LA Times Editorial on UCLA Hospital/Blue Shield Dispute Has a Buried Lede*

In yesterday’sLA Times – if you missed it – there was an editorial about a dispute betweenBlue Shield and the UCLA Hospital.  Yetbeyond saying that controlling costs and being efficient are Good Things, theeditorial seemed to miss the point - even though the point is it the text of theeditorial.  Excerpt below:

------

Blue Shield of California has suspended itsrelationship with UCLA Medical Center, one of the state's top hospitals, in a dispute overthe cost of treating patients there. It's a disturbing sign of things to comein the healthcare industry, as insurers become increasingly resistant to thecost increases that they routinely passed along in previous years. Although thestandoff is hard on the patients who've lost access to UCLA, Blue Shield isright about one thing: The healthcare industry is on an unsustainable path, andevery segment must start focusing on cost control.

…Hospitals costs have risen particularly rapidly, with the averagedaily fee for a bed in an acute-care ward more than tripling since 2000. UCLA'sreimbursements from Blue Shield have almost doubled in the last five yearsalone, the insurer says. That's partlybecause the university has been shifting onto Blue Shield some of the expenseof treating patients with Medicare, Medi-Cal or no insurance. But it's a trendthat even University of California officials acknowledge cannot continue.

…UChealth officials say they've gotten the message; that's why they created the Centerfor Healthcare Quality and Innovation in October 2010 to find ways todeliver more effective healthcare services and to control costs. The universitysystem and Blue Shield also have agreed on a new approach at UC San FranciscoMedical Center that shares the financial risk of providing care for certainpolicyholders, holding cost increases at or below the rate of inflation. Thequestion is how to bring that focus on efficiency and value to UCLA and therest of the UC system. Here's hoping the two sides find an answer soon.

Full editorial at http://www.latimes.com/news/opinion/opinionla/la-ed-blueshield-20120213,0,3668965.story

-----

In short, a key problem – according to the editorial itself –is an external one reflecting the cost shifting that goes on in the currentsystem of national health which requires providers to care for the non-insuredand to make up for government programs that provide less than fullreimbursement.

-----

*“Burying the lede” is a common stylistic error injournalism. To bury a lede (rhymes with “bead”) is to hide the most importantinformation within a news story instead of putting it up front where readerscan find it immediately.  Source: http://www.avwrites.com/?p=15

-----

Meanwhile, ourbest advice is not to get sick:

LAOmission

Our previous post deals with the Legislative Analyst's Office (LAO) report on the state budget. Quote from page 41 of the report:

"...because the state is not required under current law to contribute additional funds to UC to address its unfunded pension and retiree health liabilities, the forecast assumes no General Fund resources to assist UC for these purposes."

No Smoking Better Than No Scoping

In case you haven't noticed the signs near the Westwood Blvd. entrance to UCLA, the health center is going entirely no smoking on Nov. 17.

It's good to have no smoking. But as yesterday's post pointed out, no scoping is not so good. We are still awaiting the scoping report on the new hotel/conference center plan which is supposed to be discussed at a public meeting next week.

http://uclafacultyassociation.blogspot.com/2011/11/waiting-for-scoping-report.html

Stolen Data

UCLA Health System warns patients personal information was stolen

Anna Gorman, Los Angeles Times. 11/5/11

The UCLA Health System is warning thousands of patients that their personal information was stolen and they are at risk of possible identity theft, officials said in a statement released Friday. Officials don't believe the information has been accessed or misused but are referring patients to a data security company if their name and credit are affected. Information from 16,288 patients was taken from the home of a physician whose house was burglarized Sept. 6, according to the UCLA Health System…

The theft is not the first breach at UCLA. Between 2005 and 2009, hospital officials were repeatedly caught and fired for reviewing, without authorization, the medical records of dozens of celebrities, including Britney Spears and Farrah Fawcett. That prompted a state law imposing escalating fines on hospitals for patient privacy lapses. State regulators later fined Ronald Reagan UCLA Medical Center in connection with privacy breaches involving the records of Michael Jackson.

