President Obama defended healthcare reform on The Daily Show with Jon Stewart . Click here to view the video.
WellPoint’s firing “without cause” of its third highest ranking executive Dijuana Lewis, 51, was actually a mutual decision tied to her dissatisfaction with an organizational change that shifted some of her responsibilities to a newly formed business unit, according unnamed sources quoted in the Indianapolis Business Journal, where the company is based. More in this week’s issue of Health Plan Market Trends Letter.
The Integrated Healthcare Assn. has released a report on the lessons of accountable care organizations in California, which contains some interesting tidbits for health plans. (hat tip: Charles Boorady, Credit-Suisse). Among the lessons cited in the report:
- “ACOs are not a panacea for health care spending control: Some of California’s provider organizations have been able to use their market clout to extract high payments from health plans, as the plans’ ability to exclude providers from their networks is limited by consumer demand and regulatory network adequacy requirements. Higher-cost and inefficient providers have not faced enrollment penalties because the current California market does not incentivize purchasers or consumers to choose lower-cost or more cost-efficient providers. As ACOs are rolled out across the country, health insurance benefit designs should reward patients for choosing higher-value ACOs.”
- “ACOs must be agnostic to insurance type: Most provider organizations in California have focused on commercial, Medicare, and Medicaid HMO plans…but for ACOs to be viable across the country, mechanisms must be found to encourage PPO and traditional Medicare and Medicaid patients to use their services.”
- “Health plans acting in concert on payment methods and performance measurement helped facilitate the growth of California’s provider organizations, and should also play an integral part in fostering ACO development nationally:…In the early days of medical group formation, plans often acted in concert and adopted similar capitation payment parameters, which lessened the administrative burden on groups….Health plans must be ready and willing to foster ACO formation along similar lines, as a critical mass of payers will be pivotal to their success.”
Citi analyst Carl McDonald has downgraded WellPoint Inc. to “hold” from “buy,” in part because shares in the company have done well of late. “WellPoint’s stock is up 11% over the last three months, and it now trades at 9x [i.e., nine times projected 2011 earnings], which we think is a fair multiple given how much reform related exposure the company has,” McDonald says.
“Like many other plans in the industry, WellPoint’s growth opportunities are limited, and margin expansion will be difficult,” McDonald says. He expects WellPoint’s commercial risk membership to fall in 2011 — as more employers go self-insured. He also expects margins to be capped by minimum MCR regulations. The establishment of insurance exchanges in 2014 will impact WellPoint’s individual and small group business, historically an area of strong profitability for the company, McDonald says. “The standardized benefits on the exchange will commoditize the products, and make premium rates the primary variable consumers will [look] at in selecting a plan,” he says.
I’ll have more to say in my weekly newsletter Health Plan Market Trends on last week’s two big health plan management changes:
1. Aetna announced that chairman and chief executive Ron Williams, 60, (my choice for the smartest guy in managed care) was retiring from the company. Aetna president Mark Bertolini, 54, will take over the CEO slot effective Nov. 29 and join the company’s board. Williams will hold the title of executive chairman until April 2011, after which Bertolini will become chairman as well.
2. WellPoint fired Dijuana Lewis (my choice for the best name in managed care) without cause from her position as president and chief executive of the company’s comprehensive health solutions business unit, according to an SEC filing. She will remain with the company through 2010 to “assist in the transition of her duties.”
by Wendell Potter
Bloomsbury Press, 2010
Reviewed by Carl Mercurio
About forty-five thousand people die in America every year because they have no health insurance. I am partly responsible for some of the deaths making up that shameful statistic. – Wendell Potter, Deadly Spin
Who in the managed care industry could forget Wendell Potter?
He’s the former health plan public relations executive who skewered the industry in Congressional testimony last year – playing the role of “whistleblower” during the final months of the healthcare reform debate.
Now, two years after pulling the plug on a 20-year managed care career and a six-figure job as Cigna’s top PR man, Potter has released a tell-all book: Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care and Deceiving Americans.
What’s truly novel about Deadly Spin is that it provides an inside look at how health insurance industry spinmeisters mobilize to justify the actions of health plans that deny care, to discredit supporters of healthcare reform, and to position the industry as “part of the solution” to our healthcare problems. The formula: extensive use of industry-funded front groups, fearmongering campaigns, disinformation and reliable industry allies (third-party advocates and pundits) to disseminate pro-health plan messages that can’t be traced to insurers.
Potter describes, for example, a successful stealth campaign in the late 1990s to kill the Patient’s Bill of Rights – which would have required external review of health plan coverage denials. He outlines how the industry hired PR firm Porter Novelli to form the Health Benefits Coalition as a front to conduct “a fearmongering campaign” to convince the public and lawmakers that the bill would lead to “a tidal wave of frivolous lawsuits that would cause health insurance premiums to skyrocket.”
