Minn. to test all 3 parts of new health care law

By: Catharine Richert, Minnesota Public Radio News 

MINNEAPOLIS — No state is set to embrace the Affordable Care Act as thoroughly as Minnesota, the only one that will implement the “big three” components of health insurance expansion.

That means Minnesota will expand the Medicaid program, develop an online insurance marketplace and offer a basic health program.

It’s the third component that really sets the state apart. Only Minnesota has committed to offering a basic health program, a safety net for people who have too much income to qualify for Medicaid, but not enough to afford private insurance. By enacting that third element of the act, Minnesota will take implementation of the federal health care overhaul further than any other state.

Advocates of Minnesota’s approach say moving forward on three of the health law’s biggest initiatives means far more Minnesotans will have access to affordable coverage. But it also means Minnesota will be a unique testing ground for the various moving parts of the ambitious and complex new system.

“We are really sticking our neck out there to take advantage of all the opportunities that come along with the Affordable Care Act,” said Christina Wessel, deputy director of the Minnesota Budget Project. “If we succeed, we can be a shining light for what the Affordable Care Act can do in a state. But that also means that if we don’t do it right, we can be a light for what can go wrong as well.”

So, what are experts and insiders going to be watching to gauge how well the changes are playing out?

MinnesotaCare: Minnesota’s basic health plan

MinnesotaCare, the state’s long-standing subsidized insurance program, will serve as the vehicle for the Basic Health Program.

State lawmakers agreed to fund MinnesotaCare through 2014 until 2015, when the federal government makes BHP funding available.

The Minnesota Budget Project’s Christina Wessel said the state’s decision to preserve MinnesotaCare with adjusted eligibility rules was critical to maximizing the number of Minnesotans who can afford insurance.

“We were already so far ahead [of other states] and if we went with the Affordable Care Act’s standard model, we were going to fall backwards,” she said.

The state predicts 160,000 more Minnesotans will receive health insurance coverage under MinnesotaCare, with an estimated 70 percent – or 112,000 – of them enrolling in 2014. That’s on top of the 35,000 people already in the program who meet MinnesotaCare’s new eligibility requirements. The question is whether the enrollment system can handle that large an influx with so many other changes afoot.

And Mid-Minnesota Legal Aid’s Ralonda Mason wonders if an “affordability gap” will remain for people who earn just a little too much to qualify for MinnesotaCare. Individual coverage sold through the exchange may still be too expensive for them, even with the help of government subsidies.

“People with that income level just don’t have much other money left for other necessities like health care,” she said. “So I’m very concerned that the assistance … won’t be sufficient to allow people to purchase policies that will really be useful to them.”

Another question is cost. The Minnesota Department of Human Services, which administers MinnesotaCare, estimates that federal dollars will cover about 85 percent of the program up from 50 percent, saving the state $157 million in fiscal years 2016 and 2017.

A separate study commissioned by the state confirmed that a BHP could save Minnesota money. But it also showed that the program could cost the state more than $300 million in 2016 depending on how many enroll, the health of enrollees, and how generous the coverage is.

The software

Minnesota plans to spend more than $100 million on developing the information technology that will be the backbone for MNsure, the state’s new online insurance exchange, according to MNsure officials. The online marketplace will act as a one-stop shop for Minnesotans seeking to buy their own insurance, for small businesses that want to offer group coverage to their employees, and for people enrolling in government health plans.

The technology will have to sort out whether a person qualifies for Medicaid, the Basic Health Program or commercial insurance. For people who don’t qualify for a government program the software also has to determine if their income makes them eligible for a public subsidy.

“This is a big gamble. I can’t say [if] it’s going to succeed or not,” said Gov. Mark Dayton last March on Minnesota Public Radio’s Daily Circuit program. “It’s a huge undertaking. It’s a gargantuan software issue to try to put all this information about all these providers … and have it be current and accessible, and understandable. It’s staggering.”

But so far, officials with big health insurers that are proposing to sell plans on MNsure are not expressing concerns about the technology working.


Persuading uninsured people to enroll in a health plan is key to achieving the primary purpose of the Affordable Care Act: expanding coverage to as many people as possible and making insurance affordable.

Enrollment also is the economic lynchpin for the new insurance exchanges. The more people who buy health coverage though the exchange, in particular the more healthy people who enroll in health plans, the more money there is in the system to pay for the health care services of people who need them. If only relatively sick people buy health insurance, premium rates could increase dramatically. Enrollment would likely decline in response, defeating the purpose of the law. That’s why the law includes the “individual mandate” requiring almost all citizens to have health insurance.

And some health insurers, including the nation’s biggest, Minnetonka-based UnitedHealth Group, have voiced concerns about the health of people enrolling. CEO Stephen Hemsley recently said the company will sell plans on only about a dozen state exchanges, and is otherwise taking a “watch and see” approach.

