Under new 'copay accumulator' programs, the monthly copayments drug companies make don't count toward patients' plan deductibles or out-of-pocket maximums.
Since Kristen Catton started taking the drug Gilenya two years ago, she's had only one minor relapse of her multiple sclerosis, following a bout of the flu.
She can walk comfortably, see clearly and work part time as a nurse case manager at a hospital near her home in Columbus, Ohio. This is a big step forward; two drugs she previously tried failed to control her physical symptoms or prevent repeated flare-ups.
This year, Catton, 48, got a shock. Her health insurance plan changed the way it handles the payments that the drugmaker Novartis makes to help cover her prescription's cost. Her copayment is roughly $3,800 a month, but Novartis helps reduce that out-of-pocket expense with payments to the health plan. The prescription costs about $90,000 a year.
Those Novartis payments no longer counted toward her family plan's $8,800 annual pharmacy deductible. That meant once she hit the drugmaker's payment cap for the copay assistance in April, she would have to pay the entire copayment herself until her pharmacy deductible was met.
Catton is one of a growing number of consumers taking expensive drugs who are discovering they are no longer insulated by copay assistance programs that help cover their costs. Through such programs, consumers typically owe nothing or have modest monthly copayments for pricey drugs because many drug manufacturers pay a patient's portion of the cost to the health plan, which chips away at the consumer's deductible and out-of-pocket maximum limits until the health plan starts paying the whole tab.
In these programs, the monthly copayments drug companies make don't count toward patients' plan deductibles or out-of-pocket maximums. Once patients hit the annual limit on a drugmaker's copay assistance program, they're on the hook for their entire monthly copayment until they reach their plan deductible and spending limits.
Catton put the $3,800 May copayment on a credit card. She knows her insurer will start paying the entire tab once she hits the pharmacy deductible. But, she said, she can't afford to pay nearly $9,000 a year out-of-pocket for the foreseeable future.
"I'm talking to my doctor to see if I can I take it every other day," she said. "I guess I'm winging it until I can figure out what to do."
Drug copay assistance programs have long been controversial.
Proponents say that in an age of increasingly high deductibles and coinsurance charges, such help is the only way some patients can afford crucial medications.
But opponents say the programs increase drug spending on expensive brand-name drugs by discouraging people from using more cost-effective alternatives.
Switching to a cheaper drug may not be an option, said Bari Talente, executive vice president for advocacy at the National Multiple Sclerosis Society.
"Generally the multiple sclerosis drugs are not substitutable," she said. "Most have different mechanisms of action, different administration and different side effect profiles." Generics, when they're available, are pricey too, typically costing $60,000 or more annually, she said.
Most MS drug annual copay assistance limits, if they have them, are between $9,000 and $12,000, Talente said.
Employers argue that the drug copayment programs are an attempt to circumvent their efforts to manage health care costs. For example, employers may try to discourage the use of a specialty drug when there's a lower-cost drug available by requiring higher patient cost sharing.
There's also the issue of fairness.
"From an employer perspective, everyone under the plan has to be treated the same," said Brian Marcotte, president and CEO of the National Business Group on Health (NBGH), which represents large employers.
If someone needs medical care such as surgery, for example, that person doesn’t get help covering his deductible, while the person with the expensive drug might, he said.
According to an NBGH survey of about 140 multistate employers with at least 5,000 workers, 17 percent reported they have a copay accumulator program in place this year, Marcotte said. Fifty-six percent reported they're considering them for 2019 or 2020.
If there is no comparable drug available, drug copayment programs may have a role to play if they can be structured so that participating patients are paying some amount toward their deductible, Marcotte said. But, he said, assistance programs for drugs that are available from more than source, such as a brand drug that is also available as a generic, shouldn't be allowed.
In 2016, 20 percent of prescriptions for brand-name drugs used a drug copay assistance coupon, according to an analysis by researchers at the USC Schaeffer Center for Health Policy and Economics. Among the top 200 drugs based on spending in 2014, the study found that 132 were brand-name drugs, and 90 of them offered copay coupons. Fifty-one percent of the drugs with copay coupons had no substitute at all or only another brand drug as a close therapeutic substitute, the analysis found.
Advocates for people with HIV and AIDS say copay accumulators are cropping up in their patients' plans and beginning to cause patients trouble. Drugs to treat HIV typically don't have generic alternatives.
The biggest impact for the community their organizations serve may be for PrEP, a daily pill that helps prevent HIV infection, said Carl Schmid, deputy executive director at the AIDS Institute, an advocacy group. A 30-day supply of PrEP (brand-name Truvada) can cost nearly $2,000. Drug manufacturer Gilead offers a copay assistance program that covers up to $3,600 annually in copay assistance, with no limit on how much is paid per month.
"They're at risk for HIV, they know it and want to protect themselves," Schmid said. "It's a public health issue."
Earlier this month, the AIDS Institute was among 60 HIV organizations that sent letters to state attorneys general and insurance commissioners across the country asking them to investigate this practice, which has emerged in employer and marketplace plans this year.
Compounding advocates' concerns is the fact that these coverage changes are frequently not communicated clearly to patients, Schmid said. They are typically buried deep in the plan documents and don't appear in the user-friendly summary of benefits and coverage that consumers receive from their health plan.
"How is a patient to know?" Schmid asks. They learn of the change only when they get a big bill midway through the year. "And then they're stuck."
The $1,200 cameras come from a company called Natus Medical. They provide a close-up shot that anyone in the world can log on to see, using a password.
