President Joe Biden has been making his case for reelection to voters by telling them he is good for their pocketbooks, including at the pharmacy counter.
During his State of the Union address, Biden said legislation he signed gave Medicare the power to negotiate lower prescription drug prices.
"That's not just saving seniors money and taxpayers money," Biden said, a reference to the Inflation Reduction Act, which passed in 2022. "We cut the federal deficit by $160 billion because Medicare will no longer have to pay those exorbitant prices to Big Pharma."
Biden added, "This year, Medicare is negotiating lower prices for some of the costliest drugs." He called for giving Medicare the power to negotiate prices for 500 drugs over the next decade.
In August, the federal government announced the first 10 drugs that it will negotiate for lower prices as part of the Inflation Reduction Act. A respected source of legislation analysis projects the change will save the government a lot of money, but those dollars haven't been realized.
There is a reason Biden touted this legislation during his address: Polling by KFF shows that people, regardless of their political leanings, overwhelmingly support the idea of allowing Medicare to negotiate drug prices. But most people don't know that such negotiations are underway.
Impact of Inflation Reduction Act Will Take Many Years
In August 2022, Biden signed the Inflation Reduction Act, which will allow the federal government to negotiate prices with drugmakers for Medicare. Biden kept his promise to repeal the law that barred Medicare from negotiating prices.
The nonpartisan Congressional Budget Office projects a 10-year cumulative savings of $161.7 billion from two provisions of the Iaw: a phased-in effort to negotiate with drugmakers for lower prices and a rebate for price increases above the overall inflation rate. (The White House has previously pointed to this analysis.)
However, not all the savings will be permanent. About $44.3 billion over 10 years will be funneled into related provisions that expand access and lower out-of-pocket costs for Medicare beneficiaries.
"Negotiations are still ramping up, so the savings generated by the Inflation Reduction Act negotiation provisions are still in the future," said Matthew Fiedler, a Brookings Institution expert on the economy and health studies. "The Congressional Budget Office did expect the inflation rebate provisions of the IRA (which are encompassed in the $160 billion) to begin generating modest savings during 2023 and 2024, but there, too, most of the savings are in the future."
The legislation involves price negotiations for 10 brand-name medications that lack generic equivalents. Those drugs include the blood thinners Eliquis and Xarelto; the diabetes drugs Januvia, Jardiance, and NovoLog; Enbrel, for rheumatoid arthritis; the blood-cancer drug Imbruvica; Entresto, for heart failure; Stelara, for psoriasis and Crohn's disease; and Farxiga, a drug for diabetes, heart failure, and chronic kidney disease.
The CBO has estimated that the negotiated prices will translate to nearly $100 billion in federal savings from 2026 to 2031.
"Biden is jumping the gun on claiming savings for seniors," said Joe Antos, an expert on health care at the conservative American Enterprise Institute. "Price negotiations haven't been completed; the new prices for selected drugs aren't in place until 2026."
Biden said the legislation is "saving seniors money and taxpayers money," which could be interpreted to mean it is saving them money now on prescription drugs. But the negotiations for these drugs would define the prices to be paid for prescriptions starting in 2026. For 2027 and 2028, 15 more drugs per year will be chosen for price negotiations. Starting in 2029, 20 more will be chosen a year.
That said, other provisions in the legislation have already led to savings for seniors, said Tricia Neuman, a senior vice president at KFF:
Certain recommended adult vaccines covered under Medicare Part D, such as shingles, are covered at no cost.
The act established a cap on Part D spending that begins phasing in this year. This year, Part D enrollees will pay no more than $3,300 on brand-name drugs. In 2025, the cap for all covered Part D drugs drops to $2,000.
The Inflation Reduction Act included the $35-a-month insulin cap, improvements in coverage for low-income beneficiaries, and the inflation rebate.
When we pressed the White House to provide examples of savings that have already occurred, a spokesperson pointed to the insulin cap.
Meanwhile, Antos said that although the Part D rebate has kicked in, the savings come from a small subset of Part D drugs taken by older Americans and that the government reaps the savings, not older Americans.
"There is no reason to expect that seniors will see significant savings since there's no obligation for the feds to distribute savings to Part D enrollees," Antos said.
Our Ruling
Biden said, "We cut the federal deficit by $160 billion because Medicare will no longer have to pay those exorbitant prices to Big Pharma."
Biden's statement omits the time frame; the savings have not been realized. The CBO projected 10-year cumulative savings of $161.7 billion from two provisions of the legislation. And as for saving older Americans money on their prescriptions, that hasn't happened yet. The federal government is negotiating the first 10 drugs with the new prices set to take effect in 2026.
Georgia Gov. Brian Kemp's plan for a conservative alternative to Obamacare's Medicaid expansion has cost taxpayers at least $26 million so far, with more than 90% going toward administrative and consulting costs rather than medical care for low-income people.
Kemp's Georgia Pathways to Coverage offers government health insurance to people earning up to the federal poverty level — $15,060 for an individual adult — if they can document that they're working, in school, or performing other qualifying activities.
Since July, when the program began, about 3,500 people have signed up, according to state officials. That's a small fraction of the Georgians who could enroll if the state expanded Medicaid without such requirements.
Republican leaders in several states have sought to require that people who are eligible for Medicaid through expansion work, arguing the health program for low-income Americans shouldn't be a handout. Kemp's experiment, aimed at single adults with low incomes who aren't already eligible for Medicaid, is the only current effort to survive legal challenges. But critics say it creates obstacles for people in need of health care while wasting taxpayer dollars on technology, consultants, and attorney's fees.
The Pathways program is "fiscally foolish and anti-family," said Joan Alker, executive director and co-founder of Georgetown University's Center for Children and Families. She noted that full-time caregiving does not qualify someone for eligibility into the program. "A lot of taxpayer money has been wasted," she said, "and not on health care for people who need it."
The state projected that administrative costs will increase to $122 million over four years, mostly in federal spending, as it rolls out key features of the program, including the collection of premiums and verifying enrollees' eligibility, according to an internal planning document dated December 2022 obtained by KFF Health News. The primary consultant for the project is Deloitte, which is collecting hefty fees.
Georgia's GOP-led state legislature has rejected what Democrats say would be a far simpler way to cover the state's low-income workers: expanding Medicaid under the Affordable Care Act. That could make at least 359,000 uninsured people in Georgia newly eligible for Medicaid, according to KFF data. In addition, Georgia could reduce state spending by $710 million over two years, according to KFF research from 2021.
Despite Georgia's rocky implementation experience, state Republican leaders have put off considering a full Medicaid expansion. And such conservative states as Mississippi, Idaho, and South Dakota are weighing similar work requirements.
"You're spending money, primarily here, to put people through an extra set of hoops before they get coverage," said Benjamin Sommers, a professor of health care economics at Harvard T.H. Chan School of Public Health.
The low enrollment for Pathways has disappointed supporters, as the state projected more than 25,000 residents would enroll during its first year and 52,000 by the end of five years, according to its application to the federal government.
Chris Denson, director of policy and research at the conservative Georgia Public Policy Foundation, which supports Pathways, said the low enrollment numbers are "just part of the ramping up."
