Posted in Accountable Care, ACO, Affordable Care Act

POTUS: The De Facto Health Wonk-in-Chief of the US?

by Gregg A. Masters, MPH

United States Health Care Reform

 

Love him or hate him President Barack Obama continues to demonstrate depth, insight, tenacity and a firm grip on the state of the U.S. Healthcare ecosystem dysfunction (and remedies) well beyond his formal training as a Constitutional scholar. Now as arguably one of the most legislatively accomplished President’s in U.S. history, particularly in light of the catastrophic train wreck he inherited from his predecessor and fueled by the nonstop ‘hell no‘ chorus of his disingenuous (often health policy clueless) political opposition he weighs in to set the record straight and for legacy purposes.

On July 11, 2016, JAMA released ‘United States Health Care Reform: Progress to Date and Next Steps‘ a rather scholarly construed unbundling of the state of healthcare then and now (pre and post ACA implementation). As a rather complex piece of legislation with many moving parts, and staggered implementation timelines (some as a result of political accommodation, some merely in tune with operational and prevailing healthcare delivery and financing legacy inertia) he steps up and in classic barrister narrative fashion lays out his case, and simultaneously calls out the next steps to remedy the U.S. healthcare conundrum.

POTUS aka ‘Health Wonk-in-Chief‘ Barack Obama concludes:

Policy makers should build on progress made by the Affordable Care Act by continuing to implement the Health Insurance Marketplaces and delivery system reform, increasing federal financial assistance for Marketplace enrollees, introducing a public plan option in areas lacking individual market competition, and taking actions to reduce prescription drug costs. Although partisanship and special interest opposition remain, experience with the Affordable Care Act demonstrates that positive change is achievable on some of the nation’s most complex challenges.

I strongly encourage you to click on and read the entire piece. It is well worth your time and wholly consistent with the ‘accountable care’ narrative (the subject of this blog) driving Medicare ACOs, their commercial derivatives and large portions of the moving parts of the ACA including the entire spectrum of ‘value based’ healthcare initiatives.

For this piece, I want to focus on four areas of the ‘next steps‘ called out by POTUS, namely: the ‘Health Insurance Marketplaces’, associated ‘delivery system reform’, AND the introduction of ‘a public plan option in areas lacking individual market competition, and finally ‘taking actions to reduce prescription drug costs’.

Health insurance marketplaces

So much of the ACA oppositional cheerleading liked to stress the ‘buying across state lines‘, and ‘malpractice reform‘ as ‘freedom and choice‘ enabled solutions to the health insurance quagmire. Never mind the rampant marketing, churn, double digit premium increases, retrospective rescissions or opportunistic denial rates, coverage limits and lifetime caps so endemic in the space. Not to mention ‘mini-meds‘ or ‘junk insurance’ so prevalent in the market before some baseline notions of what constitutes ‘insurance‘ in the face of typical health, illness or accident challenges one may experience in life. Here again, coverage baselines and the need for consistency to shop, compare and ultimately purchase real health insurance seemed like too much regulatory over-reach in a market where choice absent basic ground rules somehow seemed like a more attractive solution – at least to the often clueless opposition. The entire over-reach narrative was wrapped up, sold and bought as a ‘Government controlled healthcare takeover‘ per the vacuous talking points proffered by ACA oppositional research.

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Yet, the value proposition of an ‘insurance market place‘ whether Federally run, ‘facilitated’ or state delegated exchange option makes total sense if a transparent consumer market is to emerge from the chaos that is principally the individual market (non employer sponsored health insurance), though the group, or self funded ASO market ain’t much to cheer about either. Yet such a model was/is a proven way (witness the explosive growth of private exchanges) to introduce orderly competition in an otherwise opaque industry.

