California health insurance exchange awards operational contract

California health insurance exchange awards operational contract

California's new health insurance exchange awarded a contract worth nearly $360 million to create a website and enrollment system to help Californians shop for health coverage and determine whether they are eligible for subsidies under the federal healthcare law starting late next year.

The California Health Benefit Exchange said it would start enrollment Oct. 1, 2013, for coverage that would take effect in January 2014. The exchange said it planned to pay a unit of Accenture, a Dublin, Ireland-based consulting firm, $183 million to build the system plus $176 million for operations and development over the next four years. The contract is subject to federal government approval.

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The California exchange, like others across the country, will negotiate with insurers for the best rates and assist consumers and small businesses in choosing a plan by separating them into five categories based on cost and the level of benefits.

The exchange is responsible for enrolling an estimated 1.7 million new people in Medi-Cal, the state's Medicaid program for the poor, and distributing federal premium subsidies to an estimated 2 million consumers to help them afford private coverage. Families with incomes up to $80,000 annually will be eligible for subsidies, according to the exchange.

"We want the consumer experience of enrolling in health insurance and getting the subsidies you are eligible for to be as easy as buying shoes on Zappos or getting a book on Amazon," said Peter V. Lee, the exchange's executive director and a former healthcare official in the Obama administration.

Strong participation in the exchange is crucial, experts say, so there's a mix of healthy and sick policyholders to keep premiums affordable. Premiums would continue to escalate without a diverse pool of customers, turning off new applicants and undermining a key aspect of the healthcare law.

"The way to lower costs for all Californians is to have everyone participating," Lee said.

Under the federal law, California stands to receive as much as $55 billion in federal funds for the Medi-Cal expansion from 2014 to 2019, according to the Kaiser Commission on Medicaid and the Uninsured, and a similar amount for subsidies for people buying private coverage. However, that money may not be available if the U.S. Supreme Court overturns the Affordable Care Act. A ruling is expected this month.

The exchange is crafting an advertising campaign and working with community groups to educate consumers about their new insurance options starting in 2014.

"This is a big undertaking to get reliable informa tion out to millions of people," said Lucien Wulsin, executive director of the Insure the Uninsured Project, a nonprofit research group in Santa Monica. "The information technology is key."

chad.terhune@latimes.com

A sports injury leads to a big foul in medical billing

A sports injury leads to a big foul in medical billing

It's amazing how easily the smallest healthcare mix-up can spin out of control and leave the patient on the hook for thousands of dollars in medical bills.

In Jim Furlan's case, his journey into the healthcare Twilight Zone began in September when his then-15-year-old daughter injured her knee playing in a volleyball tournament in Las Vegas.

"She was rushed to the hospital in extreme pain," he recalled the other day. "They had to give her morphine."

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The girl then flew home to Manhattan Beach, where her doctor ordered an MRI at Torrance Memorial Medical Center. It showed that she'd torn her anterior cruciate ligament, or ACL, a serious but not uncommon sports injury.

The next day, Furlan sought a second opinion from a prominent orthopedic surgeon, who confirmed the diagnosis. He scheduled an operation for about a week later, which Furlan's insurer, Aetna, readily approved.

So far so good.

The trouble began after the procedure was successfully completed. Furlan received a letter from Aetna saying that because the MRI hadn't been preapproved, he'd have to pay the nearly $6,000 cost himself.

Furlan appealed the decision. "They approved the surgery," he told me, "and no doctor would perform this surgery without first doing an MRI."

It's a fair point. I spoke with several orthopedic surgeons, and each said that in the case of knee injuries, it's almost always prudent to perform an MRI before breaking out the scalpel.

"The MRI can show if there's other damage," said Dr. Richard Bowen at Los Angeles Orthopaedic Hospital. "The vast majority of doctors would do an MRI before treatment."

Dr. David McAllister, director of UCLA's sports medicine program, observed that if additional problems were found while a patient was under anesthesia, a surgeon wouldn't be able to fix them because no prior approval had been given.

"That's a big reason why an MRI makes sense," he said. "Otherwise, the patient would have to come in for a second surgery, which would be much more expensive for the insurer."

But Aetna stuck to its guns. It denied Furlan's appeal on the grounds that "precertification was required for the MRI and there is none on file."

