Category Archives: Insurance

Private Equity in Medicine

To add to those revealed in  James Sherlock’s excellent posts about nursing homes and the health care industry generally, here is another culprit–private equity firms.  They buy up medical practices in an area, creating great bargaining power with insurance companies, and begin raising prices.  The fight is between giant, merged insurance companies and giant, merged medical practices.  The losers are patients and the winners are the private investors.

Today’s Washington Post has a long article describing how this happened with anesthesia practices in the Denver area.  The company, U.S. Anesthesia Partners, which calls itself a physician-owned company, was, in reality, created by the private equity firm, Welsh, Carson, Anderson & Stowe, which owns 55 percent of the stock.

Predatory Virginia Nursing Home Owners

by James C. Sherlock

Merriam Webster:

Pred*a*tor: (noun) one who injures or exploits others for personal gain or profit.

The most medically vulnerable of us reside in skilled nursing facilities (SNF).

Nobody plans to be there, but that is where about thirty thousand Virginians find themselves at any one time. People who are moved from hospitals to save money for the insurers but are too sick or injured to go home yet.  

They are supposed to get the skilled nursing the name suggests. Many don’t.

Most are covered by Medicare. The rest by Medicaid or private insurance. It could be any one of us tomorrow.

These patients are at risk by design in some of these SNF’s. Put in danger by a perverted business model, a model that shows that returns can be juiced into double digits by stripping staff. The facilities can then be flipped in a couple of years at a profit based upon increased cash flows.

We will track their investments using government data. We will see a ritual, system-wide understaffing.  We will also see that the government accumulated and publishes staffing data but there is no evidence they use it for anything.

There are nursing homes in Virginia, for example, that provide less than 30% of the registered nurse hours per patient per day that CMS assesses they require.  Weekend statistics are worse. Nothing happens.

Today there are large systems not one of which is staffed to CMS norms.

There are real people who are harmed by those calculated violations.  Exceptionally vulnerable people are regularly denied at least their dignity, often their health and sometimes their lives.

The owners injure and exploit patients for personal gain or profit.

They are predators. Continue reading

No Clarity In This Process

by Dick Hall-Sizemore

Here is another example of the utter inanity of this country’s medical care system and its financing.

First, some background.  I am covered by Medicare.  I also have a Medicare supplement insurance policy issued by the Commonwealth of Virginia for retirees, administered by Anthem. (Good deal, by the way.)  I chose to include the vision and dental coverage on the Anthem policy.

Like almost everyone my age, I have developed cataracts.  A couple of years ago, an ophthalmologist told me that I qualified for cataract surgery, but that the cataracts had not progressed to the point that such surgery was highly recommended.  I chose to put it off.

Today, I went in for my annual eye exam.  As I was checking in, the staff at the Virginia Eye Institute (VEI) went to great lengths to explain that a refraction (the process of determining whether I need the prescription of my glasses changed) was not covered by insurance and that I would be responsible for the $70 if I chose refraction.  I even had to sign a form acknowledging that I had been informed of this. Continue reading

Federal Flood Insurance Needs to Cover Its Costs

Flooded street in Norfolk during Hurricane Sandy

by James C. Sherlock

Virginia is suing FEMA over its new risk rating methodology for the National Flood Insurance Program (NFIP).

Virginia’s suit says that the new methodology:

doesn’t recognize many mitigation efforts, nor does it clearly explain how rates are calculated based on mitigation efforts. This means that (Virginia’s) mitigation efforts don’t result in lower premiums for policyholders.

The suit does not state that the rates are not high enough. Which they are not.

  • The costs of repair and rebuilding have soared;
  • Sea level rise combined with subsidence is both measured and forecast to increase flood hazards on Virginia’s coasts.

The rest of the country does not “owe” a discount on flood insurance to those of us that choose to live in flood-prone areas.

Rate payers need to cover the costs of the NFIP, including building a reserve – like a real insurance program. Continue reading

Virginia’s Community Banks, Under Stress, are Crucial to the Economy, Small Business and Small Communities

Back of America locations in Virginia

by James C. Sherlock

In general, I do not write enough about Virginia small businesses.

Small business is both the heart and soul of the Virginia economy.

I have no personal financial interest in Virginia’s community banks, but all of us need them to be healthy.

Because community banks disproportionately fund small business.

The Federal Reserve reported in its 2023 Report on Employer Firms: Findings from the 2022 Small Business Credit Survey

As pandemic-related funding programs ended, the data show an accompanying rise in the share of firms that sought traditional financing in the form of loans, lines of credit, or merchant cash advances. The share of these applicants that were fully approved rose year-over-year but lags prepandemic levels.