The first people to get subsidized coverage through the exchanges are likely to have “a pent-up appetite for insurance,” and may have “a higher risk profile,” Hemsley said.

Translation: We don’t like the economics of exchanges in the early stages.

It’s not clear how the carriers’ betting is playing out when it comes to Minnesota, but the market is apparently attractive enough for the nine insurance companies proposing to sell plans on MNsure. The state has not named the companies or released any information about their insurance policies, in accordance with state law.

The mandate

With a few exceptions, people who don’t qualify for Medicaid or MinnesotaCare are still required by law to get coverage, but there are questions about whether the law’s teeth are sharp enough.

Phillip Cryan, SEIU’s Healthcare Minnesota organizing director and former member of the state’s Health Insurance Exchange Task Force, worries that wealthier and healthier people who lack insurance — but who don’t qualify for large government subsidies — won’t sign up as a result.

“The carrots in the Affordable Care Act are really substantial for people who are low income to moderate income … and that will bring a lot of people into the new exchange and into health insurance coverage,” Cryan said. “The sticks, as it were, in the individual mandate – the penalty that people will pay if they do not buy coverage – are not very substantial.”

People who decide to remain uninsured will pay a fine of $95 or 1 percent of their household income next year, whichever is greater, and the fees increase every year before topping out at $695 per uninsured adult or 2.5 percent of household income in 2016.


To convince 1 million Minnesotans to obtain health coverage, MNsure will spend roughly $1.5 million on advertising targeted at populations that stand to benefit most from the new law, according to MNsure.

MNsure also has grant funding for organizations willing to educate potential enrollees about the exchange, and help them navigate it.

But there are questions about whether that outreach effort will be sufficient or effective. MNsure will pay only $25 per enrollment in a government health plan, compared to $70 for enrollment in a commercial health plan, at least initially. Some organizations that already help people enroll in public health plans say the $25 payment falls far short of their actual cost, which can reach $300.

There have also been complaints that the outreach effort is excluding vendors with experience in marketing to African-Americans.

Also, market research indicates the uninsured are not necessarily favorably disposed towards health insurance.

“There’s a low level of trust among a lot of the uninsured, especially,” said market researcher Peter Mitchell who surveyed attitudes for the Minnesota Governor’s Health Care Reform Task Force in 2012. “So you have a skeptical public,” he said.

Small Business

Many businesses owners still aren’t sure what the exchange is all about, said Rhett Buttle, VP of External Affairs for Small Business Majority, a national advocacy group for small businesses. But when they learn more, he said, they like what they hear.

“Small business owners for a long time have really struggled with the rising cost of health care, and even just the ability to obtain health care for them and their employees, so the marketplace is attractive,” he said.

But that view is far from universal. Mike Hickey, Minnesota state director for the National Federation of Independent Businesses, an organization that filed a lawsuit challenging the constitutionality of the Affordable Care Act, said a lot will depend on whether a business is eligible for a tax credit. The subsidy is only available to some businesses that employ fewer than 25 full-time employees.

“I don’t think [others] will be interested in perusing the exchange,” Hickey said. “They could really accomplish the same through an independent agent.”

Employers with fewer than 50 employees face no penalty if they refuse to offer health coverage. And the Obama administration recently decided to delay a $2,000-per-worker penalty (after the first 30) on larger employers that refuse to provide health coverage.

Red Tape

Mason of Mid-Minnesota Legal Aid welcomes efforts underway to streamline the insurance application process. For instance, people seeking Medicaid, MinnesotaCare or federal subsidies for the individual market will use a single application, and that’s “a very good thing,” said Mason.

But she warns that the new application must be straightforward.

“We have the opportunity to simplify the application process,” Mason said. “Those are some decisions that are in the process of being made, so how well we do that will influence how successful we are in getting people enrolled.”

– See more at: http://www.prairiebizmag.com/event/article/id/15197/#sthash.AZDWvkzl.dpuf

Published July 10, 2013, 08:30 AM

CMS Officials Postpone Basic Health Program for One Year

Washington Health Policy Week in Review

By Rebecca Adams, CQ HealthBeat Associate Editor


February 7, 2013 — Federal officials are delaying until 2015 the Basic Health Program, a health care overhaul option that would allow states to use federal tax subsidies to help cover low-income people whose income is too high to qualify for Medicaid.

The program is an alternative to offering that population coverage in the exchanges that will begin operating in January 2014 under the overhaul (PL 111-148, PL 111-152). It is intended to help those with incomes between 139 percent and 200 percent of the federal poverty level. The delay in the start of the program was explained in a “frequently asked questions” document from the Centers for Medicare and Medicaid Services (CMS).

CMS officials cited as the reason for delay “the scope of the coverage changes that states and the federal government will be implementing on January 1, 2014, and the value of building on the experience that will be gained from those changes.”

