California prosecutors allege the Sacramento-based health system engages in illegal practices that stifle competition and lead to higher healthcare costs for consumers.
The California Attorney General’s Office has filed suit against Sutter Health, alleging that the largest health system in Northern California is engaged in anticompetitive practices that are raising healthcare costs for consumers.
"Sutter Health is throwing its weight around in the healthcare market, engaging in illegal, anticompetitive pricing that hurts California families," California Attorney General Xavier Becerra said Friday.
"These tactics are risking Californians' lives by driving up the cost of healthcare for everyone. Big business should not be able to throttle competition at the expense of patients," Becerra said.
Sutter Health spokesperson Karen Garner said the Sacramento-based health system was still reviewing the suit and could not comment on the specifics of the complaint.
"It's important to note that publicly available data show that on average, total charges for an inpatient stay in a Sutter hospital are lower than what other Northern California hospitals charge," Garner said.
Establishing, increasing and maintaining Sutter Health's power to control prices and exclude competition;
Foreclosing price competition by Sutter Health's competitors;
Enabling Sutter Health to impose prices for hospital healthcare services and ancillary products that far exceed the prices it would have been able to charge in an unconstrained, competitive market. Those pricing practices went toward more acquisitions, extreme levels of executive compensation, and financing its own insurance arm.
The complaint alleges that Sutter violated the Cartwright Act by:
Preventing insurance companies from negotiating with it on an anything other than “all-or-nothing” system-wide basis. This means that health insurers are required to negotiate with all of Sutter Health system or face termination of their contract;
Preventing insurance companies from giving consumers more low-cost health plan options. For example, an insurance company might charge a $200 out-of-pocket cost for an outpatient surgery performed by a facility outside of the preferred group, and $100 for outpatient surgery performed by a facility inside the preferred group;
Setting excessive high out-of-network rates for patients who must seek care outside of their provider network. These rates exceed those of Sutter’s competitors and Medicare.
Restricting publication of provider cost information in rates.
The AG’s complaint comes in the wake of a new report by University of California Berkeley’s Petris Center on Health Care Markets and Consumer Welfare that documents how the rapid consolidation of healthcare markets in California has led to rising healthcare costs for consumers throughout the state.
The cost of the average inpatient hospital procedure in Northern California $223,278 exceeded that in Southern California $131,586 by more than $90,000, the report found.
Sacramento-based Sutter Health includes 24 acute care hospitals, 31 ambulatory surgery centers, nine cancer centers, six specialty care centers, nine major physician organizations, 8,200 physicians and 48,000 employees in 19 counties in Northern California.
Sutter Health also negotiates contracts on behalf of a variety of other affiliated physician groups, the largest being the Palo Alto Medical Foundation.
Garner's entire statement reads as follows:
"We are aware that a complaint was filed, but we have not seen it at this time, so we cannot comment on specific claims.
Sutter Health is proud to save patients, government payers and health plans hundreds of millions of dollars each year by providing more efficient and integrated care. It's important to note that publicly available data (from the California Office of Statewide Health Planning and Development) show that on average, total charges for an inpatient stay in a Sutter hospital are lower than what other Northern California hospitals charge.
Further, Sutter Health has held average overall rate increases to health plans to the low single digits since 2012 in spite of our actual expenses for labor, facilities and technology increasing more than 37% during the same time period. We don't know why some health plans have increased their rates to consumers as much as 20% annually.
It's also important to note that healthy competition and choice exists across Northern California. There are 15 major hospital systems and 142 hospitals in Northern California, including Kaiser Permanente, Dignity, Adventist, Tenet, UC and more. And health plans can elect to include or exclude parts of the Sutter Health system from their networks, and health plans have been doing so for many years."
Family physicians say payers don't remove the barriers to non-pharmacological alternatives to chronic pain management such as physical therapy and home healthcare.
A clinical guidance panel for the nation’s 36 Blue Cross Blue Shield companies has adopted a professional standard that opioids should not be prescribed as a first or second line of pain therapy in most clinical situations.
