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Email Chain Reveals Hawaii Obamacare Leaders Debating “Inevitable Failure”


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Thursday, June 13, 2013

Email Chain Reveals Hawaii Obamacare Leaders Debating "Inevitable Failure"
By Andrew Walden @ 12:32 AM :: 380 Views :: Health Care


by Andrew Walden

With one group predicting "inevitable failure," Hawaii's top health reform leaders have become sharply divided over the Abercrombie administration's Health Transformation plans.  In an April 21, 2013 Star-Advertiser column, Dr. Stephen Kemble MD, President of the Hawaii Medical Association, urged the Abercrombie administration to take advantage of a January, 2014 "Section 1115 waiver" renewal deadline and end Hawaii's Medicaid managed-care model.  Kemble, a leading advocate of 'Single Payer' health insurance, followed up with anOpen Letter to Governor Abercrombie signed by 131 medical professionals advocating adoption of "enhanced Primary Care Case Management (ePCCM), based on the successful Community Care of North Carolina (CCNH) model."

Citing the State's "commitment to a multi-payer approach" Kemble argues "there is nothing in the governor's Health Transformation Initiative that addresses the reasons doctors are refusing Medicaid patients."

The dispute has split the State's medical community.  Kemble tells Hawai'i Free Press

In September 2011, I was appointed by Gov. Abercrombie to be a member of the Hawaii Health Authority, charged with designing a universal health care system covering all residents of Hawaii. However. the Governor also created the Health Transformation Initiative around the same time, led by Beth Giesting and charged with implementing the Affordable Care Act for Hawaii, and I was the representative of the Hawaii Health Authority on the Health Transformation Exec. Committee. The Health Transformation Initiative became the Hawaii Health Project late last year, and as of February Beth Giesting and the Governor committed to a multi-payer approach to implementing the Affordable Care Act, perpetuating our insurance-based system for financing health care. I remain involved as a member of the Community Care Networks committee, but I am no longer on the Executive Committee.

The Hawaii Health Authority has been pushed aside and essentially stripped of any authority to carry out our legislative mandate. However, the HHA continues to meet, without a budget, working on developing a universal, cost-effective health care system that will be ready for implementation when the Affordable Care Act inevitably fails to achieve its stated goals. Beth Giesting has attended many of the Hawaii Health Authority meetings, but is refusing to consider any of our recommendations. I have not received any further response from her since May 6 to the e-mail exchange….  The Hawaii Health Authority will be meeting next week on Monday, June 17 at 4:00 PM, in the Hawaii State Capitol, room 441.

The Hawaii Health Authority is placed administratively within the Dept. of Budget and Finance, and we have issues two annual reports, attached below. The HHA web site is:

Kemble's Star-Advertiser column and Open Letter drew a sharply worded May 6 email response in which Giesting accuses Kemble of "misrepresenting the facts about QUEST" (PDF Giesting response).  Kemble then responded to Giesting, forming the email chain below which has been obtained by Hawai'i Free Press

(We have maintained the exchange in the original adding only some parenthetical notes explaining acronyms and the graph below documenting the counter cyclicality of medical care growth.) 

  *   *   *   *   *

From: Stephen Kemble

Subject: Re: Medicaid problems

Date: May 6, 2013 1:21 PM HST

To: Beth Giesting

Cc: (40 recipients)

Hi Beth,


See my comments (indented below). Health transformation founded on denial of reality is not likely to be effective.


Stephen Kemble, MD 

On May 6, 2013, at 12:14 PM, Beth Giesting wrote:

Dear Dr. Kemble 

Your email to us and opinion piece published in "Island Voices" in the April 21, 2013 Star Advertiser contained inaccuracies about the state Medicaid program and the Governor's Healthcare Transformation Initiative that must be corrected.   

Program Costs.  You state that MedQUEST costs rose "significantly faster than the national average since implementation of Medicaid managed care."  In fact, MedQUEST has saved Hawaii taxpayers about $800 million.

Kemble: What are these alleged savings in comparison to? What is the denominator, and what are the sources of information used to come up with it? There was no control group when a population of Medicaid recipients was converted to managed care, so the denominator must be someone's projection. Did the health plans themselves come up with this number? Don't forget that the health plans have the expertise and incentive to spin the numbers to make themselves look good, so assessment of savings should come from an outside, independent, objective source. Was this the case? 

Medicaid managed care for GA (General Assistance) and AFDC (Aid to Families with Dependent Children) was implemented in 1994. If we compare Hawaii's Medicaid costs to national averages (Kaiser Family Foundation, State Health Facts), from 1990 to 2001, Hawaii's average annual growth in total Medicaid spending was 10.9%, the same as the national average. From 2001-2004, Hawaii's Medicaid spending increased 12.5% per year, and the national average was 9.4% per year. From 2004-2007, Hawaii's Medicaid spending increased 6.2% per year, and the national average was 3.6%. From 2007-2010 (QExA implemented in early 2009), Hawaii's Medicaid spending increased 9.2% per year, and the national average was 6.8%. Hawaii's Medicaid spending has been increasing significantly faster than the national average ever since managed care was introduced here. 

