Medicare Advantage Piedmont-Wellstar Insurance Plan

Medicare Advantage plans coming soon from Piedmont

Piedmont Healthcare and WellStar Health System, two powerful medical organizations, are moving into a new realm: health insurance.

The hospital systems intend to create a health plan that will offer Medicare Advantage and commercial insurance in 2014, as well as serving the two organizations’ employee base that, with their families, exceeds 35,000.

The insurance plan follows the announcement last month that Piedmont and WellStar had formed a collaboration to develop health care delivery models.

Piedmont and WellStar combine 2,393 hospital beds, 10 hospitals, seven urgent care centers and more than 700 physicians.

WellStar dominates the suburbs west and northwest of Atlanta, while Piedmont has extensive operations south of the city, along with its prestigious hospital in Atlanta’s affluent Buckhead district.

The Wall Street Journal reported that in recent months, Northern California’s Sutter Health and New York’s North Shore-Long Island Jewish Health System have said they would start selling health plans. A 2011 survey of 100 hospital leaders by health research firm Advisory Board Co. found that 20 percent of them intended to market an insurance plan.

Some systems with limited insurance operations are expanding, including MedStar Health in the Baltimore-Washington area, which will add Medicare plans next year and is likely to have a plan on the Maryland health exchange, the Journal article said.

Driving the trend is the pressure to reduce costs, as well as the revolutionary changes set in motion by the Affordable Care Act.

A leader of a health insurance trade group in Georgia told GHN on Monday that Piedmont/WellStar will be an interesting partnership to watch.

Graham Thompson, executive director of the Georgia Association of Health Plans, noted that a previous insurance offering by another local hospital system organization, Promina, failed to gain a strong foothold a decade ago.

“They weren’t so adept at the back office’’ functions, he said.

It may be difficult for Piedmont and WellStar to cover the whole metro Atlanta area, Thompson said, noting that large employers have workers all over the region.

And he questioned whether Piedmont’s and WellStar’s relationships with traditional insurers will change by their becoming a health plan competitor.

Some hospital organizations, including the University of Pittsburgh Medical Center and Intermountain Healthcare in Utah, long have had health plans, the Journal article noted. Others, including some health systems considering them now, have tried and failed with them in the past.

The failures, the Journal reported, reflect in part the difficulties of reconciling conflicting interests: Hospitals typically make money when they fill their beds with patients, and health plans pay the bills for those admissions.

Piedmont said Monday in a press release that it began developing a health system-based health insurance plan in July when it partnered with Evolent Health, created in part by the University of Pittsburgh Medical Center. The Pittsburgh organization has one of the country’s most successful health system-based health plans, the news release said.

”We believe our industry’s future relies on successfully implementing a population health model of care – delivering disease prevention and care management with higher quality at lower costs,” said Gregory Hurst, president and interim chief operating officer at Piedmont. “Launching a health plan helps us move more quickly toward that future, and we consider this yet another area where we can demonstrate vision and leadership in Georgia’s healthcare industry.”

Reynold Jennings, president and CEO of WellStar, added that Piedmont and WellStar “are uniquely positioned to work together to achieve improved clinical results and reduction in costs” as called for in the Affordable Care Act. “Health systems that have a broader geographic reach and larger population base will be best suited to react to and sustain operations regardless of future federal and state legislative outcomes.”

Dr. Ronnie Brownsworth of Piedmont, a neurologist, will be CEO of the newly formed health plan.

“This health plan will keep patients and physicians at the center of our care model with the ultimate goal of improved health in our patient populations,” said Brownsworth in the press release. “We also look forward to continuing our work with other insurance plans in finding ways to deliver the best results for our patients.”

David Smith, a consultant with Kearny Street Consulting, told GHN on Monday that it’s a tough time to enter the health insurance business.

“Even the big guys [insurers] are having a very hard time figuring out what lies ahead with Obamacare,’’ Smith said.

The big unknown, he said, is how to price coverage under the health reform law’s new requirements.

“It’s going to be a new day in insurance,’’ Smith said. “To enter the market right now is a little scary.’’

Piedmont-WellStar alliance to launch health plan

Obamacare Tax Hits Knee Replacements

Knee replacements may become a thing of the past under Obamacare. In the way America “used” to be, the better biomedical technology we had, the more Americans could live longer, healthier lives. However, in the world of Obamacare and the “new” normal, health ingenuity will be too costly for everyone except the wealthy.

According to a recent study by the Journal of the American Medical Association (JAMA), the number of knee replacements paid for by Medicare has more than doubled over the past 20 years. In 2010, 243,802 Medicare recipients underwent knee replacements, up from 93,230 in 1991. According to the study, demand for the popular surgery, which costs approximately $15,000 per replacement, could reach $3.5 million annually by the year 2030.

