Hawaii health insurers back state bill attacking patient rights

Share |

There is a war going on against Hawaii's middle class, and between what appears to be a virtual media black-out on the subject and a public misinformation campaign, nobody seems to know a thing about it.

At least half a million people in Hawaii who have health insurance are going to lose the right to an effective external appeal of decisions made by their health insurance providers if Hawaii Senate Bill 1274 passes. Health insurance carriers have already admitted publicly to drafting companion legislation, and are increasingly open in their support of 1274.

SB 1274 will repeal HRS 432E-6, which created a state external review process that could intervene when a health insurance company denied medically necessary treatment or medication. The state law creates a local hearing process where both sides can present expert testimony, and decisions are issued by a panel rather than a lone individual.

According to Rafael del Castillo, a Honolulu attorney who specializes in representing clients appealing insurance company decisions under HRS 432E-6, the insurance companies have lost or given up in about eighty percent of these cases.

That means that in eighty percent of the cases, the insurance company denial had nothing to do with medical necessity, just saving the company money.

The Affordable Care Act may have also extended the coverage of HRS 432E-6 to most families with employer-paid health insurance. Del Castillo is seeking confirmation from the Department of Labor.

If Hawaii Senate Bill 1274 passes in any shape or form, the middle class is also going to lose any external review rights they just gained last fall.

SB 1274 came to life very unexpectedly in January, seeming to originate out of the office of the state's newly elected Democratic governor Neil Abercrombie. People were stunned since Abercrombie was assumed to be a pro-consumer rights politician.

At first it had a silent companion bill, S.B. 658, making patients responsible for insurance company legal fees if the patient lost the appeal. Attorneys for Wellcare, a for-profit HMO that makes about $600 million a year from its contract with Hawaii, admitted at a Senate hearing to having drafted the bill. S.B. 658 has been tabled indefinitely ever since.

The latest development is a clause that has been added to S.B. 1274 making it retroactive to January 1. All cases currently in the external review process would be dismissed, which could save the insurance companies as much as $500,000 in legal fees. According to del Castillo, the big winner in the bill going retroactive is UnitedHealth Group, operating in Hawaii as Evercare.

Every health insurance carrier operating in Hawaii is going to benefit if S.B. 1274 is signed: HMSA, Kaiser, HMAA, UHA, Aloha Care, Evercare (UnitedHealth) and Ohana (Wellcare) all benefit from repealing the law that gives their policyholders an effective way to challenge denials of treatment. That gives the insurance carriers free rein in making medical decisions based on operating profit rather than the policyholder's medical needs.

The mis-information campaign is claiming HRS 432E-6 violates new federal regulations and so MUST be repealed. Del Castillo has been working with federal authorities since January on how the existing law can meet new federal regulations with nothing more than a few tweeks, rather than a sledgehammer. According to del Castillo, Hawaii's health insurers continue to push hard to get 1274 passed and are refusing to accept any compromise that preserves the consumer protections we now have. Del Castillo has even received a letter threatening to sue him on behalf of unnamed insurers if he continues providing lawmakers with information about past external review cases consumers have won.

The media blackout on this (with the notable exception of HPR) is fascinating. It is easy for them to dismiss del Castillo's information campaign on 1274 on the basis he is the one to benefit if the current law stays in place. After all, he's the only local lawyer who is willing to represent health care consumers in this external review process. Since del Castillo finances these cases himself until the decision awards him costs, the retroactivity singles him and his clients out for special financial punishment.

Del Castillo says an editor told him years ago that one of the state's big insurance companies had threatened to pull advertising if his cases against them got any media coverage. It is obviously impossible to prove, but it is interesting that all of his advocacy work on behalf of patient rights is ignored, and even when he came in second in last year's Democratic primary race for Congress, never received a word of coverage in any of the major newspapers, TV or radio outlets.

A political candidate who gets 22,000 votes and is completely ignored by all the media is practically a story by itself.

Once upon a time, long ago, Hawaii was known as "the Health State". We had a state law that established a health patient's bill of rights, all the kids had insurance, and employers were required to provide health coverage. For a very short time, even President Obama was linked to his origins from "the Health State."

