Top state health officials say they plan to plow most of the money into higher payments for doctors, hospitals, and other healthcare providers who serve Californians covered by Medi-Cal, the state's Medicaid program.
by Angela Hart and Samantha Young
California’s powerful healthcare industry just notched a historic win: The state is going to give it an $11.1 billion infusion to improve care for millions of low-income Medicaid patients.
But the intense jockeying over the money is only beginning.
Top state health officials say they plan to plow most of the money into higher payments for doctors, hospitals, and other healthcare providers who serve Californians covered by Medi-Cal, the state’s Medicaid program. But the framework, hammered out this summer as part of state budget negotiations, lacks critical details, which has set off a lobbying frenzy among health industry groups seeking a cut.
Even as they battle for their share, industry leaders are quietly plotting a November 2024 ballot initiative to lock in the Medi-Cal payment increases, which they argue are needed to sustain the safety-net program that covers nearly 16 million Californians — a staggering 40% of the state’s population.
“We are addressing decades of systemic underfunding in Medicaid that has exacerbated inequity and health care provider deserts, where patients are often forced to get their care in emergency departments,” said Dustin Corcoran, the CEO of the influential California Medical Association, which represents doctors.
Corcoran also leads the coalition negotiating with Gov. Gavin Newsom and fellow Democratic lawmakers in Sacramento over how the money — a combination of state and federal funding to be doled out over six years — will be spent.
“Even with this historic deal, there are still parts of the health care system that are going to struggle to provide the care that patients need,” Corcoran said. “The coalition is dedicated to ensuring long-term stability and predictability in reimbursement rates in California.”
California has among the lowest Medicaid reimbursement rates in the country, which is often cited as a key reason many low-income patients can’t get care and often face excruciating wait times, especially for primary care, obstetric, and mental health appointments, said Kathryn Phillips, the associate director for improving access to care at the California Health Care Foundation. (KFF Health News publishes California Healthline, which is an editorially independent service of the California Health Care Foundation.)
“That’s where the state is struggling the most,” she said. “Low rates are why a physician may not accept Medi-Cal patients, or only accept a low number of patients.”
This deal funds the largest increase in base Medi-Cal reimbursement rates in at least 25 years, said Jennifer Kent, a former director of the state Medicaid agency.
The money will come from the managed care organization tax, which has been levied since 2005 on health insurers that do business in California. Revenue from the tax, which allows the state to secure billions in federal health care dollars it wouldn’t otherwise receive, has previously been funneled into the state general fund, which can be used for anything state leaders want.
Under the deal, and for the first time, Newsom and the legislature have agreed to use the money to improve care for poor Californians. Of the $19.4 billion projected to be raised by the tax between 2023 and 2026, $11.1 billion will go directly to Medi-Cal and $8.3 billion to the general fund to offset state spending on Medi-Cal, according to state Department of Finance spokesperson H.D. Palmer.
The new funding will start flowing next year, with $820 million earmarked for initial rate increases in primary care, obstetric care, and mental health care, Palmer said.
From 2025 through 2029, the state plans to allocate nearly $2.7 billion a year, according to the department. State and industry officials said they plan to direct some of the money to expand medical residency programs for doctors serving low-income people, fund new beds for psychiatric patients, and increase the workforce of other providers such as nurses, mental health therapists, and community health workers.
But the bulk will go to rate increases for primary care and an array of providers and services, including hospitals and long-term care facilities, abortion care, and emergency services. Higher rates for specialists, such as psychiatrists and dentists, are also desperately needed.
Although Newsom and state health officials have promised to direct the money to health care providers, they haven’t specified which ones will get increases — and there’s no guarantee the money won’t be diverted to another program. Medi-Cal, a massive and ballooning program with a budget of $152 billion this fiscal year, is under tremendous pressure. The state continues to expand the program to more people and offers a growing list of expensive services, despite the threat of budget deficits.
“There has to be more guardrails,” said Assembly member Vince Fong (R-Bakersfield) during a June legislative debate. “This should not be seen as a revenue grab.”
Mark Ghaly, Newsom’s health and human services secretary, acknowledged that even though some providers and treatments may be left out initially, the payment boosts represent a critical step toward better access.
“The core providers in Medicaid will benefit,” Ghaly told KFF Health News. “There’s always going to be someone out there with a question and a concern, and I hope that as we learn about them and we hear them, we address them.”
Ghaly said the tax will bring some Medicaid rates in California from the bottom in the country to the top. While he acknowledged concerns that the money might be diverted in future years, he said Newsom is committed to spending it on Medi-Cal. “Who knows about the uncertainty of the future?” he said. “But we have basically done as much as you can to hard-wire these changes into the way we design Medicaid. The man with the pen — the governor of California — is committed to this.”
Even though the tax deal isn’t big enough to fix all the problems in Medi-Cal, it will improve patient care, said Charles Bacchi, president and CEO of the California Association of Health Plans, which represents private and public insurers.
“There’s a lot more work to do hammering out the rate increases and where they should go,” Bacchi said. “We have to make sure that the funding actually survives the budget process next year.”
Some providers worry they may be left out.
“We’ve argued hard for optometrists to be included,” said Kristine Schultz, executive director of the California Optometric Association, noting that optometrists can’t afford to treat poor patients because of low rates. For example, optometrists get about $39, on average, to conduct an eye exam on a new Medi-Cal patient, while Medicare reimburses $158, she said.
As a result, she said, patients “are not able to get in for months.”
Ann Rivello, a therapist in San Mateo County specializing in trauma, also cited low rates — and complicated medical billing demands — as the reasons she doesn’t accept Medi-Cal patients.
“I’ve been practicing over 20 years and I do not accept Medi-Cal even though it’s within my values,” she said.
Detailed rates for most health care treatments for Medi-Cal patients are not publicly available because they are negotiated privately by insurance companies and vary by geography and health insurance plan. And the state has a slew of bonus payments it uses to supplement base Medi-Cal rates, further obfuscating how much health care providers receive.
While Medi-Cal rates vary widely, on average, California reimburses 76% of Medicare rates, Phillips said. Next year, the state plans to raise that base payment rate to 87.5% of Medicare in three target areas — primary care, obstetrics, and mental health.
As health care providers battle for their slice of the tax revenue, they say they want to avoid the same lobbying fight each time the state renews the tax, which happens every few years. One option they are considering: a ballot initiative next year that would lock the Medi-Cal funding into the state constitution.
Bacchi declined to take a position on the concept but said insurers are “taking a look at it.” He argues that California “needs to make a long-term commitment to the Medi-Cal program.”
John Baackes, the CEO of L.A. Care, the largest Medi-Cal insurer, supports the idea. He argues that a permanent increase in Medi-Cal rates would help address the disparities between Medi-Cal and private insurance coverage.
“The pandemic showed us that inequality is a life-and-death matter, because if you look at the people who got sick the most and died, they were people of color,” he said. “If we continue to ignore that, we’re idiots.”
As of July 11, 195 rural hospitals have shuttered inpatient units or closed their doors altogether in the United States since 2005.
by Cecilia Nowell
About a year ago, Valory Wangler, a family medicine doctor, invited a handful of former co-workers to her backyard.
During the early months of the covid-19 outbreak, Wangler and her colleagues had worked at a hospital in this former railroad hub of about 21,000 residents just a few miles from the Navajo Nation. The pandemic had been hard on Rehoboth McKinley Christian Hospital. Emergency federal funding was drying up and nearly a third of the staff — including Wangler, the chief medical officer — left after its board of trustees hired an out-of-state, for-profit management services firm to take over operations in August 2020.
The group of former hospital employees in Wangler’s backyard that afternoon in June 2022, including two OB-GYNs and a chaplain, knew the situation was dire and wondered what they could do.
Wangler said they realized “the most important thing we could do for the community is have good access to primary care.”
The health care cliff Wangler and her former colleagues confronted is one that has challenged dozens of rural communities over the past two decades.
