Aetna To Purchase Coventry

Aetna to acquire Coventry in $5.7 billion deal

By Gregg Blesch

Posted: August 20, 2012 – 8:15 am ET


Aetna plans to buy Coventry Health Care for $5.7 billion in a cash and stock deal that will expand the company’s reach in Medicaid and Medicare.

The deal is the latest big play by a national insurer to get a bigger footprint in Medicaid as the programs are poised to grow dramatically under the Patient Protection and Affordable Care Act.

The transaction is valued at $7.3 billion including assumption of Coventry’s debt, Aetna said in a news release.

Coventry covers about 4 million members in medical plans and 1.5 million in Medicare Part D prescription drug plans, according to the release.

Salary Caps too Low for Medicaid?

August 14, 2012 9:39 PM

Is a $5,000 salary too much for Medicaid?

(AP) MIAMI – Sandra Pico is poor, but not poor enough.

She makes about $15,000 a year, supporting her daughter and unemployed husband. She thought she’d be able to get health insurance after the Supreme Court upheld President Barack Obama’s health care law.

Then she heard that her own governor won’t agree to the federal plan to extend Medicaid coverage to people like her in two years. So she expects to remain uninsured, struggling to pay for her blood pressure medicine.

“You fall through the cracks and there’s nothing you can do about it,” said the 52-year-old home health aide. “It makes me feel like garbage, like the American dream, my dream in my homeland is not being accomplished.”

Many working parents like Pico are below the federal poverty line but don’t qualify for Medicaid, a decades-old state-federal insurance program. That’s especially true in states where conservative governors say they’ll reject the Medicaid expansion under Obama’s health law.

In South Carolina, a yearly income of $16,900 is too much for Medicaid for a family of three. In Florida, $11,000 a year is too much. In Mississippi, $8,200 a year is too much. In Louisiana and Texas, earning more than just $5,000 a year makes you ineligible for Medicaid.

Governors in those five states have said they’ll reject the Medicaid expansion underpinning Obama’s health law after the Supreme Court’s decision gave states that option. They favor small government and say they can’t afford the added cost to their states even if it’s delayed by several years. Some states estimate the expansion could ultimately cost them a billion dollars a year or more.

Many of the people affected by the decision are working parents who are poor — but not poor enough — to qualify for Medicaid.

Republican Mitt Romney’s new running mate, conservative Wisconsin congressman Paul Ryan, has a budget plan that would turn Medicaid over to the states and sharply limit federal dollars. Romney hasn’t specifically said where he stands on Ryan’s idea, but has expressed broad support for his vice presidential pick’s proposals.

Medicaid now covers an estimated 70 million Americans and would cover an estimated 7 million more in 2014 under the Obama health law’s expansion. In contrast, Ryan’s plan could mean 14 million to 27 million Americans would ultimately lose coverage, even beyond the effect of a repeal of the health law, according to an analysis by the nonpartisan Kaiser Family Foundation of Ryan’s 2011 budget plan.

For now, most states don’t cover childless adults, but all states cover some low-income parents. The income cutoff, however, varies widely from state to state.

Most states cover children in low-income families. Manuel and Sandra Pico’s 15-year-old daughter is covered by Medicaid. But the suburban Miami couple can’t afford private insurance for themselves and they make too much for Florida’s Medicaid.

Manuel Pico, a carpenter, used to make more than $20,000 a year, but has struggled to find work in the last three years after the real estate market collapsed. He occasionally picks up day jobs or takes care of the neighbor’s yard. Sandra Pico would like to work full time, but can’t afford to pay someone to watch her 34-year-old sister, who has Down syndrome.

“No matter how hard I work, I’m not going to get anywhere,” Sandra Pico said. “If you’re not rich, you just don’t have it.”

In San Juan, Texas, 22-year-old Matthew Solis makes about $8,700 a year — too much to qualify for Medicaid in that state. Solis, a single father with joint custody of his 4-year-old daughter, said he works about 25 hours per week at a building supply store making minimum wage and is a full-time college student at the University of Texas-Pan American. He aspires to be a school counselor.

He recently sought medical care for food poisoning, visiting a federally funded clinic. But he doesn’t see a doctor regularly because he can’t afford private insurance. The new health law allows young adults to remain on their parents’ insurance until age 26. But that doesn’t help Solis, whose father is uninsured and whose mother died of leukemia when he was 8.

“I voted for him (Obama) because he promised we would have insurance,” Solis said. “I’m pretty upset because I worked for Obama and I still don’t have coverage.”

His governor, Rick Perry, like Pico’s governor, Rick Scott, is rejecting the Medicaid expansion. So Solis too is out of luck unless his circumstances dramatically change.

In all but one of the states where governors are rejecting or leaning against the expansion, the income level that disqualifies a parent from Medicaid is below the federal poverty line. Only in New Jersey, where Gov. Chris Christie has said he’s leaning against the expansion, is Medicaid available to parents with incomes at the poverty line and slightly above. New Jersey will cover a parent making $24,645 in a family of three.

Most states base Medicaid eligibility for parents on household income and how it compares to the federal poverty level, which was $18,530 for a family of three in 2011, the year being used for easier state-by-state comparisons.

In Louisiana, the eligibility cutoff for a working parent is 25 percent of federal poverty, or $4,633 for a family of three. In Nevada, it’s 87 percent of the federal poverty level, or $16,121 for a family of three.

That’s been the range in states where governors are likely saying no to expanded Medicaid.

In contrast, states where governors have said they’ll expand Medicaid are more generous with working parents. The Medicaid eligibility cutoff ranges in those states from Washington’s $13,527 to Minnesota’s $39,840.

To be sure, some states with generous coverage for parents have been forced to cut back. Illinois, facing a financial crisis, ended coverage last month for more than 25,000 working parents. Even so, the state still covers working parents with incomes slightly higher than the poverty line.

The national health law’s Medicaid expansion would start covering all citizens in 2014 who make up to roughly $15,400 for an individual, $30,650 for a family of four.

The federal government will pay the full cost of the Medicaid expansion through 2016. After that, the states will pick up 5 percent of the cost through 2019, and 10 percent of the cost thereafter.

Why would a governor say no?

