Monthly Archives: March 2018

California attorney general sues Sutter Health for anticompetitive practices

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https://www.fiercehealthcare.com/regulatory/california-ag-sues-sutter-health-for-anticompetitive-practices?mkt_tok=eyJpIjoiTkdNMU56bGxOVGRpWlRRMyIsInQiOiJOQmExNkliUVBkRFNHMGRBUFZiRG5MazRJVHJxQjFvRTl3NjVNV0pxeDlHc0dyVEhBS01HRjlcL1ZLaXFcL3hpOHVzVkxtdEpZb1BPYTc3SE82VnN3U05nejlNNEVOWUhhY2h2NThFdUluTjY1SU5zUkgxZEExRTFTemI5a3dSNkZJIn0%3D&mrkid=959610

Gavel

California’s attorney general has filed a lawsuit against Sutter Health, the largest system in the northern part of the state, claiming the organization’s anticompetitive practices have driven up healthcare prices throughout the region

The charges in the lawsuit (PDF) are “not new to Sutter,” AG Xavier Becerra said at a press conference Friday afternoon. The filing follows a statewide investigation into healthcare costs that revealed wide price disparities between the northern and southern parts of the state.

“Sutter Health is throwing its weight around in the healthcare market, engaging in illegal, anticompetitive pricing that hurts California families,” Becerra said in an announcement. “Big business should not be able to throttle competition at the expense of patients.”

Sutter was able to jack up prices for care at its facilities in several ways, according to the lawsuit:

  • Forcing insurance companies to negotiate with it in an “all-or-nothing” systemwide fashion
  • Blocking payers from offering patients low-cost health plan options
  • Charging extremely high rates for out-of-network visits
  • Limiting price transparency

Karen Garner, a spokesperson for Sutter, said in a statement emailed to FierceHealthcare that the system is “aware that a complaint was filed, but we have not seen it at this time, so we cannot comment on specific claims.”

Garner said that data from the state’s Office of Statewide Health Planning and Development show lower prices at Sutter Health facilities compared to other providers operating in Northern California. Sutter has also kept rate increases for its health plan in “low single digits since 2012,” she said.

“It’s also important to note that healthy competition and choice exists across Northern California,” Garner said. “There are 15 major hospital systems and 142 hospitals in Northern California, including Kaiser Permanente, Dignity, Adventist, Tenet, UC and more. And health plans can elect to include or exclude parts of the Sutter Health system from their networks, and health plans have been doing so for many years.”

Multiple California employers and labor unions have taken action against the health system for anticompetitive practices prior to the AG’s involvement. Sutter came under fire late last year after it was revealed that in 2015 it destroyed 192 boxes of documents that these entities sought as evidence, which the system said was a regrettable mistake.

A California judge said there was “no good reason” for Sutter to have destroyed the documents and said the “most generous interpretation” was that the system was “grossly reckless.”

The AG’s lawsuit also alleges that in addition to driving up healthcare costs in Northern California, Sutter’s actions enriched its executives, and fueled acquisitions that led to further consolidation and funding for its own health plan.

Becerra’s office was spurred to act, according to the announcement, following the release earlier this week of a report from the University of California that detailed how much consolidation has impacted healthcare costs in the state, with northern regions especially affected.

The average cost for an inpatient stay in Northern California was $223,278, compared to an average of $131,586 in the southern regions, according to the report (PDF).

Kathleen Foote, senior assistant attorney general in California who heads the antitrust unit, said at the press conference that taking action against Sutter’s practices should lead to increased competition that benefits both price and care quality.

A video of the full press conference is embedded below:

 

 

State of California files suit against Sutter Health over antitrust allegations

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https://www.bizjournals.com/sanfrancisco/news/2018/03/30/state-files-antitrust-suit-against-sutter-health.html

Sutter Medical Center in Sacramento

The State of California on Friday filed an antitrust suit against Sutter Health, accusing the Sacramento-based health system of practices that have driven up the cost of care in Northern California.

Sutter is accused of preventing insurance companies from negotiating with the health system on anything but an all-or-nothing basis, which requires insurers to contract with the entire health system, and not just parts of it. The lawsuit also alleges the health system has prevented insurance companies from offering low-cost health plan options and set excessively high out-of-network rates, while restricting the publication of provider cost information for patients’ review.

A Los Angeles Times analysis of medical care costs, which is referenced in the lawsuit, found that hospitals in Northern California’s six most populous counties collect about 56 percent more revenue per patient per day from insurance companies and patients compared to hospitals in Southern California’s six largest counties.

At a news conference this morning, Attorney General Xavier Becerra said the investigation has been in the works for about six years, prompted by complaints from patients and employers about high medical care costs in Northern California.