By late 2022, the hospital had closed its labor and delivery unit and lost most of its primary care doctors. Gallup’s McKinley County was recording the largest primary care provider deficit in rural New Mexico — and local doctors knew that could lead to an increase in untreated conditions and patients seeking emergency rather than preventive care.
As of July 11, 195 rural hospitals have shuttered inpatient units or closed their doors altogether in the United States since 2005. Hundreds of others, like the one in Gallup, have cut services. Meanwhile, from 2006 to 2018, the combined number of Federally Qualified Health Centers and Rural Health Centers — outpatient clinics that receive federal funding to operate in medically underserved areas — increased by roughly 50%, according to a 2021 study from the University of North Carolina-Chapel Hill. By 2019, 20% of rural residents accessed care at such community health centers.
In response to the challenges facing their hospital, Wangler and the colleagues who’d gathered in her yard decided to open their own physician-led, nonprofit clinic, which is on its way to becoming an FQHC Look-Alike, an organization that meets the eligibility requirements of an FQHC but does not receive grant funding. That status will qualify the clinic for multiple types of federal aid including drug pricing discounts. Since it opened its doors last August, Gallup Community Health has treated about 3,000 patients in its stucco office space just a block from the historic U.S. Route 66. Many of GCH’s doctors came to Gallup from elsewhere and could have left town for more lucrative jobs. Instead, they decided to stay and attempt to fill primary care gaps.
“I’ve not seen [an FQHC] like this,” said Tim Putnam, a faculty member of the Medical University of South Carolina, a former hospital CEO, and a past president of the National Rural Health Association. Although it’s rare, if not a first, for physicians to lead their own FQHC, he said, it’s not uncommon to see FQHCs started by community groups, and in Gallup “the physicians are so dedicated to the community” that they’re like a community group themselves.
Unlike rural hospitals, which are increasingly being purchased by private equity firms and prioritizing lucrative specialties to increase profits, these health centers must offer primary care regardless of patients’ ability to pay and be overseen by a board made up primarily of patients. But while clinics provide important primary care services, researchers note that they struggle to fill the gaps in specialty and emergency care left by hospital closures.
Marcie Richmond, one of the clinic’s family medicine doctors, came to Gallup for the same reason that drew many of her colleagues: “to work with populations that might not be receiving much care.” She envisions a day when more of the Gallup area’s providers come from the local Navajo and Zuni communities, but until then she hopes to continue offering much-needed “care for people who are victims of chronic injustice.”
The clinic’s interior reflects that care: Indigenous children’s books like “Where Did You Get Your Moccasins?” and “We Sang You Home” fill the lobby, prints by Zuni artist Mallery Quetawki are going up in exam rooms, and watercolors of nearby Red Rock Park and photographs of Canyon de Chelly hang in the hallways.
On a Thursday morning in April, Renie Lente and her sister, Elsie, waited for their appointment.
Elsie has cerebral palsy and lives in a nursing home; Lente is her caregiver. Lente had called the night before after she noticed a fungal infection on Elsie’s foot, and the clinic was able to fit her in the next morning with the provider who treats her whole family. The community clinic is a “big change” from Rehoboth McKinley, where, Lente said, there was a backlog to be seen by primary care providers that left patients turning to the emergency room. After family medicine physician Neil Jackson treated Elsie, making space in the small exam room for both sisters and nursing home staffers, Lente noted that she appreciated how Jackson “treats you like family.”
“One of the things that the staff committed to from the beginning was doing what was right for the patient and figuring out finances later,” said Wangler, the clinic’s executive director.
The clinic opened its doors in large part thanks to contributions from the community: A statewide hospital system donated equipment, Gallup residents raised $30,000, and more than half the doctors volunteered their time or asked not to be paid until the clinic was operating in the black.
The team intended to offer some reproductive health care, but not prenatal care. Their clinic wasn’t a hospital, so patients would have to give birth elsewhere. But by the time the clinic opened, Rehoboth McKinley had closed its labor and delivery unit after every OB-GYN left the hospital, forcing pregnant patients to transfer their care to the local Indian Health Service facility — a sizable hospital where many Native Americans can seek care but which not all of them prefer — or to a hospital more than an hour’s drive away.
The doctors quickly started looking into what it would take to offer prenatal care. They wanted at least to save patients from having to choose between spending hours and gas money traveling for appointments and forgoing prenatal care entirely. By November, the community had raised $24,000 to pay for prenatal malpractice insurance. And during that time the clinic’s OB-GYNs and OB-trained family medicine doctors developed a plan for providing prenatal care while maintaining relationships with the more distant hospitals where their patients could deliver.
Clinic leaders intend to keep the doors open by applying for it to become a Federally Qualified Health Center Look-Alike. That would qualify it for higher Medicare and Medicaid payments.
Clinic staffers hope providing quality outpatient care can minimize hospitalizations and the need to travel for specialty care. One of the tools helping GCH doctors provide that care is the University of New Mexico Health System’s PALS, a hotline service that connects physicians anywhere in the state with specialists who can answer questions about care outside their area of practice.
“There’s a physician shortage everywhere and a real understanding that it is challenging for people to get in from the rural setting,” said Wangler, who added that specialists have been amenable to partnering and offering guidance.
Doctors like Jackson say the tight-knit community in Gallup made them want to stay and try to fill the primary care void. “All of the folks that I’m working with here are truly rooted in the community and going to be here for better or worse.”
Last week, the FDA approved Opill, the first daily oral contraceptive that will be available for sale over the counter in stores as well as online. Reproductive health advocates hailed the groundbreaking approval as a step that can help millions of people avoid pregnancy, which is unintended nearly half the time in the United States.
They long have argued that eliminating the often-time-consuming step of requiring people to get a prescription before they can get birth control pills would expand access and give people more control over their contraceptive decisions.
Advocates want the FDA approval to signal a trend.
"We hope that this is only the beginning for expanding access to a range of over-the-counter contraceptive options," said Kelly Blanchard, president of Ibis Reproductive Health, part of a coalition of advocacy groups that have worked for decades to make contraception available over the counter.
For example, a company called Cadence is working on getting FDA approval for a birth control pill with a different formulation that would also be available over the counter without a prescription.
But many details related to cost and coverage of an OTC pill still need to be sorted out. Here are answers to common questions and concerns people may have about the new pill and how to use it with their insurance.
1. Who is most likely to be interested in an over-the-counter oral contraceptive like Opill?
Anyone might be interested, depending on their circumstances. In a survey conducted last year, more than three-quarters of women of reproductive age said they were in favor of making birth control available over the counter as long as research showed it to be safe and effective.
For people who are uninsured, the new pathway will allow them to save the cost of a visit to a health care provider for a prescription, and the expense of taking time off work or getting child care in some cases.
But even people with health coverage might be very interested, experts say. For example, young people who are insured under a parent's plan might not want insurance notices sent to their parents' home.
"We were particularly thrilled that the FDA approval came with no age restriction," Blanchard said.
Similarly, people whose partners don't want them to take birth control might choose to sidestep their coverage.
Simple convenience might be a factor if you're on vacation and there's no in-network pharmacy nearby, for example, or if you can't get an appointment to see your primary care doctor for a few weeks to discuss your options but don't want to be unprotected.
2. Why this pill?
Opill (norgestrel) contains only one hormone, progestin, while most of the 60 or so contraceptive pill formulations on the market contain both estrogen and progestin.
Progestin-only pills, sometimes called mini-pills, have very few contraindications, meaning there are few medical circumstances when taking them would be ill-advised. For Opill, a key contraindication is if someone has breast cancer or a history of breast cancer.
"Since they don't contain estrogen, they have very few and quite rare contraindications, so they're safe and appropriate for a broader population to use to prevent pregnancy," said Stephanie Sober, a physician and the global lead of medical affairs for women's health at Perrigo Co., which makes the pill.
Both progestin-only pills and combination pills that contain progestin and estrogen are more than 90% effective during normal use.
3. When can I get Opill and how much will it cost?
The company says Opill will be available in stores and online in early 2024 but has not revealed how much it will charge for a monthly pack of pills.