The standard was unanimously supported at the March meeting of the Blue Cross Blue Shield Association's National Council of Physicians and Pharmacist Executives, which includes physicians and pharmacists from Blue Cross and Blue Shield companies around the nation.
The standard is in line with guidelines from the Centers Disease Control and Prevention. BCBSA said its companies will promote alternatives that include more non-opioid prescription painkillers and over-the-counter pain medications.
"Due to the lack of evidence combined with significant potential for harm, we believe professional standards require that BCBS members are given alternative options to opioids in most clinical situations," said Trent Haywood, MD, chief medical officer for BCBSA.
"We will work with medical professionals to ensure BCBS members are routinely provided alternatives to opioids through a mutual decision made inside the doctor's office," Haywood said.
The standard adoption comes as the Centers for Disease Control and Prevention this week reports that drug overdoses in the United States are a growing problem for every demographic and region in the nation.
Drug overdoses killed 63,632 Americans in 2016. Nearly two-thirds of these deaths involved a prescription or illicit opioid. Overdose deaths increased in all categories of drugs examined for men and women, people ages 15 and older, all races and ethnicities, and across all levels of urbanization, CDC said.
More than 20% of BCBS commercially insured beneficiaries filled at least one opioid prescription in 2015, according to a BCBSA study. The report also showed beneficiaries with an opioid use disorder diagnosis spiked 493% over a seven-year study period.
Ryan Stanton, MD, an emergency physician in Lexington, KY, and a spokesman for the American College of Emergency Physicians, said the new standard from BCBSA will not have much of an impact in the emergency department.
"They’re jumping on to something we were already moving towards. Hospitals are re-evaluating the way we are addressing opioids," Stanton said.
"What BCBSA is saying, which our programs say a little better, is go with evidence-based medicine, which is what we didn't do with the opioid crisis," he said. "We were pushed in several different directions to give opioids for every pain complaint. What we are realizing now and what the evidence is showing is that they are not the best option in most cases."
Michael L. Munger, MD, a family physician in Overland Park, KS, and president of the American Academy of Family Physicians, said physicians understand that opioid misuse is a serious public health issue, but he bristled at the BCBS guidance.
"A blanket ban on the prescription of pain medication ignores the reality that each patient’s treatment must be individualize to his or her specific situation. Policies must recognize that pain management requires patient-centered, compassionate care as the foundation of treatment," Munger said.
"The AAFP opposes limiting patient access to any physician-prescribed pharmaceutical without cause, as well as any actions that limit physicians' ability to prescribe these products based on the physician’s medical specialty," he said.
Munger said BCBS and other public and private payers are pushing for a ban on drug therapies but do little to encourage non-pharmacologic therapies for chronic pain.
"The administrative burden and required pre-authorizations for prescribing non-pharmacologic therapies, such as physical therapy or home health, dissuades physicians from ordering such treatments," Munger said.
"Equally important, coverage plans require copayments and deductibles that add financial burden and disincentives to patients suffering chronic pain," he said.
Haywood said BCBS companies cover non-opioid pain treatment options, and medication-assisted treatments, and provide training for doctors and pharmacists, customized coaching services for those with chronic pain and support for families in addiction recovery.
"Because Blue Cross and Blue Shield companies represent one in three Americans in diverse communities with diverse needs, we are taking a comprehensive approach to addressing the opioid epidemic through prevention, intervention and treatment," Haywood said.
SightLine Health allegedly formed leasing companies and distributed the profits that its physician-investors generated by referring cancer patients for radiation therapy.
A Houston-based radiation therapy chain will pay the federal government $11.5 million to settle a False Claims Act suit alleging that they paid physicians kickbacks to draw referrals, the Department of Justice said.
Prosecutors said SightLine Health LLC, which was acquired by Oncology Network Holdings LLC in 2011, allegedly enticed physicians to refer patients to its cancer treatment centers, and paid those physicians a share of its profits.
Specifically, prosecutors alleged that SightLine formed several leasing companies that referring physicians bought into. SightLine then distributed the profits that its physician-investors generated by referring cancer patients for radiation therapy.