If you’ve ever run a health plan, built a managed care organization or contracted for hospital, physician, ancillary and pharmaceutical services (I presided over several employer sponsored health plan initiatives, MSOs, PHOs and IPAs tackling both capitated and discounted fee for service plan launch and operational issues in for-profit, voluntary and academic health systems) you will know that prudent (empowered, informed, etc.) purchasing of health insurance options requires clear apples-to-apples covered services comparisons, exclusions and non-covered item disclosures coupled with understandable pricing transparency and the cost sharing burden associated with your election. Absent this comprehensive clarity, listing guidance and/or requirements that an exchange imposes to ‘qualify’ eligible participants as candidates to choose from is virtually impossible. Standing up the infrastructure (people,  process, culture, etc.) to enable informed choice requires such an exchange environment whether public, private or some combination thereof to transparently market their services to the consuming public.

Delivery system reform

This is clearly the ACA’s ‘achilles heel‘ as there ain’t much there, there other than aggregate ‘on the come‘ efforts to tip toe into the waters of ‘clinical integration‘, measured risk assumption and a range of payment reforms collectively recognizing fee-for-service (i.e., do more to earn more) medicine as a burning platform. The most tangible form of this commitment is represented by Secretary Burwell’s call to migrate increasing shares of Medicare beneficiaries (including me, as I turn 65 in August and have elected Kaiser Permanente Senior Plan in San Diego) into Medicare Advantage, ACOs and a broadly cast series of ‘value based‘ healthcare arrangements by certain dates.

Standing Up the ACOFor the most part, ACA focused on insurance market place reforms. While delivery system reform was principally invested in ‘nascent’ ACOs (which are mutating as we speak amidst some 5 and 1/2 years of operating experience under the Medicare Shared Savings Program (one I like to call ‘HMO-lite’ which incidentally and inevitably is morphing into its more traditional gatekeeper HMO predecessor vs. the retrospective attribution methodology that undermines successful ACO risk assumption performance).

Additional delivery system reform was to come from pilots, demonstrations and other ‘innovations’ the Center for Medicare and Medicaid Services (CMS) funded via the Center for Medicare and Medicaid Innovation (CMMI) – who’s budget the Republican controlled Congress is determined to cut.  Here, I might add at the ACO Summit circa 2012 one of the most seasoned and successful risk savvy players I had the opportunity to work for and with in Dallas, Texas Richard Merkin, MD, the founder and owner of Heritage Medical Systems and Heritage Provider Network described as the ‘hidden jewel’ in the ACA.

As much as we’ve progressed into ‘managed care‘ whether discounted, bundled, case rates, per diems or global or partial per member per month (PMPM) capitation or percent of premium the majority (estimated at 80-90%) of healthcare payments are still of the fee for services variety. Back in the 80s when American Medical International (AMI) retained me to develop and preside over their managed care strategy for the California Region’s 19 hospitals I elected ‘Director of Health System Development‘ vs. Regional Director of Managed Care as a title, since I saw the strategic imperative of building and operating a hospital system as a partnership with payors, health plans and employer groups, in order to create value. Since ‘payors’ (as a group) were our customers to grow market share we needed ‘dots on the map‘ to effectively service their employees, members or insureds. That vision and strategy collapsed before taking root since quarterly earnings per share incentives of the hospital CEOs precluded the longer term strategy of acquisitions and divestitures consistent with a dots on the map game-plan could take hold.

Today, many years later health systems are ‘getting [payor/provider partnership] religion’ at least rhetorically, yet the prevailing provider/payor mindset remains ‘your revenues are my expenses‘ – not much progress! So don’t hold your breath on material delivery system reform other than the equivalent of re-arranging furniture on the deck of the Titanic while the ship sinks. Mergers, acquisitions, the ‘death of independent‘ medicine and rise of mega institutionally led health systems more or less ‘clinically integrated‘ notwithstanding.

A public plan option in areas lacking individual market competition

While POTUS stresses the individual market as the target ‘book of business‘ most at risk and dysfunctional absent effective reform the need for a ‘public option‘ across the board (group, self funded/ASO, fully insured, etc) is rather compelling, in my view. The recent failures of the ACA enabled ‘CO-OPs‘ notwithstanding (i.e., startup insurance companies or health plans rarely if ever achieve profitability in such a short timeline given the threshold need for ‘the law of large numbers‘ for actuarial credibility and the inherent volatility of the underwriting profit/loss cycle) do nothing to undermine the argument and need for a public option writ large.

