'Bait and Switch' 

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It's early March, and a group of local insurance agents are at wit's end. The enrollment period for health insurance plans offered under Obamacare is in its final throes, and the headaches began just as soon as Covered California got off the ground. There's the typical stuff one might expect from a massive overhaul of the nation's health care system that's bringing insurance to millions of people for the first time: widespread confusion, poor communication, huge backlogs and entire days wasted on the phone, sitting on hold.

But it is a deeper problem that's bringing these seven agents together to pen a letter to North Coast Congressman Jared Huffman on this day. Though none will out and out say it, they've all realized that Anthem Blue Cross' published provider network — its list of doctors with whom the insurance company has contracted to provide services to its policy holders — is a sham.

"We are sitting on a powder keg waiting for the fuse to reach its destination and it is getting closer by the day," reads the March 4 letter to Huffman, written by Steven Justus, vice president at Anderson Robinson Starkey Insurance, and co-signed by six others. "Hospitalizations, surgeries and a myriad of other expensive medical procedures will reveal themselves as 'out of network' and insureds will be left with extremely large bills, perhaps to the extent of threatening their homes and savings through no fault of their own."

As the agents note in the letter, "it's a little complicated," but the short of it is that Anthem Blue Cross — which insures about 90 percent of Humboldt County's 5,600 Covered California patients — claimed it was under contract with hundreds of local doctors to provide "in-network" care to its patients when, in reality, few local physicians outside of the Open Door Community Health system had agreed to take the company's new plans. That left Anthem's Humboldt customers to either seek out one of the few in-network providers under the policies or risk hefty bills for out-of-network care.

"It's a bait and switch problem," says Huffman flatly, dismissing the notion that Anthem's flawed network provider lists could have simply been the result of pervasive confusion with the massive rollout of the Affordable Care Act. "Frankly, when you initially post online for the people who are shopping for policies a list that includes just about every provider in Humboldt County and represent they're part of your network and you don't actually have contracts with any of them, that's a problem and that's outrageous, really. We need to see some accountability for this."

Widely considered the most significant overhaul of the nation's health care system since the passage of Medicaid in 1965, the Affordable Care Act leaves virtually no aspect of health care delivery in the United States untouched. (See the Journal's March 6 cover story, "The Faces of Obamacare.") It mandates that just about everyone in the country secure health insurance or pay a fine. It prohibits insurers from denying policies to people with pre-existing conditions or from dropping folks because they get sick. The act also greatly expands subsidized policies for the poor, and mandates that plans cover preventative care and provide coverage for mental health and addiction services on par with coverage of physical ailments.

But the single biggest change under Obamacare is the creation of health insurance marketplaces, known as exchanges, that offer standard, government regulated plans online in a format that allows customers to compare plans side by side. The Golden State's exchange, dubbed Covered California, enrolled more than 1.2 million people, including 5,679 in Humboldt County, for its first year.

Statewide, a total of 11 insurers put plans on the exchange, including small-timers such as Stern Health Advantage and Contra Costa Health Plan, mid-sized groups such as Health Net and Kaiser Permanente, and the two giants, Anthem Blue Cross and Blue Shield. Anthem quickly cornered the market in Humboldt, offering three tiers of Covered California plans beginning in October. The plans, one local insurance agent says, "looked good on paper."

Sitting around a private table at the Ingomar Club one afternoon in March, a couple weeks after sending the letter to Huffman, several local insurance agents talked Obamacare while picking at their Cajun chicken salads. They vented about "the botched rollout" and a host of administrative failures. There was the website crash that necessitated their spending days on end faxing forms to Sacramento, the inability to find anyone to answer simple questions and the horrible lag-time in processing applications.

There was the story about a guy with a heart condition who submitted his application in November and supplied his credit card number to pay his premium. The state finally processed the paperwork in January and tried to run his card, but it had expired. By the time the guy found out his card was denied, he'd been living without health insurance for more than two months. But the big concern, the one that had brought them to the club that day and spurred the letter to Huffman, was the powder keg.

