In 2010, before the Affordable Care Act was passed by Congress, the pharmaceutical industry's top lobbying group was a very public supporter of the measure. It even helped fund a multimillion-dollar TV ad campaign backing passage of the law.
But last year, when Republicans mounted an aggressive effort to repeal and replace the law, the group made a point of staying outside the fray.
"We've not taken a position," said Stephen Ubl, head of the organization, the Pharmaceutical Research and Manufacturers of America, known as PhRMA, in a March 2017 interview.
That stance, however, was at odds with its financial support of another group, the American Action Network, which was heavily involved in that effort to put an end to the ACA, often referred to as Obamacare, spending an estimated $10 million on an ad campaign designed to build voter support for its elimination.
"Urge him to repeal and replace the Affordable Care Act now," one ad running in early 2017 advised viewers to tell their congressman. That and similar material (including robocalls) paid for by the American Action Network ran numerous times last year in 75 congressional districts.
PhRMA was one of AAN's biggest donors the previous year, giving it $6.1 million, federal regulatory filings show. And PhRMA had a substantial interest in the outcome of the repeal efforts. Among other actions, the GOP-backed health bill would have eliminated a federal fee paid by pharmaceutical companies, one estimated at $28 billion over a decade.
But there was no way the public could have known at the time about PhRMA's support of AAN or the identity of other deep-pocketed financiers behind the group.
Unlike groups receiving its funds, PhRMA and similar nonprofits must report the grants in their own filings to the Internal Revenue Service. But the disclosures don't occur until months or sometimes more than a year after the donation.
The conservative-leaning AAN has become one of the most prominent nonprofits for funneling "dark money" — difficult-to-trace funds behind TV ads, phone calls, grass-roots organizing and other investments used to influence politics. Such groups have thrived since the Supreme Court's Citizens United decision in 2010, which loosened rules for corporate political spending, and amid what critics say is nonexistent policing of remaining rules by the IRS.
(It's impossible to know from public records whether PhRMA donated before or after President Donald Trump's victory, which made repealing the health law a substantial possibility. In any case, most donations to dark-money groups are not earmarked for a particular program.)
Generally speaking, dark-money groups are politically active organizations, often nonprofits, that are not required to disclose identities of their donors. Under IRS regulations, donors may fund a nonprofit group such as AAN, which is allowed to engage in political activities and is not required to reveal its funding sources.
Dark-money groups are often chartered under Section 501(c)(4) of the tax law, which grants tax exemption to "social welfare organizations." For those seeking to influence politics but stay in the background, 501(c)(4) designations offer two big advantages: tax exemption and no requirement to disclose donors.
Against the backdrop of high drug prices and its heaviest political expenditures in years, the pharmaceutical industry is directing substantial resources through AAN and other such groups that hide the identity of their donors and have few if any limits on fundraising.
"PhRMA has always been very aggressive and very effective in their influence efforts," said Michael Beckel, research manager at Issue One, a nonprofit devoted to campaign-finance transparency. "That includes using these new, dark-money vehicles to influence policy and elections."
PhRMA's $6.1 million, unrestricted donation to AAN was its single-biggest grant in 2016, dwarfing its $130,000 contribution to the same group the year before. Closely associated with House Republicans — AAN has a former Republican senator and two former Republican House members on its board — the group backed the failed GOP health bill intended to replace the Affordable Care Act. It also supported the successful Tax Cuts and Jobs Act of 2017, which reduced corporate taxes by hundreds of billions of dollars over a decade.
So far in this election cycle, AAN has given more than $19 million to the Congressional Leadership Fund, a Republican super PAC with which it shares an address and staff, according to the Center for Responsive Politics. The fund recently ran ads opposing Democratic candidates in high-profile special congressional elections in Georgia and Pennsylvania.
PhRMA disputes the suggestion that it backs particular actions by the recipients of its donations. "PhRMA engages with groups and organizations that have a wide array of health care opinions and policy priorities," said its spokesman, Robert Zirkelbach. "It is inaccurate and would be inappropriate for you to attribute those grants to a specific campaign."
AAN declined several requests for comment.
Including AAN, PhRMA gave nearly $10 million in 2016 to politically active groups that don't have to disclose donors, its most recent filing with the IRS shows. By contrast, PhRMA and its political action committee, or PAC, made only about $1 million in comparatively transparent political donations in 2015 and 2016 that were disclosed to regulators and reported by the Center for Responsive Politics.
PhRMA's 2016 political activities included support for the Republican National Convention. Rather than directly support the Cleveland convention, which several companies pulled out of after it became clear that Donald Trump was going to be the presidential nominee, PhRMA routed $150,000 through limited liability companies with names like Convention Services 2016 and Friends of the House 2016.
Like 501(c)(4)s, LLCs do not have to disclose their donors. PhRMA's support was revealed in IRS filings more than a year later. (Donations by PhRMA and other groups to Friends of the House, which financed a luxury lounge for convention dignitaries, were first reported by the Center for Public Integrity last fall.)
PhRMA's surge in donations to AAN coincides with the arrival of Ubl, who took over as president and CEO in 2015 and has long-standing ties to Norm Coleman, a former U.S. senator from Minnesota who is now AAN's chairman. Ubl once ran the lobby for makers of knee implants, heart stents and other medical devices, one of whose most powerful members, Medtronic, is based in Minneapolis.
Dues paid by member drug companies rose by 50 percent after he got there. PhRMA's total revenue increased by nearly a fourth in 2016, according to IRS filings.
PhRMA's 2016 dark-money contributions included $150,000 to Americans for Prosperity, a conservative group associated with billionaires Charles and David Koch. Their group has already signaled it will be active in November's elections, running attack ads against Sen. Jon Tester, a vulnerable Montana Democrat, for not supporting ACA repeal.
PhRMA also gave $50,000 to Americans for Tax Reform, run by conservative anti-tax activist Grover Norquist.
PhRMA and other trade associations donate to such groups "to avoid attracting attention" amid the political fray, said Bruce Freed, president of the Center for Political Accountability, which seeks to shed light on corporate political spending. Nevertheless "they're achieving their goals by giving money to these folks and helping elect members that are going to be in support of them."
Mostly smaller amounts went to centrist and liberal groups. Center Forward, which claims to seek bipartisan, common ground on drug policy and other issues, got $300,000 directly from PhRMA and another $179,000 from a PhRMA-backed group called the Campaign for Medical Discovery, according to tax filings.
Zirkelbach disputed the notion that PhRMA donations to AAN and other groups were intended to achieve specific goals, saying, "We seek to work with organizations we agree with as well as those where we have disagreements on public policy issues."
Much of the work by PhRMA-linked, dark-money groups touches health policy and harmonizes with PhRMA's positions.
During debates over the tax overhaul, Center Forward worked to preserve a tax credit for researching rare-disease medicines known as orphan drugs. PhRMA took a similar stance, encouraging Congress "to maintain incentives" for rare-disease drugs.
Americans for Tax Reform ran similar ads in local markets opposing "price controls" on prescription drugs.
PhRMA's dark-money allies push its agenda without disclosing its role, critics say.
PhRMA is "spending millions of dollars on politics every cycle, and they're splitting it up between the state and federal level," said Robert Maguire, political nonprofits investigator for the Center for Responsive Politics, which tracks political donations. "They're just not running the political ads themselves," which keeps their name off the product, he said.
A group called Caregiver Voices United, which got $720,000 from PhRMA in 2016, backed a secret effort to generate letters opposing a drug-transparency bill in Oregon. The campaign surfaced when an employee leaked phone-script documents to a lawmaker, as reported in February by The Register-Guard newspaper in Eugene.
Caregiver Voices United is "not influenced" by PhRMA or any other outside group, said John Schall, its president.
Dark-money groups received pharmaceutical industry money from individual companies as well, not just the PhRMA trade organization.
In 2016, Amgen gave $7,500 to Third Way, a center-left group that supports reimbursement for drugs and medical devices based on their results, according to the Center for Political Accountability. Johnson & Johnson gave $35,000 that year to the Republican Main Street Partnership, a 501(c)(4) that describes itself as a coalition of lawmakers committed to "conservative, pragmatic government," the CPA data show.
But CPA's research also reveals that many pharmaceutical companies don't disclose donations made to 501(c)(4) organizations, nor are they legally required to.
Corporations "could dump millions into one of these (c)(4)s and nobody would ever know where it came from," said Steven Billet, a former AT&T lobbyist who teaches PAC management at George Washington University.
Prescription drug prices were soaring. Angry policymakers swore they'd take action. Pharma giant Merck responded by promising to address the problem voluntarily, vowing to keep price increases under the overall rate of inflation.