I’ll go one step further and say ultimately our worshipping of ‘pluralism‘ in healthcare delivery and finance will ultimately give way to a ‘Medicare E‘ version as in Medicare for everyone. If public/private partnerships and business models could successfully manage clinical risk and meet the health and healthcare needs of their constituents we would have solved the problem in the 80s and 90s. Who remembers the ‘Harry and Louise‘ narrative battles (‘if the Government choses, we lose‘) on the Clinton Health Security Act aka ‘HillaryCare‘? So perhaps we’ll get there once we exhaust every other option to avoid ‘single payor‘?

Actions to reduce prescription drug costs

This seems to me the segment the easiest to resolve. Here I’d empower Medicare to negotiate direct and on behalf of it’s entire pool of beneficiaries, rather than dilute the market power via a tapestry of variably (under) performing ‘PDPs’. The political compromise that birthed Medicare Part D (the Prescription Drug Plan) materially undermines the market power of the ‘law of large numbers’ to extract best price from vendors, suppliers or providers of services. This make NO sense, and we’re paying the price! Here, politicos assured Medicare could NOT intervene with such market clout instead they routed the business upside to a pool private participants.

Add to this macro market efficiency undermining the challenges of orphan or rare disease market segments and the egregious and unaccountable pricing practices most recently popularized by ‘bad boy’ Martin Shkreli of Turning Pharma and more recently Valeant‘s abusive pricing admissions.

Yes, specialty pharma is at risk and a major source of heartburn for AHIP and it’s employer allies, yet PHRMA has a point. The drug discovery and commercialization process/pathways to market are unpredictable and fraught will high failure rates. Coupled with the long development runways and high costs, but absent a ‘ceiling’ or ‘pricing accountability framework’ pharma’s management credo will remain ‘whatever the market can bear‘ strategy lest ProPublica‘s (et al) investigational journalism (see their guide to investigating non-profit health systems) marshals sufficient public attention and shame forces reconsideration or retraction of Pharma’s lazy over-reliance on raising ‘P’ (Price) vs. the more complex market challenge of driving ‘U’ (units via share gains) becomes their duty and ultimate measure and basis of ‘success’.

So thanks BO! Despite all odds, you (and Max Baucus et al) pulled it off. And yes, it’s only a beginning and there’s lots of work to do. In the words of then Acting CMS Administrator, Don Berwick, who was wrongly blocked (by you know who) for permanent appointment [I paraphrase below]:

This will require no less than an all hands of deck, full court press to make happen [i.e., the triple aim].

 

Posted in Accountable Care, Affordable Care Act, health reform

The 2016 Medicare Trustees Report: One year closer to IPAB cuts?

by Gregg A. Masters, MPH

From the relentless drone of ‘where are the jobs, Mr. President?’ to the misguided fear mongering of ‘death panels for Grandma’ administered by un-elected, faceless bureaucrats to the de facto death of American Democracy itself the attacks on the Affordable Care Act (ACA), flawed indeed as it is, is starting to log results, some of them are quite impressive as noted by a recent piece at Morning Consult titled: ‘Trustees: Medicare Savings Recommendations Forestalled’.

View more details on Brookings.edu
View more details on Brookings.edu

This morning Brookings in association with the American Enterprise Institute and the Schaeffer Initiative for Innovation in Health Policy at the University of Southern California hosted ‘The 2016 Medicare Trustees Report: One year closer to IPAB cuts?‘.

The event is summarized by its organizers as:

For most of the last five decades, the most-discussed finding by the Medicare trustees has been the insolvency date, when Medicare’s trust fund would no longer be able to pay all of the program’s costs. Last year’s report projected that the hospital insurance trust fund would be depleted by 2030 – just 14 years from now. The report also predicted a more immediate and controversial event: the Independent Payment Advisory Board (IPAB), famously nicknamed “death panels,” would be required to submit proposals to reduce Medicare spending in 2018, with the reductions taking place in 2019. Do we remain on this path to automatic Medicare cuts next year?