Anthem's network did not include St. Joseph Hospital or Humboldt Medical Specialists — the North Coast's largest group of specialized physicians — but few seemed to know that, including the two organization's billing staffs, according to the agents. Someone, they warned, was going to go to the hospital for a specialty procedure only to find out, after the fact, that the care was out-of-network and face tens of thousands of dollars in bills. "They cure 'em of one thing but they're going to get the bill and have a heart attack," Justus says, adding soberly that someone could lose their house or their life savings in such a scenario.

Justus and the other agents at lunch that day — Jeff Pauli and Jeff Miller — made clear they weren't pointing a finger at anyone, neither the insurance companies nor local doctors. "It's a confluence of events and unfortunate circumstances," Justus says.

But, while local doctors were left with the frustration of telling longstanding patients they could no longer see them under their new insurance policies and agents were left worrying they'd sold clients health care's version of the bridge to nowhere, Anthem seemed to be doing just fine. After all, the insurance giant was pulling in premiums — averaging some $300 a month — from thousands of Humboldt County residents while dolling out physician reimbursement rates lower than Medi-Cal and Medicare, the government subsidized insurance programs for the poor and elderly. One can imagine it being a pretty profitable business model.

Huffman says he's been keeping close tabs on the situation since receiving the agents' letter and sitting down with them a few weeks later. Covered California has been hitting rough patches throughout his district, but nothing quite like what he's seen in Humboldt. For his part, the congressman said he's simply not buying the notion that Anthem's provider list somehow got jumbled in the push to launch Covered California, or that the company didn't realize that most local physicians had turned down its low-ball reimbursement offers. "I think these are very sophisticated actors, and I think they know exactly what they're doing," he says.

Penny Figas, executive director of the Humboldt-Del Norte County Medical Society, spends huge swaths of her days seated at her desk staring at heaps of paper. It's Anthem's "in-network" provider list which was initially put up online, or what's left of it. Figas keeps the original list in a three-ring binder and it sits a few inches thick. From that, Figas has whittled it down to a list that, at just three pages long, is as accurate as she can make it before turning it over to the California Medical Society for a sit-down meeting the group has scheduled with Anthem in the near future.

The original list was a mess, Figas says. There were doctors listed under the wrong specialties and docs who had long since picked up their practices and moved out of the county. Some doctors — like the physicians in the Open Door system, including Chief Medical Officer Bill Hunter — were listed multiple times, sometimes at each of Open Door's eight locations. St. Joseph Hospital President David O'Brien made the list, even though he's worked as an administrator for the last 14 years and doesn't see patients. Figas said emergency room doctors also made the list and, perhaps the most shameful of all, so did locum docs, or doctors who happened to fill in locally on a temporary basis at some point in the past. "How does Joe Public know these aren't doctors here that you can go see?" Figas asks. "It's nuts."

More troubling than that, she says, are the doctors who made the list despite having turned down Anthem's contract offer. According to multiple sources, when Anthem was preparing to roll out its Covered California plans it took a hard line negotiating with local doctors, offering reimbursement levels 65 percent lower than for its traditional plans. That left most local doctors looking at taking a substantial loss for every Covered California patient they treated, and most walked away. But Anthem left many on its in-network provider lists anyway, leading some of their patients to purchase Anthem plans, thinking their doctor was in-network and the transition would be seamless.

Instead, those patients were faced with a difficult choice: find a new doctor, look for a new insurance plan or pay often exorbitant out-of-network fees to keep seeing their doctor of choice. The situation left local docs in difficult spots as well, sometimes forcing them to say goodbye to patients they'd been seeing for years.

Since January, the state has received some 1,800 complaints about Covered California, according to Marta Green, a spokeswoman for the Department of Managed Health Care, which oversees the new program. While the vast majority of those complaints were about the enrollment process — exactly the kinds of things the Humboldt insurance agents were griping about over lunch — Green said 211 have been about issues with accessing providers, whether it be difficulties finding a primary care physician or the accuracy of plans' physician networks.

