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Blue Shield Spotlight

Legislative Update

By Tom Epstein

As expected in the aftermath of the defeat of the governor’s health reform plan, state legislators have unleashed a torrent of bills that regulate, mandate, and eviscerate managed care and the broader health coverage market.  Prosecutors and regulators have also joined the fray, with Los Angeles City Attorney Rocky Delgadillo and DMHC director Cindy Ehnes announcing extraordinary action to remedy perceived abuses in health plan rescission practices. 

Delgadillo filed civil charges against HealthNet and WellPoint alleging unfair claims practices and false advertising, seeking restitution and reinstatement for rescinded members, and an injunction against these practices in the future.  Ehnes ordered health plans to immediately reinstate health coverage to 26 enrollees and also announced that DMHC will engage a third-party arbiter to conduct an investigation of all individual rescission cases from 2004 to the present.  
The legislature’s vision of health reform these days is imposing onerous new restrictions and mandates on health plans.  Since these bills would make coverage less affordable and undermine managed care, we’re working with broker organizations and other health plans to amend or defeat them. Here’s the line-up:

Plan/Provider Relationships

  • AB 2847 (Krekorian), which would create a legal presumption that a physician’s recommended course of treatment is always “medically necessary,” passed the Assembly Health and Judiciary Committees. 
  • AB 2910 (Huffman), which would have held health plans liable for the conduct and decisions of providers, was amended to address DMHC regulation waivers. 
  • AB 2805 (Ma), which would allow out-of-network physicians to seek payment directly from health plans through an assignment of benefits process, cleared its policy committee hearing. 
  • AB 2220 (Jones), which would permit non-contracted emergency physicians to bypass medical groups and bill health plans directly, also passed out of its policy committee hearing. 


  • AB 1945 (De La Torre) requires that health plans obtain approval from regulators prior to each effort to rescind, cancel or modify coverage and requires regulators to develop standardized applications in the individual market.
  • AB 2549 (Hayashi) would limit the time period for rescission to six months from the date of issuance of coverage and would allow an enrollee to seek regulatory review of a rescission. 

Both bills passed out of their policy committee. 

Market Regulation

  • SB 1440 (Kuehl), a bill that would require health plans to spend no less than 85% of all premiums received on healthcare benefits, passed out of the Senate Health Committee. 
  • SB 1553 (Lowenthal), a broad attack on managed care that would impose new administrative and regulatory obligations on plans, narrowly cleared its policy committee hearing. 
  • SB 1525 (Kuehl), a measure that requires plans to report data on delays or denials of authorizations and allows medical directors to be subject to disciplinary action for improper claims denials, cleared its first policy committee hearing. 
  • SB 1552 (Steinberg), the new Senate President pro Tem has introduced this bill, which requires regulators to categorize health insurance policies into five benefit tiers and define a standardized product in each tier.  Carriers would be required to offer at least the standardized product with minimum coverage standards in each tier.


More than 10 bills that seek to impose mandates on health plans to cover certain benefits (e.g., breast cancer screening, cleft palate orthodontics, HIV testing, mental health services, acupuncture) have cleared their policy committee  hearings. 

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Member Behavior Change Leads Your Reader Poll Results

Our last Shield Spotlight poll asked you to identify the biggest challenge facing health care in California in 2008. Thank you to all who responded. The number one topic you selected was changing member behavior (43%) followed by health care reform initiatives (29%), rising healthcare costs and consumer directed health care (both 14%).

Employers are aware that a healthy work force is a productive work force. But the health of the work force is not necessarily measured by absenteeism. Presenteeism—employees who show up for work but are not fully engaged mainly due to personal health and life issue distractions—accounts for up to 63% of employers’ health-related costs.1 

Chronic disease is also a leading driver of health care costs -- roughly 20% of the employee population drives 80% of the health care cost. The primary health behaviors that can reduce the likeliness of chronic disease are nutrition, exercise, and smoking cessation.

  Modifiable Risk Factors2
  Diet Exercise Smoking Stress
Heart disease, stroke X X X X
Cancer     X  
Diabetes X X    
Respiratory disease     X  


Stress reduction and preventative care can help reduce the rate of chronic disease and presenteeism. Since most adults spend half or more of their waking hours at work, employers have a real opportunity to positively impact the health of their employees.

The journal article "Best practices for an integrated population health management (PHM) program"3 recommends comprehensive communications through a variety of channels and change-management strategy as essential to the successful execution of an integrated population health management program.

Behavior change programs, which have evolved over time, encompass a broad range of activities and approaches. Some believe that setting consecutive goals that move you ahead in small steps are the best way to reach a distant point along with consecutive rewards that keep the overall effort invigorated.

The Health Belief model calls upon demographic, sociopsycho and structural variables such as age, ethnicity, social peer pressure and knowledge and the perceived threat of illness or cost/benefit analysis as the motivator to action.

