California Lawmakers Consider Giving Regulators More Grounds To Reject Health Insurance Mergers -
State lawmakers are considering a proposal to give regulators broader flexibility when determining whether insurance company mergers would be good for consumers.
The proposal, approved in the California Assembly Health Committee earlier this week, would require the state’s Department of Managed Health Care (DMHC) to evaluate if a health insurance merger would disrupt market competition, and if it would benefit consumers in terms of costs and quality. The agency regulates the vast majority of California’s health insurance market.
California’s DMHC can now decide whether to approve or reject health plan mergers based on a narrower set of criteria, including whether the merged company would be financially viable and pay out claims, and whether provider networks would be endangered.
While the agency has jurisdiction over which health plans do business in the state, it cannot on its own block a national insurance merger. But its decisions can influence the U.S. Department of Justice as companies try to win antitrust approval from the federal agency.
Under the new proposal, the DMHC would be required to consider, for instance, if a merger would create fewer insurance options in a region or if consumers’ premiums would rise.
“We want the DMHC … to have the ability to protect consumers and reject mergers if they are bad,” said Tam Ma, legal and policy director of the consumer group Health Access, which supports the measure. “Health plans and insurers should not be able to get bigger unless they actually get better.”
The proposal comes after a series of health plan mergers were approved by the Department of Managed Health Care over the past few years.
The merger of Aetna and Humana was approved by the Department of Managed Health Care in June 2016, but a federal judge recently blocked the $37 billion deal, saying it would reduce competition in the individual and Medicare markets.
Consumers Union supports the bill, arguing that Californians would benefit from clearer regulatory guidelines about proposed health insurance “megamergers.”
“While our regulators did do the best they could do under their current authority, we believe AB 595 would actually take them one step further,” said Dena Mendelsohn, staff attorney with Consumers Union.
A 2015 Commonwealth Fund study found that health insurance mergers led to higher premiums, and it was hard to determine whether mergers improved the quality of services provided by health plans.
The insurance industry opposes the measure, saying California regulators already dictate terms of health insurance consolidations.
The bill’s “vague and broad” standards would discourage new investments in health care, according to the California Association of Health Plans (CAHP).
“Even a relatively basic consolidation or transfer of assets within the same corporate family could trigger prior-approval and hold back innovative investments,” said Nick Louizos, the association’s vice president of legislative affairs.
Republican Assemblyman James Gallagher (R-Yuba City) voted for the bill. He represents a rural district in Northern California, where only two insurance carriers dominate the market in the state’s Obamacare exchange, Covered California.
Gallagher said consolidation could lead to “no competition” in the health insurance marketplace.
“I do want to see maybe some more oversight of those mergers, especially in those cases where the competition is not so robust,” Gallagher said.
The measure also would require a public hearing before any mergers are approved. Consumer advocates say those hearings have occurred at their request but aren’t now mandated by law.
Proposed Law Envisions Lead Screening For All California Children
Growing national concern about lead poisoning in children has prompted a California lawmaker to introduce legislation that ultimately would require all of the state’s kids to be tested for the toxic metal.
The bill, introduced by Assemblyman Bill Quirk (D-Hayward), would change the state’s Health and Safety Code to require testing for all children ages 6 months to 6 years.
Current regulations require lead testing only for children of those ages who are in government assistance programs, such as Medi-Cal and WIC, a supplemental nutrition program, as well as for kids who spend a significant amount of time in buildings built before 1978. That leaves many children untested who nevertheless may be exposed, said Quirk, who also chairs the Assembly Committee on Environmental Safety and Toxic Materials.
He cited contamination of the water supply in Flint, Mich., and hazardous levels of lead found in the soil near a battery recycling facility in the tiny city of Vernon near Los Angeles, as examples of why he authored this bill.
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Lead, which can be found in dust, soil, water or paint, has been identified as a leading environmental threat to children’s health. Exposure to it has been linked to lifelong health and developmental problems, including learning and hearing disabilities, behavioral problems, hyperactivity and delayed puberty, according to the U.S. Environmental Protection Agency.
In the 1970s, federal and state policies banned the use of lead in gasoline and paint. However, many older buildings still have lead paint or pipes that continue to pose risks, Quirk said.
In 2012, 650,402 children under 21 in California were tested for lead, and about 13,000 — 2 percent — had lead levels above the threshold considered potentially unsafe, according to data from the state’s Department of Public Health. That’s the latest data available according to the agency, which houses a childhood lead poisoning prevention branch and fund.
In some regions of California, children’s lead exposure is considerably higher than the statewide rate reported by the public health department.