The average monthly cost for oral contraceptives ranges from $0 for people with health insurance to about $50, said Regan Clawson, senior director of health care access strategy at Planned Parenthood Federation of America.
Perrigo said the company will have a consumer assistance program that allows some people to get Opill free of charge, but no details are yet available.
4. Do health plans have to cover the new pill?
Not necessarily. Under the Affordable Care Act'spreventive services guidelines, most health plans have to cover the full range of contraceptives approved by the FDA, including progestin-only oral contraceptives, without requiring any out-of-pocket spending by members.
But that doesn't mean plans must cover every single type of pill. Since there is more than one progestin-only pill on the market, it's possible that Opill may not be the one your plan picks to cover, said Mara Gandal-Powers, director of birth control access at the National Women's Law Center.
However, if your doctor and you determine that Opill is medically the best oral contraceptive for you, health plans are required to have a process in place that permits you to get that pill without cost sharing, even if it's not on your plan's formulary, or list of covered drugs.
5. I have health insurance, and I don't normally have to pay anything for my birth control pills. Will I be able to pick up Opill off the shelf and not pay for it?
That's the goal, advocates agree, but at first you'll probably need a prescription from your doctor to get Opill without paying for it (assuming your plan covers it). Under the health law, health plans can require a prescription for oral contraceptives.
It's a barrier that defeats the objective of making the pills easier to get, advocates said.
"If you buy something off the shelf and then have to submit it for reimbursement, that to me is not 'no out-of-pocket costs,'" Gandal-Powers said.
A recent federal directive, however, might offer clues to how this could unfold. In that guidance, the government reiterated that health plans must cover, without cost sharing, emergency contraception purchased over the counter when it is prescribed. It encouraged but did not require health plans to do so without a prescription.
Advocates are pushing for the federal government to make no-cost coverage without a prescription an explicit requirement for all over-the-counter contraceptives.
"There's nothing in the law that requires a prescription to invoke the no-cost-sharing requirement for preventive services and drugs," said Dana Singiser, co-founder of the Contraceptive Access Initiative, which has published a white paper on the subject.
"CMS is collaborating closely with the Departments of Labor and the Treasury and is considering ways to ensure that private health insurance under the ACA market reforms covers all Food and Drug Administration (FDA) approved, granted, or cleared contraceptives without cost sharing, even when available OTC and purchased without being prescribed," Sara Lonardo, press secretary at the Centers for Medicare & Medicaid Services, said in a statement.
Eight states already require health plans to cover, without a prescription or copayment, at least one contraceptive method sold over the counter, such as condoms or spermicide, said Tara Mancini, director of public policy at Power to Decide, an advocacy group that has analyzed state laws. An additional three states and the District of Columbia require coverage of over-the-counter contraception without a prescription but don't specify whether a copayment may be required. Those laws apply only to health plans regulated by the states.
"That's why federal regulation is so critical," Singiser said.
Excessive drinking during the COVID-19 pandemic increased alcoholic liver disease deaths so much that the condition killed more Californians than car accidents or breast cancer, a KFF Health News analysis has found.
Lockdowns made people feel isolated, depressed, and anxious, leading some to increase their alcohol intake. Alcohol sales rose during the pandemic, with especially large jumps in the consumption of spirits.
While this led to a rise in all sorts of alcohol-related deaths, the number of Californians dying from alcoholic liver disease spiked dramatically, with 14,209 deaths between 2020 and 2022, according to provisional data from the Centers for Disease Control and Prevention.
Alcoholic liver disease is the most common cause of alcohol-induced deaths nationally. In California, the death rate from the disease during the last three years was 25% higher than in the three years before the pandemic. The rate peaked at 13.2 deaths per 100,000 residents in 2021, nearly double the rate from two decades ago.
The disease is usually caused by years of excessive drinking, though it can sometimes occur after a short period of heavy alcohol use. There are often no symptoms until late in the disease, when weakness, confusion, and jaundice can occur.
Many who increased their drinking during the pandemic were already on the verge of developing severe alcoholic liver disease, said Jovan Julien, a postdoctoral researcher at Harvard Medical School. The extra alcohol sped up the process, killing them earlier than they would have otherwise died, said Julien, who co-wrote a modeling study during the pandemic that predicted many of the trends that occurred.
Even before the pandemic, lifestyle and dietary changes were contributing to more deaths from alcoholic liver disease, despite little change in alcohol sales, said Brian Lee, a hepatologist and liver transplant specialist with Keck School of Medicine of the University of Southern California.
Lee and other researchers found a connection between alcoholic liver disease and metabolic syndrome, a condition often characterized by excess body fat around the waist. Metabolic syndrome — often caused by poor diet and an inactive lifestyle — has risen across the country.
"Having metabolic syndrome, which is associated with obesity, high blood pressure, and diabetes, more than doubles your risk of having advanced liver disease at the same level of drinking," Lee said.
The Californians alcoholic liver disease most often kills are those between 55 and 74 years old. They make up about a quarter of the state’s adults but more than half the deaths from alcoholic liver disease.
However, death rates among Californians 25 to 44 roughly doubled during the last decade. About 2,650 Californians in that age group died of the disease during the last three years, compared with 1,270 deaths from 2010 through 2012.
"People are drinking at earlier levels," Lee said. "People are developing obesity at younger ages."
The highest death rates from alcoholic liver disease occur in rural eastern and Northern California. In Humboldt County, for instance, the death rate from alcoholic liver disease is more than double the statewide rate.
Jeremy Campbell, executive director of Waterfront Recovery Services in Eureka, said Humboldt County and other rural areas often don’t have the resources and facilities to address high rates of alcohol use disorder. His facility provides high-intensity residential services and uses medication to get people through detox.
"The two other inpatient treatment facilities in Eureka are also at capacity," he said. "This is just a situation that there's just not enough treatment."
Campbell also pointed to the demographics of Humboldt County, which has a much higher proportion of white and Native American residents than the rest of the state. Alcoholic liver disease death rates in California are highest among Native American and white residents.
Death rates rose more among Native American, Latino, Asian, and Black Californians during the last decade than among non-Latino white Californians, CDC data shows. Part of that is due to disparities in insurance coverage and access to care, said Lee. In addition, Lee said, rates of metabolic syndrome have increased more quickly among nonwhites than among whites. Racial health disparities also manifest in differing survival rates for Black and white patients after liver transplants, he added.
The trend is expected to continue. Julien projects a temporary dip in deaths because many people who would have died of the disease in 2022 or 2023 instead died sooner, after a boost in drinking during the pandemic, but that deaths will rise later as bad habits developed during the pandemic begin to take a long-term toll.
"As people increased their consumption during COVID-19, we have more folks who have now initiated alcohol use disorder," Julien said.
Phillip Reese is a data reporting specialist and an assistant professor of journalism at California State University-Sacramento.
POTTSTOWN, Pa. — The public school system here had to scramble in 2018 when the local hospital, newly purchased, was converted to a tax-exempt nonprofit entity.
The takeover by Tower Health meant the 219-bed Pottstown Hospital no longer had to pay federal and state taxes. It also no longer had to pay local property taxes, taking away more than $900,000 a year from the already underfunded Pottstown School District, school officials said.
The district, about an hour's drive from Philadelphia, had no choice but to trim expenses. It cut teacher aide positions and eliminated middle school foreign language classes.
"We have less curriculum, less coaches, less transportation," said Superintendent Stephen Rodriguez.
The school system appealed Pottstown Hospital's new nonprofit status, and earlier this year a state court struck down the facility's property tax break. It cited the "eye-popping" compensation for multiple Tower Health executives as contrary to how Pennsylvania law defines a charity.
The court decision, which Tower Health is appealing, stunned the nonprofit hospital industry, which includes roughly 3,000 nongovernment tax-exempt hospitals nationwide.