In the statement, UCLA officials said they would review the hospital's policies and make any fixes necessary. They have contracted with a data security firm to work with patients and notified the U.S. Department of Health and Human Services Office for Civil Rights, which has previously investigated privacy violations at the hospitals. "UCLA's concern for its patients is absolute, and we deeply regret any breach of confidentiality and the stress and concern it might cause our patients," the statement said.

Full article at http://www.latimes.com/news/la-me-ucla-medical-data-20111105,0,4225234.story

Buried Lede on Retiree Health?

From Wiktionary

“bury the lede”

(idiomatic, US, journalism) To begin a story with details of secondary importance to the reader while postponing more essential points or facts.

http://en.wiktionary.org/wiki/bury_the_lede

====

An article in today’s calpensions.com indicates that both CalPERS and CalSTRS have asked GASB – the Governental Accounting Standards Board – for a delay in its proposed new rules on public pension accounting. The rule would allow public pensions such as UCRP to continue with their projections of earnings on their assets (7.5% for UCRP) but would require a much lower discount rate for unfunded liabilities. The net effect of the proposed change would boost the accounting value of unfunded liability.

Buried at the end of the report is an indication that GASB is moving towards doing the same for retiree health care. Note that at UC, as in most public systems, there essentially is no trust fund with assets for retiree health – the system is pay-as-you-go. Hence, everything is unfunded liability. The impact on reported unfunded liability for retiree health would be much bigger than for pensions.

There is also a final sentence that indicates GASB is looking at “financial projections.” It is not clear to what that phrase refers, but it sure sounds like GASB is looking at whether assumed future earnings rates on assets, e.g., 7.5% for UCRP (and higher at CalPERS and CalSTRS), are too high.

Here are the last few sentences of the article:

Other speakers at the hearing said the new accounting rules should require government employers to report their retiree health debt. The state, for example, owes an estimated $60 billion over the next 30 years for retiree health care. Like most government employers, the state has not set aside money to invest and help pay for retiree health care promised current state workers. The state is paying about $1.5 billion for retiree health care this year, a rapidly growing cost.

“I think I can offer you some hope,” …the GASB chairman, told a speaker. “Dealing with OPEB (other post-employment benefits), primarily retiree health benefits, is something that’s on our agenda. We will be looking at that going forward.”

(He) told another speaker that GASB has “another project that is looking at financial projections.”

Full article at http://calpensions.com/2011/10/17/calpers-calstrs-delay-new-accounting-rules/

UPDATE: Academic Council chair Robert Anderson adds the following note re UCRP via email (in italics below):

The actual GASB proposal for pensions is to project the liabilities year by year; then project the assets forward, including future contributions according to your actuarial plan (which you must be actually following, not just planning to do at some indefinite point in the future) and your assumed rate of return on assets and see if you ever run out of money. If you do, all liabilities beyond that point are discounted back at a lower rate, most likely a corporate bond or a taxable municipal bond rate. If not, all liabilities are discounted back at the assumed rate of return. We have an actuarial plan that restores us to full funding in 30 years, and we are currently following it, so the new GASB rule on pensions should make no difference to us.

It would make sense for (GASB) to apply that to retiree health. But note we are already discounting retiree health at (if I recall correctly) 6%, precisely because we are not prefunding it. Thus, I think there would be little change in our retiree health liability. I presume CalPERS and CalSTRS are also currently required to use the lower rate also. Thus, I am not sure it would make much difference.

In short, the impact on retiree health accounting would depend on whether GASB insisted on a rate below 6%.

Mumps

Arthur Ashe Center releases mumps health alert after outbreak at UC Berkeley

By KAVITHA SUBRAMANIAN, October 6, 2011, Daily Bruin Off the Press blog

UCLA Arthur Ashe Student Health and Wellness Center has released a mumps health alert following an outbreak at UC Berkeley this past week. At least 20 Berkeley students have reported potential mumps infections as of this evening, and hundreds of students have been waiting in line at UC Berkeley’s student health center for free vaccinations, according to the Daily Californian. No cases have been reported at UCLA…

Full article at: http://www.dailybruin.com/index.php/blog/off_the_press/2011/10/arthur_ashe_center_releases_mumps_health_alert_after_outbreak_at_uc_berkeley

==============

One suspects that the “I-don’t-believe-in-vaccines” crowd had a role in the Berkeley outbreak. Let’s hope there will prove to be less of that effect here.