But about the time Obama came into office, Hawaii's Republican governor turned over seventy percent of the state Medicaid budget to two for-profit insurance carriers, the death rate among the elderly and people with disabilities increased, children had already lost their health coverage, and so the Health State was rather abruptly dismantled.

We can't let the Abercrombie Administration and this Legislature take away our right to an independent review panel when our health insurance company denies us medically necessary coverage. We can’t let lawmakers retroactively repeal rights people relied upon in incurring substantial costs and in seeking denied medical care. It doesn't matter if the company name on your insurance card is HMSA, HMAA, UHC , Kaiser, Aloha Care, Evercare or Ohana, you lose your health patient rights if SB 1274 gets passed.

We all lose.

A mom's letter opposing Hawaii Senate Bill 1274

Share |

A Hawaii mother has written the following letter, and sent it to Governor Abercrombie and Hawaii state legislators, regarding SB 1274.

My family and I are strongly opposed to Senate Bill 1274, which will unjustifiably and irreversibly damage health care consumer protection in Hawaii. Our external review law, H.R.S. § 432E-6, has served health care consumers well for over a decade. It gives health care consumers a more level playing field against powerful insurance companies. Consumers have access to experienced advocates to assist them with preparing and presenting their cases in a manner consistent with Hawaii’s medical necessity law. Decisions are made by a local expert panel, and consumers are able to present expert testimony and other evidence in a fair, but efficient, hearing process.

If this law passes, it will have a profound impact on my entire family. In addition to endangering my daughter, it could cost my family tens of thousands in unrecoverable attorney fees. When we exercised our right to appeal with the IC, we were not informed that the law could change in the process of appeals and that we could lose all of our rights retroactively. Basically the entire playing field changed with no warning. We--our daughter included--are being stripped of our current rights--this from insurance division and a Legislature that is supposed to be responsible for overseeing the safety of the Hawaii citizens they are sworn to protect. Furthermore, it appears that the retroactive application of the law, which was added by the Senate Committee on Ways and Means, punishes struggling families and benefits one, and only one, entity – rich and powerful UnitedHealthcare Insurance Company, known as “Evercare,” which would otherwise be required to pay those costs and expenses.

Please allow me to explain. We have a four-year old daughter who has a life-threatening seizure disorder known as Lennox Gastaut Syndrome. There are some days that she had had over 1,000 seizures per day. Despite these inhuman challenges, she struggles with all her might every day to learn to walk on her own and to communicate, and she is unfailingly appreciative of the help she receives. Our daughter has numerous physicians that provided her health care plan with prescriptions and letters of explanations for why she needs 24/7 skilled nursing care. It was reviewed by a physician on the health plans staff and denied. The part of this that is so concerning is the health care plans physician that provided the denial is not even a neurologist; nor has never seen our daughter as a patient; nor is this physician familiar with her care plan.

The health plans told us that, if our daughter needed 24/7 care, then the most “cost effective” place for her would be placement in an institutional setting. We feel strongly that such a move would be the most inhumane choice for
a four-year old child; it would amount to banning her to an institution away from her family forever, and depriving her once and for all of the hope of a meaningful and fulfilling life. We worry that such a move would send a horrible message to her brother—a message that family does not matter and that children can be thrown out like used Dixie cups.


Does institutionalizing a little girl who tries so hard to get better sound like something that constituents would support? The impossible part about this scenario is there is no facility in Hawaii to accomplish this “institutionalization.” Where did they want to send my medically fragile daughter? Were they thinking about taking our daughter from us and placing her on another island or, worse yet, sending her to another state? By doing this, they are putting Hannah in jail. If my daughter is placed in an institution, she won’t have her family or her right to a Free Appropriate Public Education. They will put her in a crib bed that is caged and not allow her to live her life. In essence, they would be putting her in a jail because of her disabilities. We treat our criminals better. What crime has my four year-old child committed that she deserves this fate?

I invite you to visit my child. While she has severe disabilities, she is a lovely and loving child. She works hard every day to master new skills. She is learning against great odds, and her quality of life is very high. So is the joy that she gives to us, her caretakers, and our friends.


