"One market observer referred to the Birmingham market as a 'bilateral monopoly,' given the dominant positions of BCBS and UAB," said the report by the Center for Studying Health System Change, which was based in part on interviews with health care executives, academics, consultants and state administrative staff.
The study is funded by the Robert Wood Johnson Foundation, and Birmingham is one of eight metro areas being reviewed.
Other factors cited by the study include a weak community-based care system for the area's poor and the state's highly restrictive Medicaid eligibility requirements.
The governor's office responded that Gov. Robert Bentley is focused on repairing Medicaid.
"Currently, Medicaid in Alabama is a broken system, and our focus is on fixing the system - not expanding something that's broken," said spokesman Jeremy King in an email. "Governor Bentley signed Medicaid reform legislation that will help increase efficiency in Medicaid while also helping improve patient care."
Alabama is one of about two dozen states choosing so far not to accept federal funding to expand Medicaid. As many as 300,000 Alabamians would likely be covered under such an expansion, according to one study.
According to the report, among Alabama's many challenges is "potential rate shock and instability" that come with the Affordable Care Act's tighter insurance regulations.
"Transitioning from the current minimally regulated commercial insurance market to the more stringent standards required by the ACA poses many challenges for Alabama," the report stated. "One is federal control of the insurance rate-review process, after federal authorities deemed Alabama's process ineffective."
David Becker, an associate professor in the Department of Health Care Organization and Policy at UAB, said left unaddressed in the report is the federal response to state's that declined to expand Medicaid.
"Given the cost of the bill to American taxpayers, the new benefits provided, it
seems untenable that we will leave 5 million of the poorest Americans out in the cold," Becker said. "I think it will be incredibly difficult for the Obama administration to allow that to happen, but they don't really seem to have a great strategy for resolving the stand-off with the hold-out states."
Here are key excerpts from factors the report says will influence how health reform will play out in the Birmingham area:
Uncompetitive health insurance market
"With Blue Cross and Blue Shield of Alabama controlling about 85 percent of the commercial market, Birmingham ranks among the least competitive insurance markets in the country.... The predominant commercial offerings are traditional preferred provider organization products with modest out-of-pocket cost sharing, comprehensive provider networks and few, if any, care-management features. ...BCBS is especially dominant in the small-group segment, with an estimated 95-percent market share. ...BCBS reportedly maintains dominance by keeping administrative costs lower and obtaining better provider discounts than competing insurers. BCBS' use of in-house staff rather than brokers to sell insurance policies reportedly has helped the carrier to keep administrative costs down. ... Innovative payment arrangements between plans and providers have not been attempted in most of the Birmingham market. The only plan to engage in risk sharing with providers is VIVA, which uses capitation as the payment method for some hospitals and large, hospital-owned physician practices in its network."
Blue Cross did not answer a request for comment.
UAB dominates the market.
"UAB Health System is the market's leading provider, with a flagship hospital that serves as a specialty referral center for the entire state. Outside of UAB, which employs many physicians, there has been little hospital-physician alignment in the market, although physician employment by other systems is growing. Likewise, there has been little physician consolidation into large practices.... With the exception of the small health maintenance organization (HMO) VIVA Health, risk sharing between commercial health plans and providers is nonexistent. ... UAB reportedly obtains consistently higher payment rates from insurers than other hospitals. One market observer referred to the Birmingham market as a "bilateral monopoly," given the dominant positions of BCBS and UAB."
UAB Health System CEO Will Ferniany said he chuckled when he read the 'monopoly' quote.
"We have about 19 percent of the market," he said. "I don't know how you can be a monopoly with 19 percent. I am pleased, though, that we are the preferred hospital in Birmingham."
Ferniany said UAB gets higher rates for a variety of reasons including the fact that as an academic hospital it trains residents; it maintains a Level 1 Trauma Center; it has sicker or more severely injured patients; and it provides a significant level of indigent care. Some 20 percent of UAB patients are Medicaid and 5.6 percent are charity care, he said.
Little Insurance Regulation
"Consistent with Alabama's politically conservative orientation and approach to business oversight in general, the state imposes little regulation on the commercial health insurance market . The nongroup market has no rating restrictions at all. In the small-group market (2-50 workers), Alabama prohibits rating by industry or tobacco use but allows premiums to vary by age, health status and gender. ...Compared to most states, Alabama imposes fewer benefit mandates on fully insured products and tends not to mandate coverage of more costly services--for example, infertility treatment, comprehensive autism treatment, some types of cancer treatment and access to clinical trials."
The Department of Insurance did not respond to a request for a reaction.
Stringent Medicaid eligibility.
"Alabama sets Medicaid eligibility at minimum federal levels: low income cutoffs for categorically eligible groups and no coverage for nondisabled, childless adults. Despite restrictive Medicaid eligibility, about 20 percent of Birmingham-area residents were covered by Medicaid at some point in 2012 largely reflecting the high prevalence of poverty among pregnant women and children."
Weak, Fragmented Safety Net
"Birmingham's uninsured adults--whose care is financed largely by county funding, supplemented by charity care--face serious difficulties accessing both primary and specialty care. Unlike the resources available to pregnant women and children with Medicaid or CHIP coverage,8 the safety net serving uninsured adults is a limited patchwork of providers lacking integration or coordination.
Three hospitals--UAB, St. Vincent's East and Baptist Health's Princeton Medical Center--reportedly are the main safety net providers for adults. Until 2012, Jefferson County operated a dedicated safety net hospital, Cooper Green Mercy Hospital, which provided the majority of inpatient care to the county's low-income, uninsured residents. Because of the county's bankruptcy and Cooper Green's financial problems, the hospital stopped providing inpatient and emergency care in 2012. Cooper Green became an outpatient center, but instability has led to the departure of much of the clinical staff, leading some observers to question whether Cooper Green can fulfill its intended new role as a source of coordinated, low-cost outpatient care.
The community's sole federally qualified health center, Birmingham Health Care (BHC), which operates six clinics, has been embroiled in financial scandals involving the center's former leadership team.UAB has severed all clinical partnerships between the two organizations, and BHC reportedly has done little to coordinate with other safety net providers. A number of small free clinics, which tend to focus on homeless populations or undocumented immigrants, offer some outpatient care.
Birmingham's limited, fragmented safety net is unlikely to see significant changes under health reform."
Dr. Mark Wilson, health officer for the Jefferson County Department of Health, said the study neglected to mention the health deparment's role in the local safety net.
"We currently have 5 clinic sites that provide adult primary care, using the same eligibility requirements as Cooper Green."
To read the study go here.
Link to original article from Al.com Blog