People who get their insurance through this program would not have to reimburse the federal government if their income fluctuates during the year, unlike under other health programs where a change in circumstances could change their eligibility. For example, without the basic program, if someone’s income increased slightly, he or she could become eligible for private insurance through the exchange markets, while a slight decrease could shift them into the population that is eligible for Medicaid. People not in the basic program who get their coverage through the exchanges also would have to pay back any subsidies that they received during the year if it was determined later that they had not actually qualified for them.

The benefit to the federal government is that the Basic Health Program would simplify and perhaps reduce the costs of overseeing the care of this population. A state that decided to use this option would receive 95 percent of the amount of the premium tax credits and cost-sharing reductions that would have been provided in the exchange for this group of people.

CMS officials said they will release proposed rules for the basic health program for comment in 2013 and final guidance in 2014, so that the program will start in 2015.

In the meantime, state officials who want to create a system for the population whose income is near the dividing line between eligibility for Medicaid and the exchanges are encouraged to talk to CMS officials about other options in 2014. For instance, CMS officials have said in the past that states can use Medicaid funds to buy coverage in the exchange market for Medicaid beneficiaries. And some states that already have expanded their Medicaid coverage for adults could offer to help that population pay their premiums in the exchange.

The document covers a wide range of other topics, as well. It provides technical details about the higher federal matching rate for the people who become newly eligible for Medicaid in 2014 if a state expands and how states should transition to a system that uses modified adjusted gross income as a method of figuring out individuals’ eligibility. The memo also answers detailed questions about coverage for pregnant women and children.

Article Link: http://www.commonwealthfund.org/Newsletters/Washington-Health-Policy-in-Review/2013/Feb/February-11-2013/CMS-Officials-Postpone-Basic-Health-Program-for-One-Year.aspx



Ambitious Project Aims to Improve Quality, Lower Costs for Dual Eligibles

February 05, 2013 11:00
Bob Rosenblatt / The Medicare NewsGroup

The government will begin an ambitious Medicare-Medicaid coordination program next year to try to bring better care at a lower cost to some of the 9 million people who are the sickest and poorest, and thus most costly, patients in the nation’s health care system.

Their ranks include a cross section of different groups, such as residents of nursing homes, the mentally ill, and the physically or developmentally disabled. They are called “dual eligibles” because they qualify for two massive government programs: Medicare, which covers people over age 65 and the disabled of all ages, and Medicaid, which covers poor people.

As many as 2 million of dual eligibles will be enrolled in local managed care networks, or in programs with a fixed total payment for providing their care during the year. The hope is that they will get better care, and that the taxpayers will save money because there will be better oversight of the way these patients  receive care from doctors, hospitals, visiting nurses, social workers and therapists. The goal is to have one contracting organization overseeing the myriad sources of care for a group of dual eligibles.

The program will be run by the government’s new Federal Coordinated Health Care Office.

Related FAQ: Who Are Dual Eligibles?
Related FAQ: What Does the Affordable Care Act Do With Regards to Dual Eligibles?
Related FAQ: Are There Examples in the States of Novel Approaches to Managing Dual Eligibles?

The population of dual eligibles  incurs higher medical costs than any other group of patients.  They bounce in and out of hospitals, have multiple ailments, take myriad medications, and get their care through a fragmented system of public and private hospitals, local nursing agencies and county emergency mental health centers.

Of these 9 million dual eligibles, more than one-third will spend some time in a nursing home. They represent 15 percent of the Medicare population, but consume 30 percent of Medicare spending. They are also15 percent of the Medicaid population, but consume 40 percent of Medicaid dollars.

Providing care for dual eligibles is one of the most intricate tasks of the nation’s complex health care system.

The current system, in which each thing a doctor does carries a separate charge, is called fee-for-service. Dealing with this fragmented approach is very hard for dual eligibles because it is “really fend-for-yourself,” said Matt Salo, executive director of the National Association of State Medicaid Directors.

Starting in 2014, the federal government will begin a major experiment in organizing coordinated care for dual eligibles in as many as 15 states. Beneficiaries will be offered the choice to enroll in managed care plans, which have networks of doctors, hospitals and other health care providers.

This experiment will offer more expansive care than found in a traditional managed care network. In California, for example, where Kaiser Permanente has a large network of its own providers, its plan will oversee the care of mentally ill people who might otherwise be treated at a county hospital.

Kaiser is “committed to this population,” said Susan D. Fleischman, M.D., vice president for Medicaid at Kaiser, when discussing the dual eligibles who may decide to join Kaiser’s plan.  But it’s a new population and “we’re nervous,” she told a panel discussion on dual eligibles on February 1, at the annual conference of the National Academy of Social Insurance, a nonpartisan think tank working on Medicare and Social Security issues.

