Politicians, economists and journalists debate the reasons for, and the impact of, proposed sale of Humana to Aetna

By Al Cross
Kentucky Health News

The purchase of Louisville-based Humana Inc. by fellow health-insurance giant Aetna Inc. for $37 billion still needs approval from federal anti-trust officials, partly because of the possibility that the merger will reduce competition and increase premiums.

Some other public officials, the elected kind, wasted no time weighing in on the sale. And, since it deals with health insurance, it may come as no surprise that their statements followed partisan lines, reflecting their views of the Patient Protection and Affordable Care Act.

Wall Street Journal graphic

Even before the deal was announced, Senate Majority Leader Mitch McConnell, R-Ky., said Thursday, "You’ve seen the rumors about Humana being gobbled up by someone who’s even bigger. This kind of government takeover of the private health-insurance market – think of it this way: what Obamacare has basically done is taken the private health insurance market and turned it almost into a regulated utility."

In a press release Friday, McConnell said, "This morning’s announcement, as I predicted during the debate five years ago, is the inevitable result of Obamacare’s push toward consolidation as doctors, hospitals, and insurers merge in response to an ever-growing government."

U.S. Rep. John Yarmuth, D-Louisville, said consolidation in the health-care industry has been going on for decades, "and it is appropriate for the Department of Justice to scrutinize the pending merger to ensure it does not reduce competition, and therefore, consumers' options."

Louisville Mayor Greg Fischer, a Democrat who ran in the primary for McConnell's seat in 2008, said he was "a little surprised by the political nature" of the senator's statement. Fischer and Democratic Gov. Steve Beshear were generally upbeat about the merger. "I am cautiously optimistic that this merger will be a net positive for Louisville and the commonwealth," Beshear said.

Humana has 12,500 employees and 1,500 contractors in the Louisville area. Fischer said, "I think it's very fair to speculate that it will lead to more jobs," and Bruce Broussard, president and CEO of Humana, said, "I think Louisville will be a net beneficiary as a result of this transaction."

However, University of Louisville finance professor David Dubofsky "said it may not turn out so well for the Louisville and Humana employees after all," The Courier-Journal reports, quoting him: "When two companies in the same industry merge, and the acquirer is paying a premium, you have to generate cost savings," partly by reducing employment among workers with similar jobs.

There is a connection between the merger of health-care providers, such as the creation of Kentucky One Health by several hospital groups, and the merger of insurance companies. "Many experts have said that the provider consolidation can drive higher rates—and that more-powerful insurers might have a better chance of countering them and striking pacts for new forms of payment that incentivize efficiency," Anna Wilde Matthews and Christopher Weaver write for The Wall Street Journal.

But they also note, "Research suggests that having fewer insurers leads to higher premiums, said Leemore S. Dafny, a former Federal Trade Commission official who is a professor at Northwestern University’s Kellogg School of Management.

Aetna with Humana would dominate the Medicare Advantage market in some states, with 90 percent of it in Kansas, notes Drew Altman, president of the Kaiser Family Foundation. "Of course, regulators could insist that companies take steps to maintain more competitive markets."

The Journal reports that it analyzed a Medicare database and found, "An Aetna-Humana tie-up would increase by about 180 the number of U.S. counties where at least 75 percent of customers for Medicare Advantage plans are in the hands of a single insurer." Most of those counties are in the South and Midwest. Using another federal database, it found that "In eight states, an Aetna-Humana merger would remove a competitor from the exchanges where individuals can buy coverage under the Affordable Care Act."

The prospect that jobs might be lost in Louisville doesn't mean that the ACA has put financial pressure on Aetna or Humana, Dan Diamond writes for Forbes magazine: "There’s limited evidence that the biggest players are struggling. While the ACA capped insurers’ ability to take profits, industry analysts have been fairly bullish on the sector. . . . And as I wrote earlier this week, the ACA appears to have only helped major insurers, by driving millions of new customers into the market. Aetna and Humana have seen their stock valuations triple in the past five years, since the ACA was signed into law, and the other three major insurers also have seen huge gains."

Diamond also isn't buying the argument, advanced by Aetna officials, that the combined company will be more efficient than the separate ones. "Aetna and Humana already are giant, scaled entities," he notes. "And economists aren’t buying the claim that insurer consolidation will lead to lower costs." As Judy Woodruff noted on "PBS Newshour" Friday, the deal would give the combined company more leverage to negotiate payments to health-care providers.

Health insurers' shares of total Medicare Advantage business
(Kaiser Family Foundation chart)

Diamond says the best case for Aetna's purchase is that it gets the company deeply into the Medicare Advantage business, without having to expend "a great deal of work and time," as Michael Bernstein, a partner at Baird Capital partner who focuses on health care, told Bloomberg News last month. Aetna has only 7 percent of that business, Humana 19 percent -- and about 65 percent of its revenues came from Medicare Advantage plans in 2014, Altman notes. The combined company is expected to get 56 percent of its revenue from government programs.

Diamond says economists see one more possible reason for the merger: "Amid health care’s merger mania, insurers are feeling psychological pressure to make deals of their own." And that does take us back to Obamacare. But the impact on Kentucky has yet to be seen, and so do the reasons.

Ky.'s pro-Obamacare policies led to more enrollment and support for it, but many poor are still uninsured and under-informed

Update: This story was updated to reflect the study's results for those who said they were hurt  by and not directly impacted by the ACA. 

State policy appears to have a major impact on poor people's thinking about the Patient Protection and Affordable Care Act, as well as how they describe their experience with it, according to a Harvard University study published in the journal Health Affairs.

The study surveyed nearly 3,000 low-income residents in three Southern states that had varying approaches to the ACA and its implementation: "Kentucky, which expanded Medicaid, created a successful state marketplace, and supported outreach efforts; Arkansas, which enacted the private option and a federal-state partnership marketplace, but with legislative limitations on outreach; and Texas, which did not expand Medicaid and passed restrictions on navigators" who help people with the federal and state marketplaces.

The survey found that Kentucky, which has enrolled more than 500,000 people in Medicaid and another 109,000 in private health plans through the Kynect health-insurance exchange, had the highest success in application rates, successful enrollments and positive experiences with the ACA, followed by Arkansas and then Texas.

"This corresponds to the general pattern of state-level engagement and support for the ACA coverage expansions in these three states," the researchers write.

The study also found that limited awareness and poor information continue to be two of the greatest barriers to the ACA. Even in Kentucky, where awareness was the highest, only half of the poor people surveyed said they had heard "some" or "a lot" about the ACA's coverage options. About 10 percent of Kentuckians remain without health insurance.

Another barrier to applying for coverage was the perception that it would cost too much, but for those with incomes below 138 percent of poverty in states that have expanded Medicaid, coverage is available without having to pay a premium.

"This adds to previous evidence that information gaps about the law remain a major challenge, particularly among low-income populations who likely have the most to gain from the coverage expansions," the researchers write.

The study also found that application assistance from navigators and others was the strongest predictor of enrollment, increasing enrollment to 93.1 percent from 84.9 percent. Application assistance was most common in Kentucky (46.2 percent) and least common in Texas (31.9 percent). Navigators help consumers choose health-insurance plans to meet their needs and assist them with the application process.