These state leaders are in favor of smaller government. In principle, they don’t want the federal government to expand — even if that expansion would help their own citizens. Also Medicaid is costly, taking a huge bite out of budgets already. And they don’t want to be on the hook for paying any more of the tab even if it’s years down the road.

“We don’t need the federal government telling us what to do when it comes to meeting the needs of the citizens of our states,” Florida Gov. Rick Scott wrote recently in an opinion piece for U.S. News and World Report. “And we don’t need Washington putting states on the hook for future budget obligations.”

Also, many conservatives view Medicaid as a wasteful, highly flawed program, akin to no health coverage. Many doctors across the country won’t treat Medicaid patients because the payments they receive are so low.

When the Supreme Court ruled that states could opt out of the health law’s Medicaid expansion, it raised the chances for inequity at a time when more Americans have fallen from the middle class into poverty, said Isabel Sawhill, a senior fellow at the Brookings Institution.

“Why should a sick person in Connecticut have access to health care when they don’t in Mississippi and Texas?” Sawhill asked. “We really do have a very high level of poverty as a result of the recession. And the safety net is weaker than ever.”

Medicaid, the nation’s single largest insurer, is a state and federal program created in 1965 as a companion program to welfare cash assistance to single parents. Today, the elderly and disabled cost nearly 70 cents of every Medicaid dollar, not the stereotypical single mother and her children.

What’s largely unknown to many Americans is who is left out of the safety net, said Cheryl Camillo, a senior researcher at Mathematica Policy Research. “A huge chunk of the populace is not covered, even by Medicaid,” she said.

The political rhetoric during a presidential campaign focuses on the middle class and leaves the uninsured working poor largely invisible, said Rand Corp. researcher Dr. Art Kellermann.

“We hear a lot of talk about unemployment and the aspirations of middle-class Americans. But we don’t hear about the consequences of unemployment and the consequences of the collapsing middle class,” Kellermann said. Losing health insurance is one of those consequences.

“It’s like the public just doesn’t want to believe anything else until it hits home,” he said, “Until it’s their own child, brother or parent that got laid off when they were 58, until then, it’s not real.”


Bloomberg Businessweek – Ryan Medicaid Plan

The other Paul Ryan plan: $800B in Medicaid cuts

By By Ricardo Alonso Zaldivar on August 15, 2012

WASHINGTON (AP) — There’s another Paul Ryan plan for health care, a fundamental change in caring for the poor and disabled that would affect many more people than the Medicare overhaul the GOP vice presidential candidate is best known for.

Under the Wisconsin congressman’s Medicaid plan, states would take over the program. At the same time, Ryan’s budget would reduce projected federal spending on Medicaid by about $800 billion over 10 years, dramatically shrinking it as a share of the national economy.

Medicaid serves about 60 million people, roughly 10 million more than Medicare. It’s a diverse population brought together by need. Most Medicaid recipients are low-income children and their mothers, but the costliest cases are severely disabled people, many of them seniors in nursing homes.

Ryan would also repeal President Barack Obama’s health care law, expected to add at least 11 million more people to Medicaid.

Ryan’s Medicaid plan is in sync with his new boss, Republican presidential candidate Mitt Romney.

“Gov. Romney … believes that states are far better positioned to design programs that effectively serve those in need,” said campaign spokeswoman Andrea Saul.

But no matter who runs Medicaid, such cuts would result in millions of vulnerable people losing health insurance, according to advocates for the poor and some nonpartisan economic analysts.

“Medicaid is already a very lean program,” said Edwin Park of the Center on Budget and Policy Priorities, which advocates for low-income people. “It is not a program where you can magically glean huge efficiencies by just devolving it to the states. The only way to compensate for funding reductions of this magnitude would be to institute deep, damaging cuts to beneficiaries and the health care providers who serve them.”

Bring it on, says Wisconsin Health Secretary Dennis Smith, who oversees Medicaid in Ryan’s home state. Smith, who works for Republican Gov. Scott Walker, says states can cut costs without gutting services by running Medicaid more efficiently.

“Everybody agrees that there is excess cost in the health care system, so by golly, give us the flexibility to address it, and we will,” said Smith. “We can serve the people on Medicaid with the adjustments the Ryan budget. We can make that work.”

For example, Wisconsin is now charging some low-income adults a modest monthly premium for Medicaid, tapping a new funding source to pay for valuable benefits, Smith said. And the state is looking for ways to help frail elderly people keep living at home, avoiding the costly alternative of a nursing home.

Growing enrollment has turned Medicaid into a big share of state budgets, and since Washington sets many of the rules, the program is a source of constant tension between federal and state governments. On average, the federal government pays about 60 percent of Medicaid costs, and states cover the rest. The Supreme Court recently gave some latitude to states chafing at Obama’s health care law, saying they are free to opt out of its Medicaid expansion.

Obama has largely shielded Medicaid from cuts in budget negotiations with Congress. But his administration has proposed new ways to allocate funding that could be used to dial back the federal share.

Ryan’s plan goes beyond tweaking. It would essentially rip up the Medicaid manual and start all over again. States would get a lump sum from Washington, a “block grant” indexed to reflect population growth and inflation. The idea has governors split along party lines.

Ryan’s Medicare plan, shifting future retirees to private insurance, would phase in over a decade or more. The Medicaid changes would come much more rapidly. The proposal has not been fleshed out, leaving many unanswered questions. For example:

—What happens if a state’s economy tanks?

Under current law, the federal Medicaid share is pegged to program enrollment, not population growth, said John Holahan, director of the Health Policy Center at the nonpartisan Urban Institute. That means federal funding increases when the Medicaid rolls swell. But under Ryan’s plan, “there are no provisions to automatically deal with recessions,” said Holahan. “The demand for Medicaid goes up at the same time state revenue is going down.”

—Would low-income and disabled people still have a legal right to coverage?

Converting Medicaid into a block grant would end the current right to coverage under federal law, and it remains unclear what rights could be preserved. Most analysts say states would insist on the flexibility to reduce their Medicaid rolls. The Urban Institute estimates that between 14 million and 27 million people would lose coverage because of Ryan’s spending restrictions.

—What sorts of safeguards would remain in place for seniors in need of nursing home care?