Despite Kaiser’s extensive experience with both the Medicare and Medicaid populations, “We have limited experience in delivering the full scope of services to the dual eligibles,” she said, adding, “If we are nervous, then other plans ought to be really nervous.”   

Kaiser presumably has a head start on its competitors in taking on this new population because it has the highest ratings for quality bestowed on managed care plans by the federal government. Only 11 Medicare Advantage Plans (Part C) have the government’s top 5-star rating, and six of them are Kaiser plans.

Nonetheless, “Our learning curve is going to be steep,” Fleischman said.

One of the new steps for Kaiser, and other plans, will be learning to coordinate care with county mental health facilities, which have always operated separately from traditional health plans.

Under the experiment, the goal will be for a dual eligible to have all of his or her care overseen and coordinated by plans like Kaiser’s. This can include if a 90-year-old in a nursing home falls and breaks a hip; a mentally ill person stops taking medication, has a psychotic episode and is taken to a county mental health emergency center; a developmentally disabled person needs a ride to a job training session; or someone is discharged from a hospital and needs a visiting nurse to provide therapy at home. The goal is that all the details for any kind of needed care will be managed by a single health plan. Not all of the services fall under the category of what might be described as traditional health care, but the goal is to give the individual as much access to self-sufficiency as possible.

Along with big health care challenges are big financial ones. The plans that will participate at the government’s invitation are supposed to show within a year’s time that they are delivering to their patients better care for less money as compared to people who don’t join such a plan.

The difficulty will be in providing quality care for a very diverse group of people. A plan might be “terrific” in providing care for the mentally ill but not for the developmentally or physically disabled, according to Brian Biles, M.D., professor in the department of health policy at the School of Public Health at George Washington University. 

Because many of the individuals have multiple physical or mental ailments, there is concern that the transition to a new method for getting care may be difficult.

CMS has stated that demonstration plan benefits packages should include “all primary, acute, behavioral health and long-term services and supports presently covered by Medicare and Medicaid.”

However, “Patient advocates around the country, and some lawmakers in Congress, warn that managed care plans – some run by for-profit, publicly traded companies – are ill-equipped to deal with the complex health needs of those who are elderly, mentally ill or disabled,” according to a story by Kaiser Health News.

MedicareNewsGroup.com (MNG) original articles can be reprinted or republished with credit to The Medicare NewsGroup. To use our content, simply copy and paste text from the MNG website. Use of our content is done in compliance with our Terms and Conditions but does not extend to material from other sources that are subject to their copyright. 

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Article Link:  http://www.medicarenewsgroup.com/context/understanding-medicare-blog/understanding-medicare-blog/2013/02/05/ambitious-project-aims-to-improve-quality-lower-costs-for-dual-eligibles

To boos, cheers, Corbett rejects expanding Medicaid rolls

February 06, 2013|By Amy Worden, INQUIRER HARRISBURG BUREAU

HARRISBURG – Simultaneous boos and cheers broke out among legislators in the House chamber on Tuesday when Gov. Corbett said he had no immediate plans to expand Medicaid eligibility for low-income Pennsylvanians under the federal Affordable Care Act.

The partisan reaction – among the strongest during his 45-minute budget speech – continued with instant news releases and social-media cheers and jeers, underscoring the political battle that still lingers concerning the federal health-care overhaul known as Obamacare.

Corbett won plaudits from fellow Republicans and criticism from Democrats for rejecting – at least for now – the addition of about 500,000 residents to Medicaid rolls, an option made available by the new law.

The governor said he had written to Kathleen Sebelius, secretary of health and human services, telling her that without flexibility, the costs to implement an expanded Medicaid program would be prohibitive.

“At this time, without serious reforms, it would be financially unsustainable for Pennsylvania taxpayers, and I cannot recommend a dramatic Medicaid expansion,” Corbett said in his annual budget speech.

Republicans called the move fiscally responsible. Democrats denounced him for not taking the opportunity to provide insurance for low-income residents and passing up $12 billion in federal funds available in the first three years of the program.

“This would mean a half a million people would get insurance, it would take the burden off hospitals, and it would mean a largest injection of economic development dollars,” said State Sen. Vincent Hughes (D., Phila.).

But House Majority Leader Mike Turzai (R., Allegheny) said expanding Medicaid eligibility now would surely lead to a tax hike later as federal subsidies decline, leaving the state to pick up a total of $4 billion by 2022, according to Corbett administration estimates. “We would have to raise taxes down the road,” Turzai said.

A new report by the Henry J. Kaiser Family Foundation offered a less dire forecast, estimating Pennsylvania’s costs for new Medicaid enrollees at $2.8 billion by 2022, while the federal government would provide $37.8 billion during that time period.