“There’s no doubt this is a successful operation,” said Joseph Zuckerman, chairman of the orthopedic surgery department at the New York University Hospital for Joint Diseases. Zuckerman added that more older people want the procedure so they can remain active or improve the quality of their lives. Further, the introduction of better quality devices has allowed more people — even those who have not yet reached their senior years — to obtain the surgery.

Nevertheless, Peter Cram, a health-policy researcher at the University of Iowa-Carver College of Medicine, who contributed to the study, said, “Ultimately, there’s going to be [only] some number of these we can afford.” According to Cram, the decision on who gets knee replacement surgery and who is rejected will be a “really contentious debate.”

Studies of this nature will likely be used to support the “necessity” of the ObamaCare Independent Payment Advisory Board (IPAB), the group of unelected officials who will be responsible for handing down the “rules” to physicians about who gets the knee surgery and who does not. The IPAB will, indeed, be in charge of “rationing” knee replacement surgery and other treatments and procedures, as well.

In addition, it is essential to understand the effects of the $716 billion that ObamaCare takes from Medicare to give to Medicaid. This money will be removed from Medicare in the form of payments to Medicare physicians and other providers, who, by the end of this decade, will end up being paid less than Medicaid providers. If ObamaCare is allowed to move forward, older Medicare recipients will be less likely to obtain the types of surgeries, such as knee replacements, and treatments they need because of both the IPAB rationing rules and the fact that more physicians will reject Medicare patients. This will leave a system where only wealthy seniors will be able to afford high-quality healthcare.

According to the Weekly Standard, just fifteen minutes of the first presidential debate are devoted to healthcare. This could be the most important fifteen minutes in the lives of all Americans, and it is Mitt Romney’s chance to tell the world what life will be like under fully-implemented ObamaCare — a life that could begin in about 35 days, if we are not aware.

Medigap Policies Might Get More Expensive

Your Medigap policies might get more expensive if Congress and HHS get their way.

The nation’s insurance commissioners have some stern advice about proposals to shrink Medicare spending by asking seniors with supplemental Medigap policies to pay more out of pocket for their health care: Don’t do it.

The health law requires the National Association of Insurance Commissioners to advise the administration about whether seniors would use fewer Medicare services – and therefore, cost the government less money — if the most popular Medigap plans were less generous. 

“Everything we’ve looked at has shown that increasing cost-sharing does stop people from seeking medical care,” said Bonnie Burns, training and policy specialist at California Health Advocates who serves on an NAIC committee that has studied the issue for more than a year. “The problem is they stop using both necessary and unnecessary care.”

In a draft letter approved unanimously by NAIC’s Senior Issues Task Force and Health Insurance Committee last week, the commissioners warn that limiting Medigap could backfire and raise Medicare costs when seniors don’t receive the medical care they need. The letter, to Secretary of Health and Human Services Kathleen Sebelius, was approved during the association’s annual meeting near Washington, D.C.  The letter will be sent after a third committee is expected to approve it next week.

“Once.the letter has cleared the Senior Issues Task Force, it’s probably a done deal,” said Guenther Ruch, a former administrator of the Wisconsin insurance department who, until March, chaired the Medigap subgroup that prepared the letter.

About 9 million Medicare beneficiaries – or one out of five – bought a Medigap policy in 2010, to cover a portion of medical expenses not covered by Medicare. And two-thirds of them purchased the most comprehensive plans that offer “first dollar” coverage, which protects them from having to pay almost anything out of pocket, including copays and deductibles.

The Obama administration and congressional leaders are considering similar proposals as part of their effort to avoid automatic spending cuts and tax increases as part of the “fiscal cliff” negotiations. The Congressional Budget Office has estimated that cost-sharing changes could save the Medicare program as much as $53 billion over 10 years.

Medigap policies are popular with seniors because Medicare does not cap out-of-pocket expenses. The policies are not cheap — the average premium nationwide was $178 a month in 2010 — but they protect subscribers from unexpected high medical bills, which is important to people on fixed incomes. The C and F Medigap plans cover nearly all of the out-of-pocket costs that beneficiaries would usually pay.  Two thirds of people who buy Medigap plans have incomes below $40,000 a year — about the same income levels for all Medicare beneficiaries.

“People are buying Medigap because they need the [medical] treatment, said Dotti Outland, director of regulatory affairs for UnitedHealthcare and a member of the Medigap subgroup.  “And they are paying something out of their pocket now, they are paying premiums.”

Advocates of increased cost-sharing point to studies showing that seniors with Medigap coverage tend to use more Medicare services than those without it, and they likely get unneeded care for which the government pays a large share.

The insurance commissioners were supposed to recommend specific cost-sharing changes for these Medigap plans with first-dollar coverage to reduce Medicare spending for unnecessary medical treatment and, as the law says, “encourage the use of appropriate physicians’ services.” The law requires their recommendations to be based on peer-reviewed studies or current successful managed care practices.