We exercised our right to appeal what we think is a medically and morally bad decision, and so far, our daughter has the care she needs to remain with her family, school, and community. If you allow Senate Bill 1274 to take effect, it will be devastating to Hawaii families with disabled persons. I am begging you, please, don’t take away the only rights we have to help our disabled children and community. I ask you to look into your hearts—not just at budgets-- for the implications of these proposed bills. Please take the wise and humane course of action.


Very truly yours,
S.M.
Kilauea, HI 96754

Privatizing Medicaid and Medicare is an attack on the middle class

Share |

There seems to be a general assumption that when people talk about cuts to Medicaid and Medicare, it has to do with poor people. In fact, the cuts affect middle class working families the hardest, by targeting anyone who isn't rich enough to pay for keeping a medically needy child or grandparent at home and out of an institution.

It is normal for about two-thirds of every state's Medicaid budget to go, not for people who qualify from poverty or unemployment, but to the medical care of children and adults with disabilities, whether from birth, accident, age or illness. These are middle class American families who make too much money to qualify for Medicaid; they are trying to care at home for a child, a grandmother, a sibling who qualifies for Medicaid on the basis of disability through what are called "waiver programs" (because family income/assets are "waived" in calculating eligibility).

That sixty-six to seventy percent of every state's Medicaid budget is what is up for grabs when companies like Wellcare gloat in their year-end reports that forty states are considering turning their ABD (aged, blind and disabled) population over to private contractors.

In Florida, for instance, the ABD population could be expected to account for somewhere between $12 and $14 billion, considering the $20 billion annual budget. Private contracts for ABD services were handed out to companies like Amerigroup last year. The newly elected governor of Florida, who vowed after the election to parcel out the state's entire Medicaid population to private contractors, recently announced he was filling a $174 million budget deficit by decreasing the rates paid to caregivers by 15%. Lowering reimbursement rates helps insurance companies decrease their Medical Loss Ratio thereby increasing profits. The family can either take another job to try to supplement the medical services lost, or put their family member in a hospital or institution. Again, it's the insurance company holding the state Medicaid contract for the ABD population and/or long term care who makes out.

Meanwhile Florida's state legislature is trying to rewrite Medicaid. One proposal would change the name of the Medically Needy program to the Medicaid Nonpoverty Medical Subsidy, while eliminating coverage of hospitals and medications.

What are adults with catastrophic illnesses supposed to do without medications?

Splitting up state Medicaid populations into "risk-based health maintenance organizations" will affect people who qualify because of poverty or unemployment, yes. But with two-thirds of any state's budget spent on the much smaller aged, blind and disabled population, the biggest impact is where the companies get the biggest bang for the buck saved. Capitation contracts are hard to come by, but I published Hawaii's a long time ago, verifying that individual budgets can go as high as $29,000 a month. This is not money spent on somebody because they are poor, it is money allocated to the home nursing care for someone who is so disabled they cannot live on their own.

Wasting up to twenty percent of our federal and state budgets for Medicaid and Medicare on CEO salaries and corporate profits is hurting millions of average middle class Americans whose only fault is wanting to keep their families, including their most vulnerable members, together.

Please visit this petition to put a stop to Wall Street's pillaging of Medicaid and Medicare. Every signature sends an email to Deputy Attorney General for Civil Rights Thomas Perez, Secretary Duncan of Education and Secretary Sebelius of DHHS to stop this attack on our civil and patient rights.

SB 1274 still alive, will be retroactive to January 1

Share |

The following announcement was distributed by Rafael Del Castillo:

It is time you understood something about S.B. 1274 as it goes into conference, and why it should be KILLED. It is a cruel trick on the poor and vulnerable and it is time we expressed our outrage about that.

Not only does S.B. 1274 EXCLUDE MEDICAID MEMBERS from the external review entirely, but our Senate Committee Ways and Means made the bill RETROACTIVE TO THE BEGINNING OF 2011. (only Sen. Slom voted “No”)

That means that the TWELVE cases (11 against Evercare) that are presently on file with the Insurance Division, and the EIGHT cases in internal appeals ARE DEAD THE DAY GOVERNOR ABERCROMBIE SIGNS THE BILL.