Hospitals around the country have been upgrading their neonatal intensive care units to include personal webcams for each tiny patient. It's a convenience for parents — and reduces worries about visitors bringing in germs.
The neonatal intensive care unit at St. Thomas Midtown in Nashville is the latest hospital to join the webcam wave, among facilities around the country from big cities to towns that are installing cameras over each infant.
At St. Thomas, Sherri Anderson has 20 years of experience as a neonatal nurse, watching parents run themselves ragged trying to be at the hospital every waking hour, sometimes commuting long distances.
"The parents go through a lot — emotionally, spiritually, physically," Anderson said. "It's very taxing, and sometimes they just need to go home and just recover."
The $1,200 cameras — which St. Thomas paid for through a special fundraiser — come from a company called Natus Medical. They provide a close-up shot that anyone in the world can log on to see — using a password.
Jill Brothers had twin boys born at 27 weeks, requiring a two-month stay in the NICU. Her husband, who plays professional baseball, was away for spring training most of that time, but he could get on the computer and watch the boys' progress.
"This has been a crucial element to just being a part and feeling like you're involved with their growth," she said. "There's lots of other people in the family that have been able to log on and see the boys and see them [in] real time, which is great."
Brothers still came to the hospital every day, but she found herself checking the web stream when she was up in the middle of the night — to watch the boys breathing.
"I really just felt like it was safe and comfortable," she said.
Parents' peace of mind is only one aim, though. St. Thomas NICU nursing director Donna Darnell said the new cameras could cut down on germs sneaking into the unit from other relatives stopping by.
"There are times throughout the year that we worry about a lot of visitors. Flu season is the best example," Darnell said.
Even during normal times, access for family and friends is highly restricted because of germs — and the cameras give many more people the opportunity to see the tiny patients.
In the little research that has been done, parents have loved the video access. Doctors also are OK with it, but a study published in the American Journal of Perinatology found that some nurses have misgivings about being watched all day and all night.
One of the study's authors, Dr. Gene Dempsey from the University College Cork in Ireland, helped conduct the survey and said nurses worry they will get even more after-hours calls, wanting an explanation for what's on screen. But, he said, that doesn't seem to happen.
"In fact some of the workers [in hospitals with these cameras] suggested that the interaction at parent level — in terms of phone calls in the evening and at nighttime — are less when the system is in place," he said.
Dempsey's own hospital is launching a webcam system in the next few weeks and he has made a point of getting nurses on board.
"What we're probably going to do, and we've had much discussion with the nursing staff initially, is that this would be a phased-in process," he said.
Dempsey said they'll start with "virtual visitation hours." At St. Thomas, the nursing director decided to turn off the livestreams whenever a nurse is working with a child — a compromise that seems to have everyone smiling for the camera.
MONTEBELLO, Calif. — Wendy Wan, 31, said American infant formula is advertised in her native China as the most nutritious food for a newborn.
“It sounds like it’s premium,” said Wan, who gave birth in early May at Beverly Hospital here. Wan said she was skeptical of the ads and had planned to feed her baby son only breast milk. But when her milk failed to come in quickly, she didn’t hesitate to supplement it with formula.
“I prefer breastfeeding, but I think it’s almost the same,” she said from her hospital bed the day after her son was born.
It’s not the same. The American Academy of Pediatrics recommends exclusive breastfeeding for the first six months of a baby’s life because of the well-known health benefits for both infants and mothers. Women, like Wan, who start with the intention of feeding their babies exclusively breast milk but then supplement it with formula while still in the hospital are nearly three times more likely to stop breastfeeding within two months, according to one study.
California has made significant progress in recent years promoting exclusive breastfeeding in hospitals, but many women aren’t sticking with it. All but a small fraction of women start breastfeeding while in the hospital, but nearly one-third introduce their babies to formula before leaving, according to data from the California Department of Public Health.
And significant disparities — both ethnic and socioeconomic — persist. While women of color are exclusively breastfeeding their babies more frequently than in the past, they still lag far behind whites: In 2016, nearly 82 percent of white moms gave their infants only breast milk in the hospital, compared with 60 percent of black moms and 65 percent of Asian and Latina moms, according to the department’s data. (Data for individual race groups exclude persons of Hispanic ethnicity, who can be of any race.)
Wide gaps also separate California’s counties and hospitals. Some facilities reported exclusive breastfeeding rates of more than 90 percent and others less than 25 percent. Some of the hospitals with the lowest rates are in lower-income communities. The statewide average is 69 percent.
“Where you deliver … and what race you are have a huge impact on breastfeeding,” said Arissa Palmer, executive director of the nonprofit advocacy group Breastfeed LA. “Those are barriers that we haven’t touched the surface on.”
In an effort to diminish the disparities and improve the health of babies, state law requires hospitals to implement concrete measures to promote breastfeeding no later than 2025.
Research shows that breastfeeding babies can reduce their risk of obesity, diabetes and asthma. It can also lessen the chance of heart disease and cancer in mothers.
Nationally, non-Hispanic black babies are significantly less likely to breastfeed than non-Hispanic whites or Hispanics, according to the Centers for Disease Control and Prevention. Mississippi, West Virginia, Louisiana and Arkansas have the lowest breastfeeding rates in the U.S. Colorado, Oregon, Idaho and Washington have the highest.