Green's department was also copied on a letter sent earlier this month from Huffman and six other Democratic members of Congress to Covered California Director Peter Lee. While the letter is full of flowery language congratulating Lee on a "successful first open enrollment period," it also sends the firm message that more needs to be done to ensure adequate access to health care services; that more oversight is needed. "We are hearing all too often about consumers who are finding themselves surprised, confused and unacceptably burdened by the lack of local providers covered by their plans," the lawmakers write. "Clearly, there is still work to be done on improving network adequacy, especially in rural communities."

Some eight months after it began enrolling patients, Anthem is beginning to expand its network on the North Coast, although — as the company did not respond to inquiries for this story — it's not exactly clear why. But, over the last month, Anthem has returned to the bargaining table with a number of local doctors and brought more providers into the fold. Perhaps most importantly, St. Joseph Hospital is now in the company's Covered California network, joining Mad River Hospital, which has participated from the outset.

Humboldt Medical Specialists, however, remains an out of network provider, according to Rick Igram, St. Joseph Health System's vice president for contracting. Igram says efforts are ongoing to get the specialty group included under Anthem's plans, but it hasn't happened just yet.

Surveying the local landscape of Anthem's in-network providers, it's clear things are improving, says Martin Love, chief executive officer of the Humboldt-Del Norte Independent Practice Association. The network, he says, has picked up a host of providers over the last month. "I'm certainly very happy things seems to be going better," Love says. "I think we just all wish they'd gone this way from the start."

Was it the Congressional attention? Did the state's oversight groups — the Department of Managed Health Care and the Department of Insurance — prod Anthem behind the scenes, making clear they were out of compliance with Affordable Care Act provider-to-patient ratios? It's unclear. But what is clear is that even Anthem's newfound push to expand its network has created some problems locally.

When the company initially came to Humboldt with it's take-it-or-leave-it approach to negotiations, some took it. Open Door, for example, decided it was treating many of the Covered California patients before they had insurance, so any level of compensation — not matter how meager — would be an improvement. A few other providers opted to take the contract and provide the care at a loss because they felt it was the right thing to do and their practices could sustain the hit.

Now, six months or so later, these providers, locked into three-year contracts, are watching as Anthem comes back to the table offering higher rates. "These physicians who did sign up at the beginning and accepted that miserably low reimbursement rate are kind of being punished," explains Huffman. The congressman points out that this situation is exacerbated by a provision of Obamacare that makes it illegal for physicians to discuss contract information among each other, leaving insurance companies with much of the bargaining power against a fractured community of doctors. Huffman said he and other lawmakers are working to change that provision of the law to level the playing field a bit.

Catherine Markle, the billing manager at Eureka Family Practice, says her physicians' group simply couldn't accept Anthem's contract offer the first time around, saying it would have put them out of business. But the practice's out-of-network designation was devastating to some patients, who assumed one Anthem Blue Cross plan was the same as the next, and couldn't understand why their physicians wouldn't accept the Covered California plans. Markle says frustrated and distraught patients became the norm for a few months in the practice's billing department.

But Anthem recently came calling again and, on May 1, entered into a contract with Eureka Family Practice. Markle says she can't discuss the terms of the three-year contract, but says: "We were able to come to a place where both parties were happy." Markle's voice lights up as she describes calling some of the practice's long-standing patients who had switched to Covered California policies and consequently been forced to look elsewhere for their medical care to inform them they and their policies would be welcomed back with open arms. "I was able to make those calls and it was a wonderful thing," she says. "We were never happy not taking it. That was never a good place for us."

With some practices, such as Open Door, getting terribly low reimbursement rates while others have negotiated more reasonable ones, Huffman says the situation is untenable. "It's not a model for sustainable health care moving forward, so we've got to get this fixed," he says.

