California Capitolweek   August 25, 2000

Hospital reimbursements, Vouchers,  Capitol update

Hello I’m Melissa Crowley. And I’m Jack Kavanagh. Thank you for joining us. School vouchers and proposition 38.  Is that controversial initiative right for California? We’ll get to that debate in just a moment. But first, another battle. This one impacts hospitals, providers, HMO’s and patients. A lot is at stake here in California . .   we have the highest percentage of HMO enrollees. At issue, slow reimbursement rates causing a host of other problems. The solution is under debate.

HMO/HOSPITAL PACKAGE

As these ER doctors debate the best plan for patient care…   …some say there’s another emergency in need of urgent attention.

C. Duane Dauner, California Health Care Association (SOT): The hospitals have nearly one billion in unpaid bills overdue.

And that is threatening the health of the hundreds of hospitals in California…   …according to the group that represents them.

C. Duane Dauner, California Health Care Association(SOT): It got to the point where some hospitals could not manage day to day funds due to lack of payment.  You can’t provide services unless you get paid.

Hospitals and Provider groups say they provide services twenty-four hours to all that need it…    …and since eighty percent of the insured population belongs to HMOs in California, long delays for HMO payments can be devastating…  They are pushing AB 1455 bill that would require those payments in a reasonable time frame.

Walter Zelman, California Association of Health Plans(SOT): We support prompt payment and billing, but we need to solve these problems rather than punish.

The group backing many of the state’s HMOs admits improvements need to be made……but says the cause of the problem needs to be fixed first.

Walter Zelman, California Association of Health Plans(SOT): I think hospitals and health plans and, to some extent, the physicians have gotten into a bit of a game with each other in that “I’ll pad might bill knowing that you’ll knock it down a little.  I’ll knock it down a little knowing that you’re going to pad it,” and I think we have to stop all of it.

Zelman also believes consumers need to realize the pressure is building within the healthcare system…

Walter Zelman, California Association of Health Plans(SOT): And the biggest problem we have in fixing all of this problem is we’re not fundamentally facing up to the conflict that, in healthcare at least, we’re demanding more than we’re willing to pay for.

Meantime, the day to day effort to provide the best care continues, but doctors working the rounds say the debate over how to pay for it and when payment will be received is spawning other pressing problems…Doctors dropping plans, patients left without, leading to bigger crowds in the ER.

Dr Kerry McMahon(SOT): I mean, the reimbursements are dropping out so dramatically that you can’t even meet costs, and the last resort is the emergency room.

END HMO/HOSPITALS PACKAGE

HMOS/HOSPITALS DISCUSSION

 (( Melissa  ))  Adding to the problem . . . the 7 million uninsured in California who often turn to the emergency room for care. Joining me now to talk more about this issue: Walter Zelman of the California Association of Health Plans representing dozens of HMO’s. And Martha Marsh , C-E-O of UC Davis .

Melissa: Martha, first question to you.  How long a delay are we talking?  I know most of us have to pay our bills in about thirty days.  What kind of delays are we looking at?

Martha: Well, I think right now the HMOs owe the hospitals in the state of California over one billion dollars in overdue payments, and if you look at what’s happening, in 1999, the average time to get payments is a hundred days or more sometimes, whereas in 1990, it was sixty days for these same kinds of claims, so the dilemma for the hospitals is for the same type of business that’s been going on, obviously technologies change and they’re more sophisticated, but it’s taken almost, not quite, twice as long to get paid for the same types of services.

Melissa: All right, Walter, I know it’s hard to categorize every HMO, but, in general, what’s causing these delays?

Walter: Well, obviously, there are two sides to every story.  The vast majority of hospital claims are paid very promptly, very quickly.  There are some that are questionable, that are arguable, that may not be with a contracted hospital, and the hospital has submitted charges for eighty thousand dollars, and the HMO looks at it and says, “well we think it should be fifty thousand dollars, and we need more information,” and they get very complicated and these negotiations are not the simplest things to resolve.  It’s not as if you’ve said, “okay, I’ll pay five thousand dollars for this,” and the bill comes in and they did exactly that and it’s five thousand dollars and you pay it.  Those are not controversial.  It’s when things get very high and very costly and when things were done that weren’t anticipated, and the hospital may be completely right in having done them, but it’s a complex issue, and we think that this has to be solved, and we think that part of the problem is that there’s not a lot of standardization.  It’s a very complex system.  We need to streamline it.