About 60 percent of women in the U.S. stop breastfeeding before they had initially intended to, the CDC said. Among the reasons: worries about their infants’ weight, problems with latching, unsupportive policies at work and lack of education about the benefits of breastfeeding.
Another factor may be the unintended consequences of patient satisfaction scores, said Carmen Rezak, maternal-child health quality coordinator for AHMC Healthcare, a Southern California hospital chain. Because patient ratings are tied to hospital reimbursement, nurses are sometimes afraid to deny patients' wishes. They may not want to tell relatives they cannot visit, for example, even if more privacy and quiet time do encourage breastfeeding, Rezak said.
The publication of statewide data on exclusive breastfeeding rates places “pressure on hospitals” to really look at their policies and practices compared with their competitors, said Jen Goldbronn of the state’s public health department.
One of the best-known ways to increase rates of exclusive breastfeeding is by following the “Ten Steps to Successful Breastfeeding.” These include helping mothers start nursing within one hour of birth, not giving formula to babies unless medically necessary and informing all pregnant women about the benefits of breastfeeding.
The organization Baby-Friendly USA requires hospitals seeking its “baby-friendly” seal to follow the 10 steps. In California, nearly 100 hospitals have that designation, up from 12 in 2006. The state law requiring hospitals to have breastfeeding support measures in place by 2025 specifically names the 10 steps, but also allows hospitals to adopt alternative practices proven to encourage breastfeeding.
Trish MacEnroe, executive director of Baby-Friendly USA, said hospitals across the country used to discourage breastfeeding inadvertently by whisking babies away to nurseries. Now, newborns typically stay in the room with the mother and start nursing immediately after birth. Urging moms to hold their babies “skin to skin” right after birth helps encourage breastfeeding because of the physical proximity, according to research.
Some of the hospitals with the lowest rates of exclusive breastfeeding in the state are Whittier Hospital, at 20 percent, and Monterey Park Hospital, at 22 percent. The two hospitals, both run by AHMC Healthcare, serve a high number of Asian moms and others who come to the country for the sole purpose of giving birth, Rezak said.
Foreign parents are among the most difficult to convince about the importance of exclusive breastfeeding, in part because of cultural barriers or myths about the value of formula, she said. Education is also important, Rezak said. Hospital staff try to teach all new moms to recognize when their infants are hungry or tired.
At PIH Health Hospital Whittier, moms who want formula have to sign a form acknowledging they understand their decision, said Valerie Martin, clinical director of maternity care. The hospital’s rate of exclusive breastfeeding is 80 percent, compared with 33 percent at its sister hospital in Downey.
At Beverly Hospital, where Wan gave birth, nurses show patients different positions for breastfeeding and reinforce the importance of exclusive breastfeeding. But they also try not to push new mothers, said Melissa Morita, director of maternal and child health.
Peng Peng, who lives in China, came to the U.S. about a month before giving birth to her daughter, Ella Lang, at the hospital earlier this month. Peng, 34, said that soon after Ella was born, a nurse gave her formula because her blood sugar was low.
Peng said she didn’t mind too much but still wanted to breastfeed as much as possible.
“It’s natural and it’s more nutritious,” she said. “But I’m not super against formula.”
Hospitals are expected to perform fewer unnecessary cesarean sections, prescribe fewer opioids, and cut back on the use of imaging to diagnose and treat back pain.
Covered California, the state's health insurance marketplace under the Affordable Care Act, has devised what could be a powerful new way to hold hospitals accountable for the quality of their care. Starting in less than two years, if the hospitals haven't met targets for safety and quality, they'll risk being excluded from the "in-network" designation of health plans sold on the state's insurance exchange.
"We're saying 'time's up,'" said Dr. Lance Lang, the chief medical officer for Covered California. "We've told health plans that by the end of 2019 we want networks to only include hospitals that have achieved that target."
Here's how hospitals will be measured: They must perform fewer unnecessary cesarean sections, prescribe fewer opioids and cut back on the use of imaging (X-rays, MRIs and CT scans) to diagnose and treat back pain. Research has shown these are problem areas in many hospitals — the procedures and pills have an important place, but have been overused to the point of causing patient harm, health care analysts said.
C-sections, in particular, have come under scrutiny for years.
Hospitals get paid more to perform a C-section than a vaginal delivery and C-sections usually take less time: 40 minutes for a scheduled procedure versus 24-hour on-call staffing for vaginal deliveries. Many women who don't need a C-section often get one anyway, according to the data — and rates vary by hospital. Even in low-risk cases, several California hospitals are delivering 40 percent of babies by C-section, Lang said. At one hospital, it's 78 percent.
"That means that when a woman goes to a hospital, it's the culture of the hospital that really determines whether or not she gets a cesarean section, not so much her own health," said Lang.
C-sections are major surgery. Doing them when they're not needed exposes women to unnecessary risks: infection, hemorrhage, even death. Babies delivered by C-section are more likely to have complications and spend more time in the neonatal intensive care unit.
That's not quality health care, Lang said, and that's why Covered California is telling hospitals they need to reduce their C-section rates to 23.9 percent or lower, for low-risk births.
In this case, "low-risk" is defined as a healthy, first-time mom who has carried a single baby with its head down, all the way to full term — 39 weeks gestation.
Medi-Cal, the state health program for low-income residents, CalPERS, the retirement program for state employees, and the Pacific Business Group on Health, which represents self-insured employers, are also calling on hospitals to improve their quality measures. Together, these groups pay for the health care of 16 million Californians, or 40 percent of the state, which gives them substantial leverage with hospitals.