The Stages of Change model shows that, for most persons, a change in behavior occurs gradually, with the patient moving from being uninterested, unaware or unwilling to make a change (precontemplation), to considering a change (contemplation), to deciding and preparing to make a change. And, that most people find themselves "recycling" through the stages of change several times ("relapsing") before the change becomes truly established.

Helping patients change behavior is also an important role for family physicians. Change interventions are especially useful in addressing lifestyle modification for disease prevention, long-term disease management and addictions. The concepts of "patient noncompliance" and motivation often focus on patient failure.

With ongoing education and tools to increase knowledge, incentives both monetary and motivational, along with a strong support system, members can be motivated to change their behavior.

Blue Shield offers outstanding baseline wellness programs designed to support member behavior change including:

  • Clinical reminders for important preventive screenings and services.
  • Healthy Lifestyle Rewards program, an interactive online health and wellness program that motivates and supports our members in changing their behavior and reducing modifiable risk factors such as: physical activity, good nutrition, smoking cessation and stress management.
  • Individualized Health Coach program and a Health Advocate program that provide personal, one-to-one counseling and support for members.
  • Decision guides, treatment option tools and a robust selection of health and wellness articles on 24/7.
  • Customizable marketing communication materials for employers to promote the benefits of Healthy Lifestyle Rewards to their employees.

Our integrated approach to total wellness through prevention, education and ongoing counseling and support has proven to help members change unhealthy behaviors and reduce risk.4  Personalized counseling and frequent interventions standard to Blue Shield’s disease management programs lead to improved awareness and preventative behaviors for health challenges including diabetes, asthma, coronary artery disease and chronic obstructive pulmonary disease. Savings achieved through shortened length of stay and earlier transition to lower level of care.

Employees benefited from:

  • Improved compliance with prescribed medications
  • Improved compliance with disease monitoring (lab tests, daily weight, etc.)
  • Risk reduction through education and goal monitoring (e.g., foot care for diabetics)
  • Education about appropriate level of care (doctor’s office vs. ER)
  • Better understanding about the disease and the impact of poor lifestyles
  • Support and suggestions to maintain lifestyle changes
  • Accountability for patients when non-compliance leads to health care exposure

Generally, when employee well-being improves, so does work attendance and performance.  Study results show 17% fewer hospital admissions, 20% fewer hospital days5, 13% fewer days absent and 24% fewer days not at full productivity6 with improved well-being.

Blue Shield’s wellness programs are designed to ensure your members personalized and proven programs to effectively manage their health care needs and experience. For more information, contact your sales representative.

1 Harvard Business Review, October 2004
2 PricewaterhouseCoopers Health Research Institute analysis, 2007
3 The Art of Health Promotion, May-June 2006
4 Source: Staywell Health Management Reporting; Change in Number of Health Risks Pre/Post for 2004 HLR participants
5 Results are from a 2005 Blue Shield of California study of CalPERS and selected ASO groups. 
6 Results are from a telephonic survey conducted by Healthways in Oct. – Nov. 2005 of members who were enrolled in any of the five components of the disease management program for at least six months.

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Disease Management Programs that Focus on Needs of Chronically Ill Patients

Comprehensive patient care management techniques that include patient education, provider and care coordination and professional support can sharply reduce utilization, including hospital days and emergency room visits, and lower overall costs compared to typical care management programs.  A study of Blue Shield of California HMO members published in The American Journal of Managed Care last year quantified actual cost reductions for patients with illnesses, such as late-state cancers or degenerative neurological conditions, who participated in this type of expanded care management program.

More comprehensive than usual care management interventions, patient-centered management (PCM) assigns highly-trained nurses to provide extensive patient education and care coordination as well as pain and end-of-life management. PCM helps patients select services, consider different treatment options and avoid unnecessary hospitalizations and emergency room visits, in essence changing some patient behaviors and environments that impair their care or yield unnecessary healthcare expense. 

The study results were very positive, according to Dr. Latanya Sweeney, director of the Data Privacy Lab at Carnegie Mellon and the study’s lead author with Andrew Halpert, MD, Blue Shield of California, and Joan Waranoff, MS, MBA, Blue Shield of California   Patients who received PCM had 38 percent fewer hospitalizations, a 22 percent increase in home care and suffered fewer treatment complications, such as nausea, anemia and dehydration, than patients who received usual case management.  Many cancer patients in the PCM group opted against further chemotherapy or radiation treatment (42 percent less chemotherapy than the patients in the group receiving usual care). The PCM group also had 62 percent more days in hospice care than the usual care group.  Moreover, participant satisfaction scores were highly favorable. 

Overall, the study concluded that the PCM effectively reduced overall costs by 26 percent.  The savings were realized in patients having fewer costly hospital days and emergency room visits, with care shifting to less costly home care and hospice settings when appropriate.  The average combined utilization cost of the PCM cohort was $49,742 per patient for the 18-month study duration, compared with $68,341 in the UCM cohort, with average savings of about $18,599 per patient.  After accounting for the additional cost of the program, the return on investment was 2:1.  

To see more information on this study online, visit:

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