MANAGED CARE February 1998. ©1998 Stezzi Communications

Kaiser Permanente has settled a wrongful-death lawsuit, brought by the family of a Texas man, for an eye-popping $5.3 million. The family claimed Ronald Henderson's heart attack was the result of a Kaiser cost-cutting plan that left him untreated for heart disease.

Kaiser lawyers argued that Henderson was an overweight smoker who did not obey doctors' orders, and that cost-cutting had nothing to do with his death. But during legal procedures, it was revealed that a Kaiser executive was intoxicated when he developed the HMO's plan to slash hospital admissions in North Texas.

"I don't know how many Wild Turkeys on the rocks I had," Kaiser executive John Vogt said in court papers, the Associated Press reported. The HMO settled after a test jury said it would have awarded the family 10 times the amount if the case had gone to trial.

Shortly after the Kaiser settlement — timing is everything --a study by CNA HealthPro, the insurance conglomerate, indicated that health plans should review their credentialing and denial-of-benefits/utilization-review policies as a step toward reducing liability expenses. That the Kaiser case dwarfs any settlement reported in the CNA study might make plans' risk managers nervous enough to recheck operations.

The study indicates that managed care plans are most vulnerable in the area of vicarious liability — negligence arising from medical malpractice (failure to diagnose or coordinate care). Between 1992 and 1996, 36 percent of successful claims involved vicarious liability. But claim for claim, the costliest settlements were for denial of benefits or utilization review, followed by problems rooted in sloppy credentialing practices. The highest single payment based on benefits-denial/UR was $600,000, while that for vicarious liability was $50,000 --one one-hundredth the size of the Kaiser settlement.

Managed Care’s Top Ten Articles of 2016

There’s a lot more going on in health care than mergers (Aetna-Humana, Anthem-Cigna) creating huge players. Hundreds of insurers operate in 50 different states. Self-insured employers, ACA public exchanges, Medicare Advantage, and Medicaid managed care plans crowd an increasingly complex market.

Major health care players are determined to make health information exchanges (HIEs) work. The push toward value-based payment alone almost guarantees that HIEs will be tweaked, poked, prodded, and overhauled until they deliver on their promise. The goal: straight talk from and among tech systems.

They bring a different mindset. They’re willing to work in teams and focus on the sort of evidence-based medicine that can guide health care’s transformation into a system based on value. One question: How well will this new generation of data-driven MDs deal with patients?

The surge of new MS treatments have been for the relapsing-remitting form of the disease. There’s hope for sufferers of a different form of MS. By homing in on CD20-positive B cells, ocrelizumab is able to knock them out and other aberrant B cells circulating in the bloodstream.

A flood of tests have insurers ramping up prior authorization and utilization review. Information overload is a problem. As doctors struggle to keep up, health plans need to get ahead of the development of the technology in order to successfully manage genetic testing appropriately.

Having the data is one thing. Knowing how to use it is another. Applying its computational power to the data, a company called RowdMap puts providers into high-, medium-, and low-value buckets compared with peers in their markets, using specific benchmarks to show why outliers differ from the norm.
Competition among manufacturers, industry consolidation, and capitalization on me-too drugs are cranking up generic and branded drug prices. This increase has compelled PBMs, health plan sponsors, and retail pharmacies to find novel ways to turn a profit, often at the expense of the consumer.
The development of recombinant DNA and other technologies has added a new dimension to care. These medications have revolutionized the treatment of rheumatoid arthritis and many of the other 80 or so autoimmune diseases. But they can be budget busters and have a tricky side effect profile.

Shelley Slade
Vogel, Slade & Goldstein

Hub programs have emerged as a profitable new line of business in the sales and distribution side of the pharmaceutical industry that has got more than its fair share of wheeling and dealing. But they spell trouble if they spark collusion, threaten patients, or waste federal dollars.

More companies are self-insuring—and it’s not just large employers that are striking out on their own. The percentage of employers who fully self-insure increased by 44% in 1999 to 63% in 2015. Self-insurance may give employers more control over benefit packages, and stop-loss protects them against uncapped liability.