Ian Dixon – C-VILLE Weekly

Locals hire attorney, challenge Optima premiums

After Charlottesville earned the dubious distinction of having the most expensive health insurance premiums in the country, some of the area residents who couldn’t afford to pay $3,000 a month formed Charlottesville for Reasonable Health Insurance and retained a lawyer who’s made a career out of keeping insurance companies honest.

Washington, D.C., attorney Jay Angoff was hired to implement the Affordable Care Act in 2010, and before that he was the commissioner of insurance in Missouri. He has worked for Ralph Nader, and he published a landmark study in 2005 that showed how insurance companies artificially inflated malpractice insurance rates for doctors, which in turn increased prices throughout the system.

“He developed a reputation for using the legal system to fight for the little guy against Goliath insurance companies,” says the Washington Post.

And that’s why Sara Stovall and Ian Dixon are happy to have Angoff on their side.

“We’re hoping the name recognition of our attorney and the details our letter has” will get the Bureau of Insurance to take another look at Charlottesville’s rates, says Dixon.

Dixon created a GoFundMe account to raise money to pay for legal fees, and it’s reached $17,636 of its $20,000 goal.

On January 4, Angoff sent a nine-page letter to the Bureau of Insurance detailing ways Optima Health calculated its premiums here that he says are “excessive” and even a violation of federal law.

For example, Charlottesville has a rating factor of 1.579 that far exceeds any other geographic area in the state and that of other carriers, which use 1.07 or lower for this area. Optima executives told Stovall and Dixon that rate was in part because of “the relative health of the population that’s buying.”

And consideration of morbidity in determining that rating factor “violates federal law,” Angoff writes to Virginia’s commissioner of Insurance Jacqueline Cunningham.

Optima spokesperson Kelsea Smith says, “We did not violate the guidelines” and comments the company did “are simply false.”

Angoff also points out that Optima’s own rating factor to insure small groups in Charlottesville is .937, a difference that “would seem to have no rational basis.”

Angoff calls Optima’s 8 percent profit factor in its individual premium rates “unjustifiable” for a nonprofit. And because Optima uses a 5.7 profit for its small group rates, individual policyholders may be subsidizing small group policyholders, says Angoff. He suggests the bureau “may wish to consider whether such a strategy could reasonably be considered unfair discrimination.”

The profit margin “was merely an estimate,” and Optima has lost $32 million over three years on the exchange, says Smith.

Angoff notes that Optima’s ownership of Martha Jefferson Sentara should enable it to negotiate favorable terms for those it insures and to provide leverage with UVA Health System, which Optima has claimed charges higher rates and is more expensive to cover.

That allegation drew a letter to the Post from Richard Shannon, UVA executive vice president for health affairs, who disputes Optima’s assertion that UVA is the reason premiums skyrocketed. He says Optima clients account for fewer than 1 percent of commercially insured patients cared for at UVA, and “Sentara has the opportunity to benefit from these higher premiums while paying itself as a care provider.”

Shannon also takes issue with Optima’s claim that Charlottesville is a high-cost region for health care, and cites a 2015 New York Times article that puts this area 85th lowest among 306 hospitals nationwide for commercially insured beneficiaries.

The challenge could be a first. Dixon says he’s “not aware of a consumer who’s challenged an insurance company on its rates.” And some of the details brought out in Angoff’s letter “are a hard thing for the Bureau of Insurance to dismiss,” he says.

At press time, the Bureau of Insurance had not responded to the letter. “We’re super impatient,” says Stovall. At the same time, she realizes, “We need to give the bureau the space and time to do their investigation.”

In her dream scenario, she hopes “it will motivate the bureau to take immediate action and modify the rates,” she says.

And there’s some urgency for those who lost coverage when their provider pulled out of the area. “Everybody using the Affordable Care Act before qualifies for a special enrollment period until March 2,” says Stovall. “We’re still mad as hell about it and because there’s this special enrollment period, we feel like this is something we can fight for,” says Dixon.

Stovall sees longer-term damage from the tripled health insurance premiums, which could deter someone considering starting a small business and could set a precedent for another insurance company to use the rates as a basis for setting its own.

Says Dixon, “Anyone coming to this area could say this is a very expensive area.”