But only Covered California is telling hospitals that if they don't play by the rules, they'll be benched.
"It's probably the boldest move we've seen in maternity care ever," said Leah Binder, CEO of the Leapfrog Group, a Washington, D.C.-based nonprofit that rates hospitals on quality.
Expecting hospitals to meet external metrics for quality control is a recent phenomenon, and compliance is still largely voluntary, she said.
"Back in the '80s and '90s, nobody ever thought that hospitals should have to report to anyone on how they were doing," she said. "There's never been a culture of accountability."
Covered California's move is nationally significant, Binder said, given the consequences for hospitals, and the agency's reach — 1.4 million people buy coverage through the marketplace — and they shop among plans offered by 11 state-approved insurance companies.
Insurers and business groups across the country are already keeping an eye on California's effort, she said, to see how they might band together to demand similar change from the hospitals in their regions.
Overall, California's hospitals are on board with the C-section goal. Of the 243 maternity hospitals in the state, 40 percent have met the target, Lang said, and another 40 percent have taken advantage of coaching and consulting to help educate doctors on how they can adjust their practices. They're also finding they have to educate patients who request C-sections about the procedure's risks.
"While many may prefer [the surgery], when having the full information about the risk that they may be putting themselves and their babies in, they elect not to move in that direction," said Julie Morath, CEO of the Hospital Quality Institute, a subsidiary of the California Hospital Association. Both groups support the C-section reduction goals as "the right thing to do," she said.
The strategy has raised some concerns among mothers who hear about the 23.9 percent target and worry about rationing.
"We don't just chase rates," Morath said in response to that concern, "but rather look at what the clinical needs are and how to best respond to those. So if there is an indication for a cesarean section, the mother will receive a cesarean section."
Still, not all hospitals will find it easy to comply. State data show there are about 40 hospitals that are still far off the target, including a cluster of hospitals in East Los Angeles that treat low-income, often uninsured, patients.
"If you have somebody who is on methamphetamines and is homeless and has not gotten any prenatal care, her chance of a C-section is way higher than someone who is not all those things," said Dr. Malini Nijagal, an OB-GYN at Zuckerberg San Francisco General Hospital. "And so the problem is, how do you adjust for the patient population of a hospital?"
At Memorial Hospital of Gardena, the C-section rate is 45.2 percent. At East Los Angeles Doctors Hospital, the rate is 48.1 percent, according to publicly available state data listed on CalHospital Compare and Yelp. Both hospitals are working diligently to lower the rates, according to Amie Boersma, director for communications for Avanti Hospitals, which owns both hospitals.
She said the hospitals will meet the 23.9 percent benchmark and are committed to doing so for the sake of their patients. Being excluded from Covered California health plan networks, she added, would make it even more difficult for those patients to get care. They would either have to pay out-of-network fees to be seen there, or they would have to travel farther to another facility that was still in the network.
"We are in underserved, economically challenged urban neighborhoods and it is vitally important that we continue to provide appropriate, high-quality care for our communities," Boersma said.
Health plans can request an exemption from Covered California's contract rules (in order to keep noncomplying hospitals in their networks) — as long as they document their reasoning.
"That is flexibility that we asked for to ensure that we maintain adequate access to providers," said Charles Bacchi, CEO of the California Association of Health Plans, a trade group for insurers. "Any major changes to health plan networks must be filed with regulators. And health plans have to ensure that patients continue to receive services in a timely manner."
So far, the prospect of exclusion, plus the coaching for hospitals on how to reduce the rates, have functioned as an effective motivator. By 2020, Covered California's Lang predicted, all hospitals will either have met the target or be on their way.
"It's a quality improvement project," Lang said, "but with a deadline."
Drug companies that may have engaged in 'shenanigans' to delay the entrance of cheaper competitors onto the market have raised prices and cost taxpayers more money over time.
Makers of brand-name drugs called out by the Trump administration for potentially stalling generic competition have hiked their prices by double-digit percentages since 2012 and cost Medicare and Medicaid nearly $12 billion in 2016, a Kaiser Health News analysis has found.
As part of President Donald Trump’s promise to curb high drug prices, the Food and Drug Administration posted a list of pharmaceutical companies that makers of generics allege refused to let them buy the drug samples needed to develop their products. For approval, the FDA requires so-called bioequivalence testing using samples to demonstrate that generics are the same as their branded counterparts.
The analysis shows that drug companies that may have engaged in what FDA Commissioner Scott Gottlieb called “shenanigans” to delay the entrance of cheaper competitors onto the market have indeed raised prices and cost taxpayers more money over time.
The FDA listed more than 50 drugs whose manufacturers have withheld or refused to sell samples, and cited 164 inquiries for help obtaining them. Thirteen of these pleas from makers of generics pertained to Celgene’s blockbuster cancer drug Revlimid, which accounted for 63 percent of Celgene’s revenue in the first quarter of 2018, according to a company press release.
The brand-name drug companies “wouldn’t put so much effort into fighting off competition if these weren’t [such] lucrative sources of revenue,” said Harvard Medical School instructor Ameet Sarpatwari. “In the case of a blockbuster drug, that can be hundreds of millions of dollars of revenue for the brand-name drugs and almost the same cost to the health care system.”
Indeed, a KHN analysis found that 47 of the drugs cost Medicare and Medicaid almost $12 billion in 2016. The spending totals don’t include rebates, which drugmakers return to the government after paying for the drugs upfront but are not public. The rebates ranged from 9.5 percent to 26.3 percent for Medicare Part D in 2014, the most recent year that data are available.
