Health Insurance Market Faces Big Change with Trump

The Federal election, which saw Donald Trump win the presidency and the Republican Party retain control of both houses of congress, will significantly increase the probability of the repeal and replacement of the Affordable Care Act (ACA), says Fitch Ratings. Repeal of the ACA would be credit positive for the health insurance sector and have wide-ranging implications for the broader U.S. health insurance market.

The implications of an ACA repeal are relatively predictable, but the effects of the replacement legislation are much less so. Retaining certain key aspects of the ACA through the passage of a new law is a possibility. Republicans will want to keep campaign promises without alienating voters who were uninsured before the ACA’s implementation.

Repealing the ACA is likely to enhance insurers’ underwriting flexibility and give rise to more varied product design (e.g. low-cost catastrophic coverage favored by younger and healthier consumers). It is also likely to offer pricing capabilities that reduce adverse selection risk in the individual and small group markets that resulted from provisions of the ACA. Financial results of insurers offering products on the ACA’s health insurance exchanges are most likely to benefit from these changes. Generally, these insurers are more likely to be non-profit insurers.

Repealing the ACA would mean that insurers would have to design new products, alter provider networks, and adapt systems capabilities. Fitch says that insurers have proven that they can adapt to regulatory changes.

Depending on the way the ACA is replaced, for-profit insurers who have announced large-scale withdrawals from the health insurance exchanges in recent months could be drawn back into the market for individuals covered by exchange-related products. It will rely heavily upon how their concerns about structural issues are addressed.

Successful efforts to repeal or materially replace the ACA would be a credit negative for healthcare providers as it is contributing to higher volumes of insured patients. Taken at face value, this would also be modestly negative for the pharmaceutical industry if fewer patients retain prescription coverage.

The drug pricing debate is likely to continue, though a Trump presidency would probably mean fewer headwinds for the industry than a Clinton presidency would have, given he did not focus on the issue to the same degree. Nevertheless, pharmaceutical manufacturers will continue to face pressure from payers, prescribers, and patients to develop innovative drugs that demonstrate improved clinical outcomes and associated economic benefits, regardless of which political party controls the presidency, Senate, and House.

The degree to which any policy proposals are realized is clouded by the power that Democrats retain. Regardless, uncertainty heightened by the election’s surprise to the market and the lack of policy details could influence companies’ business development and capital decisions over the short-term. Longer term implications could include incentivizing U.S. corporations to repatriate offshore cash and lower tax rates may be credit positives while exclusionary trade policies may be negative.

Over the longer-term, healthcare companies will continue to invest in growth opportunities. The fundamental outlook for the U.S. corporate health care industry remains positive. Prospects for organic demand growth are supported by demographic shifts and growing demand in emerging markets. A repeal of the ACA may slow the evolution toward value-based reimbursement schemes, but Fitch believes the shift toward linking pricing to patient outcomes will continue as patients and health insurers grapple with the growing burden of healthcare costs over the longer term. Additional information is available on

FAQs About ACA Repeal Proposals
eHealth offers these frequently-asked questions about Republican proposals to replace the Affordable Care Act:

Q: Is the Affordable Care Act going away?

A: The Affordable Care Act is still the law of the land. President-Elect Trump has promised to ask Congress to repeal and replace it early in his administration, but it’s not likely that significant changes could come into effect until well into 2017 at earliest.

Q: It’s open enrollment season right now, so should I still shop for 2017 health insurance coverage?

A: Yes. Everyone should have health insurance, and now is the time to shop. Without coverage, you leave yourself open to potentially burdensome medical bills, or even bankruptcy. If you want coverage under a new plan to begin by January 1, 2017, you typically need to enroll by December 15, 2016. Open enrollment is scheduled to continue through January 31, 2017.

Q: If I buy a plan now, can I cancel it next year if new options become available?

A: Yes. When you enroll in a new plan, you are not committing to keeping it all year. If you prefer to enroll in a new plan in the future, you can cancel your current coverage at any time.

Q: Are there other options if I really can’t afford to buy an Obamacare health insurance plan today?