Although frail elderly people must spend down most of their savings before they can qualify for Medicaid, a federal law shields spouses from becoming impoverished. It’s unclear what would take its place.

Supporters of state control say governors and legislatures are closer to the people and would not harm their own constituents.

Back in Ryan’s state, the jury is still out.

Medicaid covers nearly 1 in 5 Wisconsin residents, and hospitals have a major stake in the outcome. Joanne Alig, senior vice president for policy with the Wisconsin Hospital Association, says they would need to know more about the plan to reach conclusions.

“While I think we are supportive of looking at alternatives to the Medicaid status quo, the devil’s in the details,” she said.

Healthcare in Appalachia:Dying for a Ride

Salon Series

No matter what changes we make to healthcare, in rural America, simply getting to the doctor is a big problem


This is the second in a three-part series on rural health-care challenges. Part one, on diabetes in Appalachia, can be read here. Part three will run Friday.

LOUISVILLE, Ky. — Fausta Luchini’s client was obese and suffered from hypertension. “David,” a middle-aged man, came from a farming family but wanted to make it on his own. And the clinical psychologist is still frustrated by the way the medical system failed him. All for the want of a ride to the clinic.

“David really wanted to work. He didn’t want to spend all his time in the rehab program or on [his family’s] farm, either,” she says. “But he couldn’t get a job because he didn’t have a car — or a driver’s license. Then he got a job at a fast-food restaurant. For a while he was coming into our center, [picked up by] Medicaid, and then he would leave around 10:30 in the morning. He was going over [to the restaurant] for the lunch shift and then coming back in time for a ride back home — which was resourceful.”

And it violated Medicaid rules.

Mental patients can only use Medicaid-funded transportation to come to a treatment center. When the taxis that held Medicaid contracts found out, Luchini said, they blew the whistle — which gets to the core of a major problem for rural patients who count on Medicaid. Behavioral rehabilitation formally aims to reinsert patients into family or community life. But clinicians who work in rural America say the absence of public transportation makes getting back into a normal community almost impossible.

Most of the Seven Counties clients live in rural towns and villages east and south of Louisville. Nearly all are poor and, says Seven Counties executive director Anthony Zipple, suffer from multiple illnesses that the Medicaid system doesn’t address. And too many of them can’t get to clinics on their own.

“These folks are at far higher risk than the general population for chronic, expensive, life-threatening medical problems,” he said. “The way we have [medical care] structured in the United States, and particularly in Kentucky, doesn’t make a lot of sense.” The central dilemma, say mental health specialists, is the categorization of care into separate compartments — and they say it’s not at all clear that even the reforms proposed under Obamacare address those divisions.

For example, a key part of the ongoing healthcare reform efforts requires patients to declare a “medical home,” much as it does in most European healthcare systems, in order to control costs and coordinate care through an “accountable care organization.” Zipple argues that the pieces of the system are not linked together in a way that makes sense. “The divide between behavioral health and the rest of medicine is substantial,” and that divide leaves his clients worse off than other poor people.

Medical care, public or private, he and his staff say, separates physical illness from medical treatment — not only in the way Medicaid and private insurance pay for care, but also with the research models governing pharmacological research into drug efficacy and side effects. “A lot of the medications we use, particularly the anti-psychotics, have side effects that induce all kinds of metabolic problems. It’s well-known that people on these kinds of drugs are at higher risk for weight gain, diabetes and increased cholesterol levels — all of which result in shorter life expectancy.”

Three recent morbidity and mortality studies in Maine, Massachusetts and Ohio showed variously 50 to 300 percent higher death rates for patients diagnosed with mental/behavioral problems compared to the same age groups in the general population.

“People with serious mental illness in this country die 25 years earlier than the rest of the population,” Zipple says. Roughly two-thirds of those conditions are generally preventable through a combination of dietary control, individualized medication and physical activity. And, Zipple says, life expectancy among mental patients has continued to decline as treatments have grown more expensive. “Life expectancy for people with serious mental illness has actually gotten shorter over the last decade.”

Much of that has to do with buses and taxis.

“Transportation is the biggest thing,” says psychologist Laura Escobar-Ratliff. Escobar-Ratliff works with the Seven Counties group in the rolling farmland of Shelby County, 40 minutes east of Louisville. Shelby County has no bus or taxi service to take people shopping, to fill prescriptions or to work, she says. Medicaid-reimbursed vans can pick up patients to come to her office — but only for rehabilitation treatment programs.

“But,” she adds, “there are caveats. If there’s a car registered to your address, you can’t use the service — even if the car doesn’t run.” Yes, she admits, patients can get written waivers from the Medicaid authorities in Frankfort, the Kentucky state capital, but only if the client pays a state-certified mechanic to fill out a form, and often the clients can’t afford the cost. If there is a car that the wife (or husband) has to use to go to work, a waiver can also be granted through formal application, but, says Luchini, “They don’t want to do that because they don’t want the boss to know her husband comes to Seven Counties [for mental health care].”

“And,” adds Escobar-Ratliff, “it will have to be repeated every year … so she has to go back to her boss to say that her husband’s [mental)[ condition isn’t a temporary thing — it’s chronic.”

“These are real barriers,” says Luchini. “But then if you get the [Medicaid] transportation, you may get picked up late, so you miss the appointment, and when they get you here we’re seeing somebody else — and you have to wait ’til the next time.”

Often, they said, figuring out transportation leaves mentally disturbed or retarded clients so lost or confused that they quit coming to Seven Counties — even though they believe that many, even a majority of their clients, could reenter their communities if Medicaid and state rules were redesigned. Often they say they are told that financial constraints don’t permit such changes. But Michael Ringswald, a Louisville banker who sits on the Seven Counties board of directors, insists that more flexible policies would actually save Kentucky’s Medicaid program money.

Ringswald cites a new report from a watchdog group, Kentucky Voices for Health, showing that the state spends nearly twice as much of its Medicaid money on institutional — or nursing home — facilities as it does on independent living support, exceeded only by Michigan, Alabama and Mississippi. Another report from AARP scored the state 46th in the nation in the quality of its long-term care. The same report estimated that more than 1,400 nursing home residents could be supported far more cheaply if the state and federal Medicaid systems redirected their policies and programs toward independent living for clients.