“It’s time to hold health care corporations accountable,” Becerra said at the news conference. “If we do nothing, it will continue to happen.”

The state attorney general’s office said in a statement that the “excess profits” Sutter took in from its allegedly illegal conduct was put toward “waves of acquisitions, extreme levels of executive compensation and financing its own insurance arm.”

“Much of the increased cost of health care in Northern California is attributable to Sutter and its anticompetitive contractual practices which it has imposed as a result of its market power,” the complaint against Sutter states. “Specifically, Sutter embarked on an intentional, and successful, strategy of 
securing market power in certain local markets in Northern California.”

The lawsuit seeks to enjoin Sutter from continuing its allegedly illegal contracting practices, including all-or-nothing contract negotiations and so-called price-secrecy terms. The lawsuit also seeks to “restore competition” by requiring Sutter to stagger its negotiations between its providers of inpatient services, outpatient services and affiliated physician groups that refer patients to non-Sutter hospitals.

The lawsuit also seeks to stop Sutter from transferring money earned by its health care providers to finance its health plan, Sutter Health Plus.

“We are aware that a complaint was filed, but we have not seen it at this time, so we cannot comment on specific claims,” said Karen Garner, a spokeswoman for Sutter, in an emailed statement. “It’s important to note that publicly available data (from the OSHPD) show that on average, total charges for an inpatient stay in a Sutter hospital are lower than what other Northern CA hospitals charge.” The OSHPD is the Office of Statewide Health Planning and Development.

 

The CFO Confidence Crisis

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https://www.kornferry.com/institute/CFO-succession-plan?mkt_tok=eyJpIjoiTlRJM09UWmxNREpqT1RGaSIsInQiOiJMcEhLaTZabUw0N1QxcTN3OUlqWVA4eldPcG1XRlwvWXJzbzVnM3c1M1JUYkNuRGhvTWFQTG9PenhJbnByOXkwcitLazlkbTh1UTBKQzEwRmx5YmMwZE9aWU1Hb0ZhdTkwVUp1RGhOUTJSNDU4UVpzcFZVSm9mVjE3K1NNTWkrNHIifQ%3D%3D

Few roles are as important as the chief financial officer at most companies, but the CFOs today who are thinking about tomorrow are growing nervous about a key talent issue. They just don’t think anyone else in the company can assume their role.

Indeed, according to a new Korn Ferry survey, 81% of CFOs surveyed say they want to groom the next CFO internally, but they don’t believe that there’s a viable candidate in-house. Currently, about half of new roles are filled internally. 

“The current CFO is the one charged with identifying and developing that talent, and since they know best the skills required to meet what’s coming, they are realizing the internal bench isn’t fully prepared,” says Bryan Proctor, senior client partner and Global Financial Officers practice lead at Korn Ferry.

The lack of confidence is owed in part to CFOs feeling that their firms’ leadership development programs haven’t kept up with the rapidly changing role of CFO. Core functions such as finance and accounting are increasingly being combined under one role, with CFOs citing a lack of resources or skills and career development opportunities as reasons for the merging. Korn Ferry surveyed more than 700 CFOs worldwide, asking them about their own internal talent pipelines. The top two abilities CFOs feel their direct reports need to develop are “leadership skills and executive presence” and “strategic thinking.” 

“The tapestry of skills and experiences CFOs of today and tomorrow need are vastly different than what was needed in the past,” says John Petzold, senior client partner and CXO Optimization lead at Korn Ferry. “The reason subfunctions are merging is because the focus is less on a role or person and more about the capabilities that need to be covered by a set of individuals.”

In essence, the CFO function is being deconstructed for optimization. Leaders are breaking down necessary functions based on their organization’s strategy and identifying people with a combination of those skills and piecing them together to get the right set of talent to execute against that plan. Core financial functions such as taxes, capital allocation, and M&A still need to be done accurately and in compliance with regulations, of course. But experts say the CFO role is becoming more about adapting and deploying talent in the most efficient manner possible. 

“The leadership profile of the future CFO is less about tactical, direct experience, and more about learning agility, adaptability, and big-picture global perspective,” says Proctor. “That kind of nimbleness and ability to pivot isn’t naturally ingrained in the typical CPA.” 

 

State and Federal Contraceptive Coverage Requirements: Implications for Women and Employers

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State and Federal Contraceptive Coverage Requirements: Implications for Women and Employers

Image result for contraception coverage

Contraceptive Coverage under the Affordable Care Act (ACA) has made access to the full range of contraceptive methods affordable to millions of women. Since it was first issued in 2012, this provision has been controversial and has been the focus of two major cases that have reached the Supreme Court. Following the Hobby Lobby ruling, the Obama Administration took the stand that almost all women had an entitlement to the contraceptive benefit and developed an “accommodation” to assure they would still get coverage, even if their employer had religious objections to contraception. The Trump Administration, in contrast, has prioritized the rights of employers, and in October 2017, issued regulations that significantly broadened the exemption to nearly any employer with a religious or moral objection. The new regulations have been challenged by 8 states and have been blocked from being implemented pending the outcome of the litigation.

