13 December 2011

Midwest Edition
Calendar
January 6-8
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Aetna Sues Michigan Blue Cross

Piggyback Suit Alleges Anticompetitive Contracts
Theyre piling on in Michigan. investing in the state like we do, said Helen Aetna Inc., the countrys third largest forStojic, Blue Cross spokesman in Detroit. prot national health insurance company, has Instead, its resorting to litigation as a led a lawsuit alleging that Blue Cross Blue business strategy. Shield of Michigan engaged in Aetnas lawsuit, led Dec. 6 in U.S. District anticompetitive practices by forcing hospitals Court in the Eastern District of Michigan, to sign contracts giving it highly favorable requests a jury trial. Aetna is demanding terms. The contracts even required compensation of three times hospitals to charge the Blues the actual nancial damage competitors in the insurance it has sustained. market higher prices than the The Blues, the lawsuit Blues paid, the lawsuit says. contends, entered into Blue Crosss so-called mostcontracts where it agreed favored-nation contracts with to pay hospitals more Michigan hospitals are money if the hospitals violations of the antitrust act. increased the rates they Thats what it boils down to, said demanded to treat patients Bill Berenson, president of Aetnas covered by its competitors Michigan market, in a telephone health plans. It did this by interview. continually jacking up Blue Cross doesnt contract in premiums. And worse, the a manner that drives costs down, suit argues, at the very time it drives costs up, he said. when Michigan employers Consumers in Michigan are and consumers were paying higher premiums. Its suffering from the crushing Bill Berenson unfair business practices and effects of the recession and Aetnas Michigan antitrust. increasing healthcare costs, Market Chief The Blues are taking the Blue Cross increased their gloves off in response. pain through its Aetna is a competitor who pulled out of the anticompetitive scheme. small group market in Michigan, instead of
Continued on Next Page

March 6-7
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June 11-13
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Thursday, Dec. 15, 2011

E-Mail info@payersandproviders.com with the details of your event, or call (877) 248-2360, ext. 3. It will be published in the Calendar section, space permitting.

10 A.M. PST

California Healthcare: A 2012 Business Forecast

Please join Steven T. Valentine, President of The Camden Group, Henry R. Loubet, Chief Strategy Officer for Keenan, and Jim Lott, Executive Vice President of the Hospital Association of Southern California, to discuss the trends that will shape California!s healthcare business environment in 2012:

http://www.healthwebsummit.com/ppcalifornia121511.htm
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NEWS
Aetna (Continued from Page One)
The Justice Department and the Michigan Attorney Generals Ofce led the original antitrust case against the Blues in October 2010, alleging that the Blues required 70 Michigan hospitals to guarantee it favorable pricing over competitors using MFN clauses in contracts. (Payers & Providers, 5 April and 12 April 2011) According to the government case, Blue Cross contracts required some hospitals to charge higher rates to other insurers, known as most favored nation clauses, or MFN. Blue Cross contracts with 70 of the 131 hospitals in the state, the government case says. Some competing health plans were required to pay 30% to 40% more than Blue Cross at certain hospitals, the government argues. The Blues asked the court to dismiss the case, but in June U.S. District Judge Denise Page Hood decided it should go to trial, probably in April 2013. The Aetna case is a piggyback lawsuit, meaning that the Justice Department, not Aetna, will do most of the heavy lifting when the case goes to trial, said antitrust expert Thomas Greaney, a professor at the St. Louis University Law School. Here, piggyback is not a term of derision but suggests it has a different purpose than the governments case. The Justice Department goes to court to seek a conduct remedy, in which the court rules that the defendant cant behave this way in the future or must change its practices, or divest a division. The DoJ is not entitled to receive damages from the improper conduct. Private individuals and companies, however, may be able to prove they have been damaged, and under the antitrust laws, they have a right to receive a monetary reward, as much as three times the actual damages. The Justice Department remedy is forward-looking: stop the conduct, Greaney said. The private remedy is intended to help the victims, people who had to pay more or were excluded from the market and unable to compete. This is nancial payback. Berenson said Aetna believes that Blue Cross had the MFN clauses in place for a long time, but didnt begin enforcing them until Aetna gained a foothold in the Michigan market. In 2005, Aetna bought an existing insurer, the HMS Network, for $390 million, in an effort to break through the Blues dominance. According to the lawsuit, Blue Cross controls 60% of the commercial insurance market in Michigan, nine times as much as of its closest competitor. Aetnas fully

