Tag: Optima

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Out of pocket 

Ian Dixon (left), Karl Quist, and Sara Stovall formed Charlottesville for Reasonable Health Insurance after Optima Health Plan, now owned by Sentara, raised premiums to nearly $3,000 a month in 2017. Optima was the only health insurance provider in the area. Photo by Eze Amos.

Remember back in 2017, when some here learned their health insurance premiums could jump to $3,000 a month and that Charlottesville’s rates were the highest in the country?

Those eye-popping premiums have drawn the attention of the U.S. Department of Justice, which is taking a look at how the rates for Optima Health Plan, owned by Sentara, which also owns Sentara Martha Jefferson Hospital, jumped an average 82 percent in Virginia and up to 266 percent in Charlottesville. The DOJ notified Sentara in May 2021 it was starting an investigation under the False Claims Act.

While the government hasn’t filed a lawsuit, more than two years later, an apparently exasperated DOJ filed a petition November 13 asking a judge to order Sentara executives to provide the documents and testimony it has requested as it investigates whether Sentara bilked the federal government out of $665 million in payments it made under the Affordable Care Act, according to the petition.

On November 22, U.S. District Judge Elizabeth Dillon ordered, at Sentara’s request, the petition to be temporarily sealed. And on November 27, she ordered Sentara into court December 19 to show cause why it hasn’t complied with the DOJ’s civil investigative demands.

For Sara Stovall and Ian Dixon, it comes as no surprise that Sentara is under investigation for making false statements in its 2018 and 2019 health insurance rate filings, and false claims under the Affordable Care Act. They were among the people who learned in 2017 that Optima, the only insurance covering the area, would charge nearly $3,000 a month to insure their families. 

And the fact the DOJ had to file a petition to force Sentara execs to provide documents and testify to civil investigative demands, well, “That’s the Optima we know,” says Stovall. “That’s their M.O.”

Stovall and Dixon, along with Karl Quist, formed Charlottesville for Reasonable Health Insurance. They met with Sentara execs, the Virginia Bureau of Insurance, and an estimated 30 state and federal officials, seeking help for their premium predicament. 

“When we first brought this to the Bureau of Insurance, we gave Optima the benefit of doubt that this was a mistake,” says Stovall. “They had every opportunity to correct it. With their topmost executives refusing to cooperate with the DOJ, that tells us everything. I can’t come up with another explanation but that this was an intentional overcharge.”

“Extraordinary” is how Martin Bienstock, an attorney who specializes in insurance litigation and the False Claims Act, describes the DOJ’s petition, which says Sentara withheld 1,900 documents. “Usually a defendant would want to avoid the appearance that they’ve got something to hide.” 

Also striking to Bienstock is that as a not-for-profit corporation, “You would think they’d be operating on behalf of the public and eager to make sure they haven’t engaged in fraud or wrongdoing under the False Claims Act.” He finds it notable that Sentara has hired not one, but two large law firms. “That seems like a lot of out-of-pocket costs for a not-for-profit,” he adds.

Sentara continues to insist its premiums were reasonable and that it has cooperated with the DOJ. “The rates offered by Optima Health Plans in 2018, after Anthem and other carriers exited from the Charlottesville exchange and the Commonwealth requested Optima remain in the market, were reviewed and approved by third party actuarial experts, the Virginia Bureau of Insurance, and the Centers for Medicaid and Medicare Services in accordance with state and federal laws,” says Sentara spokesperson Mike Kafka in an emailed statement. 

“We have been transparent and cooperative with DOJ throughout this more than two-year process,” he adds. “The current petition, filed on November 13, seeks answers to questions and information we responded to and provided previously.” 

In the course of the investigation, Sentara turned up nearly 7,000 pages that were not previously disclosed. “It strikes me as a pretty egregious failure to identify documents,” says Bienstock.

DOJ officials discovered that not all relevant documents had been turned over during a meeting with Sentara, when some showed up in a PowerPoint presentation. ”Sloppy,” says Dixon.

