Tagged Health Industry

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Health Giant Sutter Destroys Evidence In Crucial Antitrust Case Over High Prices

Sutter Health intentionally destroyed 192 boxes of documents that employers and labor unions were seeking in a lawsuit that accuses the giant Northern California health system of abusing its market power and charging inflated prices, according to a state judge.

In a ruling this week, San Francisco County Superior Court Judge Curtis E.A. Karnow said Sutter destroyed documents “knowing that the evidence was relevant to antitrust issues. … There is no good explanation for the specific and unusual destruction here.”

Karnow cited an internal email by a Sutter employee who said she was “running and hiding” after ordering the records destroyed in 2015. “The most generous interpretation to Sutter is that it was grossly reckless,” the judge wrote in his 12-page ruling.

Sutter, which has 24 hospitals and nearly $12 billion in annual revenue, said the destruction was a regrettable “mistake.”

“It’s stunning what Sutter did to cover up incriminating documents in this case,” said Richard Grossman, the lead plaintiffs’ lawyer representing a class of more than 1,500 employer-funded health plans.

Employers and policymakers across the country are closely watching this legal fight amid growing concern about the financial implications of industry consolidation. Large health systems are gaining market clout and the ability to raise prices by acquiring more hospitals, outpatient surgery centers and physician offices.

In April 2014, a grocery workers’ health plan sued Sutter and allegedit was violating antitrust and unfair competition laws. The plaintiffs began requesting documents related to contracting practices, such as “gag clauses” that prevent patients from seeing negotiated rates and choosing a cheaper provider and “all-or-nothing” terms that require every facility in a health system to be included in insurance networks.

Sutter disputes the broader allegations in the lawsuit over its market conduct and said its charges are in line with its competitors’.

The judge said that in 2015 Melissa Brendt, Sutter’s chief contracting officer in the managed-care department, and an assistant general counsel, Daniela Almeida, authorized Brendt’s executive assistant to destroy 10 years’ worth of managed-care documents going back to 1995. The company earlier had scheduled the documents to be destroyed in 2035 — 20 years later.

The executive assistant, Sina Santagata, testified in a deposition she wasn’t aware of any other time in her 17 years at Sutter when the managed-care department destroyed records held in storage.

In his Nov. 13 ruling against Sutter, the judge singled out an email by Santagata as “particularly noteworthy.”

The executive assistant emailed Brendt, the chief contracting officer, on July 30, 2015, after sending the order to destroy the records. She wrote, “I’ve pushed the button … if someone is in need of a box between 3/15/95 & 11/23/05 … I’m running and hiding. … ‘Fingers crossed’ that I haven’t authorized something the FTC will hunt me down for.”

The Federal Trade Commission (FTC) enforces antitrust laws in health care to prevent hospitals, drugmakers and other industry players from engaging in anti-competitive behavior that could harm consumers.

Santagata testified that she was being “sarcastic” in her email, and Sutter told the judge that the FTC reference was just a “joke.”

Karnow saw no humor in it. “There are infinite topics for jokes, and the choice of this one is strong evidence” in the plaintiffs’ favor, he wrote in his order Monday.

As part of his sanctions against Sutter, the judge ordered the health system to examine email backup tapes covering 2002 through 2005 to search for documents on some of the same topics as the destroyed records. Also, Karnow said he will consider a plaintiffs’ motion for issuing jury instructions that are adverse to Sutter in light of the document destruction. The trial is scheduled for June 2019.

“The record shows that Sutter’s conduct was more than just an inadvertent error,” Karnow wrote.

Sutter spokeswoman Karen Garner said the incident was a “mistake made as part of a routine destruction of old paper records” and the Sacramento-based health system disclosed the error as soon as it was discovered.

“We regret that as part of a routine archiving process we failed to preserve some boxes of decades-old hard-copy documents,” Garner said.