Never mind that if the insurer's bean counters had stopped to think about things for just a moment, they'd probably have agreed with the medical experts that an MRI is a key part of ACL surgery.

M eanwhile, Torrance Memorial Medical Center started billing Furlan because he'd signed a waiver declaring that if his insurer didn't pony up, he'd have to cover the tab. The hospital's invoices warned that if he didn't make good, "your account will be referred to a professional collection agency."

Frustrated, Furlan took his case straight to the top, writing a letter last month to Aetna's chief executive, Mark Bertolini. He said he received no answer. So he came to me.

An Aetna spokeswoman, Cynthia Michener, deemed the whole mess "a big misunderstanding."

She said Furlan's doctor erred in not seeking pre-approval for the MRI, so as far as Aetna was concerned, the doctor, not Furlan, was responsible for the nearly $6,000 bill.

But that's not what the insurer's letters to Furlan say. They say "you are responsible" for the MRI costs. Michener blamed that language on "an incorrect code" somehow being entered on Furlan's file.

As Furlan saw things, he 'd have to pay the thousands of dollars to Torrance Memorial and then sue his doctor for reimbursement â€" a crazy turn of events.

Aetna's Michener agreed. "This sort of thing shouldn't happen," she said. "We definitely don't want the patient getting caught in the middle."

Yet this sort of thing does happen, and with alarming frequency. One of the many shortcomings of the U.S. healthcare system is that, with so many players vying for people's money, and with so much clerical bureaucracy baked into billing, it's often difficult to simply get one party to speak with another.

And before you know it, minor misunderstandings escalate to collection agencies and lawsuits.

At least Aetna has decided to do the stand-up thing. Michener said the insurer would cover Furlan's MRI bill and school Furlan's doctor on the importance of getting pre-approval for tests.

That's great. But you'd think Aetna could have made this decision sooner, such as during the app eal process (and before the news media started sniffing around).

The U.S. healthcare industry is worth about $3 trillion. Would it kill these people to simply pick up the phone and call one another from time to time?

David Lazarus' column runs Tuesdays and Fridays. He can be seen daily on KTLA-TV. Send your tips or feedback to david.lazarus@latimes.com.

Letters: Healthcare bargain hunting

Letters: Healthcare bargain hunting

Re "Patients save by paying cash," May 27

Let me see if I have this right: People in California pay hundreds of dollars a month in health insurance premiums for the "privilege" of paying up to 10 times the cash cost of a medical procedure or test?

With such obviously brilliant talent available, I think I will ask a health insurance company negotiator to come along with me when I buy my next car.

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David Bowles

Rancho Santa Fe

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Mayor Bloomberg vs. the Big Gulp

Mayor Bloomberg vs. the Big Gulp

New York Mayor Michael Bloomberg has been on a years-long crusade against obesity, or at least against the cultural and commercial forces that promote it. In his latest step, he's proposing to ban the sale of super-sized sugary drinks by restaurants, cinemas, street vendors and stadium concessionaires. The move exemplifies the tension between individual liberty and societal responsibility that's particularly acute in the field of public health. Americans cherish their freedom to live as they choose, without "nanny state" dictates from the government. But because they're not willing to deny medical care to people who urgently need it, society has to pick up the tab for those who make heedless choices. Striking the right balance between the two will be one of the central challenges for government in the coming decades, as rising healthcare costs put an increasing strain on federal, state and local budgets.

Almost everything gover nment does restricts the freedom of the governed in some way. Spending programs have to be paid for with taxes that leave people less money to use as they see fit. Laws limit what people can do without risking fines, lawsuits or incarceration. People tend to accept these limits without complaint when there's a clear connection to public safety and civil order, or a clear benefit from the spending that's proportionate to the cost.

The support weakens when the connection to public safety isn't so clear or the benefits are more abstract. For example, seat belt laws are widely supported: There's no question that they save lives and reduce the severity of injuries. But when the federal government lowered the speed limit on all interstate highways to 55 miles per hour in 1974, numerous states rebelled, insisting that there was no public safety reason for such a low limit in rural areas.

