Archive for April, 2018

California Legislature proposes “fixing” our soaring healthcare costs by setting “fixed” levels of reimbursement to providers. Does that sound familiar?

April 26, 2018

Reports from California is that their is legislation proposed that would set the fee schedules by which providers would be paid by insurers and other private medical plans.  Services ranging from hospital inpatient stays, doctor and specialist visits, surgeries, lab and diagnostics such as MRI or CT scans plus basically every health care service would have a fee schedule attached for which providers would be paid. If legislation introduced recently in Ca is passed it would drastically change the way healthcare services are paid.

Is setting a fee schedule a new idea?  No.
Has it been tried before? Yes.
Will providers oppose it? Oh, yes!
Will it work? Yes probably, if not sabotaged by political ideology.

We are all aware that, since 2010, the cost of health care and the premiums to pay for that care has risen 100%+ and is causing crushing financial pain for tens of millions of Americans. The politics surrounding the healthcare issue makes it seem that nobody has an answer and no one seems willing to try new ideas.
But that’s not exactly true, the private sector is continually trying new ideas but gets very little press supporting its actions. This idea of setting a fee schedule has been and is currently being used by many plans in Ca.

In fact, this proposal submitted in the Ca. legislature is already successful in the private healthcare sector being used for medical plans, dental plans as well as vision and wellness plans. Employers as well as insurers are boldly trying to control their costs and the cost to their employees, our citizens. Too often, it’s the government that gets in the way of the private sector’s innovations.

The California proposal would affect private health plans of insurers as well as plans sponsored by employers which then provide the medical coverage to their employees. The idea is to limit or set the reimbursements to providers as a percentage of what Medicare allows. According to the proposal a commission of some number of people, appointed by the governor and legislative leaders, would actually set the reimbursement rate for basically every service provided by doctors, hospitals, surgery centers and other facilities.

While I hate the political nature of “a commission of appointees) the fee structure must be determined in some transparent manner. Setting reimbursements as a percentage of Medicare would be transparent.

In the private sector this concept of reimbursements being tied to Medicare is referred to as Reference Based Pricing (RBP). Some health plan payers call it Value Based Pricing in an effort to add a little marketing pizzazz. But it is a concept with merit because Medicare pricing is supposed to be based on setting a reimbursement that covers a provider’s cost-plus a little profit. People often forget that Medicare allowed rates include a profit margin.

There are a number of examples of how this idea of a fix rate has/is being used now.

  • Dental Plans – One common and successful method is a scheduled plan that dental plans have implemented for years. The dental plan pays a set amount for each service that a dentist can provide.
    For ex:
    * Exam pays $60
    * Cleaning pays $75
    * X-rays pays $45
    These fix schedule dental plans are generally less expensive that standard dental plans yet provide very rich benefits.
  • Medical plans have used EPOs (Exclusive Provider Organization) which means on that plan you only see “in Network” providers or else it is not paid for at all.
  • How ever, many insurers took this EPO idea to the extreme after the ACA was enacted. Insurers created plans with what’s known as “skinny” networks which drastically reduces the number of providers in a member’s area. Most of these “skinny” network plans suck, to be blunt but honest. Few members are satisfied with the choice of Docs on these skinny networks but these plans helped reduce or at least slow the premium increases Americans faced.

The proposal to set reimbursement levels faces opposition in the heavily Liberal Ca Legislature.  One reason may be because many on the Left wish to push for Single Payer and any prospect of controlling costs or improving benefits produces obstacles to the healthcare take-over that Single Payer represents. Thus, many lawmakers are unwilling to make significant changes even if those changes could help lower costs for the employers and employees in Ca.

A good example of this reluctance to help lower cost is the Ca. healthcare law known as SB 161. This SB 161 was enacted to make it virtually impossible for small employers with fewer that 100 employees to self-insure the group health plan they provide for their employees. SB 161 set artificial pricing levels for re-insurers that increase the risk and cost that small employers would bare. It makes the option of self-insuring to risky.
SB 161 was enacted solely to protect Covered California group plan (Ca.’s Exchange)  thereby shielding Covered Cal from the competition by employers self-insuring their health plans. Simply put legislators wanted SB 161 to eliminate Covered Ca’s competition even though it eliminated a popular alternative for employers with as few as 15 employees.

The point is that many Ca. legislators want single payer so badly that setting reimbursement levels which could reduce costs is contrary to their objectives.