The United Food and Commercial Workers and its Employers Benefit Trust initially filed the case against Sutter in 2014. The joint employer-union health plan represents more than 60,000 employees, dependents and retirees. The court certified the case as a class action in August, allowing hundreds of other employers and self-funded health plans to potentially benefit from the litigation.

In addition to its 24 hospitals, Sutter’s nonprofit health system has 35 surgery centers and more than 5,000 physicians in its network. It reported $11.9 billion in revenue last year and income of $554 million.

Grossman, the plaintiffs’ counsel, said he welcomed the judge’s ruling. But he said much of the evidence is irreplaceable, particularly handwritten notes from negotiating sessions and meetings involving key Sutter executives.

He said those records covered a critical period in the early 2000s when there was a “sea change in Sutter’s contracting strategy” and it implemented provisions that insulated the health system from price competition.

“This was groundbreaking in the industry,” Grossman said. “Until we address the anti-competitive behavior of entities like Sutter, we will not solve the problem of high costs in health care.”

The plaintiffs are seeking to recover hundreds of millions of dollars from Sutter from what it claims are illegally inflated prices. The lawsuit alleges that an overnight hospital stay at Sutter hospitals in San Francisco or Sacramento costs at least 38 percent more than a comparable stay in the more competitive Los Angeles market.

A study published last year found that hospital prices at Sutter and Dignity Health, the two biggest hospital chains in California, were 25 percent higher than at other hospitals around the state. Researchers at the University of Southern California said the giant health systems used their market power to drive up prices — making the average patient admission at both chains nearly $4,000 more expensive.

“Sutter is a pretty extreme case of market power, but health care consolidation has become a really important issue across the country,” said Kathy Hempstead, a health care researcher at the Robert Wood Johnson Foundation. “It’s been on the back burner somewhat because of the debate over the Affordable Care Act, but there is bipartisan interest in tackling this.”

This story was produced by Kaiser Health News, which publishes California Healthline, a service of the California Health Care Foundation.

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California Fines Anthem $5 Million For Failing to Address Consumer Grievances

California’s managed-care regulator has fined insurance giant Anthem Blue Cross $5 million for repeatedly failing to resolve consumer grievances in a timely manner.

The state Department of Managed Health Care criticized Anthem, the nation’s second-largest health insurer, for systemic violations and a long history of flouting the law in regard to consumer complaints.

“Anthem Blue Cross’ failures to comply with the law surrounding grievance and appeals rights are long-standing, ongoing and unacceptable,” said Shelley Rouillard, director of the Department of Managed Health Care. “Anthem knows this is a huge problem, but they haven’t addressed it.”

Before this latest action, California had already fined Anthem more than $6 million collectively for grievance-system violations since 2002.

The state said it identified 245 grievance-system violations during this latest investigation of consumer complaints at Anthem from 2013 to 2016.

Rouillard cited one example in which Anthem denied a submitted claim for an extensive surgical procedure, even though it had issued prior approval for the operation. Twenty-two calls contesting the denial — placed by the patient, the patient’s spouse, the couple’s insurance broker and the medical provider — failed to resolve the complaint. It was not until the patient sought help from the managed-care agency, more than six months after the treatment, that Anthem paid the claim.

Anthem Inc. could not be immediately reached for comment. The company, based in Indianapolis, sells Blue Cross policies in California and 13 other states.

California is known for having tough consumer protection laws on health coverage and for assisting policyholders when they exhaust their appeals with insurers. In other actions, the state has fined insurers for overstating the extent of their doctor networks and for denying patients timely access to mental health treatment.

Jamie Court, president of Consumer Watchdog, an advocacy group in Santa Monica, Calif., said the regulatory response to these problems varies greatly by state.  He singled out New York, Washington and Kansas as some of the states with good track records of holding health insurers accountable.

“The real problem is when states don’t act there is not a great avenue for the consumer. It’s very hard to bring legal action,” Court said. “Anthem definitely needed a wake-up call. But this will also send a message to other insurers.”