Kentucky reported an overall better application experience than the other two states in the study, and had a significantly higher enrollment rate (92.4 percent) than Arkansas (87 percent) and Texas (84.8 percent).

The study found that advertising about the law didn't seem to affect whether people applied for coverage or enrolled in a plan. However, ads were strongly associated with perceptions of the law.

About 20 percent of respondents said they had read or heard more negative ads and approximately 12 percent recalled more positive ads, and two-thirds said ads were about equal. (Negative ads were most frequently reported in Arkansas, where Obamacare was an issue in a U.S. Senate race last year.)

Twice as many respondents felt that the ACA had helped them as hurt them, although the majority reported no direct impact. In Kentucky, 40 percent said it had helped them, 12 percent said it had hurt them and 48 percent said it had not impacted them directly;  In Arkansas, 30 percent said it had helped them, 17 percent said it had hurt them and 54 percent said it had not impacted them directly; and in Texas, 21 percent said it had helped them, 14 percent said it had hurt them and 66 percent said it had not directly impacted them.

"Nonetheless, 48 to 66 percent of low-income adults in all three states felt the law had not directly impacted them in 2014," the researchers wrote, "which suggests that the ACA has not yet reached many who might benefit from it."

Supreme Court upholds Obamacare subsides in all states; ruling has no direct effect on Kentucky, but focuses political debate

By Molly Burchett
Kentucky Health News

The U.S. Supreme Court ruled Thursday that the tax subsidies provided under the Patient Protection and Affordable Care Act are legal in every state.

While the ruling has no effect on Kentucky, and would have had no direct effect if it had gone the other way, it sets the table for continued political debate about health policy in Congress and in Kentucky's race for governor.

"Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them," Chief Justice John Roberts wrote in the 6-3 majority opinion. "If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter."

The law says the federal government can pay subsidies to help people afford insurance bought through “an Exchange established by the State.” The lawsuit argued that Americans in the 34 states using the federal exchanges were not eligible for the subsidies, which are crucial to the law's success, helping to make health insurance more affordable, reducing the number of uninsured Americans. Proponents of the law say not providing subsidies to individuals in those 34 states relying on the federal exchange would have upended the law, notes CNN.

President Obama called on critics to accept the law as permanent, saying after the ruling, "The Affordable Care Act is here to stay."

But Senate Majority Leader Mitch McConnell, R-Ky., called Obamacare “a rolling disaster for the American people,” with a “multitude of broken promises, including the one that resulted in millions of Americans losing the coverage they had and wanted to keep. Today’s ruling won’t change the skyrocketing costs in premiums, deductibles, and co-pays that have hit the middle class so hard over the last few years.”

Maps: Percentage uninsured in 2012, above, and 2014, below

Obama countered, "The setbacks I remember clearly. But as the dust has settled, there can be no doubt that this law is working. It has changed, and in some cases saved, American lives. It set this country on a smarter, stronger course." He added, "The law has helped hold the price of health care to its slowest growth in 50 years" and "Nearly one in three Americans who was uninsured a few years ago is insured today. The uninsured rate in America is the lowest since we began to keep records."

A White House fact sheet noted that the law also expanded "access to preventive care, including immunizations, well-child visits, certain cancer screenings, and contraceptive services, with no additional out-of-pocket costs as well as no more annual caps on essential benefit coverage and new annual limits on out-of-pocket costs."

Since Kentucky established its own exchange, Kynect, for buying subsidized health insurance or signing up for Medicaid, the ruling may seem moot for Kentuckians. However, it establishes some of the facts for a health-care policy debate in the governor's race between Republican Matt Bevin and Democratic Attorney General Jack Conway.

The exchanges and the expansion of the federal-state Medicaid program are choices for the states, and Bevin has said that if elected he would shut down Kynect and end the Medicaid expansion, which has covered about 430,000 Kentuckians. The federal government is paying their entire cost through next year; in 2017 the state would start picking up a small share, rising to the law's limit of 10 percent in 2020.

Conway has acknowledged questions about whether the state can afford to pay its share, but to “say you’re going to kick a half a million people off of health insurance based on what we may or may not be able to afford in 2021 is irresponsible.” A Conway spokesman said he "appreciates the court's careful consideration of this case and agrees with today's decision," reports the Lexington Herald-Leader.

The Herald-Leader's Mary Meehan interviewed officials and experts for a package of questions and answers about the law and Kentucky. It is published at http://www.kentucky.com/2015/06/25/3917832_in-light-of-the-supreme-court.html.

Outgoing Gov. Steve Beshear, a Democrat who expanded Medicaid, said in a statement that the decision “reaffirms that, from the very start, we did the right thing for the more than 500,000 Kentuckians who have qualified for health-care coverage through Kynect since January 1, 2014.”

Susan Zepeda, president and CEO of the Foundation for a Healthy Kentucky, said in a release, "While many have been awaiting this important decision, we must remember that much remains to be done to assure that all Kentuckians – and all Americans – have timely access to safe, effective and affordable quality care." Zepeda said Kentuckians continue to work on ways to improve and protect Kentuckians' health, such as reforming the way we pay for care and making health care cost and pricing more transparent.

"As people who have forgone care too long because of its expense now gain access to care, it will place a larger short-term burden on the health-care system, which approaches like these can help to address," said Zepeda. "The Affordable Care Act permits – and incentivizes – local health care innovation. We can and must shape Kentucky solutions to Kentucky’s health challenges."

Most insured through Kynect will pay more in 2016; Kentucky Health Cooperative seeks 25 percent increase

By Molly Burchett
Kentucky Health News

The federal health law requires that insurers planning to significantly increase premiums for policies on a health-insurance exchange to submit their rates by June 1 for review. Many insurance carriers across the country, including four in Kentucky, are requesting double-digit increases in insurance premiums for 2016.

For the individual market, the requested average rates from companies already participating in the Kynect exchange are:

• Anthem Health Plans, 14.6 percent increase;
• CareSource Kentucky, 11.8 percent increase;
• Humana Inc., 5.2 percent increase;
• Kentucky Health Cooperative, 25.1 percent increase;
• WellCare Health Plans, a 9.28 percent decrease.

The rates are not final, but are subject to approval by the state Department of Insurance, "so we don’t yet know what the final numbers will be," Gov. Steve Beshear said. "Changes still may occur. Rates should be finalized sometime in mid-July. We do expect that some plan rates will go down, some will go up and some will stay close to the same as last year."

Consumers will have more choices when enrollment opens, because the exchange is adding three new insurers to its individual market. United Healthcare will be offering coverage statewide, Aetna policies will be available in 10 counties, and Baptist Health Plan, now Bluegrass Family Health, will offer coverage in 79 counties. CareSource will expand its coverage area from 16 to 67 counties.

With these additions, at least three insurers will be offering Kynect coverage in every county, said Ronda Sloan of the Department of Insurance.

"When open enrollment begins this fall, Kentuckians should seek information about their individual plans, not average costs," Beshear said. "System-wide averages don’t give a good picture of what an individual’s out-of-pocket costs may be."