Tim Jost, an expert on health law and the Affordable Care Act, and professor emeritus at Washington and Lee, explains that cases under the False Claims Act can be filed by the Department of Justice or a whistleblower. If the latter, the case is sealed and if the government recoups its losses, the whistleblower gets a share. 

Health care fraud can be criminal, he says, but it appears the DOJ is investigating Sentara under the civil False Claims Act.

“There are many False Claims Act cases in the health care areas,” says Jost, usually with drug companies, hospitals, or physicians. “But this is the first time I’ve seen one with respect to the Affordable Care Act.”

It’s common for defendants to object to government requests for information as being overly burdensome, says Jost. But the undisclosed documents turning up in a PowerPoint? “I think that’s kind of awkward. It looks like the DOJ is kind of irritated that they’re being strung along.”

Stovall is happy that a government agency is finally looking into what her group has been saying for years. “To me, it really speaks to their arrogance that we wouldn’t be savvy enough to know how insurance works and that regulators would look away.” 

Most surprising for Stovall is the $665 million Sentara collected from the government “to cover these apparently fraudulent subsidies.” 

“If anything shocked me in the past six years,” says Dixon, “it’s the arrogance of thinking you can triple rates and think no one is going to look in and ask questions and that you can get away with it.”

Dixon notes that Sentara made a big deal about its not-for-profit status, and points out that recently retired CEO Howard Kern, who is named in the DOJ petition multiple times for refusing to provide documents, made $33 million, according to Sentara’s 2021 IRS 990 filing, which also lists nearly $5 billion in assets at the end of that year. 

Its current CEO, Dennis Matheis, was president of Optima in 2018. Now the Optima name is vanishing in a multi-million dollar rebranding to Sentara Health Plans. Speculates Stovall, “That suggests something you might do if investigated by the DOJ.”

Even if the government reclaims the $665 million it alleges it’s out, that’s not going to make whole the people who are still out the premiums they paid to Sentara, says Dixon. “Some people really got harmed.”

Emily Bardeen is one of those people. She says she got “a paltry check from the insurance company that was supposed to make up for the outrageous rates but was a drop in the bucket.”

She had just retired when Optima became the sole insurance option in Charlottesville, and she and her husband made $200 too much in income to qualify for Affordable Care Act subsidies, she told C-VILLE in 2018. They ended up paying $30,000 a year in health insurance premiums, more than their mortgage, she said.

“What I couldn’t get over was that the State Corporation Commission [which oversees the Bureau of Insurance] approved the rates,” she says. “They somehow agreed this was reasonable. That was what was so shocking to me.”

She believes Optima took advantage of its monopoly in Charlottesville. “It was a terrible example of price gouging, and approved by the state,” she says. “Shameful.”

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Stressed test: Life with the highest health insurance premiums in country

Massage therapist Jane Neldon has been unable to relax about being able to pay for her health insurance. eze amos

A year ago, Jane Neldon thought she was doing well enough as a massage therapist to start working on her own. Then she saw her health insurance premium spike from $280 a month to more than $700.

“My health insurance costs more than the rent for my office,” she says. “In a year that I thought I’d finally be making strides, I was knocked back down.”

Emily Bardeen retired two years ago at 62 years old and in budgeting, she anticipated the $500 a month she was paying for health insurance could double. Instead, she’s paying more than $2,000 a month for coverage with Optima, the only carrier available for individual coverage in Charlottesville. Its rates here for 2018 jumped 300 percent, the highest in the country.

“It’s crushing as a retired person,” she says. “I pay $2,336 for the right to have a $4,600 deductible on my silver plan.”

When she spoke with C-VILLE, Bardeen had just gotten home from the hospital. “I knew going to the hospital was going to cost me $4,600,” she says. “I nearly didn’t go, but I really needed to.”

