Tag: 2013 News

Dr. Richard Thorp, president of the California Medical Association says that an estimated seven out of every 10 physicians in California are rebelling against the state’s Obamacare health insurance exchange and won’t participate. Thorp has been a primary care doctor for 38 years in a small town 90 miles north of Sacramento. The CMA represents 38,000 of the roughly 104,000 doctors in California. “We need some recognition that we’re doing a service to the community. But we can’t do it for free. And we can’t do it at a loss. No other business would do that,” he said.

According to the story in the Washington Examiner, California offers one of the lowest government reimbursement rates in the country — 30 percent lower than federal Medicare payments. And reimbursement rates for some procedures are even lower. In other states, Medicare pays doctors $76 for return-office visits. But in California, Medi-Cal’s reimbursement is $24, according to Dr. Theodore M. Mazer, a San Diego ear, nose and throat doctor. In other states, doctors receive between $500 to $700 to perform a tonsillectomy. In California, they get $160, Mazer added.

Only in September did insurance companies disclose that their rates would be pegged to California’s Medicaid plan, called Medi-Cal. That’s driven many doctors to just say no.

They’re also pointing out that Covered California’s website lists many doctors as participants when they aren’t. “Some physicians have been put in the network and they were included basically without their permission,” Lisa Folberg said. She is a CMA’s vice president of medical and regulatory Policy. “They may be listed as actually participating, but not of their own volition,” said Donald Waters, executive director of the Alameda-Contra Costa Medical Association. Waters’ group represents 3,100 doctors in the East Bay area that includes Oakland, with an estimated 200,000 uninsured individuals. “This is a dirty little secret that is not really talked about as they promote Covered California,” Waters said. He called the exchange’s doctors list a “shell game” because “the vast majority” of his doctors are not participating.

Independent insurance brokers who work with both insurance companies and doctor networks estimate that about 70 percent of California’s 104,000 licensed doctors are boycotting the exchange. Mazer, a past president of the San Diego County Medical Society, agreed, saying, “I cannot find anybody in my specialty in the area that has signed a contract directly with any of these plans. The real question,” Mazer added, “is how many doctors have signed up for how many programs, and whether there’s more than 50 percent participation.”

Dr. Sherry Franklin, a pediatric endocrinologist at Rady’s Children’s Hospital, San Diego, and at the University of California San Diego Hospital, isn’t joining the exchange. Franklin said last summer she “got a letter in the mail letting me know if I wanted to participate with Blue Cross through the exchange, which is different from my regular Blue Cross practice, because they are paying less. They did not tell me how much less. You had to agree or disagree. So, of course, I said no.”

For its part, Covered California expects as many as 85 percent of the state’s doctors will join the new exchange. “The Covered California board says we have plenty of doctors, and they allege they have 85 percent of doctors participating,” notes Mazer. “But they’ve shown no numbers.” The exchange issued a May release making that claim before doctors could respond to a memorandum of understanding from insurers. Most didn’t because the MOU lacked reimbursement rates. “When they sent out MOU information and said, ‘Would you be willing to participate?’ earlier this year, most of us said, ‘How about sending us the rates?’ ” Mazer recalled. Mazer said that not only are many doctors not participating, but many are also thinking of retiring. “I just turned 55, and a lot of us are kind of going, ‘Maybe there’s something else we can do in the last 10 years,’ because this is just getting too onerous to keep on going.”

If a large number of doctors either balk at participating in the exchange or retire, the state’s medical system could be overwhelmed. No one is more aware of this than Alex Briscoe, health director for Alameda County Health Care Services Agency, which includes Oakland. “Enrollment doesn’t mean access, because there aren’t enough doctors to take the low rates of Medicaid,” he said. “There aren’t enough primary care physicians, period.” Briscoe hopes his eight community health centers can handle the 200,000 uninsured individuals he said reside in his county, but he warned that “there is a doctor shortage. It is going to get worse as more people enter the market.” Briscoe professed not to be surprised by the refusal of doctors to participate in Covered California. “It rings true. I’ve been kind of wondering in my head, ‘How are they offering such low premiums?”

On December 4, 2013 Richard Lopez Escamilla Jr. 47, was sentenced in Kings County Superior Court to one felony count of insurance fraud and was ordered to pay restitution of nearly $4.2 million to SCIF, SeaBright Insurance and the Employment Development Department. Escamilla was also sentenced to serve six years in prison for defrauding two insurance companies by underreporting employee payroll and unemployment insurance tax evasion.

He operated businesses under several names including ROC Harvesting, EC Labor, EC Labor Inc., and ES Labor. He often changed the names of his businesses to pretend to be a new business in order to lower his premiums.

The department of Insurance said that he was accused of illegally reducing his workers comp premiums by underreporting employee payrolls for his farm labor contracting company, as well as misrepresenting previous comp claims for the firm.

“This is a win for California consumers, insurers and taxpayers,” said Insurance Commissioner Dave Jones. “This case isn’t just about one crook who stole from two insurance companies, business owners across the state end up paying the real price for workers’ compensation fraud through higher premiums and those costs are passed to consumers.”