Melissa: All right, while this debate takes place and we look for fixes, and we’re going to get to what some of those may be in just a moment, as a healthcare consumer, I’m concerned, how are the patients affected?  Are there going to be longer lines in the emergency rooms or some providers dropping health plans?  What’s the bottom line for patients, Martha?

Martha: Well, I think the issue for patients is one that’s a really important one, and the reason is that if the hospitals are having trouble getting paid, they can’t add services.  There are longer waits now in the emergency rooms in the city of Sacramento.  They’re all busy.  We’re busy, and you can’t add new services to increase access for patients, so I think one of the concerns, if you listen to what patients are saying today, it’s concerns about getting care.  It’s concerns about getting in.  It’s concerns about quality, and what the hospitals are trying to do is get paid promptly so that they have the ability to do that.  Let me just give one example: what happens is, in Walter’s example, the patient is in the hospital, the hospital has provided the care, they’ve paid the doctors, they’ve paid the nurses, they’ve paid the pharmacy companies, and then there is this delay in their getting paid, and what happens is that that puts constraints on their cash, which means they can’t add things which are beneficial to patient care.

Melissa: All right, we’ve talked a lot about delay of payments, and I know, Walter, you’ve said a lot of times that HMOs are seen as the bad guys, but there are other factors, it’s almost like a deck of cards, that can lead to these payments, that there are other problems that we need to deal with first.  Are you referring to, say, reimbursements from Medicare, Medical?

Walter: Yeah, HMOs obviously have a responsibility to try to provide quality care and arrange for quality care, but also to keep the costs down, and we know from the old system from the late eighties and early nineties, if HMOs just take any claim that comes in from a doctor or hospital and pay whatever the doctor or hospital wants, we know what that means.  It means we’re going to get fifteen, twenty percent increase in premiums every year, so we have to be the bad guy in a way.  We have to be the cop that makes sure that everything was done according to the book, that it was really necessary, that it was really appropriate care, and that sometimes creates some tension.  I think that the other piece of tension that’s coming here is that they’re having cutbacks across the board from Medicare.  Medical is now going to get a little bit of money, but in California, Medical reimbursements have been incredibly low, and California is one of the lowest cost states in the country, so we’re providing, hospitals and health plans, and doctors, high quality, low cost healthcare, and we’re all under a pressure cooker, and the problems that we’re hearing about now are a result, I think, of the fact that people are demanding more and more services, more access, more benefits, but people don’t want to pay more for it, and we’re all feeling that squeeze, and we have to all work our own way out of it, but then maybe educate the public about the larger questions as well.

Melissa: All right, one thing that both sides do agree upon is that there are a lot of fires to put out within the health care system.  This one has been called one of the most urgent.  Martha, what is it going to take to fix this problem, and how soon do you think we can tackle this one?

Martha: Well, there is a bill before the state legislature now, and, hopefully, we will come to a compromise with the HMOs because I think it is in everybody’s best interest to do that.  What the hospitals really want is the ability to get paid quickly and to get paid on time, and I think that would really help.  I think that’s one little thing.  I agree with Walter there’s a lot of pressure that’s on the system right now, and what’s unusual is that Medical has low payments, Medicare is cut back, and the health plans under financial pressure, and that sort of trickles down into the hospitals and doctors, but it is all hit at the same time, and that’s what causing this.

Melissa: We should mention at one time both sides were pretty close to trying to reach an agreement before this bill 1455 came through.  As we speak, the Department of Managed Care that was formed after some sweeping reforms last year, is trying to bring all parties together to reach an agreement.  Walter, is that practical?  Do you think it will work?

Walter: Yes.  I think we’re very close to reaching an agreement.  There are still some, you know, bumps in the road.  There are a whole series of parties involved, and I think that always makes it complicated.  I think that if we’re just plans and hospitals now, we could work this out.  The main thing that health plans put on the table is that, after a certain period of time, if a hospital doesn’t feel that it’s been paid appropriately, doesn’t think that it got what it deserves, that it was paid late, we open it up to an external review process by which we would say that any hospital that hasn’t been paid can go to an external, independent reviewer, an expert in medicine if necessary and ask an expert of billing if necessary, and without arbitration, without lawyers, everybody sends in the paper, and that external reviewer decides what that hospital should get, and the health plan cuts the check, and if we're late in paying, we pay interest, and we put that on the table.

