Association.

To find out more about this settlement's(lack of) impact on providers:
- read this InsideARM piece

Related Articles:
Amerigroup settles Medicaid charges
Amerigroup may settle Medicaid fraud charges soon
Illinois doctors fight Medicaid HMO plan
Audit finds that IL Medicaid paid providers late

N.J. Blue plan files to go for-profit

Anne Zieger — Wed, 20 Aug 2008 00:50:58 -0400

New Jersey's Horizon Blue Cross and Blue Shield has filed with the state to convert from not-for-profit to for-profit status, in what it says is a bid to boost its financial options. In its filing with the state's attorney general and Department of Banking and Insurance, the health plan said that switching will give it more financial flexibility. In particular, it expects to gain greater access to capital for investment in information technology, pay-for-performance initiatives and business operations. These investments would exceed the plan's annual $35 million by a projected $20 million to $30 million per year during the next five years. The plan has already set aside $500,000 to help hospitals in its network bring up medical history technology.

Horizon's application comes under a 2001 law authorizing such conversions. Under its terms, proceeds from the first sale of stock in the new, for-profit company must be deposited in a public foundation that was set up to pay for insurance affordability programs and public health efforts. The payment is intended to pay back the state for the tax breaks Horizon got as a not-for-profit. The deal is projected to generate about $1 billion, down from an estimated $3 billion the health plan expected to generate for the state three years ago.

To learn more about the planned switch:
- read this Modern Healthcare piece (reg. req.)
- read this piece in The Star-Ledger

Related Articles:
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WellPoint loses money for Q2, but still pleases investors

Anne Zieger — Mon, 28 Jul 2008 19:57:42 -0400

Giant health plan WellPoint had what most financial types would consider a tough second quarter, with earnings falling 10 percent and its overall profit predictions for 2008 falling. Still, given that these numbers were better than investors expected, the company's stock did OK nonetheless. Perhaps the fact that it raised premiums--as executives vowed to do last quarter--gave investors more confidence that things weren't going south completely.

WellPoint's second-quarter net income fell to $750.5 million or $1.44 a share, from $835.2 million or $1.35 a share, a year earlier. Meanwhile, WellPoint has cut back its 2008 earnings projections, with the company now forecasting profits of $5.42 to $5.57 a share rather than $5.42 to $5.67. (While that's a small difference on the top end, every trim-back hurts, particularly on the Street.)

WellPoint CEO Angela Braly said that the lower forecast comes from bigger drops in enrollment in its commercial plans than it had expected. In fact, the company expects health-plan enrollment to fall by 150,000 in the second half of this year. She also noted that recent settlements with California regulators over its rescission policies for individual policy-holders have had an impact.

That being said, executives were able to point to some successes. For example, WellPoint cut its backlog of medical claims by 23 percent from the end of 2007, sped up its claims-paying system and revised its premiums to make sure it won't be taking big medical losses in the future, they said.

To learn more about WellPoint's financial performance:
- read this Wall Street Journal piece (sub. req.)

Related Articles:
WellPoint pays hospitals $11.8M to settle bills from rescissions
WellPoint profits fall 25 percent during first quarter

WellPoint pays hospitals $11.8M to settle bills from rescissions

Anne Zieger — Tue, 08 Jul 2008 20:32:01 -0400

Leading health plan WellPoint has agreed to pay $11.8 million to settle claims with hundreds of hospitals that it failed to pay after it dropped patients after treatment. WellPoint was sued by about 480 hospitals after it refused to pay them when it dropped policies of individual policyholders. The health plan had dropped these policyholders, it said, because the patients made mistakes on their applications or had pre-existing conditions. The patients, for their part, said that WellPoint subsidiary Anthem Blue Cross had improperly investigated their medical histories for evidence of such conditions after they'd submitted costly medical bills.

In their case, the hospitals said that Anthem should pay, given that the health plan authorized the care for patients who, at the time of treatment at least, were members in good standing. The fact that Blue Cross dropped the patients later had no bearing on the plan's obligation to pay these bills, the hospitals argued. Now the hospitals will be reimbursed for these bills. As part of the settlement, they've agreed to stop trying to collect these bills from the patients.

Anthem (and WellPoint's) legal troubles on this front are far from over, however. It still faces a separate class-action suit from the state's doctors over unpaid bills for patients with canceled policies. There's also a class-action pending that was filed on behalf of more than 6,000 patients whose policies were canceled since 2001. Meanwhile, the state's Department of Managed Health Care is considering piling on more fees, having already imposed a $1 million fine last year after it concluded the rescissions were illegal. The new fines could be as much as $200,000 per violation on about 1,700 disputed cancellations.

To learn more about these legal issues:
- read this Los Angeles Times article

Related Articles:
California hospitals, MDs join Blue Cross payment suit
BC of California fined $1M for cancellations
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Johns Hopkins demands $2M from MD health plan

Wed, 04 Jun 2008 06:59:54 -0400

Making an emphatic move in a disagreement that has simmered for more than five years, Johns Hopkins Healthcare has sued regional Blue plan CareFirst of Maryland for $2 million, claiming that it owes that sum for claims made since October 2004. Johns Hopkins says that CareFirst, the region's largest health plan, denied or underpaid for nearly 15,000 claims for service performed through April 30. It also claims that CareFirst cut some already-negotiated Medicare reimbursement rates without disclosing those changes, as well as using outdated fee schedules and making mathematical mistakes.