A: You may want to consider a short-term health insurance plan. Just be aware that short-term coverage is not a full replacement for an Obamacare health insurance plan, for many reasons. For example, unlike Obamacare plans, short-term plans typically consider your pre-existing medical conditions, so you may be denied coverage or face waiting periods or certain exclusions related to pre-existing medical conditions. Most short-term plans are significantly more affordable than major medical plans in terms of monthly premiums. However, short-term plans do not count as minimum essential coverage under Obamacare because they typically cover much less than Obamacare plans. As such, short-term plans may leave you open to a potential tax penalty under the Affordable Care Act if you do not qualify for an exemption from the tax penalty. There are also limitations on how long a short-term plan can be in effect, with many plans next year expected to be available for terms of only three months or less. Rules about short-term plans may change under a Trump administration.

Q: Would Republican proposals eliminate the health insurance plan I have now?

A: Neither Donald Trump’s nor the draft House Republican proposals is designed to eliminate specific health insurance plans. However, if the ACA is repealed or changed, it is likely that insurers could decide to change or stop offering some of the plans they offer, especially plans sold through government exchanges.

Q: Will the tax penalty for going uninsured go away?

A: Probably. Both the draft House Republican and Donald Trump’s proposals would repeal the tax penalty for not having Obamacare-compliant health insurance coverage. However, it is not clear when such a change would take effect or how the details of the repeal would work, if it happens.

Q: Will there be a specific open enrollment period?

A: Under the draft House Republican plan there would be an initial open enrollment period during which anyone can apply for coverage at the standard rate (that is, the rate a healthy person with a history of continuous coverage would typically pay). After this, you could be required to pay a higher rate based on your health status or medical or coverage history.

Q: What happens if I lose my job, move, get married, or start a business?

A: Under the draft House Republican plan, your coverage in such scenarios would likely still be “guaranteed issue” if such events count as a qualifying life event under the new plan. This means that pre-existing medical conditions could not affect your eligibility for coverage and you would be able to retain your coverage or shop for a new plan without being medically underwritten or declined, so long as you don’t have a gap in your coverage. However, because the proposals are still changing, it is not entirely clear which events would count as qualifying life events and what the specific rules may be that would allow you to purchase a new plan with these protections.

Q: Will I have to pay more for health insurance if I have a pre-existing condition?

A: Under the draft House Republican plan, you would not face medical underwriting or higher monthly premiums based on your health as long as you don’t have a gap in coverage before enrolling in a new plan.

Q: Will I be able to purchase health insurance from a state where it’s more affordable?

A: Likely yes. The draft House Republican plan would make it easier for states to enter into interstate compacts that may allow the sale of health insurance across state lines. Donald Trump’s plan would also allow for the purchase of coverage across state lines. However, it is still uncertain if these proposed changes would actually result in insurance companies offering more affordable plans in many states or regions.

Q: Would health insurance benefits be the same as those under Obamacare-compliant plans?

A: Not necessarily. Neither the draft House Republican plan nor Mr. Trump’s proposals provide details on health insurance benefits, but it appears that benefits may be more flexible than those required for current Obamacare-compliant health insurance plans. For example, you may have the option to enroll in a plan that does not cover things like maternity care or brand-name prescription drugs.

Q: Will tax credits or subsidies still be available?

A: The draft House Republican proposal would allow anyone buying their own health insurance to qualify for tax credits, regardless of their income. Under the ACA, tax credits end abruptly once your annual income exceeds 400% of the federal poverty level, but the draft House plan would extend tax credits to people at any income level. Donald Trump’s proposal would allow all Americans to deduct health insurance premiums from their taxable income.

Q: How much will the tax credit be? How will it be determined?

A: Current proposals do not specify the dollar value of the new tax credits. However, tax credits could be based on your age and geography rather than your income. Older people could get a bigger tax credit, as could people who live in more expensive areas of the country.

Q: What if the cost of my plan is too high even with a tax credit?