It is also important to keep in mind that premiums cannot be viewed in isolation, and you should look at the individual market dynamics that impact how much consumers pay for their health care coverage.

Why are most rates going up?

For an insurance company to survive, its cost of providing benefits should be less than the premiumums paid for those benefits. Companies now have had more than a full year of claims data to inform pricing structures, and many insurers are finding that people who buy policies on exchanges are considerably older and sicker than anticipated, reports Megan McArdle of Bloomberg News.

As a result, insurers are incurring greater costs of providing benefits than expected. Initially, the U.S. Department of Health and Human Services said that about 40 percent of the exchange policies should be bought by people between 18 and 35, the most healthy age group, to keep the exchanges financially stable. However, according to HHS data, that group accounted for only 28 percent of the policies in 2014 and 2015.

Not only do older people have more complex and more costly health needs, rising premiums in some state-based exchanges are due in part to the uncertainty in the overall health-insurance marketplace. First, there is much uncertainly about the reform law's "risk corridor program," which was designed to have insurers share the financial risk of offering policies on Obamacare exchanges from 2014 through 2016.

The program creates a pool of money to reduce risk for insurers: Those that pay out less in benefits than they collect in premiums pay into the pool; those whose premiums don't cover the cost of providing benefits take money from the pool. However, a recent Standard & Poor's report says the risk corridor will probably not get enough money from insurers with profitable exchange plans, so many insurers must raise premiums to support themselves.

Kentucky Health Cooperative needs shoring up

In another potentially worrisome sign, some insurers had risk-corridor receivables that exceeded half of their reported capital, and Kentucky Health Cooperative had the second-highest level of receivables as a percentage of capital: 117 percent, reports CNBC. That helps explain why it has asked for the largest average increase in premiums this year, 25 percent, and last year, 20 percent. The cooperative is one of several start-ups funded by the reform law to encourage competition in states; it sells most of the 106,000 private policies on Kynect.

Other reasons for the overall premium increases include rising health-care costs, especially for prescription drugs, Larry Levitt, senior vice president of the Kaiser Family Foundation, said on "PBS NewsHour" Wednesday night.

Speaking nationally, Levitt said state regulation means the requested premiums "will come down, in some cases by a lot." He said "Insurers are jockeying for position in these new marketplaces [so] there are some good deals to be had, but consumers really have to look around,"

David Blumenthal, president of The Commonwealth Fund, which researches health and social policy, said exchanges like Kynect "give people the ability to comparison-shop much more easily than before."

Lexington Herald-Leader says Kentucky Hospital Association report on members' finances damages the group's credibility

The Kentucky Hospital Association's recent "Code Blue" report on its members' finances is a symptom of "financial hypochondria," the Lexington Herald-Leader said in a long editorial Sunday. It said the title, "signaling a patient needs resuscitation, is an unintentionally fitting title because the KHA's credibility could use a little CPR."

Read more here: http://www.kentucky.com/2015/05/17/3855678/hospitals-suffering-financial.html#storylink=cpy

The report "voices a universal human desire: more money, less accountability. The association implies that federal financial penalties aimed at reducing harm to patients are too onerous for hospitals that care for Kentuckians," the editorial says. "Little more than anecdotes are offered with no acknowledgment that some Kentucky hospitals are recording record bottom lines and steep drops in uncompensated care."

The newspaper offered its own anecdote, a large one, noting that the University of Kentucky's medical center is a major beneficiary of the Medicaid expansion under federal health reform: "The 2014 period saw an 83 percent drop in non-paying inpatients, a 66 percent drop in non-paying outpatients and a $60 million increase in Medicaid revenue. UK Healthcare's annual net income through March is up $70 million over the same time last year. Not all of that increase is due to the Medicaid expansion or Kynect," the state exchange for enrolling in Medicaid or buying private insurance.

"The important point," the paper says, is that "Slowing down spending on hospital care is one of the best things we can do for the economy and our health. The United States spends the highest percentage of its GDP on health care of any country but gets worse outcomes. Even by U.S. standards, Kentuckians over-utilize hospital care."

Read more here: http://www.kentucky.com/2015/05/17/3855678/hospitals-suffering-financial.html#storylink=cpy

Law requires equal access to mental-health and drug-abuse treatment, but is not always obeyed; Ky. says it's working on issue

By Melissa Patrick
Kentucky Health News

By law, mental health benefits must be offered equally to medical and surgical benefits if the plan offers them, but this isn't always the case.

Not only does a 2008 federal law require most employer-sponsored plans to provide equal access to mental health benefits, but that parity was expanded and strengthened in 2010 by the Patient Protection and Affordable Care Act. Twenty-three states, including Kentucky since 2000, require some level of parity.

Common requirements of these laws prohibit insurers from charging higher co-payments and deductibles for mental-health services; require insurers to pay for mental-health treatment in the same scope and duration as medical treatments; ban insurers from requiring additional authorizations for mental-health services; and says they must offer an equal number of mental-health providers and approved drugs.

While insurers typically keep track of the copayment and deductible requirements, they struggle with keeping track of the compliance requirements related to actual delivery of medical services, Michael Ollove reports for Stateline.

The spokeswoman for the Kentucky Department of Insurance, Ronda Sloan, said in an e-mail that Kentucky is very diligent about parity requirements. "Kentucky insurance companies must cover mental-health treatment like other covered services," she wrote. "We review both provider networks and drug formularies for compliance and (make sure) both meet the requirements of the ACA."

A recent report by the National Alliance on Mental Illness found that this isn't always the case. Nearly one-third of those surveyed were denied authorization for mental health and substance abuse treatment, with this rate nearly twice as high for those on ACA plans.

It also found other barriers to care including the number of mental health providers in health insurance plan networks; more than half of the health plans analyzed covered less than 50 percent of anti-psychotic medications; high out-of-pocket costs for prescription drugs; high co-pays, deductible and co-insurance rates; and a lack of information about mental health coverage to consumers to help them make informed decisions in choosing their health plans.

The survey was conducted by Avalere Health and is based on a survey of 2,720 individuals with mental illness or with someone in their family with mental illness and an analysis of 84 insurance plan drug formularies in 15 states.

Sloan said that in Kentucky, "Work is being done on many fronts to increase access and progress is being made to address some of the access issues."

She said Kentucky monitors provider networks to make sure they are meeting their minimum requirements. She also said that a recent law passed by the 2015 General Assembly, which created three levels of drug and alcohol counselors with varying degrees of  certification, will have a "positive impact" on access to treatment.

Gwenda Bond, spokeswoman for the state Cabinet for Health and Family Services, said in an e-mail, "We also opened the provider network for behavioral-health services in early 2014 to a range of private providers of such services, increasing the number of options available for members, who previously could only receive treatment through the community mental health centers."

One of the main obstacles for consumers and providers is that it is not clear what criteria insurance companies and managed-care Medicaid organizations use to determine medical necessity for mental-health and substance-abuse care, and aren't transparent with this information.

"Without that information," Ollove wrotes, "it is difficult for regulators and consumers to determine whether the denial of coverage is warranted." 