"The ruling sent a warning shot to all nonprofit hospitals, highlighting that their state and local tax exemptions, which are often greater than their federal income tax exemptions, can be challenged by state and local courts," said Ge Bai, a health policy expert at Johns Hopkins University.
The Pottstown case reflects the growing scrutiny of how much the nation's nonprofit hospitals spend — and on what — to justify billions in state and federal tax breaks. In exchange for these savings, hospitals are supposed to provide community benefits, like care for those who can't afford it and free health screenings.
More than a dozen states have considered or passed legislation to better define charity care, to increase transparency about the benefits hospitals provide, or, in some cases, to set minimum financial thresholds for charitable help to their communities.
The growing interest in how tax-exempt hospitals operate — from lawmakers, the public, and the media — has coincided with a stubborn increase in consumers' medical debt. KFF Health News reported last year that more than 100 million Americans are saddled with medical bills they can't pay, and has documented aggressive bill-collection practices by hospitals, many of them nonprofits.
In 2019, Oregon passed legislation to set floors on community benefit spending largely based on each hospital's past expenditures as well as its operating profit margin. Illinois and Utah created spending requirements for hospitals based on the property taxes they would have been assessed as for-profit organizations.
"States have a general interest in understanding how much is being spent on community benefit and, increasingly, understanding what those expenditures are targeted at," said Maureen Hensley-Quinn, a senior director at the National Academy for State Health Policy. "It's not a blue or red state issue. It really is across the board that we've been seeing inquiries on this."
Besides providing federal, state, and local tax breaks, nonprofit status also lets hospitals benefit from tax-exempt bond financing and receive charitable contributions that are tax-deductible for the donors. Policy analysts at KFF estimated the total value of nonprofit hospitals' exemptions in 2020 at about $28 billion, much higher than the $16 billion in free or discounted services they provided through the charity care portion of their community benefits.
Federal law defines the sort of spending that can qualify as a community benefit but does not stipulate how much hospitals need to spend. The range of community benefit activities, reported by hospitals on IRS forms, varies considerably by organization. The spending typically includes charity care — broadly defined as free or discounted care to eligible patients. But it can also include underpayments from public health plans, as well as the costs of training medical professionals and doing research.
Hospitals also claim as community benefits the difference between what it costs to provide a service and what Medicaid pays them, known as the Medicaid shortfall. But some states and policy experts argue that shouldn't count because higher payments from commercial insurance companies and uninsured patients paying cash cover those costs.
Bai, of Johns Hopkins, collaborated on a 2021 study that found for every $100 in total spending, nonprofit hospitals provided $2.30 in charity care, while for-profit hospitals provided $3.80.
Last month, another study in Health Affairs reported substantial growth in nonprofit hospitals' operating profits and cash reserves from 2012 to 2019 "but no corresponding increase in charity care."
And an April report by the Lown Institute, a healthcare think tank, said more than 1,350 nonprofit hospitals have "fair share" deficits, meaning the value of their community investments fails to equal the value of their tax breaks.
"With so many Americans struggling with medical debt and access to care, the need for hospitals to give back as much as they take grows stronger every day," said Vikas Saini, president of the institute.
The Lown Institute does not count compensating for the Medicaid shortfall, spending on research, or training medical professionals as part of hospitals' "fair share."
Hospitals have long argued they need to charge private insurance plans higher rates to make up for the Medicaid shortfall. But a recent state report from Colorado found that, even after accounting for low Medicaid and Medicare rates, hospitals get enough from private health insurance plans to provide more charity care and community benefits than they do currently and still turn a profit.
The American Hospital Association strongly disagrees with the Lown and Johns Hopkins analyses.
For many hospitals — after dozens of closures over the past 20 years — "just keeping your doors open is a clear community benefit," said Melinda Reid Hatton, general counsel for the AHA. "You can't focus entirely on charity care" as a measure of community benefit. Hospitals deliver nine times the community benefit for every dollar of federal tax avoided, Hatton said.
The 2010 Affordable Care Act, she noted, imposed additional community benefit mandates. Tax-exempt hospitals must conduct a community health needs assessment at least once every three years; establish a written financial assistance policy; and limit what they charge individuals eligible for that help. And they must make a reasonable attempt to determine if a patient is eligible for financial assistance before they take "extraordinary collection actions," such as reporting people to the credit bureaus or placing a lien on their property.
Still, the Government Accountability Office, a congressional watchdog agency, argues that community benefit is poorly defined.
"They're not requirements," said Jessica Lucas-Judy, a GAO director. "It's not clear what a hospital has to do to justify a tax exemption. What's a sufficient benefit for one hospital may not be a sufficient benefit for another." The GAO, in a 2020 report, said it found 30 nonprofit hospitals that got tax breaks in 2016 despite reporting no spending on community benefits.
The GAO then recommended Congress consider specifying the services and activities that demonstrate sufficient community benefit.
The tax and benefit question has become a bipartisan issue: Democrats criticize what they see as scant charity care, while Republicans wonder why nonprofit hospitals get a tax break.
In Georgia, Democratic lawmakers and the NAACP spearheaded the filing of a complaint to the IRS about Wellstar Health System's nonprofit status after it closed two Atlanta-area hospitals in 2022. The complaint noted the system's proposed merger with Augusta University Health, under which Wellstar would open a new hospital in an affluent suburban county.
"I understand you pledged over $800 million" in the deal with AU Health, state Sen. Nan Orrock, an Atlanta Democrat, told Wellstar executives at a recent legislative hearing, citing the system's disinvestment in Atlanta. "Doesn't sound like a nonprofit. It sounds like a for-profit approach."
Wellstar said it provides more uncompensated healthcare services than any other system in Georgia, and that its 2022 community benefit totaled $1.2 billion. Wellstar attributed the closures to chronic financial losses and an inability to find a partner or buyer for the inner-city hospitals, which served a disproportionately large African American population.
In North Carolina, a Republican candidate for governor, state Treasurer Dale Folwell, said many hospitals "have disguised themselves as nonprofits."
"They're not doing the job. It should be patients over profits. It's always now profits over patients," he said.
Ideas for reforms, though, have run up against powerful hospital opposition.
Montana's state health department proposed developing standards for community benefit spending after a 2020 legislative audit found nonprofit hospitals' reporting vague and inconsistent. But the Montana Hospital Association opposed the plan, and the idea was dropped from the bill that passed.
Pennsylvania, though, has a unique but strong law, Bai said, requiring hospitals to prove they are a "purely public charity" and pass a five-pronged test. That may make the state an easier place to challenge tax exemptions, Bai said.
This year, the Pittsburgh mayor challenged the University of Pittsburgh Medical Center over the tax-exempt status of some of its properties.
Nationally, Bai said, "I don't think hospitals will lose tax exemptions in the short run."
But, she added, "there will likely be more pressure from the public and policymakers for hospitals to provide more community benefit."
Mountain States editor Matt Volz contributed to this report.
Doctors are concerned that a Supreme Court ruling issued June 29 will have far-reaching effects not only on the diversity of doctors and other care providers in training but ultimately also on patient care.
The decision found it is unconstitutional for colleges and universities to use race as a factor in student admissions, which will affect enrollment decisions at public and private educational institutions, including medical schools.
Like other academic institutions, medical schools have long factored race into admission decisions. The schools operated under the principle — and there is considerable evidence they are correct — that a more diverse workforce of doctors does a better job of treating diverse patients.
The "decision demonstrates a lack of understanding of the critical benefits of racial and ethnic diversity in educational settings and a failure to recognize the urgent need to address health inequities," read a statement from David Skorton, president and CEO of the Association of American Medical Colleges, and Frank Trinity, its chief legal officer.
Chief Justice John Roberts wrote the majority opinion. It held that the admissions programs of defendants Harvard College and the University of North Carolina violate the equal protection clause of the 14th Amendment, which prohibits racial discrimination. The decision overturned decades of legal precedent that had allowed colleges and universities to evaluate prospective students by their race, in addition to factors such as academic records and test scores.