There are plenty of other issues to fix as well, especially in rural areas like Humboldt. While Figas agrees getting the in-network provider lists straight and getting more local doctors under contract with Anthem Blue Cross is a priority, she says changes under the Affordable Care Act are putting an increased strain on an already frayed system in Humboldt County. "Being in a rural area, we don't have the provider base," she says.

Even before Obamacare, there was a shortage of physicians locally, she says, noting that more and more local docs are nearing, or have passed, retirement age. "Every time we lose a physician, their patients have to be absorbed into someone else's practice," she says. The system was already stretched, Figas says, and now there are some 9,000 additional MediCal and Covered California patients, many of whom didn't have insurance before. "If you already have shortages and (doctors) are booked solid, giving people insurance and access doesn't help the problem on the other side," she says.

From an insurance company's perspective, Humboldt County poses some unique challenges. Sean Barry, a spokesman for Blue Shield of California, says it comes down to a supply and demand issue. Because doctors in Humboldt are in high demand, he says their practices are already bulging at the seams and they don't feel the need to make concessions to take on new patients.

"It's mostly a supply issue," Barry explains. "Generally, we've seen when there are fewer providers over a larger region, we see higher costs. Also in lower population densities, there's not the economies of scale you'd find in an urban area." From Blue Shield's perspective, Barry says it's a constant balancing act: The company wants to contract with enough doctors to treat policy holders but also needs to be careful not to overextend. "It's a challenge in the North Coast and in the North Eastern areas of the country," he says. "It's a balance, we need to meet adequacy requirements, but we also are very attentive to what the premium is going to be (for customers). That's a balance that we've been looking at and will continue to look at in the coming years."

It seems that's the challenge for all involved in healthcare on the North Coast: finding balance. Currently, Huffman says he sees too much power in the hands of insurance companies, and particularly Anthem Blue Cross, which holds a near monopoly on the Covered California market locally. But the congressman seems quick to take on anyone who would point to what's happening in Humboldt as a sign that Obamacare is fatally flawed.

"I'm a fan of the Affordable Care Act," Huffman says. "It's an important reform and moves us in the right direction, but we've got some work to do to make sure the implementation is successful, and that's what this is all about." If anything, Huffman says, Obamacare didn't go quite far enough. "I continue to believe we need a public option in the mix to keep insurance companies honest, but if we can just hold them accountable, there's every reason to believe the system should work better now that we've managed to get most people covered."

And Huffman pledges that he will continue to pressure Covered California, and the state's departments of managed health care and insurance to continue to hold Anthem's feet to the fire. But, he says, at least under Obamacare, there's a fire burning.

"I think anyone who thought this was going to be smooth and seamless and without challenges was naive," he says. "Remember that the context before the Affordable Care Act was insurance companies overreaching and gouging and dropping patients for technicalities and preexisting conditions. So, I never thought that, with the passage of this law, insurance companies would stop engaging in questionable practices. This is what they do."

Having trouble with Obamacare?

If so, the California Department of Managed Health Care wants to hear from you. "If people are struggling, we want to hear about their problems, both because we want to help them solve them and because we want to know what's going on in the marketplace," says department spokeswoman Marta Green. The Department of Managed Health Care's website at www.dmhc.ca.gov or call its help center at (888) 466-2219.

Covered California in Humboldt

5,184 People who purchased insurance plans on the exchange with government subsidies

495 People who purchased unsubsidized plans on the exchange

5,679 Total Humboldt County residents insured under Covered California plans

Source: Covered California

Breakdown of plans in Northern California

49,603 Total people insured under Covered California in Northern California

90.8% Of Northern California enrollees who purchased plans from Anthem Blue Cross of California. According to Covered California, Northern California includes Alpine, Amador, Butte, Calaveras, Colusa, Del Norte, Glenn, Humboldt, Lake, Lassen, Mendocino, Modoc, Nevada, Plumas, Shasta, Sierra, Siskiyou, Sutter, Tehama, Trinity, Toulumne and Yuba counties. Together, they account for 4 percent of the 1.2 million people enrolled in Covered California plans statewide.

Source: Covered California