The American Enterprise Institute and the Schaeffer Initiative for Innovation in Health Policy, a collaboration between the USC Leonard D. Schaeffer Center for Health Policy & Economics and the Brookings Institution, hosted a discussion of the new 2016 trustees report on June 23. Medicare’s Chief Actuary Paul Spitalnic summarized the key findings followed by a panel of experts who discussed the potential consequences of the report for policy actions that might be taken to improve the program’s fiscal condition. You can join the conversation at #MedicareReport.

In the tsunami of misrepresentation and outright deception of the many moving parts of the ACA the ultimate barometer of success – at least from the health policy perspective – is the forecasted effect the law was to have on the U.S. Treasury, i.e., it will bankrupt the country and undermine the roots of our pluralistic healthcare ecosystem, replacing it with a ‘top down’ Government run Federal quagmire.

EDITOR’s NOTE: for the Acting CMS Administrator’s take on the Federally Faciliated and State Run ‘Marketplace’, check out Andy Slavitt’s recap via ‘Marketplace Year 3: Issuer Insights and Innovation (Part 3).

Well the ACA results are in and the truth be told, while not a sealed trend (there are both headwinds and macroeconomic wildcards in the mix), the data is ‘encouraging‘.

Enjoy the audio!

 

Posted in Accountable Care, ACO, Affordable Care Act

MACRA, MIPS and APMs: A Report from CAPG

by Gregg A. Masters, MPH

So everyone is talking about value based healthcare. No longer is ‘business as usual‘ even an option on the table as the volume driven FFS zeitgeist continues to lose supporters in health policy circles while a growing body of clinical initiatives from ACOs to a range of variably structured and differentially market positioned risk bearing organizations (RBOs) model the new paradigm.CAPG_Guide to APMs

For some this value based healthcare mantra is code-speak for the associated narrative if not mandate to reflect all payment or delivery system model entries that shift clinical risk to providers whether ‘institutional‘, i.e., hospitals and/or their parent health systems (including IDNs), or ‘professional‘, i.e., physician networks, enterprises, medical groups or their managing agents (MSOs). This pool of value based participants includes a range of ACOs whether participating in the Medicare (MSSP or other options) program or their commercial derivatives as negotiated by many of the national or regional health insurance companies; not to mention ‘OWAs’ (other weird arrangements) that arguably incorporate one or more strategies to play and thrive under a range of risk based incentives.

CAPG_Guide to APMs_matrix

Contributing clarity to an arguably non-homogeneous market including performance results to date via provider entity type use cases is CAPG (fka as the California Association of Physician Groups) who recently published ‘CAPG’s Guide to Alternative Payment Models: Case Studies of Risk-Based Coordinated Care‘. 

This is a timely and resource rich report sourced from an eclectic pool of risk savvy industry players (CAPG members) that CAPG Executives Don Crane, President and CEO, and Mara McDermott, Vice President of Federal Affairs, introduce as follows:

You’ll … learn where each model is successful and strong, and where each has room for improvement. Key areas where CAPG members are demonstrating success in APMs include:

• Improving the quality and efficiency of care for patients. These APMs align physician payment to the achievement of performance objectives.

• Encouraging team-based care and a commitment to primary care.

• Innovating to better meet the needs of patients, particularly those with chronic conditions.

In addition to the significant progress our members are making in improving patient care and innovation, several themes have emerged where there is room for improvement:

• Improving data sharing with payers to continue to drive care improvements.

• Engaging patients in new payment approaches, particularly in accountable care organizations (ACOs).

• Aligning quality measures across programs. This will play an important role in reducing the burden on physician practices and getting actionable information to consumers.
As physicians across the nation embark on this journey toward risk-bearing arrangements, we hope you find this paper a practical, helpful, and invaluable guide. 