In a dissent, Associate Justice Sonia Sotomayor wrote on behalf of the court’s three liberal justices that the ruling "cements a superficial rule of colorblindness as a constitutional principle in an endemically segregated society where race has always mattered and continues to matter."
What Does the Ruling Mean for Med Schools?
The decision may have serious repercussions, medical educators say.
The AAMC, which represents more than 500 medical schools and teaching hospitals, filed an amicus brief with the court arguing that diversity in medical education "literally saves lives" by ensuring that doctors, nurses, and other medical professionals can competently care for an increasingly diverse population.
"Diversity in health care providers contributes to increased student, trainee, and physician confidence in working with patient populations who are different from their own identities," said Norma Poll-Hunter, senior director of workforce diversity at the AAMC.
Although it’s impossible to predict the full impact of the court’s ruling, looking to some of the nine states that already have bans on race-conscious college admissions may provide clues. An analysis of bans in six states found that medical school enrollment of students of color who were members of underrepresented groups fell roughly 17% after the bans were instituted.
What About Patients?
At this point it’s hard to say.
Despite the United States having one of the world’s most advanced systems of medical research and clinical care, Black people and some other minorities often fare worse than white people across a range of health measures. Their life expectancies are shorter: 65.2 years for American Indian and Alaska Native people and 70.8 for Blacks in 2021, versus 76.4 for whites, according to KFF. Black and AIAN infants were roughly twice as likely to die as white infants, and women in those minority groups had the highest rates of mortality related to pregnancy in 2021.
Research shows people of all races tend to prefer to see physicians who are similar to them in race or ethnicity, according to Poll-Hunter. When patients are of the same race as their provider, they report higher levels of satisfaction and trust and better communication.
When patients are of the same race or gender as their provider, they may also have better health outcomes, research shows.
For example, in a study of 1.8 million infants born in Florida hospitals between 1992 and 2015, Black newborns were half as likely to die when cared for by Black physicians as when their doctors were white. Research has historically focused on white newborns with white doctors, said the study’s lead author, Brad Greenwood, a professor of information systems and operations management at George Mason University.
"To the extent that physicians of a social outgroup are more likely to be aware of the challenges and issues that arise when treating their group, it stands to reason that these physicians may be more equipped to treat patients with complex needs," according to the study.
However, the solution is not to try to ensure all Black patients are seen by Black physicians, Greenwood said.
"Jim Crow-ing medicine is not going to solve this," he said, referring to laws enacted in the 19th and 20th centuries that enforced racial segregation.
Ensuring a diverse physician base can improve care for all patients, including those from marginalized groups. "As you increase diversity, the diversity of opinion increases the scope of how people think about things and express best practices," he said.
Do No Harm, a group of medical and policy professionals who oppose race-conscious medical school admissions and other policies that incorporate identity-based considerations into health care decision-making, says race-conscious admission is about discrimination, not diversity.
"Our view is that whoever gets into health care should be the most qualified," said Stanley Goldfarb, who chairs the board of Do No Harm. "It doesn’t matter the gender or the race. The only thing that matters is that they’re good, ethical people and good at what they do."
Goldfarb cited studies that showed "no relationship" between race or ethnicity concordance and the quality of communication, and "inconclusive" evidence for patient outcomes.
The first med school class that will be affected will be the class of 2028. Some experts have suggested that colleges and medical schools may adopt policies that take income or family wealth into account when determining whom to admit. After California banned race-conscious admissions in 1996, the medical school at the University of California-Davis upended its process to put less emphasis on MCAT scores and grades and more on socioeconomic measures, according to Stat.
Poll-Hunter, with the AAMC, isn’t convinced. "There’s no substitute or proxy for race," she said. "The reality is that in the United States we have a history of exclusion, displacement, and colonization such that we can’t ignore the reality of race."
This week the FDA is expected to approve what many scientists and doctors believe is the first drug to show promise of slowing the progression of Alzheimer's disease.
But while patient advocates are celebrating, critics see it as the unfortunate triumph of a flawed theory of the disease's cause and predict the rollout of the drug will aggravate racial disparities in elder care.
An FDA advisory panel last month voted 6-0 to support FDA approval of lecanemab, from the Japanese pharmaceutical company Eisai. In a clinical trial involving nearly 1,800 early-stage Alzheimer's patients, the drug slowed progression of the disease somewhat in those who got biweekly infusions, compared with those given a placebo.
But the drug didn't reverse Alzheimer's symptoms, and it will require careful monitoring of patients for months or years, including many brain scans. Those receiving lecanemab, which carries the brand name Leqembi, were twice as likely as placebo recipients in the major trial to suffer hemorrhaging or swelling in the brain. These incidents, related to the drug's stripping away of amyloid proteins, were generally minor, but three deaths appear to have been caused by the drug.
With the FDA poised to give full approval to lecanemab and Eisai set to promote it to the primary care physicians who treat most dementia patients, critics are speaking out. Some say the drug, which Eisai plans to market for $26,500 a year, offers false hope. Others say any positive impact it has won't benefit lower-income patients, who tend to be diagnosed too late for the drug to be effective, and usually receive care in settings ill-equipped to handle the drug's stringent requirements.
"The most likely consequence of this medication is to take resources and attention away from addressing basic supports for older adults with cognitive impairment," said Maria Glymour, chair of the Department of Epidemiology at the Boston University School of Public Health. The money spent on expensive drugs like lecanemab would be better invested in fighting diseases like high blood pressure and diabetes, which hasten dementia, and on community-based services for older adults, she said.
The critique of lecanemab builds on another complexity of the drug's approval: Few African Americans were involved in testing it.
Of the 859 people infused with lecanemab during the trial, only 20 were Black. Minorities are often underrepresented in research, but this study had an additional barrier, said Carey Gleason, a clinical neuropsychologist at the University of Wisconsin School of Medicine and Public Health. Many Black volunteers in the trial "screened out," she said, because PET scans showed relatively low levels of amyloid in their brains. Lecanemab works by removing amyloid, so the trial organizers excluded patients — regardless of their Alzheimer's symptoms — if their PET scans were negative.
Eisai spokesperson Libby Holman said the company worked to enroll a diverse population but that amyloid levels "differed among racial and ethnic groups." She added, "If individuals do not have elevated amyloid, they do not have Alzheimer's disease."
Indeed, lecanemab's approval marks the culmination of the idea, formalized 32 years ago, that Alzheimer's disease can be understood as cognitive decline caused by amyloid buildup, the "trigger," in combination with the "bullet," a protein called tau.
For example, Blacks are up to twice as likely as whites to be diagnosed with Alzheimer's, while showing equivalent levels of amyloid in most major studies. No one is sure why, but the hypothesis is that having multiple simultaneous health conditions and being exposed to environmental stressors put Blacks as a group at higher risk.
Furthermore, Blacks and other minorities tend to be diagnosed at later stages, which automatically excludes them from use of lecanemab, which was designed and approved to treat early-stage Alzheimer's.
"The drug has to be used in the very early window of the disease," Gleason said. "It's well documented that marginalized communities and people don't get access to diagnostic services as do more privileged populations, because our medical care is two-tiered."
"Lecanemab should still come to market," she said. "But we need to be investing in other pathways."
In its review of the costs and benefits of lecanemab, a 15-member panel appointed by the Institute for Clinical and Economic Review gave the drug low marks. Its rollout would aggravate elder care disparities, the panel said, by favoring wealthier patients who have more resources, better insurance, and an easier time getting to multiple appointments.
Advocates for minority health care are well aware of these risks. But many feel the only response is to push harder for access to the drug. Black people whose conditions qualify them for the drug would do as well on it as whites, said Carl Hill, chief diversity, equity and inclusion officer for the Alzheimer's Association, which is raising awareness of the drug through churches and grassroots groups.
Manly is not so sure. "There are reasons to question whether it would be safe in Black people," she said, noting that older Black people diagnosed with dementia have higher rates of vascular conditions like hardening of the arteries compared with white patients. That could pose potentially higher risks of brain hemorrhaging if they took the drug. In general, the trial's lack of representativeness across racial and ethnic groups means the drug may not perform as well against Alzheimer's disease across these groups, Manly said.
