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The following is a collection of links to articles/text from articles published between 2010-2011, the majority of which focus on California politics and health policy.
Daniel Weintraub’s California Health Report
By: Jennifer Chaussee
In-home care program targeted for deep cuts
As Gov. Jerry Brown and state lawmakers look for places to cut in the state’s $85 billion budget, a popular program that provides in-home services for hundreds of thousands of disabled and elderly Californians has become a natural target.
The In-Home Supportive Services program is the fastest growing major social program in state government. Democrats defend it as a humane and cost-effective way to keep people living independently rather than in more costly nursing homes. But Republicans have questioned the program’s policy of paying relatives to care for their loved ones and have suggested that the program is rife with fraud.
Both parties, however, share a concern about the program’s rapid growth.
Enrollment has more than doubled in the past ten years. So has the cost of caring for the average client. As a result, spending on the program has increased by an average of 13 percent annually, according to the non-partisan Legislative Analyst’s Office, which serves as a key advisor to the Legislature.
The cost increases have been driven by higher wages and benefits for the caregivers and more hours of care for the recipients.
The in-home workers were once paid only minimum wage. But many of them were unionized earlier this decade and their wages and benefits improved. This made it easier for clients to find help but also increased the cost of the program. The average client receives about 85 hours of care per month in their home.
The program now costs about $5.5 billion a year. Since 1993, the federal Medicaid program has paid for half of that cost, leaving the state and the counties to split the rest. The state’s share came to about $1.5 billion last year.
Former Gov. Arnold Schwarzenegger tried repeatedly to cut the cost of the program by limiting wages, eligibility and services, but most of his proposals were rebuffed by Democrats in the Legislature. This year, Brown proposed to cut $486 million in state money from IHSS, essentially eliminating the program for about 87 percent of its recipients, or about 375,00 elderly or disabled people.
“The goal of the administration’s proposal is to try to achieve savings while maintaining a core level of care to these clients,” said H.D. Palmer, deputy director of the Finance Department.
Legislators responded with a scaled back plan that seeks to save the same amount of money with far less impact on the recipients.
Lawmakers accepted Brown’s proposal to require clients to obtain a doctor’s certification stating that they would be forced into a nursing home if they lost the services they were getting at home. This is expected to end services for about 43,000 people and save the state about $120 million a year.
Legislators are also counting on getting an additional $121 million in federal funds and have approved $128 million in cuts to the program that will be specified later.
Among the most controversial proposals still on the table is Brown’s plan to eliminate domestic services – housecleaning, laundry, cooking – for people who live with their caregiver. These are mostly cases of people who are being cared for by a family member.
One feature of the program that has been widely praised is its policy of allowing recipients to choose their own caretaker. The client is considered a consumer and the state government, acting through the counties, handles eligibility screenings and pays the wages for the caregivers.
This policy empowered the clients to choose their own family members as caregivers, in turn allowing the family members to stay at home and not forfeit an income. Today, the majority of caregivers are relatives of the recipients. Advocates say that without this provision the relatives would have to work outside the home, leaving the recipients without care. They would eventually end up in nursing homes at an increased cost to the taxpayers.
But the same provision that empowered the disabled also opened the door for fraud as some people inflated their hours and others simply concocted relationships between caregiver and client that did not exist. State officials reported a backlog of 400 potential cases last year, although they say they don’t know how much money is lost to fraud.
“There is no way to actually determine the amount of fraud,” Norman Williams, spokesman for the California Department of Health Services, said.
Over time, changes were made to IHSS in the name of fraud prevention. As of 2010, potential IHSS caregivers are screened through the IHSS authority within their county to verify that they have not been convicted of crimes like elder abuse or government fraud.
The Health Services Department reported having received 136 case referrals for IHSS fraud since June of 2010, just within Southern California alone. If the state recovers all the money alleged to have been lost in those cases, it would amount to $2.5 million, Williams said.
Others say that the more aggressive efforts to deter fraud may have deterred clients from seeking services to which they are entitled.
“I think a number of people believe that former Governor Schwarzenegger’s anti-fraud measures enacted in 2009 have had a real impact on caseload,” said Karen Keeslar, Executive Director of the California Association of Public Authorities, county agencies that run the program for the state.
Aside from the anti-fraud efforts, the question of whether cutting the program could actually save or cost the state money is complex.
The obvious alternative for many IHSS recipients is to move into a nursing home. And since nursing home care can be three or four times more costly than in-home services, it is assumed that the state would be forced to spend more on elderly and disabled care in the absence of the in-home program.