"We believe these moderate increases are a responsible approach, which will help to contain costs," the Merck CEO said at the annual shareholders meeting.
That assurance wasn't made last week, when multiple drug companies offered similar pledges amid similar criticism. It was nearly three decades ago, in 1990.
Promises by the pharmaceutical industry to contain prices are a familiar — and fleeting — phenomenon, say analysts who have watched the unstoppable rise in drug costs over the years.
History's lesson, they say, is that price-restraint vows last only as long as it is politically necessary for companies to make them. Recent pharma pledges are unlikely to be any different, they predict.
"These things are always very temporary," said Paul Ginsburg, director of the University of Southern California-Brookings Schaeffer Initiative for Health Policy. "I don't think anyone considers this significant."
Last week, Swiss drugmaker Novartis said it would not raise prices on U.S. products between now and the end of the year. Pfizer, Merck, Sanofi and Roche have all made similar announcements in the wake of repeated criticism from policymakers, especially President Donald Trump.
The current assurances come as the administration floats proposals that could contain costs at the margins, such as promoting competition from generic drugs or changing Medicare drug-purchase policies, some analysts believe.
"The president is using the bully pulpit to make some change, and that is certainly one aspect of using the power of the presidency," said Dan Mendelson, who founded consultancy Avalere Health and oversaw the health division at the Office of Management and Budget under President Bill Clinton. "If you make changes to regulation and law, those are certainly more durable … over the long term."
One big wave of pharma price vows came in the early 1990s. Expensive new drugs such as antidepressants and statins to lower cholesterol were quickly driving up costs — although overall prices were far lower than they are now.
Ethicists and consumer advocates were outraged that lifesaving AZT, which counteracted the HIV virus, cost about $8,000 a year when it launched in the late 1980s. These days the cost of some medicines exceeds $1 million a year.
Criticism from policymakers back then might also sound familiar.
"There is no question that we face a growing crisis in the United States due to rising prescription drug prices," Sen. David Pryor, an Arkansas Democrat who was chairman of the Aging Committee, said in 1990.
In response came a cascade of public promises to limit drug price increases to no more than the rate of inflation.
Merck was one of the first, taking what became known as "the Rahway pledge," referring to the New Jersey location of its headquarters. Pfizer made a similar promise in 1992, saying it would limit increases to 4 percent or less.
"Pfizer is mindful of the needs of the broader public," Pfizer chief executive William Steere Jr. told industry analysts in a presidential election year in which both Democrats and Republicans were discussing health care reform.
Bristol-Myers Squibb and Glaxo also said they would keep price increases below inflation, according to a 1992 Newsday story that quoted an analyst referring to "pharmapolitically correct" price promises.
Just two years later, Pryor said many manufacturers were raising prices far faster than the inflation rate. He found that prices for especially profitable and high-volume drugs went up sharply. That echoes today's criticism of the industry.
Merck recently announced it would cut prices by 10 percent on half a dozen drugs, a seemingly significant concession. But those medicines together account for less than 0.1 percent of the company's sales, calculated Umer Raffat, an analyst at Evercore ISI. That suggests the move was "just optics" rather than substance, Raffat said in a note to clients.
"We commit to not increase the average net price across our portfolio of products by more than inflation annually," Merck said last week.
"Every now and then senior company executives decide that there is so much anger and pressure, and they will show they are good citizens" by promising to restrain prices, said Donald Light, health policy professor at Rowan University's School of Osteopathic Medicine in New Jersey. "But it only happens for a year or two."
On the other hand, industry watchers say, the political and economic environment has shifted since the 1990s. Drug prices are higher than ever. Because of high-deductible insurance plans and other cost-shifting, "consumers are responsible for a much larger burden" in paying for drugs, Mendelson said.
That's why some are not ruling out at least peripheral regulation and perhaps new laws to address pharma prices.
The administration's drug "blueprint" has proposed lowering Medicare reimbursement on hospital- and doctor-administrated drugs. Last week, the administration proposed altering a rule on drug rebates used when pharmacy benefit managers negotiate prices with insurers and drug companies.
Avalere President Matt Brow said there is a political reason to make something happen before the November midterm elections.
"I think this administration is willing to take action that most administrations in our memory haven't been willing to do," Brow said.
The woman arrived at the emergency department at Huntington Hospital on New York's Long Island after she was hit by her boyfriend during an argument. Her situation raised concerns among the medical staff, which had recently been trained to be on the lookout for signs of sex trafficking.
An undocumented immigrant from El Salvador, she worked at a local "cantina" frequented by immigrants. Her job was to get patrons drinks and to dance with them, but many workers in those jobs are expected to offer sex, too. Her boyfriend didn't want her to work there, and that led to the fight, one doctor recalled.
As part of the intake process, the emergency staff asked the 36-year-old woman a series of questions about whether she'd ever had sex for money, or whether she had to give someone else part of what she earns, among other things. The screening questions were part of a new program at Northwell Health, a 23-hospital system in the New York metro area that includes Huntington Hospital, to train staff and provide them with tools to identify and support victims of human trafficking.
There are no hard figures for how many people are involved in human trafficking, the term used when individuals are forced to work or have sex for someone else's commercial benefit. Polaris, a Washington, D.C.-based nonprofit that advocates for these people and runs help lines for them, said calls and texts to its national hotlines have steadily ticked up in recent years, increasing the number of cases 13 percent between 2016 and 2017, to 8,759.
But health care providers frequently fail to recognize these patients' situation. According to a 2014 survey of about 100 survivors of sex trafficking, 88 percent said that while they were being trafficked they had contact with a health care provider, typically someone in an emergency department.
"When trafficking victims come through the health care system but we don't identify them, it's a big missed opportunity," said Dr. Santhosh Paulus, a family physician who is the site director of the Huntington Hospital's family medicine residency program and who started the program at Northwell.
Northwell is one of a growing number of hospitals and health care systems that are putting such programs in place. They want to alert staff to be on the lookout for trafficking, much as they watch for signs of child abuse, domestic violence and elder abuse.
Since last spring, nearly 300 staff members at Huntington Hospital and a family clinic have received training in how to spot trafficking victims and how to help them.
Training is given not only to doctors and nurses but also to registration and reception staff, social workers and security guards. Restore NYC, an organization that assists people caught up in sex trafficking, provided the initial training to key staff, and a hospital task force trains the others. During the next few years, similar efforts will be rolled out at all of Northwell's 23 hospitals, Paulus said.
Identifying victims of trafficking is not unlike identifying victims of other forms of violence, said Dr. Wendy Macias-Konstantopoulos, director of the human trafficking initiative at Massachusetts General Hospital.
One of the big red flags is when people delay coming in for medical care, such as waiting weeks to come in to get an injured ankle or sexually transmitted infection checked out, Macias-Konstantopoulos said. Or it may be a pattern of injuries that don't make sense. Sometimes people are reluctant to explain their injury, or they come in with someone who seems overbearing.
"Having a high index of suspicion is the first step," she said. "If we're not asking about it, we're just not going to see it."
Starting in October, health care providers can also use new diagnosis codes in their records that differentiate trafficking from other types of abuse. This will help track the number of victims and provide appropriate treatment.
Asking may not be enough, however. Depending on what's going on in their lives, these patients may not be willing or ready to acknowledge that they need help, said Holly Gibbs, human trafficking response program director for Dignity Health, a health care system with nearly 40 hospitals in California, Nevada and Arizona.
Gibbs knows the issue well. She was forced briefly into prostitution in Atlantic City, N.J., after meeting a man at a shopping mall as a 14-year-old and running away with him. The man persuaded Gibbs to go with him with promises of a new, glamorous life as a musician or model. At the time, Gibbs said, she thought that what happened to her was her own fault, a result of choices she made. No health care or law enforcement professional connected her to social services that could have helped her understand otherwise. She was reunited with her family by law enforcement personnel, who arrested the man. He was was later convicted.
Dignity Health has implemented a human trafficking response program in the emergency departments and labor and delivery areas of each of its hospitals. Now it's rolling out the program at clinics and physicians' offices as well.
A key priority is to help clinicians know how to talk to patients about any violence they may be facing and to connect the patients with outside sources of help.
But in the end, if these patients don't want assistance, "you respect their wishes," Gibbs said. "They may not be ready to accept help now, but you may plant seeds so they'll be able to accept it later on."
Industry analysts say for-profit hospital companies are poised to grow more rapidly as they buy up both for-profits and nonprofits, potentially altering the character and role of public health-oriented nonprofits.
Mission Health, the largest hospital system in western North Carolina, provided $100 million in free charity care last year. This year, it has partnered with 17 civic organizations to deliver substance abuse care to low-income people.