 

Most of you will connect and more or less identify with the ‘it takes a village‘ [to raise a child] admonition popularized by the presumptive Democratic Nominee for President, Hillary Clinton. In the grand transformation of a change resistant and to a very large degree legacy inertia driven healthcare financing and delivery ecosystem, this village idea may just be a gross understatement. Rather, I think the then Acting Administrator of CMS Don Berwick got it right scaling the true nature of the challenge before healthcare leadership, which is to steward the market mandated transformation via an ‘all hands on deck, full court press‘ invitation to make this transformation even remotely possible. In other words, this will take much more than just a ‘village‘.

Major props to CAPG for an important body of work on this nascent and ‘learning as we go‘ industry.

 

Posted in Accountable Care, health reform, JP Morgan Healthcare Conference, Medicare

Must listen JP Morgan Healthcare Conference Webcasts: @MolinaHealth

by Gregg A. Masters, MPH

NOTE: This is the third in a series of ‘Must listen’ webcasts produced at JP Morgan’s 34th Annual Healthcare Conference. The first focused on telehealth sector market leader Teladoc, the second on Centene. For background and details on this august annual gathering, see ‘If It’s January, It’s JP Morgan Healthcare Conference. Remaining companies to detail as they represent important ‘bell weather’ insights relative to their respective sectors, include: Aetna, AthenaHealth, Genomic Health,Universal American, Tenet Health, as well as several from the ‘non-profit’ (tax exempt) sector including Baylor Scott and White

Molina Healthcare’s operations and strategy positioning insights are similar to Centene and in many ways constitute bell weather operators in the same space. Market and performance comparisons are material on a number of levels including the ‘urge to merge’ in the HMO or managed care space, and the implications such continuing consolidation holds for movement towards clinical and financial integration in the provider space. Additionally as many predict the future viability of the Medicare Trust Fund may rely largely on the efficacy of how Part C stakeholders articulate a sustainable vision of Medicare Advantage program to extend and enhance the life cycle of the Medicare program itself.

For direct link to the JP Morgan Healthcare Conference, click here. For the associated Molina Healthcare profile, click here, the deck here and webcast, here.

Meanwhile, below are some slides which outline the company’s performance and market sector overall:

JPM_MolinaHealthcareJPM_MolinaHealthcare_revenueJPM_MolinaHealthcare_membership

 

JPM_MolinaHealthcare_home_community
JPM_MolinaHealthcare_medicaid
JPM_MolinaHealthcare_medicaid_growth JPM_MolinaHealthcare_medicaid_spend

JPM_MolinaHealthcare_acquisition JPM_MolinaHealthcare_year_ahead

 

 

Posted in Accountable Care, ACO, Affordable Care Act

Must listen JP Morgan Healthcare Conference Webcasts: @Centene

by Gregg A. Masters, MPH

NOTE: This is second in a series of ‘Must listen’ webcasts produced at JP Morgan’s 34th Annual Healthcare Conference. The first focused on telehealth sector market leader Teladoc. For background and details on this august gathering, see ‘If It’s January, It’s JP Morgan Healthcare Conference. Remaining companies to detail as they represent important ‘bell weather’ insights relative to their respective sectors, include: Aetna, AthenaHealth, Centene, Genomic Health, Molina Health,Universal American, Tenet Health, as well as several from the ‘non-profit’ (tax exempt) sector including Baylor Scott and White

Centene’s operations and strategy positioning insights are material on a number of levels including the ‘urge to merge’ in the HMO or managed care space, and the implications such continuing consolidation holds for movement towards clinical and financial integration in the provider space. Additionally as many predict the future viability of the Medicare Trust Fund may rely largely on the efficacy of how Part C stakeholders articulate a sustainable vision of Medicare Advantage program to extend and enhance the life cycle of the Medicare program itself.

For direct link to the JP Morgan Healthcare Conference, click here. For the associated Centene profile, click here, the deck here and webcast, here.

For two related pieces on navigating the ‘white waters’ of the market’s transformation from volume-to-value as well as the recent ‘collateral damage’ (aka data breach) of healthIT as central spine enabling the transformation, check out ‘Centene–Health Net Entity Could Be Medicaid Leader and ‘Centene loses hard drives with health info on 950,000 beneficiaries, launches search‘, respectively.