Initially, the proposal sets reimbursement levels at 125% to 140% of what Medicare would pay a provider for the same service. The Private sector has many TPAs implementing RBP for employers and the reimbursement level of 125% to 180% is common.

Some argue that these price controls could push doctors to move out-of-state or retire. That’s always the fear-tactic for innovative ideas. Opponents say that it will be much harder for folks to see a physician when they’re sick, or will force hospitals to lay off staff and cut back or even close. Again a common fear tactic used by opponents.

“No state in America has ever attempted such an unproven policy of inflexible, government-managed price caps across every health care service,” Dr. Theodore Mazer, the CMA president, said in a statement.

Dr. Mazer is partially correct however his statement is a bit skewed. Medicare and Medical already sets reimbursements and in Ca accounts for 30+% of Ca.’s 34 million people. It’s true that not every provider accepts Medicare because of the reimbursement levels but that can be addressed in private plans.

But if the State backed this idea of RBP affecting private payers, such as insurers and self-funded employers, then it would bring down the unit cost of care dramatically. We all know that the total cost of healthcare is the unit cost of care times the number of units consumed. Controlling the unit cost of care is a big step to controlling total cost.

Dietmar Grellman, senior vice president of the California Hospital Association states, “from the providers perspective there is some concern and rightly so. Paying hospitals 125 percent of Medicare’s rate would cut $18 billion in revenue and force them to trim nurses and other support staff”.

Mr. Grellman’s point is valid and highlights why our healthcare delivery and finance system has run so a muck.
He says, “Private insurers make up for the low payments from government-funded health care, which doesn’t cover the full cost of care”. It is a fact for 40 years and once again the actions by the government cost employers, employees, you and me because the Hospitals and other Providers charge us more to make up what they say they lose to Medicare plans.

This proposed legislation in Ca. is not the worse idea ever considered in Ca. Trust me on that. But, it may not get traction because of the forces amassed against it. No one wants Hospitals to curtail services or lay off staff. That is not part of the solution to an already over-stressed delivery system. But there must be some room for discussion.

Several years ago, a friend of mine who managed a medium size hospital in the mid-west was grousing about the cut backs his hospital had to accept by insurers and the government. I’ll simplify but he said:

  • We invoiced $460 million for services.
  • We only collected $340 million.
  • I asked “What were your operating cost to provide services”?
  • He said “I can’t/won’t tell you that”

Maybe that’s why an aspirin can cost $18 dollars in some hospitals.

This idea of RBP is a good idea but it is not the save-all to end-all in the fight against rising premiums and care. We need to tie several of these good ideas, we discussed, together to make the solution that all America is hoping for and deserves.

Together, we could make it happen, because we are all in this together.
Let me know what you think.

Until next week.

Mark Reynolds, RHU
It stands for “Walk the Faith”.

Last July, our Post heading was “What would the consequences be if the GOP passes NO legislation to Repeal & Replace? Let’s look at the impact on insurance coverage.” Were we RIGHT?

April 19, 2018

Below is a re-Post of July 27th 2017 with a few comments highlighted in Red. With midterms only 6+ months away, will the decisions made by the GOP last year come back to bite? Read on to see if we were close.

 As I write this post, the Senate has voted to open hearings and take amendments for the Senate’s R&R bill. Basically this is the Senate’s last effort do accomplish anything  for now on Repeal & Replace. Without being pessimistic, I would wager that the smart money will be bet on nothing coming of this.

Regardless of one’s political leaning everyone must agree that action is needed to either replace the ACA (with something better) or make repairs to the ACA (that will keep it alive). I realize that is a big summation but if we are honest then we must conclude that the ACA is failing so one way or another action is needed. Either for the benefit of the millions of Medicare Expansion subsidized enrollees or for the tens-of-millions of premium paying citizens and employers, the ACA needs either fixed or replaced.

So, what would the consequences be if our House & Senate don’t do anything. That is, if they don’t provide or modify the subsidies for the insurers and all of the other ACA issues that need changed to survive or don’t replace the whole darn thing, then we will see a number of absolutely predictable results.