Based in bucolic Asheville, the six-hospital system also screens residents for food insecurity; provides free dental care to children in rural areas via the "ToothBus" mobile clinic; helps the homeless find permanent housing, and encourages its 12,000 employees to volunteer at schools, churches and nonprofit groups.
Asheville residents say the hospital is an essential resource.
"Mission Health helped saved my life," said Susan ReMine, 68, an Asheville resident for 30 years who now lives in nearby Fletcher, N.C. Suffering from kidney failure, she was in Mission Health's main hospital in Asheville for three weeks last fall. And, from 2006 to 2008, a Mission Health-supported program called Project Access provided her with free care after she lost her job because of illness.
After 130 years as a nonprofit with deep roots in the community, Mission Health announced in March that it was seeking to be bought by HCA Healthcare, the nation’s largest for-profit hospital chain. HCA owns 178 hospitals in 20 states and the United Kingdom.
The pending sale reflects a controversial national trend as hospitals consolidate at an accelerating pace and the cost of health care continues to rise.
"We understand the business reasons [for the deal], but our overwhelming concern is the price of health care," said Ron Freeman, chief financial officer at Ingles Markets, a supermarket chain headquartered in Asheville with 200 stores in six states. "Will HCA after a few years start to press the hospital to make more profit by raising prices? We don’t know."
And the local newspaper, the Citizen Times, editorialized in March: "How does it help to join a corporation where nearly $3 billion that could have gone to health care instead was recorded as profit? … We would feel better were Western North Carolina’s leading health-care provider to remain master of its own fate."
Merger Mania
From 2013 to 2017, nearly 1 in 5 of the nation’s 5,500-plus hospitals were acquired or merged with another hospital, according to Irving Levin Associates, a health care analytics firm in Norwalk, Conn. Industry analysts say for-profit hospital companies are poised to grow more rapidly as they buy up both for-profits and nonprofits — potentially altering the character and role of public health-oriented nonprofits. Nonprofit hospitals are exempt from state and local taxes. In return, they must provide community services and care to poor and uninsured patients —a commitment that is honored to varying degrees nationwide.
Of the nation’s 4,840 non-federal, general hospitals, 2,849 are nonprofit, 1,035 are for-profit and 956 are owned by state or local governments, according to the American Hospital Association.
In 2017, 29 for-profit companies bought 11 not-for-profits and 18 for-profit hospitals, according to an Irving Levin Associates analysis for Kaiser Health News.
Sales can go the other way, too: 53 nonprofit hospital companies bought 18 for-profits as well as 35 nonprofits in 2017.
A recent report by Moody’s Investors Service predicted stable growth for for-profit hospital companies, saying they are well-positioned to demand higher rates from insurers and have less exposure to the lower rates paid by government insurance programs such as Medicare and Medicaid. In contrast, a second Moody’s report downgraded from stable to negative its 2018 forecast for the not-for-profit hospital sector.
"The main motivation of for-profit companies is to grow so they can cut costs, get paid more and maximize profits," said Suzanne Delbanco, executive director of the Catalyst for Payment Reform, an employer-led health care think tank and advocacy group. "They are not as focused on improving access to care or the community’s overall health."
'We Wanted To Thrive'
Ron Paulus, Mission Health’s president and CEO, said he and the hospital’s 19-member board concluded last year that the future of Mission Health was iffy at best without a merger.
HCA declined to make anyone available for an interview but provided this statement: "We are excited about the prospect of a transaction that would allow us to support the caliber of care they [Mission Health hospitals] have been providing."
Driving Mission Health’s decision, Paulus said, were strained finances and the board’s strong feeling that the hospital needed to invest in new technology, modern data management tools and top clinical talent.
"We wanted to thrive and not just survive," he said. "I had a healthy dose of skepticism about HCA at first. But I think we made the right decision."
During the past four years, Paulus said, the company has had to cut costs $50 million to $80 million a year to preserve an "acceptable operating margin." The forecast for 2019 and 2020, he said, saw the gap between revenue and expenses rising to $150 million a year.
Miriam Schwarz, executive director of the Western Carolina Medical Society, said many area physicians were surprised by the move and "are trying to grapple with the shift."
"There’s concern about the community benefits, but also job loss," said Schwarz. "But [doctors] do recognize that the hospital must become more financially secure."
Weighed against community concerns is the prospect of a large nonprofit foundation created by the deal. Depending on the final price, the foundation could have close to $2 billion in assets.
Creation of such foundations is common when for-profit companies buy nonprofit hospitals or insurance companies. Paulus said the foundation created from Mission Health could generate $50 million or more a year to — among other initiatives — "test new care models such as home-based care … and address the causes of poor health in the community in the first place."
In addition, HCA will have to pay upward of $10 million in state and local taxes.
Mixed Results
Industry analysts say the hospital merger and consolidation trend nationwide is inevitable given the powerful forces afoot in health care.
That includes pressure to lower prices and costs; improve quality, safety and efficiency; modernize IT systems and equipment; and do more to improve overall health.
But academics and consumer advocates say hospital consolidation yields mixed results. While mergers—especially purchases by for-profit companies—provide much-needed capital and financial stability, competition is stifled, often leading to higher prices.
Martin Gaynor, a professor of economics and health policy at Carnegie Mellon University, and colleagues examined 366 hospital mergers from 2007 to 2011 and found that prices were on average 12 percent higher in areas where one hospital dominated the market versus areas with at least four rivals. Another recent study found that 90 percent of U.S. cities today have a "highly concentrated" hospital market. Asheville is one, with Mission Health being dominant.
"The evidence is overwhelming at this point: Mergers solve some problems for hospitals, but they don’t make health care less expensive or better," said Gaynor. "In fact, prices usually go up."
Mission Health CEO Paulus said he believed HCA is committed to restraining price increases and cost growth.
If no obstacles arise, Paulus said, HCA’s purchase of Mission Health would be formalized in August and finalized in November or December, pending state regulatory approval.
Update (July 20, 2018): After this story was published, Zuckerberg San Francisco General Hospital agreed to waive the $15,666 trauma response fee charged for Park Jeong-whan’s visit to the hospital. In a letter, the hospital’s patient experience manager said the hospital did a clinical review and offered "a sincere apology for any distress the family experienced over this bill." Further, the hospital manager wrote that the case "offered us an opportunity to review our system and consider changes."
On the first morning of Jang Yeo Im's vacation to San Francisco in 2016, her 8-month-old son, Park Jeong Whan, fell off the bed in the family's hotel room and hit his head.
There was no blood, but the baby was inconsolable. Jang and her husband worried he might have an injury they couldn't see, so they called 911, and an ambulance took the family — tourists from South Korea — to Zuckerberg San Francisco General Hospital (SFGH).
The doctors at the hospital quickly determined that baby Jeong Whan was fine — just a little bruising on his nose and forehead. He took a short nap in his mother's arms, drank some infant formula and was discharged a few hours later with a clean bill of health. The family continued their vacation, and the incident was quickly forgotten.
Two years later, the bill finally arrived at their home: They owed the hospital $18,836 for a visit lasting three hours and 22 minutes, the bulk of which was for a mysterious fee for $15,666 labeled "trauma activation," also known as "a trauma response fee."
It's a huge amount of money for my family," said Jang, whose family had travel insurance that would cover only $5,000. "If my baby got special treatment, OK. That would be OK. But he didn't. So why should I have to pay the bill? They did nothing for my son."
American hospital bills are today littered with multiplying fees, many of which don't even exist in other countries: fees for blood draws, fees for checking the blood oxygen level with a skin probe, fees for putting on a cast, minute-by-minute fees for lying in the recovery room.
But perhaps the pinnacle is the "trauma fee," in part because it often runs more than $10,000 and in part because it seems to be applied so arbitrarily.
A trauma fee is the price a trauma center charges when it activates and assembles a team of medical professionals that can meet a patient with potentially serious injuries in the ER. It is billed on top of the hospital's emergency room physician charge and procedures, equipment and facility fees.
Emergency room bills collected by Vox and Kaiser Health News show that trauma fees are expensive and vary widely from one hospital to another.
Charges ranged from $1,112 at a hospital in Missouri to $50,659 at a hospital in California, according to Medliminal, a company that helps insurers and employers around the country identify medical billing errors.
"It's like the Wild West. Any trauma center can decide what their activation fee is," says Dr. Renee Hsia, director of health policy studies in the emergency medicine department at the University of California-San Francisco.
Hsia is also an emergency medicine doctor at Zuckerberg San Francisco General Hospital, but was not involved in the care of the patients discussed in the story — and spoke about the fees generally.