The remaining drugs do not appear in the Medicare and Medicaid data.
By delaying development of generics, drugmakers can maintain their monopolies and keep prices high. Most of the drugs cost Medicare Part D more in 2016 than they did in 2012, for an average spending increase of about 60 percent more per unit. This excludes drugs that don’t appear in the 2012 Medicare Part D data.
Revlimid cost Medicare Part D $2.7 billion in 2016, trailing only Harvoni, which treats hepatitis C and is not on the FDA’s new list. The cost of Revlimid, which faces no competition from generics, has jumped 40 percent per unit in just four years, the Medicare data show, and cost $75,200 per beneficiary in 2016.
Some drugs on the FDA’s list, including Celgene’s, are part of a safety program that can require restricted distribution of brand-name drugs that have serious risks or addictive qualities. Drugmakers with products in the safety program sometimes say they can’t provide samples unless the generics manufacturer jumps through a series of hoops “that generic companies find hard or impossible to comply with,” Gottlieb said in a statement.
The Department of Health and Human Services Office of Inspector General issued a report in 2013 that said the FDA couldn’t prove that the program actually improved safety, and Sarpatwari said there’s evidence drugmakers are abusing it to stave off competition from generics.
Gottlieb said the FDA will be notifying the Federal Trade Commission about pleas for help from would-be generics manufacturers about obtaining samples, and he encouraged the manufacturers to do the same if they suspect they’re being thwarted by anticompetitive practices.
Celgene spokesman Greg Geissman said the company has sold samples to generics manufacturers and will continue to do so. He stressed maintaining a balance of innovation, generic competition and safety.
“Even a single dose of thalidomide, the active ingredient in Thalomid, can cause irreversible, debilitating birth defects if not properly handled and dispensed. Revlimid and Pomalyst are believed to have similar risks,” Geissman said.
The highest number of pleas for help related to Actelion Pharmaceuticals’ pulmonary hypertension drug Tracleer. In 2016, that drug cost Medicare $90,700 per patient and more than $304 million overall. Meanwhile, spending per unit jumped 52 percent from 2012 through 2016.
Actelion was acquired by Johnson & Johnson’s pharmaceutical arm, Janssen, in 2017.
Actelion spokeswoman Colleen Wilson said that the company “cooperate[s]” with makers of generic drugs and “has responded to all requests it has received directly from generic manufacturers seeking access to its medications for bioequivalence testing.”
PhRMA, the trade group for makers of brand-name pharmaceuticals, said the FDA’s list was somewhat unfair because it lacked context and responses from those it represents.
“While we must continue to foster a competitive marketplace, PhRMA is concerned that FDA’s release of the ‘inquiries’ it has received lacks proper context and conflates a number of divergent scenarios,” said PhRMA spokesman Andrew Powaleny.
Congress is considering the CREATES Act, which stands for “Creating and Restoring Equal Access to Equivalent Samples” and would foster competition in part by allowing generics manufacturers to sue brand-name drug manufacturers to compel them to provide samples.
The bill’s sponsor, Sen. Patrick Leahy (D-Vt.), said more transparency from the FDA is helpful, but more work from the agency is needed to end the anticompetitive tactic. “With billions of dollars at stake, a database alone will not stop this behavior,” Leahy said.
Co-sponsor Sen. Chuck Grassley (R-Iowa), chairman of the Judiciary Committee, expressed similar sentiments, telling KHN: “The CREATES Act is necessary because it would serve as a strong deterrent to pharmaceutical companies that engage in anticompetitive practices to keep low-cost generic drugs off the market.”
The FDA hasn’t come out in support of CREATES. “They should know that this is going to require a legislative solution,” Sarpatwari said. “Why are they not stepping into this arena and saying that?”
Anthem slashed the rate it reimburses medical suppliers for breast pumps by 44%, meaning some breast pumps that used to be free under the ACA will now entail a cost to consumers.
A sharp cut in breast pump payments by the nation’s second-largest health insurer has prompted a strong reaction from breastfeeding advocates, who warn that some new moms will not get the pumps they need and fewer babies will be breastfed.
Starting last month, Anthem Inc. slashed the rate it reimburses medical suppliers for breast pumps by 44 percent — from $169.15 to $95. The move means some breast pumps that used to be free under a provision of the Affordable Care Act will now entail a cost to consumers, according to the advocacy group MomsRising. More complex pumps, which have always required an out-of-pocket payment, will now be more expensive. It’s unclear how many women will be affected.
“It’s going to have a bigger impact on lower-income moms who can’t afford the increased out-of-pocket expense,” said Ruth Martin, vice president of Workplace Justice Campaigns for MomsRising. “Some moms will just stop breastfeeding.”
The lower payment rate applies to all commercial health plans sold by Anthem, which provides medical coverage for 40 million — or about 1 in 8 — people in the United States. The rate will not affect Anthem-run Medicaid plans, company spokesman Eric Lail said.
Anthem says that a variety of high-quality breast pumps will still be available to nursing moms at no cost, as required by the ACA.
But the lower reimbursement appears to be limiting the number of free pumps available to Anthem enrollees as medical suppliers charge them for the shortfall on models that the old Anthem rate used to fully cover.
Bob Achermann, executive director of the California Association of Medical Product Suppliers, acknowledged that lower reimbursement rates for medical equipment in general have forced suppliers to make tough decisions, including limiting customer choices.
