23 July 2009
PAYERS & PROVIDERS
Calendar
July 30
Medicare HCC Management. U.S. Grant
Hotel, San Diego.
Explores how health plans and providers
can optimize revenue from their Medicare
partnerships. Conducted by Financial
Research Associates. $995.
Register online:
http://www.frallc.com/register.aspx?
ccode=H110
August 9-11
Governance Support Conference, Grand
Hyatt, San Francisco.
Exploring ways to provide governance
support, including the use of e-portals and
case studies. Conducted by the
Governance Institute. $1,195.
Register online:
www.governanceinstitute.com
September 24
P4P Stakeholders Meeting, Sheraton
Gateway, Los Angeles.
A forum for California healthcare
stakeholders to discuss pay-for-
performance efforts. Conducted by the
Integrated Healthcare Association.
Fee TBD.
Info:
http://www.iha.org/2009P4PSM.htm
E-Mail
payersandproviders@gmail.com
with the details of your event, or
call (877) 248-2360, ext. 3. It will
be published in the Calendar
section, space permitting.
California Edition
DMHC: Big Plan Complaints Surge
Kaiser Bucks Trend with a Drop; Reviews go up
Complaints about California’s health plans “We would be very concerned that there is a
lodged with the Department of Managed trend among insurers becoming more
Health Care were up just slightly in 2008, but aggressive and denying medically necessary
three of the state’s larger plans saw double- care.”
Overall plan enrollment among larger
digit average increases, despite an overall
drop in year-to-year enrollment. plans was 15.6 million in 2008, according to
Meanwhile, independent medical DMHC data. That compares to 16.3 million
reviews (IMRs) of denials of treatment or in 2007, a drop of about 4%. Complaints in
payments, which are managed by the DMHC, 2008 totaled 3,864 among those plans,
were up sharply overall. Among plans with compared to 3,915 in 2007. Complaints
more than 400,000 enrollees, among plans with
COMPLAINTS BY HEALTH PLAN
IMRs increased 17.5%, from enrollment below 400,000
Anthem Kaiser were up 16.1%, to 212 in
1,569 in 2007 to 1,900 Blue Shield Health Net
in 2008. They were up
2000
2008, from 178 in 2007.
18% among the smaller Enrollment among the
plans. 1834 smaller plans rose 4.6% in
A significant 2008.
1500
portion of this increase 1516 The drop in complaints
was due to the DMHC among larger plans is
skewed by Kaiser
shifting ER 1000
reimbursement 1046
958 Permanente. The not-for-
complaints into a new profit Kaiser saw its
IMR category. Factoring 500 675
583
complaints fall significantly,
out this change, IMRs from 1,834 in 2007 to
373
among larger plans 292 1,516 in 2008, down
were still up 6%. 0 17.3%. With the shifting
2008 2007
The trend was Source: DMHC away of ER complaints
troubling to some taken into account,
Kaiser’s tally was still down
consumer advocates, who
believe the plans may be trying to deny more 6.7%.
claims in order to shore up margins in a bleak “We track complaints as they come
economy. in to identify areas where we can improve.
“These are not numbers that should be We believe those efforts are reflected by the
going up as enrollment is going down,” says decline in complaints from 2007 to 2008,”
Anthony Wright, executive director of Health says Kaiser spokeswoman Meg Walker.
Access, a Sacramento-based consumer group.
Continued on Next Page
info@AthenaGroup1.com
www.AthenaGroup1.com
2009 by Payers & Providers Publishing, LLC
 Payers & Providers NEWS Page 2

DMHC (Continued from Page One)