"Investment arrangements that are structured to improperly compensate physicians for referrals can encourage physicians to make decisions based on financial gain rather than the best interest of their patients," said Acting Assistant Attorney General Chad A. Readler in DOJ's Civil Division.
"As the professionals charged with recommending and referring medical procedures for our community, physicians' primary motivation must remain the well-being of their patients," said U.S. Attorney Erin Nealy Cox. "Today's settlement demonstrates our determination to eliminate complex business ventures that improperly interpose financial considerations into our physicians' medical judgment."
In addition to the settlement, ION and SightLine have entered into a five-year corporate integrity agreement with the federal auditors that will monitor relationships between ION and SightLine and referring physician investors.
The whistleblower who prompted the suit was not identified by DOJ, but that person will receive a $1.75 million share of the settlement.
SightLine, which operates nine radiation clinics in five states, did not return calls Friday morning seeking comment.
Drug overdose deaths in 2016 increased in all categories of drugs examined for men and women, people ages 15 and older, all races and ethnicities, and across all levels of urbanization.
Drug overdoses in the United States are a growing problem for every demographic and region in the nation, according to a study released today by the Centers for Disease Control and Prevention.
Drug overdoses killed 63,632 Americans in 2016. Nearly two-thirds of these deaths involved a prescription or illicit opioid. Overdose deaths increased in all categories of drugs examined for men and women, people ages 15 and older, all races and ethnicities, and across all levels of urbanization, CDC said.
The analysis confirms that recent increases in drug overdose deaths are driven by continued sharp increases in deaths involving synthetic opioids other than methadone, such as illicitly manufactured fentanyl.
"No area of the United States is exempt from this epidemic—we all know a friend, family member, or loved one devastated by opioids," said CDC Principal Deputy Director Anne Schuchat, MD.
CDC's analysis, based on 2015-2016 data from 31 states and Washington, DC, showed:
Across demographic categories, the largest increase in opioid overdose death rates was in males between the ages of 25-44.
Overall drug overdose death rates increased by 21.5%.
The overdose death rate from synthetic opioids (other than methadone) more than doubled, likely driven by illicitly manufactured fentanyl.
The prescription opioid-related overdose death rate increased by 11%.
The heroin-related overdose death rate increased by 19%.
The cocaine-related overdose death rate increased by 52%.
The psychostimulant-related overdose death rate increased by 33%.
Overdose death rates differ by state
Death rates from overdoses involving synthetic opioids increased in 21 states, with 10 states doubling their rates from 2015 to 2016. New Hampshire, West Virginia, and Massachusetts had the highest death rates from synthetic opioids.
Fourteen states had significant increases in death rates involving heroin, with Washington D.C., West Virginia, and Ohio having the highest rates.
Eight states had significant increases in death rates involving prescription opioids. West Virginia, Maryland, Maine, and Utah had the highest rates.
Sixteen states had significant increases in death rates involving cocaine, with Washington D.C., Rhode Island, and Ohio having the highest rates.
Fourteen states had significant increases in death rates involving psychostimulants; the highest death rates occurred primarily in the Midwest and Western regions.
The map divides the nation into 326 referral regions that link patient home counties to hospital counties and allow multiple patient home counties to join to the same hospital county.
Clinicians and scientists at the University of Pittsburgh School of Medicine and UPMC have mapped out a coordinated emergency and trauma care system for the nation.
The Pittsburgh Atlas, published today in the Annals of Emergency Medicine, divides the United States into 326 referral regions.
The atlas also creates the framework that will allow states and groups of counties to implement quality improvement programs accountable to regional performance measures instituted by state and local governments, the atlas's authors said.
"Recent proposed changes to healthcare could shift more responsibility to the state level with regard to who is insured or what services are offered," said lead author David J. Wallace, MD, an assistant professor in Pitt's Department of Critical Care Medicine.
"A set of regions that maintain state lines is essential in that circumstance," Wallace said.