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In Brief
SLU Hospital, WellPoint Start War of Words Over New Contract
Tenet HealthCare Corp. and WellPoint Inc. are locked in a erce battle over reimbursement rates at two St. Louis hospitals. St. Louis University Hospital and Des Peres Hospital, both owned by Dallas-based Tenet, say that because contract negotiations have broken down, they will end their managedcare contracts with Anthem Blue Cross and Blue Shield of Missouri, the states dominant insurer, and Healthlink Inc., both owned by WellPoint, based in Indianapolis. WellPoint said SLU wants high price increases for inpatient care. The hospital said WellPoint is paying substantially less than other payers. Last week SLU CEO Phillip Sowa, requested an independent third-party mediator to help reset the negotiations. Unless the parties can come to terms, the hospital will terminate its contracts as of Jan. 1. Anthem spokesperson Deb Wiethop said the contracts would have automatically renewed, but Tenet wanted a steep rate increase. Tenet elected to terminate the contracts, she said in a statement, instead of entering into genuine good faith negotiations for reasonable contract terms.

Two University Hospitals in Cleveland Build Senior-Friendly ERs

Two suburban hospitals in Cleveland have redesigned emergency rooms to improve care for elderly patients. University Hospitals Bedford Medical Center and Richmond Medical Center have installed soft lighting, pressury-reducing mattresses,

Continued on Page 3

insured accounts rose from 4,600 in 2005 to more than 10,000 in 2006, to 17,600 in 2007. It enjoyed a similar upswing in the small group market, growing revenues from $1.7 million in 2005 to $58 million in 2007. Shortly after that, Aetna claims, hospitals throughout the state raised their rates to the out-of-state company, asserting that their contracts with Blue Cross forced them to do so, by as much as 25%. The deals you negotiate with hospital systems are a component of the pricing we can bring to the street, Berenson said. The better discount you have, the better price you can bring to the marketplace. Aetnas pricing became uncompetitive, and its business rapidly deteriorated. In July 2010, it announced it would no longer offer smallgroup insurance in Michigan, effective February 2011. Stojic vigorously countered Aetnas version of events. The lawsuit alleges that we drive up costs. The opposite is true, she said. We provide more value for the dollar. Because Blue Cross represents more covered lives than any other company, it expects hospitals to give better terms. A volume discount is not unusual in industry, Stojic said. You bring volume, you get a better price. Our customers expect us to use every available tool to keep premiums affordable. The total amount of discounts negotiated on behalf of its customers amounted to $13 billion in 2009, she said. Our customers are demanding that we slow the rising cost of healthcare, she added, and the hospital discounts are an important part of that strategy. We have a motivation to keep healthcare affordable, because it's consistent with our not-for-prot mission, Stojic said. We're based here, we want to keep people in Michigan healthy. Michigan is not a market to us; it's our home. Aetna is a for-prot company, based in Hartford, Conn. It participates in markets where it's most cost efcient, and it's also a very large company, about seven times the size of Blue Cross, she said. The case has national signicance, according to Greaney. You dont nd many instances where the big boys challenge each other in court, he said. Obviously litigation is time consuming and costly, and doesnt always pay off. But the incentive of treble damages could be alluring for other companies elsewhere.