Nationally, consumers continue to express their displeasure with health insurers over a wide range of issues, including denials for treatment, billing disputes and the lack of in-network doctors.

Verified complaints related to health insurance and accident coverage rose 12 percent in 2016 compared to the previous year, totaling 53,680, according to data compiled by the National Association of Insurance Commissioners. The data only includes incidents in which state regulators confirmed there was a violation or error by the insurer involved.

Court and other advocates welcomed the significant fine in California and said this is just the latest example of Anthem’s failure to uphold basic consumer protections.

Overall, state officials said that calls to Anthem’s customer service department often led to repeated transfers of calls and that the company failed to follow up with enrollees.

After previous fines, Anthem has pledged to provide more training to employees and to better track grievances and appeals in order to reduce delays.

“If you look at the history of Anthem and the penalties assessed over the years, they are definitely an outlier compared to other health plans,” Rouillard said.

“All the plans have some issues with grievances, but nothing to the degree we are seeing with Anthem.”

The managed-care department said a health plan’s grievance program is critical, so that consumers know they have the right to pursue an independent medical review or file a complaint with regulators if they are dissatisfied with the insurer’s decision. The grievance system can also help insurers identify systemic problems and improve customer service, state officials said.

The state’s independent medical review program allows consumers to have their case heard by doctors who are not tied to their health plan. The cases often arise when an insurer denies a patient’s request for treatment or a prescription drug.

In 2016, insurance company denials were overturned in nearly 70 percent of medical review cases and patients received the requested treatment, according to state officials.

This story was produced by Kaiser Health News, which publishes California Healthline, a service of the California Health Care Foundation.

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How Older Patients Can Dodge Pitfalls Entrenched In Health Care System

Being old and sick in America frequently means a doctor won’t ask you about troublesome concerns you deal with day to day — difficulty walking, dizziness, a leaky bladder, sleep disturbances memory lapses, and more.

It means that if you’re hospitalized, you have a good chance of being treated by a physician you’ve never met and undergoing questionable tests and treatments that might end up compromising your health.

It means that if you subsequently seek rehabilitation at a skilled nursing facility, you’ll encounter another medical team that doesn’t know you or understand your at-home circumstances. Typically, a doctor won’t see you very often. In her new book, “Old & Sick in America: The Journey Through the Health Care System,” Dr. Muriel Gillick, a professor of population medicine at Harvard Medical School and director of the Program in Aging at Harvard Pilgrim Health Care Institute, delves deeply into these concerns and why they’re widespread.

Her answer: a complex set of forces is responsible.  Some examples:

  • Medical training doesn’t make geriatric expertise a priority.
  • Care at bottom-line-oriented hospitals is driven by the availability of sophisticated technology.
  • Drug companies and medical device manufacturers want to see their products adopted widely and offer incentives to ensure this happens.
  • Medicare, the government’s influential health program for seniors, pays more for procedures than for the intensive counseling that older adults and caregivers need.

In an interview, Gillick offered thoughts about how older adults and their caregivers can navigate this treacherous terrain. Her remarks have been edited for clarity and length:

Q: What perils do older adults encounter as they travel through the health care system?

The journey usually begins in the doctor’s office, so let’s start there. In general, physicians tend to focus on different organ systems. The heart. The lungs. The kidneys. They don’t focus so much on conditions that cross various organ systems, so-called geriatric syndromes. Things like falling, becoming confused or dealing with incontinence.

Q: What can people do about that?

Older people are often unwilling to bring these issues to the attention of their doctors. But if a family member is accompanying the patient, they should speak up.

In some practices, a nurse practitioner may be more attuned to these issues than the physician. So, it’s a good idea to learn who in the medical office you go to is good at what.

Another approach is to request a geriatric assessment or consultation that will bring these issues to the forefront.

Q: How do geriatric assessments work?