But the banking industry, trying to reestablish itself as the economy’s primary funding agent after the COVID federal money tsunami receded, is under stress not seen in 2022.

The Fed’s rapid rise in interest rates to combat inflation, driven by federal spending, has lowered the value of banks’ fixed rate collateral.

Community banks, not the source of the problem, are bearing the brunt of the reaction.

Depositors need to understand how important Virginia’s 42 community banks are to Virginia’s economy — and many of their own jobs. Continue reading

Virginia Mental Health Services in Deep Trouble – A Survey

Eastern State Hospital. Courtesy Virginia Department of Behavioral Health and Development

by James C. Sherlock

Nov. 29 updates in blue.

Supply cannot begin to keep up with demand.

In this case, the consequences involve personal welfare and public safety. And they can be terrible in both cases.

Governor Youngkin will propose to the 2023 General Assembly additional funding and policy prescriptions for the state’s mental health system.

The state offers inpatient services, community-based government services, and Medicaid-funded services.  Medicare offers payments to participating hospitals. Private insurances offer coverage.

I say “offer,” because much of what policy prescribes has proven difficult to fill in practice.

Virginia’s mental health system is in deep trouble because of shortages of personnel and facilities to absorb the very steep rates of increases in persons needing assistance.

The personnel problems are twofold and affect both government and private services.

  1. Key personnel positions require trained specialists, the shortages of whom are manifest across the country; and
  2. Working conditions in mental health care are very stressful, physically demanding and dangerous, driving away badly needed low skilled workers who can easily find jobs elsewhere.

Medicaid programs offer services that private facilities and practitioners, facing the same labor shortages, have proven in some combination unable or unwilling to provide at Medicaid reimbursement rates. State-contracted Medicaid Managed Care Organizations (MMCOs) have not solved those problems.

So part of the answer is money, but we really don’t know how much. And in this case, money alone may not provide sufficient services to satisfy demand. Continue reading

Hormone Treatment of Transgender Adolescents in Virginia – New Concerns

by James C. Sherlock

We have discussed at length the controversial policies of the American Academy of Pediatrics (AAP).

It is time to consider the impact of Great Britain’s ongoing National Health Service Review of its transgender support to children and young people.

It offers new concerns about clinical challenges in the diagnosis and treatment of gender dysphoria in adolescent patients, especially the safety of puberty blockers.

And it causes us to discuss what has been going on for years at the University of Virginia Children’s Hospital Transgender Youth Health Services.  

It is a state hospital that has treated hundreds of patients from the earliest stages of puberty with both puberty blockers and cross-gender hormones. Continue reading

Medicaid, Public Health and Chronic Disease Management

UVa Hospital

by James C. Sherlock

From the CDC:

Chronic diseases have significant health and economic costs in the United States. Preventing chronic diseases, or managing symptoms when prevention is not possible, can reduce these costs.

Virginia pays a great deal of money every year to contractors who manage the care of its Medicaid population.

It is a hard job, but even though the challenges are tough, it has appeared to me for a long time that we are not getting our money’s worth from $18 billion annually in Medicaid payments for the populations managed by these contractors.

A white paper, “Prevent Costly Chronic Disease Through Member Engagement” caught my eye as the basis for a follow up to my earlier report on public health and Medicaid managed care in Petersburg.

This is that update. Continue reading

Hey, Buddy, What’s Your Friggin’ Problem?

by James A. Bacon

Based on anecdotal evidence, I have long thought that the rudest, most aggressive drivers in the United States resided in the Northeastern states. It turns out, based on insurance data, that Virginia has some of the worst drivers in the country. So much for our self-image as courteous ladies and gentlemen.

Insurify, a website that helps consumers find automobile insurance, collects a massive volume of data on driver history, including accidents and tickets. Virginians stand out in several regards. Ranked by driving offenses including failure to yield or stop, improper backing, passing where prohibited, tailgating, street racing, and hit-and-run, Virginia is the No. 1 state for drivers with a “rude” driving violation on record. The percentage of rude drivers (3.58%) is more than twice that of the national average (1.68%).

Likewise, Virginia ranks No. 1 in the country for the percentage of drivers with a reckless driving offense (0.56%). That is more than five times the national rate (.09%) Continue reading

Things Are Not Always As Intuitive As They May Seem

Photo credit: CNBC

by Dick Hall-Sizemore

Sometimes, public policy proposals can be counterintuitive.