But not all recipients would be forced to enter an institution if they are denied IHSS benefits. A report by the LAO last year found that while IHSS is cost effective for the state budget alone, it is unlikely that enough patients would be forced to enter nursing homes to make the program cost effective for both the state and the counties.
And if the program is preserved for the most impaired clients while eliminating or sharply curtailed for others, the increase in costs associated with nursing home care could be minimized. The quality of life of those who lose their assistance would likely decline, but they and their families, not the state’s taxpayers, would feel the pain.
Jennifer Chaussee is a correspondent with the California Health Report at http://www.healthycal.org.
March 2, 2011
Courts get last word on budget cuts
California’s Legislature is so polarized over the state budget that lawmakers in recent years have mostly kicked the problem down the road. But even when lawmakers do agree and the governor goes along, they don’t have the final say.
The state and federal courts have repeatedly intervened in the operation of California government, preventing budget cuts approved by legislators of both parties and even forcing the state to spend billions of dollars more than lawmakers approved.
The major rulings cover how much the state should pay doctors who care for the poor, the quality of health care in the state prisons, the wages paid to workers who provide services to the elderly and the disabled, subsidies for public transportation and psychiatric care for children. And there are many more – plus out-of-court settlements that also drive up costs, especially in education.
“It’s at least $5 billion just in court rulings,” said H.D. Palmer, deputy director of the Department of Finance.
The biggest of these is the case involving health care in the state prisons. About 10 years ago, legal advocates and inmates began suing the state in federal court, claiming that the care in the prisons was so bad that it represented cruel and unusual punishment prohibited by the U.S. Constitution. A judge agreed and eventually appointed an independent overseer to improve conditions, essentially giving him a blank check to spend taxpayer dollars to fix the problem.
Since then, the cost of revamping prison health care services rose from $1.2 billion to $2.5 billon between 2005 and 2009, according to a report by the non-partisan Legislative Analyst’s Office (LAO). And while costs declined a bit in the 2009-2010 budget year, the state is required to spend at least enough money to maintain improvements to its prison health care system.
A similar scenario played out in 1998 when the state was sued for not providing accurate mental health screening services for children eligible for the Medi-Cal program. In 2001, advocates won their case against the state, and by 2008 the federal court appointed a special master to oversee the program’s renovation. Costs soon skyrocketed, and there is little the Legislature can do about it.
Sometimes, though, the state can fight such court-imposed costs by filing appeals.
Recipients of In-Home Supportive Services, a program that delivers care to the elderly and the disabled in their own homes, filed a series of lawsuits against the state after the Legislature cut worker wages and restricted eligibility.
The plaintiffs prevailed in district court and a federal appeals court affirmed the court’s order. The court concluded that the wage cuts and eligibility restrictions would jeopardize economy, efficiency, quality, and access within the IHSS program. The state has appealed the decision a final decision has yet to be reached.
The issue of state worker furloughs has caused an ebb and flow of court rulings and state appeals, leading to over 30 court battles within the past three years.
From 2008 to 2009, various state departments filed a series of lawsuits challenging the Governor’s authority to put their workers on furlough. Then-Governor Schwarzenegger won several of these lawsuits, which upheld his ability to issue furloughs, including one lawsuit against Service Employees International Union (SEIU), one of California’s largest state employee unions.
But the courts did not uphold the Governor’s ability to furlough all state workers. The courts ruled that it was against state law to put employees of the State Compensation Insurance Fund (SCIF) on furlough. The California Correctional Peace Officers Association (CCPOA), the central union for police officers, also won their case against furloughs under the claim that they were a de facto salary cut. And the state Supreme Court, while ruling in favor of Schwarzenegger in one case, hinted broadly in its ruling that future governors would need legislative approval before imposing furloughs.
In 2008, the state legislature tried to cut Medi-Cal costs by slashing rates paid to doctors and other providers by 10 percent. A series of lawsuits filed by Medi-Cal advocates against the state brought the state to the U.S. Ninth Circuit Court of Appeals, which ruled that the cuts violated federal Medicaid standards of quality, economy, efficiency, and access to care. The courts also expanded the ruling to encompass the majority of Medi-Cal service providers not originally involved in the lawsuit.
Last year Schwarzenegger ran into a judicial roadblock when he tried to eliminate state funding for a child care program that seeks to help poor parents move from welfare to the workforce. A judge intervened, blocking the cuts temporarily. Now the Legislature and Gov. Jerry Brown are considering restoring the money – more than $200 million per year.
