3 November 2011

California Edition
Calendar
November 14-16

Providers Facing Big Medi-Cal Cuts

Recent Reductions Raise Questions on Eligibility
Although he predicted that would not enough to put any acute care operators out of business, Lott was concerned that more physicians would drop out of Medi-Cal, and that community clinics that are not federally qualied for additional revenue may begin restricting access. The unintended consequences is that more and more patients are going to nd their ways into hospital emergency rooms, Lott said. This will begin to force more hospitals to look more closely at their Medi-Cal business, said Steven T. Valentine, president of The Camden Group, an El Segundo-based hospital consulting rm. Valentine added that the cuts may pressure providers to the point that Californias lawmakers may have to begin imposing access restrictions to Medi-Cal much in the way states such as Arizona and Florida are currently attempting. Thats despite the fact California recently obtained a federal waiver to boost Medi-Cal enrollment prior to the signicant expansion expected in 2014 as a result of the Affordable Care Act. California, like other states, is going to have to start addressing the eligibility requirements, Valentine said. They have a fairly lenient policy for enrollment, and they allow a lot of people in to obtain pretty good benets.

Industry observers say the Centers for Medicare and Medicaid Services recent decision to allow a 10% cut in ;063K"'830!I11"@30=3"8!"K!I456=!C0.! reimbursements to providers participating in G$'#3@$1!I88506!;"8K$'$8@$J!C$6!N0'! the Medi-Cal program will pressure many to ?36="8)!G08!C3$9"J!?"T!="!%"#$!=7$! 38451='.!K"'T0'4!38!08!$'0!"K!=5'&56$8@$J!! drop out, and could prompt lawmakers to impose access restrictions that are becoming ;"1=!#0'3$1!5H!="!PURRJ ! commonplace in other states. CMS granted a request by the California ;63@M!?$'$!K"'!N"'$!>8K"'%0=3"8 Department of Health Care Services, which oversees the Medi-Cal program, to make cuts to most outpatient care, skilled nursing November 15-17 facilities within hospitals, and freestanding subacute facilities. ! The reductions, which had been approved ;063K"'830!G=0=$!O5'06!?$06=7!I11"@30=3"8! by lawmakers, required federal approval before they could be implemented. 088506!@"8K$'$8@$J!I'4$8!B$1=!?36="8)! G0@'0%$8="J!I8!$L0%380=3"8!"K!=7$!3115$1! Even before these cuts, California has @"8K'"8=389!'5'06!H'"#34$'1J!P,QRSP*QRJ one of the worst Medicaid provider reimbursement rates in the nation. These additional cuts will clearly impact access to ;63@M!?$'$!K"'!N"'$!>8K"'%0=3"8 care for millions of Californians, said Anthony Wright, executive director of Health Access California. The cuts are based on 2008 November 29 reimbursement rates, according to Jim Lott, executive vice president of the Hospital <$8$'0=3"806!;7089$!>8!?$06=7@0'$A!B70=! Association of Southern California. That C"$1!D7$!E5=5'$!?"64F!<""4!G0%0'3=08! means theyre even steeper than 10%. ?"1H3=06)!:"1!I89$6$1J!I!1$%380'! This is a cost shift (to hospitals) because 1H"81"'$4!&.!=7$!?"1H3=06!I11"@30=3"8!"K! the primary care system is already G"5=7$'8!;063K"'830!$L0%38389!=7$!3115$1! underfunded, Lott said. @"8K'"8=389!=7$!8$L=!9$8$'0=3"8!"K! 7$06=7@0'$!$%H6".$$1J !
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NEWS