The program was intended to start in July 2021 but was delayed two years due to legal wrangling. In December 2022, Georgia officials told the federal Centers for Medicare & Medicaid Services that it would cost at least $51 million over two years to design, develop, and implement an eligibility system, funds that would largely be channeled to Deloitte Consulting, according to the documents KFF Health News obtained.
About 45% of Pathways applications were still waiting to be processed, based on the state's most recent monthly reports, said Leah Chan, director of health justice at the Georgia Budget and Policy Institute, a nonprofit research organization that supports full Medicaid expansion.
The eligibility system, she said, "the thing that we've spent the most money on, is actually one of the things standing in the way of the program seeing higher enrollment."
The state Department of Community Health reported $26.6 million in Pathways spending through Dec. 31, of which more than 80% was paid for using federal funds. Deloitte was paid $2.4 million to prepare and submit the application to the federal government. Just $2 million was paid to insurers to cover medical care. In the fourth quarter, administrative costs alone rose by more than $6 million.
The total costs do not include legal fees for defending the Pathways program. The state attorney general's office said that as of Feb. 7 those costs surpass $230,000.
In striking contrast, North Carolina has enrolled 380,000 beneficiaries in its Medicaid expansion as of March 1, according to that state's Department of Health and Human Services. North Carolina became the 40th state to expand Medicaid under the ACA on Dec. 1, a move that has prompted fresh debate over expansion in a handful of other Southern holdout states.
Georgia, which has one of the highest uninsured rates among states, is currently the only state that requires people in its Medicaid expansion population to prove they are working or doing other qualifying activities to gain health coverage.
A spokesperson for Kemp, Carter Chapman, told KFF Health News that the governor "remains committed to implementing Georgia Pathways, an innovative program expanding coverage to tens of thousands of otherwise ineligible, low-income Georgians, despite the Biden administration's continued efforts to disrupt its rollout."
In February, citing the delays in implementation, Georgia filed a suit against the federal government to ensure the work requirement program could continue running through 2028 instead of 2025, when it was originally scheduled to end. CMS refused to comment because of pending litigation.
Georgia's cost estimates are in line with what other states anticipated for administrative spending for Medicaid work requirement programs, including Kentucky's projected spending of $272 million, according to a 2019 report from the Government Accountability Office, a federal agency that recommended CMS consider administrative costs in such applications.
In Arkansas, administrative costs for the state's work requirement program were nearly 30% higher than costs of running standard Medicaid in 2016, according to a report from the Arkansas Center for Health Improvement, a nonpartisan health policy group in the state. People struggled to prove they qualified because setting up online accounts was difficult and confusing and many had limited access to the internet, said Robin Rudowitz, a vice president at KFF and director of the Program on Medicaid and the Uninsured. Arkansas' work requirement program ended in 2019 after a judge blocked it, but not before 18,000 people lost coverage. Unlike Arkansas, which placed a work requirement on a population already receiving Medicaid expansion benefits, Georgia is offering coverage to new people who qualify. But the program's expense may not be worth sustaining it, Sommers said.
Typically, in Medicaid, administrative costs range from 12% to 16% of overall program spending, said Laura Colbert, executive director of the advocacy group Georgians for a Healthy Future, which supports full Medicaid expansion.
"It's reasonable to expect that at least 80% of costs of a public or private health insurance plan to go toward health care and services," she said.
Clinicians worry that the CDC is repeating past mistakes as it develops guidelines that providers will apply to control the spread of infectious diseases.
This article was published on Tuesday, March 19, 2024 in KFF Health News.
Four years after hospitals in New York City overflowed with COVID-19 patients, emergency physician Sonya Stokes remains shaken by how unprepared and misguided the American health system was.
Hospital leadership instructed health workers to forgo protective N95 masks in the early months of 2020, as COVID cases mounted. "We were watching patients die," Stokes said, "and being told we didn't need a high level of protection from people who were not taking these risks."
Droves of front-line workers fell sick as they tried to save lives without proper face masks and other protective measures. More than 3,600 died in the first year. "Nurses were going home to their elderly parents, transmitting COVID to their families," Stokes recalled. "It was awful."
Across the country, hospital leadership cited advice from the Centers for Disease Control and Prevention on the limits of airborne transmission. The agency's early statements backed employers' insistence that N95 masks, or respirators, were needed only during certain medical procedures conducted at extremely close distances.
Such policies were at odds with doctors' observations, and they conflicted with advice from scientists who study airborne viral transmission. Their research suggested that people could get COVID after inhaling SARS-CoV-2 viruses suspended in teeny-tiny droplets in the air as infected patients breathed.
Now, Stokes and many others worry that the CDC is repeating past mistakes as it develops a crucial set of guidelines that hospitals, nursing homes, prisons, and other facilities that provide health care will apply to control the spread of infectious diseases. The guidelines update those established nearly two decades ago. They will be used to establish protocols and procedures for years to come.
"This is the foundational document," said Peg Seminario, an occupational health expert and a former director at the American Federation of Labor and Congress of Industrial Organizations, which represents some 12 million active and retired workers. "It becomes gospel for dealing with infectious pathogens."
Late last year, the committee advising the CDC on the guidelines pushed forward its final draft for the agency's consideration. Unions, aerosol scientists, and workplace safety experts warned it left room for employers to make unsafe decisions on protection against airborne infections.
"If we applied these draft guidelines at the start of this pandemic, there would have been even less protection than there is now — and it's pretty bad now," Seminario said.
In an unusual move in January, the CDC acknowledged the outcry and returned the controversial draft to its committee so that it could clarify points on airborne transmission. The director of the CDC's National Institute for Occupational Safety and Health asked the group to "make sure that a draft set of recommendations cannot be misread to suggest equivalency between facemasks and NIOSH Approved respirators, which is not scientifically correct."
The CDC also announced it would expand the range of experts informing their process. Critics had complained that most members of last year's Healthcare Infection Control Practices Advisory Committee represent large hospital systems. And about a third of them had published editorials arguing against masks in various circumstances. For example, committee member Erica Shenoy, the infection control director at Massachusetts General Hospital, wrote in May 2020, "We know that wearing a mask outside health care facilities offers little, if any, protection from infection."
Although critics are glad to see last year's draft reconsidered, they remain concerned. "The CDC needs to make sure that this guidance doesn't give employers leeway to prioritize profits over protection," said Jane Thomason, the lead industrial hygienist at the union National Nurses United.
She's part of a growing coalition of experts from unions, the American Public Health Association, and other organizations putting together an outside statement on elements that ought to be included in the CDC's guidelines, such as the importance of air filtration and N95 masks.
But that input may not be taken into consideration.
The CDC has not publicly announced the names of experts it added this year. It also hasn't said whether those experts will be able to vote on the committee's next draft — or merely provide advice. The group has met this year, but members are barred from discussing the proceedings. The CDC did not respond to questions and interview requests from KFF Health News.
A key point of contention in the draft guidance is that it recommends different approaches for airborne viruses that "spread predominantly over short distances" versus those that "spread efficiently over long distances." In 2020, this logic allowed employers to withhold protective gear from many workers.
For example, medical assistants at a large hospital system in California, Sutter Health, weren't given N95 masks when they accompanied patients who appeared to have COVID through clinics. After receiving a citation from California's occupational safety and health agency, Sutter appealed by pointing to the CDC's statements suggesting that the virus spreads mainly over short distances.