More than a decade ago, a National Academy of Medicine reportendorsed coordinated, regional, accountable systems as an approach to improve healthcare for severe acute conditions requiring trauma and emergency services.
In 2013, the National Quality Forum highlighted the importance of region-level performance measures that promote timely, high-quality care.
The Pittsburgh Atlas was modeled on the Dartmouth Atlas of Health Care, a set of geographic regions based on Medicare and Medicaid hospital discharge claims that was created more than 20 years ago, and is used for epidemiological studies that compare the cost, quality and consumption of health care in different parts of the country, Wallace said.
However, the Dartmouth Atlas ignores state and county boundaries – resulting in a set of regions that do not promote coordination or accountability, the atlas authors said.
The Pittsburgh Atlas looks at nearly 731,000 Medicare patients who sought care for a heart attack, stroke or moderate to severe trauma in 2011. Referral regions were created by combining patient home counties to hospital counties, allowing multiple patient home counties to join to the same hospital county.
The researchers used six ways to divide the United States into emergency care referral regions and found one that keeps the vast majority of patients closest to home.
"We were surprised at how well our regions performed in terms of keeping patients close to home – they did as well as those in the Dartmouth Atlas," said Wallace. "We truly expected there would be a greater trade-off since the Pittsburgh Atlas faced the additional geopolitical boundary constraints."
Wallace said the Pittsburgh Atlas may not be representative for all patients. It was built using the largest collective source of hospitalizations for heart attack, stroke and major trauma in the nation but it is limited to patients 65 years old and older with data from 2011.
Referral patterns may have changed with population changes and hospital openings and closings – meaning the Pittsburgh Atlas would need periodic updates, he said.
The data files for the Pittsburgh Atlas are publicly available and give "researchers, policymakers, hospital systems and public health agencies a way to move beyond simply comparing apples to apples, and into thinking about orchards," Wallace said.
The federal investigation has resulted in 53 convictions – 38 of them doctors – in connection with the scheme, which involved millions of dollars in bribes and more than $100 million in payments from Medicare and private payers.
A federal judge in Newark, NJ on Wednesday sentenced a Bergen County physician to 18 months in prison for his role in a far-ranging test-referral bribery scheme, the Department of Justice announced.
Basel Batarseh, MD, of Franklin Lakes, NJ, is the 38th physician convicted in the scheme operated by senior executives at now-defunct, Parsippany-based Biodiagnostic Laboratory Services LLC, federal prosecutors said.
Batarseh previously pleaded guilty to one count of accepting bribes in violation of the Federal Travel Act. He was also sentenced to one year of supervised release, fined him $7,500 and ordered forfeiture of $104,611.
According to documents filed with the court, Batarseh, an internist practicing in West New York, NJ, located across the Hudson River from Manhattan, accepted bribes totaling more than $104,000 from BLS employees and associates between 2007 and 2010.
In exchange, Batarseh generated more than $1.3 million in lab business for BLS.
The federal investigation has thus far resulted in 53 convictions in connection with the scheme, which its organizers have admitted involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and private insurance companies.
It is believed to be the largest number of medical professionals ever prosecuted in a bribery case, DOJ said.
The investigation has recovered more than $13 million through forfeiture. BLS, which is no longer operational, pleaded guilty in June, 2016 and forfeited all of its assets.
S&P forecasts lower near-term statutory minimum requirements for defined benefit plans, which could help financial profiles for not-for-profit healthcare providers.
The nation’s not-for-profit healthcare sector has benefited from a boost in the funded status of its pension plans in fiscal 2017 due primarily to robust investment market returns, according to a report this week from S&P Global Ratings.
This boost is occurring, S&P said, despite lower assumed discount rates in recent years, which provide a more conservative liability measure.
In the near term, S&P said a higher funded status should mean lower statutory minimum contributions to defined benefit pension plans, which could help overall financial profiles as operating performance in the healthcare sector has come under stress.
"However, the projected benefit obligation for many plans has continued to increase and many have had to contend with updated mortality tables, which more accurately recognize longer lives -- which leads to increased pension liabilities," said S&P credit analyst Anne Cosgrove.