Comprehensive data from the Health Care Cost Institute shows that the average price that health insurers paid hospitals for trauma response (which is often lower than what the hospital charges) was $3,968 in 2016. But hospitals in the lowest 10 percent of prices received an average of $725 — while hospitals in the most expensive 10 percent were paid $13,525.
Data from Amino, a health cost transparency company, shows the same trend. On average, Medicare pays just $957.50 for the fee.
According to Medicare guidelines, the fee can be charged only when the patient receives at least 30 minutes of critical care provided by a trauma team — but hospitals do not appear to be following that rule when billing non-Medicare patients.
At the turn of the century such fees didn't even exist.
But today many insurers willingly pay them, albeit at negotiated rates for hospitals in their networks. Six insurers and industry groups declined to discuss the fees, and a spokeswoman for America's Health Insurance Plans, the industry trade group, said, "We have not seen any concerning trends surrounding trauma center fees."
Trauma centers argue that these fees are necessary to train and maintain a full roster of trauma doctors, from surgeons to anesthesiologists, on-call and able to respond to medical emergencies at all times.
SFGH spokesman Brent Andrew defended the hospital's fee of over $15,000 even though the baby didn't require those services.
"We are the trauma center for a very large, very densely populated area. We deal with so many traumas in this city — car accidents, mass shootings, multiple vehicle collisions," said Andrew. "It's expensive to prepare for that."
At What Cost Trauma?
Experts who've studied trauma fees say that at some hospitals there's little rationale behind how hospitals calculate the charge and when the fee is billed. But, of course, those decisions have tremendous financial implications.
After Alexa Sulvetta, a 30-year-old nurse, broke her ankle while rock climbing at a San Francisco gym in January, she faced an out-of-pocket bill of $31,250 bill.
An ambulance also brought Sulvetta to Zuckerberg San Francisco General Hospital, where, she recalled, "my foot was twisted sideways. I had been given morphine in the ambulance."
Sulvetta was evaluated by an emergency medicine doctor and sent for emergency surgery. She was discharged the next day.
SFGH also charged Sulvetta a $15,666 trauma response fee, a hefty chunk of her $113,338 bill. Her insurance decided that the hospital fees for the one-day stay were too high, and — after negotiations — agreed to pay only a charge it deemed reasonable. The hospital then went after Sulvetta for $31,250.
"My husband and I were starting to think about buying a house, but we keep putting that off because we might need to use our life savings to pay this bill," she said.
SFGH spokesman Andrew, meanwhile, said that the hospital is justified in pursuing the bill. "It's fairly typical for us to pursue patients when there are unpaid balances," he said. "This is not an uncommon thing."
‘I Feel Like I Created A Monster'
Trauma response fees were first approved by the National Uniform Billing Committee in January 2002, following a push by a national consulting firm specializing in trauma care. The high costs of staffing a trauma team available at all hours, the firm argued, threatened to shut down trauma centers across the country.
Trauma centers require special certification to provide emergency care for patients suffering very serious injuries above and beyond a regular emergency department.
"We were keeping an ongoing list of trauma centers that were closing all over the country," said Connie Potter, who was executive director of the firm that succeeded in getting the fee approved. She now consults with hospital trauma centers on how to bill appropriately.
Trauma teams are activated by medics in the field, who radio the hospital to announce they are arriving with a trauma patient. The physician or nurse who receives the call then decides whether a full or partial trauma team is needed, which results in different fees. Potter said that person can also activate the trauma team based on the consultation with the EMTs.
But reports from the field are often fragmentary and there is much discretion in when to alert the trauma team.
An alert means paging a wide range of medical staff to stand at the ready, which may include a trauma surgeon, who may not be in the hospital.
Potter said if the patient arrives and does not require at least 30 minutes of critical care, the trauma center is supposed to downgrade the fee to a regular emergency room visit and bill at a lower rate, but many do not do so.
Hospitals were supposed to come up with the fee for this service by looking at the actual costs of activating the trauma team, and then dividing it over the amount that their patients are likely to pay. Hospitals that see a lot of uninsured and Medicaid patients might charge more to patients with private insurance to make up for possible losses.
But soon, Potter said, some hospitals began abusing the fee by charging an exorbitant amount that seemed to be based on the whims of executives rather than actual costs.
"To a degree, I feel like I created a monster," Potter said. "Some hospitals are turning this into a cash cow on the backs of patients."
The $15,666 is San Francisco General's low-level trauma response fee. The high-level response fee in which the trauma surgeon is called into action is $30,206. The hospital would not provide a breakdown of how these fees are calculated.
Unfortunately, outside of Medicare and state hospitals, regulators have little sway over how much is charged. And at public hospitals, such fees may be a way to balance government budgets. At SFGH, the $30,206 higher-level trauma response fee, which increased by about $2,000 last year, was approved by the San Francisco Board of Supervisors.
An Ibuprofen, Two Medical Staples — And A $26,998 Bill
Some patients question whether their particular cases ought to include a trauma fee at all — and experts think they're right to do so.
Sam Hausen, 28, was charged a $22,550 trauma response fee for his visit to Queen of the Valley Medical Center in Napa, Calif., in January.
An ambulance brought him to the Level 3 trauma center after a minor motorcycle accident, when he took a turn too quickly and fell from his bike. Records show that he was alert with normal vital signs during the 4-mile ambulance ride, and that the ambulance staff alerted the hospital that the incoming patient had traumatic injuries.
He was at the hospital for only about half an hour for a minor cut on his head, and he didn't even need X-rays, CAT scans or a blood test.
"The only things I got were ibuprofen, two staples and a saline injection. Those were the only services rendered. I was conscious and lucid for the whole thing," said Hausen.
But because the ambulance medics called for a trauma team, the total for the visit came to $26,998 — and the vast majority of that was the $22,550 trauma response fee.
Queen of the Valley Medical Center defended the charge. "Trauma team activation does not mean every patient will consult with and/or be cared for by a trauma surgeon," spokeswoman Vanessa deGier said over email. "The activation engages a team of medical professionals. Which professional assesses and cares for a trauma patient depends on the needs and injury/illness of the patient."
Guidelines for trauma activation are written broadly on purpose, in order to make sure they don't miss any emergencies that could otherwise kill patients, said Dr. Daniel Margulies, a trauma surgeon at Cedars-Sinai in Los Angeles and chair of the American College of Surgeons committee on trauma center verification and review. Internal injuries, for example, can be difficult to diagnose at the scene of an accident.
"If you had someone who needed a trauma team and didn't get called, they could die," he said.
Medics err on the side of caution when calling in trauma patients to avoid missing a true emergency. To that end, the American College of Surgeons says it is acceptable to "overtriage," summoning the trauma team for 25-35 percent of patients who don't end up needing it.
But that logic leaves health consumers like Jang, Sulvetta and Hausen with tens of thousands in potential debt for care they didn't ask for or need, care that is ordered out of an abundance of caution — a judgment call by an ambulance worker, a triage nurse or a physician — based on scant information received over a phone.
Jeong Whan had fallen 3 feet from a hotel bed onto a carpeted floor when his nervous parents summoned an ambulance. By the time the EMTs arrived, Jeong Whan was "crawling on the bed, not appearing to be in any distress," according to the ambulance records. The EMTs called SFGH and, after a consultation with a physician, transported Jeong Whan as a trauma patient, likely because of the baby's young age.
At the hospital, Jeong Whan was evaluated briefly by a triage nurse and sent to an emergency department resuscitation bay.
Jang recalls being greeted by nine or 10 providers at the hospital, but the baby's medical records from the visit do not mention a trauma team being present, according to Teresa Brown of Medliminal, who reviewed the case.
The baby appeared to have no signs of major injury, and no critical care was required. Five minutes later, the family was transferred to an exam room for observation before being released a few hours later. Brown said she would dispute the $15,666 trauma response fee because the family does not appear to have received 30 minutes of critical care from a trauma team.
Jang currently has a patient advocate working on her behalf to try to negotiate the bill with the hospital. She said she fears that the pending medical debt could prevent her from getting a visa to visit New York and Chicago, which she hopes to do in the next few years.
She said her experience with the U.S. health care system and its fees has been shocking. "I like the USA. There are many things to see when traveling," she said. "But the health care system in USA was very bad."
Premiums in California's health insurance exchange will rise by an average of 8.7 percent next year, marking a return to more modest increases despite ongoing threats to the Affordable Care Act.
The state marketplace, Covered California, said the rate increase for 2019 would have been closer to 5 percent if the federal penalty for going without health coverage had not been repealed in last year's Republican tax bill.