A distinction based on distance reflects a lack of scientific understanding, explained Don Milton, a University of Maryland researcher who specializes in the aerobiology of respiratory viruses. In general, people may be infected by viruses contained in someone's saliva, snot, or sweat — within droplets too heavy to go far. But people can also inhale viruses riding on teeny-tiny, lighter droplets that travel farther through the air. What matters is which route most often infects people, the concentration of virus-laden droplets, and the consequences of getting exposed to them, Milton said. "By focusing on distance, the CDC will obscure what is known and make bad decisions."
Front-line workers were acutely aware they were being exposed to high levels of the coronavirus in hospitals and nursing homes. Some have since filed lawsuits, alleging that employers caused illness, distress, and death by failing to provide personal protective equipment.
One class-action suit brought by staff was against Soldiers' Home, a state-owned veterans' center in Holyoke, Massachusetts, where at least 76 veterans died from COVID and 83 employees were sickened by the coronavirus in early 2020.
"Even at the end of March, when the Home was averaging five deaths a day, the Soldiers' Home Defendants were still discouraging employees from wearing PPE," according to the complaint.
It details the experiences of staff members, including a nursing assistant who said six veterans died in her arms. "She remembers that during this time in late March, she always smelled like death. When she went home, she would vomit continuously."
Researchers have repeatedly criticized the CDC for its reluctance to address airborne transmission during the pandemic. According to a new analysis, "The CDC has only used the words ‘COVID' and ‘airborne' together in one tweet, in October 2020, which mentioned the potential for airborne spread.'"
It's unclear why infection control specialists on the CDC's committee take a less cautious position on airborne transmission than other experts, industrial hygienist Deborah Gold said. "I think these may be honest beliefs," she suggested, "reinforced by the fact that respirators triple in price whenever they're needed."
Critics fear that if the final guidelines don't clearly state a need for N95 masks, hospitals won't adequately stockpile them, paving the way for shortages in a future health emergency. And if the document isn't revised to emphasize ventilation and air filtration, health facilities won't invest in upgrades.
"If the CDC doesn't prioritize the safety of health providers, health systems will err on the side of doing less, especially in an economic downturn," Stokes said. "The people in charge of these decisions should be the ones forced to take those risks."
Billy Abbott, a retired Army medic, wakes at 6 every morning, steps on the bathroom scale, and uses a cuff to take his blood pressure.
The devices send those measurements electronically to his doctor in Gulf Shores, Alabama, and a health technology company based in New York, to help him control his high blood pressure.
Nurses with the company, Cadence, remotely monitor his readings along with the vital signs of about 17,000 other patients around the nation. They call patients regularly and follow up if anything appears awry. If needed, they can change a patient's medication or dosage without first alerting their doctor.
Abbott, 85, said he likes that someone is watching out for him outside his regular doctor appointments. "More doctors should recommend this to their patients," he said.
Increasingly, they are.
Dozens of tech companies have streamed in, pushing their remote monitoring service to primary care doctors as a way to keep tabs on patients with chronic illnesses and free up appointment time, and as a new source of Medicare revenue.
But some experts say remote monitoring's huge growth — spurred on during the covid-19 pandemic, when patients were hesitant to sit in crowded doctors' waiting rooms — has outpaced oversight and evidence of how the technology is best used.
"It is the wild West where any patient can get it if a doctor decides it is reasonable or necessary," said Caroline Reignley, a partner with the law firm McDermott Will & Emery who advises health providers.
In 2019, Medicare made it easier for doctors to bill for monitoring routine vital signs such as blood pressure, weight, and blood sugar. Previously, Medicare coverage for remote monitoring was limited to certain patients, such as those with a pacemaker.
Medicare also began allowing physicians to get paid for the service even when the monitoring is done by clinical staff who work in different places than the physician — an adjustment advocated by telemedicine companies.
In just the first two full years, remote monitoring services billed to Medicare grew from fewer than 134,000 to 2.4 million in 2021, according to federal records analyzed by KFF Health News.
Total Medicare payments for the four most common billing codes for remote monitoring rose from $5.5 million in 2019 to $101.4 million in 2021, the latest year for which data is available.
Part of the allure is that Medicare will pay for remote monitoring indefinitely regardless of patients' health conditions as long as their doctors believe it will help.
For doctors with 2,000 to 3,000 patients, the money can add up quickly, with Medicare paying an average of about $100 a month per patient for the monitoring, plus more for setting up the device, several companies confirmed.
Medicare enrollees may face 20% in cost sharing for the devices and monthly monitoring, though certain private plans through Medicare Advantage and Medicare supplement policies may cover those costs. The government allowed insurers to waive the patient cost sharing during the pandemic.
About 400 doctors and other providers repeatedly billed Medicare for remote patient monitoring in 2019. Two years later, that had mushroomed to about 3,700 providers, according to Medicare data analyzed by KFF Health News. (The data tracks providers who billed more than 10 patients for at least one type of remote monitoring.)
Federal law enforcement officials say they are conducting investigations after a surge in complaints about some remote patient monitoring companies but would not provide details.
The Department of Health and Human Services' Office of Inspector General in November issued a consumer alert about companies signing up Medicare enrollees without their doctors' knowledge: "Unscrupulous companies are signing up Medicare enrollees for this service, regardless of medical necessity," and bill Medicare even when no monitoring occurs.
In a statement to KFF Health News, Meena Seshamani, director of the federal Center for Medicare, part of the Centers for Medicare & Medicaid Services, did not say how CMS is ensuring only patients who can benefit from remote monitoring receive it. She said the agency balances the need to give patients access to emerging technology that can improve health outcomes with the need to combat fraud and make proper payments to providers.
While some small studies show remote monitoring can improve patient outcomes, researchers say it is unclear which patients are helped most and how long they need to be monitored.
"The research evidence is not as robust as we would like to show that it is beneficial," said Ateev Mehrotra, a Harvard Medical School researcher.
A January report by the Bipartisan Policy Center, a Washington, D.C.-based think tank, warned about "a lack of robust evidence on the optimal use of remote monitoring" and said some policy and medical experts "question whether we are effectively ‘rightsizing' the use of these services, ensuring access for patients who need it most, and spending health care dollars in effective ways."
Denton Shanks, a medical director at the American Academy of Family Physicians, said remote monitoring helps patients manage their diseases and helps physician practices be more efficient. He has used it for the past two years as a doctor at the University of Kansas Health System.
It has worked well, he said, though sometimes it can be challenging to persuade patients to sign up if they have to pay for it.
"For the vast majority of patients, once they are enrolled, they see a benefit, and we see a benefit as their vital signs come in the normal range," Shanks said.
The size of the market is tantalizing.
About two-thirds of the more than 66 million Medicare beneficiaries have high blood pressure, the most common metric monitored remotely, according to physicians and the monitoring companies.
"The patient need is so enormous," Cadence CEO Chris Altchek said. The company has about 40 nurses, medical assistants, and other providers monitoring patients in 17 states. He said patients enrolled in remote monitoring experience a 40% reduction in emergency room visits. Cadence says 82% of its patients use the devices at least once every two days.
Timothy Mott, a family physician in Foley, Alabama, said valuable appointment times in his office open up as patients who previously needed vital signs to be checked there turn to remote monitoring.