A: The draft House Republican proposal would likely place limitations on rate increases. People who are still unable to afford health insurance may be able to turn to state-run high-risk insurance pools, where available, to buy subsidized health coverage at a reduced price.

Q: What if my tax credit is bigger than my insurance premium? Does that money go back to the government?

A: You would likely be able to keep the extra tax credit. The draft House Republican proposal suggests that you may get to keep any excess tax credits you receive for use in a Health Savings Account (HSA), to pay for qualified medical expenses on a tax-advantaged basis. Mr. Trump also strongly supports the broader use of HSAs.

Q: What if I don’t have an HSA?

A: You may want to consider enrolling in a health insurance plan eligible for use with a Health Savings Account. Both Donald Trump’s and the draft House Republican proposals would increase the tax-free contributions you’re allowed to make to an HSA. A Republican proposal could also allow employers to contribute to an HSA on your behalf (on a pre-tax basis).

Please note that because the political situation is constantly changing and difficult to predict, it is still uncertain when or if any of the proposals for health care reform described in this FAQ may actually be enacted, either in part or in whole. Even if new reforms are enacted, it is very likely that the final reforms will differ significantly from the proposals described in this document. As such, eHealth does not recommend that health insurance consumers drop or change their insurance coverage or take other drastic actions in anticipation of any proposal being enacted.

What ACA Repeal Could Mean for California
Insurance Commissioner Dave Jones issued the following statement about the impact of proposals to repeal the Affordable Care Act: Passage of the Affordable Care Act was one of the most significant changes in federal law in decades. Thanks to the Affordable Care Act, over 20 million Americans gained health insurance coverage that they will lose if the law is repealed. Federal premium subsidies to help families that otherwise could not afford to buy health insurance coverage and the Medicaid expansion are essential to the expansion of coverage to over 20 million Americans. With President-Elect Trump and the Republican Congressional Leadership talking “repeal and replace,” those federal subsidies are eliminated as well as the other market reforms in the Affordable Care Act that protect ordinary consumers.

Health insurance coverage saves lives. Repeal of the Affordable Care Act would result in the denial of health insurance for people with pre-existing health conditions. Americans with employer-based and individual market coverage would lose access to preventative health care without cost sharing, which has helped so many people stay healthy. Access to preventative care would be undermined by the imposition of significant deductibles and other out-of-pocket costs.

Without the Affordable Care Act, insurers can increase profits and administrative costs, reducing the premium dollars spent on actual medical care. Children would no longer be able to stay on their parents’ insurance policies until the age of 26, and like everyone else, anyone could be denied coverage due to pre-existing conditions. Americans don’t want to go back to a time when health insurance could be denied based on pre-existing conditions, policies were rescinded when people fell ill, benefit packages failed to cover many essential health benefits and there were annual and lifetime limits on coverage. Before the Affordable Care Act, health insurers could often prevent people from having coverage when they needed it most.

With “repeal and replace” there is no soft landing. States do not have the financial capacity to back fill the proposed federal cuts to health insurance subsidies. Over 20 Million Americans will lose their health insurance coverage. In California, the Affordable Care Act has enabled us to provide health insurance to 5.5 million additional Californians through the Medicaid expansion and another 1.4 million Californians have health insurance through our exchange, Covered California, of which 90% get a reduced premium thanks to the Affordable Care Act subsidies. Repeal and replace will undo the tremendous progress we have made in reducing the number of uninsured by half, nationally and in California. For the more than 20 Million Americans who gained health insurance coverage thanks to the Affordable Care Act, repeal and replace means death and despair.

A Note on the Future of Health Care in California
by Sandra R. Hernández, MD, president & CEO California Health Care Foundation
Based on President-elect Trump’s campaign promises, we expect officials in Washington to immediately begin pursuing health policy changes that could undermine many of the gains we’ve achieved in health care. The most significant of these is the repeal of the landmark Affordable Care Act (ACA). This unexpected turn of events comes at a time when our state has been setting an example for the nation with the successful implementation of the ACA.