The conviction was the result of a joint investigation with the The San Joaquin Valley Premium Task Force, the King’s County district attorney’s office and the Employment Development Department.

Many workers’ compensation (WC) claims result in no payment from the WC system, but do lead to increased costs for employee group insurance plans, reports a study in the December Journal of Occupational and Environmental Medicine, official publication of the American College of Occupational and Environmental Medicine (ACOEM).

Nationwide, so-called zero-cost WC claims could cost group health insurance plans more than $200 million per year, according to the study by Abay Asfaw, PhD, and colleagues of the National Institute for Occupational Safety and Health.

The researchers analyzed data on more than 12,000 injured workers who filed for WC insurance from 2002 through 2005. Sixteen percent of the claims were “zero-cost” claims – that is, they resulted in no WC payments. Use of and payments from the employees’ group health insurance increased after WC claims. That was so for zero-cost claims as well as claims resulting in payments. But the zero-cost claims were associated with significantly greater increases in costs to group health insurance, after adjustment for other factors. The increase was largest for outpatient care, with an estimated increase of approximately $400 per claim.

“Our national estimated showed that zero-cost WC claims added $212 million in medical bills to group health insurance per year,” the researchers write. Because their data may miss some occupational injuries, they suspect the true economic impact is even higher.

The study adds to previous evidence suggesting that non-WC insurance – including not only employee health plans but also public insurance – cover at least part of the costs of work-related injury and illnesses. “If WC provides inadequate coverage – workers will seek treatment using other insurance,” Dr Asfaw and coauthors conclude. “Our key finding is that zero-cost WC medical claims have repercussions for other insurance systems and society, and their economic implications are substantial.”

This study quantifies and illustrates an employers quagmire. A zero dollar comp claim is not really zero dollars. It is in actuality cost shifting, not necessarily cost saving. Large employers pay the costs of all forms of employee benefits including group health care. For those employers aggressive defense of an AOE-COE issue in the comp forum may produce illusory savings if that cost is simply shifted to another employer funded program. The bigger picture may be a view that an injured worker is a costly problem no matter which of the employer’s pockets pays the cost. Thus aggressively rapidly solving the medical issues may be less costly in the long run than a strategy that simply pushes the cost from one employer program to another.

Adrienne Johnson was a professional basketball player who was not employed by a California team, has never resided in California, has played one professional game in California out of 34 games played during the 2003 season, and has suffered no specific injury in California. Upon graduation from Ohio State University, she was drafted by the Cleveland Rockers, a professional basketball team in the Women’s National Basketball Association (WNBA), and played for them for two years. Johnson next played for the Orlando Miracle, which became the Connecticut Sun in 2003. In December 2003, an MRI revealed she had a knee injury, for which she had surgery in 2004. Although Johnson did not play during the 2004 season she signed with the Seattle Storm and practiced with that team in Seattle in 2005. She did not play for that team during the 2005 regular season and has not played in any professional games since the end of the 2003 season.

While playing for the Orlando Miracle, Johnson lived in Orlando, Florida. When her team moved to Connecticut, Johnson moved from Orlando to Hackensack, New Jersey, and she continued to play for that team. At the time of her September 2010 deposition in the workers’ compensation proceeding in California, Johnson resided in Louisville, Kentucky and had been living there for two years.

Johnson sustained an injury to her right knee while playing for the Orlando Miracle in 1999. She had surgery for this injury in Orlando, Florida in 2000. In May 2001, while in training camp in Orlando, Johnson tore her Achilles tendon. She was treated again in Orlando and missed the entire 2001 season. She re-injured her right knee in 2003. Johnson signed a two-year contract with the Connecticut Sun on May 2, 2003. She signed this contract in Hackensack, New Jersey. Her agent was based in Ohio.

Johnson filed a workers’ compensation claim in Connecticut in August 2003 for the injury to her right knee. It was resolved by a settlement resulting in a $30,000 payment to Johnson. Johnson played 34 games in the 2003 season, which was the full season. During that season, she played one game in Los Angeles, California on July 20, 2003.

Johnson filed an application for adjudication of the claim in California against the Connecticut Sun and its workers’ compensation insurer Federal Insurance Company, which is part of the Chubb Group of insurance companies. The Workers’ Compensation Judge (WCJ) awarded disability indemnity., After a petition for reconsideration, the Board rescinded the award and returned the matter to the WCJ for further proceedings to apportion the compensation between the present injury and past injuries for which she already received workers’ compensation benefits in Connecticut. The defendants petitioned for a writ of review, contending that the Board does not have jurisdiction over Johnson’s claim. The Court of Appeal agreed that there was no subject matter jurisdiction in the published opinion of Federal Insurance Company vs WCAB, Adrienne Johnson.