Page 2

Kids Have Secondhand Smoke Risk

Exposure Pegged to Some Socioeconomic Groups
Nearly 1 million children in California are exposed or at risk to being exposed to secondhand cigarette smoke, according to a new study by UCLA researchers. The data, compiled by the UCLA Center for Health Policy Research, is far less dire than its original estimates that 2.5 million children statewide were exposed to secondhand smoke when it was released late last month. The center dramatically revised its numbers downward this week due to errors in pooling of data from the California Health Interview Survey, which the center uses for its research. According to the new numbers, 224,000 children are directly exposed to secondhand smoke in the home. Another 742,000 had a member of the household who smoked but did not do so in the home, placing the child at risk for exposure. Exposure to secondhand smoke can put children at risk for respiratory ailments such as asthma, or aggravate existing respiratory issues. It can also elevate their risk of contracting cancer. The state has the nations second-lowest rate of smokers, due in part to successes in implementing steep tobacco taxes, laws that prohibit smoking, and public health campaigns. Lawmakers recently enacted a law banning smoking in a vehicle where a minor is present, but the UCLA study suggests that more steps must be taken. "California's ght against tobacco has been a major public health success story, but we still need to spread awareness and ensure that every family knows the dire consequences of addiction, said Sue Holtby, the study's lead author. "The next frontier in the campaign against smoking is to reduce smoking at home." Income, race and other socioeconomic factors correlate strongly as to whether a child will be exposed to smoke. African-American households were nearly four times as likely to have a child exposed to second-hand smoke than Asian-American households, 12.6% compared to 3.2%. Among whites, the rate of exposure was 3.6%, and among Latinos, 2.2%. Lower-income households were also far more likely to have children exposed to smoke. The highest rate of children exposed to smoke was in homes with incomes between 100% and 200% of the Federal Poverty Level: 4.6%, with those households at or below the poverty level had a slightly lower rate. Those households with incomes above 300% of the FPL had children exposed to smoke at a 2.4% rate, nearly half the rate of their less afuent counterparts. Geography also played a role, with the highest rate of exposed children in more rural areas such as the San Joaquin Valley and the Sierra Nevada region. Those areas rate of exposure was nearly triple that of the Central Coast, where only 1.6% of households exposed their children to secondhand smoke. However, the far more densely populated Los Angeles region also had a high rate of kids exposed to smoke: 4.1%. Thats despite the fact that fewer than 11% of adults and teenagers who live there actually smoke. The study suggested that the introduction of anti-smoking campaigns in the regions with the largest number of children and smokers could reduce the exposure rates.

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In Brief
Kaiser Opens New $550M Hospital In Ontario
Kaiser Permanente opened a state-ofthe-art hospital in Ontario on Tuesday. The $550 million facility includes all private rooms with sleeping areas for family members and computer terminals for caregivers, and furniture and carpeting made from recycled materials. This state-of-the-art facility is one of the largest, greenest, and most technologically advanced ever built in the area, and we are thrilled to be opening our doors, said Greg Christian, Kaisers executive director for Ontario and Fontana. This investment symbolizes our commitment to the health of all people who live and work in the Inland Empire. The facility is Kaisers 14th hospital in Southern California and 31st statewide. A replacement facility for Kaisers current facility in Fontana is scheduled to open in 2013.

Sharp Healthcare, United Enter Into New Pact, Will Rebrand MA Plan
The Sharp HealthCare hospital system and UnitedHealthcare have entered into a new ve-year pact that includes health plans rebranding of one of its Medicare Advantage policies. The Sharp SecureHorizons Plan will make Sharp the exclusive provider for the coverage, which

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Health Net Reports Flat Earnings

Most New Growth Coming Outside of California
Woodland Hills-based insurer Health Net reported third quarter earnings that were at from a year ago, while its membership growth is shifting away from California. Health Net reported net income for the quarter ending Sept. 30 of $61.8 million on revenue of $2.8 billion. That compares to net income of $62.7 million on revenue of $3.4 billion for the third quarter of 2010. The decline in revenue was attributed mostly to the companys withdrawal from the Northeastern U.S. It took pretax writeoffs of $22.8 million in order to conclude those operations and reduce administrative expenses elsewhere. Total enrollment in California stood at 2.27 million at the end of the quarter, up about 1% from enrollment of 2.22 million during the year-ago quarter. The entire gain was from Medi-Cal managed care, where enrollment grew to 988,000, compared to 896,000 during the third quarter of 2010. That growth offset enrollment losses in both its group and individual business lines that totaled 40,000. Enrollment in Oregon dropped almost 6%, but was up in Arizona by 25%, from 141,000 to 177,000. Health Nets overall enrollment in commercial, Medicare, Medicaid and TriCare plans stood at 5.96 million, virtually unchanged from a year ago. In an earnings conference call, Chief Executive Ofcer Jay Gellert indicated that Health Net was focused on increasing margins on its existing lines of business in order to boost protability. Margin expansion has been a hallmark of our recent progress and the third quarter was another step forward...we continue to benet from disciplined pricing, favorable product and geographic mix changes, and low utilization trends. he said.

In Brief
functions as a health maintenance organization. It will be the only Medicare Advantage plan offered by United in San Diego County with drug coverage that does not charge a monthly premium. Through collaboration with such a trusted and highly regarded health care system over the next ve years, were condent we can provide our members with enhanced value and quality coverage, said Michael McCarthy, regional executive director of UnitedHealthcare Medicare Solutions in Southern California.