Two former governors – Pete Wilson and Arnold Schwarzenegger – were sued by the California Teachers Association in disputes over Proposition 98, the voter-approved constitutional amendment that sets minimum levels of spending for the schools. Both governors settled out of court in decisions that guaranteed billions of dollars in future funding for public education.
The courts’ intimate involvement in California’s finances could conceivably put judges in charge of the entire budget. If the voters reject Brown’s proposal to extend $11 billion in temporary taxes, the state will be forced to make spending cuts so deep that they cannot be implemented without violating one court order or another.
If that happens, the judges will have to face off with each other over whose ruling will stand and whose might be set aside because the state does not have enough money to satisfy them all.
Jennifer Chaussee is a correspondent for the California Health Report at http://www.healthycal.org.
March 3, 2011
Decline in medical malpractice insurance rates on the horizon
By Jennifer Chaussee | 03/03/11 12:00 AM PST
Doctors, nurses, and other health care providers could enjoy cheaper malpractice insurance in the coming year.
State Insurance Commissioner Dave Jones urged a half dozen of California’s top medical malpractice insurers to lower their rates, a move that caught some in the industry by surprise.
The ripple effects of the potential cut were uncertain. Joel Loucher, Jones’ top aide for rate reductions, said that while lowering rates could potentially affect health care costs, it would be small.
“It’s an auxiliary to health rates in general. Presumably, it’s a component of health costs, not a driving factor,” Loucher said.
“But it is one of the underlying costs. Medical malpractice insurance is a cost that clinics or hospitals have and to the degree that you lower any of their expenses, they’re able to control costs wherever they can,” Loucher said.
But since California has limits in place that prevents medical malpractice insurers from hiking their rates beyond a certain point, medical malpractice has taken to the shadows of the more contemporary debate on health insurance rates.
Prior to the insurance cap, malpractice insurance rates arguably were exorbitant – so exorbitant, that many health care providers who have been in the business since before the cap consider the current rates to be perfectly reasonable, Loucher said.
“But it doesn’t mean that the companies aren’t doing well and there isn’t room for lower rates … we still want to make sure the rates aren’t excessive,” Loucher said.
Due to the landmark Proposition 103, which was approved by voters in 1988, the insurance commissioner is authorized to force medical malpractice insurers to lower their rates if they are considered excessive.
While the commissioner regulates the entire insurance industry in California, he does not have the authority to force lower health insurance rates. “This issue (regarding medical malpractice insurance rates) was brought to his attention from contacts he made from his time in the legislature,” Loucher said.
The call for lower malpractice insurance rates follows a 2009 analysis of annual company reports by the Department of Insurance. New reports for 2010 were released earlier this week and will be part of the lengthy investigative process that will determine whether DOI will require the six insurers to lower their rates.
The DOI is not releasing the names of the six companies targeted by the request. “We’re not going to single anyone out,” said Jones spokesman Ioannis Kazanis.
“The reason we put out this call to them was because we went over 2009 data and there were some red flags where it looked like these insurers would have to re-file at a lower rate,” Kazanis said.
Those red flags came in the way of loss ratios, or the percentage of every premium dollar an insurer spends on claims. “We noted that some of the loss ratios for some of the larger medical malpractice insurers are quite low,” noted Loucher.
But low loss ratios aren’t the best way to judge rate levels, Loucher said, so DOI has requested additional information from the six companies in order to better determine whether or not rates need to be lowered.
And that process could take a while.
DOI still has to analyze the companies’ most recent annual reports for 2010 before taking a look at a heap of other factors that could more accurately indicate current rate levels. In the meantime, Jones’ call for lowered rates is more like a casual heads-up to insurers.
“Essentially, we’ve made an informal contact telling them that rough indicators show that their rates may be excessive,” Loucher said.
While the request may only be semi-official, it is somewhat out of the ordinary for DOI to request filings from insurers outside of the existing filing schedule.
“More common is for the department to wait for companies to make filings as opposed to going out and seeking them,” Loucher said.
If all the number crunching proves the rates are excessive it could be July before each of the six insurers are able to complete a new filing, Loucher said.
From there, the new filing, with adjusted rates, would have to be properly vetted by DOI, a process that could take several months. Assuming things go smoothly and the files are approved, the insurers are then allotted 90 days to implement lower rates.
Insurers who refuse to lower their rates could end up in court. “But we’re hoping for a civil process so things don’t have to get too formal,” Loucher said.