Cosgrove said many not-for-profit issuers have focused on lowering pension funding risks, including increasing annual contributions to improve the funded status, closing current plans to new participants, freezing plans, and in some cases terminating plans altogether.
S&P has tracked the funding levels of defined-benefit plans of not-for-profit hospitals and health systems since 2007, when, on average, they were at their highest level (at 90%).
Funded statuses declined sharply in 2008 and 2009, by 20 percentage points during the Great Recession and the cratering of global investment markets. After the recession, funded ratios were essentially flat at near 70% through 2012, despite hospitals' healthy contributions to plans, S&P said.
Public, not-for-profit West Tennessee Healthcare will acquire CHS's Tennova Healthcare subsidiary hospitals in Jackson, Dyersburg and Martin in a deal with an value estimated at $67 million.
Community Health Systems, Inc. continues to unload hospitals in its ongoing effort to reduce debt.
The Franklin, TN-based for-profit hospital chain announced that it would sell three hospitals in its Tennova Healthcare subsidiary to West Tennessee Healthcare, a Jackson-based public, not-for-profit health system.
The three hospitals are: 225-bed Tennova Healthcare Dyersburg Regional; 150-bed Tennova Healthcare Regional Jackson; and 100-bed Tennova Healthcare Volunteer Martin.
Financial terms were not disclosed, but local media estimated the value of the deal at $67 million.
The deal includes all physician clinics and outpatient services associated with the three hospitals, which will also become part of WTH’s 18-county network of medical centers and outpatient services.
WTH CEO James E. Ross called the acquisition is good news for consumers, employers, physicians and future patients.
"This transaction is consistent with our stated mission to improve the health and well-being of the communities we serve while providing exceptional and compassionate care," Ross said in amedia release. "It will enable us to provide expanded access to quality healthcare."
CHS said in a media release that the three hospitals are among the planned divestitures discussed on the company’s fourth quarter 2017 earnings call. CHS has been working to reduce the debt burden it accrued with the 2014 acquisition of Naples, FL-based Health Management Associates.
When the deal is finalized this summer, WTH will employ more than 7,000 people and operate seven hospitals across the region.
The marks the fourth divestiture of a Tennova hospital for CHS this year.
The Tennova hospitals were acquired and rebranded by CHS in 2014 when it bought out HMA. After the WTH sell-off, Tennova will operate 12 hospitals across Tennessee.
The deal would include St. Vincent's 473-bed community teaching hospital and a 76-bed inpatient psychiatric hospital, and would broaden Hartford HealthCare’s footprint in Fairfield County.
Hartford HealthCare has signed a nonbinding letter of intent to acquire Ascension's St. Vincent's Medical Center in Bridgeport, Connecticut, the two health systems announced jointly.
"Our goal, in coordination with the Board of St. Vincent's, has been to position St. Vincent's so its associates, physicians and volunteers can continue to provide safe, high-quality healthcare to the Bridgeport and Fairfield County community," said Ascension CEO Patricia A. Maryland.
"In our rapidly evolving healthcare environment, healthcare providers have a greater opportunity to successfully serve individuals and communities by working in clinically integrated systems of care. And Hartford HealthCare is Connecticut's most comprehensive healthcare network," Maryland said.
St. Vincent’s includes a 473-bed community teaching hospital, a 76-bed inpatient psychiatric facility in Westport, a large multispecialty provider group, and St. Vincent's Special Needs Services.
If the transaction is completed, Hartford HealthCare would continue to operate St. Vincent's in compliance with Catholic traditions. The transaction would not include St. Vincent’s College.
Hartford HealthCare has more than 19,000 employees and includes acute-care hospitals, a behavioral health network, multispecialty physician groups, a regional home care system, an array of senior care services, a physical therapy and rehabilitation network, and an accountable care organization.
"Hartford HealthCare would be privileged to partner with the people of St. Vincent's who have done so much for their communities," Hartford HealthCare CEO Elliot Joseph said. "Together, we can provide even broader access to St. Vincent's excellent care to residents of Fairfield County."