"In terms of equity I feel conflicted," she said. "I'd love for all families like mine to have equitable access to an Alzheimer's drug, but only if it's safe and effective."
Even the most optimistic Alzheimer's experts believe the drug's risks require careful selection of patients by highly trained clinicians with sufficient resources to detect and monitor any problems.
Jason Karlawish, a neurologist at the Perelman School of Medicine at the University of Pennsylvania, said the FDA should set up a Risk Evaluation and Mitigation Strategy, or REMS, which would require doctors administering the drug to follow a series of steps to reduce and monitor its dangers. A REMS, currently in place on about 60 drugs, generally limits access to a drug.
The conflict between safety and access is only one paradox of lecanemab's arrival.
The FDA approved an earlier anti-amyloid treatment, Aduhelm, in 2021. but most doctors rejected it as ineffective and unsafe. Some Alzheimer's scientists who have long argued that amyloid isn't the whole answer feel that lecanemab's middling performance only confirms their thesis.
One skeptic is George Perry, a neurobiology professor at the University of Texas at San Antonio. He has hypothesized that amyloid and tau buildup are a reaction to the aging process that play a role in preserving, rather than wrecking, the brain. The accumulation of amyloid in older people's brains, in Perry's view, reflects the body's effort to fight aging disease.
Dementia clearly has many causes, said S. Ahmad Sajjadi, a clinician and neuroscientist at the University of California-Irvine. Ideally, patients will someday receive treatments as specific and targeted as those increasingly available to treat cancers, he said.
For now, for a select group of patients, lecanemab offers a whisper of hope that some will want to pursue, despite the risks, Karlawish said — perhaps a 10% chance of freezing the progression of the disease for months or even longer.
Patient groups such as the Alzheimer's Association, which funds much of the research in the field, are demanding broad access to lecanemab and oppose the Biden administration's plan to have Medicare initially pay for the drug only if patients are enrolled in a registry, a kind of post-marketing clinical trial.
At a public hearing during the FDA advisory panel meeting on the drug, Alzheimer's Association CEO Joanne Pike noted that patients on lecanemab declined five months more slowly in their first 18 months on the drug, on average. That "deserves celebration," she said.
Perry, who has received research funding from the Alzheimer's Association, questions its strong support for the drug but isn't surprised, given the group's promise to its members and supporters to help find a cure for the disease.
"They've pushed amyloid so hard for 30 years," he said, "and they can't turn back."
Health insurers and medical providers are battling over who should supply high-cost infusion drugs for patients, with the tussle over profits now spilling into statehouses across the country.
The issue is that some insurers are bypassing hospital pharmacies and physician offices and instead sending more complex drugs through third-party pharmacies. Those pharmacies then send the medications directly to the medical provider or facility for outpatient infusing, which is called "white bagging," or, more rarely, to patients, in what is called "brown bagging." That shifts who gets to buy and bill for these complex medications, including pricey chemotherapy drugs.
Insurers say the policies are needed because hospital markups are too high. But hospitals argue that adding an intermediary results in unnecessary risks and delays, and they say some insurers have their own or affiliated pharmacy companies, creating financial motives for controlling the source of the medications. The patients, meanwhile, are left to deal with the red tape.
Paula Bruton Shepard in Bolivar, Missouri, is among those caught in the middle. Flares of lupus, an autoimmune disease, rob Shepard of her mobility by attacking her joints. She relies on monthly infusions to treat her symptoms. But at times, she said, her treatments were delayed due to UnitedHealthcare's white bagging infusion policy. And interruptions to her treatments exacerbated her symptoms.
"I once had to use a toilet lift and it was kind of demoralizing to say, ‘I'm a 50-year-old woman and I have to use a toilet lift,'" Shepard said of the medication delays.
This is a tug of war over profits between insurers and medical providers, said Ge Bai, a professor of accounting and health policy at Johns Hopkins University. While insurers claim the arrangement reduces costs, she said, that doesn't mean insurers pass along savings to patients.
"I don't think we should have more sympathy toward one party or the other," Bai said. "Nobody is better than the other. They're all trying to make money."
The savings from white bagging can be significant for expensive infusion drugs, according to a report from the Massachusetts Health Policy Commission. For example, Remicade, used to treat a variety of inflammatory diseases, including Crohn's, cost on average $1,106 per unit in 2015 under hospitals' traditional buy-and-bill system, the commission found in its review of state claims data. That same drug cost an average of $975 per unit under white bagging, a 12% savings.
But the report also found patients, on average, faced higher cost sharing — what they are responsible for paying — for Remicade and other drugs when white bagging was used. While some patients had only modest increases to their costs under the policy, such as $12 more for a medication, the review found it could mean much greater cost sharing for some patients, such as those on Medicare.
At Citizens Memorial Hospital in rural Bolivar, more than 1 in 4 patients who receive regular infusions are being forced to use an outside pharmacy, said Mariah Hollabaugh, the hospital's pharmacy director. Shepard was among them.
Even if the hospital has the exact drug on the shelf, patients must wait for a separate shipment, Hollabaugh said, potentially interrupting care. Their shipped drugs may sometimes be unusable when the doctor needs to change the dosage. Or the medicine comes in a nondescript package that doesn't get immediately flagged for the pharmacy, potentially subjecting the drugs to damaging temperature fluctuations. For patients, that can mean delays in care.
"They're in pain, they're uncomfortable," Hollabaugh said. "They may be having symptoms that don't allow them to go to work."
Siteman Cancer Center, led by physicians from Washington University School of Medicine in St. Louis, has confronted the same issue. But the cancer center's size has helped it largely avoid such insurer policies.
John DiPersio, a Siteman oncologist and researcher who led the university's oncology division for more than two decades, said Siteman reluctantly allows white bagging for simple injectables but refuses to accept it for complicated chemotherapies. It does not accept brown bagging. Occasionally, he said, that means turning patients away.
"You're talking about cancer patients that are getting life-threatening treatments," DiPersio said, referring to the dangers of chemo drugs, which he said can be fatal if used improperly. "It doesn't make any sense to me. It's all stupid. It's all lunacy."
At least 21 states, including Missouri, introduced some form of white or brown bagging legislation during the most recent legislative session, according to the American Society of Health-System Pharmacists. And in the past two years, the trade group said, at least 13 states have already enacted restrictions on white bagging, including Arkansas, Louisiana, and Virginia.
ASHP has created model legislation to limit insurers from requiring the practices as a condition of coverage.
"This is a major issue," said Tom Kraus, a vice president at the trade group. "We see this as central to our ability to coordinate patient care."
At the heart of the tension is an often-litigated federal program that allows certain hospitals and the clinics they own to purchase drugs at deep discounts. The 340B program, named for a section of the law that created it, allows hospitals to buy certain drugs for much less — sometimes for a total cost of a single penny — than what they are later paid for those drugs. Hospitals are not required to pass along 340B savings to patients.
The program was intended to help hospitals spread scarce resources further to treat patients in poor and vulnerable communities, but it has morphed into a means of enriching hospitals and their affiliated clinics, researchers said in a 2014 Health Affairs report. Hollabaugh said many rural facilities such as Citizens rely on the revenue generated from the 340B drugs to subsidize infusions that have no profit margin.
The number of participating hospitals and their affiliated outpatient clinics has increased significantly since the 340B program was created in 1992. More than 2,600 of the nation's roughly 6,100 hospitals were participating in the 340B program as of January 2023. That gives them access to discounts that can knock off as much as 50% of a drug's cost, according to the Health Resources & Services Administration, which oversees the program.
The insurance industry argues that hospital markups, especially when made on top of those discounts, have gotten out of control.
"The fact is, people got greedy," Shannon Cooper, a lobbyist for Blue Cross and Blue Shield of Kansas City, said during a Missouri state Senate hearing in March.