Corbett’s announcement comes on the heels of a decision by one of his Republican counterparts, Ohio Gov. John Kasich, to opt into the Medicaid expansion plan, as Republican chief executives of three other states have done.

The wording of Corbett’s speech appeared to leave open the possibility, though, that if the Obama administration were to build more flexibility into the program, Corbett might shift his stance.

Medicaid expansion was one of the hallmarks of the controversial health plan approved by Congress in 2011 and upheld last year by the U.S. Supreme Court. A total of 19 states and the District of Columbia have opted into the program. Enrollment for families of four earning up to $31,800 begins in October and money begins flowing to the states in January.

Under the expansion, the federal government covers 95 percent of the costs in the first three years, with the state’s share increasing in future years.

Contact Amy Worden at 717-783-2584 or aworden@phillynews.com or follow @inkyamy on Twitter.

Patient Involvement Lowers Health Costs, Study Says

Confidence, skill in managing day-to-day care seen as key to savings

February 5, 2013

HealthDay News | U.S. News


TUESDAY, Feb. 5 (HealthDay News) — Patients who take an active role in their health care have lower medical costs, according to a new study.

Researchers analyzed data from about 33,000 patients in Minnesota and found that the average health care costs of those with the highest levels of motivation, knowledge, skills and confidence to manage their own health care were 8 percent to 21 percent lower than those with the lowest levels.

“The study highlights the important role that patients play in determining outcomes,” study leader Judith Hibbard, a professor emerita in the planning, public policy and management department at the University of Oregon, said in a university news release.

“We found that patients who were more knowledgeable, skilled and confident about managing their day-to-day health and health care — also called patient activation — had health care costs that were substantially lower than patients who lacked this type of confidence and skill,” she explained.

The findings appear in the February issue of the journal Health Affairs.

Even among patients with the same type of chronic illness, those who were more “activated” had lower health care costs than those who were less activated.

Health care systems should consider assessing patients’ levels of involvement and motivation, and support patients who wish to become more engaged in their health and health care, as a way to improve patient health and lower costs, the researchers said.

More information

The U.S. Agency for Healthcare Research and Quality explains how patients can be more involved in their health care.

Copyright © 2012 HealthDay. All rights reserved.


Article Link: http://health.usnews.com/health-news/news/articles/2013/02/05/patient-involvement-lowers-health-costs-study-says

Smokers To Face Big Costs from Affordable Care Act

By: Alexandra Sutter, WMBD/WYZZ

Updated: January 30, 2013


PEORIA — If you’re a smoker, prepare to pay more.

Next year, President Obama’s Affordable Care Act will put big penalties on smokers, with insurers charging nearly double for those who can’t kick the habit.

Lorraine Harvey has been smoking since she was just a teenager and for her, smoking is also a part of her job at Discount Tobacco in Peoria.

She said, “It’ll affect my income, you know. It’s going to affect can I smoke or not, my health care insurance. It affects everything about me.”

Harvey said she’s fed up with the increasing cost of her habit. She said last summer’s tax increase was bad enough, but a rise in insurance premiums may be the final straw. “The government wants it both ways. We want your tax money but now you get to pay even higher premiums to have healthcare insurance. That’s not fair to the people.”

The Obama Administration said health insurers will be allowed to charge smokers thousands of dollars.

According to the Associated Press, that means a 50 year old smoker could be paying more than four thousand dollars a year and a 60 year old could wind up paying more than five thousand dollars, on top of premiums.

Now, Harvey said she’s trying to quit. She said, “I mean, you get to the point where you have to. Especially when your insurance rates are going to go up 50 percent. It’s crazy.”

Young smokers may be off the hook. According to the Affordable Care Act, it is mainly the older smokers that will pay the higher fines. 


Article Link: http://centralillinoisproud.com/fulltext?nxd_id=302682 


Reader Letter | State must fix Medicaid managed care

Just over a year ago, Kentucky began a statewide Medicaid managed care program under which three private organizations provide health coverage for approximately 560,000 Medicaid patients. Because of a significant budget shortfall in the Medicaid program, the state moved quickly to implement the program through the managed care organizations, known as MCOs.

The program was intended to help the state save money while ensuring patients receive the quality care they need. Kentucky’s hospitals, as essential care providers for Kentuckians in every region, have been on the front lines as this new system has been implemented. Our primary interest, of course, is patient care, and we also contribute to the economic well-being of communities throughout the state.

Our concern, however, is that patient health, hospitals and the communities they serve are threatened by a number of serious problems that have emerged in the months since the statewide Medicaid managed care system took effect.

Hospitals’ close monitoring of the new system has documented the following significant issues:

• Medicaid patients are being inappropriately denied coverage for emergency care, inpatient psychiatric care and other critical behavioral health services.

• Patients are being referred to outpatient services that do not exist in their areas by out-of-state MCO reviewers who know little about available resources in Kentucky.