Update: http://www.sacbee.com/2011/10/08/3968593/vaccination-refusal-endangers.html

Renovated UCLA Santa Monica Hospital Holding Open House Today

Santa Monica Hospital was originally built in 1926 - as shown above. It was acquired by UCLA and recently renovated. The hospital is holding an open house today. Details at:

http://www.smmirror.com/?ajax#mode=single&view=32890

Don't Panic

Some readers of yesterday’s New York Times who read the article about municipalities reneging on pensions may panic, particularly those readers close to retirement. There is a temptation to go for the lump-sum cashout in a panic, i.e., get the money while the getting is good.

Before you do, however, it is important to note that states such as California and state agencies such as UC, do not have a legal means to declare bankruptcy. There is no legal way out of their pension obligations.

Using the lump-sum option will eliminate your access to retiree health care. It is true that retiree health care is not guaranteed indefinitely. But it is worth a lot, even if (as planned) retiree contributions rise. Were the Regents to drop retiree health, they would be encouraging folks to take the lump-sum cashout, a step which which would not be desirable in terms of dealing with the Regents’ pension management responsibilities.

So yours truly advices you not to panic.

The NY Times article is at http://www.nytimes.com/2011/08/13/us/13bankruptcy.html

Maintaining a Healthy Balance

UC has maintained a kind of cautionary balance for its health plans meant to smooth out sudden bumps in health care premiums. Since the state budget has squeezed the UC budget - including using UC as a loan department - the Regents approved various actions at their July meeting to try and deal with the cash crunch. Among these was tapping the health reserve.

As the letter below (a public document I have been assured) indicates, the systemwide University Committee on Faculty Welfare has expressed concern about completely depleting the fund.

Apparently, that is not the intention at this time, but the Regents action would allow it. Were the fund completely depleted, upward bumps in premiums would immediately have to be covered, potentially raising participant contributions suddenly and without the possibility of smoothing.

Below is the text of the letter:

July 25, 2011

NATHAN BROSTROM, EXECUTIVE VICE PRESIDENT BUSINESS OPERATIONS

RE: Regents Plan to Draw Down Health and Welfare Reserves

Dear Nathan,

The University Committee on Faculty Welfare (UCFW) received a presentation at its June 10, 2011,meeting by Provost Pitts and CFO Taylor on the subject “Revenue Bridging Strategies”. As background, a white paper on this subject dated June 2011 was shared with the committee members. One strategy listed was “Draw Down $50 million From Health & Welfare Reserves”. We further note that adoption of Regent Action Item F11 at the July 14, 2011, Regents meeting included an endorsement of the President’s plan to draw down “as needed” (emphasis added) from the University’s employee/retiree health and welfare reserves. The discussion associated with this action mentions that as much as $97 million could be drawn down from this fund source. We are concerned that a complete depletion of the employee/retiree health and welfare reserve may have significant negative impacts on employees and retirees if health care costs experience an unexpected and sudden increase. On July 22, 2011, Provost Pitts reassured members of UCFW’s Task Force on Investment and Retirement (TFIR) that the intent of the Office of the President is not to draw down more than $50 million from this fund source.

We strongly recommend that any action withdrawing more than the originally suggested amount of $50 million first be discussed with UCFW and other Senate committees involved in health and welfare benefits and budget planning. Thank you for your attention to our concern.

Sincerely,

Joel E. Dimsdale, UCFW Chair

Copy: UCFW
Larry Pitts, Provost
Peter Taylor, Chief Financial Officer
Dwaine Duckett, Vice President, Human Resources
Martha Winnacker, Executive Director, Academic Senate