The cost of a breast pump can vary widely, depending on the model and whether it is purchased directly from a retailer or with insurance through a medical equipment supplier. Retail prices range from as little as $12 for the most basic pumps to $400 for the higher-end ones. Some hospital-grade pumps, which can cost several thousand dollars, are typically rented by moms for roughly $80 a month.
But the amount insured consumers pay, if anything, is based on the prices their health plan negotiates with suppliers, which can be lower than retail.
Anthem declined to reveal any prices on the range of pumps it offers but listed a handful of “popular” pumps its enrollees can get for free.
“Anthem recognizes the positive health benefits that breastfeeding can have on mothers and their newborns,” the company told California Healthline in an emailed statement. “The recent [rate] adjustment … will not impact the ability of any new mother to access a high-quality, standard double electric breast pump from our contracted medical suppliers.”
To comply with the ACA’s free breast pump mandate, commercial insurers have offered certain models at no cost. That has saved families hundreds of dollars, since breast pumps often were not covered at all before the ACA. Some state Medicaid programs, including Medi-Cal, also provide this coverage.
But the no-cost pumps do not work for all mothers, experts say. Breast pumps vary from manually operated ones to electric ones to the much stronger hospital-grade variety. The design or capacity of one pump may fit the needs — or bodies — of some women but not others.
Some mothers, for example, need to pump more milk because their babies have medical conditions that make it difficult for them to drink directly from the breast. Other mothers, returning to work after maternity leave, may need to express milk for daytime feedings by caregivers — or, if they are pumping at their workplace, to minimize break time.
Women who need more complex pumps — ones that have always required coinsurance payments — now must shell out more money as a result of Anthem’s decision, breastfeeding advocates say. That, in turn, raises a key question: Will more mothers simply settle for lower-end pumps that medical experts say might frustrate them and induce them to give up breastfeeding?
Breast pumps “are not cheap,” said Karissa Soma, an Orangevale, Calif., mom who took a half-year off work to care for her 5-month-old son. “I paid almost $5,000 in hospital bills, and you add the expense to stay home. It’s already so much.”
Critics of Anthem’s decision believe it cuts against the spirit of the ACA breast pump rule, which was intended to remove barriers to breastfeeding. Research shows the health law provision, which was implemented in 2012, has induced more new moms to breastfeed their babies and to continue doing so longer than before.
“It is clear that this [Anthem] decision would have far-reaching and deleterious effects on a mother’s ability to reach their breastfeeding goals,” the United States Breastfeeding Committee and dozens of other breastfeeding advocates wrote in an April 25 letter to Anthem President and CEO Gail Boudreaux.
When 31-year-old Bakersfield, Calif., resident Megan Eskew, an Anthem enrollee, gave birth in April 2017, she needed a pump to feed her milk to her baby boy, Reid, who spent the first six days of his life in the intensive care unit and could drink only from a bottle.
The hospital-grade pump delivered the breast milk that Eskew, a first-time mom, believed was critical for Reid. When Reid left the hospital, he still needed to drink from a bottle, so Eskew selected a high-end pump that required a coinsurance payment of roughly $100 under the terms of her health plan. That was a year before Anthem cut its reimbursement.
“I’m lucky I had the financial resources to buy a pump,” Eskew said, “but not all moms have those options.”
The rules now under review, according to Trump administration officials, would require facilities receiving federal family planning funds to be physically separate from those that perform abortion
The planned revival of a policy dating to Ronald Reagan’s presidency may finally present a way for President Donald Trump to fulfill his campaign promise to “defund” Planned Parenthood. Or at least to evict it from the federal family planning program, where it provides care to more than 40 percent of that program’s 4 million patients.
Congress last year failed to wipe out funding for Planned Parenthood, because the bill faced overwhelming Democratic objections and would not have received the 60 votes needed to pass in the Senate.
But the imposition of a slightly retooled version of a regulation, which was upheld by the Supreme Court in 1991 after a five-year fight, could potentially accomplish what Congress could not.
The rules now under review, according to Trump administration officials, would require facilities receiving federal family planning funds to be physically separate from those that perform abortion; would eliminate the requirement that women with unintended pregnancies be counseled on their full range of reproductive options; and would ban abortion referrals.
All those changes would particularly affect Planned Parenthood.
Planned Parenthood, which provides a broad array of reproductive health services to women and men, also provides abortion services using non-federal funds. Cutting off funding has been the top priority for anti-abortion groups, which supported candidate Trump.
“A win like this would immediately disentangle taxpayers from the abortion business and energize the grassroots as we head into the critical midterm elections,” Marjorie Dannenfelser, president of the anti-abortion Susan B. Anthony List, said in a statement.
In a conference call with reporters, Planned Parenthood officials said they would fight the new rules.
“We’ve been very clear, Planned Parenthood has an unwavering commitment to ensuring everyone has access to the full range of reproductive health care, and that includes abortion,” said Dawn Laguens, executive vice president of the Planned Parenthood Federation of America.
Here is a guide to what the proposal could do and what it could mean for Planned Parenthood and the family planning program:
What Is Title X?
The federal family planning program, known as “Title Ten,” is named for its section in the federal Public Health Service Act. It became law in 1970, three years before the Supreme Court legalized abortion in Roe v Wade.
The original bill was sponsored by then Rep. George H.W. Bush (R-Texas) and signed into law by President Richard Nixon.