Meanwhile, here are some slides which paint the picture both company and industry:

Centene overview

Centene growth 2015

Screen Shot 2016-01-27 at 11.41.27 AM

Screen Shot 2016-01-27 at 11.41.42 AM

Screen Shot 2016-01-27 at 11.41.57 AM

Centene

Centene specialty growth

Centene growth strategy

Centene market vy product

Centene pipeline

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Centene:

http://jpmorgan.metameetings.com/confbook/healthcare16/company.php?company=CENTENE+Corporation&p=19768&special_list_title=

http://marketrealist.com/2015/07/centene-health-net-entity-medicaid-leader/

Posted in Accountable Care, ACO, Affordable Care Act

The Droids You Are Looking For Are Not Here

by Gregg A. Masters, MPH

Beneath the ideological crossfire and mostly bluster of the ACA ‘repeal and replace crowd’, while the latest ‘new, new, thing‘ aka the defacto Rorschach upside of a litany of mostly vaporware or me too ‘meh‘ digital health apps, platforms or S-1 filings (see: ‘Disruptive Idiots from Silicon Valley‘) stumble into maturity amidst growing calls for validation and evidence of tangible ecosystem sustainability, a pulse of innovation can be found in some less ‘sexy’ sectors.

Some time ago physician innovation pioneer Richard Merkin, MD, the founder and principal visionary behind the Heritage Provider Network and all of its sequelae (Heritage Medical Systems, Heritage ACO, etc.), opined from the stage at the ACO Summit that perhaps the biggest contribution (gold) from the ACA was to be mined from the forward leaning work stimulated by the law’s enablement of the Centers for Medicare and Medicaid Innovation (CMMI) aka @CMSinnovates on twitter.

Richard Gilfillan MDThe indisputable driver of what was then invested in Richard Gillfilan, MD the first CMMI Director (now stewarding the transformation at Trinity Health System, @TrinityHealthMI), was the volume to value imperative.

Into this challenge was cast considerable public capital/incentive funds to model what that meant from a delivery system and financing re-engineering perspective. Perhaps fueling the discounting of CMMI’s early efforts was the poorly constructed ‘Pioneer ACO‘ program, ostensibly designed to attract a more risk savvy pool of players who could reasonably assume greater risk and therefore earn more meaningful bonuses for doing what they already know how to do principally via Medicare Advantage participation. This early cohort of 32 ‘Pioneers’ has dwindled recently to 19 with the recent defection of the trophy Darmouth-Hitchcock ACO, see:Dartmouth-Hitchcock exits Medicare’s Pioneer ACO program‘.

With that as backdrop, consider the following timely guide from the Cooperative of American Physicians titled ‘The Physician’s Guide To Value-Based Compensation‘. Consider this an essential ‘blocking and tackling’ primer of how to incentivize the granular behavior of those who write the ‘purchase orders’ for an essentially supply driven healthcare economy. As my colleague and surfing buddy John Mattison, MD (@JohneMattison), Assistant Medical Director, and CMIO Kaiser Permanente Southern California (@KPshare) often says: ‘we get what we incent’.

CAP_guide to value based comp

[Editor’s Note: and for those of you really interested in where the AMA stands on the bridging the volume-to-value divide, listen to: Health 2.0 Fall Conference 2015: An AMA Deep Dive on ‘The App Cure’].

Whether the ACA is repealed (highly doubtful) or materially modified (also not likely) its essence will not and cannot be ‘undone’ – the horse is out of the barn. Like it or not, the controlling DNA driving the many moving parts articulated in the ACA (and its state lab version ‘RomneyCare’) builds on decades of established health policy thinking on what works in the uniquely American public/private pluralistic partnership of healthcare financing and delivery.

Watch the ‘enablers’

Whether ACOs, fully integrated delivery systems (real IDNs – NOT their IDN lite versions), PCMHs, or one of a number of strains of risk bearing organizations (RBOs) from bundled pricing to full blown per member per month (PMPM) capitation, this is where the sustainable action can and will be found. This other stuff, plays well at CES and the many wannabe healthcare industry copy cat conferences playing an up the ante ‘cool factor’ card to an often ADD crowd, yet it’s tangible contribution to the triple aim or sustainable healthcare economy remains squarely ‘on the come.