A geriatric assessment does two major things. It looks at the whole person. And it focuses on that person’s functioning — on what they can do. Can they dress themselves, walk, get to the bathroom? Can they cook meals? Take a bus downtown? Balance their checkbook?

An outpatient geriatric assessment is typically 1½ to two hours and conducted by an interdisciplinary team. A social worker or a mental health professional will ask about the person’s family situation. Are they living alone? Do they have support? A nurse practitioner will look at physical function. And a physician will go over medical concerns and examine the cognitive performance of the individual. Then, the team pulls all these pieces together to look at what’s going on with that person.

When someone starts being frail — having consistent difficulty doing things — an assessment of this kind is often a good idea.

Q: The next step you talk about in your book is the hospital.

One of the big perils in the hospital is technology, which is also its great virtue.  Technology can improve quality of life and be life-extending. But, sometimes, it creates endless complications.

An example are imaging tests such as CT scans. Physicians hardly think of this as an invasive test. But often one has to administer a dye to see what’s going on.  That dye can cause kidney failure in someone with impaired kidney function — something that’s common in older adults.

Sometimes there’s no real need for scans. An example would be an older person who becomes acutely confused in the hospital, which happens a lot. The appropriate response is to look at what’s causing the confusion and take away the offending agent. Often, that’s a medication that was started in the hospital. Or, it’s an infection. But the routine knee-jerk reaction is to do a CT scan to rule out the possibility of a stroke or bleeding in the brain.

For the most part, doctors want to do whatever it takes to diagnose a problem.  For younger patients, this may make sense. But for frail older patients with multiple medical conditions, a cascade of complications can result.

Q: What do you advise older patients and their families do?

When a test is proposed, ask the doctor “how important is it to pursue this diagnosis” and “how will the results change what you do?”

It’s also reasonable to say something along the lines of “every time I’ve had a test, it seems like I get into some kind of trouble. So, I really want to know, with this test or this treatment, what kind of trouble could I get into?”

Q: In your book, you talk about how a doctor-patient relationship can be sidelined when someone goes to the hospital. Instead, hospitalists provide care. How should people respond?

It’s really important to give that doctor a sense of the patient and who they are.  Say, your 88-year-old mother is in the hospital, and she’s become profoundly confused. The doctor doesn’t know what she was like a week or a month ago. He may assume she has dementia unless he hears otherwise. He won’t understand it might be delirium.

You or a caregiver want to come across as someone who can make it easier for the doctor to do his or her job — versus someone who’s a nuisance. You want to build trust, not annoyance.

Q: What about skilled nursing facilities?

These are settings that people go to after the hospital, to get rehabilitation.  Typically, the contact with doctors is minimal after an initial evaluation, though there’s a spectrum as to how much medical care there is.

A subset of older adults go to rehab just to get physical therapy after they’ve had a joint replacement or a hip fracture. They are really pretty stable, medically. If they get good physical therapy and nursing care, it’s probably OK that the doctor isn’t around much.

But there are also older patients who come to skilled nursing facilities, or SNFs, after having had one complication after another in the hospital. These patients can be very fragile, with many medical problems. They’re at risk of getting some new problem in the SNF — perhaps an infection — or an exacerbation of one of the problems they already have that hasn’t resolved.

Q: What do you recommend?

When you arrive at an SNF, it’s a new cast of characters. A physician whom you’ll see fleetingly. Nurses. Physical therapists. Aides. If you’re a caregiver, make sure you have face-to-face time with these staffers.

SNFs are required within the first week or so to have a care planning meeting with the team. They’re supposed to invite patients and their representatives to the meeting. This is a good place to say something along the lines of “My mother has been through a lot, and now that we’ve met you and seen what you can do, we’d like you to do your best to treat her here and not send her back to the hospital.”