But the overwhelming majority of institutionalized behavioral care clients do not go into nursing homes. Instead they are sent to so-called Personal Care Homes, which are often abandoned hospitals or motels that, in Ringswald’s view, are simply “warehousing” institutions that take mentally ill people directly from the state’s psychiatric hospital, feed them, provide bathing facilities and administer anti-psychotic drugs — at a cost of $1,158 per month to the state.

Redirecting Medicaid behavioral care toward job-holding and independent living, he maintains, not only is better for the clients, “it drops the costs dramatically. Once you start warehousing them in personal care institutions, you’re always going to have to warehouse them.”

Partial support for this story provided by the Henry J. Kaiser Family Foundation.


Frank Browning reported for nearly 30 years for NPR on sex, science and farming. He is the author of, among other books, “A Queer Geography” and “Apples.” More Frank Browning.



Health reform may expose immigrant status of millions


9:29am EDT

By Salimah Ebrahim

WASHINGTON (Reuters) – As she was ushered into surgery eight years ago, Paula was confident that doctors at Washington’s Howard University Hospital would find the cancer that had been growing in her right breast for months. She was less certain about where she would wake up the next day.

“I felt scared because of the stories in other states … It was always in the back of my mind that a doctor, or an immigration officer dressed as a doctor, could take me,” said Paula, 60, of the fear that she would be exposed as an undocumented immigrant and deported.

Still cancer-free, Paula, who asked to have her last name withheld, waits in the tiny chapel of La Clinica Del Pueblo, a community health clinic in Washington, DC, where she receives routine care.

She and other illegal immigrants worry that their ability to access healthcare at facilities like La Clinica will become even more risky once President Barack Obama’s healthcare law takes effect. The reform requires all U.S. citizens and permanent residents to obtain health insurance, either through the government-run Medicaid program for the poor or by purchasing private insurance via state exchanges starting in 2014.

It also bars undocumented immigrants from participating. As more low-income citizens receive insurance, the fear is that many of the estimated 12 million undocumented immigrants will be easier to identify just because they lack coverage.

“It’s my 3 a.m. nightmare,” said Alicia Wilson, La Clinica’s executive director. “While we do not collect information about the immigration status of our patients, the fact that they will be uninsured could be taken as ‘code’ for also being undocumented.”

Paula is one of thousands of undocumented immigrants who benefit from the DC Health Care Alliance, one of the most generous taxpayer-funded health plans in the country for patients regardless of income or immigration status. Looking out at La Clinica’s crowded waiting room, she firmly clasps the card that gives her membership in the program.

“This is the card that opens a lot of doors … This clinic has protected us and it is helping us to get the help we need regardless of the risks,” said Paula, who entered the United States from Mexico on foot nearly 10 years ago.

In recent years, funding for both the clinic and the healthcare alliance has come under fire from conservative groups who oppose using tax dollars to pay for the care of illegal immigrants, as local governments already struggle with budget cuts in a weak economy.

Wilson and other advocates see that opposition gaining momentum once the healthcare law takes effect, particularly in states where anti-immigration sentiment runs high.


The 4 million U.S.-born children of such immigrants are also vulnerable when policies on immigration and healthcare collide.

According to the Urban Institute, nearly 1 in 10 U.S. families with children are of “mixed status,” with at least one parent who is undocumented and one child who is a citizen.

These children are likely to be eligible for insurance, including the government-sponsored Children’s Health Insurance Program (CHIP). But many remain out of the system because of their parents’ dread that the undocumented spouse will be identified and deported, since U.S. immigration authorities, part of the Department of Homeland Security, must verify a child’s residency status.

“You’ve got a community that’s caught in the nexus, the crossroads of two different laws,” said Jennifer Ng’andu, a lawyer and deputy health policy director at the National Council of La Raza – a national Latino civil rights and advocacy group.

According to Ng’andu, 8 percent of children from families where both parents are U.S. citizens don’t have insurance, compared with 25 percent in households where children live with at least one undocumented parent.

Robert Rector, a senior researcher at the conservative Heritage Foundation, said that making it easier for such families will set an unwelcome precedent that the country cannot afford, even if their children were born within its borders.

“These kids are very expensive. They are getting on average $10,000 a year in public education and welfare and other services that their parents are really going to never earn enough to pay for,” Rector said. “If you say this child was born in the U.S. and therefore gets to stay and we’re not going to do anything about it, you’re kind of creating an unlimited open avenue for future illegal immigration.”


Elisabeth, 26, an undocumented immigrant from Mexico City, is a single mother with three children, two of them U.S. citizens. Her worry that government authorities might split up her family is present each time she takes them to the doctor.

“I have a fear of hospitals, questions about my status and am always worried that the police will intervene, that my children will be taken away from me,” she said. “I live in the fear with every document I fill out, that it all goes to immigration.”

Elisabeth, who also asked for her full name to be withheld, said her own health has been compromised as a result. For two years she suffered in silence as a victim of domestic violence, enduring repeated beatings by her then partner and having her ribs broken while pregnant with her youngest child. The couple has since separated.

The healthcare she has received – such as giving birth to her children in the hospital – has been organized by Mary’s Center, another community clinic in the Washington area, and through the DC Health Care Alliance.

While immigrants do have legal protections that allow them to receive care from hospitals and other providers without endangering their status, even the slightest chance of exposure can be terrifying. In the first half of 2011, 46,486 who claimed to have at least one U.S. citizen child were deported, U.S. Immigration and Customs reported.


Ezekiel Emmanuel, a senior Obama healthcare advisor, acknowledges the concern that the law may expose immigrants.

“We were all aware of it,” he says. “Is that a negative tradeoff for getting universal coverage? Yes … It’s a visible consequence that we couldn’t do anything about given the politics of the situation.”

As the political debate over healthcare becomes increasingly focused on cutting costs, experts expect more scrutiny on the fate of undocumented immigrants.

“We’re in a time of fiscal austerity where you have 8 percent unemployment among predominantly legal citizens and yet you continue to have a system that openly invites illegal immigrants to come and stay,” says the Heritage Foundation’s Rector. “The first solution to the healthcare costs is to enforce the law (barring employment to illegal immigrants).”