Of course, the Politician’s thoughts will immediately turn to their own future and the 2018 elections (probably have been already) but I want to focus on the impact to all of us, the hard-working premium paying, mortgage paying, car payment making, tax paying citizens. It won’t be good but let’s look at it:

  1. Regardless of whether or not the subsidies of the ACA are paid to insurers we will see: (Correctly so, they’re not paid, yet.)
    a. Premiums for individual plans increase double-digit (20% or more) and be projected to continue for the next few years. It’s happening!
    b. The Counties without an insurer for the individual ACA plans will continue to increase. It’s projected that as many as 1/3 of all counties will have no individual ACA plan available. In the more rural states we could see the number of counties with no individual plans exceed 80% of the counties within those states.
    YEP, that’s what’s happening!
    c. The number of insurers willing to even offer plans anywhere in the country will decline, including those insurers offering plans outside the ACA Exchanges for both group and individual plans. Sadly, for rural areas this is true.
  2. Medicaid enrollment will continue to rise. Even though Medicaid plans provide lower benefits and there are fewer providers, most people don’t realize those facts until it’s too late. Besides, the idea of “free insurance” will become more and more appealing as premiums continue to rise for the tens-of-millions of premium paying citizens that use very little or no healthcare each year. “Why should I pay premium when I never use my plan and those folks are getting it for free?”. Right?
    This is happening plus a few states are trying to expand further.
  3. To summarize: fewer insurers offering fewer choices with few participating providers all at premiums increased each year. That is correct, Madam.
  4. Of course, the result of # 1, 2, and 3 above will lead to another crisis because there won’t be enough money to pay for all of the Medicaid claims and insurer’s subsidies. Which will lead to:
    a. Increased taxes or create new taxes on benefits to generate more funds.
    b. Decrease the benefits at either the plan benefit level or utilization level. That means the IPAB “Independent Patient Advisory Board” or Death Panel will decide what gets authorized and covered and what does not.
    Your 90-year-old mom may need a new hip but will the IPAB authorize it?”
    Luckily, as you read in previous Posts the IPAB is dead, not your 90-year-old mom.

We could go on and on because it is clear that the entire healthcare finance and delivery system will feel the impact of our Congress doing nothing. There is some hope though due to the President’s EOs for AHPs.

One additional concern is the “overly optimistic political corrected” desire to pass a “skinny bill” that would simply repeal the Play or Pay mandates. That could be catastrophic to insurers and to premiums that would need to be increased.

I don’t understand politics and have the scars to prove it but I do try to understand human nature. Human nature will drive most politicians to look out for themselves in their own individual voting district throughout the healthcare debate. This is already occurring in many districts.
Sad thing is that the GOP seems to be immobilized from taking action on R&R  due to the criticisms from people who wouldn’t vote for them regardless of any action taken.

Makes you want to ask, “So, a small percentage of people in your district, who wouldn’t vote for you under any circumstances, are preventing you from doing what’s right for tens of millions of American?” See this example before, haven’t we?
As I said, I don’t understand politics.

Sorry for the negative outlook concerning our Congress and especially its leadership. But, since neither the House nor Senate bills actually repeal the ACA there seems to be little to ignite optimism. And of course, times and circumstances change the immediate need of the population so all help is on hold.

I think we can point to the children’s book “The Emperor’s New Suit” as the beginning of the GOP’s downfall.  You can’t tell people it’s an ACA repeal bill, while leaving the core foundation of the ACA including taxes, and expect the people to embrace it. Reducing the Play or Pay penalties to zero and calling it repeal  does not repeal the Play or Pay core fear of the ACA. It only increases premiums.
I didn’t like that book when I was a kid, and I still don’t!

Well, we’ll see what happens this week and together we will address it.
Because, we’re all in this together, right?
It’s because we suffer with these political blunders together that makes it more frustrating. Together, we are fed up and should do something.
I know – vote.

Until next time.

Mark Reynolds, RHU
It means “Walk the Faith”.


Insurers expected to increase ACA premiums sharply this Fall because they did not get their “bail out” funds. Guess who gets the blame?

April 12, 2018


Isn’t it interesting that when predictions come true about the failures of the ACA, the Left and the Media go looking for someone to blame? In this case the failure predicted is collapse of ACA State Exchanges with the projected “premium spikes” for the Fall of 2018 and the blame goes to Congress and the President.

But the blame game continues as Insurers, politicians at every level, and the Media lay the blame for the expected premium increase squarely on the Congress and the President. The “blamer’s” logic is that Congress failed to include any funding for bailing out Insurers in the Tax Reduction and Jobs Act in December 2017.