 

 

Posted in Accountable Care, ACO, Affordable Care Act, health insurance reform

Health Insurance Industry Consolidation: Any ‘Qui Tam’ Exposure?

by Gregg A. Masters, MPH

If you’re a health policy junkie like me, then the best show in town (or anywhere for that matter) was in the Dirksen Senate Office Building in Washington, D.C., where HMO industry veteran and Chairman, President and CEO of Aetna Mark T. Bertolini and Anthem President and CEO Joseph R. Swedish among other industry stakeholders testified before the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights on health insurance industry consolidation, for video replay click here or watch below:senate hearing health insurance industry

As most of you reading this blog know, subject to the Department of Justice review Aetna will acquire Humana, and Anthem will acquire CIGNA. Thus, the submitted testimonies and ad hoc answers to sitting Senators on the Subcommittee were potentially a high stakes exchange.

Moreover, the hearing today was nothing short of a tutorial into the dynamics of the managed competition marketplace (both theory and practice since absent complete transparency assuming the salutary benefits of such competition may be more ‘wishful thinking‘ than reality as noted by Senator Blumenthal – CT, the home of the insurance industry) and whether this unique American strain of public/private collaboration can deliver on the oft repeated promises of such integration, i.e., that scale via consolidation drives operating efficiencies, improves quality and lowers costs to end users. We shall see…

As I heard the pitches from the various representatives assembled to offer perspective to the sitting Senators (see list here), I began to wonder if any of their testimony would be subject to the ‘false claims Act‘ if post consolidation the promised benefits do not accrue to the intended benefactors.

For those of you not familiar with the ‘False Claims Act‘ or otherwise known as Qui Tam filings, here a summary including its recent expanded scope via the Affordable Care Act:

The False Claims Act, expanded by the Fraud Enforcement and Recovery Act of 2009, P.L. 111-21 (S. 386), 123 Stat. 1617 (2009), now proscribes: (1) presenting a false claim; (2) making or using a false record or statement material to a false claim; (3) possessing property or money of the U.S. and delivering less than all of it; (4) delivering a certified receipt with intent to defraud the U.S.; (5) buying public property from a federal officer or employee, who may not lawfully sell it; (6) using a false record or statement material to an obligation to pay or transmit money or property to the U.S., or concealing or improperly avoiding or decreasing an obligation to pay or transmit money or property to the U.S.; (7) conspiring to commit any such offense. Additional liability may also flow from any retaliatory action taken against whistleblowers under the False Claims Act. Offenders may be sued for triple damages, costs, expenses, and attorneys fees in a civil action brought either by the United States or by a relator (whistleblower or other private party) in the name of the United States.
If the government initiates the suit, others may not join. If the government has not brought suit, a relator may do so, but must give the government notice and afford it 60 days to decide whether to take over the litigation. If the government declines to intervene, a prevailing relator’s share of any recovery is capped at 30%; if the government intervenes, the caps are lower and depend upon the circumstances. Relators in patent and Indian protection qui tam cases are entitled to half of the recovery.

Not sure if qui tam consideration can or even remotely applies to the upside representations proffered in favor of the acquisitions, since as noted by one or more witnesses today much of the empirical (public) record is incomplete and inconsistent with respect to supporting or discounting the arguments that will or have been made to DOJ as they conduct their anti-trust investigation into the proposed acquisitions or mergers.

[Editor’s Note: Two examples of previous health insurance industry consolidations were noted, including Aetna’s 1999 acquisition of PruCare, and United Health Group’s acquisition of Sierra Health Services. I will post the submitted witness testimony once it becomes available online, including any current discussion ‘tea leaves’ of what and where the DOJ investigation may be headed in both transactions. If you have anything, please feel free to add in comments section.]

This Subcommittee hearing is rich with both fundamentals and nuance considerations of the Affordable Care Act and whether it’s many moving parts can indeed align to meet the legislative intent of its authors.

Stay tuned!