Some health policy experts disagree, saying U.S. citizens would benefit even more if the health law included undocumented immigrants within its requirements.

Even when immigrants have insurance, their health costs amount to only half or two-thirds of the expenditures seen with U.S.-born citizens, according to a 2009 study by Leighton Ku, director of the Center for Health Policy Research at George Washington University.

“Many people think immigrants are overusing and overtaking emergency rooms, yet all the data shows they use emergency rooms less than citizens. They use everything less than citizens,” he said.

Broadening the pool of insured people to include those who use less health care means a larger population can help shoulder the costs of sicker Americans. State health insurance exchanges, which will allow individuals to buy subsidized health plans starting in 2014, exclude illegal immigrants, leaving out millions of young, healthy people who could otherwise spread the risk.

Health insurers are seeking a way around the problem, according to a senior official at one of the largest U.S. insurance companies.

“Here you’ve got a law which says everybody has to have coverage, but you have classes of people without access to coverage,” the official told Reuters on condition of anonymity. “Washington makes it very difficult for us to do the right thing.

“Obviously, we’re capitalistic and we want to make money, but at the same time we want the health system to work better, and the health system works better when people have access to coverage.”

An estimated 600,000 undocumented workers have private insurance plans through employer-sponsored programs. But they may lose out if their employers can’t manage those same plans within the state health insurance exchanges, or if premiums rise. The Restaurant Opportunities Center of Los Angeles, which provides affordable health coverage to 75,000 undocumented restaurant workers, is trying to figure that out.

“It’s not merely that they are not eligible for the subsidies, but that they cannot even get a policy from the health insurance exchanges even if they wanted to pay the full cost themselves,” Ku said. “If you’re an undocumented alien, we still let you go to the store and buy cereal or go to a car dealer and buy a car.”

(Editing by Michele Gershberg and Prudence Crowther)

States May Drop Medicaid Expansion, CMS Says


Cheryl Clark, for HealthLeaders Media , August 9, 2012

The federal announcement this week that states may choose to expand their Medicaid programs to 138% of the federal poverty level for some period of time, and then later drop out, could provoke some states deeply opposed or on the fence to reconsider.

But the news doesn’t answer many of the big questions that remain, says Matt Salo, executive director of the National Association of Medicaid Directors.

Earlier this week, Cindy Mann, director of the Centers for Medicare & Medicaid Services’ Center for Medicaid and the Children’s Health Insurance Program (CHIP) spoke in Chicago at the National Conference of State Legislatures in an effort to clarify the issue.

“A state can decide when to come in, if to come in and also, if a state does adopt the expansion and determines at a later time, for whatever reason, that it does not want to maintain the expansion, it could also decide, because it’s a voluntary program, to drop the expansion,” Mann told the American Hospital Association, which included the statement in a news briefing late Tuesday.

“The ability to opt out is certainly better than no option,” Salo says, adding that “some states have been reluctant because “they had felt trapped by the permanency of it. But I don’t think that in and of itself is enough to say that states will feel better about adopting the Medicaid expansion.”

Too many other questions about how the Medicaid expansion would work need to be answered soon, says Salo, whose organization last month sent a list of 47 questions about the protocols for the expansion programs to CMS. 

Questions about the Medicaid expansion provisions of the Affordable Care Act emerged June 28 after the U.S. Supreme Court ruled on a provision of the law that said if states did not expand their Medicaid programs to 138% of the federal poverty level, the point at which subsidies for the federal exchanges would kick in, would not lose all their federal Medicaid funding match, which ranges around 50%.  The court declared that invalid, saying that states could opt out of the expansion to 138% without losing all their funding.

Some 30 states, including many that challenged the constitutionality of the Patient Protection and Affordable Care Act, such as Texas and Florida, have said they don’t intend to expand, while others are await further clarifications before announcing their decisions.

The issue is a hot button one for hospitals, whose leaders worry that in states that don’t expand their Medicaid programs, millions of patients will remain uninsured, as if the PPACA had never existed. That would require hospitals to shoulder the costs of care when patients need it emergently.

Meanwhile, these hospitals are shouldering billions in reimbursement cuts and reduction in disproportionate share funds that they agreed to in anticipation that all states would expand their Medicaid programs.

Joy Wilson, health policy director at the National Conference of State Legislatures, the group holding the meeting where Mann spoke, said lawmakers in attendance seemed interested in the new option. “There was some comfort in that if they were if their states decided to do the expansion, and for whatever reason it didn’t work out fiscally, they would have an option to reverse that course,” she says. “There was some feeling that was a good thing.”

Wilson adds that many states “just don’t know what they’re going to do yet because they don’t have all their facts in front of them.”

One particular sticking point remains in what Salo and others call “the moving parts.”

States may now have a patchwork of programs to deal with the welfare or healthcare needs of the uninsured, provided they have no other source of coverage.  If a state expands its Medicaid program, the need for those patchwork programs—providing food, medicines, housing—would go away,  or at least be greatly reduced, and much harder to start up again. It could mean saying no to other sources of federal or state or philanthropic funds that the states could never get back.

Compounding the problem is that while federal funds pledge to pay for 100% of the Medicaid expansion for the first three years, after that the funding begins to drop to 90%, forcing states to pick up the tab for a large number of patients it didn’t have to pay for before.

Salo says that while he’s glad CMS has clarified this issue, there are dozens of remaining questions about how the expansion programs will work.  “The question that remains unanswered, which is still the most important one, is whether states can expand to a federal poverty level to a partial level below 138%?” he asks.

Take a hypothetical state that covers citizens with Medicaid up to an income level of 70% of the federal poverty level.

“If a state says no, we’re not expanding, the exchange subsidies will kick in at 100% of the federal poverty level, but there will still be a gap for people who earn incomes below 100%, and they will have nothing,” he says. In this example, anyone earning between 71% and 99% of the federal poverty level will have no coverage and will not be eligible for health insurance exchange subsidies.

Cheryl Clark is a senior editor and California correspondent for HealthLeaders Media Online.