It means that pending motions on which consumers are entitled to over $40,000 in fees and costs incurred ARE ALSO DEAD.

That means OVER $60,000 people have invested in appeals IS LOST, GONE, IF GOV. ABERCROMBIE SIGNS IT THANKS TO THE SENATE COMMITTEE ON WAYS AND MEANS’ HANDOUT TO HEALTH PLANS. WAY MEAN!

THE PEOPLE WHO HAVE APPEALS WILL NOT ONLY LOSE THEIR RIGHT TO CONTINUE THEIR APPEALS, WHICH WERE FILED UNDER THE LAW GOVERNING THEM, BUT THEY WILL NEVER RECOVER THOSE COSTS FROM THE HEALTH PLANS EVEN THOUGH THE LAW AT THE TIME THEY WERE INCURRED INDEMNIFIED THEM FOR ENFORCING THE LAW.

HOW IS THAT FOR EQUITY? HOW IS THAT FOR CONSUMER PROTECTION?

TO THOSE OF YOU WHO HAVE CASES PRESENTLY PENDING, I APOLOGIZE. I AM DOING EVERYTHING I CAN TO PROTECT YOUR RIGHTS BUT I NEED ALL THE HELP I CAN GET. YOU WILL LOSE YOUR CASES AND YOUR COSTS UNLESS YOU AND I CAN GET A LARGE NUMBER OF PEOPLE FIRED UP.

SO ARE YOU GOING TO LET YOUR LEGISLATURE AND THE NEW ADMINISTRATION YOU SENT TO WASHINGTON PLACE RUN OVER THE MOST VULNERABLE IN HAWAII FOR THE BENEFIT OF HEALTH PLANS? Or are you going to let them know you are outraged?

Now that things are getting down to hand-to-hand, HOW ABOUT A FEW LETTERS TO THE EDITOR?
HOW ABOUT A FEW PHONE CALLS TO LEGISLATORS AND THE GOVERNOR?

To get your message to the Governor, you can call Mike Ng, Governor’s Policy Analyst, at 808-586-0295 or email him at Michael.Ng.@hawaii.gov

HOW ABOUT ASKING YOUR FRIENDS AND NEIGHBORS TO DO THE SAME?

I also apologize for all of the red ink (capital letters), but red ink is what this is about. The Administration’s original bill ignored the issue of pending cases, so our SENATE Committee on Ways and Means helpfully added language the HEALTH INSURANCE PLANS lobbied for. Let them know how you feel about that.

It is time they explained to you why they voted to retroactively deprive people of rights and property.
(I am giving you email addresses, but keep in mind that emails get ignored. Calls cannot be ignored so easily. Neither can faxes.)

COMMITTEE ON WAYS AND MEANS

David Y. Ige
Phone 808-586-6230 Fax 808-586-6231
E-Mail: sendige@Capitol.hawaii.gov

Michelle Kidani
Phone 808-586-7100 Fax 808-586-7109
E-Mail: senkidani@capitol.hawaii.gov

Suzanne Chun Oakland
Phone 808-586-6130 Fax 808-586-6131
E-Mail: senchunoakland@Capitol.hawaii.gov

Donovan M. Dela Cruz
Phone 808-586-6090 Fax 808-586-6091
E-Mail: sendelacruz@capitol.hawaii.gov

J. Kalani English
Phone 808-587-7225 Fax 808-587-7230
E-Mail: senenglish@Capitol.hawaii.gov

Will Espero
Phone 808-586-6360 Fax 808-586-6361
E-Mail: senespero@Capitol.hawaii.gov

Carol Fukunaga
Phone 808-586-6890 Fax 808-586-6899
E-Mail: senfukunaga@Capitol.hawaii.gov

Gilbert Kahele
Phone 808-586-6760 Fax 808-586-6689
E-Mail: senkahele@capitol.hawaii.gov

Donna Mercado Kim
Phone 808-587-7200 Fax 808-587-7205
E-Mail: senkim@Capitol.hawaii.gov

Ronald D. Kouchi
Phone 808-586-6030 Fax 808-586-6031
E-Mail: senkouchi@Capitol.hawaii.gov