Neldon and Bardeen are two of the many locals who were gobsmacked by the rates Optima offered here. And they’ve joined Charlottesville for Reasonable Health Insurance, an 810-member group that doesn’t believe Optima’s rates are justified.

Sara Stovall, one of the group’s organizers, raised an outcry last year when she found out insurance for her family of four would cost nearly $3,000 a month. The group filed a complaint May 30 with the State Corporation Commission about the Bureau of Insurance, which okayed Optima’s 300 percent premium increase.

“We have extremely compelling information that the Bureau of Insurance acted irresponsibly,” says Stovall. Optima’s preliminary rates for 2019 are 30 percent lower than 2018, further proof, she says, that the current rates are “unjustifiable.”

The SCC responded that the group’s letter wasn’t enough and it needed an attorney and actuary to file a formal complaint, says Stovall. “They’re sort of circling the wagons,” she says. The group is determined to push the issue and already has an attorney—and Stovall has talked to an actuary.

For Neldon, 31, skyrocketing premiums have been “a huge heavy weight on me,” she says. “It’s a factor in every decision I make. Do I go to the doctor or wait it out? That used to be an easy decision for me.”

She adds, “It’s a new stress about something I haven’t had before.”

“It affects our life in every way,” echoes Bardeen. She and her husband were about $200 above the Affordable Care Act’s cutoff for subsidies. “There’s no sliding scale. You either get help or you don’t.”

Bardeen’s husband is eligible for Medicare, but for her health insurance, they’re paying $30,000 a year—twice as much as their mortgage. “It’s unthinkable,” she says. The couple is considering a move to Waynesboro, and while insurance isn’t the main reason, “it is a factor,” she says.

Bardeen stresses that during her visit to Sentara Martha Jefferson’s ER, her caregivers “were very conscious” about her health insurance concerns. Sentara also owns Optima.

On July 1, a Senator Creigh Deeds bill goes into effect that allows self-employed people like Neldon to get the coverage available for small businesses. And Deeds and Delegate David Toscano are working on other bills, such as one that would require more transparency in hospital pricing, says Stovall.

For Neldon, the new law means “some light” at the end of the health insurance tunnel.

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Locals hire attorney, challenge Optima premiums

Ian Dixon and Sara Stovall, at a Charlottesville for Reasonable Health Insurance meeting in December at Random Row Brewery, have raised more than $17,000 and hired a powerhouse lawyer to question Optima’s tripled health insurance premiums. Stephen Barling

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.”

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Morbidity rates: Optima’s health insurance premium calculations challenged

Sara Stovall and Ian Dixon met with Senator Tim Kaine, far right, and Kristen Molloy, his senior health policy advisor, and legislative correspondent Nicholas Widmyer. Photo courtesy Senator Kaine's office.

 

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.

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Sticker shock: Charlottesville health insurance premiums spike to highest in nation

Sara Stovall and her husband, Stephen Barling, are looking at health insurance premiums pushing $3,000 a month for their family of four. Bethany Snyder

For many families, an income of $100,000 pretty much means they’re living the American dream. And for many families, that dream came crashing down when they saw what their health care premiums are going to be for 2018.

For Sara Stovall, premiums for her family of four will go from $940 a month to nearly $3,000 a month—$36,000 for the year.

Eden Henderson’s premiums for her family of three jumped 225 percent to $2,600 a month.

And John Harris, former Carlyle Group CFO, says the $1,629 a month silver plan he’s currently paying for his family of four with Anthem will cost $5,395 a month—nearly $65,000 for the year—for the same plan next year with Optima. For laughs he calculated a gold plan. That totals nearly $97,000 a year.

It’s difficult to pin down why Charlottesville and Albemarle, Fluvanna and Greene counties have seen the largest jumps in the country—234 percent for a 40-year-old ineligible for subsidies, compared to a 17 percent to 35 percent increase nationally, according to the Kaiser Family Foundation.