El Centro Hospital Uses Patients Palms For Check-Ins

El Centro Regional Medical Center has begun using a new check-in system for patients that scans the vein patterns on their palms in order to verify their identity. Known as PatientSecure, the system was developed by HT Systems of Tampa, Fla. The use of palm vein patterns for identication is considered about 100 times more reliable than ngerprinting, according to a statement issued by the hospital. It has had 50 such scanners in use at the facility since Sept. 21. Patients have the option of having their palm vein patterns tied in with their medical records. The intent of using such a system is to avoid mixups and better preserve patient condentiality by cutting down on the amount of medical record information that is exchanged verbally, according to hospital ofcials. "It is worth noting that in many healthcare systems, ours included, it is common to have multiple patients with the same rst and last name, and this system helps prevent any misidentication," said El Centro Chief Executive Ofcer David Green.

Obesity Plagues Special Needs Kids

Rates Are Much Higher Than Nationwide Averages
American children are already combating obesity, but those children with disabilities and special needs have an even tougher time controlling their weight, according to a new report by a San Francisco-based advocacy organization. Finding Balance, released by AbilityPath.org, concluded that the obesity rate among boys with disabilities is 21%, compared to 17% for those without disabilities. About 23% of disabled girls are obese, compared to 14% among those who do not have disabilities. The report noted that mobility issues, food aversions and side effects from medications can all contribute to obesity in children who are disabled or have special needs. Physical activity is not a deterrent: nearly a third of Special Olympics athletes are considered obese, and about half are at an unhealthy weight. This is quite alarming to us, said Stephen Corbin, a Special Olympics vice president. Once people get very heavy, they tend not to want to do physical activity. So its almost a self-fullling death sentence.

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OPINION

Page 4

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The Autism Treatment Law Is Flawed

Exemptions Leave Millions Without Access to Therapy
Senate Bill 946 was signed into law by Gov. California Brokers for Affordable Health Jerry Brown with much fanfare last month. It Care and other groups representing the private requires insurers to pay for certain autism sector supported the bills extension of therapies specically applied behavioral mandated coverage to include autism and analysis that they had been resisting as being other behavioral health issues. These groups non-medical in nature. care about the health and well-being of all The Legislature decided to address this Californians and understand the emotional, issue after some of the states largest health psychological, and nancial challenges that plans wound up being embroiled in litigation face families that must contend with autism regarding the coverage issue. and other similar maladies. "The science clearly shows that treating The Legislature realized that requiring the the mind through behavioral therapy is no same coverage of its own insurers would be different than treating a broken arm or a heart extremely expensive, possibly upwards of a condition," said its author, Sen. Darrell $100 million per year and it blinked, but just Steinberg, D-Sacramento. one eye, not both. Although the bill is While lawmakers had considered a temporary x no problem putting those until the Affordable Care Act costs on the shoulders of kicks in with greater force in private enterprise and public 2014, the law is actually agencies, they shrank from inequitable, as it exempts bearing the cost themselves. large numbers of Californians Second, they believe from coverage. that once the full force of SB 946 exempts from federal health care reform coverage plans provided to come into place in the approximately 1.3 2013-2014 the coverage will enrollees in the enormous be mandated so that they will California Public Employees be forced to offer it and that Retirement System. they may be able to nd Autism is an important other funds (taxes, fees, health issue that I fully federal grants, etc.) to pay for support to provide the coverage, possibly appropriate employee imposing yet another burden benets coverage. However, I on the private sector. am concerned that this law The current situation imposes an additional annual cost of creates an uneven playing eld By about $850 million on private health public insurers Henry Loubet between the counterparts, and plans the employees and business their private that pay for them, but allows companies dedicated to serving both CalPERS to simply ignore the issue public agencies and private industry entirely. in the most economical fashion possible. While its admirable that CalPERS has I strongly urge the Legislature to revisit been intensely focused on reining in the costs this imbalance in SB 946 and correct a law of the healthcare it provides to its enrollees, that not only impacts private industry but also this sort of systematic exclusion is not the way the families and children of public employees. for that organization to proceed. Despite the strong objections offered to the bill by such organizations as the California Henry Loubet is the chief strategy officer for Brokers for Affordable Health Care and the Keenan. He is a member of the Payers & California Association for Health Plans, the Providers editorial board. bill was passed through the legislature and signed into law even with this blatantly unfair Op-ed submissions of up to 600 words are provision intact.
welcomed. Please e-mail proposals to editor@payersandproviders.com

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