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Wisconsin Medicaid on the Line

53,000 Could Lose Coverage Next Year, State Says
About 53,000 adults in Wisconsin are likely to lose their Medicaid coverage by next July because of an impasse between Wisconsin authorities and the Centers for Medicare and Medicaid Services. Gov. Scott Walker and the states Republican controlled legislature wrote into law a stipulation that the state would drop the beneciaries unless the federal authorities approve all the reforms of BadgerCare passed earlier this year by Dec. 31. Last Friday, CMS approved proposals by several states to trim spending on Medicaid, amounting to around $500 million. But Cindy Mann, director of the federal Center for Medicaid and Childrens Health Insurance Program Services, said it would not have time to decide on some other changes to Wisconsins program in the next three weeks. Mann permitted the state to raise premium rates for certain adults in BadgerCare Plus. It said it would need more time to think about other changes, including those affecting children. Wisconsin ofcials didnt say whether they would cut 53,000 adults without children from the rolls. It would permit the state to save $60 million. Dennis Smith, who heads the states Department of Health Services, wrote in a response to the federal ofcials that he was concerned that although the deadline has been acknowledged, federal staff may not fully understand the law under which we are operating. Medicaid covers one in ve Wisconsin residents, about 1.2 million people. The states various Medicaid programs will cost the federal and state governments a combined $6.73 billion in 2011. State ofcials are worried that the inexorable rise in health spending is crowding out other priorities such as schools, roads, and bridges.

In Brief
larger signage, non-skid oors and handrails. Seniors in the rooms will have access to hearing amplication and large-print materials. Seniors make up about 15% of ER visitors, but in these two hospitals, it is about 20%, said Laurie Delgado, president of the two hospitals. A key aspect of the program is review of the patients drug usage and interactions. Many people in this age group are taking as many as 15 prescriptions, which may cause adverse interactions. A pharmacist will review all the medications that patients are on. The rst senior-specic emergency room opened in 2008 at a hospital in Silver Spring, Md. Today there are about 15 across the country.

Whats Essential in a Health Plan?

Benefit Package Must Be Affordable, Group Argues
The Essential Health Benets Coalition has asked the Department of Health and Human Services to make sure the eventual basic benets package under health reform remains affordable for employers and families. Citing the rise of healthcare costs as the most signicant barrier to obtaining health insurance coverage, the coalition said in a statement that regulations that further increase costs of health coverage will not only have a negative impact on its affordability, but will also negatively affect employers abilities to create jobs and increase workers wages. The coalition comprises groups from a broad swath of the U.S. economy, including pharmacy benet managers, health plans, and the Blue Cross and Blue Shield Association. It also includes many small business organizations that have been hostile to the Affordable Care Act, such as the National Retail Federation, the U.S. Chamber of Commerce, the National Federation of Independent Business, and the National Association of Manufacturers. The coalition points out that every new benet comes at a cost. It cited a government report showing that the growth in premiums over the past 10 years tracked directly with the growth in required benets. State legislatures routinely pass bills requiring that insurance reimburse the services of a specic provider group, such as nurse midwives, or cover a certain service, such as infertility care. The total of state coverage mandates is at 2,156. Connecticut has the highest amount, at 59, and Idaho has the fewest, at 13. The coalition wants HHS to follow recommendations from the Institute of Medicine regarding state benet mandates. In October the IOM said HHS should consider cost as a factor in mandating which benets should be required of insurance plans under health reform. The IOM report said the government should announce the minimum benet package by May 1, 2012. The coalition, which was formed a few months ago, said state benet mandates should not receive any special consideration and should be subject to the same evaluation standards as the rest of the basic benet package. Also, it wants the package to be based on evidence-based evaluation of the effectiveness of treatments and their costs.