A Reuters analysis found that more than 7 percent of children screened in the Fruitvale neighborhood of Oakland had elevated levels of lead in their blood. In Selma, a city located about 15 miles southeast of Fresno, more than 6 percent of children tested showed high levels of lead.
In comparison, about 5 percent of children tested in Flint showed high levels of lead in their blood after the drinking water was found to be contaminated, the Reuters report showed.
Nationwide, about 2.5 percent of children aged 6 and younger have elevated lead levels, defined as at least 5 micrograms per deciliter, according to the U.S. Centers for Disease Control and Prevention.
Quirk said the Reuters analysis highlighted potential gaps in the way states gather data on lead contamination in children.
“Given the ages of California’s infrastructure, lead exposure risks are ubiquitous,” Quirk said in an email. “The current screening process only tests certain children. Better data can help us better identify clusters and arm the state with a thorough, more comprehensive response.”
John Froines, a professor emeritus at the UCLA Fielding School of Public Health, said screening all children is a good step toward addressing lead contamination, but scientists still disagree on what should be considered safe levels of lead.
When lead is inhaled or ingested, it travels through the bloodstream and ends up in bones and soft-tissue organs such as the brain, Froines said. In bones, lead can accumulate over time and last up to 32 years, he said.
Under the current lead-testing regulations, screening of children is paid for by the child’s health plan or Medi-Cal. Quirk said this would continue to be the case if testing were extended to all of the state’s children.
The California Association of Health Plans is reviewing Quirk’s bill to assess how much it would cost, according to a spokeswoman for the insurance industry group.
Quirk’s office anticipates the bill will be considered by the Assembly Committee on Environmental Safety and Toxic Materials in early April.
Are Virtual Doctor Visits Really Cost-Effective? Not So Much, Study Says
Consultations with doctors by phone or video conference appear to be catching on, with well over a million virtual visits reported in 2015.
The convenience of “telehealth” appeals to patients, and the notion that it costs less than an in-office visit would make it attractive to employers and health plans.
But a new study suggests that while telehealth services may boost access to a physician, they don’t necessarily reduce health care spending, contrary to assertions by telehealth companies.
The study, published Monday in the journal Health Affairs, shows that telehealth prompts patients to seek care for minor illnesses that otherwise would not have induced them to visit a doctor’s office.
Telehealth has been around for more than a decade, but its growth has been fueled more recently by the ubiquity of smartphones and laptops, said Lori Uscher-Pines, one of the study’s authors who is a policy researcher at the Rand Corp., a nonprofit think tank based in Santa Monica, Calif.
These virtual consultations are designed to replace more expensive visits to a doctor’s office or emergency room. On average, a telehealth visit costs about $79, compared with about $146 for an office visit, according to the study. But it found that virtual visits generate additional medical use.
“What we found is contrary to what [telehealth] companies often say,” Uscher-Pines told California Healthline. “We found an increase in spending for the payer.”
The researchers found that only 12 percent of telemedicine visits replaced an in-person provider visit, while 88 percent represented new demand.
The researchers examined 2011-13 utilization data of 300,000 people enrolled in the Blue Shield of California Health Maintenance Organization plan offered by the California Public Employees Retirement System, which covers current and former state employees and their families. CalPERS’ Blue Shield HMO started offering telehealth services, available 24/7 to its beneficiaries, in April 2012.
The researchers focused on virtual visits for respiratory illnesses, which include sinusitis, bronchitis, pneumonia and tonsillitis, among others.
While a single telehealth visit for a respiratory illness costs less than an in-person visit, it often results in more follow-up appointments, lab tests and prescriptions, which increases spending in the long run. Liability concerns may prompt telehealth physicians to recommend that a patient go in for a face-to-face appointment with a doctor, the study notes.
Researchers estimated that annual spending for respiratory illnesses increased about $45 per telehealth user, compared with patients who did not take advantage of such virtual consultations.
Jason Gorevic, the CEO at Teladoc, the operator that provides telehealth services for CalPERS Blue Shield members, said the new study doesn’t square with Teladoc data showing the cost savings of telemedicine.
According to 2016 data, Gorevic said, only 13 percent of Teladoc visits represent new medical use. He noted that the Rand study uses older data, and that many things have changed since then — including the technology, the rate at which these services are being adopted and patient engagement.
“In fact, other more comprehensive studies — using six times the amount of claims data including the same population as the [Rand] study — have found tremendous value of telehealth, with consistently repeatable results,” Gorevic said. These other studies have shown that telehealth decreases overall health care spending, he said. But Uscher-Pines said the Rand findings were not surprising.