Melissa: Martha, in our final couple of seconds, is that a workable solution?  Is that something that you think could help?

Martha: I think that those things could help.  I think the basic problem though, is it’s adding another administrative layer into a system that’s already complicated, and I think that if we could find a way to streamline the payment system and get paid early, that would be better for everybody, for both the health plans and the hospitals

END HMOS/HOSPITALS DISCUSSION

(( Melissa  )) We would like your thoughts on the best way to fix problems within the HMO system while still keeping costs down. Send us an email to capitolweek dot org or drop us a letter to the address on your screen. There is another matter on the horizon that hospitals are keeping a watchful eye on. Hospitals are calling for a postponement of state seismic requirements. The industry says they’re approaching a deadline where they need to rebuild.  Some hospitals say they may have to close because they can not afford upgrades, estimated at 24 billion dollars system wide. Current law requires hospitals to be retrofitted under stringent  earthquake safety standards by 2008.  Some pending state senate bills would allow flexibility so hospitals can remain operational during retrofitting.  US Senator Dianne Feinstein is looking at legislation to provide some federal funding for hospitals.

(( Jack )) Healthcare is a big issue on the radar screens of presidential campaigns.  Another big one . . . vouchers.  A controversial state initiative will be on the November ballot.  Opposing proposition 38 . . .

. . . virtually every school group in the state and the Governor.  Tim Draper, a Redwood City venture capitalist, is providing most of the money for the " yes" side.  At this point, supporters have raised 3 times the amount of money than their opponents.  Just what is at stake for parents, teachers, and students? 

Michael Isip has this report.

VOUCHER REPORT

Dwayne Gorman, supports Prop 38(SOT): For my daughters, a voucher would mean that I have my choice the choice for perhaps a better education… that’s why the gormans support proposition 38.  That initiative would give some parents a 4000 dollar publicly financed voucher for private schooling. The idea being …   … competition for students force public schools to improve and give control back to parents.

Dwayne Gorman, supports Prop 38(SOT): If I go into a car lot with $4,000 what kind of choice would I get, they would come at me, looking for me. And would, treat me better.  They would know that I am a commodity.  I do have a power, to, to pick and chose so to speak, where they would go for their education.

Almitra Becerra, Elementary Teacher opposed to Prop 38: It is a poorly written initiative. That will more than anything harm the kids in California’s public schools.

And according to this 6^th grade teacher, prop 38 will de-rail recent reforms, like statewide testing and standards outlining what children should learn.

Almitra Becerra, Elementary Teacher opposed to Prop 38: You can’t take Johnnie who couldn’t read at first grade and expect that w/in a year he’s going to make 3 years progress w/o a lot of intensive help.

 California school reform centers on the star exam, that’s the annual test used to gauge student achievement.  Test results from July show improvement in most grades, but still California kids are below the national average…  …but teachers say the deck is stacked against  poorer school districts . .  …Martin Van Buren is one of the lowest performing schools in the Stockton unified school district …but it’s also in the middle of a federal housing project.  …Where a number of students can’t afford basic supplies . .  many parents are migrant farm workers, which means some kids miss school for extended periods of time.

Almitra Becerra, Elementary Teacher opposed to Prop 38: We have children who don’t speak English, who have learning disabilities, hearing disabled, blind, speech problems. Private schools aren’t going to take those kids. I say give us some time and let’s see what we can do in the next 3 or 4 years.

But for the gormans . . their three daughter could miss new opportunities.

Dwayne Gorman, supports Prop 38(SOT): If I were able to finish, to send my daughter to private school she would see a whole different way of life.

Tammy Gorman, supports Prop 38(SOT):That’s what they say America is built on.  Choice to, to pick and chose what we want to do. To grow up and be what we want to be. 

I’m Michael Isip for California Capitolweek.

 END VOUCHER PACKAGE

(( Jack ))  Total spending in the battle over Prop 38 could exceed 40 million dollars by the November election.  Ads for and against are already on the airwaves.  Opponents are relying on the star power of Governor Gray Davis and Lieutenant Governor Cruz Bustamante.  The Yes side put together this controversial ad, using a clip from the last state of the state in which the governor criticizes public schools

On the presidential trail, George Bush has not taken an official position on Prop 38.  But he has supported vouchers and school choice in Texas. On the other side, al gore addressed the issue directly last week at the democratic convention.