We are enormously proud that California has led the nation in harnessing the ACA to make our state a better place to live and work. More than 91% of our residents now have coverage. Nearly 5 million Californians gained health benefits through expanded Medi-Cal eligibility or through Covered California’s subsidized insurance marketplace. Under the ACA, Medi-Cal enrollment has risen to about 14 million, providing necessary coverage to one of every three Californians.

With so many Californians using this new coverage to gain health and financial security, we must not – we cannot – roll back the clock. Our friends, loved ones, and communities must not experience disruptions in access and care. CHCF’s mission is unchanged – to partner with others to help California build on its successes and to advance to the next level to provide universal access to care.

CHCF will work with public officials, consumer advocates, and industry leaders to ensure that California continues moving in this positive direction so it can remain the nation’s engine for health care innovation and social progress. and for the stewardship of public resources.

Working with our partners, CHCF will continue to bring together our staff expertise, research, analysis, and powerful human stories to inform policymakers and change makers who are building pathways to improved care. We will need to adapt and be resilient. Most of all, we must remain bold in our vision that all the people of this very diverse state get the right care at the right place and time, consistent with their wishes.


Integrated Health Care Is the Best Approach to Fighting Diabetes
by Collette Manning
A growing trend in population health management aims to address treating a patient’s whole body, rather than individual parts. Integrated health care connects dental, vision, and disability data through a patient’s insurance carrier, which promotes early detection and improved management of chronic conditions. Integrated health care programs help improve patients’ health by coordinating medical and specialty care, making every patient-provider interaction more meaningful with richer information.

These programs not only help improve patient outcomes but can also reduce medical costs. For example, retinal scans can often lead to early diagnosis of diabetes since eye care providers can detect early signs of the disease in the eye. With an integrated health plan, vision patients, who are showing signs of early diabetes, trigger a referral to the care management team that helps them get the best care possible.

This approach can also help people with diabetes manage their condition through regular checkups and reminders. Regular vision check-ups are critical since diabetes is the leading cause of adult-onset blindness. With this approach, there is a free flow of data between a patient’s diabetes care provider and their vision specialist, so the specialist can monitor the patient’s eyesight even more closely for signs of deterioration.

Integrated care helps manage diabetes by managing disease in other areas of the body. Diabetics face an increased risk of periodontal disease. Inflammation in the mouth can make it harder to manage blood sugar, leading to a cycle of patient health concerns and potential escalating cost. According to the CDC, diabetics who treat their periodontal disease through increased care have 39% fewer hospital admissions and 40% lower medical costs. With an Integrated health care program, patients with diabetes who have medical and dental coverage get enrolled automatically into a care-management program with enhanced dental services. They are notified of coverage for an added cleaning—three, instead of the usual two per year.

Diabetes cases are expected to increase. Prevention, early detection, and management of the disease will be essential to ensuring the best outcomes for patients while mitigating the cost burden. Integrated health care programs, are the future of better care and can achieve this goal. Diabetes cannot be treated in a vacuum, and health care plans should seek to mimic the body’s inter-connectivity.

Collette Manning, RN, CCM, ONC is the Clinical Integration Strategy and Planning Director for Specialty Businesses at Anthem Blue Cross where she works with a team to identify and implement opportunities designed to deliver a fully integrated healthcare experience among health, vision, dental, disability, life and voluntary products for Anthem Blue Cross members. Collette has more than 30 years of Care Management experience in the provider and insurance setting. Anthem’s integrated care program is called the “Anthem Whole Health Connection.”

CDHP Enrollees Have Lower Health Care Costs
Individuals enrolled in consumer-driven health plans (CDHPs) have lower health care costs and lower health care utilization than do PPO plan members, according to research from the Health Care Services Corporation (HCSC). The analysis tracked more than 400,000 Blue Cross and Blue Shield members in Illinois, Montana, New Mexico, Oklahoma, and Texas, and analyzed health care costs for the first year following migration to a CDHP and continued to monitor those usage patterns for three years after migration.