Markups are not unique to 340B hospitals, said Sean Dickson, who helps lead pharmaceutical policy for AHIP, a trade group formerly known as America's Health Insurance Plans. The markups thrusted on commercial plans are "widely out of line" with what Medicare will pay, he said, and that is driving up costs without providing additional value.
Legislation that targets white bagging hinders an insurer's ability to rein in such costs, Dickson said, especially when an area lacks competition.
"What we're really trying to focus on here is putting pressure on those markups that are not related to cost or safety," Dickson said.
Anthem Blue Cross and Blue Shield lobbyist David Smith testified during the March hearing in Missouri that even the idea of white bagging elicited a quick response and that almost every major hospital system in the state said they would drop their prices and come back to the negotiation table.
For now, Citizens Memorial Hospital and other Missouri medical facilities will have to continue to tango with the insurers: Legislation to limit white and brown bagging did not pass during the Missouri General Assembly's recent session.
Shepard, though, won't need such legislation.
UnitedHealthcare had been sending her lupus infusion through other pharmacies on and off since 2021, unwilling to cover the drugs if they came from Citizens' in-house pharmacy. Shepard had to authorize each shipment before it was sent. If she missed the monthly call, she said, it was a "bureaucratic mess" trying to get the medication shipped.
"We are driving unnecessary costs out of the health care system to help make care more affordable, while also maintaining drug safety, effectiveness and quality of care," UnitedHealthcare spokesperson Tony Marusic wrote.
But after KFF Health News inquired about Shepard's case, Marusic said UnitedHealthcare stopped white bagging Shepard's medication to "prevent potential delays in shipping." And during her latest infusion in June, her hospital was again able to supply Shepard's medication directly.
"I'm just so relieved," Shepard said. "I don't have to take phone calls. I don't have to reply to emails. I just show up."
Lucia Agajanian, a 25-year-old freelance film producer in Chicago, doesn't have a specific primary care doctor, preferring the convenience of visiting a local clinic for flu shots or going online for video visits. "You say what you need, and there's a 15-minute wait time," she said, explaining how her appointments usually work. "I really liked that."
But Olga Lucia Torres, a 52-year-old who teaches narrative medicine classes at Columbia University in New York, misses her longtime primary care doctor, who kept tabs for two decades on her conditions, including lupus and rheumatoid arthritis, and made sure she was up to date on vaccines and screening tests. Two years ago, Torres received a letter informing her that he was changing to a "boutique practice" and would charge a retainer fee of $10,000 for her to stay on as a patient.
"I felt really sad and abandoned," Torres said. "This was my PCP. I was like, 'Dude, I thought we were in this together!'"
The two women reflect an ongoing reality: The primary care landscape is changing in ways that could shape patients' access and quality of care now and for decades to come. A solid and enduring relationship with a primary care doctor — who knows a patient's history and can monitor new problems — has long been regarded as the bedrock of a quality healthcare system. But investment in primary care in the U.S. lags that of other high-income countries, and America has a smaller share of primary care physicians than most of its European counterparts.
An estimated one-third of all physicians in the U.S. are primary care doctors — who include family medicine physicians, general internists, and pediatricians — according to the Robert Graham Center, a research and analysis organization that studies primary care. Other researchers say the numbers are lower, with the Peterson-KFF Health System Tracker reporting only 12% of U.S. doctors are generalists, compared with 23% in Germany and as many as 45% in the Netherlands.
That means it's often hard to find a doctor and make an appointment that's not weeks or months away.
"This is a problem that has been simmering and now beginning to erupt in some communities at a boil. It's hard to find that front door of the health system," said Ann Greiner, president and CEO of the Primary Care Collaborative, a nonprofit membership organization.
Today, a smaller percentage of physicians are entering the field than are practicing, suggesting that shortages will worsen over time.
Interest has waned partly because, in the U.S., primary care yields lower salaries than other medical and surgical specialties.
Some doctors now in practice also say they are burned out, facing cumbersome electronic health record systems and limits on appointment times, making it harder to get to know a patient and establish a relationship.
Others are retiring or selling their practices. Hospitals, insurers like Aetna-CVS Health, and other corporate entities like Amazon are on a buying spree, snapping up primary care practices, furthering a move away from the "Marcus Welby, M.D."-style neighborhood doctor. About 48% of primary care physicians currently work in practices they do not own. Two-thirds of those doctors don't work for other physicians but are employed by private equity investors or other corporate entities, according to data in the "Primary Care Chartbook," which is collected and published by the Graham Center.
Patients who seek care at these offices may not be seen by the same doctor at every visit. Indeed, they may not be seen by a doctor at all but by a paraprofessional — a nurse practitioner or a physician assistant, for instance — who works under the doctor's license. That trend has been accelerated by new state laws — as well as changes in Medicare policy — that loosen the requirements for physician supervisors and billing. And these jobs are expected to be among the decade's fastest-growing in the health sector.
Overall, demand for primary care is up, spurred partly by record enrollment in Affordable Care Act plans. All those new patients, combined with the low supply of doctors, are contributing to a years-long downward trend in the number of people reporting they have a usual source of care, be it an individual doctor or a specific clinic or practice.
Researchers say that raises questions, including whether people can't find a primary care doctor, can't afford one, or simply no longer want an established relationship.
"Is it poor access or problems with the supply of providers? Does it reflect a societal disconnection, a go-it-alone phenomenon?" asked Christopher Koller, president of the Milbank Memorial Fund, a foundation whose nonpartisan analyses focus on state health policy.
For patients, frustrating wait times are one result. A recent survey by a physician staffing firm found it now takes an average of 21 days just to get in to see a doctor of family medicine, defined as a subgroup of primary care, which includes general internists and pediatricians. Those physicians are many patients' first stop for healthcare. That runs counter to the trend in other countries, where patients complain of months- or years-long waits for elective procedures like hip replacements but generally experience short waits for primary care visits.
Another complication: All these factors are adding urgency to ongoing concerns about attracting new primary care physicians to the specialty.
When she was in medical school, Natalie A. Cameron said, she specifically chose primary care because she enjoyed forming relationships with patients and because "I'm specifically interested in prevention and women's health, and you do a lot of that in primary care." The 33-year-old is currently an instructor of medicine at Northwestern University, where she also sees patients at a primary care practice.
Still, she understands why many of her colleagues chose something else. For some, it's the pay differential. For others, it's because of primary care's reputation for involving "a lot of care and paperwork and coordinating a lot of issues that may not just be medical," Cameron said.
The million-dollar question, then, is how much does having a usual source of care influence medical outcomes and cost? And for which kinds of patients is having a close relationship with a doctor important? While studies show that many young people value the convenience of visiting urgent care — especially when it takes so long to see a primary care doctor — will their long-term health suffer because of that strategy?
Many patients — particularly the young and generally healthy ones — shrug at the new normal, embracing alternatives that require less waiting. These options are particularly attractive to millennials, who tell focus groups that the convenience of a one-off video call or visit to a big-box store clinic trumps a long-standing relationship with a doctor, especially if they have to wait days, weeks, or longer for a traditional appointment.
"The doctor I have is a family friend, but definitely I would take access and ease over a relationship," said Matt Degn, 24, who says it can take two to three months to book a routine appointment in Salt Lake City, where he lives.
Patients are increasingly turning to what are dubbed "retail clinics," such as CVS' Minute Clinics, which tout "in-person and virtual care 7 days a week." CVS Health's more than 1,000 clinics inside stores across the U.S. treated more than 5 million people last year, Creagh Milford, a physician and the company's senior vice president of retail health, said in a written statement. He cited a recent study by a data products firm showing the use of retail clinics has grown 200% over the past five years.
Health policy experts say increased access to alternatives can be good, but forgoing an ongoing relationship to a regular provider is not, especially as people get older and are more likely to develop chronic conditions or other medical problems.
"There's a lot of data that show communities with a lot of primary care have better health," said Koller.
People with a regular primary care doctor or practice are more likely to get preventive care, such as cancer screenings or flu shots, studies show, and are less likely to die if they do suffer a heart attack.