Morbidity rates: Optima’s health insurance premium calculations challenged

In November, Sara Stovall was grappling with a health insurance premium that had skyrocketed from $940 a month to $3,000 for her family of four in the Charlottesville market, which found itself with the highest rates in the country.

Now Stovall says she has a better idea of why this area’s rates are so high. She believes Optima Health—the area’s only individual policy provider—used a factor in calculating health insurance premiums that the U.S. Department of Health and Human Services forbids—and she says its incoming CEO admitted as much in a December 14 meeting.

Stovall and fellow Charlottesville resident Ian Dixon met with Optima CEO Michael Dudley and his successor, Dennis Mathias. It was there that in explaining why Charlottesville’s rates are so high, according to Stovall and Dixon, Mathias said, “The morbidity of the people buying in this marketplace is higher than other parts of the state.”

The two say Dudley further explained that morbidity is “how sick people are.”

And that’s a big no-no in HHS’ 2018 Unified Rate Review Instructions: “Geographic factors may not reflect differences in morbidity by region.”

To Dixon and Stovall, inclusion of morbidity as a factor would explain why a Charlottesvillian would pay 68 percent more for a bronze health plan than someone in the Hampton Roads area.

They point out that Optima’s filings use an area rating factor for Charlottesville that’s 58 percent higher than Hampton Roads—but they say Anthem’s area rating for Charlottesville was lower than Hampton Roads. “There’s no history of our area being rated this high,” says Dixon.

Another factor they question is the difference between Optima’s individual policy rates and the small group rates it offers businesses. In Charlottesville, the small group rate is significantly lower than an individual plan, despite both using the same providers and the same provider reimbursement rates, says Dixon.

“We don’t see any justification for the 58 percent difference from small group and individual rates,” says Stovall.

“They said small groups are healthier,” says Dixon. “The health of the population and morbidity cannot be used in setting the rates.”

In a statement from Optima’s Dudley, he does not address the question of whether morbidity was used in how the company calculated its Charlottesville premiums.

“We have carefully revisited our 2018 premium calculations,” and determined the calculations were accurate, reviewed by third-party actuarial experts and approved by the Virginia Bureau of Insurance and the Centers for Medicaid and Medicare Services, he says.

Optima did not respond to a question about the statements allegedly made by Dudley and Mathias on morbidity, but says, “This is a very complex issue, and we correctly addressed all appropriate adjustments in accordance with state and federal laws, and, as required by the regulations, the geographic factors did not reflect differences in morbidity by region.

Stovall and Dixon met with people from Virginia’s Bureau of Insurance, and say that while those in the meeting initially were skeptical about their concerns, “by the end of the meeting they felt our concerns were valid,” says Stovall.

“You’ll have to rely on what they’re telling you as far as the meeting goes,” says Ken Schrad, spokesperson for the State Corporation Commission, under which the Bureau of Insurance resides.

“The bureau can always seek further information to be responsive to an inquiry or complaint from an already accepted filing,” he says.

Would Optima’s request for premium rates that are the highest in the country raise any red flags at the Bureau of Insurance? Says Schrad, “There’s so many factors that go into filing for insurance plans. To point out one factor alone as driving something would be hard to do.”

Optima maintains that when Anthem pulled out of the Charlottesville market, leaving zero insurance providers, despite business advisors telling the insurer to steer clear, it was asked by the commonwealth to come in and cover as many people as it could.

Optima Health is owned by Sentara, which also owns Sentara Martha Jefferson Hospital here. Optima did not respond to a question about whether that also was a factor in its decision to offer coverage here.

The company did say it had lost more than $30 million in the past three years in Virginia under the Affordable Care Act and this “is not sustainable.”

And Dudley’s response to Stovall and Dixon suggests they move on. “The reality is that premium rates are locked in for 2018,” he says. He adds the wish that “Washington would establish an environment that allows for affordable health plans.”

While Dixon considers the response “evasive” in not addressing “the crux of our complaint about morbidity,” he and Stovall are with Dudley on one point. They plan to escalate with the Bureau of Insurance and go back to their senators and congressman to figure out why Charlottesville can’t get affordable care.

Updated December 27 with Optima’s denial that morbidity was used to calculate Charlottesville’s health insurance premiums.