Similarly, the public accepts some governmental intrusion into what people eat and drink. There is an assortment of restrictions on alcoholic beverages, including a minimum drinking age, drunk-driving laws and regulations governing when and where liquor may be advertised. There are food safety standards and nutritional mandates on school lunch programs. Manufacturers have to list the ingredients, calorie and fat content of packaged foods, and local governments are increasingly demanding the same kinds of disclosures from restaurants.

But telling the average person that he has to eat X or cannot eat Y goes a step further. It intrudes on personal decisions that consumers make with their own dollars that affect just their own bodies. That's what makes even a relatively tame proposal such as Bloomberg's big-cup ban so controversial. Bloomberg's plan, which is pending before the city's Board of Health, would outlaw the sale of sweet ened drinks larger than 16 ounces. But somewhat arbitrarily, it wouldn't apply to groceries or convenience stores, to calorie-laden lattes or fruit juices, or even to restaurants that offered two 16-ounce sodas for the price of one.

The mayor's initiative also rests on a shaky scientific foundation. Researchers have found that people who regularly drink soda are more likely to be overweight, and that those who increase their soda intake have a greater chance of becoming obese and diabetic. But there's little data to support the idea that a ban on large cups and bottles of sugary beverages would make a real difference in obesity, especially a ban as porous as the one Bloomberg has proposed.

With no precedents to show the effectiveness of Bloomberg's approach, a better way to balance the competing interests of public health and personal choice would be to require more effective disclosure about t he calories in soda and a more aggressive effort to educate the public about the associated risks and costs. There are nearly 400 calories in 32 ounces of Coca-Cola Classic, which is almost as much as aMcDonald's quarter-pound hamburger. Raising awareness about calorie counts may also encourage restaurants to compete to offer the healthiest goods, not just the biggest portions.

Considering that 36% of the U.S. population is obese, far too many Americans aren't connecting the dots between weight and chronic disease, particularly diabetes and heart disease. And that's not just a personal health issue. Studies have shown that preventable diseases linked to behavioral choices are responsible for about half the premature deaths in the U.S. annually, and for much of the demand for costly medical care. At least some of those costs are borne directly by Medicare, Medicaid a nd other taxpayer-funded public programs, and indirectly by healthy people who carry private insurance.

The larger and more difficult question for the public is where to draw the line between an appropriate government effort to improve public health and an inappropriate interference with individual autonomy. If the only consideration were reducing how much taxpayers had to spend on healthcare, then Bloomberg's next logical step would be to require restaurants to serve vegetables with every food order, or to require every New Yorker to join a health club, or to ban ice cream.

He's not about to do that, though, because Bloomberg is a canny politician. Ultimately, society will decide what limits to place on individuals in the name of public health, and officials who go further than their constituents are ready to go will be tossed out at the next election. New Yorkers have given Bloomberg a lot of leeway on health issues so far, which suggests his views reflect thei r concerns about diet and obesity. Others who follow his lead may not find their constituents to be so tolerant.

SpaceX capsule completes historic mission

SpaceX capsule completes historic mission

About 563 miles west of Baja California, SpaceX's Dragon space capsule successfully splashed down after spending nine days in outer space.

When the unmanned cone-shaped capsule hit the water at 8:42 a.m. Pacific time Thursday, it marked the end of a historic mission carried out by the Hawthorne company officially known as Space Exploration Technologies Corp. It was the first privately built and operated spacecraft to dock with the International Space Station.

"Welcome home, baby," said Elon Musk, SpaceX's founder and chief executive, in a news briefing from company headquarters.

After the two spacecraft connected in space May 25, astronauts aboard the space station unloaded half a ton of cargo, water and clothes. The Dragon spent six days attached to the station and was refilled with 1,455 pounds of cargo for the trip back to Earth. The cargo will be delivered to NASA.

Astronauts sent the capsule back in the pre-dawn hours Thursday for a trip that lasted about five hours.

After the capsule reentered Earth's atmosphere, the three main parachutes billowed open about five minutes before splashdown. The orange-and-white-striped parachutes, each 116 feet in diameter, slowed the spacecraft's descent to 16 to 18 feet per second.

The craft bobbed in the water until an 80-foot boat, two 25-foot rigid-hull inflatable boats and a 185-foot barge equipped with a crane made the recovery. The capsule is set to arrive Monday at the Port of Long Beach.