Before the ACA was passed, many states had enacted contraceptive equity laws that required plans to treat contraceptives in the same way they covered other services. In addition, since the ACA was passed, a number of states have enacted laws that basically codify in state legislation the ACA benefit rules (requiring all plans to cover, without cost-sharing each of the 18 FDA approved contraceptive methods). This issue brief provides an update on the status of the continuing litigation on the federal contraceptive requirement and explains the interplay between the federal and state contraceptive coverage laws and the implications for employers and women.

Background on State and Federal Contraceptive Coverage Requirements

Before the ACA, coverage for prescription contraceptives was generally widespread in the private and public sectors, but not universal, and certainly not free of cost-sharing. In 2000, a ruling by the Employment Equal Opportunity Commission found that employers that covered preventive prescription drugs and services but did not cover prescription contraceptives were in violation of the Civil Rights Act.1 Currently, 29 states and DC2 require insurance plans to cover contraceptives, with a wide range of coverage and cost-sharing requirements, and exemptions among these mandates (Appendix A). State laws, however, do not have authority over all plans; they only apply to state regulated (fully-insured) plans, but not self-funded plans under ERISA where 60% of covered workers are insured.3

The ACA is the first law to set preventive coverage requirements for health insurance across all markets – individual, small group, large group and self-insured plans. Starting in 2012, all new private plans were required to cover, without cost-sharing, the full range of contraceptive services and supplies approved by the Food and Drug Administration (FDA) as prescribed for women. Only employers that were classified as a “house of worship” were exempted from this requirement. While a number of states had contraceptive equity laws that required plans to cover some or all methods, cost-sharing typically applied. Fully-insured plans must comply with both state and federal laws. For some health services, the federal law may require a higher level of benefits, and for other services the state law may require a higher level of benefits.

Conclusion

The outcome of the litigation challenging the Trump Administration’s new regulations is not clear. Currently, the federal government is blocked from enforcing the new regulations. The new regulations would substantially expand the exemption to nonprofit and for-profit employers, as well as to private colleges or universities with religious or moral objections to contraceptive coverage. If the new regulations become effective, for women enrolled in fully-insured employer plans, the scope of their contraceptive benefits would depend on the coverage policies and exemptions established by state laws. Employers who qualify for the exemption under federal law would still need to comply with the state contraceptive requirement. Depending on the state law, employers may still have to provide no-cost coverage for some or all methods of contraception or a narrower set of contraceptive benefits. For women covered by fully-insured plans issued for employers with religious or moral exemptions, their choice of contraceptive methods would be determined by the scope of benefits and exemptions allowed by state law where they live.

 

 

State Regulation of Coverage Options Outside of the Affordable Care Act: Limiting the Risk to the Individual Market

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http://www.commonwealthfund.org/publications/fund-reports/2018/mar/state-regulation-coverage-options-outside-aca?omnicid=EALERT1377329&mid=henrykotula@yahoo.com

Abstract

  • Issue: Certain forms of individual health coverage are not required to comply with the consumer protections of the Affordable Care Act (ACA). These “alternative coverage arrangements” — including transitional policies, short-term plans, health care sharing ministries, and association health plans — tend to have lower upfront costs and offer far fewer benefits than ACA-compliant insurance. While appealing to some healthy individuals, they are often unattractive, or unavailable, to people in less-than-perfect health. By leveraging their regulatory advantages to enroll healthy individuals, these alternatives to marketplace coverage may contribute to a smaller, sicker, and less stable ACA-compliant market. The Trump administration recently has acted to reduce federal barriers to these arrangements.
  • Goal: To understand how states regulate coverage arrangements that do not comply with the ACA’s individual health insurance market reforms.
  • Methods: Analysis of the applicable laws, regulations, and guidance of the 50 states and the District of Columbia.
  • Findings and Conclusions: No state’s regulatory framework fully protects the individual market from adverse selection by the alternative coverage arrangements studied. However, states have the authority to ensure a level playing field among coverage options to promote market stability.