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In Brief
New Budget Ushers in
Even Steeper Cuts
After months of back-and-forth
debate, the Legislature and Gov.
Arnold Schwarzenegger appear to
have closed a yawning $25 billion
With Kaiser removed from the data,
complaints among the larger plans were up
11.3%. Meanwhile, enrollment among those
plans – Anthem, Health Net, Blue Shield, L.A.
Care and PacifiCare – was down nearly 5% in
2008 compared to 2007.
Both DMHC and plan officials suggest the
spike in complaints and IMRs might be the
result of consumers being more aware of their
rights.
“In times like these, when healthcare
coverage offers less financial protection and is
more complex to understand, consumers are
more eager to fight for what they are owed,”
says DMHC Director Cindy Ehnes.
“People are becoming more savvy, and
we provide services to help members,” says
Brad Kieffer, spokesman for Health Net,
whose complaints were up 21.8% while its
enrollment in California increased marginally.
“When that kind of information is available, it
provides a greater dialogue.” Officials at
Anthem California issued a statement along
similar lines.
A spokeswoman with the California
Association of Health Plans noted that IMRs
that were either overturned by larger plans or
by the DMHC after submission for review were
essentially flat. Among larger plans, 1,125
IMRs were either overturned or reversed in
2008, meaning 775, or 41%, were upheld. In
2007, 871 IMRs were either overturned or
reversed, meaning 698, or 45%, were upheld.
The full DMHC report may be obtained at:
http://www.dmhc.ca.gov/aboutthedmhc/gen/
gen_depreport.aspx.

Healthcare Philanthropies Hit Hard

budget gap. However, much of that
shortfall would be made up in steep
cuts to healthcare programs.
Among the programs that will
be cut or affected under the current
proposal:
• $1.3 billion from Medi-Cal
• $144 million from Healthy
Families
• In-home care services: workers to
undergo more extensive
background checks. Expected to
cut staff and several million
dollars a year.
• The sale of the State
Compensation Insurance Fund to
a private entity. Expected to raise
$1 billion.
Lawmakers are to vote on the
package today (July 23). However,
threats by Los Angeles County to
sue to stop the budget’s passage
and a potential Republican revolt
over the early release of about
18,000 prisoners could derail the
plan. The state has issued nearly
$750 million in IOUs since the
beginning of the month to cover its
bills.
One Million Will Lose
Coverage Statewide
Nearly 1 million Californians are
projected to lose their healthcare
insurance coverage between 2008
and 2010, according to a new study
by Families USA.
The Washington-based
consumer organization blamed the
severe recession, which began in
December 2007, for much of the
coverage losses. It used the Urban
Institute’s formula linking a .59%
Some Cut Staff as Recession Erodes Endowments
California’s large healthcare philanthropies than the 5% of overall assets a foundation such
have been battered by the economic crisis, as California Wellness is legally required to
with some endowments down disperse annually.
nearly 40% and staff jobs However, the
California California
slashed. Although the level of composition of its grants has
grantmaking has yet to be Wellness Endowment changed. Whereas in years
impacted, leaders say that Foundation past about 60% of the
could change as planning for California Wellness grants
next year gets underway this 2007 Assets 2007 Assets were earmarked toward
fall. operational expenses for
“I don’t know what’s $1.2 billion $4.2 billion grantees, that’s shot up to
going to happen in 2010. (estimated) about 90% this year.
There is a possibility that we “Asking grantees to do
2008-2009 2008-2009
could cut back, and there is a new projects under these
Assets Assets
possibility that we could circumstances is unrealistic,”
maintain current (grantmaking $694.7 million $2.8 billion
Yates says.
levels),” says Gary Yates, California Wellness has
President of the Woodland not cut any of its 41 staff
Hills-based California Wellness Foundation. positions (down from 52 at the beginning of
Founded in 1992 via the for-profit conversion the decade).
of Health Net, California Wellness’ That was not the case at the Los Angeles-
endowment dropped 37% – or about $500 based California Endowment, whose assets are
million – in the recent financial crisis. down by about one-third, or roughly $1.3
Nonetheless, Yates says his foundation billion. It cut 40 positions – about a third of its
made $50 million in grants during 2009, the
Continued on Next Page
same level as 2008. That’s about 50% more