• Hospitals are being denied payment for emergency room services as MCOs second-guess physicians and their treatment choices for patients.

• Provider networks are inadequate. Contract cancellations by MCOs with multiple hospitals have left patients in large parts of the state, particularly in Eastern Kentucky, without ready access to such critical services as maternity care, radiation therapy and adult and child psychiatric care. Patients and their families are forced to travel hours from home to receive care.

• MCOs frequently are not paying hospitals on time as required by state law — with payments taking more than a year in some cases — placing a significant financial strain on hospitals and forcing some to lay off employees.

• The state Medicaid Department has taken no significant action to enforce its contracts with MCOs to address these issues, leaving Kentucky Medicaid patients and health providers to fend for themselves.

Kentucky hospitals are not the only source of documentation of these problems. A report by the nationally respected Urban Institute validated many of the same concerns. Among the issues cited in that November 2012 report:

• Changing provider networks.

• Patients having difficulty maintaining continuity of needed prescription medications.

• Administrative difficulties that include authorization delays and claim denials.

• The fact that the state’s oversight of Medicaid managed care is “still developing.”

Medicaid managed care has the potential to improve services and lower costs, but not if patients are struggling to gain access to needed care and providers are fighting to be paid for the care they have given patients.

Action is needed to address the problems that patients and hospitals are experiencing with Medicaid managed care and to make the system work properly. And with the possibility that Medicaid will be expanded in Kentucky to include an additional 350,000 people, it is critical that these issues be addressed right away to avoid greater problems in the future.

State laws must be strengthened to ensure the Medicaid managed care system works for the benefit of patients, providers and taxpayers.

In addition, although managed care organizations essentially operate like private insurance companies, they are not subject to the same consumer protections that state law applies to private insurers. Strengthening consumer protections for Medicaid patients will ensure the organizations play by the same rules as all insurance companies that serve the public.

Making the managed care system work in the best possible way for Kentucky should be the shared goal of providers, state government and the MCOs themselves. We can achieve this goal by taking the right steps — right away.


Prestonsburg, Ky. 41653


Princeton, Ky. 42445

Mr. Warman is chairman of the Kentucky Hospital Association and President/CEO of Highlands Regional Medical Center in Prestonsburg, Ky. Mr. Lovell is chairman-elect of the KHA and CEO of Caldwell Medical Center in Princeton, Ky.

States move forward on health insurance exchanges

By Sean LengellThe Washington Times

December 17, 2012, 11:42AM


Eighteen states and the District of Columbia have moved forward with plans to set up their own statewide health-insurance-buying exchanges ahead of a key deadline.

States had until Friday to submit applications to the federal government to establish state-based exchanges. Health and Human Services Secretary Kathleen Sebelius on Monday announced the list of states that met the deadline, which comprised California, Hawaii, Idaho, Minnesota, Mississippi, Nevada, New Mexico, Rhode Island, Vermont, Utah, Kentucky, New York, Colorado, Connecticut, Massachusetts, Maryland, Oregon and Washington.

States also can choose to set up an exchange under a state-federal partnership, with a decision on that option due Feb. 15. If any state is undecided after that, the federal government will run that state’s exchange.

Exchanges, a major component of the federal Affordable Care Act, are design dot be marketplace where individuals and small businesses can shop for the most affordable coverage and where many will get help from the government to pay their premiums.

About half the nation’s states say they’ll take a pass on the setting up their own health care exchanges, ceding the responsibility to the federal government.

Open enrollment for the exchanges is set to begin in October, with coverage to start in January 2014.

“While last week was one milestone, we are not taking an ‘all or nothing’ approach to exchanges,” Mrs. Sebelius said. “Many states are making impressive progress, and we are committed to working with all states as we approach open enrollment in October 2013.”

Article Link:


Learning From University of Louisville Hospital’s Partnership Search

 Written by Kathleen Roney | December 14, 2012


In November, the University Medical Center, operator of University of Louisville Hospital and the James Graham Brown Cancer Center, announced a joint operating agreement bringing together University Hospital with KentuckyOne Health in Louisville. This joint operating agreement is the result of more than a two-year partner search for University Hospital, which faced a few obstacles along the way.

In 2011, the hospital was part of a proposed three-way merger between Jewish Hospital & St. Mary’s HealthCare in Louisville and Catholic Health Initiatives’ St. Joseph Health System in Lexington, Ky. Catholic Health Initiatives would have overseen the multi-hospital system. Kentucky Gov. Steve Beshear blocked the merger between the public and faith-based organizations, saying such an arrangement would result in the transfer of state assets, in the loss of governance over those state assets and was not in the best interest of the Commonwealth. This left financially challenged University Hospital without a partner. Jewish Hospital & St. Mary’s and St. Joseph Health System pursued the merger without University Hospital to form KentuckyOne.