Medicaid Providers May Face the Music Over Unpaid Taxes

A new government study shows health-care providers collected billions in Medicaid payments while failing to pay federal taxes, underscoring the need for reform.
Kathleen Hoffelder
CFO Magazine
Medical suppliers, home-care providers, and hospitals that are delinquent on their taxes could face changes in Medicaid reimbursement, thanks to a U.S. government study that showed widespread tax evasion by health-care providers in three states.

A U.S. Government Accountability Office (GAO) report to Congress last month revealed that 7,000 Medicaid providers in Florida, New York, and Texas which received more than $6 billion in reimbursements under the American Recovery and Reinvestment Act, failed to pay almost $800 million on their federal taxes from before 2009. (The Act, which was created in 2009 to promote business growth, gave states almost $90 billion in federal funds for Medicaid.)

To crack down on delinquent Medicaid providers, the GAO recommended that the IRS explore new ways to collect unpaid taxes from them. In particular, the report discussed using a series of tax levies on, or seizures of, health-care providers’ Medicaid payments. That would mark a dramatic change from the current way of collecting unpaid taxes, a change that would require an act of Congress. The IRS maintains that since Medicaid reimbursements do not, as of now, qualify as federal payments, it could not impose a levy on them.

Still, the current way of collecting unpaid taxes from Medicaid providers needs to be changed, says Richard Hillman, managing director of the Forensics Audits and Investigative Service at the GAO and author of the report. His study, which took an additional in-depth look at 40 Medicaid business and individual providers, wasn’t representative of the whole population, he says, but “it was a pretty significant result.”

The GAO estimates that as much as $330 million could have been collected from Medicaid providers in the three states if the IRS had a more stringent collection policy in place.

The IRS, for its part, agreed with the GAO findings that alternative collection measures need to be taken and plans to discuss the topic with the Treasury’s Office of Tax Policy. It cautioned, however, that any potential legislation related to the collection of outstanding tax debts from Medicaid providers could impact the basic structure of the Medicaid program. Medicaid is funded by the federal government but payments fall under state jurisdiction due to they way they are disbursed. 

Operationally it would be very simple to make the changes necessary and have better collection policy, according to Jeff Leston, CEO of Castlestone Advisors, a health care anti-fraud technology solutions provider that works with the federal Medicaid and Medicare offices. But “the IRS has many restrictions on what [it] can do with [its] data [on Medicaid providers],” Leston says.

Any change related to tax collection from Medicaid providers would have to go through Congress. Senators Max Baucus (D-Mont.), Tom Coburn (R-Okla.), Carl Levin (D-Mich.) Charles Grassley (R-Iowa) and Orrin Hatch (R-Utah) requested the GAO report but they admit they have more work to do. In a statement following the release of the report, Sen. Coburn said the “GAO’s findings raise serious questions about steps that need to be taken to improve the integrity of the Medicaid program.”

A review of Medicaid providers in other states could add fuel to the fire. The GAO noted in its study that “given that we found over $6 billion of payments made to tax-delinquent Medicaid providers in just three states, a more rigorous review of the potential costs and financial benefits of implementing enhanced continuous and other levies of Medicaid payments is warranted.”

Further study could begin with California. The GAO had to exclude the state from its report because California did not comply with requests for Medicaid payment data over eight months. “There was a material difference between the actual detailed data we got and the information they had reported publicly,” says the GAO’s Hillman.

Regardless of which states may come under the microscope next, the GAO doesn’t plan on sitting on the sidelines. “We are very interested in ensuring our recommendations are effectively implemented. We will be following up on a periodic basis with the IRS on the status of  their efforts,” says Hillman.

In depth analysis of Medicaid study – Opinion

Avik Roy, Contributor

The Apothecary is a blog about health-care and entitlement reform

8/01/2012 @ 2:38AM |960 views

Economists Claim Medicaid’s Health Outcomes are Great. Or Do They?

Harvard Medical School (Photo credit: See-Ming Lee)

The big news last week in the health policy world was a study published by three Harvard economists, arguing that Medicaid expansions were “significantly associated with reduced mortality.” Their paper comes in the wake of dozens of clinical studies showing that Medicaid beneficiaries suffer from very poor health outcomes relative to those with private insurance, and in some cases fare worse than those with no insurance at all. Now, some media outlets are using the Harvard paper to browbeat states into expanding their Medicaid programs. But the Harvard paper, while interesting, has many flaws, flaws that call its expansive conclusions into question.

First, let’s talk about the good things in the Harvard paper, which appeared in last week’s issue of the New England Journal of Medicine. It was authored by three credentialed economists at the Harvard School of Public Health: Ben Sommers, Kate Baicker, and Arnold Epstein. (Sommers has taken leave from Harvard to work for the Obama administration.)

I respect them all, and have cited their work in the past. Sommers and Epstein, for example, have done some solid research on the Medicaid woodwork problem that poses hidden costs to states under Obamacare. And their latest examination of Medicaid’s performance is a useful contribution to the literature.

“Our results offer new evidence that the expansion of Medicaid coverage may reduce mortality among adults,” the authors conclude. “Policymakers should be aware that major changes in Medicaid—either expansions or reductions in coverage—may have significant effects on the health of vulnerable populations.”

An accompanying editorial from two liberal law professors is less subtle: “The question of whether the states will expand Medicaid, therefore, is not just a question of politics; it is a question of life, health, and death.” The New York Times went even further, declaring it a “canard” that people question Medicaid’s health outcomes.

The Harvard authors are clearly aware that their work has policy implications, and welcome its use to advance the expansion of Medicaid. So, let’s examine how well their analysis backs that up.

Medicaid mortality increased in one state and decreased in two states

The authors looked at three states that expanded their Medicaid programs to childless adults—Maine, Arizona, and New York—and compared them to four neighboring states that did not—New Hampsire, Nevada and New Mexico, and Pennsylvania, over the years 1997 to 2007.

The authors found that Maine’s mortality rate increased relative to New Hampshire’s (by 13.4 deaths per 100,000); Arizona’s decreased relative to Nevada and New Mexico (by 10.2/100,000); and New York’s mortality rate declined relative to Pennsylvania (by 22.2/100,000).

