When Hospital Systems Buy Health Insurers
Another
hospital system wants to buy another health insurance company, and
consumers may well wonder what this trend could mean for them.
As reported last week in Modern Healthcare,
the St. Louis-based Ascension Health, the country’s largest nonprofit
hospital system, “is in talks to acquire an unnamed insurance company
that operates in 18 states.”
We’ve seen this before. One of New York’s largest hospital networks recently began offering its own health plan.
Several other hospital systems, like California’s Sutter Health and
Catholic Health Initiatives, which operates in 17 states, among others, have entered the insurance business.
More
typically, health insurance and health care delivery have been separate
businesses — adversaries, even — in negotiating over prices. Why are
the two sides getting cozy?
There
are several reasons hospitals might want to be in the insurance
business, or more closely aligned with insurers. By acting in
cooperation, a unified organization might be able to better design incentives for higher-quality care.
Or, by combining similar functions like human resources or tech
support, the organization might cut costs. A joint provider-insurer may
also be better able to adapt to — and make more money from — new Medicare payment models
in the Affordable Care Act. Eventually, an organization that combines
the functions of health care provision and health care insurance might
have a leg up in the market, putting competitors at a disadvantage or driving them out. With less competition, of course, an organization would be in a good position to raise premiums.
Wary of threats to competition and the effects on consumers and patients, health economists and antitrust regulators are watching these market dynamics with a concerned eye.
Medicaid surge triggers cost concerns for states
WASHINGTON — From California to Rhode Island, states are confronting new concerns that their Medicaid costs will rise as a result of the federal health care law.
That’s likely to revive the debate about how federal decisions can saddle states with unanticipated expenses.
Before President Obama’s law expanded Medicaid eligibility, millions of people who were already entitled to its safety-net coverage were not enrolled. Those same people are now signing up in unexpectedly high numbers, partly because of publicity about getting insured under the law.
For states red or blue, the catch is that they must use more of their own money to cover this particular group.
In California, Democratic Governor Jerry Brown’s recent budget projected an additional $1.2 billion spending on Medi-Cal, the state’s version of Medicaid, due in part to surging numbers. State officials say about 300,000 more already-eligible Californians are expected to enroll than was estimated last fall.
‘‘Our policy goal is to get people covered, so in that sense it’s a success,’’ said state legislator Richard Pan, a Democrat who heads the California State Assembly’s health committee. ‘‘We are going to have to deal with how to support the success.’’
Mike Tipping: ‘LePlagiarism’ far more extensive than previously believed
Multiple sections of reports from a controversial consultant were lifted verbatim from others’ writing.
This week, an editorial in the Bangor Daily News revealed that two pages of a report on Maine Department of Health and Human Services programs were plagiarized, nearly word for word, from a 2011 report by the Center on Budget and Policy Priorities. The document was the second written as part of a $925,000 no-bid contract between the LePage administration and conservative consultant Gary Alexander.
This was the latest in a string of incidents that have discredited Alexander’s work, including the revelation of a $575 million multiplication error in his previous report to the state (a document commissioned by LePage in an attempt to justify his refusal of federal funding to provide health care coverage for 70,000 Mainers).
Alexander’s firm and the LePage administration have both attempted to downplay the plagiarism. A statement from the Alexander Group called it a “footnoting problem,” and DHHS Commissioner Mary Mayhew accused Democrats and the media of attempting to “politicize punctuation.”
This wasn’t a punctuation error. A new analysis of the report by a plagiarism detection expert shows that many additional, lengthy sections were lifted verbatim from other sources with little or no attribution. It’s now clear that Alexander was dishonestly passing off the work of others as his own.
As more plagiarism is found in Alexander Report, why should we care?
Posted May 27, 2014, at 11:12 a.m.
In more ways than one, the $925,000, no-bid contract Gov. Paul LePage’s administration signed with the Alexander Group offered a lesson in vetting and process.
Long before it was found that the consulting firm had plagiarized much of its work, there was a lack of public confidence that was destined to taint any proposal put forward by the Alexander Group.
The LePage administration announced in November 2013 that it had signed the contract with the welfare consulting group led by Gary Alexander, Rhode Island’s former health and human services chief, two months after the two parties agreed to a no-bid deal.
The administration chose its preferred vendor without issuing a request for proposals that would have allowed it to review multiple bids and choose the most qualified vendor at the best price. As a result, there was no public vetting process LePage administration officials could point to, to assure skeptical Maine lawmakers and taxpayers the state had retained the most qualified consultant for the job.