SCHOOL VOUCHERS DISCUSSION

Are school vouchers right for California . . . is Proposition 38 right for California? Joining me now: 

State Senator Deborah Ortiz of Sacramento, she opposes Proposition 38.  And Brian Bennett from San Diego, policy consultant for Prop 38, Yes”

Jack: Deborah, let me start with you.  There are those that make the argument that there has been enough time to get the public schools back up to snuff.  Why not go to vouchers?

Deborah: Well, I think the voucher proposal that’s before the voters really has no accountability.  It would require increased spending and state dollars, and it would take away money from existing programs.  The roughly seven hundred thousand children in private school right now, if we were simply to fund four thousand dollars for each of those children, that’s a three billion cost that would come outside of the money set aside for education right now, and there are no checks and balances.  There is no accountability.  There are no credential requirements.  The training for teachers at so called private schools that would spring up as a result of this would be a disaster because we would have no mechanism to assure the training and the experience of those teachers.

Jack: Brian, where are the guarantees?  Who’s to say that these voucher schools will be any better than the existing schools we have now?

Brian: Oh, I think the data research already indicates that.  I think in Milwaukee and Cleveland, we already have sufficient neutral data that indicates that students have achieved at a rate of two to six to eight points a year.  Where vouchers have been tried, vouchers have worked.  I think it would be remiss, however, in not congratulating the senator and her bipartisan supporters for their support of the extension of the Cal grants program yesterday, and I point out that their support for post secondary vouchers, which is essentially what the Cal grants program is, came without all this additional discussion—

Jack: So the viewers understand, that would be tuition help for students with an average as low as a C, for example?

Brian: That is correct, and we support that proposition of choice.  In the private schools, we believe that the parents hold the system accountable.  That’s been true in Milwaukee and Cleveland and in Florida with public voucher programs.  I think that everybody would be interested to be reminded that a hundred percent of the Catholic school teachers in California now have mandatory credentialing requirements and have had for some time.  Those schools as well as others affiliated with non-public school organizations have participated for years in the accreditation programs by the Western Association of Schools and Colleges.  Parents hold schools accountable.

Jack: One of the arguments I hear, Deborah, is just give us a chance, look at the progress we’ve made in the last two years, however, if you’re a parent, and your kids are in school right now, you don’t have a year to get the system correct.

Deborah: I think what we need to let the viewers know is that the proposal that is before the viewers in November is not like the Milwaukee and Cleveland model.  Those programs really do address low-income, low-performing schools.  This is sort of a subsidy for the wealthy if you will.  This is a fourth thousand dollar voucher, which, you know, private schools of any credibility or stature are double or triple that amount, and it would simply be allowing people who have the ability to pay the difference to buffer that cost.  It’s not going to help the students who need it most.  In our time, I think that California has done some incredible things in the last four years.  You know, the jury’s out.  We still have to have time for the money we’ve invested.  We should not throw that money out the window.

Jack: Brian, if I want school choice, I take the list that comes from the state of the test results, find the schools and the districts that are pretty, and I move there.

Brian: If you have the money to do so, or if you have the money right now, you can move your child into a private school.  Let me point out, just for our information however, that the average tuition paid for non-public schools in the state of California, again, I’ve used Catholic schools to represent nearly sixty percent of statewide enrollment, the average elementary charges less that twenty-two hundred dollars a year.  To suggest that this is a benefit for the rich is absurd.  Where given a chance, parents have chosen to—particularly in low income, urban settings—that’s probably what prompted vice president Gore to respond the week before last that he understands that if he had his child in a low performing school, that he’d look to vouchers as well.  We agree with Vice President Gore, Mr. Lieberman, and it’s great to have all four candidates using the V word.

Jack: You’re chomping at the bit to make a point here.

Deborah: Well, the point is that this is a system that draws money away from the existing public school system.  There is no accountability.  There is no checks and balances.  This is a system that’s going to benefit, not the poorest and the most needy, but rather the wealthy, and it’s simply not the solution.

Jack: Can you address that qualifications issue?

Brian: Yeah, absolutely.  Parents are asking the right questions right now.  What’s your school doing?  Is my child learning?  Tell me how long I have to wait in order to learn.