Cadence nurses regularly contact Mott's patients and monitor their readings and make changes as needed.
"I was concerned early on whether they were going to make the right decisions with our patients," Mott said. "But over time the dosage changes or changes in medication they are making are following the best guidelines on effectiveness."
At the six-month mark, about 75% of patients have stayed with the monitoring, Mott said.
The advantages are apparent even to some providers who do not get paid by Medicare to offer the service. Frederick Health, a Maryland health system, provides remote monitoring to 364 high-risk patients and estimates the program saves the nonprofit system $10 million a year by reducing hospital admissions and ER visits. That estimate is based on comparisons of patients' Medicare claims before they started the program and after, said Lisa Hogan, who runs the program.
The hospital pays for the program and does not bill Medicare, she said.
Shelly Olson's mother, who has dementia, has lived at the Scandia Village nursing home in rural Sister Bay, Wisconsin, for almost five years. At first, Olson said, her mother received great care at the facility, then owned by a not-for-profit organization, the Evangelical Lutheran Good Samaritan Society.
Then in 2019, Sanford Health — a not-for-profit, tax-exempt hospital system — acquired the nursing home. The COVID-19 pandemic struck soon after. From then on, the facility was regularly short of staff, and residents endured long wait times and other care problems, said Olson, a registered nurse who formerly worked at the facility.
Now Scandia Village has a new, for-profit owner, Continuum Healthcare. Olson said she was reassured when Continuum hired two locals as the facility's new administrator and nursing director.
But Kathy Wagner, a former Scandia Village nursing director, is not optimistic. "The for-profit owner will face the same problems," said Wagner, who is now retired and serves on an informal task force that monitors the facility's quality of care. "No one has articulated what the for-profit owner will bring to the table to change the picture."
The sale of Scandia Village this year is part of a trend of for-profit companies, including private equity groups and real estate investment trusts, snapping up struggling not-for-profit nursing homes, many of which were operated for decades by Lutheran, Catholic, Jewish, and other faith-based organizations.
The pace of sales has ticked up, reaching a high last year, according to Ziegler Investment Banking. Since 2015, 900 not-for-profit nursing homes and senior living communities nationwide have changed hands, with more than half of them acquired by for-profit operators.
For-profit groups own about 72% of the roughly 15,000 nursing homes in the United States, which serve more than 1.3 million residents.
While overall for-profit ownership percentage hasn't notably increased in recent years, the type of for-profit companies that own these facilities has shifted toward private equity, real estate investment trusts, and complicated ownership structures, said David Grabowski, a professor of health care policy at Harvard Medical School.
Consumer advocates, researchers, and regulators are leery about this trend. They point to studies showing that nursing homes owned by for-profit companies — particularly investors in private equity and real estate — tend to have skimpier staffing, lower quality ratings, and more regulatory violations. Motivated by these concerns, the Biden administration issued a rule last fall that requires nursing homes to disclose more information about their owners and management firms.
Executives at not-for-profit organizations, as well as researchers who study nursing homes, wonder how for-profit companies can accomplish what the previous not-for-profit owners could not: reviving financially struggling nursing homes.
"I don't know where these investor groups can see savings without cutting back on the level of quality," Grabowski said.
Part of the problem is that to boost profits, many for-profit operators set up a network of related companies to provide fee-based services such as management, physical therapy, and staffing. They also may sell a nursing home's real estate to a sister company, which then charges high rent. These payments cut into the available operating funds to provide adequate staffing and quality care.
Last year, New York Attorney General Letitia James sued the for-profit owners of four nursing homes for financial fraud and resident neglect, alleging that they used more than $83 million in public funds to enrich themselves through a complex network of related companies while providing horrendous care.
"When nonprofits are sold, you start to see a precipitous decline in quality," said Sam Brooks, director of public policy for National Consumer Voice for Quality Long-Term Care. "Nonprofits generally staff well above for-profits. When churches and nonprofits divest these homes, for-profits move in, and the care gets really bad."
The leaders of not-for-profits that have sold facilities to for-profit operators cite a variety of reasons for exiting or downsizing. Those reasons include state Medicaid payment rates that are too low to cover operating costs and a shortage of nursing and other staffers that makes it hard to maintain quality care. In addition, they say their facilities have seen fewer admissions, at least partly because Medicare Advantage plans have tightened coverage policies for rehabilitation care in nursing homes.
Susan McCrary, chief executive of St. Ignatius Community Services in Philadelphia, said her organization sold its nursing home because it was losing money. She said low state Medicaid rates forced their hand, even after the state bolstered its Medicaid payments by 17.5% in January 2023.
McCrary said the St. Ignatius board worried the losses would jeopardize the organization's ability to continue its mission of serving low-income seniors, for whom it also operates three independent-living and assisted living buildings.
At the same time, "our board definitely had concerns about selling to a for-profit because we're aware of the research that shows the quality of care is not the same as with a nonprofit," McCrary said. "But we knew we needed to move forward with this process to continue our services in West Philadelphia."
Nate Schema, CEO of the Evangelical Lutheran Good Samaritan Society, said his organization decided to sell some of its long-term care facilities to Continuum Healthcare, a New Jersey-based corporation, and a second company, Idaho-based Cascadia Healthcare, as part of its strategy to better serve its communities. Good Samaritan now operates in seven Midwestern states, down from 22 states. Consolidating markets better enables his organization to launch programs for nursing home residents in conjunction with Sanford's hospitals and clinics.
"We've been very intentional about finding quality partners to carry on our mission," Schema said. "Unfortunately, we haven't seen a lot of nonprofit providers coming to us."
Continuum, which took over Scandia Village nursing home in January, will address staffing shortages by improving wages, benefits, and career opportunities, said Tim Hodges, the corporation's communications director. Continuum, which is owned by private investors and commercial lenders, owns eight nursing homes in four states.
Similarly, Steve LaForte, Cascadia's executive vice president, said his company has revived the finances of the nine Good Samaritan nursing homes it took over in the Pacific Northwest partly by attracting more patient referrals and strengthening relationships with state policymakers, in the hope it "leads to more realistic Medicaid rates." He said Cascadia has also focused on workplace culture — such as by not using workers from staffing agencies — and on empowering those who run the individual facilities to select vendors for pharmacy, rehabilitation, and other services.
Cascadia, he said, does not use tactics like contracting with sister vendors to boost its profits. "That type of organization gives the whole industry a bad name," LaForte said.
The overall perception of for-profit corporations is unfair, said Zach Shamberg, CEO of the Pennsylvania Health Care Association, because all nursing homes are struggling under inadequate Medicaid rates and high labor costs due to a shortage in workers.
He said he hopes that Pennsylvania's Medicaid rate increase — plus a new minimum staffing requirement and a mandate that 70% of total costs be dedicated to resident care — will address the financial and quality issues. Nursing homes in Pennsylvania and across the country are also lobbying state lawmakers and the federal government to offer extra payments tied to quality outcomes for residents.
"If there aren't for-profit entities to buy these facilities, these facilities are closing, which would exacerbate the existing access to care crisis as the population gets older," Shamberg said.
California Attorney General Rob Bonta announced Monday that he is throwing his weight behind legislation to bar medical debt from showing up on consumer credit reports, a Democratic-led effort to offer protection to patients squeezed by health care bills.