Background

Recent federal actions have created the potential for instability in the individual health insurance market, through which approximately 18 million Americans currently purchase their health insurance coverage.1 In October 2017, President Trump issued an executive order to encourage the sale of health insurance products that do not comply with the consumer protections of the Affordable Care Act (ACA).2 In December, Congress repealed, effective in 2019, the tax penalty for individuals who can afford to maintain health insurance coverage but decline to do so (the individual mandate penalty).3

Prior to health reform, insurers in the individual market had wide latitude to deny coverage, charge an unaffordable premium, or limit benefits based on a person’s medical history. As a consequence, individual market health insurance routinely proved inadequate for consumers’ health and financial needs and was often inaccessible to those with even minor health problems.4 The ACA established numerous consumer protections designed to make it easier for consumers in the individual market to access affordable, adequate health insurance. The law requires insurers that sell individual health insurance to offer coverage to all individuals regardless of health status, requires coverage of preexisting conditions, and prohibits insurers from charging higher premiums based on a person’s medical history or gender. It also includes limits on cost-sharing and requires insurers to cover a minimum set of essential health benefits, including coverage for mental and behavioral health care, prescription drugs, and maternity services.

For these consumer protections to work as intended and to keep premiums affordable, they need to be paired with policies that encourage a broad and balanced risk pool. To promote continuous enrollment by the sick and healthy alike, the ACA imposes an individual mandate and provides financial assistance to make coverage more affordable for those with lower and moderate incomes. Importantly, the ACA also defines what types of coverage were sufficiently protective for purposes of satisfying the individual mandate. To prevent cherry-picking of individuals who are low health risks, it also requires all individual market insurers to play by the same rules.

In many ways, the ACA’s regulatory approach to the individual market has proven successful. During the most recent open enrollment period, approximately 11.7 million Americans signed up for coverage through the ACA marketplaces (also called exchanges), most of whom are eligible for subsidies to help with the cost of coverage.5 In turn, improved access to comprehensive individual health insurance under the ACA, along with the expansion of Medicaid, has helped to reduce the uninsured rate by a third, as of 2018, and lower consumers’ average out-of-pocket costs.6 And, despite insurers’ continued uncertainty over the possible repeal of the health law and the Trump administration’s approach to implementing the ACA, analysis showed that, on average, states’ individual markets were stabilizing, with some insurers reaching profitability.7

However, challenges remain. In the past two years, the individual market in most states has seen significant increases in premiums, coupled with decreases in the number of participating insurers.8 While the ACA’s premium subsidies insulate many consumers from these price hikes, many millions of consumers are not eligible for subsidies, and those individuals identify the cost of coverage as a significant barrier to care.9 And though marketplace sign-ups remain stable despite federal policy uncertainty and Trump administration actions seen as undermining the ACA, enrollment remains well below early expectations.10

These challenges are interrelated and can be attributed to many factors. Still, the availability of coverage options that are not compliant with the ACA’s rules, as well as confusion over them, likely has played an important contributing role.

Policy Implications

Although states’ approaches to implementing the ACA can sharply differ, the law’s consumer protections operate nationwide, and nearly all states have taken responsibility for enforcing these reforms in their jurisdictions. The insurance exchanges in most states have proven resilient in the face of significant change and uncertainty, with millions of Americans now able to depend on individual health insurance to protect them both medically and financially.

However, maintaining a stable individual market will become more challenging, thanks to an environment in which healthy consumers are not required to maintain insurance and federal regulations are loosened to promote coverage arrangements likely to weaken insurance risk pools and raise premiums. These developments may incline healthy individuals to look increasingly outside the compliant market for coverage, leaving those who remain to face higher costs and fewer plan choices.68

Based on our review of state laws and standards, it appears that no state maintains a regulatory environment that fully protects its individual health insurance market from being undermined by the alternative coverage options we have identified. However, states continue to be the primary regulators of private health insurance. Although the ACA set a federal floor of consumer protections for insurers that operate in the individual market, it did not curtail states’ power to regulate above these minimum standards and to exercise full authority over coverage arrangements that fall outside the scope of federal insurance law.

How We Conducted This Study

This analysis is based on a review of applicable laws, regulations, and guidance enacted or promulgated prior to February 1, 2018, by each of the 50 states and the District of Columbia. This review was supplemented by correspondence with state regulators in 48 states and the District of Columbia.

A number of states have taken steps to limit the availability of non-ACA-compliant products and protect against adverse selection. Massachusetts and New York promptly discontinued transitional coverage and effectively prohibit underwritten short-term policies, while several other states tightly restrict the duration of such plans. Significantly, Massachusetts also has its own individual mandate, requiring state residents to maintain coverage that meets minimum standards.69 Other states have begun to explore enactment of similar policies in anticipation of the federal mandate’s 2019 repeal.

On many fronts, states face a federal regulatory approach to the individual market that is significantly different from what was originally envisioned under the Affordable Care Act. In light of these changed circumstances, there may be value for states in considering regulatory options for protecting their individual insurance markets and their insured beneficiaries from the detrimental effects of non-ACA-compliant policies. The decisions states make will likely have a significant impact on their residents’ access to adequate and affordable coverage and on the stability of their individual health insurance markets.