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How Two Companies You’ve Never Heard Of May Have Disrupted Care For Thousands Of Californians

Mar 27, 2018

Every time you want to see a doctor, decisions are made about who’s in your network, what’s approved, and how much it’ll cost. Although your health plan manages everything, each of those decisions could be outsourced to a separate company—and those behind-closed-doors actions can have big impacts. Allegations of misconduct within two of these intermediary companies are already having real impacts on patients in the Valley.

Last fall, Dr. Sanjay Srivatsa received a letter.

Srivatsa is a cardiologist in Fresno, and the letter was from EHS, a medical group he belongs to. EHS subcontracts with health insurers and reimburses doctors like Srivatsa for seeing Medi-Cal patients.

The letter was official business. “It's a straightforward contract that just basically says we are renegotiating the price for your treatment services,” he says.

But that new price was not good. For a common procedure, EHS wanted to slash Srivatsa’s payments in half for in-network patients. He could have refused, but “in many cases, these patients had already been set up for their procedures,” he says. “So to tell them they weren’t going to do them, and furthermore we weren’t going to take their insurance anymore, that would have been a hell of a blow.”

He signed the contract, keeping those patients and taking the financial hit.

Around the same time, a whistleblower leaked an explosive report to health regulators in Sacramento—not about EHS, but a different company, called SynerMed. It handles billing and other paperwork for medical groups. According to the report, SynerMed had been falsifying paperwork going to doctors and patients.

And SynerMed managed EHS.

"This is outrageous. In 30 years of working on this issue I have never seen such a systematic denial of care as what is alleged here." - Beth Capell, Health Access California

“I happen to believe that those two companies were financially linked at the waist somewhere up the tree and we’re not aware of it,” says Srivatsa.

We can’t know if Srivatsa’s new EHS contract was related to the SynerMed report. But it did foreshadow bigger problems. Within months, the state ordered health insurers to sever ties with EHS.

Suddenly, many of Srivatsa’s patients were out of his network. Some only learned this when they showed up at his office. “When they found that I no longer could take care of them, they were angry, some of them, disappointed, etc, because they couldn’t see me and they couldn't understand why,” he says.

The fallout from dropping EHS affected more than half a million of the state’s Medi-Cal patients. That includes 100,000 in the San Joaquin Valley—patients of almost 1,700 doctors. And if the allegations are true, hundreds or thousands were denied care. Care that could have been critically important.

“This is outrageous,” says Beth Capell, a policy advisor with the non-profit Health Access California. “In 30 years of working on this issue I have never seen such a systematic denial of care as what is alleged here.”

According to the leaked report, SynerMed had been falsifying letters denying medical procedures for years. Requests like these are turned down all the time by insurers, but they should ostensibly be for medical reasons. SynerMed, on the other hand, was allegedly doing it indiscriminately to keep up with company audits.

Later, the state accused SynerMed of ordering EHS to limit access to pricier specialists—essentially hiding specialists from patients based on costs, not on medical need. “So literally if you had a heart condition, if you had cancer, if you needed dialysis, if you had rheumatoid arthritis,” says Capell, “you could not get the care you need.”

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An investigation by state health regulators is ongoing. After the report was leaked in November, SynerMed announced it would shut down within six months. Valley Public Radio obtained a company document from December that acknowledged deficiencies in the department handling medical authorizations. The company couldn’t be reached for comment.

EHS, however, denies the allegations. After the state Department of Managed Health Care ordered nine health insurers to cut ties with EHS, the company sued the agency for government overreach. “The state’s arbitrary, capricious actions quite possibly will destroy a $400 million company without due process, without any evidence, and without regulatory authority,” says EHS spokesperson Kassy Perry.

Perry also denies EHS and SynerMed’s close business ties, even though the two shared administrative offices and some management staff. Many press releases on the EHS website are about Synermed.

Without EHS, more than 600,000 patients around the state could have been transferred to new doctors with little notice. In the San Joaquin Valley, the move affected over 110,000 Medi-Cal patients covered by CalViva or Adventist Health.

Linda Nguy, a health policy advocate with the Western Center on Law and Poverty, says that likely meant interruptions in care. “Some people may have had to travel much further,” she says. “We’ve certainly heard of provider shortages there where it can take months to get an appointment with a specialist.”

If the allegations themselves are true, hundreds to thousands of patients were denied procedures they could have been eligible for. CalViva alone estimates more than 400 patients could have been affected. Those are who Nguy worries about the most. “How many individuals didn’t get the care that they needed? How many individuals have gone without services just because they didn’t know of their right to appeal," she asks. "Those are some looming questions.”

She also wonders how well the state can regulate health care with so many companies involved.

Sanjay Srivatsa shares Nguy's doubts. “The question is, when these Medi-Cal dollars are being shifted sideways through all these subcontracted agencies,” he asks, “what do we sacrifice in the process?”

We’ll know more once the state finishes its investigation.