Ollove also notes other problems include the federal governments delay in creating regulation guidelines, the challenges states and the federal government have had in simply implementing the ACA, let alone regulating parity and the stigma that is still associated with mental illness and addictions that make regulators not want to get involved.

Two states, New York and California, are leading the way in enforcing parity rules, Patrick Kennedy, a former Democratic congressman from Rhode Island, told Ollove, saying that they were the "only states that consistently enforce mental health parity."

Sloan took issue with that, saying, "We believe Kentucky consistently enforces the rules related to mental health and substance abuse parity." 

Kentuckians who believe they have been improperly denied mental-health and substance-abuse care should contact the Department of Insurance.

3,047 got private health insurance in special March-April signup designed to avoid or reduce tax penalty for not being covered

More than 3,000 Kentuckians signed up for health coverage during a special March-April enrollment period that allowed them to avoid or reduce tax penalties for being uninsured.

"At the Feb. 15 close of the 2015 open enrollment period, 158,685 individuals had enrolled in health care coverage through Kynect for 2015," a state press release said. "That number included 102,830 Kentuckians who have either newly enrolled in a qualified health plan since Nov. 15, 2014, or renewed the private insurance plan they purchased through Kynect last year."

With the additional 3,047 enrollments, the final enrollment in private health insurance was 105,877. The federal tax penalty for being uninsured in 2014 was $95 for each adult household member or 1 percent of income, whichever is greater. In 2015, it will be $325 for each adult or two percent of income, whichever is greater. Penalties for not insuring children are half those for adults.

“Given that the personal risks of not having health coverage are even greater than the penalties, we decided to continue a special enrollment period to allow those individuals more time to sign up,” Gov. Steve Beshear said in the release.

Those who took advantage of the special enrollment period will still owe a penalty for any months they were uninsured and did not qualify for an exemption in 2014 and 2015. "This special enrollment period was designed to allow such individuals the opportunity to get covered for the remainder of the year and avoid additional fees for 2015," the release said.

Kentucky hospitals say they're losing money on Obamacare, as cost of treating new Medicaid patients exceeds reimbursements

By Melissa Patrick
Kentucky Health News

Kentucky hospitals are struggling financially because of the billions of dollars in cuts caused by the implementation of the Patient Protection and Affordable Care Act, and many aren't sure they will survive, the Kentucky Hospital Association said at its annual meeting May 8.

KHA applauded the successful implementation of the federal health reform in Kentucky, which has extended health insurance coverage to approximately 500,000 more Kentuckians, mainly through expansion of Medicaid, but said that has come at a "significant cost to our commonwealth hospitals."

"The expansion [of Medicaid] has infused money into some of our hospitals, which is good, but the rest of the story is the cuts," KHA President Michael Rust said.

KHA Chair Dennis Johnson, CEO of Hardin Memorial Health in Elizabethtown, said  the revenue from the expansion "is less than the cuts Kentucky hospitals will experience in order to finance the ACA."

Kevin Halter, KHA's incoming chair and CEO of Our Lady of Bellefonte Hospital in Ashland, said,
“Much has been made about the fact that Kentucky hospitals have received an additional $506 million in Medicaid payments last year through the expansion, suggesting that hospitals' bottom lines are healthier as a result, but what is often not mentioned is that hospitals lose money on every Medicaid patient they treat.”

The report says that changes in the way hospitals are paid under Obamacare are projected to result in the loss of almost $7 billion in federal cuts to Kentucky hospitals through 2024:

• Lower-than-cost Medicaid and Medicare reimbursements, 82 percent and 86 percent respectively, with actual Medicaid and Medicare payment cuts from 2010 to 2024 projected to be $4.6 billion
• Readmission penalties, which can be as much as 3 percent of Medicare payments, imposed on hospitals that readmit patients within 30 days of discharge, regardless of the reason
• Medicare cuts to hospitals that have any increase in hospital-acquired infections
• Cuts, delayed until 2017, in extra payments to hospitals that have a "disproportionate share" of Medicare and Medicaid patients.

KHA also cited impacts that aren't associated with the reform law, such as sequestration, or automatic across-the-board federal budget cuts, and other cuts in Medicare.

Hospital officials said that rural hospitals have been hit hardest by these changes because 72 percent of their patients are on Medicaid or Medicare. A recent report by state Auditor Adam Edelen found that 68 percent of Kentucky's rural hospitals have below-average of poor financial health, with 34 percent of the total in the latter classification.

Part of the problem is that the law was built on the nationwide presumption that about half of the newly insured would have private health insurance and the other half Medicaid, but in Kentucky, a poor state, 75 percent of the newly insured are covered by the Medicaid expansion, which covers those earning less than 138 percent of the federal poverty line, or about $33,000 for a family of four.

Halter said while hospitals got $506 million for treating patients covered by the expansion, that treatment costs the hospitals $617 million to deliver that care. While low Medicaid reimbursement is not a new problem, Johnson said, "There's no question it's been accelerated under the ACA."

Gov. Steve Beshear said expanded Medicaid payments had "blunted the impact of other fiscal pressures on hospitals. . . . We are very aware of the challenges that medical providers face in Kentucky. Rather than trying to turn back the clock and return to old business practices, we are working directly with providers to help them develop new strategies for better, more efficient, quality health care delivery."

The challenges are real.

A September 2014 survey found that more than 65 percent of the 109 responding Kentucky hospitals had reduced staff since June 2013, eliminating more than 7,700 positions, with more jobs lost in rural hospitals than the urban ones. About 44 percent had frozen or reduced wages, and 40 percent of had cut costs by reducing or eliminating programs, such as closing psychiatric units and outpatient clinics.

"The reality is that hospitals are being forced to reduce costs to deal with these financial pressures," said Charles Lovell, CEO Caldwell Medical Center in Princeton. "This is the third year without our employees getting an increase."

While Obamacare has reduced hospitals' losses on patients who can't pay, Halter noted that 12 percent of Kentuckians remain uninsured, and the report said hospital emergency rooms are still the first choice for many new Medicaid patients because they have't found a regular physician. Many Kentucky counties are short of doctors.

Federal agency offers a consumer-friendly website that ranks patients' experiences in your local hospitals

Consumers now have access to a website that ranks 3,500 hospitals around the country on patients' experiences to help them choose a hospital and better understand the quality of care participating hospitals offer, according to a Centers for Medicare and Medicaid Services press release.

The 12 star ratings on Hospital Compare are based on 11 of the publicly reported measures from the Hospital Consumer Assessment of Healthcare Providers and Systems Survey, and a summary rating for the survey. The survey asks patients questions about nine topics:communication with doctors, communication with nurses, responsiveness of hospital staff, pain management, communication about medicines, discharge information, cleanliness of the hospital environment, quietness of the hospital environment, and transition of care. This survey information is self-reported by patients and will be updated quarterly.

“The patient experience star ratings will make it easier for consumers to use the information on the Hospital Compare website and spotlight excellence in health care quality,” Dr. Patrick Conway, acting principal deputy administrator for the CMS, said in the release.

Consumers already have access to Medicare star systems to rate nursing homes, dialysis centers, private Medicare Advantage insurance plans and certain situations for physicians and group practices, but are they using it?