Bonta is a sponsor of Sen. Monique Limón's bill, which seeks to block health care providers, as well as any contracted collection agency, from sharing a patient's medical debt with credit reporting agencies. It would also prevent credit reporting agencies from accepting, storing, or sharing any information concerning medical debt. Medical debt isn't necessarily an accurate reflection of credit risk, and its inclusion in credit reports can depress credit scores and make it hard for people to get a job, rent an apartment, or secure a car loan.
"This is a broken part of our current system that needs to be fixed," Bonta, a Democrat, told KFF Health News. "This is California's opportunity, and we relish the ability to be up in front of key issues."
If enacted, California would become the third state to remove medical bills from consumer credit reports, following Colorado and New York in 2023. Minnesota has a proposal to do the same. Last year, the Biden administration announced plans to develop similar federal rules through the Consumer Financial Protection Bureau, but they have yet to be released. And should former President Donald Trump return to the White House, he would have the prerogative to undo the rules.
Limón said it's important for the state to enshrine its own protections into law alongside the federal push. "We may be waiting for a very long time to see outcomes that California could potentially deliver in the next year," said the Santa Barbara Democrat.
Bonta said he's not sure what sort of opposition to the bill to expect, but he wonders if providers and collection agencies will be resistant.
A KFF Health News analysis found that credit reporting threats are the most common collection tactic used by hospitals to get patients to pay their bills. A hospital, for example, might be concerned that a credit score ban might make it more difficult to get patients to pay for medical care they have already received.
The three largest U.S. credit agencies — Equifax, Experian, and TransUnion — have said they would stop including some medical debt on credit reports as of 2022. Among the excluded debts are paid-off bills and those less than $500, but the agencies' voluntary actions left out millions of patients with bigger medical bills on their credit reports.
Limón said she often hears from constituents about the impact medical debt has on their lives. Medical debt disproportionately affects low-income, Black, and Latino Californians, according to the California Health Care Foundation.
And, increasingly, people with healthy incomes who often carry medical insurance are incurring medical debt. A KFF Health News-NPR investigation found that about 100 million people across the country are saddled with medical debt, which has forced some to give up their homes, ration food, and take on extra work.
Though the legislation wouldn't forgive medical debt, Limón said she hopes it will encourage people to seek medical care when they need it.
"You hear so many people now that are concerned about getting medical care because they can't afford it and instead wait to get worse," Limón said. "If the bill passes, we'll see less fear and more people going to get medical care."
Margaret Parsons, one of three dermatologists at a 20-person practice in Sacramento, California, is in a bind.
Since a Feb. 21 cyberattack on a previously obscure medical payment processing company, Change Healthcare, Parsons said, she and her colleagues haven't been able to electronically bill for their services.
She heard Noridian Healthcare Solutions, California's Medicare payment processor, was not accepting paper claims as of earlier this week, she said. And paper claims can take 3-6 months to result in payment anyway, she estimated.
"We will be in trouble in very short order, and are very stressed," she said in an interview with KFF Health News.
A California Medical Association spokesperson said March 7 that the Centers for Medicare & Medicaid Services had agreed in a meeting to encourage payment processors like Noridian to accept paper claims. A Noridian spokesperson referred questions to CMS.
The American Hospital Association calls the suspected ransomware attack on Change Healthcare, a unit of insurance giant UnitedHealth Group's Optum division, "the most significant and consequential incident of its kind against the U.S. health care system in history." While doctors' practices, hospital systems, and pharmacies struggle to find workarounds, the attack is exposing the health system's broad vulnerability to hackers, as well as shortcomings in the Biden administration's response.
To date, government has relied on more voluntary standards to protect the health care system's networks, Beau Woods, a co-founder of the cyber advocacy group I Am The Cavalry, said. But "the purely optional, do-this-out-of-the-goodness-of-your-heart model clearly is not working," he said. The federal government needs to devote greater funding, and more focus, to the problem, he said.
The crisis will take time to resolve. Comparing the Change attack to others against parts of the health care system, "we have seen it generally takes a minimum of 30 days to restore core systems," said John Riggi, the hospital association's national adviser on cybersecurity.
In a March 7 statement, UnitedHealth Group said two services — related to electronic payments and medical claims — would be restored later in the month. "While we work to restore these systems, we strongly recommend our provider and payer clients use the applicable workarounds we have established," the company said.
"We're determined to make this right as fast as possible," said company CEO Andrew Witty.
Providers and patients are meanwhile paying the price. Reports of people paying out-of-pocket to fill vital prescriptions have been common. Independent physician practices are particularly vulnerable.
"How can you pay staff, supplies, malpractice insurance — all this — without revenue?" said Stephen Sisselman, an independent primary care physician on Long Island in New York. "It's impossible."
Jackson Health System, in Miami-Dade County, Florida, may miss out on as much as $30 million in payments if the outage lasts a month, said Myriam Torres, its chief revenue officer. Some insurers have offered to mail paper checks.
Relief programs announced by both UnitedHealthand the federal government have been criticized by health providers, especially hospitals. Sisselman said Optum offered his practice, which he said has revenue of hundreds of thousands of dollars a month, a loan of $540 a week. Other providers and hospitals interviewed by KFF Health News said their offers from the insurer were similarly paltry.
In its March 7 statement, the company said it would offer new financing options to providers.
Providers Pressure Government to Act
On March 5, almost two weeks after Change first reported what it initially called a cybersecurity "issue," the Health and Human Services Department announced several assistance programs for health providers.
One recommendation is for insurers to advance payments for Medicare claims — similar to a program that aided health systems early in the pandemic. But physicians and others are worried that would help only hospitals, not independent practices or providers.
Anders Gilberg, a lobbyist with the Medical Group Management Association, which represents physician practices, posted on X, formerly known as Twitter, that the government "must require its contractors to extend the availability of accelerated payments to physician practices in a similar manner to which they are being offered to hospitals."
HHS spokesperson Jeff Nesbit said the administration "recognizes the impact" of the attack and is "actively looking at their authority to help support these critical providers at this time and working with states to do the same." He said Medicare is pressing UnitedHealth Group to "offer better options for interim payments to providers."
Another idea from the federal government is to encourage providers to switch vendors away from Change. Sisselman said he hoped to start submitting claims through a new vendor within 24 to 48 hours. But it's not a practicable solution for everyone.
Torres said suggestions from UnitedHealth and regulators that providers change clearinghouses, file paper claims, or expedite payments are not helping.
"It's highly unrealistic," she said of the advice. "If you've got their claims processing tool, there's nothing you can do."
Mary Mayhew, president of the Florida Hospital Association, said her members have built up sophisticated systems reliant on Change Healthcare. Switching processes could take 90 days — during which they'll be without cash flow, she said. "It's not like flipping a switch."
Nesbit acknowledged switching clearinghouses is difficult, "but the first priority should be resuming full claims flow," he said. Medicare has directed its contractors and advised insurers to ease such changes, he added.
Health care leaders including state Medicaid directors have called on the Biden administration to treat the Change attack similarly to the pandemic — a threat to the health system so severe that it demands extraordinary flexibility on the part of government insurance programs and regulators.