 The “blamers” also are saying that the GOP  had a chance to lower rates with an amendment that a couple Republicans had hoped to attach to the $1.3 billion  spending package passed on March 23, 2018.

Let’s clarify a couple things:

  • The ACA’s re-insurance “subsidy” program paid participating insurers huge taxpayer subsidies from 2014 until the program was scheduled to expire at the end of 2016.
  • The subsidies were designed help get the ACA Exchanges up and running but not remain intact beyond that point. The intent was to cover two issues:
    • One – the claims of high-cost patients for whom the law’s preexisting-conditions provisions provided guaranteed coverage.
    • The extra subsidies were supposed to keep premiums from skyrocketing. Obviously that failed as premium increased astronomically each year since 2010. By the end of 2016, premiums had doubled from pre-ACA levels.
  • The premium spikes you are hearing about will only affect the individual plans in state exchanges, the so-called Obamacare Plans. The premium increase will impact less than 10 million Americans and 90% of those receive subsidies so they pay almost nothing for their coverage and care. 
  • These points are important to remember because the Media will try to stir up activist who will then cry for single payer.

 You know this Post is no fan of the GOP’s efforts to R&R the ACA over the past 12 months, actually past 7 years. Additionally, we predicted delays and Democrat inspired litigation issues as the GOP continues its piecemeal approach to fixing our healthcare finance and delivery system.

We have already witnessed evidence of this by the lawsuits filed against the President’s efforts for Association Health Plans and allowing Short Term Medical plans to extend to 12 months.

Who does this lack of “bail out” impact the most? The Media would try to make you believe that the folks covered will be harmed but as we stated earlier that is untrue since 90% of the folks covered by these Omabacare plans pay nothing or almost nothing for their premium or services that they receive.

So, who else does this impact? The answer is the states that so enthusiastically embraced the ACA and rushed to create their Exchanges back in 2010 through 2014. They knew that their citizens would get the subsidies offered so they anticipated great enrollment numbers and enrollees would be “hooked” on Obamacare and unable to leave. It’s the so-called “blue” states feeling the biggest impact.

Reports indicate that some states are seeking their own solutions. Ironically, this funding issue may actually cause states to adopt realistic changes and better solutions than the ACA could ever provide. Let’s face it, government bailouts, especially bailouts for government initiated programs, seldom resolve issues and generally lead to more and more funding. Lot’s of examples of that over the pass 50 years.

Some reports indicate that a few states (mostly blue) are looking for how a they could restore the individual mandate (IM). Actually, there are many experts,”real experts”, who believe the elimination of the IM will lead to more reliance on Employer sponsored coverage thus reliving that burden on the states where the citizen lives.
Two things come to mind about that.

  • One – Employer sponsored plans tend to be less costly to members and provide richer benefits than the ACA individual plans.
  • But we wonder- Do “blue” states really want their citizens to leave the state-run and controlled plan for an Employer’s plan? The state would lose control/dominance over that member so you decide the state’s motivation.
  • States are in the news about their plight and their possible steps to fund the Insurers themselves. But will any of them really step up? Or is it just talk?
  • It is realistic to see states take steps to utilize the opportunities President Trump set forward with AHPs and 12 month Short term Med Plans. We’ve already seen efforts by Utah, Iowa, and Wisconsin to initiate steps in that direction.
    Of course, the Dems have threatened litigation.

In an election year it’s easy to predict that these issues will get much press, mostly uninformed or lopsided, but that noting will be resolved. As we’ve witnesses in the discussion concerning the Daca folks and immigration, issues are more important than solutions for certain politicians.
This premium spike issue will work for candidates because most or our citizens will not realize that it affects only the Exchange Individual plans (less than 10 Million people) which is less than 3% of our total population.

The states that ramped up their subsidized Exchange Plans as well  as expanded Medicaid eligibility are in a financial bind. As stated by Mila Kofman, executive director of the D.C. health exchange, “States don’t print money, and individual markets, to become stable, need an infusion of federal dollars,”. Doesn’t the verbalization that “states don’t print money” sound a bit creepy coming from a bureaucrat’s mouth?

In 2010 to 2014, many of us predicted that the ACA subsidy program would become an issue, when it became clear to us that the Federal funding for these programs would cease in 2016. Come on…, we all know that States receiving Federal subsidies is like an addiction! Did anyone expect States to wean themselves off the addiction?