Not much, according to a recent Kaiser Family Foundation poll. It found that only 31 percent of those polled had seen any information comparing doctors, hospitals, and health insurance plans in the past 12 months. When asked specifically if they had seen information comparing prices or quality across plans and providers, fewer than 1 in 5 people said they had seen such information, and fewer than one in 10 reported using such information.

CMS said the website helps meet goals of the Patient Protection and Affordable Care Act, which calls for transparent, easily understood and widely available public reporting. The agency also reminds consumers that the site is just one tool to help them make a decision abut which hospital to use, and encourages them to talk to their health-care providers about hospital quality, and to use "multiple factors" when deciding about a hospital, such as clinical outcomes and other publicly reported data that is on the website.

To see the rankings:

• Go to the Hospital Compare website
• Type in your ZIP code, or the name of a particular hospital
• Click on "Search"
• Choose three hospitals, by clicking on the "Add to Compare" button
• Click on "Compare Now," located at the top of the screen
• Click on "Survey of Patients' Experiences"
• Scroll down and view star ranking and additional information results

This is a screen shot of the final screen, with a bar of options to click on.

As income taxes are filed, half who got Obamacare subsidy will have to pay part of it back; almost as many will get a refund

By Melissa Patrick
Kentucky Health News

This week will go down in history as the first time the Internal Revenue Service enforced the Patient Protection and Affordable Care Act's tax penalty for those who can afford insurance but didn't buy it.

The penalty for those who don't qualify for an exemption is $95 per adult and $47.50 per child, or 1 percent of your income, whichever is larger. The penalty will increase next year to the greater of $325 per adult or 2 percent of household income.

"Ever since its passage, the mandate that every American have health insurance has been at the heart of the controversy over the ACA," Elaine Kamarck writes for the Brookings Institution. It was an issue long before the law passed; in the 2008 presidential primaries, Hillary Clinton favored it and Barack Obama opposed it; as president, he changed his mind.

Tens of thousands of Kentuckians who got subsidies to help pay for their health insurance through the Kynect exchange will probably be surprised to find that they will have to repay some of the subsidy, or that they will get a refund, depending on the difference in their actual income level and the income that was recorded at the time they bought insurance. Most incomes were likely based on an estimated income for the year. Generally, if you overestimated your 2014 income, you will get a refund. If you underestimated it, you will have to repay some or all of the subsidy, which was subtracted from the "sticker price" of insurance to calculate your premium.

Infographic from Kaiser Family Foundation

A study by the Kaiser Family Foundation estimates that 50 percent of Americans who got 2014 tax subsidy will owe some money, and 45 percent will receive a refund. The foundation estimates the average repayment will be $794 and the estimated average refund to be $773.

Some reasons for the income differences are getting a raise, losing a job, and working a different number of hours; and non-job factors such as a change in family size as a result of births, deaths or divorce. These changes should be reported when they occur, so subsidies can be modified, but often aren't, says the Kaiser Family Foundation.

John Ydstie of NPR reports some real examples of policyholders facing these surprises. He tells the story of one person who makes $30,000 a year who decided to take less than her estimated $250-a-month premium subsidy because of her uncertainty about the program, and is getting a $3,900 refund. He notes that most people on Obamacare can't afford to do this.

Ydstie also tells the story of a young woman whose monthly subsidy dropped to $60 from $250 after she married her longtime partner in 2014 and their combined incomes bumped them into a different category. They have to pay back $1,800 but are hoping the amount will be adjusted to $400, to apply only to the months they were married; this has not yet been determined.

As the IRS implements the law, it is faced with budget, staffing, and operational cuts, Kamarck writes: "Given the staff limitations of the IRS and the complexity of reporting and reconciling the government subsidies in the law with people’s income there is likely to be confusion, frustration and, most importantly, a lot of people who find out that their tax refund is a great deal smaller than they anticipated." She suggests that the IRS, in order to survive the first tax season with the ACA, "give taxpayers a break whenever it can."

Higher-income Kentuckians' reported health keeps declining; reports from those with lower incomes go up, marginally

A statewide poll again finds that Kentuckians with higher incomes consider themselves in better health than those with lower incomes.

The latest Kentucky Health Issues Poll, taken Oct. 8 through Nov. 6, found that 55 percent of Kentucky adults who are above 200 percent of the federal poverty level (FPL) said their health was either "excellent" or "very good," compared to 29 percent of Kentucky adults at or below 200 percent of the FPL. The FPL for a family of four in 2014 was $47,700.

However, the percentage of Kentucky adults in the higher-income category reporting excellent or very good health has dropped significantly since the poll started asking this question in 2008, to 55 percent in 2014 from 66 percent in 2008. So has the overall percentage of Kentucky adults reporting excellent or very good health, dropping to 41 percent in 2014 from 49 percent in 2008.

The percentage of lower-income Kentucky adults reporting excellent or very good has been about the same since 2008. This year the poll found a 3 percent increase among those in this group who reported very good or excellent health. The difference is not statistically significant, but coincides with implementation of federal health reform, and and if it continues could show the law's impact.

The poll also found that 52 percent of adults age 45 and younger considered their health as excellent or very good while 33 percent of those over age 45 reported excellent or very good health.

“KHIP provides important data regarding the connections among a person’s age, earnings level and perceived health status,” said Susan Zepeda, president and CEO of the Foundation for a Healthy Kentucky, which co-sponsored the poll. “By asking the same question year to year, we can spot trends in perceived health. The latest results are an important reminder of the links between poverty and poor health.”

The poll is conducted by the Institute for Policy Research at the University of Cincinnati and is co-sponsored by Interact for Health, formerly the Health Foundation of Greater Cincinnati. It surveyed a random sample of 1,597 adults via land lines and cell phones, and has a margin of error of plus or minus 2.5 percentage points. That applies to each figure, making the 3 percent difference statistically insignifcant.

New diabetes cases in expanded-Medicaid states much higher than other states; 46,000 new Ky. Medicaid clients got screened

By Melissa Patrick
Kentucky Health News

New diabetes cases among poor Americans are much more numerous in Kentucky and other states that have embraced the Patient Protection and Affordable Care Act, a medical testing company has found. The diagnoses rose 23 percent in the Obamacare states and barely rose in the others, apparently because state Medicaid programs are encouraging screening for diabetes.

Quest Diagnostics conducted the study by analyzing laboratory test results from all 50 states and the District of Columbia in its large database over two six-month periods, Sabrina Tavernise reports for The New York Times. The authors determined that because in January 2014, 26 states and the District of Columbia had expanded Medicaid and 24 had not, it was a good time to conduct this study, which is reported in the journal Diabetes Care.

The research team used the results of the basic test for diabetes, which measures a form of hemoglobin that has interacted with glucose, A1c. "In the states that expanded Medicaid, the number of Medicaid enrollees with newly identified diabetes rose by 23 percent, to 18,020 in the first six months of 2014, from 14,625 in the same period in 2013," Tavernise reports. "The diagnosis rose by only 0.4 percent — to 11,653 from 11,612 — in the states that did not expand Medicaid."