Dragon's mission, which began March 22 when the Falcon 9 rocket it sat atop lifted off in the predawn hours from Cape Canaveral, Fla., is considered the first test of NASA's plan to outsource space missions to privately funded companies now that the U.S. fleet of space shuttles has been retired.

Next on the launchpad for a shot at the space station is Orbital Sciences Corp. of Dulles, Va., which has a test flight of its commercial rocket set for this year.

william.hennigan@latimes.com

Hollywood's Ari Emanuel talks tough on piracy

Hollywood's Ari Emanuel talks tough on piracy

RANCHO PALOS VERDES -- William Morris Endeavor Entertainment co-chief executive Ari Emanuel used the platform of the Wall Street Journal's All Things Digital Conference to call on Silicon Valley and Hollywood to work together to curb Internet piracy -- in his own provocative style.

"I'm going to get a lot of people [angry]," Emanuel said at the onset of his remarks, noting that Southern California's entertainment industry "probably screwed this up" and contributed to an impasse by pressing Congress to adopt the controversial Stop Online Piracy Act. The measure flatlined earlier this year amid fierce opposition from some of the largest Web companies and civil liberties groups.

Northern California's technology companies, meanwhile, have failed to do their part to curb rampant online piracy of movies and TV shows, which threatens the economic underpinnings of the entertainment industry, Emanuel said.

"We should be able to figure this out together," said Emanuel. "I actually don't think Northern California wants to do it."

Emanuel called on search giant Google Inc.and video distributors such as ATT and Verizon to block access to pirated content in the same way they do for other objectionable material, such as child pornography.

The conversation about online piracy ultimately will take place, Emanuel predicted, when these Internet players realize that they need the high-quality content created by his clients, which include "The Social Network"writer Aaron Sorkin, "Curb Your Enthusiasm" creator Larry David and "Family Guy" animator Seth MacFarlane.

"Eventually, I think people are going to pay for not two cats on a couch, they’re going to pay lot more money for  Aaron Sorkin,  they’re going to pay a lot more money for Seth MacFarlane.  Eventually, this conversation has got to happen."

William Morris End eavor, meanwhile, has been investing in digital startups that play at the intersection of technology and entertainment.

The agency acquired a minority stake in online and mobile marketing firm Red Interactive Agency in Santa Monica, funded a social publishing group called "The Audience" and backed a Los Angeles-based visual effects company called OToy Inc.

Indeed, convergence has been a major new focus for the agency since the venerable William Morris Agency merged with Emanuel's Endeavor.  And it attracted investment from Silver Lake, a private equity firm with stakes in Groupon, Skype and Zynga.

"We spent a lot of time in Silicon Valley, kind of figuring out how we could start coming together with what we do and what Silicon Valley does," Emanuel said.

Indeed, Emanuel talked about potentially capitalizing on the latest fund-raising craze, crowd sourcing, to raise money for a new film, inspired by the critically acclaimed television series about foo tball in Texas, "Friday Night Lights."  He said the project could draw contributions from the show's million-plus Facebook fans, or spark interest by posting story-boards on the photo sharing social network site Pinterest.

"I could go the traditional route, put the cast together and have a conversation with the studio, or I could go back to the studio and say I have X-amount of money," Emanuel said. "I would like to figure out if we could do that, change paradigms."

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Bruce Springsteen berates bankers — in German

Bruce Springsteen berates bankers — in German

"Wrecking Ball" is perhaps the most politically outspoken album of his career, repeatedly attacking a system that props up megalithic financial institutions while devaluing the working person and the roots of his beloved Americana. Berlin is an apt city for him to revisit populist themes â€" his famous 1988 concert in East Berlin (seen by a reported 160,000 people) is sometimes cited as one contributing factor in the buildup of popular pressure to tear down the Berlin Wall in 1989. 

His recent L.A. sets, by comparison, were more upbeat and revivalist affairs. But this packed Berlin show proved that the Boss' message translates in any language. 

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â€"August Brown

Photo: Bruce Springsteen performs in the Olympic Stadium in Berlin on May 30. Credit: Britta Pedersen / EPA.