JABA insurance counselor Heather Rowland puts the blame squarely on the Trump administration for destabilizing the market by stopping federal cost-sharing reduction payments, which subsidize lower deductibles, copays and out-of-pocket maximums, and for threatening to end the individual mandate that requires everyone to have insurance, which caused insurers to fear they’d be stuck with older and sicker buyers.

As a result, companies like Anthem and Aetna, which used to be in Albemarle, pulled out, while the sole remaining insurer, Optima, sharply raised its premiums to cover the riskier pool.

Rowland also believes the constant refrain of “repeal and replace” further destabilized the market. Fifth District Congressman Tom Garrett ran on a platform last year of repealing the Affordable Care Act because insurance premiums were too expensive, and he says President Barrack Obama acknowledged “real problems” with the ACA.

The second American Health Care Act would have reduced premiums—if it had passed in the Senate, says Garrett. Premiums of $36,000 a year are “ridiculous,” he says. “We need to keep doing our job.”

House Minority Leader David Toscano says he’s heard from many constituents faced with unaffordable health care. “Some people are under the misguided viewpoint that the Affordable Care Act is responsible,” he says. “In fact, it’s the Trump administration undermining the market.”

Optima decided to stay so that Charlottesville residents would not be left without an option, and “to provide plans knowing they might be out of reach for some residents but give an option to an estimated 70 percent who would qualify for subsidies,” says Optima spokesperson Kelsea Smith in an email. “We chose to cover as many people as we could.”

As for why Charlottesville and Albemarle premiums skyrocketed to the highest in the country, says Smith, “First and foremost, we understand residents’ frustration. We knew these rates would be difficult for some. We wish the circumstances were different, but to leave everyone without an option was not acceptable and goes against our not-for-profit mission.”

Among the factors she lists: The health insurance exchange has not worked as originally envisioned. Younger, healthier patients have not gotten insurance to offset the costs of older, sicker citizens. And without other insurance companies here, “all the risk of covering this more expensive patient base was left on the shoulders of Optima,” she says.

Sentara owns both Optima and the former Martha Jefferson Hospital. Despite having two hospitals, Smith says an academic medical center like UVA is more expensive than other hospitals.

When Stovall logged onto healthcare.gov November 1 and saw the lowest rate she could get was nearly $3K a month, “It was so absurd my husband and I laughed,” she says. “This is a $36,000 a year plan with a $12,000 deductible. How can anyone see that as remotely reasonable?”

She and her husband talked about moving, or she may look for a job that pays less. “In past years we’ve always tried to make as much money as we can,” she says. The one option she’s not considering with two young children is going without insurance.

“People say if you make more, you should pay more,” she says. “I agree. But you assume it’s reasonable. It doesn’t mean we can pay one-third of our income. That’s double our mortgage.”

The good news is for people who are single and make under $48,000 or a family of four earning less than $98,400. Those earners still qualify for subsidies under the Affordable Care Act, at least for 2018, according to Rowland.

Stovall found that if her family made under $98,000, she could get an insurance plan for $10 a month.

But she warns of a caveat with the non-sliding scale. If you earn $1 over those subsidy-eligible limits of $98K, you owe the full $36,000 cost.

“A lot of people could get stuck by not knowing that,” she says. “That could be devastating.”

What you should know

  • Sign-up in the health marketplace lasts 45 days—half of previous years—and ends December 15.
  • Advertising has been eliminated, and healthcare.gov is seeing 12-hour maintenance shutdowns every Sunday during the open enrollment period, says insurance counselor Heather Rowland.
  • In Charlottesville, where the median household income was around $64,000 and the median per capita income is $34,000, according to a U.S. Census 2016 survey, many people will be eligible for affordable health care insurance, at least for 2018.
  • The self-employed have been hardest hit. Some are looking at hiring employees to qualify for group insurance. Other options include short-term insurance, which does not cover pre-existing conditions, and the Christian cost-sharing ministry Medi-Share, which is not insurance but is exempt under the ACA’s individual mandate.