Even aside from the plagiarism, the poor quality of the two analyses the Alexander Group has produced were confirmation of that skepticism and conclusive evidence that Maine had wasted public funds on two unoriginal, politically charged documents. And Maine has produced far superior results in the past for far less money through processes that involve extensive public vetting. Such public processes, in turn, engender public confidence.
In 2012, the Legislature charged the Maine Department of Health and Human Services with assembling working groups to review the state’s Medicaid and general assistance programs and produce recommendations for both short-term savings and long-term reforms.
Organizations representing health care providers, municipal officials, low-income residents and others had seats at the table. Maine residents with expertise in government finance and economics also lent a hand.
The groups met in public, considered public input and vetted ideas in public. Their members didn’t agree on everything, but they developed many unanimous recommendations. And their suggestions carried weight among policymakers: Many of the general assistance working group’s recommendations have become law. Maine’s Medicaid program has incorporated many of the MaineCare redesign group’s recommendations into its regular practice.
Whether one supports those groups’ recommendations or not, it’s more difficult to dismiss them following a public process that considered input from a variety of parties with a stake in the outcome. Plus, with members volunteering their time, the work groups did not incur significant costs.
Tax dollars are paying Gary Alexander to recommend cutting aid to Maine’s poorest
Posted May 23, 2014, at 10:02 a.m.
On Friday afternoon, Gov. Paul LePage announced he would suspend all payments to the Alexander Group, which was selected through a no-bid contract to present recommendations for the state’s public assistance programs. LePage said he would also “take further action, including termination of the contract, if warranted,” two days after a BDN editorial showed parts of consultant Gary Alexander’s work was lifted word for word from other professional reports.
We have argued against the policy recommendations in the Alexander reports and their blatant plagiarism, and we think it’s past time for the LePage administration to cancel the contract. The governor has taken the right step in suspending payment, but it’s clear he also has grounds to end the deal entirely.
If he or Maine residents need another reason to discredit the Alexander Group’s work, they can look no further than the consulting firm’s recommendations for “reforming” the municipal-state General Assistance program.
The recently released second installment of the group’s five-part analysis of Maine government assistance programs suggests several ideas for cutting costs within the statewide General Assistance system. General Assistance is an option of last resort for people in emergency situations often facing destitution or homelessness; it’s administered by municipalities, and it’s paid for jointly by municipalities and the state.
People must apply for the aid — such as for food, medication prescriptions or housing — and the payment is made directly to the vendor. Many municipalities require people to work, often doing odd jobs for the town or city, in order to receive the assistance.
Because General Assistance is reserved for people in dire circumstances who may not qualify for other aid, it is irresponsible to lightly suggest eliminating it, without any discussion about alternative approaches or the effects on Maine people and its economy. But that is what the Alexander Group does. It suggests several “options,” as the report puts them, for cutting costs. One is to “eliminate the GA program altogether.”
We don’t think Gov. Paul LePage needed to pay the Alexander Group $925,000 to suggest ideas like that. Need to cut costs in a certain program? Well, just get rid of it!
Never mind what would happen to Maine’s neediest or how long-term costs would transfer to municipalities. Don’t think too hard about the fact that consultant Gary Alexander is being paid with Maine tax dollars and federal funds to recommend an idea that required no creativity or skill and would take assistance away from Maine residents.
Safety Net Hospitals Already Seeing More Paying Patients — And Revenue
And the share of uninsured patients was cut roughly in half this year at two other major safety net hospitals—Denver Health in Colorado and the University of Arkansas for Medical Sciences Hospital (UAMS) in Little Rock, Ark.
One of the biggest beneficiaries of the health law’s expansion of coverage to more than 13 million people this year has been the nation’s safety-net hospitals, which treat a disproportionate share of poor and uninsured people and therefore face billions of dollars in unpaid bills.
Such facilities had expected to see a drop in uninsured patients seeking treatment, but the change has been faster and deeper than most anticipated— at least in the 25 states that expanded Medicaid in January, according to interviews with safety-net hospital officials across the country.
“This is really phenomenal,” said Ellen Kugler, executive director of the National Association of Urban Hospitals, based in Sterling, Va., which represents inner-city safety net institutions. “It shows the Affordable Care Act is clearly working in these locations.”
Safety net hospitals, most of which are government-owned or nonprofit, have typically struggled financially because their urban locations mean they treat more uninsured patients who show up in emergency rooms and cannot be turned away.
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