Giesting: To the extent that our expenditures have increased more than the national average, as cited by the Kaiser Family Foundation State Health Facts, that is due to changes inenrollment rather than per capita spending.  During the period 2004-07 enrollment increased by 6%, which mirrored the increase in Medicaid spending. From 2007-10, enrollment increased by 28% while spending grew by only 9.2%.

Kemble: There is so much variability between states in eligibility criteria and benefits, and these have been changed so often in so many states, that it is very difficult to make individual state to state comparisons. That is why I looked at the comparison between Hawaii's Medicaid costs and the US National average, figuring that the economic forces leading to changes in enrollment here would be reflected across the country in the average. We are certainly not the only state to experience increases in enrollment between 2001 and 2010. 

Giesting:  Access and Quality.  You further charge that under the QUEST program, patient access and quality of care have been reduced. Actually, HEDIS scores, which measure quality, have shown improvements from 2009 to 2012 on diabetes measures, lipid control, blood pressure control, childhood vaccinations, and chlamydia testing. 

Kemble: There have been a number of factors affecting HEDIS (Healthcare Effectiveness Data and Information Set) scores, including increasing numbers of physician offices implementing Electronic Health Records with chronic disease registries, QI (quality improvement) efforts by Mountain Pacific Quality Health (our Medicare QIO), and quality improvement efforts by other health plans (especially HMSA) that would affect all the patients in a doctor's practice. None of these can be attributed to the QExA Medicaid managed care plans. In fact, as a practicing doctor treating Medicaid patients, I have never seen any sign of a quality improvement program initiated by the QExA plans. 

Giesting: About 3/4ths of all MedQUEST enrollees are served by private providers and, according to the State health Access Data Assistance Center (SHADAC), 69.9% of Hawaiʻi physicians were accepting new Medicaid patients in 2011, a slightly higher percentage than the national average of 69.4%.

Kemble: Recent surveys by HMA (range of specialists) and Kelley Withy (not yet published data on psychiatrists) show about 2/3 are refusing new Medicaid patients, and of those who do accept Medicaid many are accepting only HMSA QUEST.


My experience "on the ground," and that of all the other doctors I know who still treat Medicaid patients, is that there are a lot of Medicaid patients, especially those with the QExA plans, who either can't find any private sector doctor who will treat them, or who have to wait months for an appointment. There has always been some difficulty with finding doctors who will accept new Medicaid patients, but this has become much worse since the implementation of the QExA program.


From the perspective of a provider, when the QUEST managed care program was initiated in 2004 for GA and AFDC, almost everyone treating Medicaid signed up for the plans, despite the marked increase in hassles with prior authorizations, formulary restrictions, etc. Physician acceptance of QUEST patients dwindled somewhat. HMSA was the first plan to back off on unreasonable managed care policies in the second decade of the program, and physician satisfaction with their plan improved, but not for AlohaCare. For ABD (aged, blind or disabled) patients with FFS (fee for service) Medicaid, most doctors maintained their existing patients and still accepted limited numbers of Medicaid patients until implementation of QExA in 2009. The plans' participating provider panels are representative of the doctors who were previously treating FFS Medicaid patients and signed up on behalf of their existing patients. However, it has now become almost impossible to find a doctor who is still accepting new QExA patients.


The 2011 HSAG External Quality Review for the MedQUEST program confirms poor plan performance on measures of quality, access to care, consumer satisfaction, and provider satisfaction:

(poor performance *, extremely poor performance **)


On aggregate scores of HEDIS quality measures, the plans scored 50% or better on the following percentage of measures:

AlohaCare:                         5.3%**

HMSA:                             36.9%*

Kaiser:                            79%

Evercare:                         36.9%*

Ohana:                             21.1%*


Global ratings of plans by consumers (national Medicaid managed care average 65.4%*, which I consider "poor"):

AlohaCare:                        67.4%*

HMSA:                             69.2%*

Kaiser:                            73.4%

Evercare                          43.4%**

Ohana:                             40.9**


Providers were very dissatisfied with adequacy of formularies, availability of specialists, and availability of behavioral health specialists, especially for the QExA plans and AlohaCare:

                  Formulary    Specialists    Beh Health

AlohaCare:      8%**          8.0%**         3.4%**

HMSA:          23.2%*       33.3%*          14.7%**

Kaiser:          56.4%         61.3%            35%*

Evercare:       4.4%**       5.8%**          3.3%**

Ohana:         10.1%**       6.2%**          4.6%**


Giesting:  Administrative costs.  You contend that managed care plans "add substantially higher administrative costs;" however, QUEST and QExA plans require that 87% and 90%, respectively, of expenditures must be for care. The percentage spent on administration amounts to the same dollar amount whether there is one plan or five. 