Wisconsin Must Train or Recruit 2,200 More Physicians by 2030

Wisconsin must train or recruit as many as 100 extra physicians a year for the next 20 years to meet the expected demand for medical services, the Wisconsin Hospital Association has determined. Pointing out that it takes as long as 10 years to form and train a physician, a report by the hospital association has put the spotlight on a projected shortage of doctors. Primary care doctors will be in especially short supply, and will make up 80% of the shortage. The report is quite timely, said John Raymond Sr., M.D., in an interview with the Milwaukee Journal Sentinel. If we are going to address the potential shortage of healthcare providers, the best time to do it is now. Raymond is CEO of the Medical College of Wisconsin, one of two medical schools in the state. The report estimates that the state will need at least 2,196 more physicians (above what would normally be expected) by 2030.

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Payers & Providers

OPINION

Page 4

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Doing the Right Things Properly

The Reasons that Three Hospitals Didnt Harm My Wife
My wife was lying in the back of an reinforced safety consciousness. ambulance, dazed and bloody, while I sat in Although consciousness can spur change, the front, distraught and distracted. We had sustaining it requires a supportive culture. The been bicycling in southern Maine when she hit safety culture at Glenbrook Hospital in suburban the handbrakes too hard and catapulted over Chicago part of the NorthShore University the handlebars, turning a vacation into a race HealthSystem was obvious. The orthopedic to the nearest hospital. surgeon, consulting neurosurgeon, and The anxiety when a loved one is injured is anesthesiologist all talked about safety. Before compounded when you know just how risky surgery, nurses tted Susan with surgical stockings making things better can get. As a long-time to prevent deep vein thrombosis an evidenceadvocate for patient safety, the headline, Wife based guideline followed by less than half of of patient safety expert is victim was a result I hospitals. When I questioned prophylactic deeply hoped to avoid. antibiotic use, a nurse indignantly cited a study Following the accident, we spent time at a showing I was mistaken. 50-bed hospital in Maine; a I backed off, happy theyd thought Boston teaching hospital about the issue seriously. where Susan was transferred But if consciousness is one with a small vertebra fracture barrier to culture change, another at the base of her neck and of at least equal importance is broken bones in her left elbow cash. and hand; and a large Theres a link between nancial community hospital near our stress and patient distress. A recent suburban Chicago home. study in Health Affairs found the There were plenty of oppor178 worst hospitals care for tunities for bad things to more than twice the proportion of happen but none did. elderly minority and poor patients What went right? After all, as the 122 best, where costs are the national death toll from lowest and quality highest. medical errors over the last Money talks in other ways. decade has remained Some hospitals implicitly see By Michael L. Millenson stubbornly constant. Based adverse events as a way to keep on personal and professional beds lled (although, of course, observations, Id simplify the formula that kept patient deaths thwart that goal). Would a cashSusan safe into three variables: consciousness, strapped York have transferred Susan, or would culture, and cash. they have assured a well-insured patient they Consciousness of patient safety sounds easy, could take care of her neck?! Would a bottom-line but isnt. The harm caused patients is driven Mass General or Glenbrook have angled inadvertent and often part of complex for a longer stay? interventions. As a result, a 2009 JAMA Its tough enough to change culture without commentary noted, Clinicians have labeled worrying youll lose money doing so. Thats why virtually all harm as inevitable for decades. Medicare is increasingly linking payment to But the cloak of invisibility is being lifted. explicit quality and safety indicators. Twenty-six states require hospitals to report We ask a great deal of medical professionals. certain medical errors. Just as importantly, Our experience showed that doing the right more patients and their families are speaking thing appropriate care -- and doing the right up. thing right safe and effective care can When the ER nurse at Maines York Hospital become the norm at all kinds of hospitals. On a gave Susan morphine, I asked about the personal and system level, thats very good news. dosage. When she was transferred to Massachusetts General Hospital in Boston, I Michael L. Millenson is president of Health asked each medical professional to identify him Quality Advisors in Highland Park, Ill. A version or herself. Although its impossible to know the of this article appeared in Kaiser Health News. impact, at a minimum these questions

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