HCSC found that, in the first year following migration from a PPO plan to a BlueEdge CDHP plan, members had an average 7.1% reduction in medical costs. That reduction improved to an average of 9.2% in a three-year period. After switching from a PPO to HCSC’s BlueEdge CDHP, the study found a three-year average reduction in the following:

  • Inpatient care costs decreased 16.1%
  • Outpatient care costs decreased 5.7%
  • Professional services costs decreased by 10.4%.

Employers Expect Health Care Costs to Increase 5% in 2016 and 2017

Employers expect total health care costs (both employer and employee) to increase 5% in 2016 and 2017, up from 4% in 2015, according to a survey by Willis Towers Watson. Employers expect average employee per year costs to rise to $12,338 in 2016 and to nearly $13,000 in 2017. Despite these cost pressures, 81% of employers will make relatively modest changes to employee premium contributions and other cost-sharing provisions such as deductibles and out-of-pocket limits for 2017.

“With employee affordability concerns paramount, in 2017 employers will focus primarily on changing coverage provisions for costly services to manage costs. These include having more restrictive pharmacy benefits, continually adding surcharges for working spouse and dependent coverage, and offering incentives to encourage employees to use centers of excellence for specialty services,” said Julie Stone, a national health care practice leader of Willis Towers Watson.

Eighty-eight percent of employees say their top priority is managing pharmacy spending. Planned actions include the following:

  • Ensuring appropriate utilization: Sixty-one percent of employers have added programs to ensure appropriate use of high-cost drugs, up from 53% in 2015; 85% are considering doing so by 2018.
  • Addressing specialty pharmacy spending that occurs through the medical benefit plan: Thirty-nine percent of employers have adopted this strategy, up from 26% in 2015; 82% will consider it by 2018.
  • Differentiating benefit coverage to influence the site of care: Nineteen percent of employers have made such changes; another 43% are considering them for 2018.
  • Focusing on dependent costs: Twenty-eight percent of employers have already reduced spousal subsidies by adding surcharges for coverage when it is available through a spouse’s own employer. The percentage of employers adding a working spouse surcharge is expected to nearly double by 2018. The average surcharge is now about $100 per month in addition to required premium contributions.
  • Increasing enrollment in high-deductible health plans with tax-advantaged savings accounts, with more employers moving to full replacement: By 2018, 49% of employers offering an account-based plan expect that to be the only choice available to employees.
  • Encouraging the use of centers of excellence: Centers of Excellence have proven quality outcomes for treating back, knee, cardiac, and infertility issues by offering incentives.
  • Moving to benefit designs that require employees to participate in other health-related activities to reduce employee cost-sharing.

“Although cost management is always a focus, over the next 12 months employers also will be seeking to modernize their benefit offerings to appeal to a multi-generational workforce. “The 2017 open enrollment period will  showcase some of the changes, including expanded choice of core medical and voluntary benefits, greater use of technology for decision support and an enhanced, consumer-style benefit shopping experience,” said Trevis Parson, chief Health and Benefits actuary for Willis Towers Watson. For more information, visit

MA Urges Expanded Infertility Benefits for Veterans
The American Medical Association (AMA) is urging Congress to permanently lift its ban on Veterans Administration (VA) coverage of IVF. The AMA also encouraging the Dept. of Defense (DOD) to offer service members fertility counseling and information on relevant health care benefits provided through TRICARE and the VA at pre-deployment and during the medical discharge process. Because of increased ground patrol and the increased use of improvised explosive devices (IEDs) in Afghanistan, the incidence of service members sustaining genitourinary injuries is 350% higher than for those who served in the Iraq War. Gunshot wounds and exposure to hazardous materials are also common causes of infertility. Approximately 1,400 service members returned from Iraq and Afghanistan with severe injuries to their reproductive organs. Additionally, thousands more sustained paralysis, brain injuries or other conditions that make IVF their best option to conceive a child. The new policies build on existing AMA policy that encourages health insurers to provide benefits for the diagnosis and treatment of male and female infertility. AMA policy also urges all physicians to participate, when needed, in providing health care to veterans, and encourages state and local medical societies to create a registry of physicians who are willing to provide health care to veterans in their community. The AMA supports improved access to health care for veterans, including in the civilian sector, for returning military personnel when their needs are not being met by locally available resources through the DOD or the VA.