Following the failed three-way merger, University Hospital re-started its partnership search, this time taking a more formal approach. After a second attempt, University Hospital again chose the same organizations — this time organized as KentuckyOne Health. However, the second time around, the organizations pursued a different structure — a joint operating agreement instead of a merger — that met the stipulations set by Gov. Beshear and Attorney General Conway.

Under the new deal, University Medical Center  will retain ownership of its assets and will operate University Hospital’s Center for Woman and Infants;  KentuckyOne Health will oversee day-to-day operations of the remainder of the hospital. All current policies for women’s health, end-of-life care and its pharmacy will remain unchanged, including a full range of reproductive services. In addition, KentuckyOne has committed to maintaining University Hospital’s current levels of charity care.

Developing a successful joint operating agreement between a public academic health center and a non-profit, religious-affiliated health system had its challenges, but University Hospital navigated the process — twice. Through two periods of negotiation and deal forming, David L. Dunn, MD, PhD, executive vice president for health affairs of University of Louisville, learned a great deal. Here he discusses the partnership search following Gov. Beshear and Attorney General Conway’s ruling and lessons he learned from the experience.

A second transaction process

“[When Gov. Beshear turned down the three-way merger he] indicated to [University of Louisville] that we needed to ‘cast our net more widely.’ I was at the University of Buffalo prior to coming to Louisville and had experience with a request for proposal process. We used that process as a wider net to search for a partner,” says Dr. Dunn.

In February, the hospital issued a request for proposal, hoping to combat financial challenges and make improvements. Proposals were accepted until March. In October, Dr. Dunn was given authority to choose a private partner and the KentuckyOne Health announcement was made in November.

The interesting point is that University Hospital chose KentuckyOne Health as a partner the second time around after a second, broader partnership search. According to Dr. Dunn, the difference was that University of Louisville satisfied the governor and attorney general’s concerns by following a competitive bid process and considering more partners.  KentuckyOne was ultimately chosen because it was, and is, an extremely good fit, says Dr. Dunn.

Here are five recommendations from Dr. Dunn that other hospitals may be able to learn from in pursuing affiliations, partnerships or acquisitions of their own.

1. Conduct a financial analysis on your hospital. Dr. Dunn recommends conducting a complete financial overview of your hospital before pursuing a competitive process for two reasons.

 “If you are a public entity, and need to involve elected state officials, the financial overview may give reason to why you are planning or pursuing a deal. [For] potential partners, a financial overview increases transparency so the partner may see [the hospital] it is considering clearly,” says Dr. Dunn.

 2. Pursue a competitive process with a request for proposals.

Although University Hospital’s competitive process was an outgrowth of Gov. Beshear and Attorney General Conway’s concerns, Dr. Dunn would recommend other hospitals follow a competitive process.

 “I think the RFP process — at least for academic medical centers — could be considered a best practice because it allows [the medical center] to disseminate [its] interest in obtaining a health system partner. Rather than in a random fashion, [the deal forms in] a very considered fashion. You can select a series of entities that target your terms and ask them to come to the table to discuss the deal further,” says Dr. Dunn.

3. Keep the necessary officials informed throughout the process.

University of Louisville and University Hospital executives maintained regular contact  with Gov. Beshear, Attorney General Conway and their staff throughout the second partnership search, and Dr. Dunn believes this played a role in the success of the transaction.

“They provided advice or counsel before we launched the request for proposal. We asked for their input, because we wanted to make sure that the process we were following was acceptable to them,” says Dr. Dunn. “Even the [communication] plan we used was unique because [it was developed directly] from the guidance that Gov. Beshear and Attorney General Conway gave us as to what the problems in our first deal were.”

4. Engage expert consultants.

According to Dr. Dunn, having a legal team that understands transaction law, in particular, healthcare transaction law, made a big difference because they focused on the legality of the deal.

“They helped us work directly with Gov. Beshear and Attorney General Jack Conway to ensure the legal soundness of the deal as well,” says Dr. Dunn. “We also brought in consultants early on to help us with this process in terms of the analysis. When we issued the RFP we had to engage [certified public accountants] to examine the financial sustainability of the medical center and the health science center. We also engaged an investment banking firm to help us assess financial performance of the organizations that responded to the RFP and to compare the financial pro formas of the proposed transactions.”

5. Consider alignment on mission, culture and values early.

According to Dr. Dunn, considering how two or more organizations will align in mission, culture and values is important, and it is a good idea to get an understanding of those issues earlier rather than later. University Hospital discussed those issues with the organizations now part of KentuckyOne Health during the 2011 negotiations, so the discussions were not as in-depth the second time around. Regardless, they should always be discussed.