The program provides wellness exams and comprehensive contraceptive services, as well as screenings for cancer and sexually transmitted diseases for both women and men.
In 2016, the most recent year for which statistics have been published, Title X served 4 million patients at just under 4,000 sites.
Title X patients are overwhelmingly young, female and low-income. An estimated 11 percent of Title X patients in 2016 were male; two-thirds of patients were under age 30; and nearly two-thirds had income below the federal poverty line.
What Is Planned Parenthood’s Relationship To Title X And Medicaid?
Planned Parenthood affiliates account for about 13 percent of total Title X sites but serve an estimated 40 percent of its patients. Only about half of Planned Parenthood affiliates perform abortions, although the organization in its entirety is the nation’s leading abortion provider.
Planned Parenthood also gets much more federal funding for services provided to patients on the Medicaid program (although not for abortion) than it does through Title X.
Eliminating Medicaid funding for Planned Parenthood has proven more difficult for lawmakers opposed to the organization because the federal Medicaid law includes the right for patients to select their providers. Changing that also would require a 60-vote majority in the Senate. So that particular line of funding is likely not at risk.
While opponents of federal funding for Planned Parenthood have said that other safety-net clinics could make up the difference if Planned Parenthood no longer participates in Title X, several studies have suggested that in many remote areas Planned Parenthood is the only provider of family planning services and the only provider that regularly stocks all methods of birth control.
Texas, Iowa and Missouri in recent years have stopped offering family planning services through a special Medicaid program to keep from funding Planned Parenthood. Texas is seeking a waiver from the Trump administration so that its program banning abortion providers could still receive federal funding. No decision has been made yet, federal officials said.
Why Is Planned Parenthood’s Involvement With Title X Controversial?
Even though Planned Parenthood cannot use federal funding for abortions, anti-abortion groups claim that federal funding is “fungible” and there is no way to ensure that some of the funding provided for other services does not cross-subsidize abortion services.
In the early 1980s, the Reagan administration tried to separate the program from its federal funding by requiring parental permission for teens to obtain birth control. That was followed by efforts to eliminate abortion counseling.
Starting in 2011, undercover groups accused the organization of ignoring sex traffickers and selling fetal body parts in an effort to get the organization defunded. Planned Parenthood denies the allegations.
What Happened The Last Time An Administration Tried To Move Planned Parenthood Out Of Title X?
In 1987, the Reagan administration proposed what came to be known as the “gag rule.” Though the administration’s new proposal is not yet public, because the details are still under review by the Office of Management and Budget, the White House released a summary, saying the new rule will be similar although not identical to the Reagan-era proposal.
The original gag rule would have forbidden Title X providers from abortion counseling or referring patients for abortions, required physical separation of Title X and abortion-providing facilities and forbidden recipients from using nonfederal funds for lobbying, distributing information or in any way advocating or encouraging abortion. (The Planned Parenthood Federation of America, the umbrella group for local affiliates, has a separate political and advocacy arm, the Planned Parenthood Action Fund.)
Those rules were the subject of heated congressional debate through most of the George H.W. Bush administration and were upheld in a 5-4 Supreme Court ruling in 1991, Rust v. Sullivan.
Even then, the gag rule did not go into effect because subsequent efforts to relax the rules somewhat to allow doctors (but not other health professionals) to counsel patients on the availability of abortion created another round of legal fights.
Eventually the rule was in effect for only about a month before it was again blocked by a U.S. appeals court. President Bill Clinton canceled the rules by executive order on his second day in office, and no other president tried to revive them until now.
How Is The Trump Administration’s Proposal Different From Earlier Rules?
According to the summary of the new proposal, released Friday, it will require physical separation of family planning and abortion facilities, repeal current counseling requirements, and ban abortion referrals.
One of the biggest differences, however, is that the new rules will not explicitly forbid abortion counseling by Title X providers.
But Planned Parenthood officials say that allowing counseling while banning referrals is a distinction without a difference.
Kashif Syed, a senior policy analyst for the organization said: “Blocking doctors from telling a patient where they can get safe and legal care in this country is the definition of a gag rule.”
What Happens Next?
All proposed rules are reviewed by the Office of Management and Budget. Sometimes they emerge and are published in a few days; sometimes they are rewritten, and it takes months.
Meanwhile, Planned Parenthood officials said they will not know if they will take legal action until they see the final language of the rule. But they say they do plan to use the regulatory process to fight the changes that have been made public so far.
This week, Vermont passed a first-in-the-nation law that would facilitate the state’s importation of prescription drugs wholesale from Canada. It represents the state’s effort to tackle head-on the issue of constantly climbing drug prices.
Other states, including Louisiana and Utah, have debated similar legislation and are watching Vermont’s progress closely.
After all, the issue of drug importation polls well across the political spectrum and has been endorsed by politicians ranging from candidate Donald Trump, before he became president, to liberal firebrand Sen. Bernie Sanders (I-Vt.).
So how much impact might a state law like this actually have?
Trump has since stepped back from his campaign position, and the White House did not include drug importation in its proposal last week to bring down drug prices.
And cautions abound that importation may not actually save that much money as questions swirl about whether the policy undermines drug safety standards.
Kaiser Health News breaks down the challenges that lie ahead for importation champions, and what it shows about the future of the drug pricing fight.
States need federal approval to launch any kind of importation program.
Just having a law like Vermont’s on the books is not enough to legalize importation. The next step is for the state to craft a proposal outlining how its initiative would save money without jeopardizing public health. The proposal, in turn, is then subject to approval by the federal Department of Health and Human Services.