Health Care Spending Is Up 4.6 Percent in 2015
Spending on health care for the privately insured in the United States increased 4.6% in 2015, outpacing previous years’ growth, finds a new report from the Health Care Cost Institute (HCCI). Spending grew just 3% in 2013 and 2.6% in 2014. Prices for outpatient, inpatient, and professional care, and prescription drugs increased 3.5% to 9% in 2015, a bigger hike than in the prior two years, according to the analysis. Price increases were the primary reason spending grew more quickly in 2015 and were the largest driver of spending growth throughout the four-year study period.

The 2015 Health Care Cost and Utilization Report covers the period from 2012 through 2015 and includes claims data from four national insurance companies: Aetna, Humana, Kaiser Permanente and UnitedHealthcare. In addition to reporting on national trends, the report includes snapshots of spending in the District of Columbia and 18 states: Arizona, Colorado, Connecticut, Florida, Georgia, Illinois, Kentucky, Maryland, Nevada, New York, Ohio, Oklahoma, Oregon, Tennessee, Texas, Virginia, Washington, and Wisconsin.

HCCI Senior Researcher Amanda Frost said, “Spending grew faster than we might have expected in 2015, given the low growth of previous years. The combination of people using more health care services and faster growth in prices pushed up spending, with prices playing the biggest role.”

Spending for Americans younger than 65 and covered by employer-sponsored insurance increased to $5,141 per person in 2015. Out-of-pocket spending on deductibles, co-pays, and co insurance rose 3% in 2015, an average of $813 per capita. People over 45 spent more than $1,000 out-of-pocket, and women spent $236 more out-of-pocket than men. Of the 18 states reviewed, the lowest per capita out-of-pocket spending was observed in DC ($636) followed by Maryland ($682), while the highest was observed in Texas ($983).

Use of outpatient care and professional services, such as doctor visits and lab tests, rose slightly in 2015. While the use of generic prescriptions increased, use of brand prescriptions declined, resulting in an overall drop in the use of prescriptions.

ER visits and common medical and surgical hospital admissions declined in 2015, continuing a pattern seen in previous years. Office visits to primary care physicians fell each year since 2012. In contrast, office visits to specialists increased over the study period.

Spending on prescription drugs grew faster than spending on any other health care service. In 2015, $649 per capita was spent on brand prescriptions, an increase of 11.4% from the previous year, with more dollars going to hormones and anti-infective drugs, such as those used to treat Hepatitis C and HIV. Spending on generic prescriptions reached $313 per person, a 3.3% increase from 2014.

The following are notable price trends:

  • ER visit prices jumped 10.5% to an average of $1,863 in 2015.
  • Prices for administered drugs-chemotherapy and other medications which are given by a healthcare professional-spiked 12.5 percent, increasing to an average of $534 in 2015.
  • Prices for brand anti-infective drugs more than doubled over the study period.
  • The average price per filled day rose from $35 in 2012 to $83 in 2015. As a result of these higher prices and despite a decrease in use, spending per capita on brand anti-infective agents nearly doubled over the study period, going from $53 per person in 2012 to $101 per person in 2015.
  • The average price of for an acute hospital admission increased by an average of $1,000 each year of the study, hitting $19,967 in 2015
  • The average price per filled day for generic prescriptions was either $1 or $2and remained that price in every year of the study period.

