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Witness: Blues could move reserves to avoid rebate; Crain's Detroit Business
Topic Started: Apr 21 2008, 09:10 AM (255 Views)
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Witness: Blues could move reserves to avoid rebates
Crain's Detroit Business
April 20, 2008

The former COO of the Accident Fund Insurance Co. of America told a state Senate health committee last week that Blue Cross and Blue Shield of Michigan could manipulate its reserves - which would help it avoid triggering a state-mandated premium reduction process - by timing the transfer of reserves to its subsidiaries.

Mark Hogle, COO of the Blues' for-profit Accident Fund from 1997 to September 2005, contradicted testimony earlier by two Blues executives - Accident Fund general counsel Steve Hess and Blues' CFO Mark Bartlett.

Bartlett told Sen. Tom George, R-Kalamazoo, chair of the Senate Health Policy Committee, that the Blues do not intentionally transfer reserves to the Accident Fund or other subsidiaries to avoid triggering a rate reduction.

After the meeting, George told Crain's, “The testimony (of Hogle and Bartlett) is at odds.”

George said he planned to keep to his hearing schedule on the Blue Cross bills and would not launch an independent inquiry.

“This is not a courtroom,” said George, adding, “We have been presented with very conflicting views that this committee should study very carefully.”

The next hearing on the Accident Fund bills - Senate substitute for House Bill 5284 and H.B. 5285 - is set for April 30, when senators are expected to vote on the legislation. Hearings are scheduled Wednesday and Thursday on reform bills for individual policies, H.B. 5282 and 5283.

Gary Wolfram, a Hillsdale College economist hired by the Coalition for a Fair & Competitive Insurance Market, a group of commercial insurers that opposes the Blues' bills, said he believes the Blues' $2.4 billion in reserves gives the for-profit Accident Fund an unfair advantage.

“We have become quite successful, not because we have a special advantage but because we offer good prices and good customer services,” said the Accident Fund's Hess.

George's substitute bill for H.B. 5284 asks the Accident Fund to pay $100 million into a fund that would provide subsidies to people who buy individual health insurance.

The Blues' Bartlett called that idea “a licensing fee” that no other insurer must pay. “It is a barrier to growth,” he said.

Several other committee members, including Sen. Bruce Patterson, R-Lansing, and Sen. Gilda Jacobs, D-Huntington Woods, expressed concern that the $100 million fund could lead to increased premium rates for the Blues' health insurance subscribers.

Kurt Gallinger, a spokesman for the coalition who also is vice president with Amerisure, a Farmington Hills-based property and casualty insurer, said the Blues already have raised premiums “quite alarmingly” the past four years.

Since 2003, premium rates have increased 79 percent for individual policies and 92 percent for group policies, Gallinger said.

During the same period, Blue Cross has transferred $173 million in assets to allow subsidiaries to purchase companies while only receiving $35 million in dividends, Gallinger said.

By transferring money to subsidiaries and recording the purchased asset at a lower amount on the balance sheet, the Blues can manipulate what is called the risk-based capital ratio, Hogle said.

The RBC is based on a complicated formula developed by the National Association of Insurance Commissioners that in part measures the amount of capital (assets minus liabilities) available to the insurer.

According to state law, if the Blues' RBC ratio exceeds 1,000, the insurer must notify the state insurance commissioner and develop a process to reduce that ratio. One way would be for the Blues to reduce premiums.

Currently, the Blue's RBC stands at 688 with a target of 675, Bartlett said. “It has dropped the last two years,” he said.


Pioneering long-distance care
Henry Ford surgeon treats patients from afar via computerized ultrasound linkup
Detroit News
April 21, 2008
http://detnews.com/apps/pbcs.dll/article?A...9/BIZ/804190369

Trauma surgeon Dr. Scott Dulchavsky isn't looking to take away from the adrenaline-infused thrill of climbing Mount Everest.

He simply wants to ensure that those who make the trek to the world's highest peak do so in good health.

That was his charge last Monday when from his laptop back in the United States, Dulchavsky guided a group of Canadian alpinists through a physical check-up via a satellite link. The climbers, who at the time were nearly two-thirds their way to the summit, used a portable ultrasound machine -- about the same size of a laptop -- to scan parts of their body and send the images to Dulchavsky.

"You get great images with zero training," Dulchavsky said as he demonstrated the machine using his own arms in his office at Henry Ford Hospital. As he did so, grainy white images of his wrist bones flashed on the screen. "We're pushing the boundaries on what we can do with ultrasound."

Chairman of the surgery department at Henry Ford, Dulchavsky is no stranger to extreme challenges. For the past 15 years, he's helped pioneer new paths in telemedicine, a fast-growing sector of the medical field that allows doctors to confer with patients in far-flung locations using secure broadband connections.

His patient roster includes everyone from Olympic athletes to astronauts manning the International Space Station. He's also performed ultrasound scans on players of Detroit sports teams, including the Tigers and Red Wings.

"Now, if Apolo Ohno goes off the short track, I can pull it up on my computer at Starbucks and say 'uh oh'," Dulchavsky said of the Olympic speed skater.

A Detroit native, Dulchavsky got his start investigating the use of ultrasound images in orbit when he linked up with the National Aeronautics and Space Administration in the early 1990s. There, he devised a system that allowed astronauts to conduct their own scans using the ultrasound wand and sending those images back to earth for doctors to view.