The average increase in California is smaller than the double-digit hikes expected around the nation, due largely to a healthier mix of enrollees and more competition in its marketplace. Still, health insurance prices keep growing faster than wages and general inflation as a result of rising medical costs overall, squeezing many middle-class families who are struggling to pay their household bills.
The 8.7 percent increase in California ends two consecutive years of double-digit rate increases for the state marketplace.
"It's not great that health care costs are still increasing that much, but the individual market is not sticking out like a sore thumb like it has in other years," said Kathy Hempstead, senior adviser at the Robert Wood Johnson Foundation. "It's falling back to earth."
The future may be less bright. An estimated 262,000 Californians, or about 10 percent of individual policyholders in and outside the exchange, are expected to drop their coverage next year because the ACA fines were eliminated, according to the state. Peter Lee, executive director of Covered California, warned that the exodus of healthier consumers will drive up insurance costs beyond 2019 — not just for individual policyholders but for California employers and their workers.
"We are paying, in essence, a surcharge for federal policies that are making coverage more expensive than it should be," Lee said in an interview. "There will be more of the uninsured and more uncompensated costs passed along to all of us."
Critics of the Affordable Care Act say it has failed to contain medical costs and left consumers and taxpayers with heavy tabs . Nearly 90 percent of Covered California's 1.4 million enrollees qualify for federal subsidies to help them afford coverage.
Foiled in its attempt to repeal Obamacare outright, the Trump administration has taken to rolling back key parts of the law and has slashed federal marketing dollars intended to boost enrollment. Instead, the administration backs cheaper alternatives, such as short-term coverage or association health plans, which don't comply fully with ACA rules and tend to offer skimpier benefits with fewer consumer protections.
Taken together, those moves are likely to draw healthier, less expensive customers out of the ACA exchanges and leave sicker ones behind.
Nationally, 2019 premiums for silver plans — the second-cheapest and most popular plans offered — are expected to jump by 15 percent, on average, according to an analysis of 10 states and the District of Columbia by the Avalere consulting firm. Prices vary widely across the country, however. Decreases are expected in Minnesota while insurers in Maryland are seeking 30 percent increases.
In California, exchange officials emphasized, consumers who shop around could pay the same rate as this year, or even a little less.
Christy McConville of Arcadia already spends about $1,800 a month on a Blue Shield plan for her family of four, opting for "platinum" coverage, the most expensive type. Her family doesn't qualify for federal subsidies in Covered California.
She's worried about further increases and doesn't want to switch plans and risk losing access to the doctors she trusts. "We're getting right up to the limit," McConville said.
Amanda Malachesky, a nutrition coach in the Northern California town of Petrolia, said the elimination of the penalty for being uninsured makes dropping coverage more palatable. Her family of four pays almost $400 a month for a highly subsidized Anthem Blue Cross plan that has a $5,000 deductible.
"I've wanted to opt out of the insurance model forever just because they provide so little value for the exorbitant amount of money that we pay," said Malachesky, who recently paid several hundred dollars out-of-pocket for a mammogram. "I'm probably going to disenroll … and not give any more money to these big bad insurance companies."
Covered California is aiming to stem any enrollment losses by spending more than $100 million on advertising and outreach in the coming year. In contrast, the Trump administration spent only $10 million last year for advertising the federal exchange across the 34 states that use it.
Also, California lawmakers are looking at ways to fortify the state exchange. State legislators are considering bills that would limit the sale of short-term insurance and prevent people from joining association health plans that don't have robust consumer protections.
However, California hasn't pursued an insurance mandate and penalty at the state level, which both health plans and consumer advocates support. New Jersey and Vermont have enacted such measures.
Lee said it's up to lawmakers to decide whether a state mandate makes sense.
David Panush, a Sacramento health care consultant and a former Covered California official, said some lawmakers may be reluctant to push the idea, even in deep-blue California.
"The individual mandate has always been the least popular piece of the Affordable Care Act," he said.
Despite the constant uncertainty surrounding the health law, many insurers nationally are posting profits from their ACA business and some plans are looking to expand further on the exchanges.
In California, the same 11 insurers are returning, led by Kaiser Permanente and Blue Shield of California. Together, those two insurers control two-thirds of exchange enrollment. (Kaiser Health News, which publishes California Healthline, is not affiliated with Kaiser Permanente.)
The Covered California rate increases are fairly uniform across the state. Premiums are climbing 9 percent across most of Southern California as well as in San Francisco. Monterey, San Benito and Santa Cruz counties faced the highest increase at 16 percent, on average.
The rates are subject to state regulatory review but are unlikely to change significantly. Open enrollment on the exchange starts Oct. 15.
The ACA's expansion of coverage has dramatically cut the number of uninsured Californians. The proportion of Californians lacking health insurance fell to 6.8 percent at the end of last year, down from 17 percent in 2013, federal data show.
Without any public scrutiny, insurers and data brokers are predicting health costs based on data about things like race, marital status, how much TV consumers watch, whether they pay their bills on time or even buy plus-size clothing.
This article was first co-published by ProPublica and NPR on July 17, 2018.
To an outsider, the fancy booths at last month's health insurance industry gathering in San Diego aren't very compelling. A handful of companies pitching "lifestyle" data and salespeople touting jargony phrases like "social determinants of health."
But dig deeper and the implications of what they're selling might give many patients pause: A future in which everything you do — the things you buy, the food you eat, the time you spend watching TV — may help determine how much you pay for health insurance.
With little public scrutiny, the health insurance industry has joined forces with data brokers to vacuum up personal details about hundreds of millions of Americans, including, odds are, many readers of this story. The companies are tracking your race, education level, TV habits, marital status, net worth. They're collecting what you post on social media, whether you're behind on your bills, what you order online. Then they feed this information into complicated computer algorithms that spit out predictions about how much your health care could cost them.
Are you a woman who recently changed your name? You could be newly married and have a pricey pregnancy pending. Or maybe you're stressed and anxious from a recent divorce. That, too, the computer models predict, may run up your medical bills.
Are you a woman who's purchased plus-size clothing? You're considered at risk of depression. Mental health care can be expensive.
Low-income and a minority? That means, the data brokers say, you are more likely to live in a dilapidated and dangerous neighborhood, increasing your health risks.Bottom of Form
"We sit on oceans of data," said Eric McCulley, director of strategic solutions for LexisNexis Risk Solutions, during a conversation at the data firm's booth. And he isn't apologetic about using it. "The fact is, our data is in the public domain," he said. "We didn't put it out there."
Insurers contend they use the information to spot health issues in their clients — and flag them so they get services they need. And companies like LexisNexis say the data shouldn't be used to set prices. But as a research scientist from one company told me: "I can't say it hasn't happened."
At a time when every week brings a new privacy scandal and worries abound about the misuse of personal information, patient advocates and privacy scholars say the insurance industry's data gathering runs counter to its touted, and federally required, allegiance to patients' medical privacy. The Health Insurance Portability and Accountability Act, or HIPAA, only protects medical information.
"We have a health privacy machine that's in crisis," said Frank Pasquale, a professor at the University of Maryland Carey School of Law who specializes in issues related to machine learning and algorithms. "We have a law that only covers one source of health information. They are rapidly developing another source."
Patient advocates warn that using unverified, error-prone "lifestyle" data to make medical assumptions could lead insurers to improperly price plans — for instance raising rates based on false information — or discriminate against anyone tagged as high cost. And, they say, the use of the data raises thorny questions that should be debated publicly, such as: Should a person's rates be raised because algorithms say they are more likely to run up medical bills? Such questions would be moot in Europe, where a strict law took effect in May that bans trading in personal data.
"We have a health privacy machine that's in crisis."
—Frank Pasquale
This year, ProPublica and NPR are investigating the various tactics the health insurance industry uses to maximize its profits. Understanding these strategies is important because patients — through taxes, cash payments and insurance premiums — are the ones funding the entire health care system. Yet the industry's bewildering web of strategies and inside deals often have little to do with patients' needs. As the series' first story showed, contrary to popular belief, lower bills aren't health insurers' top priority.
Inside the San Diego Convention Center last month, there were few qualms about the way insurance companies were mining Americans' lives for information — or what they planned to do with the data.
The sprawling convention center was a balmy draw for one of America's Health Insurance Plans' marquee gatherings. Insurance executives and managers wandered through the exhibit hall, sampling chocolate-covered strawberries, champagne and other delectables designed to encourage deal-making.
Up front, the prime real estate belonged to the big guns in health data: The booths of Optum, IBM Watson Health and LexisNexis stretched toward the ceiling, with flat screen monitors and some comfy seating. (NPR collaborates with IBM Watson Health on national polls about consumer health topics.)