A Kentucky study indicates that more screening isn't the only reason for such numbers; the Medicaid expansion population appears to be more susceptible to diabetes than normal.

The study by Deloitte Consulting found that chronic conditions, including diabetes, were more than twice as prevalent in the expansion population than other people of the same age and gender who were on Medicaid before it expanded. That comparative group was considered to be the group most similar to the Medicaid expansion population, since the state lacks historical data for the expansion group.

The study found that the Medicaid expansion group had a 102.5 percent higher prevalence of diabetes than the comparative group. About two of every 1,000 in the expansion group had diabetes, compared to one of every 1,000 members of the traditional-Medicaid group.

About 46,000 of the 400,000 people in the expansion group had a diabetes screening in the first year of the expansion. Both studies suggest better access and utilization of preventive care and early diagnosis will promote earlier treatment and better long-term outcomes.

Kentucky ranks 17th among the states in prevalence of diabetes, according to the 2014 "States of Obesity" report.  The state Cabinet for Health and Family Services reports an estimated 233,000 adult Kentuckians have pre-diabetes. For county-by-county data on diabetes, click here.

Quest Diagnostics recognized that its study only looked at changes in raw numbers of the lab results from one company and did not have access to a federal data set. This has caused some to voice skepticism that the study results are a result of the Medicaid expansion. Others, while recognizing that the study did not "have the precision of a scientific drug trial," Tavernise writes, said "the changes in the numbers are real ... 23 percent versus zero," and that "the health-care law was the most plausible explanation for the findings." Another said, "for an observational study, it’s really very strong."

Kentucky Health News is an independent news service of the Institute for Rural Journalism and Community Issues, based in the School of Journalism and Telecommunications at the University of Kentucky, with support from the Foundation for a Healthy Kentucky.

Auditor will hold meetings in Prestonsburg, Princeton and Sonerset to discuss his report on financial status of rural hospitals

State Auditor Adam Edelen will hold three public meetings in rural communities to discuss the findings of his special report about the financial health of rural hospitals.

The meetings will be held Monday, April 21 at 1 p.m. at the Mountain Arts Center in Prestonsburg; Monday, May 4 at 11 a.m. (CT) at the Caldwell County Memorial Hospital in Princeton; and Thursday, May 6 at 1 p.m. at the Liberty center of Somerset Community College.

The report, which covers fiscal years 2011 through 2013, found that as many as one-third of Kentucky's rural hospitals were in poor financial shape, with 68 percent of them ranking below the national average financially.

“Although closure may be an unfortunate reality for some," Edelen said in the press conference, "I believe more can and should be done to help these hospitals rethink their models of business in delivering health care in the 21st century." He went on to suggest rural hospitals consider hiring outside managers, merge with larger hospitals, form coalitions with other rural hospitals or find a specialized health niche as possible alternate business models to consider.

The report calls for the creation of a state work group to monitor rural hospitals, including making sure state law gives them the flexibility to retool their business models. Susan Zepeda, president and CEO of the Foundation for a Healthy Kentucky, suggested that the proposed work "could be incorporated into the work already under way under a State Innovation Model grant, which is engaging many sectors of health service in Kentucky in an ambitious, collaborative redesign effort."

Edelen said some of the primary problems faced by rural hospitals stem from the many changes in health care since the inception of Medicaid managed care, a decrease in the number of health-care providers, and an economic climate in some areas that doesn't support the current health payment model, which depends on the majority of its users to have private health insurance.

The report suggested that the Cabinet for Health and Family Services negotiate better contracts with managed-care organizations as it approaches the June 30 deadline, especially to address provider payments, stricter penalties for non-compliance and increased administrative burdens that managed care has put on hospitals. Edelen and Haynes sounded hopeful that this was going to happen.

Gov. Steve Beshear called Edelen's report "a dated snapshot" because the 2013 data used in the report does not include 2014 information,when the federal health reform was fully implemented through expansion of Medicaid to people with incomes up to 138 percent of the federal poverty line. Beshear said hospitals received $506 million to care for such people in 2014 while seeing significant reductions in losses on patients who couldn't or wouldn't pay.

Edelen's spokeswoman, Stephenie Hoelscher, said in an email that Edelen believes the full effect of all the changes in health care to hospitals' bottom line is still not clear, and his report establishes a baseline for critical analysis going forward.

Health reform law has been good for hospital finances, health-care costs, Obama administration says

U.S. hospitals have saved billions of dollars because the federal health-reform law has provided coverage for patients who were once charity cases, the Obama administration announced Monday, the fifth anniversary of the Patient Protection and Affordable Care Act.

"Hospitals also saw fewer emergency room visits, which rack up far higher costs and often leave hospitals with the tab," Sarah Ferris writes for The Hill, which covers Congress. "The government’s report, which focuses on the benefits of Medicaid expansion, is an effort to entice states that have been politically resistant to expanding the program."

Kentucky hospitals have acknowledged that the law has reduced their losses from "uncompensated care," but say other aspects of the law have created a mixed effect, depending partly on hospitals' ability to adapt. The increase in coverage has brought hospitals much more money, but they say continued problems with managed-care Medicaid have cause them financial difficulty.

From paying patients' point of view, the law appears to have reduced inflation in health-care costs, but has not achieved advocates' goal of reducing costs. A White House report said, "Since the Affordable Care Act was enacted, health care prices have risen at the slowest rate in nearly 50 years. Thanks to exceptionally slow growth in per-person costs throughout our health care system, national health expenditures grew at the slowest rate on record from 2010 through 2013."

For the White House's Kentucky-specific list of benefits of the law, click here.

Reform law 'quietly accomplishing the goals it was created to achieve,' McClatchy Newspapers reporter writes

The federal health-reform law is still controversial and still facing a legal challenge, but "is quietly accomplishing the goals it was created to achieve," Washington correspondent Tony Pugh reported for McClatchy Newspapers on the occasion of the law's fifth anniversary. (The Lexington Herald-Leader is a McClatchy paper.)

"The nation’s uninsured rate has plummeted as more Americans enroll in Medicaid or in federal and state marketplace coverage," Pugh notes. "The law’s consumer protections and insurance-benefit requirements have improved the quality of coverage for millions of people who get health insurance outside the workplace. Premiums for marketplace health insurance have largely been reasonable and have increased only moderately thus far. Long-term cost estimates for providing coverage under the law have been falling."

Howver, Pugh writes, "The law may never overcome the bitter politics that surrounded its enactment and that partly define its legacy. Long viewed as a government overreach, the health-care law has been problematic for those who want the private insurance market to dictate who gets health insurance and what it should cost. . . . Moreover, the law’s requirement that most Americans have health insurance is seen as an infringement on individual freedom. The Supreme Court ruled in June 2012 that the so-called individual mandate didn’t violate the Constitution."

The White House issued a state-specific list of the law's benefits. For Kentucky's, click here.

Health reform law drives a trend to include lifestyle changes in a patient's health care plan, alongside traditional medicine

Lifestyle changes can play a huge role in treating and warding off many health conditions and thanks to the Patient Protection and Affordable Care Act there is now a shift to include helping people make these changes part of their health care plan, Laura Ungar reports for The Courier-Journal and USA Today.