Physicians who see patients regularly are better able to spot patterns of seemingly minor concerns that could add up to a serious health issue.
"What happens when you go to four different providers on four platforms for urinary tract infections because, well, they are just UTIs," posed Yalda Jabbarpour, a family physician practicing in Washington, D.C., and the director of the Robert Graham Center for Policy Studies. "But actually, you have a large kidney stone that's causing your UTI or have some sort of immune deficiency like diabetes that's causing frequent UTIs. But no one tested you."
Most experts agree that figuring out how to coordinate care amid this changing landscape and make it more accessible without undermining quality — even when different doctors, locations, health systems, and electronic health records are involved — will be as complex as the pressures causing long waits and less interest in today's primary care market.
And experiences sometimes lead patients to change their minds.
There's something to be said for establishing a relationship, said Agajanian, in Chicago. She's rethinking her decision to cobble together care, rather than have a specific primary care doctor or clinic, following an injury at work last year that led to shoulder surgery.
"As I'm getting older, even though I'm still young," she said, "I have all these problems with my body, and it would be nice to have a consistent person who knows all my problems to talk with."
KFF Health News' Colleen DeGuzman contributed to this report.
This article was produced by KFF Health News, formerly known as Kaiser Health News (KHN), a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF — the independent source for health policy research, polling, and journalism.
KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.
Federal regulators want most patients to see a healthcare provider in person before receiving prescriptions for potentially addictive medicines through telehealth — something that hasn't been required in more than three years.
During the COVID-19 public health emergency, the Drug Enforcement Administration allowed doctors and other healthcare providers to prescribe controlled medicine during telehealth appointments without examining the patient in person. The emergency declaration ended May 13, and in February, the agency proposed new rules that would require providers to see patients at least once in person before prescribing many of those drugs during telehealth visits.
Controlled medications include many stimulants, sedatives, opioid painkillers, and anabolic steroids.
Regulators said they decided to extend the current regulations — which don't require an in-person appointment — until November 11 after receiving more than 38,000 comments on the proposed changes, a record amount of feedback. They also said patients who receive controlled medications from prescribers they've never met in person will have until November 11, 2024, to come into compliance with the agency's future rules.
The public comments discuss the potential effects on a variety of patients, including people being treated for mental health disorders, opioid addiction, or attention-deficit/hyperactivity disorder. Thousands of commenters also mentioned possible impacts on rural patients.
Opponents wrote that healthcare providers, not a law enforcement agency, should decide which patients need in-person appointments. They said the rules would make it difficult for some patients to receive care.
Other commenters called for exemptions for specific medications and conditions.
Supporters wrote that the proposal would balance the goals of increasing access to healthcare and helping prevent medication misuse.
Zola Coogan, 85, lives in Washington, Maine, a town of about 1,600 residents northeast of Portland. Coogan has volunteered with hospice patients and said it's important for very sick and terminally ill people in rural areas to have access to opioids to ease their pain. But she said it can be hard to see a doctor in person if they lack transportation or are too debilitated to travel.
Coogan said she supports the DEA's proposed rules because of a provision that could help patients who can't travel to meet their telehealth prescriber. Instead, they could visit a local healthcare provider, who then could write a special referral to the telehealth prescriber. But she said accessing controlled medications would still be difficult for some rural residents.
"It could end up being a very sticky wicket" for some patients to access care, she said. "It's not going to be easy, but it sounds like it's doable."
Some healthcare providers may hesitate to offer those referrals, said Stefan Kertesz, a physician and professor at the University of Alabama at Birmingham whose expertise includes addiction treatment. Kertesz said the proposed referral process is confusing and would require burdensome record-keeping.
Ateev Mehrotra, a physician and Harvard professor who has studied telehealth in rural areas, said different controlled drugs come with different risks. But overall, he finds the proposed rules too restrictive. He's worried people who started receiving telehealth prescriptions during the pandemic would be cut off from medicine that helps them.
Mehrotra said he hasn't seen clear evidence that every patient needs an in-person appointment before receiving controlled medicine through telehealth. He said it's also not clear whether providers are less likely to write inappropriate prescriptions after in-person appointments than after telehealth ones.
Mehrotra described the proposed rules as "a situation where there's not a clear benefit, but there are substantial harms for at least some patients," including many in rural areas.
Beverly Jordan, a family practice doctor in Alabama and a member of the state medical board, supports the proposed rule, as well as a new Alabama law that requires annual in-person appointments for patients who receive controlled medications. Jordan prescribes such medications, including to rural patients who travel to her clinic in the small city of Enterprise.
"I think that once-a-year hurdle is probably not too big for anybody to be able to overcome, and is really a good part of patient safety," Jordan said.
Jordan said it's important for healthcare practitioners to physically examine patients to see if the exam matches how the patients describe their symptoms and whether they need any other kind of treatment.
Jordan said that, at the beginning of the pandemic, she couldn't even view most telehealth patients on her computer. Three-fourths of her appointments were over the phone, because many rural patients have poor internet service that doesn't support online video.
The proposed federal rules also have a special allowance for buprenorphine, which is used to treat opioid use disorder, and for most categories of non-narcotic controlled substances, such as testosterone, ketamine, and Xanax.
Providers could prescribe 30 days' worth of these medications after telehealth appointments before requiring patients to have an in-person appointment to extend the prescription. Tribal healthcare practitioners would be exempt from the proposed regulations, as would Department of Veterans Affairs providers in emergency situations.
Many people who work in healthcare were surprised by the proposed rules, Kertesz said. He said they expected the DEA to let prescribers apply for special permission to provide controlled medicine without in-person appointments. Congress ordered the agency to create such a program in 2008, but it has not done so.
Agency officials said they considered creating a version of that program for rural patients but decided against it.
Denise Holiman disagrees with the proposed regulations. Holiman, who lives on a farm outside Centralia, Missouri, used to experience postmenopausal symptoms, including forgetfulness and insomnia. The 50-year-old now feels back to normal after being prescribed estrogen and testosterone by a Florida-based telehealth provider. Holiman said she doesn't think she should have to go see her telehealth provider in person to maintain her prescriptions.
"I would have to get on a plane to go to Florida. I'm not going to do that," she said. "If the government forces me to do that, that's wrong."
Holiman said her primary care doctor doesn't prescribe injectable hormones and that she shouldn't have to find another in-person prescriber to make a referral to her Florida provider.
Holiman is one of thousands of patients who shared their opinions with the DEA. The agency also received comments from advocacy, healthcare, and professional groups, such as the American Medical Association.
The physicians' organization said the in-person rule should be eliminated for most categories of controlled medication. Even telehealth prescriptions for drugs with a higher risk of misuse, such as Adderall and oxycodone, should be exempt when medically necessary, the group said.
Some states already have laws that are stricter than the DEA's proposed rules. Amelia Burgess said Alabama's annual exam requirement, which went into effect last summer, burdened some patients. The Minnesota doctor works at Bicycle Health, a telehealth company that prescribes buprenorphine.
Burgess said hundreds of the company's patients in Alabama couldn't switch to in-state prescribers because many weren't taking new patients, were too far away, or were more expensive than the telehealth service. So Burgess and her co-workers flew to Alabama and set up a clinic at a hotel in Birmingham. About 250 patients showed up, with some rural patients driving from five hours away.
Critics of the federal proposal are lobbying for exemptions for medications that can be difficult to obtain due to a lack of specialists in rural areas.
Many of the public comments focus on the importance of telehealth-based buprenorphine treatment in rural areas, including in jails and prisons.
Rural areas also have shortages of mental health providers who can prescribe controlled substances for anxiety, depression, and ADHD. Patients across the country who use opioids for chronic pain have trouble finding prescribers.
It also can be difficult to find rural providers who prescribe testosterone, a controlled drug often taken by transgender men and people with various medical conditions, such as menopause. Controlled medications are also used to treat seizures, sleep disorders, and other conditions.