This is not the first time Hopkins has made such a charge against CareFirst. Back in 2003, Hopkins attorneys sued CareFirst for more than $250,000 for nonpayment of services, arguing that the plan had underpaid it for services delivered at the Johns Hopkins Hospital and Johns Hopkins Bayview Medical Center.

Hopkins is asking the Circuit Court of Baltimore County to address these issues, as well as determine whether CareFirst is the primary payer for members also covered by Medicare or other federally funded health plans.

To learn more about the dispute:
- read this FierceHealthcare piece

A little feedback from you, the reader

Wed, 28 May 2008 06:59:59 -0400

Folks, this week I decided to give you a chance in the spotlight, as many of you have had some great things to say:

On health plans, and their approach to keeping profits up:

Having worked across the industry's major segments--providers, payors, pharmas, etc.-- I continue to be astonished at the utter absence of creativity and vitality in health plans. It is as if they see providers as a labor market and have decided that the right approach is "union-busting." And yet, example after example of the superiority of multispecialty group practices suggests the way to reduce medical loss is to integrate more closely with providers and encourage them to integrate more with one another. The answers exist and they are proven to work. - Pharmacy systems supplier CEO

In response to a column in which I complained about ongoing patient dumping allegations in Los Angeles:

I admire your ambition to solve patient dumping, but this is the natural reaction to an unfair legislation called EMTALA, whereby the Hospitals are mandated to care for non-paying patients, without imposing corresponding payment obligations.

Yes, poor health is bad and it is horrible that the sick are not cared for for monetary reason. So is hunger and homelessness. However, at least for how, the government has not mandated the corresponding industries to provide food and shelter to anyone without addressing the payment issues.

So good luck fixing the problem. This problem of health insurance is the symptoms of the underlying problems with health care. So far, politicians like the presidential candidates are addressing the issue of lack of health insurance, but no one is willing to look at the problems of health care that drove up healthcare cost. - Physician

Both thoughtful responses to important problems. Now, readers, how about an articulate voice from the pharmaceutical industry on, say, why brand-name drugs should push generics off the street for years--or a health plan exec on why mass cancellations of individual plans make sense? My mailbox is open! - Anne

Health plans to boost premiums, squeeze providers

Wed, 14 May 2008 06:59:57 -0400

As readers know, several leading health plans have taken a profitability beating over the last several months, for reasons that include operational issues, medical costs and losses in the financial markets. WellPoint, for one, missed Wall Street's first-quarter profit estimates by a wide margin, something that made financial analysts more than a bit nervous.

Now, hoping to calm watchers on the Street, industry leaders like WellPoint and UnitedHealth Group are assuring investors that they plan to raise premiums enough to stabilize their income--even if it means losing some members. "We will not sacrifice profitability for membership," WellPoint President and CEO Angela Braly recently told analysts during a conference call.

At the same time, the plans are promising to use their muscle to get better deals from their provider networks. This vow isn't surprising, given that both the plans and analysts see medical costs as a critical factor in sapping industry profits this year. However, it's not clear that plans like UnitedHealth--already known for extremely aggressive negotiations--can cut reimbursement any further.

To learn more about this trend:
- read this AMNews article

Related Articles:
Fear and trembling in health plan land
Insurer troubles could mean more bad debt for providers
WellPoint profits fall 25 percent during first quarter
UnitedHealth suffers financial setback

Fear and trembling in health plan land

Wed, 07 May 2008 06:59:59 -0400

Well, this week caps it. It seems like we're looking at just about a clean sweep where bad-news health plan financials are concerned: UnitedHealth Group, Humana, Cigna, WellPoint, Kaiser and Health Net have already taken a hit, and that's just for the first quarter. It's hard to imagine the second quarter of this year will bring dramatically better news, either.

Now, it's worth noting that we're talking primarily about plans that have watched profits fall, not plans who've sunk into the red. It's not like WellPoint or Kaiser are headed for bankruptcy court by any means. But we are talking about a shock to the industry--and some plans are indeed in the hole. For example, Moody's has placed Health Net's senior debt on review for a downgrade following its first quarter net loss of $35.7 million.

So what's going on here? A lot of different factors seem to be in play, including the turmoil in the financial markets, medical costs, legal and regulatory issues, and more. For example, as you'll see in today's newsletter, Kaiser attributed its losses largely to the subprime mortgage debacle. Oxford Health Plans, meanwhile, reported a medical loss ratio of 102.8 percent in addition to losing money on Wall Street. (In other words, for those that don't speak insurance, Oxford paid out almost $1.03 for every premium dollar it took in.) Health Net took a drubbing, in part, because it had to pay off regulators in California who were fed up with its practice of canceling individual policies after they were issued.

Once Wall Street recovers, the plans' investment income will again cover a multitude of sins, and the industry will regain its swagger. In the meantime, things aren't going to be pleasant for its leaders, and providers who have to strike deals with them may find themselves getting savaged. After all, it can be dangerous to be trapped in a room with a rabid health plan executive. - Anne