Pohai Ryan
Phone 808-587-8388 Fax 808-587-7240
E-Mail: senryan@capitol.hawaii.gov

Jill N. Tokuda
Phone 808-587-7215 Fax 808-587-7220
E-Mail: sentokuda@Capitol.hawaii.gov

Glenn Wakai
Phone 808-586-8585 Fax 808-586-8588
E-Mail: senwakai@capitol.hawaii.gov

The sole person you can send thank you’s for protecting your rights is Senator Slom, who voted “NO”
Sam Slom
Phone 808-586-8420 Fax 808-586-8426
E-Mail: senslom@Capitol.hawaii.gov

Rep. Ryan Yamane, House Health Chair, and Sen. Josh Green, Senate Health Chair, are expected to be the subject matter experts on the conference committee.

Let them hear how you feel about depriving people of health care and property RETROACTIVELY.

Sen. Green
Phone 808-586-9385 Fax 808-586-9391
E-Mail: sengreen@capitol.hawaii.gov

Rep. Yamane
Phone 808-586-6150 Fax 808-586-6151
E-Mail: repyamane@Capitol.hawaii.gov

Imua! Pass it on!
Rafael del Castillo

Death by Medicaid: the Republican dream of unbridled profit-taking at work in Florida and Hawaii

Share |

It's all about the privatization of Medicaid and Medicare. Along with CHIP, together they churned more than $887 billion in state and federal funds directly into the American economy in 2009, and private insurance companies saw a gold mine waiting to be exploited.

In 2010, just nine private health insurers reported getting their hands on more than $111 billion of it, up 35% over 2009. The companies have put together a self-serving body of research demonstrating how converting state Medicaid enrollees into privatized Medicaid contract policyholders saves the state money while proving better service. All of these plans are managed care.

The state and the insurer agree on a table of "risk" values and apply it to each policyholder. That amount, which can vary between $200 and $29,000 a month (based on individual medical needs), is called the capitation payment. Every Medicaid policyholder has an personal, individual budget that the contractor is paid monthly by the state, using a combination of local and federal funds.

How much of the capitation payment is spent on actual medical costs is called the Medical Loss Ratio (or Health Benefits Ratio). Private insurance companies make their money by not spending the money that they are paid in premiums.

If you are paying your private health insurer $250 a month for your coverage, you likely are not keeping track of how much of it is spent. If you suddenly develop a serious or life-threatening condition, you know the insurer will keep paying the costs (at least up to a point) regardless of how much it exceeds your $250 per month payment. The company is taking all the $250 per month payments from tens of millions of members, and there is always plenty left over to take care of higher needs here or there.

The perspective should be a little different, however, when the insurance company is being paid $29,000 a month to keep a medically fragile child at home with their family, anywhere from two-thirds to three-quarters of which are federal dollars.

Even if there were stringent regulations in place (which there are not) as to how much of these federal and state funds have to be spent on actual medical costs, it would make no difference. An FBI sting operation against health insurer Wellcare "videotaped a meeting of top executives in January 2007. Florida Medicaid officials had demanded an accounting of WellCare's behavioral health spending, and the company knew it was only about half of what the state believed. The solution: simply double every charge." The former Wellcare employee who wore video cameras and microphones to work every day estimated that the fraud against Florida Medicaid ranged in the $400 to $600 million range.

What somehow remained unmentioned was the fact that this type of Medicaid fraud, which Hellein's tapes show is openly shared between companies such as Wellcare, Amerigroup and UnitedHealth Group, is ongoing. Fines and Deferred Prosecution Agreements do not really seem to put a dent into it, in fact. Wellcare was paid $890 million by Florida for the same Medicaid contracts in 2010, and got a 2.5% to 3% rate increase in September. They claimed to spend 87% of that on actual medical costs, but Hellein's audiovisual evidence makes it clear these figures easily have little relation to reality.

Besides, they made around $600 million from their Hawaii contract, before getting a raise last summer. The Hawaii contract does not stipulate any minimum Medical Loss Ratio. The individual policyholders are all elderly, blind and/or disabled adults and children, so are not likely to be keeping track.