For more information, visit Ranked A Fastest-Growing Company ranked 99th on Deloitte’s 500 fastest-growing technology, media, telecommunications, life sciences and energy tech companies in North America.’s revenue grew more than 1,000% over the three years ending in 2015. The privately-held company expects its revenue in 2016 to increase by nearly 400% above 2015 results and has expanded its services into the large market of Medicare-eligible consumers. Earlier this year, got a Red Herring 100 North America company for its “game-changing” approach to helping consumers shop for health plans, and it was also recognized by Inc. 500 as the sixth fastest-growing private company in the insurance segment. The website features virtually all state-based exchange plans, federal exchange plans, many private, off-exchange plans and options for Medicare-eligible consumers. For more information, visit


There’s a New Employee Benefits Insurer In California
Insurance Commissioner Dave Jones approved new insurance products by LifeMap Assurance Company for sale in California, including life, disability, dental, accident, and critical illness coverage options. Beginning January 2, 2017, LifeMap will offer group term life insurance, group dental insurance, group disability income insurance, and group accidental injury through their employer to provide financial peace of mind. LifeMap will also sell critical illness insurance in California. David Taaffe, LifeMap senior VP of Business Development said, “LifeMap is anchored in the Pacific Northwest and we’re excited to expand our western footprint by entering California’s vibrant market. We’re now in eight markets with California being one of the most diverse in the country.”

Owners of Sober Living Facilities Arrested In Massive Fraud Bust
California Dept. of Insurance detectives, assisted by multiple law enforcement agencies, arrested Chris Bathum and Kirsten Wallace on multiple felony counts of grand theft and identity theft for allegedly conspiring to defraud patients and insurers out of more than $176 million through an elaborate conspiracy.

“Bathum and Wallace’s alleged conspiracy victimized hundreds of people addicted to drugs and alcohol by keeping them in a never-ending cycle of treatment, addiction, and fraud while lining their pockets with millions of dollars from allegedly fraudulent insurance claims,” said Insurance Commissioner Dave Jones. The Los Angeles Times reports that Christopher Bathum faces accusations of sexually assaulting female clients and giving them drugs. Wallace faces money laundering charges. The investigation was launched a month before ABC’s “20/20” aired an hour-long episode on Bathum and his treatment centers, which had been the subject of an L.A. Weekly report last year detailing the allegations and dozens of lawsuits filed against him. Bathum has denied the allegations.

Bathum, the owner and CEO of Community Recovery of Los Angeles (CRLA) and Wallace, the CFO stole patient identities and bought health insurance policies for patients without their knowledge. After completing treatment, Bathum continued to bill insurance companies for treatment services. Bathum and Wallace billed health insurance companies more than $176 million in fraudulent claims. The insurers, including Anthem Blue Cross, Blue Shield, Cigna, Health Net and Humana, paid approximately $44 million in total before discovering the suspected fraud and stopping claim payments to CRLA.

Bathum and Wallace are charged with multiple counts of the following felonies:

  • Identity theft for submitting fraudulent health insurance applications without patients’ knowledge.
  • Five counts of billing fraud for submitting claims for services not provided and duplicate billings.
  • Five counts of grand theft by false representation for representing CRLA as a residential treatment facility, which it is not licensed to provide.
  • Five counts of grand theft by false representation to insurers for filing fraudulent health insurance policy applications. Additional charges include enhancements for losses greater than $500,000 and for losses greater than $3.2 million.

This is likely the first wave of indictments and charges in an ongoing investigation into one of the largest health insurance fraud cases in California, said Jones. If convicted on all counts, Bathum and Wallace face more than 35 years in prison. Bail was requested at $2 million. They are likely to be arraigned on November 14, 2016.


Doctor Shopping App Launch
Doctor Pocket is an iOS and Android application that enables you to communicate with specialists. Users can chat with doctors from Harvard, Yale, Johns Hopkins, and McGill. Users can personalize their account by entering basic profile information that will be seen by specialists in family medicine, pediatrics, radiology, and dermatology. For more information, visit

Identity Theft Protection
Organizations that offer their employees the IdentityForce UltraSecure or the UltraSecure+Credit products can have their employees sign up to receive full coverage for an unlimited number of children living in the same household for no additional charge. For more information, visit

Fiduciary Rule Compliance
Accenture introduced a cloud-based solution, Accenture Wealth Management Compliance Solution for Salesforce, designed to help wealth management firms comply with the Dept. of Labor’s fiduciary rule for advisers overseeing retirement accounts. The rule, effective April 2017, provides that advisers may not receive payments that create conflicts of interest. For more information, visit