Beyond the money matters — critical as they are — providers and others say they lack basic information about the attack. UnitedHealth Group and the American Hospital Association have held calls and published releases about the incident; nevertheless, many still feel they're in the dark.
Riggi of the AHA wants more information from UnitedHealth Group. He said it's reasonable for the conglomerate to keep some information closely held, for example if it's not verified or to assist law enforcement. But hospitals would like to know how the breach was perpetrated so they can reinforce their own defenses.
"The sector is clamoring for more information, ultimately to protect their own organizations," he said.
Rumors have proliferated.
"It gets a little rough: Any given day you're going to have to pick and choose who to believe," Saad Chaudhry, an executive at Maryland hospital system Luminis Health, told KFF Health News. "Do you believe these thieves? Do you believe the organization itself, that has everything riding on their public image, who have incentives to minimize this kind of thing?"
What Happens Next?
Wired Magazine reported that someone paid the ransomware gang believed to be behind the attack $22 million in bitcoin. If that was indeed a ransom intended to resolve some aspect of the breach, it's a bonanza for hackers.
Cybersecurity experts say some hospitals that have suffered attacks have faced ransom demands for as little as $10,000 and as much as $10 million. A large payment to the Change hackers could incentivize more attacks.
"When there's gold in the hills, there's a gold rush," said Josh Corman, another co-founder of I Am The Cavalry and a former federal cybersecurity official.
Longer-term, the attack intensifies questions about how the private companies that comprise the U.S. health system and the government that regulates them are defending against cyberthreats. Attacks have been common: Thieves and hackers, often believed to be sponsored or harbored by countries like Russia and North Korea, have knocked down systems in the United Kingdom's National Health Service, pharma giants like Merck, and numerous hospitals.
The FBI reported 249 ransomware attacks against health care and public health organizations in 2023, but Corman believes the number is higher.
But federal efforts to protect the health system are a patchwork, according to cybersecurity experts. While it's not yet clear how Change was hacked, experts have warned a breach can occur through a phishing link in an email or more exotic pathways. That means regulators need to consider hardening all kinds of products.
One example of the slow-at-best efforts to mend these defenses concerns medical devices. Devices with outdated software could provide a pathway for hackers to get into a hospital network or simply degrade its functioning.
The FDA recently gained more authority to assess medical devices' digital defenses and issue safety communications about them. But that doesn't mean vulnerable machines will be removed from hospitals. Products often linger because they're expensive to take out of service or replace.
Senator Mark Warner (D-Va.) has previously proposed a "Cash for Clunkers"-type program to pay hospitals to update the cybersecurity of their old medical devices, but it was "never seriously pursued," Warner spokesperson Rachel Cohen said. Riggi said such a program might make sense, depending on how it's implemented.
Weaknesses in the system are widespread and often don't occur to policymakers immediately. Even something as prosaic as a heating and air conditioning system can, if connected to a hospital's internet network, be hacked and allow the institution to be breached.
But erecting more defenses requires more people and resources — which often aren't available. In 2017, Woods and Corman assisted on an HHS report surveying the digital readiness of the health care sector. As part of their research, they found a slice of wealthier hospitals had the information technology staff and resources to defend their systems — but the vast majority had no dedicated security staff. Corman calls them "target-rich but cyber-poor."
"The desire is there. They understand the importance," Riggi said. "The issue is the resources."
HHS has proposed requiring minimum cyberdefenses for hospitals to participate in Medicare, a vital source of revenue for the entire industry. But Riggi says the AHA won't support it.
"We oppose unfunded mandates and oppose the use of such a harsh penalty," he said.
In a little more than two years as CEO of a small hospital in Wyoming, Dave Ryerse has witnessed firsthand the worsening financial problems eroding rural hospitals nationwide.
In 2022, Ryerse's South Lincoln Medical Center was forced to shutter its operating room because it didn't have the staff to run it 24 hours a day. Soon after, the obstetrics unit closed.
Ryerse said the publicly owned facility's revenue from providing care has fallen short of operating expenses for at least the past eight years, driving tough decisions to cut services in hopes of keeping the facility open in Kemmerer, a town of about 2,400 in southwestern Wyoming.
South Lincoln's financial woes aren't unique, and the risk of hospital closures is an immediate threat to many small communities. "Those cities dry out," Ryerse said. "There's a huge sense of urgency to make sure that we can maintain and really eventually thrive in this area."
A recently released report from the health analytics and consulting firm Chartis paints a clear picture of the grim reality Ryerse and other small-hospital managers face. In its financial analysis, the firm concluded that half of rural hospitals lost money in the past year, up from 43% the previous year. It also identified 418 rural hospitals across the U.S. that are "vulnerable to closure."
Mark Holmes, director of the Cecil G. Sheps Center for Health Services Research at the University of North Carolina, said the report's findings weren't a surprise, since the financial nosedive it depicted has been a concern of researchers and rural health advocates for decades.
The report noted that small-town hospitals in states that expanded Medicaid eligibility have fared better financially than those in states that didn't.
Leaders in Montana, whose population is nearly half rural, credit Medicaid expansion as the reason their hospitals have largely avoided the financial crisis depicted by the report despite escalating costs, workforce shortages, and growing administrative burden.
"Montana's expansion of Medicaid coverage to low-income adults nearly 10 years ago has cut in half the percentage of Montanans without insurance, increased access to care and preserved services in rural communities, and reduced the burden of uncompensated care shouldered by hospitals by nearly 50%," said Katy Mack, vice president of communications for the Montana Hospital Association.
Not one hospital has closed in the state since 2015, she added.
Hospitals elsewhere haven't fared so well.
Michael Topchik, national leader for the Chartis Center for Rural Health and an author of the study, said he expects next year's update on the report will show rural hospital finances continuing to deteriorate.
"In health care and in many industries, we say, 'No margin, no mission,'" he said, referring to the difference between income and expenses. Rural hospitals "are all mission-driven organizations that simply don't have the margin to reinvest in themselves or their communities because of deteriorating margins. I'm very, very concerned for their future."
People living in rural America are older, sicker, and poorer than their urban and suburban counterparts. Yet, they often live in places where many health care services aren't available, including primary care. The shorter life expectancies in these communities are connected to the lack of success of their health facilities, said Alan Morgan, CEO of the National Rural Health Association, a nonprofit advocacy group.
"We're really talking about the future of rural here," Morgan said.
Like South Lincoln, other hospitals still operating are likely cutting services. According to Chartis, nearly a quarter of rural hospitals have closed their obstetrics units and 382 have stopped providing chemotherapy.
Halting services has far-reaching effects on the health of the communities the hospitals and their providers serve.
While people in rural America are more likely to die of cancer than people in urban areas, providing specialty cancer treatment also helps ensure that older adults can stay in their communities. Similarly, obstetrics care helps attract and keep young families.
Whittling services because of financial and staffing problems is causing "death by a thousand cuts," said Topchik, adding that hospital leaders face choices between keeping the lights on, paying their staff, and serving their communities.
The Chartis report noted that the financial problems are driving hospitals to sell to or otherwise join larger health systems; it said nearly 60% of rural hospitals are now affiliated with large systems. South Lincoln in Wyoming, for example, has a clinical affiliation with Utah-based Intermountain Health, which lets the facility offer access to providers outside the state.