To understand the scope of what they were offering, consider Optum. The company, owned by the massive UnitedHealth Group, has collected the medical diagnoses, tests, prescriptions, costs and socioeconomic data of 150 million Americans going back to 1993, according to its marketing materials. (UnitedHealth Group provides financial support to NPR.) The company says it uses the information to link patients' medical outcomes and costs to details like their level of education, net worth, family structure and race. An Optum spokesman said the socioeconomic data is de-identified and is not used for pricing health plans.
Optum's marketing materials also boast that it now has access to even more. In 2016, the company filed a patent application to gather what people share on platforms like Facebook and Twitter, and link this material to the person's clinical and payment information. A company spokesman said in an email that the patent application never went anywhere. But the company's current marketing materials say it combines claims and clinical information with social media interactions.
I had a lot of questions about this and first reached out to Optum in May, but the company didn't connect me with any of its experts as promised. At the conference, Optum salespeople said they weren't allowed to talk to me about how the company uses this information.
It isn't hard to understand the appeal of all this data to insurers. Merging information from data brokers with people's clinical and payment records is a no-brainer if you overlook potential patient concerns. Electronic medical records now make it easy for insurers to analyze massive amounts of information and combine it with the personal details scooped up by data brokers.
It also makes sense given the shifts in how providers are getting paid. Doctors and hospitals have typically been paid based on the quantity of care they provide. But the industry is moving toward paying them in lump sums for caring for a patient, or for an event, like a knee surgery. In those cases, the medical providers can profit more when patients stay healthy. More money at stake means more interest in the social factors that might affect a patient's health.
Some insurance companies are already using socioeconomic data to help patients get appropriate care, such as programs to help patients with chronic diseases stay healthy. Studies show social and economic aspects of people's lives play an important role in their health. Knowing these personal details can help them identify those who may need help paying for medication or help getting to the doctor.
But patient advocates are skeptical health insurers have altruistic designs on people's personal information.
The industry has a history of boosting profits by signing up healthy people and finding ways to avoid sick people — called "cherry-picking" and "lemon-dropping," experts say. Among the classic examples: A company was accused of putting its enrollment office on the third floor of a building without an elevator, so only healthy patients could make the trek to sign up. Another tried to appeal to spry seniors by holding square dances.
The Affordable Care Act prohibits insurers from denying people coverage based on pre-existing health conditions or charging sick people more for individual or small group plans. But experts said patients' personal information could still be used for marketing, and to assess risks and determine the prices of certain plans. And the Trump administration is promoting short-term health plans, which do allow insurers to deny coverage to sick patients.
Robert Greenwald, faculty director of Harvard Law School's Center for Health Law and Policy Innovation, said insurance companies still cherry-pick, but now they're subtler. The center analyzes health insurance plans to see if they discriminate. He said insurers will do things like failing to include enough information about which drugs a plan covers — which pushes sick people who need specific medications elsewhere. Or they may change the things a plan covers, or how much a patient has to pay for a type of care, after a patient has enrolled. Or, Greenwald added, they might exclude or limit certain types of providers from their networks — like those who have skill caring for patients with HIV or hepatitis C.
If there were concerns that personal data might be used to cherry-pick or lemon-drop, they weren't raised at the conference.
At the IBM Watson Health booth, Kevin Ruane, a senior consulting scientist, told me that the company surveys 80,000 Americans a year to assess lifestyle, attitudes and behaviors that could relate to health care. Participants are asked whether they trust their doctor, have financial problems, go online, or own a Fitbit and similar questions. The responses of hundreds of adjacent households are analyzed together to identify social and economic factors for an area.
Ruane said he has used IBM Watson Health's socioeconomic analysis to help insurance companies assess a potential market. The ACA increased the value of such assessments, experts say, because companies often don't know the medical history of people seeking coverage. A region with too many sick people, or with patients who don't take care of themselves, might not be worth the risk.
Ruane acknowledged that the information his company gathers may not be accurate for every person. "We talk to our clients and tell them to be careful about this," he said. "Use it as a data insight. But it's not necessarily a fact."
In a separate conversation, a salesman from a different company joked about the potential for error. "God forbid you live on the wrong street these days," he said. "You're going to get lumped in with a lot of bad things."
The LexisNexis booth was emblazoned with the slogan "Data. Insight. Action." The company said it uses 442 non-medical personal attributes to predict a person's medical costs. Its cache includes more than 78 billion records from more than 10,000 public and proprietary sources, including people's cellphone numbers, criminal records, bankruptcies, property records, neighborhood safety and more. The information is used to predict patients' health risks and costs in eight areas, including how often they are likely to visit emergency rooms, their total cost, their pharmacy costs, their motivation to stay healthy and their stress levels.
People who downsize their homes tend to have higher health care costs, the company says. As do those whose parents didn't finish high school. Patients who own more valuable homes are less likely to land back in the hospital within 30 days of their discharge. The company says it has validated its scores against insurance claims and clinical data. But it won't share its methods and hasn't published the work in peer-reviewed journals.
McCulley, LexisNexis' director of strategic solutions, said predictions made by the algorithms about patients are based on the combination of the personal attributes. He gave a hypothetical example: A high school dropout who had a recent income loss and doesn't have a relative nearby might have higher than expected health costs.
But couldn't that same type of person be healthy? I asked.
"Sure," McCulley said, with no apparent dismay at the possibility that the predictions could be wrong.
McCulley and others at LexisNexis insist the scores are only used to help patients get the care they need and not to determine how much someone would pay for their health insurance. The company cited three different federal laws that restricted them and their clients from using the scores in that way. But privacy experts said none of the laws cited by the company bar the practice. The company backed off the assertions when I pointed that the laws did not seem to apply.
LexisNexis officials also said the company's contracts expressly prohibit using the analysis to help price insurance plans. They would not provide a contract. But I knew that in at least one instance a company was already testing whether the scores could be used as a pricing tool.
Before the conference, I'd seen a press release announcing that the largest health actuarial firm in the world, Milliman, was now using the LexisNexis scores. I tracked down Marcos Dachary, who works in business development for Milliman. Actuaries calculate health care risks and help set the price of premiums for insurers. I asked Dachary if Milliman was using the LexisNexis scores to price health plans and he said: "There could be an opportunity."
The scores could allow an insurance company to assess the risks posed by individual patients and make adjustments to protect themselves from losses, he said. For example, he said, the company could raise premiums, or revise contracts with providers.
"No one gave anyone permission to do this."
—Erin Kaufman
It's too early to tell whether the LexisNexis scores will actually be useful for pricing, he said. But he was excited about the possibilities. "One thing about social determinants data — it piques your mind," he said.
Dachary acknowledged the scores could also be used to discriminate. Others, he said, have raised that concern. As much as there could be positive potential, he said, "there could also be negative potential."
It's that negative potential that still bothers data analyst Erin Kaufman, who left the health insurance industry in January. The 35-year-old from Atlanta had earned her doctorate in public health because she wanted to help people, but one day at Aetna, her boss told her to work with a new data set.
To her surprise, the company had obtained personal information from a data broker on millions of Americans. The data contained each person's habits and hobbies, like whether they owned a gun, and if so, what type, she said. It included whether they had magazine subscriptions, liked to ride bikes or run marathons. It had hundreds of personal details about each person.
The Aetna data team merged the data with the information it had on patients it insured. The goal was to see how people's personal interests and hobbies might relate to their health care costs. But Kaufman said it felt wrong: The information about the people who knitted or crocheted made her think of her grandmother. And the details about individuals who liked camping made her think of herself. What business did the insurance company have looking at this information? "It was a dataset that really dug into our clients' lives," she said. "No one gave anyone permission to do this."
In a statement, Aetna said it uses consumer marketing information to supplement its claims and clinical information. The combined data helps predict the risk of repeat emergency room visits or hospital admissions. The information is used to reach out to members and help them and plays no role in pricing plans or underwriting, the statement said.
Kaufman said she had concerns about the accuracy of drawing inferences about an individual's health from an analysis of a group of people with similar traits. Health scores generated from arrest records, home ownership and similar material may be wrong, she said.
Pam Dixon, executive director of the World Privacy Forum, a nonprofit that advocates for privacy in the digital age, shares Kaufman's concerns. She points to a study by the analytics company SAS, which worked in 2012 with an unnamed major health insurance company to predict a person's health care costs using 1,500 data elements, including the investments and types of cars people owned.
The SAS study said higher health care costs could be predicted by looking at things like ethnicity, watching TV and mail order purchases.
"I find that enormously offensive as a list," Dixon said. "This is not health data. This is inferred data."