You can see now that while the Media gives time for politicians (including a few in the GOP) to complain and lay blame the crisis was predictable and the solutions are available. But, it’s an off-year election year so getting elected and re-elected is more important than real solutions.

What do you think? In this case we truly are all in this together because the assistance the politicians seek for less than 10 million will adversely impact 330 million of us.
Again, that’s 330 million people impacted so, we really are in this together!

Until next week,

Mark Reynolds, RHU
mark@reynolds, wtf
It stands for “Walk the Faith”.



How can the average American stay informed about the public issues and policies that impact our lives? It’s not easy folks!

April 5, 2018

I realize the heading to this Post is a bit superficial and maybe beneath our readers standards but in such an important election year the news we see and hear is, too often, either salacious to attract viewers, narrowed by the presenter’s bias, intended to distract from important issues or just plain fake.

The talking heads on TV, both Cable and Network, will pick up a story line planted by someone with an agenda then pontificate upon the subject with what ifs and maybe’s for days. It’s tiresome for viewers, for sure. Then the initial story will be proven false or inaccurate or simply fade away.

We are in a period now in which the news should be full of Big Pharma & Insurer profits and high premiums, weak coverage with few providers and the overall failure of the ACA to accomplish what it was advertised to do. The News should be honestly covering other important issues such as immigration and the Dem’s neglect for Daca, Russian provocations, President’s planned meeting with NOKO leader, the effects of other country’s unfair trade policies  on America, terrorism within our borders, not to mention the unimaginable breach of our privacy by Social Media, to name a few.

What do we get for news instead? On most outlets its the story of Russia-Trump collusion and if that doesn’t work the private affairs of the President before he was in office, some reaching back 20 years or more. Or maybe the less scandalous but equal waste of time; the discussion about the House proposing a balanced budget amendment to the Constitution.

Experience tells us that our government in general and congress specifically understands the news cycles and what steps to take to engage what they desire and avoid what they choose to avoid.
For instance:

  •  Remember the Millions of Dollars in hush money pay by Congress on behalf of Congress members to cover sexual harassment allegations? We all wanted to see a list of those pay outs didn’t we. Have we seen such a list?
  • Remember Lois Lerner and John Koskinen of IRS fame? The GOP was going to uncover that for us so that it could never happen again. Lois Lerner’s testimony is sealed in Congress said to be for her personal safety. What about the safety of our citizens against the first or second most powerful force in America.
  • Unmasking of Americans by the Obama administration. US Ambassador Samantha Powers requested the unmasking of 360 Americans ( that’s right 360) during the last year of the Obama reign. Hear anything about that lately?
  • Catch and Release at the southern border. Sure, the number of crossings went down for several months in 2017 but ICE and the Border teams have no more space for retention or authority to retain those crossing the border.
  • Sanctuary cities and politician’s actions to restrict ICE. What’s being done to protect the legal citizens including those who immigrated legally. We are starting to hear about brave Americans like the those Los Alamitos, Ca who have taken a stand but will it gain notoriety?
  • Plus, the failures of the ACA to deliver better access and more affordable health insurance.

I could go on and you probably have other issues in mind as well. The point is that the average American, which is about 330 million average people, can’t stay up to date and certainly not excited about most of these issues. You’re busy going to work, raising your family, scratching out a living in an increasingly complex world.

The only people who seem to stay active and focused on issues is generally the folks who are impacted, or think they are, by current laws, policies, or morays. The other group that stay focused and mobilized are the folks who make a living off of generating headlines, often with misleading stories, to anger and excite the groups from which they profit.

We see it plainly in the marches recently by kids against guns, by people allegedly for DACA and immigration, against sexual harassment, for gender equality and so forth. Sometimes don’t you wish the policies or programs you support had the energy and outside money that some of these other groups receive.
Frankly, it impossible to maintain the pace to battle for what’s right and for justice.

I guess it’s human nature to be strongly for or against some issue but then run out of gas in the efforts to promote one’s beliefs. Plus, it’s frustrating to see Congress avoid common sense to process the expedient but worse to see Congress avoid common sense for their own benefit.

So it’s ho-hum, nothing’s changed including the frustration many feel. The answer is keep up the fight if you can, try to stay as informed, as you can and participate when you can.
After all, we are all in this together!

Until next week.

Mark Reynolds, RHU
It stands for “Walk the Faith”.