Continued on Page 3 www.thecamdengroup.com

2009 by Payers & Providers Publishing, LLC

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In Brief
drop in healthcare coverage to
every 1% increase in the
unemployment rate.
Based on those numbers,
Families USA estimated that more
than 27,000 Californians have
been losing insurance coverage
every month since the start of
2008. It projects total statewide
coverage losses of 995,200 by next
year – nearly 400,000 more than
Florida, which is projected to have
the second-highest number of
coverage losses. Altogether, 6.9
million Americans are expected to
lose their health insurance.
Blue Shield Expands
CalPERS Coverage
San Francisco-based Blue Shield of
California has expanded
geographic coverage of its low-cost
health maintenance organization
option offered through CalPERS.
Starting in January 2010, Blue
Shield will offer the NetValue
HMO product in San Francisco,
San Luis Obispo, Imperial and
northern San Mateo Counties.
About 23,000 CalPERS members
would be eligible to use the plan,
which offers a lower premium in
exchange for a tighter network and
an out-of-pocket maximum that
can reach $3,000 for a family.
Currently, the NetValue
product has 110,000 CalPERS
enrollees in 17 counties statewide.
WHA To Exit Medi-Cal
Western Health Advantage on June
30 notified Medi-Cal of its
intention leave the program two
years before its contract expires.
The Sacramento-based plan cited
low reimbursement and rising
medical costs for the decision,
saying it was becoming too
difficult to cover expenses. WHA
covers 16,000 Medi-Cal managed
care enrollees in Sacramento
County. It will officially exit Medi-
Cal on Jan. 1.
NEWS
Philanthropies
staff – earlier in the year. It also scaled down
its San Diego office and moved its San
Francisco office to less-pricey Oakland.
“We’re changing in terms of an
organization, and it requires a new
discipline,” says California Endowment
spokesman Jeff Okey. The California
Endowment was created in 1996 as part of
the for-profit conversion of Blue Cross of
California.
The California Endowment makes about
$150 to $180 million in grants annually. That
number did not change in 2009, but the
organization is embarking on a big statewide
initiative in 2010 called Healthy
Communities. That will consume about half
of its grantmaking power next year.
Meanwhile, some smaller organizations
-- such as community clinics – are having a
Payers & Providers Launches
New Publication Strives to Inform on Health Policy
This first issue of Payers & Providers is the
culmination of many months of work between
myself and the publication’s
distinguished Editorial Board. It By Ron Shinkman topic they feel passionately about.
has been a challenge, but one that
has been worthwhile.
This is what I envision for the publication:
• It becomes a “must-read” every Thursday
morning. It will accomplish that by
providing healthcare news that is fresh
rather than rehashed. The story about the
Department of Managed Health Care is a
case in point: it was first reported here.
• It achieves clarity in writing and design. I
am a clarity freak. Therefore, I want the
reader to “get” the story immediately,
without having to wade into run-on
sentences or cluttered graphics.
RFS Consulting
Expert Healthcare Communications
■White Papers ■Media Campaigns
(818) 848-8510
2009 by Payers & Providers Publishing, LLC
Page 3
(Continued from Page Two)
tougher time performing fundraising.
“The biggest challenge has been with the
individual donors,” says Louise McCarthy, vice
president of governmental affairs with the
Community Clinic Association of Los Angeles
County. “There’s definitely been a shrink.”
That has made community clinics even
more reliant on the larger healthcare
philanthropies, McCarthy observes. As a result,
competition is heating up among smaller
healthcare organizations for grants.
How long the distress in healthcare
philanthropy lasts is anyone’s guess. “There’s
no reason we can’t rebuild our portfolio over
time,” Yates says. But he believes it will take
five or six years for California Wellness to
reach its 2007 asset levels again. “And that’s
with a reasonable rate of return,” he adds.
• It becomes a forum for healthcare leaders.
There are few publications where
healthcare executives can discuss a
That is why Payers & Providers has
an Editorial Board and an Opinion
Page. Every reader of Payers & Providers is
free to submit an opinion article about any
topic that is important to them. It will
almost certainly find its way into print here.
Payers & Providers will begin publishing
weekly on Oct. 1. If you have any comments
or suggestions on this new venture as it
moves along, do not hesitate to contact me
by e-mail at ronshinkman@gmail.com.