In recent years, rural hospitals have faced many added financial pressures, according to Chartis and other researchers. The rapid growth of rural enrollment in Medicare Advantage plans, which do not reimburse hospitals at the same rate as traditional Medicare, has had a particularly profound effect.
Topchik predicted sustainability for rural health facilities will ultimately require greater investment from Congress.
In 1997, Congress responded to a rural hospital crisis by creating the "Critical Access Hospital" designation, meant to alleviate financial burdens rural hospitals face and help keep health services available by giving facilities cost-based reimbursement rates from Medicare and in some states Medicaid.
But these critical access hospitals are still struggling, including South Lincoln.
In 2021, Congress established a new designation, "Rural Emergency Hospital," which allows hospitals to cut most inpatient services but continue running outpatient care. The newer designation, with its accompanying financial incentives, has kept some smaller rural hospitals from closing, but Morgan said those conversions still mean a loss of services.
"It's a good thing that now we keep the emergency room care, but I think it masks the fact that 28 communities lost inpatient care just last year alone," he said. "I'm afraid that this hospital closure crisis is now going to run under the radar."
"It ends up costing local and state governments more, ultimately, and costs the federal government more, in dollars for health care treatment," Morgan said. "It's just bad public policy. And bad policy for the local communities."
If you went 'anywhere in the world,' you could get a prescription filled for 40% to 60% less than it costs in the U.S. — President Joe Biden, Feb. 22, 2024.
This article was published on Wednesday, March 6, 2024 in KFF Health News.
It's well documented that Americans pay high prices for healthcare. But do they pay double or more for prescriptions compared with the rest of the world? President Joe Biden said they did.
"If I put you on Air Force One with me, and you have a prescription — no matter what it's for, minor or major — and I flew you to Toronto or flew to London or flew you to Brazil or flew you anywhere in the world, I can get you that prescription filled for somewhere between 40 to 60% less than it costs here," Biden said Feb. 22 at a campaign reception in California.
He followed up by touting provisions in the 2022 Inflation Reduction Act to lower drug prices, including capping insulin at $35 a month for Medicare enrollees and limiting older Americans' out-of-pocket prescription spending to $2,000 a year starting in 2025. The law also authorized Medicare to negotiate prices directly with drug companies for 10 prescription drugs, a list that will expand over time.
Research has consistently found that, overall, U.S. prescription drug prices are significantly higher, sometimes two to four times as high, compared with prices in other high-income industrialized countries. Unbranded generic drugs are an exception and are typically cheaper in the U.S. compared with other countries. (Branded generics, a different category, are close to breaking even with other countries.)
However, such factors as country-specific pricing, confidential rebates, and other discounts can obscure actual prices, making comparisons harder.
"The available evidence suggests that the U.S., on average, has higher prices for prescription drugs, and that's particularly true for brand-name drugs," said Cynthia Cox, director of the Peterson-KFF Health System Tracker, which tracks trends and issues affecting U.S. healthcare system performance. "Americans also have relatively high out-of-pocket spending on prescription drugs, compared to people in similarly large and wealthy nations."
Andrew Mulcahy, a senior health economist at Rand Corp., a nonpartisan research organization, agreed that Biden's overall sentiment is on target but ignores some complexities.
He said price comparisons his team has conducted reflect the amounts wholesalers pay manufacturers for their drugs, which can differ sharply from prices consumers and their drug plans pay.
"In many of those other countries, [patients] pay nothing," Mulcahy said. "So I think that's part of the complication here when we talk about prices; there are so many different drugs, prices, and systems at work."
What International Drug Pricing Comparisons Show
A 2024 Rand study that Mulcahy led found that, across all drugs, U.S. prices were 2.78 times as high as prices in 33 other countries, based on 2022 data. The report evaluated most countries in the Organization for Economic Co-operation and Development, or OECD, a group of 38 advanced, industrialized nations.
The gap was largest for brand-name drugs, the study found, with U.S. prices averaging 4.22 times as high as those in the studied nations. After adjusting for manufacturer-funded rebates, U.S. prices for brand-name drugs remained more than triple those in other countries.
The U.S. pays less for one prescription category: unbranded, generic drugs, which are about 33% less than in other studied countries. These types of drugs account for about 90% of filled prescriptions in the U.S., yet make up only one-fifth of overall prescription spending.
"The analysis used manufacturer gross prices for drugs because net prices — the amounts ultimately retained by manufacturers after negotiated rebates and other discounts are applied — are not systematically available," a news release about the report said.
People with health insurance pay prices that include both markups and discounts negotiated with insurers. Uninsured people may pay a pharmacy's "usual and customary" price — which tends to be higher than net prices paid by others — or a lower amount using a manufacturer discount program. But many of these adjustments are confidential, making it hard to quantify how they affect net prices.
In 2021, the Government Accountability Office released an analysis of prices of 20 brand-name drugs in the U.S., Canada, Australia, and France. The study found that retail prices were more than two to four times as high as in the U.S.
Like Rand, the agency adjusted for rebates and other price concessions for its U.S. estimate, but the other countries' estimates reflected gross prices without potential discounts.
"As a result, the actual differences between U.S. prices and those of the other countries were likely larger than GAO estimates," the report said.
Another analysis by the Peterson-KFF Health System Tracker that Cox co-authored compared the prices of seven brand-name drugs in the U.S., Germany, the Netherlands, and the United Kingdom, and found that some U.S. prices were two to four times as high. For unbranded, generic drugs, the price gaps were smaller.
"Despite the fact that the U.S. pays less for generic drugs and Americans appear to use more generic drugs than people in other countries, this did not offset the higher prices paid for brand-name drugs," Cox said.
The Peterson-KFF report, using 2019 OECD data, found that the U.S. spent about $1,126 per person on prescription medicines, higher than any peer nation, with comparable countries spending $552. This includes spending by insurers and out-of-pocket consumer costs.
"Private and public insurance programs cover a similar share of prescription medicine spending in the U.S. compared to peer nations," the report noted. "However, the steep costs in the U.S. still contribute to high U.S. healthcare spending and are passed on to Americans in the form of higher premiums and taxpayer-funded public programs."
Why Is the U.S. Such an Outlier on Drug Pricing?
The U.S. has much more limited price negotiation with drug manufacturers; other countries often rely on a single regulatory body to determine whether prices are acceptable and negotiate accordingly. Many nations conduct public cost-benefit analyses on new drugs, comparing them with others on the market. If those studies find the cost is too high, or the health benefit too low, they'll reject the drug application. Some countries also set pricing controls
In the U.S., negotiations involve smaller government programs and thousands of separate private health plans, lowering the bargaining power.
"It's complicated. Everything in healthcare costs more here, not just [prescriptions]," said Joseph Antos, a senior fellow at the American Enterprise Institute, a conservative-leaning think tank, in an email interview. Although the government's new Medicare drug negotiation is the United States' first attempt to set drug prices, Antos noted that U.S. drug price negotiation still doesn't operate as price-setting for prescriptions in Europe does because it's limited to a few drugs and doesn't apply to Medicaid or private insurance.
Drug patents and exclusivity is another factor keeping U.S. drug prices higher, experts said, as U.S. pharmaceutical companies have amassed patents to prevent generic competitors from bringing cheaper versions to market.