In the first of an occasional series called "HealthVoices" that focuses on "areas where policy, public health and people intersect," Ungar tells the story of Kevin French, who self-describes himself as "the quintessential unhealthy Kentuckian" and how lifestyle changes have made a difference in his health.

French tells Ungar that with the help of medical professionals and The KentuckyOne Healthy Lifestyle Center in Louisville he has "learned how to eat well, handle stress, exercise and "basically change everything."

"My medicine usage has declined somewhat. I'm still on medicines but not the dramatic type like I was. Some of them's been cut in half," French told Ungar. "Several costs of medicines have declined dramatically."

The center provides "medically supervised exercise, nutrition counseling, stress management and classes in disciplines such as yoga" and is the third such facility the medical system has opened in Louisville, Ungar writes.

Experts say that the ACA is driving this "colossal shift" in health care away from the "traditional reliance on pills and procedures by patients as well as the American medical system," Ungar writes, but she also notes that the patient must also make a commitment to these lifestyle changes if it is to work, as French has.

A cardiologist at the center, Paul Rogers, told Ungar about the importance of lifestyle changes, especially exercise. in warding off cardiovascular disease, one of the state's biggest killers.

"Compared to even the best medical therapy, we can decrease heart attacks, strokes and deaths by between 35 and 45 percent by changing lifestyle. The thing I see that holds people back most probably is effort and fear," Rogers told Ungar. "The recommendations these days are 30 minutes of…aerobic activity six times a week. I think if people started devoting themselves to that, that would change the health of our state dramatically."

Poll analysis indicates Kentucky has the largest percentage of people who have gained health coverage under Obamacare

Kentucky has the nation's highest percentage of formerly uninsured people who have gained coverage under federal health reform, according to an alternative interpretation of the latest national polling data from The Gallup Organization.

Gallup again ranked Kentucky second to Arkansas in the expansion of insurance, but those rankings are based on percentage-point declines. However, the more illustrative ranking may be the percentage of formerly uninsured who are now covered.

That can be calculated, roughly, by dividing the percentage-point decline by the original percentage of uninsured. That shows Kentucky ranking first, with 52 percent of the formerly uninsured now having coverage, either with private insurance or the federal-state Medicaid program. Connecticut ranks second at 51.2 percent and Arkansas third at 49.3 percent.

The state Cabinet for Health and Family Services recently issued a press release about Kentucky staying at second in the Gallup rankings. Told about the alternative calculation, cabinet spokeswoman Jill Midkiff wrote, "While we certainly do not dispute Gallup's findings, it is accurate to say that Arkansas’s decrease in the uninsurance rate has been larger. However, Kentucky has seen the highest percentage of formerly uninsured who have become insured." Gallup did not respond to a request for comment.

Foundation for a Healthy Kentucky wants a claims database to increase transparency about health-care cost and quality in Ky.

Kentucky has experienced rapid changes in health care since the implementation of the Patient Protection and Affordable Care Act, and the next step is to implement a program that will provide more transparency about the cost and quality of health care so consumers can make informed, value-based health decisions, says a news release from the Foundation for a Healthy Kentucky.

A recent Kentucky Health Issues poll found that most Kentuckians think they can find out what doctors charge for treatments and procedures if they need this information. They seem to believe that transparency already exists, but this is often not the case.

The foundation recommends that Kentucky develop and establish an all-payer claims database, or APCD, for consumers and stakeholders as a tool to address this issue of price transparency.

"Clear, factual information about the cost and quality of health care is necessary for consumers to select value-driven care and for consumers and providers to be involved and accountable in their decision about their health and health care services," says the release.

The APCD Council defines APCDs as “large-scale databases that systematically collect health-care claims data from a variety of payer sources which include claims from most health-care providers," says the news release. The information includes patient demographics, provider codes, and clinical, financial and utilization data. This information is then made available to the public.

The foundation said it analyzed national and state expert presentations, reviewed studies and held a meeting in October with more than 60 Kentucky leaders in government, business, policy and health care to discuss the issue.

Participants discussed barriers, feasibility, solutions and other factors in implementing price transparency in Kentucky from the perspectives of the consumer, provider, policymaker and researchers. Here are some of their collective findings, according to the release:

• Current cost and health service information are difficult to understand. 
• Price and quality data need to be useful to the consumer through simple, useful tools, currently it is not. 
• The state must be involved in implementing an APCD by passing laws to require the collection and sharing of data and requiring the data to be reported publicly. 
• An effective APCD would allow estimates and cost comparisons between providers; would include expected out-of-pocket costs and quality measures that can be compared across providers; would have the ability to see spending patterns over time for all enrolled under one policy; would offer individual level data; and would offer health care value-based cost saving tips.
• There is a significant variation in health-care pricing, and physicians may need an incentive to consider cost when making decisions for patients.

Colorado was one of the first states to establish price transparency legislation, data collection and reporting on a state-wide level. Representatives from that state's APCD said it was initially funded by foundations, but will use fees to sustain itself going forward.

Bill to cap co-payments for drugs is backed by emotional testimony, but opposed by health insurers and employer groups

By Melissa Patrick
Kentucky Health News

FRANKFORT, Ky. -- People with chronic conditions are often denied the best medication for their condition because it is not on their insurance plan's preferred formulary, which makes the co-payment more for that medication than they can afford.

Sen. Tom Buford

Senate Bill 31, sponsored by Tom Buford, R-Nicholasville, would put a $100-per-month cap on co-payments for a 30-day supply of a medication for drugs subject to a tiered formulary, and not to exceed $200 per month total for all medications. House Bill 146, sponsored by Rep. James Kay, D-Versailles, has a similar bill that is currently in the House Banking and Insurance committee.

The Senate Health and Welfare Committee heard discussion on this bill Feb. 25, which opened with an impassioned plea from Buford to pass it. He said 18 states have passed or are in the process of passing similar bills. But they face strong opposition from the insurance industry and employers, and the bill has been on the committee agenda "for discussion only."

Buford said insurance companies have avoided big increases in premiums by raising co-payments, "which have gone over 54 percent and some 80 percent." Saying the average salary of Kentuckians is $23,700, he said many have to chose between living expenses and paying for medicine. "You may have insurance, but you may not have health care," he said.

The state Department of Insurance estimates that the bill would increase premiums by $3.20 to $4 per month and, because of greater utilization of services, raise the ultimate health-care costs of all insured Kentuckians (except those on state plans) by $2.58 to 3.23 per month.

Buford disputed the estimate, saying it essentially comes from the insurance industry. He acknowledged that capping co-pays would raise costs, but said the increase could be modest. He said that after Vermont passed a cap, the cost averaged only 32 cents per month per member for large-group plans and 74 cents per month for small-group plans.

Tom Underwood, state director of the National Federation of Independent Business, said the bill would primarily affect small-group employers, partly because small businesses have no power to negotiate with insurance companies.

Julie Davis of Glasgow, who has epilepsy, told the committee that she was forced to switch insurance this year, and a $60-per-month medication that she had been taking for seizures now cost $1,200 per month. She said they made her switched to a generic medicine, against the advice of her neurologist, and since has had her first breakthrough seizure in two and one-half years.