But after a year and a half of research and discussion, they came up empty handed.

“None of the studies provided a basis for the design of nominal cost sharing that would encourage the use of appropriate physicians’ services,” the letter says. “Many of the studies caution that added cost sharing would result in delayed treatments that could increase Medicare program costs later (e.g., increased expenditures for emergency room visits and hospitalizations) and result in adverse health outcomes for vulnerable populations (i.e., elderly, chronically ill and low-income).”

The letter acknowledges that Sebelius may disagree with the NAIC and seek cost-sharing changes regardless.  “If that is your decision, please know that the NAIC stands ready to continue its regulatory role in developing Medicare supplement standards.”

Nevada state insurance commissioner Scott Kipper, who chairs the Senior Issues Task Force, said the letter conveys “without any doubt that we want to continue to be the organization that HHS turns to on Medigap.”

An earlier version of the letter had rejected cost-sharing overall, but recommended $25 co-payments for advanced diagnostic imaging tests and $50 co-payments for scooters as a way to reduce fraudulent charges. But the group’s consumer representatives argued strongly against including that option. Three days before the Senior Issues Task Force vote, 15 national consumer and patient advocacy groups, along with eight NAIC consumer representatives, wrote Kipper urging that the co-pay recommendations be dropped.

“The Centers for Medicare and Medicaid Services has the ability, and obligation, to discourage improper use of these services by all Medicare beneficiaries, not only those who purchase Medigap plans,” they said, adding that increasing Medigap cost-sharing is the wrong tool for reducing Medicare spending.

Obamacare Medicare Cuts Drive Doctors Away

Obamacare Medicare cuts will lead to doctors abandoning Medicare patients.

There are 600,000 physicians in America who care for the 48 million seniors on Medicare. Of the $716 billion that the Affordable Care Act cuts from the program over the next ten years, the largest chunk—$415 billion—comes from slashing Medicare’s reimbursement rates to hospitals, nursing homes, and doctors. This significant reduction in fees is driving many doctors to stop accepting new Medicare patients, making it harder for seniors to gain access to needed care. Here are a few of their stories.

Paul Wertsch is a primary physician inMadison, Wisconsin. In 1977, he and his two partners invested $500,000 of their own money and opened their own practice, the Wildwood Family Clinic, on the east side of town. Wertsch’s clinic is popular with the seniors who go there, but over time, Medicare’s fee schedule has made it harder and harder on the practice.

Wertsch billed Medicare $217 to care for a Medicare patient with a sinus infection whose appointment ran late, because the patient required more time. Medicare reimbursed the clinic for $54.38. Later in the day, a younger patient with the same sinus infection, requiring half the time, was charged the same $217. But his private insurer reimbursed the clinic for twice the amount of Medicare: $108.04.

“I love taking care of Medicare patients,” Wertschtold the Capital Times, a progressive paper in Madison. “But every time we treat them we have to dig into our wallets. What kind of business model is that?” Today, Medicare patients represent one-quarter of Wildwood’s practice overall, and as much as 70 percent for some of the clinic’s veterans, like Wertsch. In 2011, Wildwood decided to stop accepting new patients from the Medicare program.

Wildwood was the first clinic in the Madison area to stop taking new Medicare patients. But, nationally, doctors like Wertsch are increasingly common.

‘Well, honey, it’s just going to get worse’

Joseph Shanahan is a rheumatologist in Raleigh, North Carolina. Shanahan told his local ABC affiliate, WTVD, that he was one of the few rheumatologists left in the Research Triangle area who accepted Medicare patients. “The reimbursement is so low [with Medicare]—in some cases 60, 80 dollars—it costs you more to get a plumber to come to your house than to get a rheumatologist to come to the hospital,” he said.

This spring, Shanahan decided to stop taking new Medicare patients. “Not by choice,” said Shanahan, “but I’ve got to pay off the business loan I got, and I got to pay my staff, and I got to pay my malpractice insurance.” Shanahan reiterated what you hear from a lot of doctors: that they don’t want to stop taking new patients, but the government has left them no choice. “I don’t do medicine for the money,” he explained. “I never got into it to get rich. The real reward in medicine is taking care of patients and making them feel better.”

Steve Daniels, a reporter with WTVD, led an investigation into problems with Medicare access in North Carolina. A team of volunteers used the “mystery shopper” method, posing as Medicare beneficiaries looking for a new doctor. Of the 200 family physicians they called, nearly half said that they were no longer accepting new Medicare patients.

“I have had many friends who have moved down here to retire and they cannot find a physician to take them,” said one of WTVD’s volunteers. “It’s very sad because they are coming down here to start a new life, a lot coming to be closer to families, and they have medical problems. Unfortunately, they’re finding that no one wants to take them.”