The court reasoned that the issue of personal jurisdiction must be decided before the conflicts of law question. The WCJ’s determination that “[p]laying in even one professional basketball game in California is sufficient to establish jurisdiction” mischaracterizes the issue, which is not one of personal jurisdiction but rather one of whether one or more state compensation laws apply and whether in this case California may provide a forum for the claim. Thus the issue in this case is which state’s workers’ compensation law applies, not which state has personal jurisdiction. The issue may be characterized as a conflicts of law issue, which arises when there are contacts in multiple states.

Whether California’s workers’ compensation law governs depends on the application of the due process clause of the United States Constitution. If an employer or the insurer are subject to workers’ compensation law of a state that does not have a sufficient connection to the matter they are deprived of due process. Also, the determination may depend on the application of the full faith and credit clause of the United States Constitution. That is, if the workers’ compensation law of another state exclusively should apply and California does not have a sufficient contact with the matter, California must, under the full faith and credit clause, accede to the other state to provide a forum. California courts have long focused on the contacts of the employment relationship with California in determining which state’s workers’ compensation law applies. Despite a lack of California authority, it is widely accepted that rights created by the compensation act of one state cannot ordinarily be enforced in another state or in a federal court. Such a principle is justified because workers’ compensation laws involve administrative machinery that will differ from state to state. In some states there is an exception to this rule.

The Court was not, therefore, faced with an issue of which law to apply, but only with whether California’s workers’ compensation law applies in this case. That issue has been framed as one of due process under the 14th amendment of the United States Constitution. If this state lacks a sufficient relationship with Johnson’s injuries, to require the employer to defend the case here would be a denial of due process such that the courts of this state do not have authority to act. This might be referred to as a lack of subject matter jurisdiction.

The court concluded that a single basketball game played by a professional player does not create a legitimate interest in injuries that cannot be traced factually to one game. The effect of the California game on the injury is at best de minimis. Accordingly, California does not have a sufficient relationship with Johnson’s injuries to make the application of California’s workers’ compensation law reasonable. And California law has no obligation to apply the workers’ compensation law of any other state. Thus, as a matter of due process, California does not have the power to entertain Johnson’s claim.

It’s a crime so profitable that even dead people are in on the act. A story in Reuters Health says that a U.S. Senate committee revealed last year that public health insurer Medicare had paid as much as $92 million from 2000 to 2007 for medical services or equipment ordered or prescribed by doctors who were dead at the time. Many had died more than five years before the date when they supposedly ordered or authorized the service.

Healthcare fraud said to cost U.S. taxpayers hundreds of billions of dollars a year has garnered increased attention amid the congressional debate about overhauling the U.S. healthcare system — especially since President Barack Obama wants to cover some of the cost of reforms by fighting abuse. Yet interviews with several law enforcement and healthcare experts indicate the president may be disappointed. Some fear the focus on fraud may come as too little, too late after years of government complacency and inaction.

Experts like the FBI’s John Gillies say the problem has been getting worse all the time, as mob figures and violent criminals are lured by fabulously easy money and relatively light prison sentences into fraud targeting Medicare, the federal health insurer for more than 43 million elderly and disabled Americans. “There are so many schemes involved. Take any aspect of the healthcare industry and there’s a fraud going on in there right now,” Gillies, special agent in charge of the FBI Miami Division, told Reuters in a recent interview.

Florida has long been known for its unsavory association with cocaine cartels, political shenanigans and swampland real estate deals. Gillies says the state is also now “ground zero for healthcare fraud” since so many elderly Americans have retired to end their days in its famous sunshine. Hardly a week goes by without authorities in Florida reporting another arrest, indictment or conviction for Medicare fraud, which has replaced the drug trade as the crime of choice among many criminals.

The cases often involve multimillion-dollar schemes featuring bogus suppliers of wheelchairs, or other so-called durable medical equipment devices, and sham infusion therapies for the treatment of HIV and AIDs patients. One case filed recently in South Florida included the indictment of 11 members of New York’s Bonanno crime family, and prosecutors say the crimes are becoming more elaborate, involving kickbacks, stolen identities and manipulative billing practices. “When we shut down one scheme they just move onto the next scheme,” said Gillies, referring to fraudsters perpetrating one of the most lucrative financial crimes in America today. “I do not see it slowing down any time soon,” he said.

The FBI estimates that fraud accounts for 3 percent to 10 percent of U.S. healthcare expenditure per year, and Gillies said it could easily cost about $200 billion annually. That is broadly in line with a Thomson Reuters report released on October 26. The report said that in 2007, when the United States spent nearly $2.3 trillion on healthcare and both public and private insurers processed more than 4 billion health insurance claims, fraud was estimated to reach as much as 10 percent of annual healthcare spending. At that rate, due largely to fraudulent Medicare claims, kickbacks for referrals for unnecessary services and other scams, the losses in 2007 would have been more than $220 billion.

The National Healthcare Anti-Fraud Association, an organization of about 100 private insurers and public agencies, estimates that some $60 billion, or about 3 percent of total annual healthcare spending, is lost to fraud. But the Thomson Reuters report said that figure is considered conservative.