Back then, he said, carting an MRI machine or CT scanner to outer space was no easy feat, so NASA turned to light-weight ultrasound machines, which render images by bouncing sound waves off internal body parts.

For the astronauts, the discovery was a boon. "It turned out to be the most interesting and useful (experiment) that we'd performed," said Leroy Chiao, a NASA astronaut who'd worked with Dulchavsky from the International Space Station. "As we go farther into space, establish a base on the moon and go out to Mars, this remote diagnostic technique is going to be very useful."

Telemedicine, the merging of medicine and telecommunications, is often used by emergency rooms and radiology departments to send images to a specialist off-site and by home health agencies and private doctor's offices that may not have frequent face-to-face access to their patients.

Much of Dulchavsky's research takes place in NASA's anti-gravity aircraft, often referred to as the "vomit comet" for its stomach-turning free falls. At the heart of his research is a 10-pound portable ultrasound machine which he gives to subjects, and via a video link, guides them on how to roll the wand over various parts of the body to examine broken bones and collapsed lungs. The anti-gravity aircraft allows him to probe how the ultrasound machine performs in weightless environs.

In the long run, Dulchavsky envisions his research as having more down-to-earth applications. He is currently conducting research in rural Madagascar where a team of researchers plans to install ultrasound units and train personnel on how to use them to improve prenatal care for pregnant women. In August, he plans to attend the Olympic Summer Games in China to continue investigations on using ultrasound to monitor the health of competing athletes.

And then, there's Mount Everest, where he's testing how the machine performs in high altitudes.

On Monday, he linked with his subjects through his laptop. Using video, Dulchavsky showed the climbers how to move the ultrasound wand over the right and left side of the chests. His task was to check for a pulmonary condition that often surfaces in low-pressure environs.

Asked whether providing medical care to climbers on Mount Everest might blunt the thrill of the life-risking climb, Dulchavsky, who is an avid snowboarder and pilot, simply shook his head. "If you had an elevator there," he said. "That may take some of the fun out of it."


Doctor shortage lies ahead
With many planning to retire, report says state will have 4,400-physician deficit by 2010.
Detroit Free Press
April 21, 2008
http://www.freep.com/apps/pbcs.dll/article...1019/Business06

Aging and frustrated by bureaucracy, 41% of the state's 40,000 licensed physicians plan to retire from the practice of medicine in the state in the next 10 years, according to a recently released survey of physicians by the Michigan Department of Community Health. By 2010 the state will have 4,400 fewer doctors than it will need as the over-65 population doubles and an aging physician workforce calls it quits, according to a 2005 report from the Michigan State Medical Society, the state's largest physicians group.

Almost 40% of the state's doctors are 50 or older, according to the society.

Other factors affecting the future shortages are younger doctors' preference for working part-time, problems keeping Michigan-trained doctors in the state and difficulties recruiting doctors because of the state's economic problems, experts say.

Within the Oakwood Healthcare System alone, as many as 30% of the system's 2,400 doctors are expected to retire in the next three to five years, said Dr. Mark Hannis, senior vice president and director of medical education. In response, Oakwood has doubled its doctor residency programs to 200 in the past six years to help funnel more doctors into its pipeline.

"We're setting ourselves up here for the perfect storm," said Dr. Gregory Forzley, chairman of the board of the Michigan State Medical Society. "We have physicians who are slowing down or aging at the same time baby boomers are getting older and need more doctors."

Patients already live with a shortage of primary care doctors in more than 60 of the state's 83 counties, said Kim Sibilsky, executive director of the Okemos-based Michigan Primary Care Association.

Doctor shortages in all specialties are tied to where a person lives. Outstate counties have greater shortages than many urban areas, according to the state physician survey. Washtenaw and Oakland counties had the greatest number of doctors for every 100,000 residents, compared to Oscoda County with the fewest doctors.

In response to the impending shortage, many medical schools are expanding. Wayne State University and both medical schools at Michigan State University have added enrollment to train more doctors. And other universities are in various stages of exploring whether to start new medical schools.

Last April, Oakland University and Beaumont Hospitals announced plans to begin a medical school in metro Detroit by 2010.

Today's residents get approached early and often by the hospitals during their training to get them to join their staffs after they complete the final laps of their medical training.

Oakwood courts doctors by matching them to practices and, Hannis said, "provides everything a physician needs to get started," including computers, 401(k) plans, full health benefits, malpractice insurance and even white doctor's coats embroidered with their names.

Last year, 41% of the resident doctors training at Oakwood stayed on with the system, compared with a 25% rate at hospitals nationwide, and a 24% rate within Oakwood four years ago when it started tracking the issue.

Keeping the staff
Given the raiding and competition between health systems for doctors -- a problem certain to increase with the opening of two new hospitals in metro Detroit by the St. John and Henry Ford health systems in the next year -- many health systems also have to focus on retention.

The Henry Ford Health System surveys doctors about problems and provides a support system that relieves them of some of the hassles private doctors face, such as adding electronic medical records systems, technology and leadership and management opportunities, said Dr. John Popovich, chief of medicine.

The Detroit Medical Center pays off loans up to $15,000 for primary doctors trained at Wayne State University, its academic partner.

For details of the physicians study by the Michigan Department of Community Health, go to www.michigan.gov/mhwc and find the link to the 2007 Physician Licensure Survey.
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