Drug companies have also argued that high prices reflect research and development costs. Without higher consumer prices to offset research costs, the companies say, new medicines wouldn't be discovered or brought to market. But recent studies haven't supported that.
One 2023 study found that from 1999 to 2018, the world's largest 15 biopharmaceutical companies spent more on selling and general and administrative activities, which include marketing, than on research and development. The study also said most new medicines developed during this period offered little to no clinical benefit over existing treatments.
Our Ruling
Biden said, if you went "anywhere in the world," you could get a prescription filled for 40% to 60% less than it costs in the U.S.
He exaggerated by saying "anywhere in the world," but for comparable high-income, industrialized countries, he's mostly on target.
Research has consistently shown that Americans pay significantly higher prices overall for prescription medication, averaging between two times to four times as high, depending on the study. The U.S. pays less for unbranded, generic drugs, but those lower prices don't offset the higher prices paid for brand-name drugs, researchers said.
Factors including country-specific pricing, confidential rebates. and other discounts also obscure true consumer prices, making comparisons difficult.
Biden's statement is accurate but needs clarification and additional information. We rate it Mostly True.
PolitiFact copy chief Matthew Crowley contributed to this report.
A Maryland firm that oversees the nation's largest independent network of primary care medical practices is facing a whistleblower lawsuit alleging it cheated Medicare out of millions of dollars using billing software "rigged" to make patients appear sicker than they were.
The civil suit alleges that Aledade Inc.'s billing apps and other software and guidance provided to doctors improperly boosted revenues by adding overstated medical diagnoses to patients' electronic medical records.
"Aledade did whatever it took to make patients appear sicker than they were," according to the suit.
For example, the suit alleges that Aledade "conflated" anxiety into depression, which could boost payments by $3,300 a year per patient. And Aledade decided that patients over 65 years old who said they had more than one drink per day had substance use issues, which could bring in $3,680 extra per patient, the suit says.
The whistleblower case was filed by Khushwinder Singh in federal court in Seattle in 2021 but remained under seal until January of this year. Singh, a "senior medical director of risk and wellness product" at Aledade from January 2021 through May 2021, alleges the company fired him after he objected to its "fraudulent course of conduct," according to the suit. He declined to comment on the suit.
The case is pending and Aledade has yet to file a legal response in court. Julie Bataille, Aledade's senior vice president for communications, denied the allegations, saying in an interview that "the whole case is totally baseless and meritless."
Based in Bethesda, Maryland, Aledade helps manage independent primary care clinics and medical offices in more than 40 states, serving some 2 million people.
Aledade is one of hundreds of groups known as accountable care organizations. ACOs enjoy strong support from federal health officials who hope they can keep people healthier and achieve measurable cost savings.
Aledade was co-founded in 2014 by Farzad Mostashari, a former health information technology chief in the Obama administration, and has welcomed other ex-government health figures into its ranks. In June 2023, President Joe Biden appointed Mandy Cohen, then executive vice president at Aledade, to head the Centers for Disease Control and Prevention in Atlanta.
Aledade has grown rapidly behind hundreds of millions of dollars in venture capital financing and was valued at $3.5 billion in 2023.
Mostashari, Aledade's chief executive officer, declined to be interviewed on the record.
"As this is an active legal matter, we will not respond to individual allegations in the complaint," Aledade said in a statement to KFF Health News. "We remain focused on our top priority of delivering high-quality, value-based care with our physician partners and will defend ourselves vigorously if needed in a court of law."
The lawsuit also names as defendants 19 independent physician practices, many in small cities in Delaware, Kansas, Louisiana, North Carolina, Pennsylvania, and West Virginia. According to the suit, the doctors knowingly used Aledade software to trigger illegal billings, a practice known in the medical industry as "upcoding." None has filed an answer in court.
More than two dozen whistleblower lawsuits, some dating back more than a decade, have accused Medicare health plans of overcharging the government by billing for medical conditions not supported by patient medical records. These cases have resulted in hundreds of millions of dollars in penalties. In September 2023, Cigna agreed to pay $37 million to settle one such case, for instance.
But the whistleblower suit filed against Aledade appears to be the first to allege upcoding within accountable care organizations, which describe part of their mission as foiling wasteful spending. ACOs including Aledade made headlines recently for helping to expose an alleged massive Medicare fraud involving urinary catheters, for instance.
Finding the 'Gravy'
Singh's suit targets Aledade's use of coding software and guidance to medical practices that joined its network. Some doctors treated patients on standard Medicare through the ACO networks, while others cared for seniors enrolled in Medicare Advantage plans, according to the suit.
Medicare Advantage is a privately run alternative to standard Medicare that has surged in popularity and now cares for more than 30 million people. Aledade has sought to expand its services to Medicare Advantage enrollees.
The lawsuit alleges Aledade encouraged doctors to tack on suspect medical diagnoses that paid extra money. Aledade called it finding "the gravy sitting in the [patient's] chart," according to the suit.
The company "instructed" providers to diagnose diabetes with complications, "even if the patient's diabetes was under control or the complicating factor no longer existed," according to the suit.
Some medical practices in Delaware, North Carolina, and West Virginia billed the inflated code for more than 90% of their Medicare Advantage patients with diabetes, according to the suit.
The lawsuit also alleges that Aledade "rigged" the software to change a diagnosis of overweight to "morbid obesity," which could pay about $2,500 more per patient. Some providers coded morbid obesity for patients on traditional Medicare at 10 times the national average, according to the suit.
"This fraudulent coding guidance was known as ‘Aledade gospel,'" according to the suit, and following it "paid dividends in the form of millions of dollars in increased revenue."
These tactics "usurped" the clinical judgment of doctors, according to the suit.
'No Diagnosis Left Behind'
In its statement to KFF Health News, Aledade said its software offers doctors a range of data and guidance that helps them evaluate and treat patients.
"Aledade's independent physicians remain solely responsible for all medical decision-making for their patients," the statement read.
The company said it will "continue to advocate for changes to improve Medicare's risk adjustment process to promote accuracy while also reducing unnecessary administrative burdens."
In a message to employees and partner practices sent on Feb. 29, Mostashari noted that the Justice Department had declined to take over the False Claims Act case.
"We recently learned that the federal government has declined to join the case U.S. ex rel. Khushwinder Singh v. Aledade, Inc. et al. That's good news, and a decision we wholeheartedly applaud given the baseless allegations about improper coding practices and wrongful termination brought by a former Aledade employee three years ago. We do not yet know how the full legal situation will play out but will defend ourselves vigorously if needed in a court of law," the statement said.
The Justice Department advised the Seattle court on Jan. 9 that it would not intervene in the case "at this time," which prompted an order to unseal it, court records show. Under the false claims law, whistleblowers can proceed with the case on their own. The Justice Department does not state a reason for declining a case but has said in other court cases that doing so has no bearing on its merits.
Singh argues in his complaint that many "unsupported" diagnosis codes were added during annual "wellness visits," and that they did not result in the patients receiving any additional medical care.
Aledade maintained Slack channels in which doctors could discuss the financial incentives for adding higher-paying diagnostic codes, according to the suit.
The company also closely monitored how doctors coded as part of an initiative dubbed "no diagnosis left behind," according to the suit.