Kemble: MLR (Medical Loss Ratio) figures are marred by "creative accounting," especially for Medicaid managed care plans. United Health has already had to pay a fine to Hawaii for misrepresentation of their MLR figures. In 2010, the Health Insurance industry negotiated with the Obama administration to allow "medical management" to be counted as "health care," not administration, for purposes of calculating their MLR. Every health plan in the country immediately shifted their managed care costs into the "health care" column. I used to be on the Board of a certain local health plan that uses judicious managed care policies with a lot of physician input to ensure that these policies stay reasonable. Their medical management costs were 1-1.5% of their budget. Based on my experience as a practicing doctor, I would guess HMSA is in the same ballpark. My experience with the QExA plans is that they do a LOT more micromanaging of medical decision-making, so they must be spending 3-4 times as much on "medical management," counted as "health care" for the MLR, even if almost all of it actually goes to obstruction and denial of care.


Giesting:  Governor's Healthcare Transformation Initiative. While you misrepresented the facts about QUEST, we agree that we can do better, as can all public and commercial payers.  That's why we strongly disagree with your statement that "there is nothing in the governor's Health Transformation Initiative that addresses the reasons doctors are refusing Medicaid patients."  

Kemble: You are not listening to doctors about this. I have encountered unanimous agreement on this from many, many practicing doctors and other providers who are still attempting to treat Medicaid patients.


Giesting:  We know that administrative complexity resulting from multiple plans can be a burden to providers and interfere with progress toward better models of care.  That's why one of the Healthcare Transformation Initiative committees is focusing on these very issues.  Another committee – of which you are member - is identifying strategies to enhance care coordination.  MedQUEST will be a central player in this but, again, all patients, regardless of insurer, deserve more help to coordinate and manage care and that is the objective of this group. 


Kemble: We have a shortage of doctors in general, especially for primary care and psychiatry, and of those we do have, many are not taking new patients with Medicaid and Medicare. Care coordination and patient-centered medical homes can't do much if most doctors won't accept the patient's health insurance plan. Even the "champions" of HMSA's patient-centered medical home program in the commercial sector are refusing Medicaid and Medicare patients.


Giesting: To be sure the Medicaid program faces challenges in Hawaii, as in every other state.  Counter-cyclical growth is hard to accommodate while the increases in chronic diseases seen across all sectors are even more clearly manifested in Medicaid clients.  We are proud of the continuous efforts to innovate and improve our MedQUEST programs and this is why the Governor's Healthcare Transformation Initiative and MedQUEST are embracing opportunities to work together to continue this tradition.

Beth Giesting

Healthcare Transformation Coordinator

Office of the Governor


  *   *   *   *   *

From: Stephen Kemble

Subject: Re: Medicaid problems

Date: May 12, 2013 12:48:35 PM HST

To: Beth Giesting

Cc: (40 recipients) 

Hi Beth,


You have stated that our Medicaid costs have been rising around 3% faster than the national average due to increases in enrollment, not Medicaid managed care. I have looked at the Kaiser Family Foundation State Health Facts web site in search of data on enrollment. As of 2009, 20% of the population of the U.S. was enrolled in Medicaid, and in Hawaii it was 19%. North Carolina also had 19% of their population enrolled in Medicaid. By comparison, California had 30%.


Hawaii's Medicaid enrollment is just below the national average. As noted below, our Medicaid spending rose an average of 2.7% per year higher than the US average over the 9-year period from 2001 to 2010, for an increase of 24% ABOVE the national average.


Unless Hawaii's Medicaid enrollment started out 24% below the national average in 2001, the increase in our Medicaid costs since 2001 cannot be due to increasing enrollment, but must actually be due to increasing cost per enrollee compared to the US average. The cost escalation has been consistent ever since Hawaii converted fee-for-service Medicaid to Medicaid managed care.


Medicaid managed care as a way of structuring Medicaid has clearly been a failure in terms of cost. Everyone treating Medicaid patients agrees it is also a failure in terms of access to care, physician participation, and the efficiency with which providers can care for Medicaid patients. Managed care policies that we see in practice have nothing to do with improving the cost-effectiveness of care or care coordination, but everything to do with obstruction and denial of necessary care, and the managed care program is universally hated among providers. The HSAG Quality Review data confirms this. Furthermore, most of the care coordination problems that Medicaid providers encounter every day are directly caused by the fragmentation of Medicaid into competing plans and obstructions to care imposed by the managed care plans, not by failures in coordination among providers.