Data scientist Cathy O'Neil said drawing conclusions about health risks on such data could lead to a bias against some poor people. It would be easy to infer they are prone to costly illnesses based on their backgrounds and living conditions, said O'Neil, author of the book "Weapons of Math Destruction," which looked at how algorithms can increase inequality. That could lead to poor people being charged more, making it harder for them to get the care they need, she said. Employers, she said, could even decide not to hire people with data points that could indicate high medical costs in the future.
O'Neil said the companies should also measure how the scores might discriminate against the poor, sick or minorities.
American policymakers could do more to protect people's information, experts said. In the United States, companies can harvest personal data unless a specific law bans it, although California just passed legislation that could create restrictions, said William McGeveran, a professor at the University of Minnesota Law School. Europe, in contrast, passed a strict law called the General Data Protection Regulation, which went into effect in May.
"In Europe, data protection is a constitutional right," McGeveran said.
Pasquale, the University of Maryland law professor, said health scores should be treated like credit scores. Federal law gives people the right to know their credit scores and how they're calculated. If people are going to be rated by whether they listen to sad songs on Spotify or look up information about AIDS online, they should know, Pasquale said. "The risk of improper use is extremely high. And data scores are not properly vetted and validated and available for scrutiny."
As I reported this story I wondered how the data vendors might be using my personal information to score my potential health costs. So, I filled out a request on the LexisNexis website for the company to send me some of the personal information it has on me. A week later a somewhat creepy, 182-page walk down memory lane arrived in the mail. Federal law only requires the company to provide a subset of the information it collected about me. So that's all I got.
LexisNexis had captured details about my life going back 25 years, many that I'd forgotten. It had my phone numbers going back decades and my home addresses going back to my childhood in Golden, Colorado. Each location had a field to show whether the address was "high risk." Mine were all blank. The company also collects records of any liens and criminal activity, which, thankfully, I didn't have.
My report was boring, which isn't a surprise. I've lived a middle-class life and grown up in good neighborhoods. But it made me wonder: What if I had lived in "high risk" neighborhoods? Could that ever be used by insurers to jack up my rates — or to avoid me altogether?
I wanted to see more. If LexisNexis had health risk scores on me, I wanted to see how they were calculated and, more importantly, whether they were accurate. But the company told me that if it had calculated my scores it would have done so on behalf of their client, my insurance company. So, I couldn't have them.
Senior research fellow Claire Perlman contributed to this story.
Editor's note: HealthLeaders Media secured permission from ProPublica to republish this article with a modified headline.
Patients whose blood cancers have failed to respond to repeated rounds of chemotherapy may be candidates for a new type of gene therapy that could send their cancers into remission for years.
But the two approved therapies, with price tags of hundreds of thousands of dollars, have roiled the insurance approval process, leading to delays and, in some cases, denials of coverage, clinicians and analysts say.
The therapy involves collecting patients' own T cells, a type of white blood cell, genetically modifying them, and then infusing them back into patients, where they hunt down and kill cancer cells. Known as CAR T-cell therapy, it has been called a "living drug."
Two drugs, Kymriah and Yescarta, were approved last year to treat patients whose blood cancers haven't responded to at least two other rounds of treatment. Kymriah is approved for people up to age 25 with a form of acute lymphoblastic leukemia, the most common cancer in children. Kymriah and Yescarta are both approved for adults with advanced lymphomas.
Researchers report that some critically ill patients who received the therapy have remained cancer-free for as long as five years.
"This is what patients need," said Dr. Yi Lin, a hematologist who oversees the CAR-T cell practice and research for the Mayo Clinic. "With the likelihood of getting patients into durable survival, we don't want to deny them the therapy." She said she receives no personal financial support from the drugs' makers.
But it comes at a cost. The drugs are hugely expensive. Kymriah and Yescarta cost $373,000 to treat adults with advanced lymphomas, while Kymriah costs $475,000 to treat acute lymphoblastic leukemia in children and young adults. In addition, many patients experience serious side effects that can land them in a hospital intensive care unit for weeks, pushing treatment costs more than $1 million.
All of this gives government and private insurers pause.
Most commercial insurers are covering CAR-T therapies now, but they do so on an individual basis, writing single-patient agreements each time, said cancer experts. Large insurers that are already familiar with complicated therapies like stem-cell transplants are getting speedier at handling CAR-T treatment requests, they said. But that's not always the case at smaller or regional plans, where delays can add weeks to the approval process.
"A request for CAR-T may end up with somebody on the payer authorization team who doesn't understand the technology or the urgency of the request, when somebody has only weeks or months to live," said Stephanie Farnia, director of health policy and strategic relations at the American Society for Blood and Marrow Transplantation.
Farnia is in contact with many of the more than 50 medical centers that are authorized to provide treatment. The process of getting to a treatment center and evaluated for therapy is involved, she said, "to then be substantially delayed due to paperwork is incredibly frustrating" for patients.
Medicare and Medicaid often pose greater coverage challenges than do private insurers, according to insurance experts.
Some Medicaid programs don't cover the treatment, said Dr. Michael Bishop, director of the cellular therapy program in the hematology-oncology section at the University of Chicago. Medicaid, the state-federal health program, covers children in low-income households and some adults.
"Medicaid has been very tough," he said. "Certain states just deny coverage, even states with balanced budgets."
Matt Salo, executive director of the National Association of Medicaid Directors, said states have to evaluate the cost as well as the drugs' effectiveness. "Medicaid is a finite pot of money, and it's stretched threadbare even on a good day," he said.
People who are on Medicare, the health insurance program for people age 65 and older and some people with disabilities, typically haven't faced coverage denials to date, clinicians say. But the government's reimbursement rates are raising concerns for providers.
Last spring, Medicare announced payment rates for providers who administer Yescarta and Kymriah on an outpatient basis. The payments would more than cover the costs of the drugs. Medicare beneficiaries' out-of-pocket costs would be capped at $1,340 plus their Part B deductible, if it hasn't been met, the agency said.
The problem with this plan: Facilities typically provide treatment on an inpatient basis, because of the potential for severe, systemic side effects.
"There's a lot of toxicity and questions about whether it can even be provided in an outpatient setting," said Gary Goldstein, the business manager at the blood and marrow transplant program at Stanford Health Care in Stanford, Calif.
For inpatient care, "CAR T-cell therapy … would be paid at a much lower amount compared to outpatient hospital use," according to officials at the Centers for Medicare & Medicaid Services.
The agency is considering how to handle payment for inpatient CAR-T care for the upcoming fiscal year that starts in October. For now, some medical centers are absorbing whatever Medicare doesn't pay.
"How can you tell a patient who's 66, ‘If only you'd gotten lymphoma when you were 64'? Goldstein asked.
But the current approach can't continue indefinitely, he said.
"Even if there aren't any centers that are making that decision today, if coverage doesn't change for Medicare, it absolutely is going to be a problem tomorrow," said Goldstein.
If the Affordable Care Act’s protections for people with preexisting medical conditions are struck down in court, residents of the Republican-led states that are challenging the law have the most to lose.
"These states have been opposed to the ACA from the beginning," said Gerald Kominski, a senior fellow at the UCLA Center for Health Policy Research. "They’re hurting their most vulnerable citizens."
The states’ lawsuit argues that because Congress eliminated the Obamacare tax penalty for not having insurance coverage, effective next year, the entire law is unconstitutional. By extension, the suit calls on federal courts to find the health law’s protections for people with preexisting conditions unconstitutional — and Sessions agrees.
Nine of the 11 states with the highest rates of preexisting conditions among adults under 65 have signed onto the lawsuit to strike down the ACA, according to data from insurance companies and the U.S. Centers for Disease Control and Prevention. The 2015 data, the most recent available, were analyzed by the Kaiser Family Foundation in 2016. (Kaiser Health News, which produces California Healthline, is an editorially independent program of the foundation.)
Those who support the lawsuit contend that there are other means of protecting people with preexisting conditions.
"If a court strikes down the constitutionality of the ACA, there are ways to repeal and replace without Arizonans with preexisting conditions losing their coverage," said Katie Conner, a spokeswoman for Arizona Attorney General Mark Brnovich.
Conner said her boss, who is party to the lawsuit, believes preexisting conditions should "always be covered." In Arizona, more than 1 in 4 adult adults under 65 have a preexisting condition, according to the data.
The state with the highest rate of adults with preexisting conditions is West Virginia — 36 percent of those under age 65. That means that about 1 in 3 of them could have a hard time buying insurance through the individual marketplace without the ACA protections.