When Rand researchers studied retail clinics last year, they found that making access to health care more convenient triggers new use and additional costs. That study found 58 percent of visits to in-store clinics represented new use of medical services rather than a substitute for doctor office visits.
Yet the fact that telehealth services are more affordable per visit than a trip to a physician’s office shows that there is still a pathway to cost savings, Uscher-Pines said.
To achieve cost savings, telehealth services would have to replace costlier visits, the researcher said. Insurers could increase telehealth visit costs for patients to deter unnecessary use. Another way to increase the health system value of virtual doctor visits is to target specific groups of patients — such as those who often use emergency rooms for less severe illnesses. An emergency room visit costs an estimated $1,734.
“You could take these people in the emergency department and offer them this cheaper option. That would be a direct replacement,” Uscher-Pines said.
Gorevic said that a challenge for telehealth is engaging consumers, so the comparatively low fees provide a financial incentive.
“Because a telehealth visit is much cheaper than an in-person visit, the cost sharing should be reflective of that,” he said.
Marcus Thygeson, senior vice president and chief health officer at Blue Shield, which also provides virtual doctor visits through Teladoc, in a statement said that “increased convenience can increase utilization, so overall healthcare costs may increase or stay the same. Blue Shield supports the use of telemedicine to improve access for both primary and specialty healthcare, especially in rural communities.”
The researchers noted several limitations to the Rand study. For example, researchers examined only one telehealth company and studied only visits for respiratory illnesses. In addition, the patients whose data were scrutinized had commercial insurance, and it is possible the use of telehealth would differ among people with government insurance, high-deductible plans or no insurance at all, the study said.
Not Turning Back’: California Governor Vows To Protect State’s Health Care
In an unusually impassioned speech, Gov. Jerry Brown vowed Tuesday to protect California’s health care gains under Obamacare against Republican attempts in Washington, D.C., to roll them back.
“More than any other state, California has embraced the Affordable Care Act,” Brown told state legislators and appointees in his annual State of the State address at California’s Capitol. “I intend to join with other Governors and Senators, and with you, to do everything we can to protect the health care of our people.”
Brown said California would not “turn back” on advances it’s made in health coverage under pressure from the new Republican administration in Washington. Under the new federal leadership, he said, the “future is uncertain and dangers abound.”
Health coverage for Californians under the Affordable Care Act “has come with tens of billions of dollars from the federal government,” said Brown. “Were any of that were to be taken away, our state budget would be directly affected, possibly even devastated.”
Leveraging an estimated nearly $20 billion federal money, health coverage has been extended to five million Californians under Obamacare, which includes federally subsidized private health plans and an expansion of eligibility for Medicaid, the program for low-income people — known in this state as Medi-Cal.
Brown received cheers and several standing ovations from legislators during his speech, an address intended to set the state’s policy-making tone for the year. The 78-year old governor was visibly energized during his 16-minute speech, often speaking in an emphatic, defiant tone. While also emphasizing renewable energy initiatives and an inclusive immigration policy, Brown veered off script to voice support for women’s reproductive health care.
“We’re going to fight for Planned Parenthood, which has been unfairly attacked in too many places in this country,” he said.
Health care advocates quickly piped up on Twitter and in press releases to support the governor, saying he is rightly alarmed at the threat of losing billions of federal dollars not just from the repeal of the Affordable Care Act, but also under Congressional proposals to change Medicaid into a state block grant program.
“We look forward to working with [Governor Brown] to fight for our health in Congress,” Anthony Wright, executive director of Health Access, said in a statement.
Kieryn Darkwater, a young transgender person of color, praised the speech on Twitter, saying it provided reassurance that California is a safe place for immigrants and others who are “marginalized.”
“I deeply appreciated that he spent so much time talking about the issues of health care and protections for our communities,” Darkwater, an Oakland-based activist, artist and programmer said via email to California Healthline.
“Medi-Cal is currently keeping me both alive and able to stay afloat financially,” Darkwater said.
Assembly member Rob Bonta, D-Oakland, the former chairman of the Assembly Health Committee, tweeted that he was proud Brown “came out swinging in strong defense of health, immigrants, [and] science.”
Even some state Republicans responded favorably to Brown’s call for bipartisanship.
Senate Republican Leader Jean Fuller, R-Bakersfield, said reaching across party lines is especially important to build bridges with national policymakers.
“Working with Washington should emulate the bipartisan successes we have had in our state,” Fuller wrote in a statement.
Covered California, the state’s Obamacare insurance exchange, reported strong enrollment numbers today despite uncertainty surrounding a possible repeal of the health reform law. Officials said 320,000 Californians have signed up in the subsidized marketplace since November, roughly on par with last year’s enrollment over the same time period.