Hawaii, in fact, is an excellent example of how Republicans envision Medicaid functioning. Hawaii created two Medicaid populations: a small one of about 40,000 "aged, blind and disabled" adults and children who had special medical needs; and a bigger one for the other 267,000 people signed up for regular Medicaid. The small one gets more than seventy percent of the state's total $1.7 billion annual Medicaid budget, which is divided between two contract holders: UnitedHealth Group and Wellcare.

Former Republican Hawaii Governor Linda Lingle was responsible for moving the state's "aged, blind and disabled" population overnight from a fee-for-service system to a privatized managed care plan operated by two out-of-state for-profit corporations. Sworn testimony was videotaped last year stating this group had experienced a 36% increase in deaths within the first year after UnitedHealth and Wellcare took over.

While Wellcare's SEC filings bemoan the company's high Medical Loss Ratio, UnitedHealth celebrated its lowest rate in five years in the fourth quarter of 2010. Company wide, they got it down below 80%.

Apply that to their 2010 Medicaid premium earnings from Hawaii, also about $600,000,000, and it means $120,000,000 in operating profit was generated for the company. Wellcare would have cleared at least another $75,000,000, and there is no good reason to assume their MLR here would be as low as it is on contracts like Florida's where it has been stipulated.

For Wall Street, this was very good news. For the forty thousand or so elderly and children, as well as adults with disabilities, it was very bad news. Their service budgets were cut by that amount. Life-saving medications they had been taking for years were suddenly denied. Home nursing services were abruptly slashed.

To look at this another way, the State of Hawaii could hand over those two Medicaid contracts to local, non-profit corporations, keep services at the current level, and cut out the middleman profit of about $195 million a year. Sure, a portion would have to be paid out to hire back 200 - 300 state workers who have lost their jobs directly or indirectly from the privatization, but that would be funds going right back into the state economy.

But even with a new Democratic Governor, Hawaii's privatized Medicaid system for the "aged, blind and disabled" population is remaining privatized. UnitedHealth and Wellcare both have numerable complaints pending against them with federal regulators, and as recently as yesterday continue brazenly to violate federal regulations. The state is looking to save $100 million from Medicaid over the next two years. Why isn't even our Democratic governor trying to cut big business profiteering out of Medicaid?

In part, that seems to be because the national winds supporting Medicaid's privatization are so subtle.

Florida's new Republican Governor was the CEO of a healthcare corporation found guilty of the biggest Medicare fraud in US history. He is a strong believer in the privatization of Medicaid. In February, Governor Rick Scott announced a plan "to transfer Florida's Medicaid recipients into privately run managed-care programs. Doing so would save the state nearly $4 billion over the next two years, he says."

As of June 2009, almost a million Floridians already received their Medicaid from "privately run managed-care programs." These programs had earned the state a reputation as the "Medicaid fraud capital of the world", and FierceHealthIT said last summer that "Medicare and Medicaid fraud might as well be the state sport of Florida." In July the Florida Attorney General's office announced it had received permission to mine Medicaid claims to find fraud. Two months ago, Florida's Medicaid and Public Assistance Fraud Strike Force "estimated Medicaid fraud costs taxpayers more than $2 billion a year. That's about 10 percent of the $20 billion Medicaid budget, which happens to be the fastest growing segment of Florida's $70 billion budget."

If Florida has a $20 billion annual Medicaid budget, and two-thirds of it goes to help children, the elderly and people with disabilities (which is an approximate national average), and 56% of the Medicaid population is enrolled in privatized managed care run by for-profit corporations, and they are averaging an 85% Medical Loss Ratio, then somewhere around $1.1 billion is being skimmed off the top of the contracts as operating profit.

Governor Scott now says the state Disability Division is $174 million in the hole, and he's making it back by cutting home services to the state's disability population. Individuals are expected to see cuts ranging between fifteen percent and forty percent.

Profits to the big providers are not being touched, because that is not the "free enterprise" way. As Florida's recently elected Republican Congressman Allen West said, free enterprise is the solution to healthcare reform and what he calls "the bureaucratic nanny state."

Apparently taking money that is given away by the bureaucratic nanny state is OK, as long as it is not spent.

Please sign our petition to stop handing federal and state Medicaid dollars over to companies who won't spend it.