The proposal would exempt states with a Medicaid managed care penetration of 85% or more from some monitoring requirements, and provide flexibility to states when they make nominal rate reductions to fee-for-service payment rates.
A proposed rule change by the Centers for Medicare & Medicaid Services would exempt state Medicaid programs from some access-to-care reporting requirements.
Specifically, the proposal would exempt states with a Medicaid managed care penetration of 85% or more from some monitoring requirements, and provide similar flexibility to states when they make nominal rate reductions to fee-for-service payment rates.
"These new policies do not mean that we aren't interested in beneficiary access, but are intended to relieve unnecessary regulatory burden on states, avoid increasing administrative costs for taxpayers, and refocus time and resources on improving the health outcomes of Medicaid beneficiaries," CMS Administrator Seema Verma said in a media release.
Under CMS's Notice of Proposed Rulemaking:
States with an overall Medicaid managed care penetration rate of 85% or greater (currently, 17 states) would be exempt from most access monitoring requirements.
Reductions to provider payments of less than 4% percent in overall service category spending during a state fiscal year (and 6% over two consecutive years) would not be subject to the specific access analysis.
When states reduce Medicaid payment rates, they would rely on baseline information regarding access under current payment rates, rather than be required to predict the effects of rate reductions on access to care, which states have found very difficult to do.
Jeff M. Myers, president and CEO of Medicaid Health Plans of America, said the existing rules are not needed in states with a high penetration of Medicaid managed care plans because they already have robust provider networks.
"The exception lessens the burden on states and is in line with the overall effort to streamline some regulations and introduce more efficiency into the program," Myers said.
Jack Rollins, senior policy analyst at the National Association of Medicaid Directors, said the proposed rule change appears to address some concerns raised by the states.
"We are still reviewing but our preliminary impression, the caveat that we haven't had a conversation with our members, is that CMS appears to have taken state feedback into consideration and are making what looks to be some positive changes that will allow states to manage their programs effectively and still strike the balance between ensuring appropriate access and setting some guardrails around it without causing so much administrative complexity," Rollins said.
Rollins said the proposed rule change amends an Obama administration rule that established a Medicaid access monitoring for fee-for-service programs, but exempted managed care.
"What that rule did was identify a bucket of five or six core service areas where states needed to put together data packages that showed how their rates compared to other payers in the state and nationally," Rollins said. "They would compare their rates to what Medicare paid, what other state Medicaid programs paid, maybe some commercial payers in the private market paid. The intent behind that was to look at the comparison and show that Medicaid rates aligned or were relatively close to other payers, or maybe they were far off."
In addition to monitoring these core service areas, the rule also required states that were making rate reductions or restructurings in other services areas to produce an access monitoring plan to assess the impact on the rate change over three years, and to provide upfront projections on how the rate change would affect access.
"Our members took issues with some of that regulatory frame work," Rollins said. "The fact that it applied to fee-for-service and not managed care, when managed care programs are the primary delivery system for Medicaid these days."
"Many states might have the majority of their Medicaid populations covered under managed care and only a relatively small or vestigial fee-for-service," he said. "Those states felt it didn't make a lot of sense to invest a lot of time and staff resources and state dollars creating a comprehensive access monitoring plan for a program that in some states covered maybe 100 people."
In addition, providing state-by-state comparisons proved challenging.
"First of all, many states said they had trouble accessing any kind of private pay rates from Managed care plans in the private market. Understandingly, that information is proprietary," Rollins said.
"Second, Medicaid covers a lot of services that Medicare does not so there is not always a one-to-one comparison," he said.
"Third, it is difficult to compare your rate structures to other states, because if you've seen one Medicaid program you've seen one Medicaid program," he said. "There is so much variation in terms of the populations covered and how states cover them, the various waiver authorities they might use in their program designs, that states are finding it very difficult to make an apples-to-apples comparison."
The proposed rule was published last week in the Federal Register and public comments will be accepted for the next 60 days. Rollins said NAMD will offer comment on the proposal after speaking with its members.