The office of West Virginia Attorney General Patrick Morrisey, who joined the legal challenge against the ACA, declined to comment. But a spokesman for Morrisey’s re-election campaign told PolitiFact last month that "help should be provided to those who need it most, including those with preexisting conditions."
Plaintiffs in the lawsuit "are paying lip service to these critical protections for people, but they are in fact engaged in a strategy that would get rid of those protections," said Justin Giovannelli, an associate research professor at Georgetown University's Center on Health Insurance Reforms. "Frankly, it's hard to square what they're saying on the one hand and what they're arguing in the courts on the other."
According to a poll released in June, also by the Kaiser Family Foundation, three-quarters of Americans say that maintaining protections for people with preexisting conditions is "very important." This includes majorities of Democratic, Republican and independent voters.
Before the health law was adopted, insurance companies routinely denied coverage to millions of people with preexisting conditions who purchased insurance through the individual marketplace. If they didn’t deny coverage outright, some health plans charged consumers exorbitant premiums, or offered policies that excluded coverage for pricey conditions. (Although many people got insurance through their employers or public plans that covered preexisting conditions, they could have been left vulnerable if their employment status or other circumstances changed.)
The KFF analysis estimated that at least 27 percent of adults under 65 — more than 50 million Americans — had at least one preexisting condition that would have jeopardized their coverage pre-ACA. The foundation said its estimates were an undercount because some diseases that insurers cited when declining coverage are not in the survey data. Also, each insurance company set its own rules and conditions for denials, making accurate counts of those who could be affected hard to nail down.
Less precise estimates by other researchers and the Department of Health and Human Services show that up to half of all adults under age 65 have at least one preexisting condition.
As the Trump administration looks to reduce the number of asylum applicants, this clinic and others like it seek evidence that can help determine whether someone should gain asylum in the U.S.
OAKLAND, Calif. — Dr. Nick Nelson walks through busy Highland Hospital to a sixth-floor exam room, where he sees patients from around the world who say they have fled torture and violence.
Nelson, who practices internal medicine, is the medical director of the Highland Human Rights Clinic, part of the Alameda Health System. A few times each week, he and his team conduct medical evaluations of people who are seeking asylum in the United States. The doctors listen to the patients' stories. They search for signs of trauma. They scrutinize injuries, including electrocution scars, bullet wounds and unset broken bones.
As the Trump administration looks to reduce the number of asylum applicants, citing loopholes and fraudulent claims, this clinic — and others like it in San Diego, Los Angeles, New York and Chicago — seeks evidence that can help determine whether someone should gain asylum in the U.S.
The Highland clinic opened in 2001 as a place for asylum seekers and refugees to get care. Five years later, the staff started offering forensic exams that aim to discern whether there is evidence of torture or abuse. Nelson, who took over as director in 2012, says his team does between 80 and 120 evaluations each year.
Nelson and his colleagues diagnose physical and psychological ailments and, in many cases, substantiate these patients’ claims about how they were hurt. Sometimes the asylum seekers have health coverage that pays for the exams, but the county covers the cost for those who don't.
"Our job is to make sure that the asylum office understands all the medical and psychological facts about a person's case so that they can make a decision," Nelson said.
Nelson bases his findings on an internationally recognized protocol for torture documentation.
For example, he may be called on to judge whether a scar or injury could have occurred as the patient describes. Sometimes, Nelson said, attorneys ask him to answer specific questions, such as, "Is this burn scar consistent with a cigarette burn?" or "Are these marks on his back consistent with being beaten with PVC pipe?"
Nelson has had some medical training on what to expect to see in cases of torture. He also applies his general expertise as a doctor in knowing how to interview and examine patients, and has learned something about the countries these asylum seekers are fleeing and the injuries they may have endured.
Juan Lopez Aguilar, who fled Guatemala three years ago, meets with Nelson at the Highland Hospital in Oakland, Calif., in June 2018. (Heidi de Marco/KHN)
For example, when someone is hit with a long, stiff object, it produces a pair of parallel bruises like railroad tracks, he said.
"That's a specific thing that I didn't learn in medical school or residency," he said, "but that I have learned through taking care of a lot of people who have been tortured."
In most cases, Nelson said, he finds evidence to support the stories his patients tell him. But there are also exams that don't yield definitive evidence.
Nelson also addresses the asylum seekers' health needs, sometimes diagnosing cases of tuberculosis or HIV that were previously undiagnosed. Nearly all of the patients he sees need mental health referrals, he said, because of years of torture or abuse in their native countries.
One of the patients Nelson recently treated is 60-year-old Juan Lopez Aguilar, an indigenous Maya who fled Guatemala three years ago. He said he was beaten and threatened off and on for nearly four decades because of his ethnicity and feared for his life back home. Lopez Aguilar's son also was murdered in 2005 and his daughter fled because of threats, his attorney said.
"I'm worried," Lopez Aguilar told the doctor through a translator, as he sat in the exam room. "There are a lot of gangs. They want to kill people in my community."
Nelson first examined and interviewed Lopez Aguilar earlier this spring and wrote a report corroborating the man's account for his asylum case, formally filed last year.
Lopez Aguilar, who grew up in a family of peasant farmers, told Nelson that his community was attacked by soldiers when he was in his 20s and that his father was killed during that attack. Lopez Aguilar moved to another part of Guatemala, where he continued to be the victim of "race-based harassment, extortion and threats," Nelson said.
Lopez Aguilar, who has worked as a dishwasher, has now returned to the clinic for a regular medical visit. He tells the doctor in his native language that he has been having severe headaches and dizziness since soon after he arrived in the U.S.
His wife and some of his children are back in Guatemala, he explained, and he can't petition to bring his wife to the States unless and until he is granted asylum. That won't be before 2020, when his court date is scheduled.
Men like Lopez Aguilar have faced increasingly tough odds since early June, when U.S. Attorney General Jeff Sessions announced that gang violence and domestic abuse would no longer be considered grounds for granting asylum.
Nelson searches Tefamicael for signs of trauma and examines injuries and wounds. (Heidi de Marco/KHN)
To be eligible for asylum, applicants must prove they face physical violence, or fear it, based on factors such as race, ethnicity or religion.
Even before the Trump administration's recent crackdown, getting asylum was a difficult and time-consuming proposition. In 2017, only about 38 percent of asylum seekers in the U.S. were granted that status by the immigration court, according to data from the nonpartisan Transactional Records Access Clearinghouse at Syracuse University.
The harsher federal policies, including detentions at the border, have generated anxiety and uncertainty among those seeking asylum and their advocates and immigration lawyers.
"Every day is a roller coaster," said Oakland attorney Haregu Gaime, who frequently refers her clients to the Highland clinic.
Niloufar Khonsari, executive director of Pangea Legal Services, a Bay Area legal advocacy group, said the obstacles won't deter people from seeking a safe place to live or from seeking judicial help to stay in the U.S.
When applicants are examined at the Highland clinic, Khonsari said, it "definitely makes a difference for judges."
Gaime said the clinic's reports frequently help corroborate her clients' experiences in a way that their testimony alone cannot.
"Sometimes a traumatized person is not able to relay what happened to them in a way that tells the full story," she said.
Ira Mehlman, spokesman for the Federation for American Immigration Reform, which favors stricter controls on immigration, noted that there are limits to a doctor's ability to interpret these cases. Doctors may be able to determine if somebody suffered an injury, he said, but not necessarily the circumstances that led to it. "And they can't determine if it was because of political persecution," he said.
Mehlman said there is no question that there is violence in Central America and that gangs are rampant, but the U.S. can't accept everyone who is danger.
On the same morning that Nelson saw Lopez Aguilar at Highland clinic, he also examined Gebremeskl Tefamicael, an asylum seeker from Eritrea. Nelson took notes as he listened to Tefamicael's story of being conscripted into the military, then imprisoned and tortured.
Nelson asked Tefamicael exactly what his tormentors used to tie him up.
It was a rope made from tree bark, the patient responded, as Nelson wrote in his notebook a description of the scars on Tefamicael's wrists.
Afterward, Nelson's report for the court stated that Tefamicael's physical scars and psychological state are consistent with the man's description of what happened to him.
Nelson said he got involved with the clinic because he wanted to treat people who were underserved. People fleeing their countries and seeking asylum here are "definitely one of the more … underserved and generally marginalized" communities, he said.
Often, Nelson doesn't hear until months or years later whether his patients have been granted asylum. But when the request is approved, he said, he sees a tremendous change in them.
Getting asylum doesn't take away the trauma, but it relieves these people of the fear of returning to a country where they are not safe, Nelson said.
"When someone who has got a real basis for an asylum claim gets granted, and you were part of demonstrating why that should be the case," he said, "that feels really good."