Beverly Frake was one of those people. Frake moved to North Carolina in 2010 from upstate New York, to escape the northern winters, and to be closer to her daughter, who lived in the area. “I moved into this nice apartment complex, big medical complex across the street, I thought, ‘How lucky am I?’” she told Daniels. “And I went there and was told in the waiting room, well they just don’t take Medicare patients. One of the receptionists said to me, ‘Well honey, it’s just going to get worse.’”

Medicare’s problems have been building for decades

These problems with the Medicare program predate the passage of Obamacare. For decades, politicians have been wrestling with Medicare’s runaway costs. Conventional fixes, like raising the retirement age, reducing benefits, or raising premiums were considered politically toxic. So instead, Congress sought the path of least resistance: paying doctors and hospitals less to provide the same level of service.

In 1988, Congress instituted a new system of price controls, called the Resource-Based Relative Value Scale, or RBRVS. Designed by an acclaimed Harvard health economist, William Hsiao, experts thought that the RBRVS system would succeed in controlling Medicare spending. It didn’t. Doctors, especially specialists, compensated for being paid less per-service by performing more services.

In 1997, Congress tried to fix the RBVRS using a new system called theSustainable Growth Rate, tying growth in physician fees to growth in the size of the nation’s economy, as measured by GDP. That didn’t work either. As Medicare spending continued to grow at a faster pace than the economy, the SGR law required Congress to reduce Medicare fees accordingly. But both parties in Congress, at the behest of the American Medical Association, routinely overrode the SGR provision with costly “doc fix” legislation.

Obamacare significantly worsens the Medicare access problem

The AMA supported Obamacare, on the promise that the law would include a permanent “doc fix.” But Democrats reneged on that promise, owing to the cost of a permanent SGR adjustment: something on the order of $200 billion over ten years, depending on the prescribed growth rate of the fees.

Instead, the Affordable Care Act further reduced fees to health care providers, by $415 billion over the 2013-2022 time frame. As these reductions go into effect, more and more physicians are certain to stop taking new Medicare patients. We already see this problem with the Medicaid program for low-income Americans, where doctors don’t accept Medicaid patients, leading to poor health outcomes.

The Obama campaign offers several lame defenses of these cuts. “The President’s plan doesn’t cut [benefits] by one dime,” insists deputy campaign manager Stephanie Cutter. “He ends taxpayer subsidies to insurance companies, and weeds out waste, fraud, and abuse, which saves the Medicare system $716 billion.”

But Cutter’s assertion the law doesn’t cut benefits only makes sense if you don’t count getting a doctor’s appointment as a “benefit.” And her argument that the provider cuts merely amount to eliminating “waste, fraud and abuse” displays a callous disregard for how the law’s blunt, across-the-board payment reductions affect doctors like Joseph Shanahan, and seniors like Beverly Frake.

In 2011, the Department of Health and Human Services attempted to conduct an investigation into the problem of physicians opting out of Medicare. But they had to shutter the inquiry, because the government doesn’t “maintain sufficient data regarding physicians who opt out of Medicare.”

memorandum sent by the lead investigator to acting Medicare chief Marilyn Tavenner concluded that the problem is getting worse. “Based on the limited data that we received, the number of opted-out physicians appears to have increased each year from 2006 to 2010,” wrote the inspector. “More physicians may opt out in the near future.”

If you want to reduce waste, increase choice and competition

The Romney and Wyden-Ryan plans for Medicare reform do far more to get at the problem of waste, by using the tried-and-true methods of choice and competition. The plans use competitive bidding to challenge insurers, and traditional Medicare, to pay doctors whatever they want to pay, while providing a Medicare benefit package at the best possible price.

A similar method is already used in the Medicare prescription-drug program, or Part D, which has, remarkably, come in more than 30 percent underCongressional Budget Office projections for its fiscal cost. This year, the program actually reduced premiums, relative to 2011: something that almost never happens in government health-care programs.

Instead of a politically-motivated, one-size-fits-all, across-the-board fee cut, the Romney approach allows competing insurers to negotiate with hospitals and doctors to gain the optimal combination of access and price. Under a competitive bidding system, insurers are likely to pay primary care physicians more, while bearing more scrutiny upon the wasteful, costly procedures that drive Medicare spending higher.

The key to putting Medicare on a fiscally sustainable path isn’t to take a sledgehammer to the program, as Obamacare does, and ration care from above, but to make structural improvements that give seniors and their doctors the bottom-up incentive to avoid wasteful spending.

So far, many media reports have displayed confusion about these concepts. But if we have an honest debate between who should control Medicare’s health dollars—bureaucrats or seniors—I have a feeling as to which side will win.