You have to have trust to make that happen. The family has to trust the medical team. And the team has to trust that the family isn’t going to get upset and sue them. A meeting of this kind has the potential to allow everyone to figure out what’s important and what the plan will be going forward.

We’re eager to hear from readers about questions you’d like answered, problems you’ve been having with your care and advice you need in dealing with the health care system. Visit khn.org/columnists to submit your requests or tips.

KHN’s coverage related to aging and improving care of older adults is supported in part by The John A. Hartford Foundation.

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California Firm Running Physician Practices Is Closing Down as Scrutiny Ramps Up

SynerMed, a company that manages physician practices serving hundreds of thousands of Medicaid and Medicare patients across California, is planning to shut down amid scrutiny from state regulators and health insurers.

The company’s chief executive, James Mason, notified employees in an internal email Nov. 6, obtained by Kaiser Health News, that audits by health plans found “several system and control failures within medical management and other departments.”

As a result, Mason wrote, the company “will begin the legal and operational steps to shut down all operations.” He said he was working on the transition of SynerMed’s clients to another management firm within the next 180 days.

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Separately, the California Department of Managed Health Care confirmed it is investigating the company.

“There is an open investigation of SynerMed, but the details are confidential right now,” said spokesman Rodger Butler. His agency monitors the financial solvency and claims-payment practices of many physician groups that contract with health plans.

The company’s sudden decision to shut down has sparked alarm among some doctors and medical groups that have relied on the company to handle their finances and business operations.

For years, SynerMed has served as a key middleman between health plans and independent physician practices, handling insurance contracting, paying claims and performing other administrative tasks so doctors can focus on treating patients. That role has expanded as millions more Californians are enrolled in Medicaid managed-care plans under the Affordable Care Act.

SynerMed has billed itself as “one of the largest Medicaid/Medicare management service organizations in the nation.” Last year, the company boasted that it had enrollment of 1 million patients in California, aided by an influx of enrollees who got coverage under the federal health law.

Mason, the CEO, didn’t respond to requests for comment. The company referred calls to its general counsel, but she couldn’t be reached.

In his email to employees, Mason said he had “discovered certain internal control issues within the medical management department.”

“Well,” he wrote, “as a result of the manner in which those issues were disclosed to the health plans and regulatory agencies, we have been subject to unannounced audits by almost all of our health plan partners.”

The CEO said two medical groups, AlphaCare and EHS (Employee Health Systems) Medical Group, have already terminated their contracts with SynerMed.

“I am heartbroken and saddened by these events after we have worked so hard to build our reputation as a company that operates with integrity,” Mason wrote in his email to employees.

Part of SynerMed’s growth had come from managing care for low-income seniors and people with disabilities who are eligible for both Medicare and Medicaid, called Medi-Cal in California. The state has been at the forefront nationally in trying to shift those “dual-eligible” patients into managed-care plans, which are paid a fixed rate per patient to coordinate a range of medical care.

A spokesman for the Medi-Cal program said the agency had no information to share on SynerMed.

SynerMed is a subsidiary of PAMC, Ltd., which also owns Pacific Alliance Medical Center in Los Angeles’ Chinatown. The hospital agreed to pay $42 million in June to settle federal allegations of improper kickbacks to referring physicians.

The U.S. Justice Department said Pacific Alliance Medical Center agreed to the settlement to resolve a whistleblower lawsuit alleging that the hospital submitted false claims to Medi-Cal and Medicare. In a news release at the time, federal officials said the hospital and its owners did not admit liability in settling the case.

The hospital is closing later this month. Officials there attributed the closure to the fact that the lease on the property is ending and it wasn’t financially feasible to retrofit facilities to meet the state’s seismic requirements.

In a statement to Kaiser Health News, PAMC said “there is no connection between the closure of [the hospital] and any matters involving SynerMed. SynerMed is a wholly owned subsidiary that provides completely different services.”

This story was produced by Kaiser Health News, which publishes California Healthline, a service of the California Health Care Foundation.

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