Jack: Yeah, but Debbie’s also asking the question, “would your teachers be credentialed?  Would they be—

Brian: Absolutely.  They are right now, and the proposition clearly states that students in the voucher receiving schools will participate in the star testing program.  They must make public their finances.  In addition to that, and I know the Senator is very closely attached to this issue, it repeats the prohibitions relative to background checks for teachers, so we’ve done everything that we possibly can to guarantee that there is a safe outlet for that choice—

Deborah: Children with special education needs, children with disabilities are not guaranteed a place in these so-called private schools that will be funded with state dollars.  There is no assurance that access, ADA—a child with a learning disability has no place in these publicly funded, private institutions.  They get to pick and choose, and the cream of the crop will—

Brian: The senator is certainly aware that we have public school students in the state of California using California public taxpayer dollars to attend private schools for special ed because of the inability of the current system to meet their needs.  We have five-hundred and fifty-one thousand special ed students in this state.  Of that number, about fifty-six percent are there because they were classified as learning disabled, and for ninety percent of those, according to the Los Angeles Time in December of ninety-nine, they are there because the system never taught them how to read—

Deborah: We don’t have the capacity in our private school system to even absorb the anticipation—

Brian: We already have two thousand special ed students attending non-public schools on a regular basis in Los Angeles.  To suggest that these schools are in violation of the law simply misreads the proposition.  We’re already covered by the public employability provisions by the Americans with Disabilities Act.

Jack: You do make a good point.  There is a wave of kids coming into schools across the country, not just in California.

Deborah: There’s no capacity in our public system, let alone in our private system.  If you took the seven-hundred thousand children that are currently in private schools, never mind the children that will theoretically be leaving the public system and going to the private system, that’s three billion dollars in vouchers alone.  We simply don’t have the capacity to subsidize new students coming in.  We’re simply going to subsidize those students who are currently in the system—

Jack: And we’re almost out of time—

Brian: Except that this is a four year phase in program, and the first year, only public schools are eligible, and the second year only K through 2 students.  For every eight thousand dollar student in the public school system seeking to make a choice because his parents have the right to make the choice, that student represents a four thousand dollars savings which caused the L.A.O. office to say that we will save two-point-four billion dollars—

Deborah: Except for the janitor who has a second job who can’t drive their child across town in the morning and pick them up, nor has public transportation.  This is simply going to be a benefit for those that have the resources already to further enhance a system that simply doesn’t have any credibility or any background or any assurance of credentialization—

Jack: On that note, we are out of time.

END VOUCHER DISCUSSION

(( Jack ))  Log onto our new and expanded election website at capitol week dot org.

There you can take our weekly poll.  This week’s topic . . .do you support school vouchers . Melissa ??

(( Melissa  ))  Other capitol news to get to this week.  2 million children in California have no health insurance.  A rally this week sponsored by PICO, a statewide network of community organizations . . . meant to prevent the loss of about 590 million in unspent federal funds.  Money that would have provided health coverage for children under California’s  Healthy Families,” . . . a program designed for children of the working poor.  Pending legislation would hold onto that money to enroll parents.  To date 323,000 children are enrolled in healthy families, that’s about half of the number eligible.

And the confirmation process for a next state insurance commissioner is underway.  Governor Davis has nominated Justice Harry Low to replace Chuck Quackenbush.  The assembly also released a report on their investigation.  Some say tougher recommendations are needed to  prevent future abuse in the insurance department.  The state assembly also approved legislation that would give Northridge victims an additional year to file insurance claims.

An update now on soaring electricity rates . . . at Governor Davis’s request, President Clinton is providing some federal money to help low income people pay their bills in Southern California.  The public utilities commission froze rates in San Diego this week . . .but some say the move does NOT go far enough.  And some assembly members are calling for more action.  Assemblywoman Susan Davis is pushing legislation to roll back rates dating back to July 1999 levels.  The bill would also require the Public Utilities Commission to determine the cause of price spikes.

(( Jack ))  Now . . as this year’s legislative session nears the end, it’s a good time to review the Governor’s performance.  Check out this month’s edition of the California Journal.  Inside . . . ratings on the Governor’s record in key policy areas.  

(( Melissa  ))  Next week  We go one on one with Presidential candidate Ralph Nader.

((Jack))  Plus we’ll look at a healthcare crisis facing California’s sickest children.