In other words, the authors found that Medicaid was associated with an increase in mortality in Maine, but a decrease in mortality in Arizona and New York. Indeed, according to the authors, “single-state analyses showed [statistically] significant effects only in the largest state, New York.” Based on these three conflicting results, we are supposed to declare the debate over, and definitively conclude that Medicaid improves health outcomes?

Comparing New York to Pennsylvania suffers from many confounding factors

Also, it must be noted that no two states are alike. In particular, New York—the state that appeared to show the largest benefit from expanding Medicaid—was compared to Pennsylvania, a neighboring state with a substantially different population and health-care system. Pennsylvania’s poverty rate of 11.5 percent is meaningfully lower than New York’s 14.1 percent.

Most notably, New York has a much larger immigrant population. In 2000, 38 percent of New Yorkers were from ethnic or racial minorities, compared to only 16 percent of Pennsylvanians. Hispanics and Asians comprised 21 percent of the New York population, compared to 5 percent of Pennsylvanians. This last bit is especially relevant, because recent immigrants and non-citizens are far more likely to be uninsured than U.S. citizens of any race. According to the U.S. Census, 45 percent of non-citizens are uninsured, compared to 20 percent of foreign-born naturalized citizens, and 14 percent of native-born residents.

Why are immigrants far more likely to be uninsured than native-born Americans, to a degree far greater than would be expected by differences in income? It may be that first-generation immigrants are less accustomed to Western, insurance-based health care systems.

Indeed, the Harvard authors found a profound difference between Medicaid’s performance in white and non-white populations. Based on their methodology, Medicaid improved mortality in the white population by 14 deaths per 100,000, compared to 41 per 100,000 in the non-white population.

In other words, if the authors had been able to find a more comparable state to New York, they might not have seen a significant improvement in mortality in New York relative to the comparator. And if that had been true, the study may have shown no significant effect of Medicaid on mortality rates.

But there was no suitable comparator to New York. Connecticut, New Jersey, and Vermont all had poverty rates in the 8 to 9 percent range, far lower than New York’s 14 percent. New York’s neighbors all have smaller minority populations than New York does.

In other words, the comparison that drove the authors’ key statistical finding, New York, was the one with the least suitable comparator state, and the most confounding problems.


A more scientific approach would have been to eliminate the New York results entirely, and focus only on Maine and Arizona. But if the Harvard authors had done that, they would have ended up with a completely different result: that Medicaid had no impact on mortality, compared to having no insurance at all. And that wouldn’t have been as satisfying.

There are other important differences between states

There are other confounding factors that could explain why the authors found differences between the states’ Medicaid programs. Were there differences in the baseline health statuses of the populations of the various states? How different were their crime rates? What about other changes to Medicaid unrelated to eligibility (such as cost-sharing and reimbursement)? Did certain hospitals in certain states improve their clinical practices in substantial ways? None of these questions appear to have been raised by the Harvard authors.

There is another Medicaid outcomes study being conducted in Oregon that addresses some of these inter-state issues. I will have more to say about that study in a future post.

Economists look at county-level data, not individual patients

One thing that’s remarkable about the health outcome studies done by economists is that they almost never look at the outcomes of actual individual patients. The Harvard study used county-level data from the Centers for Disease Control, “totaling 68,012 observations specific to an age group, race, sex, year, and county.”

Contrast this approach to that of the landmark Medicaid outcomes study from the University of Virginia, which examined 893,658 individual surgical cases from the Nationwide Inpatient Sample database, and found that Medicaid’s health outcomes were worse than those of the uninsured. Which of these datasets would you consider to be more credible?

The study doesn’t compare Medicaid to private insurance

Most importantly of all, the Harvard study doesn’t answer the real policy question that divides conservatives and liberals: should we shove the poor into government-run health care programs, or instead give them access to high-quality private insurance? John McCain, you’ll recall, proposed universal private health insurance in 2008, and was criticized for doing so by Barack Obama.

Whatever you believe about the relative benefits of Medicaid to having no insurance at all, there is no serious debate about the superiority of private insurance to Medicaid. “For certain populations and particularly in certain states, [Medicaid] is unambiguously inferior to private insurance and to Medicare,” wrote Jonathan Cohn, one of Obamacare’s most influential advocates, in the New Republic in 2011.

Given the fact that private insurance’s superiority in health outcomes is undisputed, and given that the debate in Washington is about whether or not Medicaid should be government-run or privatized, you’d think that academic economists would be racing to do studies comparing Medicaid to private plans. I’m not sure why, but such studies have been few and far between. Indeed, the Harvard study makes no mention of a significant problem with Medicaid expansions: how they crowd out private insurers who previously covered the poor.

Interesting but flawed papers, like last week’s, are a useful contribution to the debate. But even if we ignore those flaws, and grant the Harvard authors the benefit of the doubt—that Medicaid provides, at great taxpayer cost, a marginal benefit—we ought not to rest until the poorest Americans have access to the same, high-quality private insurance that the rest of us enjoy.

Obamacare doesn’t give Medicaid enrollees access to high-quality, private insurance. Instead, the law doubles down on the existing, broken system, aiming to add 17 million more Americans to Medicaid’s ragged rolls. We can do better.

Follow Avik on Twitter at @aviksaroy.

Dual-Eligible Demonstrations Push Forward After Court Ruling


BY: | August 1, 2012

While they haven’t attracted the amount of press, or federal dollars, as the Medicaid expansion or state health insurance exchanges, the dual-eligible demonstration projects under the Affordable Care Act (ACA) also hung in the balance while the law’s constitutionality remained uncertain. So with the Supreme Court’s decision to uphold the federal health care reform law—and a pending deadline in September—states that have gotten a head start on the projects know that a year-plus of planning will not go to waste.

At the beginning of 2011, the U.S. Department of Health and Human Services (HHS) awarded $1 million planning grants to 15 states. The money was intended to help states develop ideas on how they can better manage dual-eligibles: the poor elderly who qualify for both Medicare and Medicaid. The goal is to both provide better care by improving coordination between Medicare (which is federal-run) and Medicaid (which is state-run) and, by doing so, cut costs.