Getting emotional, Davis said that when she has such seizures, "I am out of commission for almost a month" and this has forced her to give up a job that she loved, move in order to be closer to a support group, and only allows her to work from home. She also said that at times she "fears for her life," and her insurance company has denied her appeals.

Deb McGrath of the Epilepsy Foundation said it had found that the most commonly prescribed and effective epilepsy drugs are on the non-preferred list of the "silver" plans on the state health-insurance exchange, the most common type of plan. A patient must pay a 40 percent co-insurance or a high deductible plus a co-pay to get a preferred drug on these plans.

She said the U.S. Department of Health and Human Services has called the practice of limiting coverage and imposing high cost-sharing for drugs that treat certain conditions "discriminatory."

McGrath said, "These barriers make it impossible, near impossible, for individuals, for those living with chronic health conditions like epilepsy, like arthritis, Alzheimers, crones disease, diabetes, and AIDS access to care that they desperately need."

Carl Breeding, a lobbyist for American Health Insurance Plans, gave the committee a letter from the Insurance Commissioner Sharon Clark, which he summarized as saying this bill would "prevent the state from being able to work" under federal health reform because of the way deductibles work and would "eliminate the bronze plan," the lowest-cost plan.

But Mark Guimond, a lobbyist for the Arthritis Foundation, said the lack of co-pay caps can increase costs because the resulting lack of medication can lead to hospitalizations, surgeries and time off work. "These are extremely expensive medications: $1000, $2000, $3000 a month," Guimond said, and patients "are being stuck with co-pays or co-insurance that may be 30-40-50 percent of these amounts."

The Kentucky Association of Manufacturers, which opposes the bill, wrote in the Lexington Herald-Leader that "These increased costs take away capital that state manufacturers could otherwise deploy to reinvest in their plants and more importantly remain competitive globally, so that we can continue to employ hard-working Kentuckians."

In animated remarks to the committee, Buford replied, "I hate to say this, but I could care less if we beat Japan in making toys if it depends on someone's life and health and the ability for them to live. It's more important apparently for some to deny the insurance than it is to make that profit on the bottom line of their company."

Beshear says Ky. rural hospitals 'have a positive cash flow' but he can't prove it; industry says it sees 'some improvement'

By Al Cross
Kentucky Health News

FRANKFORT, Ky. -- Gov. Steve Beshear says Kentucky's rural hospitals are profitable again, thanks to his expansion of Medicaid, but he offers little evidence to support his claim, and the hospital industry disputes it.

In a long, joint interview with Colorado Gov. John Hickenlooper at the Brookings Institution in Washington, D.C., Feb. 20, Beshear said, “Our rural hospitals have a positive cash flow for the first time in a long time, so it’s working, it’s going to work, and my job is just to get it so embedded that nobody can do anything about it.”

Kentucky Health News asked Beshear's office for evidence of rural Kentucky hospitals’ positive cash flow, but the office cited only a news story about Carroll County Memorial Hospital in Carrollton, which said it turned a small profit in 2013 (thanks to federal health-reform grants for digitizing medical records) and a much larger one in 2014.

"Some of them have improved and some of them have not," said Mike Rust, president of the Kentucky Hospital Association. As a result of Medicaid expansion, he said, "Some have benefited greatly but others are still struggling."

The association's vice president of health policy, Elizabeth Cobb, said, "In general we’re seeing some improvement in rural hospital finances," largely from a decline in the number of charity cases as a result of previous patients having coverage. "We were already taking care of most of those," she said.

State figures show Medicaid payments to rural hospitals rose 20 percent in the state fiscal year that ended June 30, 2013, but only 6 percent in the next year, when the Medicaid expansion began; and that the payments to urban hospitals rose 4 percent and 10 percent the last two years.

Based on claims from July through September, the state forecasts that Medicaid payments to rural hospitals in the current fiscal year will increase 26 percent, and payments to urban hospitals will rise 15 percent. (The state has estimates for each hospital.)

Cobb said the expansion hasn't generated as many new patients as might be expected for rural hospitals because of the shortage of primary-care physicians who admit patients: "We're not seeing a huge expansion of utilization as a result of Medicaid expansion."

That keeps patients coming to hospital emergency rooms for care, some of which is deemed non-emergency by managed-care organizations, the insurance-company subsidiaries that have overseen the care of Medicaid beneficiaries since 2011. Two MCOs pay only a $50 "triage fee" in such cases, regardless of what diagnostic tests the hospital performs; that was the topic of a legislative hearing last week.

And that is just one part of hospitals' problems with the MCOs. "What we're seeing generally is that while hospitals are receiving payment for some patients who may have been uninsured previously and are now insured by Medicaid, we're still seeing the challenges of hospitals being paid by managed-care organizations," Cobb said. "There's an increase in the administrative burden for small hospitals to work with five different MCO plans that all have very different rules and criteria."

Clinton County Hospital Administrator J.D. Mullins cited MCO problems is explaining his facility's decision to file for bankruptcy last year, mainly to restructure payments on the federal loan for a $14.7 million addition completed a few years ago, the Clinton County News reported.

"These companies’ polices have restricted access to the hospital’s services and reduced our reimbursement even more," Mullins told the Albany paper. "When the idea of a new hospital facility was first proposed, no one could have foreseen the condition of health care today."

The hospital is in the district of Sen. Max Wise, R-Campbellsville, who told fellow members of the Senate Health and Welfare Committee Feb. 26, "I would love to take the governor's report to the six of my seven counties out in rural Kentucky that are struggling right now in their hospitals. . . . What I'm hearing from them is the system is broken and it continues to be broken."

Wsie was referring to Beshear's recent report that Medicaid expansion is generating more money, jobs and tax revenue than forecast. Another committee member, Sen. Ralph Alvarado, R-Winchester, said, "Almost every senator here has received letters that say: This stinks, we are not getting paid, we are going under."

Cobb said some rural hospitals are reporting cuts in jobs and services. That is probably reflected in U.S. Bureau of Labor Statistics data compiled by Paul Coomes, emeritus economics professor at the University of Louisville. It shows hospital employment trending down while other health-care jobs have been going up.

While Carroll County and others are benefiting from federal digitization grants, "That funding’s going to go away," Cobb said, and "Every year you've got to pay for upgrades, and the requirements continue to increase at the federal level." Federal officials say digitization should make hospitals more efficient.

Of the Carrollton hospital, Cobb said, "That’s a special situation. That’s not a typical one." She said the facility "put in place a lot of measures to try to improve their management" and has partnered with larger hospitals to offer more services, such as cardiology, "and that’s breathed some life back in."

Rural hospitals in Nicholas and Fulton counties have closed in the last year, and state Auditor Adam Edelen, who is preparing to issue a report on rural hospitals, has warned that others are in danger, threatening to put new obstacles between rural Kentuckians and health care. "Not acknowledging the looming access issue is a disservice to the low-income and elderly Kentuckians who are depending on an intact provider network,” Edelen spokeswoman Stephenie Hoelscher said.