“We aligned missions by laying out our mission, understanding their mission and making sure there were large amounts of cross-over between our organizations,” says Dr. Dunn. “We also examined how KentuckyOne Health — in terms of its parent companies — comported itself, what its mission was and how it behaved as a corporate citizen.”

In terms of the religious culture and mission, Dr. Dunn says discussions were very clear around each organization having their own culture — whether it was a faith-based culture, a Catholic faith-based culture or an academic culture. “We had a crystal clear understanding that all of us would respect each other’s traditions but not adopt them.”

Despite challenges along the way, the University of Louisville was able to structure a joint operating agreement that satisfied all parties. The above practices helped the organizations find mutually agreeable terms to form a deal that passed state inspection. Although every deal is different and circumstantial, tenets for success can be applied in multiple situations.

Article: http://www.beckershospitalreview.com/hospital-transactions-and-valuation/learning-from-university-of-louisville-hospitals-partnership-search.html

America’s Health Rankings show worrisome rates of chronic disease, inactivity


CBS NEWS/ December 11, 2012, 9:57 AM


A new report shows it’s not only what you put into your body that affects your health — it’s where you live.

United Health Foundation unveiled its 22nd annual America’s Health Rankings on Tuesday that provided a national look at health problems — and progress — in all 50 states.

Researchers pulled data from agencies which included the Centers for Disease Control and Prevention, Census Bureau and American Medical Association to come up with the annual list. This year’s health rankings found that Americans are living longer, but according to Dr. Reed Tuckson, chief of medical affairs for United Health Group, many are living sicker.

“What worries us in particular about this year’s report is that some key risk factors that are driving up preventable chronic illness are getting worse,” Dr. Tuckson told CBSNews.com.

Some states fared better than others in the annual report. Vermont topped America’s Health Rankings for the sixth year in a row while last year’s least healthy state, Louisiana, was joined in a last place tie with Mississippi.

Tuckson said one of the trends from this year’s report that concerns him most is the high rate of Americans who live a sedentary lifestyle outside of work. The report found more than 26 percent of the country is physically inactive. That’s one in four U.S. adults.

Last July, a study in The Lancet equated the international death toll from physical inactivity to that caused by smoking cigarettes. The researchers found that sedentary individuals are significantly more likely to have heart disease, diabetes and breast and colon cancers because they don’t walk as little as 30 minutes per day, five days a week.

Tuckson also noted increases in chronic diseases like hypertension, which now affects 30 percent of Americans, and also large amounts of diabetes, a disease that one in 11 Americans is diagnosed with. Smoking rates are still too high, Tuckson adds.

A growing problem in the U.S. highlighted in the report is children living in poverty. Today, more than 21 percent of U.S. children under 18 live in poverty — an increase of 35 percent over the last decade — which puts them at a disadvantage for access to healthier foods, physical activity and health care, said Tuckson.

Nationwide, obesity continues to be an epidemic affecting about 27.8 percent of the country, or more than 66 million adults.

Even the least obese state in the country, Colorado, had an obesity rate above 20 percent. Besides adding to belt sizes, obesity causes preventable diseases that rack up $66 billion per year in health care costs, and cost the economy between $390 billion and $580 billion lost productivity each year, according to the report.

Some of the biggest gaps in America’s health can be seen by comparing the five highest ranked states to the five lowest ranked. For example, while smoking rates in the five healthiest states — Vermont, Hawaii, New Hampshire, Massachusetts and Minnesota — ranged from 16.8 percent to 19.4 percent of adult residents, smoking rates were between 23.1 percent and 28.6 percent in the five least healthy states of Mississippi, Louisiana, Arkansas, West Virginia and Carolina.

Likewise, 27.2 percent to 36.0 percent of the population in the five lowest ranked states lead sedentary lives, compared to between 21.0 percent and 23.5 percent of the population in the five healthiest states.

The economy may be a factor in these health gaps, the report found. The top five states reported a higher median household income of $51,862 to $65,880, while the five lowest ranked states ranged from $37,881 to $43,939. Rates of childhood poverty were also significantly higher in the five lowest ranked states compared to the five-highest rated states.

But not all is bleak.

The report found decreases in death rates from heart disease and cancer, including a 30 percent drop in heart disease deaths since 1990, which Tuckson says shows our country’s medical care is effective. He also sees hope for improving physical activity in youth, citing an uptick in after-school physical activity and structured play time. That’s not only important for the children, he said, but it gets adults involved and may make them more likely to change their own health behavior.

Exercise and eating healthy, he said, could be fun and make the family feel great.

“The most common misconception people have about living healthy is it’s hard,” said Tuckson.

Click here for a complete look at America’s Health Rankings 2012.

© 2012 CBS Interactive Inc. All Rights Reserved.


Article Link: http://www.cbsnews.com/8301-204_162-57558427/americas-health-rankings-show-worrisome-rates-of-chronic-disease-inactivity/