Ron Shinkman is the Publisher of Payers &
Providers.
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Payers & Providers
Vol. 1, Issue 1
Payers & Providers is
published every Thursday by
Payers & Providers Publishing,
LLC. An annual individual
subscription is $99 a year
($149 in bulk). It is delivered
by e-mail as a PDF
attachment, or as an electronic
newsletter.
All advertising, subscriber and
editorial inquiries:
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Mailing address:
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Editorial Board
Steven T. Valentine, President,
The Camden Group
Ross Goldberg, Chairman of the
Board, Los Robles Hospital
Medical Center
Jim Lott, Executive Vice President,
Hospital Association of Southern
California
Elaine Batchlor, M.D., Chief
Medical Officer, L.A. Care Health
Keith Richman, M.D., Executive
Vice President, Lakeside
Community Healthcare
Publisher
Ron Shinkman
ronshinkman@gmail.com
OPINION
Reform’s Endgame: Pacing Obama
Matching his political skills with results will not be easy
Barack Obama is closer to achieving
healthcare reform than any president since
Harry Truman first tried 60 years ago.
Getting legislation to the President’s
desk by his desired Oct. 15 deadline will
be relatively easy. Making reform work is
a different matter. The current plan has a
thousand variables. It could take years
before they stop pushing against one
another and actually mesh.
President Obama is an
observer’s observer. That gift
has helped him avoid all the
pitfalls that doomed past
reform efforts. The secrecy that
made Bill and Hillary Clinton’s
plan an easy political target
was eliminated by giving
Congress the bulk of the work.
The provider hostility that
killed Truman’s proposal was
overcome by getting those
parties to pitch in.
Insurers merely promised to
take all applicants, a pledge that
can be actuarially hedged.
Providers actually have to make spending
cuts. Under an agreement recently struck
by the American Hospital Association,
Medicare and Medicaid payments to
hospitals would be cut $155 billion over
the first decade of reform, assuming 95%
of Americans are able to obtain health
insurance.
This agreement stems from another of
President Obama’s remarkable abilities: an
infinite appetite for the printed word. One
magazine article, “The Cost Conundrum,”
has been steering the healthcare reform
debate in recent weeks. Written by
physician/author Atul Gawande and
published less than two months ago in the
New Yorker, it examined healthcare costs
in McAllen, Tex. It suggested McAllen was
an outlying island of over-utilization,
abetted by overly entrepreneurial
physicians (my colleague Dr. Keith
Richman will discuss this at length in a
future issue).
“The Cost Conundrum” immediately
caught the attention of President Obama
and his staff. As a result, Medicare
payments were put on the table for deep
cuts.
2009 by Payers & Providers Publishing, LLC
Page 4
The AHA deal moderates those cuts
by nearly $90 billion. However,
California hospitals are still looking at a
potential revenue loss of more than $17
billion over the next decade, including
more than $7 billion in payments to
disproportionate-share hospitals.
The cuts to inpatient providers
do not even include a projected 21.5%
reduction in Medicare
payments for physicians that
will likely go into effect next
year.
Providers are never
pleased when reimbursement
shrinks, but this is quite
possibly the worst time in
decades to experience it. In
California, the loss of hundreds
of thousands of jobs due to the
economic crisis has swelled
the ranks of the uninsured. The
By amount of uncompensated care
Jim Lott has been rising. Hospital
management feels the financial
strain in virtually every corridor.
Should the American people buy
into the public health plan and the ranks
of the uninsured shrink by 30 million or
so over the next five years, it could work
out. Hospitals would no longer need that
extra money to cover uncompensated
care. But that’s a lot to accomplish in a
short period of time, particularly when
many people can’t currently afford to buy
health coverage – whether it’s available
to them or not.
That President Obama has been
able to shift virtually the entire burden of
enacting healthcare reform away from the
Oval Office may be the deftest political
feat in decades. Whether everyone else
will be as adroit breathing life into the
reforms remains to be seen.
Jim Lott is Executive Vice President of the
Hospital Association of Southern California. He
is a member of the Payers & Providers Editorial
Board.
Op-ed submissions of up to 525 words are
welcomed. Please e-mail proposals to
payersandproviders@gmail.com, or call (877)
248-2360, ext. 3.
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