In another example, Potter describes the use of PR firm APCO Worldwide in the industry’s campaign to bash Michael Moore’s HMO-bashing documentary Sicko. APCO established a front called Health Care America to place industry-friendly advertising, news and commentary — a strategy the firm had used in its work with Big Tobacco.* (See my review of Sicko).
Cigna itself used a similar strategy in the case of a 17-year-old health plan member who died of cancer after being denied coverage of a liver transplant, hiring APCO “to place stories with reporters, editors, and producers it had good relationships with and to get ‘third parties’ to convey Cigna’s messages.”
It’s commendable that Potter has come clean about his role in the industry’s PR machine. (More broadly, Deadly Spin gets a lot right about what’s wrong with the U.S. health insurance industry — albeit, much of it well-covered ground). Still, it’s hard to feel much empathy for a guy who was paid handsomely to lie to news reporters, deceive the public, demonize the uninsured, suppress HMO horror stories, and undermine efforts to reform the U.S. healthcare system – all with very little remorse.
I didn’t feel then that we were doing anything unethical or underhanded. We were all well read and well educated….We all wore nice clothes and ate at the best restaurants and had kids in good schools and houses in the right zip codes. We knew people in Congress and the White House. We talked every day to reporters at the Wall Street Journal and the New York Times. We were powerful and influential….The American dream didn’t get any better than this.
Potter can also sound a bit presumptuous at times, such as when he says of his Congressional testimony: “Telling the truth is very cathartic. I highly recommend it” — advice that’s probably unnecessary for those Americans who never made “deep into six figures” or ate off gold-rimmed dishes on corporate jets and yet still managed to tell the truth for much of their lives.
Potter’s says his epiphany came in 2007 in Wise County, VA, in the southern Appalachians at a health fair organized by Remote Area Medical – a relief group founded to deliver basic medical care to third-world countries and now meeting similar needs among the uninsured and underserved in the U.S.
Hundreds of people, many of them soaking wet from the rain that had been falling all morning, were waiting in lines that stretched out of view….Some of those lines led to barns and cinder block buildings with row after row of animal stalls, where doctors and nurses were treating patients….Those people in Wise County would not have had to stand in line in the rain for hours to get care in animal stalls if so much of the money Americans spend for health care didn’t wind up in the pockets of insurance company executives and their Wall Street masters.
The Last Straw
Potter cites three other drivers of his 2007 spiritual awakening. The first: He attended the first U.S. public screening of Sicko, which depicts the very type of HMO horror stories Potter had worked so hard to suppress over the years. “I had to fight to hold back tears,” he writes. (The next day, Potter relates, APCO launched the industry’s campaign to discredit Moore and Sicko).
The second: The case of Nataline Sarkisyan, the 17-year-old Cigna member who lost a three-year battle with leukemia after initially being denied coverage for a liver transplant. (A week later, Cigna reversed its decision in the face of public protests; however, Sarkisyan died before the procedure could be attempted).
Sarkisyan’s case is a complex example of a very real problem: what happens when an insurer denies coverage to one of its own sick members. It’s complex because Sarkisyan was a very sick woman. She was suffering serious complications from a bone marrow transplant, and she was on life-support. Other credible independent transplant specialists also questioned the efficacy the procedure. Nor is it clear the transplant would have been approved in nations with nationalized healthcare. Even Potter admits, “Who was right? The reality is that in many cases no one ever knows.” The real issue is that a conflicted for-profit company shouldn’t be making this kind of decision. (See Maggie Mahar’s excellent coverage of the Sarkisyan Case).
Potter had to spin the story of Sarkisyan – a girl just three years younger than his own daughter – and that was the last straw for him: “I didn’t feel up to the task of spinning. I felt, instead, burned out.” But he did spin, and shortly after, quit.
It’s ironic that such a complicated case pushed Potter over the edge – as opposed to a clear-cut example of a health plan denying warranted coverage. All of which brings us to the final driver of Potter’s spiritual awakening: he quit drinking on Oct. 17, 2006.
If I had not quit drinking, I would not have been affected by Sicko the way I had been, and I probably would not even have thought about going to the [Remote Area Medical] expedition in the first place. I also doubt that I would have allowed myself to get so emotionally involved in the life and death of Nataline Sarkisyan.
The alcohol made him do it? Just kidding. But Deadly Spin does feel like the story of a 50-plus American executive who has a midlife crisis as much as it’s about one man’s realization that spending 20 years lying to cover-up the unconscionable practices of the health insurance industry is a bad thing:
I couldn’t get out of my head the nagging belief that I was put on this earth to do something much more important than what I had been doing for the last twenty years.
Dude, what guy in his fifties doesn’t feel that way?
*Addition, Nov. 23, 2010: Potter later clarified that APCO originally formed Health Care America with funding from the pharmaceutical industry.