Medicaid managed care is by far the largest single obstacle to care coordination and to improving the cost-effectiveness of care in our Medicaid program. If we do not address this problem, all the care coordination and delivery system reforms now being planned for Medicaid will not be effective. 


  *   *   *   *   *

From: Stephen Kemble

Subject: Re: Medicaid problems

Date: May 15, 2013 12:48:35 PM HST

To: Beth Giesting

Cc: (40 recipients) 

Hi Beth,


This (see article below) is exactly the sort of thing that is driving the escalation in our Medicaid costs while driving psychiatrists and other doctors out of participating in the program, leaving the patients scrambling to find anyone who will see them.


I repeat, "There is nothing in the governor's Health Transformation Initiative that addresses the reasons doctors are refusing Medicaid patients."



Psychiatrists Waste Millions of Hours Obtaining Prior Auths

Health insurers require time consuming prior auths for emergent psych admission

Published on May 14, 2013 by J. Wesley Boyd, M.D., Ph.D. in Almost Addicted 

My colleagues and I recently tabulated how long psychiatric patients who were deemed in need of inpatient admission—overwhelmingly because of suicidalthoughts or plans—stayed in the emergency department prior to being hospitalized, as well as the amount of time that the emergency department psychiatrists spent obtaining authorization from the patient's insurer.

We found both lengthy waits for severely ill psychiatric patients in need of immediate hospitalization as well as time consuming prior authorizations required by insurance companies and published our findings in Annals of Emergency Medicine.

In our study psychiatric personnel spent, on average, 38 minutes on the telephone getting authorization.  In 10% of cases it took more than one hour to obtain insurance authorization; in one case authorization took five hours of psychiatrist time.  On top of the time required to obtain authorization, psychiatric patients who need admissions wait a long time for inpatient beds to open up.  The total time that patients remained in the ER in our study averaged 8.5 hours.

Our data don't include a handful of patients who boarded in the ED over the weekend while waiting for an inpatient bed to become available for them and also excluded uninsured patients and those with Medicare, which doesn't require prior authorization.

A much larger study published just before ours found even longer wait times--more than 11 hours while awaiting placement into an inpatient facility.

Out of 53 requests, we had only one prior authorization request denied, so basically the process of calling the insurance company, relaying patient information, and obtaining her authorization to pay for admission, is a needless, time consuming process given that the end result—namely, the insurance company saying they will in fact pay for the admission—is a foregone conclusion provided I jump through the proper hoops.

Imagine if women in labor required this kind of authorization or if children with ruptured appendices did?  There would be a public outcry and the practice would end immediately.

Given that there are approximately 2.5 million inpatient psychiatric admissions annually in the US, if 2/3 of them require some form of prior authorization (which is likely an underestimate), then roughly a million hours of time annually is wasted by psychiatric clinicians obtaining these authorizations.  Add to that the many day hospital admission and psychiatric medication requests that also require prior authorization from insurance companies, and the total number of psychiatric clinician hours spent on the phone asking for authorization of service is staggering.  

Just today, for example, I spent 25 minutes on the phone obtaining authorization for a psychiatric medication I prescribed for a 50-ish year old professional male. Knowing the call would take a chunk of time, I thought about not making the call and just having him pay out of pocket for the medication instead of taking my time to make the call, but I just couldn't bring myself to concede defeat to his insurance company so, ultimately, I made the call.

This is a travesty.  It is demoralizing to psychiatric clinicians.  For me to have to calculate whether my time is worth it for an insurer to pay for medications it is supposed to pay for is pathetic.

It also testifies to the fact that psychiatric patients are singled out for this kind of scrutiny because they are vulnerable and often unwilling to publicly advocate for themselves, the way that pregnant or pediatric patients and their allies might. I'd wager that insurance companies hope to profit off this vulnerability, given that overworked clinicians might opt to, if they are on the fence about how to proceed, do something other than admitting their patients given the hassle of seeking authorization.  My co-authors and I call this "rationing this by hassle factor."

The humanity of societies is judged by how well they take care of their most vulnerable, and we undoubtedly need to do better.  Health insurance needs to provide real coverage and assurance to those in need, not set up roadblocks to needed care that deter clinicians from seeking care when it is life-saving.

If we had a health care system that was not profit driven—an improved Medicare for all would be ideal--then I'd wager such impediments to urgent care would not be present and patients could receive the care they need without unnecessary hurdles for healthcare clinicians to jump through, set up only to generate greater profit for insurers. 

References:  Amy Funkenstein, MD, Monica Malowney, BA, J. Wesley Boyd, MD, PhD.  Insurance Prior Authorization Approval Does Not Substantially Lengthen the Emergency Department Length of Stay for Patients With Psychiatric Conditions.  Annals of Emergency MedicineVolume 61, Issue 5, May 2013:  596–597 




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