Virginia law authorizes health insurance companies to charge smokers up to 50% greater than the premium that would otherwise be effective. The 2022 General Assembly passed legislation that would have repealed this authorization. The bills, HB 675 (Hope, D-Arlington) and SB 422 (Edwards, D-Roanoke), passed both houses with strong bipartisan majorities.

The Governor vetoed them.  His explanation for the vetoes was:

Smoking and tobacco use are among the leading causes of chronic health problems that result in higher healthcare costs. This legislation would force insurance companies to recover costs associated with tobacco users by raising premiums on non-tobacco users. The ability to reduce premiums by quitting smoking is also a valuable incentive to encourage healthier habits.

Requiring non-tobacco users to cover the increased healthcare costs associated with tobacco use is not a policy I can support.

On its face, this explanation sounds reasonable. After all, society should discourage smoking and no one wants to subsidize unhealthful habits. Continue reading

Feds Require Changes to Virginia Health Insurance Law

by James C. Sherlock

There are a couple of new issues between Virginia’s Bureau of Insurance (BOI) and the federal Centers for Medicare/Medicaid Services (CMS).

The problems were briefed today by a Board of Insurance representative to the Health Insurance Reform Committee.

CMS has told the BOI that the 2020 General Assembly passed a law (possibly without knowing the implications) that violated a federal statute. The Virginia law attempted to protect the state from having to spend money to fund a new health insurance mandate for Qualified Health Plan (QHP) holders. QHPs are small group and individual policies sold on the ACA exchange.

The feds are not amused. Virginia law apparently will need to be changed. Continue reading

Will Liability Insurers Drive School Mask Policies?

by James C. Sherlock

California has imposed a school mask mandate for the fall.  Virginia has not — yet.

California shows us some of the implications. In that state, the mandate has produced varying reactions.  Reporting in Education Week has illuminated some of those. Continue reading

Another Bit of Nonsense in the Cost of Health Care

Image credit: Johns Hopkins University

by Dick Hall-Sizemore

I just had an experience that illustrates the bewildering complexity of the finances of the American health care system.

Yesterday, I had a colonoscopy. I’m a veteran of this procedure, having had several because there is a history of colon cancer in my family. (No polyps this time, by the way.)

The protocol for the dreaded “prep” time has changed. No longer does the patient have to consume a gallon or two of sickening sweet liquid (others who have had this procedure know what I am talking about). Now, one has to take 24 pills in two stages between 6 p.m. the night before and 6 a.m. the day of the procedure, along with a lot of water. Continue reading

Is DOJ’s Focus on Healthcare Monopolies Coming to Virginia?

by James C. Sherlock

The Acting head of the Justice Department’s Antitrust Division, Richard A. Powers, yesterday delivered a speech that described the Justice Department’s new goals, strategies and resources for criminal antitrust enforcement.

The clouds have darkened over Virginia’s healthcare monopolies.

The Commonwealth. Virginia has failed in its duty to oversee its healthcare industry.  The full extent of that failure has been detailed in previous columns.

It has failed in two major ways:

  1. The Virginia Department of Health (VDH) has been captured by the healthcare provider industry that it regulates. Indeed VDH has been actively complicit in industry evasion of antitrust statutes through its administration of Certificate of Public Need (COPN) law.
  2. The Commonwealth’s regulatory structure has a strategic vulnerability. Neither the VDH that regulates providers nor the State Corporation Commission that regulates insurers can adequately oversee integrated health care delivery and insurance companies to prevent or detect what amount to internal conspiracies in restraint of trade. In the wrong hands, integrated provider monopolies and regionally powerful insurers can serve as weapons against competitors to both.

Continue reading

An Agenda for High Quality Primary Care

by James C. Sherlock

The Business of Healthcare

I have written columns here and in various newspapers across the state for a number of years supporting health enterprise zones (HEZ’s) in underserved areas of Virginia.

I drafted and Republican Attorney General candidate Jason Miyares sponsored legislation of that title in the General Assembly.

It lost. Like night follows day, Democrats killed it. Fast forward.

The National Academy of Sciences, Engineering and Medicine released an implementation plan May 4 for the U.S. government, recommending it provide high-quality primary care to all Americans. The program proposed is simply too large in my view to be run effectively in 50 states by the federal government and its one-size fits all regulations.

But it contains good ideas — action items that Virginia can and should legislate without waiting for federal legislation that may never see the light of day. Continue reading