How big is the dual-eligible issue? According to federal estimates, dual-eligibles comprise 15 percent of Medicaid enrollment, but account for 39 percent of its spending. They also make up a disproportionate amount of Medicare spending. The problem is that, because the programs are run separately by the federal government and the states, there isn’t always communication between the two, even though they’re together covering one individual.

Broadly speaking, Medicare covers acute incidents (such as a trip to the emergency room) while Medicaid covers long-term care (such as nursing home residency). But, in action, the lines aren’t so clearly drawn. Reports have circled for years about the offices bickering over which would pay for which services for an individual. The Wall Street Journal last year recounted the story of a quadriplegic who was forced to stay in a rehabilitation facility for six months while the two programs argued over which would be responsible for covering his home-based care.

“It’s a national shame that we are subjecting the poorest and sickest among us to this fragmented care,” said Matt Salo, executive director of the National Association of Medicaid Directors, at a Health Affairs conference last month.

The ACA aimed to address the dual-eligible problem through two offices created by the law: the Federal Coordinated Health Care Office (colloquially called the Duals office) and the Center for Medicare and Medicaid Innovation, which would together oversee the state demonstrations. The Duals office authorized the 15 $1 million planning grants, and a total of 26 states have stated their intention to undertake demonstration projects. Strategies for improvement include moving dual-eligibles into managed-care systems or focusing on specific populations (such as nursing home residents) who commonly have issues in coordinating care.

States that want to begin their demonstrations in 2013 must finalized their plans by Sept. 20, according to an April presentation by the Medicare Payment Advisory Commision (MedPac). About half are expected to do so; the remainder will launch their demonstrations in 2014. To prepare for that deadline, MedPac projected that states would have to submit their initial proposals and seek public comment in the spring, then meet with health-care providers in June to get their input.

The initial constitutional challenge to the ACA was filed the day after President Barack Obama signed it into law—which means almost most all duals demonstration planning so far took place under the air of uncertainty that ended on June 28, when the Court issued its decision to, in effect, uphold the entire law.

While overturning the ACA would have invalidated the Duals offices and their funding, the dual-eligible issue would still have needed to be addressed, as spending for Medicaid and Medicare is projected to crescendo in the coming decades. The only option, state officials say, was to push forward despite the lack of assurance about the law’s fate. 

“The issue isn’t going to go away. It’s only going to increase in terms of the pressure it puts on the health-care system,” says Patti Killingsworth, assistant commissioner at TennCare, Tennessee’s Medicaid office, who oversees long-term care services and her state’s demonstration project. “So, what we said in our planning process is: we are going to find a way to improve the coordination of care for dual-eligibles regardless of the authority that we use.”

Given the amount of work that states had done over the last year, some would likely have pushed on with their plans regardless of the Court’s ruling. But knowing that they’ll have the full resources outlined in the ACA is reassuring, state officials say. For starters, the Duals office is expected to facilitate data sharing across the two programs, a key component to improvement that has been missing in the past.

“We were committed to serving this population regardless. What this enables us to do is to do it better and smarter,” says Denise Levis at Community Care of North Carolina, which is overseeing that state’s demonstration project. “Everyone’s agreed that things need to change. But we were a little anxious, so it was a relief.”


This article was printed from:

Gov’t report: No clear way for IRS to block Medicaid payments to providers who cheat on taxes


By Associated Press, Updated: Thursday, August 2, 3:10 AM

WASHINGTON — Thousands of Medicaid health care service providers still got paid by the government even though they owed hundreds of millions of dollars in federal taxes, congressional investigators say. A legal technicality is making it harder for the IRS to collect.

In a report being released Thursday, the Government Accountability Office says Medicaid payments to doctors, hospitals and other providers aren’t technically considered federal funds, since they’re funneled through state health care programs.

Because of that glitch, the IRS can’t just shut off the payment spigot to collect tax debts. Investigators only looked at three states, so the full extent of the losses is even greater.

One dentist who received more than $100,000 from Medicaid while owing back income taxes was spending money on fine dining, trips, spas, shopping and wine, the report said.

In another case, a medical transport company received more than $1 million from Medicaid while owing millions in unpaid payroll taxes for its employees. Not paying the payroll taxes is a violation of federal law.

Medicaid, a federal-state program that mainly serves low-income people, is the companion to Medicare, which primarily serves seniors.

While the IRS can block Medicare payments to scofflaw providers using something called a “continuous levy,” it is precluded by law from using the same strategy to go after Medicaid payments — even though the federal government pays about 60 percent of the costs of Medicaid.

GAO investigators recommended that the IRS immediately reassess its policies to find more efficient ways of collecting back taxes from Medicaid service providers. Part of the problem seems to be coordination with states.

In a formal response to the report, the IRS said it agrees action is needed. Congress has an opportunity to close the loophole during budget deliberations after the elections.

Republican Sen. Tom Coburn of Oklahoma said piles of unpaid taxes ought to raise a red flag about anybody doing business with the government.

“People who cheat on their taxes show a clear disregard for the law, so they might be more likely to defraud Medicaid, or even harm patients,” Coburn said in a statement. “GAO’s findings raise serious questions about steps that need to be taken to improve the integrity of the Medicaid program.”

Unpaid taxes are a persistent problem for the government, a so-called tax gap of about $350 billion a year. Much of the money is considered uncollectable.

GAO investigators scrutinized Medicaid providers, from doctors to hospitals to medical transport companies, in three large states: Texas, New York and Florida.

During 2009, about 7,000 Medicaid providers who were paid a total of $6.6 billion by the program also owed $791 million in unpaid taxes.

They represented nearly 6 percent of all the Medicaid providers reimbursed by the three states, a fairly large proportion to be found delinquent considering that they were receiving income from a major government program.

Advocates for the poor may complain that a tax crackdown will only drive legitimate providers away from Medicaid. The program already pays much less than Medicare or private insurance. But the GAO said that concern doesn’t justify continuing to tolerate the problem.

“Even though Medicaid providers are relied on to deliver significant medical services to those most in need, payment of billions of federal dollars to those who do not pay their fair share of federal taxes raises questions about the integrity and fairness of the tax system,” the report said.

“Given that we found over $6 billion of payments made to tax delinquent Medicaid providers in just three states, a more rigorous review … is warranted,” investigators concluded.