HHS has had yea-or-nay power over state importation programs since at least 2003, because of a provision included in the law creating Medicare Part D. But it’s never actually approved such a plan. And — despite mounting political pressure — there’s little reason to think it will do so now.
In the past weeks, HHS Secretary Alex Azar has come out strongly against importation, calling it a “gimmick” that wouldn’t meaningfully bring down prices.
He also has argued that the U.S. government cannot adequately certify the safety of imported drugs.
HHS declined to comment beyond Azar’s public remarks.
Importation backers — including the National Academy for State Health Policy (NASHP), which helped craft Vermont’s bill and has worked with state lawmakers — hope he’ll reverse these positions. But few are optimistic that this will happen.
“I don’t expect that Vermont alone will be able to bring sufficient pressure to bear on Secretary Azar to convince him to change his mind,” said Rachel Sachs, an associate law professor at Washington University in St. Louis, who tracks drug-pricing laws.
A state’s importation program would also require buy-in from Canadian wholesalers. What’s in it for them?
Perhaps not much. Canadian wholesalers might stand to lose financially.
After all, pharmaceutical companies that market drugs in the United States might limit how much they sell to companies that have supply chains across the border. They could also raise their Canadian list prices.
“Almost inevitably, Canadians would cease getting better prices,” said Michael Law, a pharmaceutical policy expert and associate professor at the University of British Columbia’s Center for Health Services and Policy Research. “If I were a [Canadian] company, I wouldn’t want that to occur — and [drugmakers] could take steps to limit the supply coming north. … It probably results in [Canadians] getting higher prices.”
Trish Riley, NASHP’s executive director, dismissed this concern, saying some Canadian wholesalers have indicated interest in contracting with Vermont.
Vermont would still have to prove to HHS that its proposal would yield “substantial” savings. This won’t be easy.
In fact, some analysts suggest savings would be limited to a narrow slice of the market.
Importation could bring down the price of some generics and off-patent drugs by increasing competition, suggested Ameet Sarpatwari, a lawyer and epidemiologist at Harvard Medical School who studies drug pricing.
Many generic drugs have also seen substantial price hikes in recent years — but curbing these costs is only part of the equation.
“It’s not a panacea for the drug-pricing reform or high drug prices as a whole,” Sarpatwari said.
Branded drugs, which drive much of the American problem with prescription price tags, are distributed by a single company and, therefore, that company has greater control over supply and pricing pressure.
Drug safety looms over the debate.
The worry, according to critics, is that American regulators can’t effectively determine whether imported drugs meet the same safety standards as those sold directly in the United States. A year ago, a bipartisan group of former Food and Drug Administration commissioners made that very argument in a letter to Congress.
Azar has argued this same point, as has the influential pharmaceutical industry, represented by the Pharmaceutical Research and Manufacturers of America.
“Lawmakers cannot guarantee the authenticity and safety of prescription medicines when they bypass the FDA approval process,” said Caitlin Carroll, a PhRMA spokeswoman, in a statement released on Vermont’s law.
This position, though, draws skepticism.
In cases of drug shortages or public health emergencies, the United States has imported drugs. And many Canadian and American drugs are made and approved under similar standards, Law noted.
“In terms of general safety, it is kind of nonsense. … We share plants,” he said. “The idea that Canadian drugs are somehow unsafe is a red herring.”
An argument in favor of plans like Vermont’s focuses on the idea that because the state would import drugs wholesale — rather than enabling individuals to shop internationally — it would be able to address concerns about safety or quality, Riley said.
Plus, Sarpatwari suggested, the government has resources to track drugs that come from Canada, especially if a drug were recalled or ultimately found to have problems.
“Our technology is catching up with our ability to do effective monitoring,” he said. “Particularly when it’s coming from a well-regulated country, I think there is less fear over safety.”
States have been leading the charge on addressing the drug price issue, but their efforts reach only so far.
The federal government has taken little action to curb rising drug prices — though HHS now says it plans to change that.
So far, state legislatures have been pushing for laws to penalize price gouging, promote price transparency or limit what the state will pay.
But state initiatives often require federal permission.
Vermont’s law, which is arguably meaningless without HHS’ say-so, is just one example.
Sarpatwari pointed to a request from Massachusetts to develop a drug formulary for its Medicaid insurance program — theoretically giving the state more leverage to negotiate cheaper prices by reducing how many drugs it’s required to cover.
That proposal also is contingent upon approval from HHS. The administration has been publicly silent, though some newsreports suggest it leans toward rejecting the request.
Meanwhile, Sachs said Vermont’s law, and others like it, will challenge the White House to show its mettle in taking on drug costs.
“We’re seeing explicit actions by the states to put pressure back on the federal government,” Sachs said. “The administration is publicly committed to lowering drug prices. It is being asked to make decisions which will, in some ways, show how much it really is attempting to accomplish that goal.”
The tall, gangly man twists a cone of paper in his hands as stories from nearly 30 years of addiction pour out: the robbery that landed him in prison at age 17; never getting his high school equivalency diploma; going through the horrors of detox, maybe 40 times, including this latest bout, which he finished two weeks ago. He's now in a residential treatment unit for at least 30 days.
"I'm a serious addict," said Julio Cesar Santiago, 44. "I still have dreams where I'm about to use drugs, and I have to wake up and get on my knees and pray, 'Let God take this away from me,' because I don't want to go back. I know that if I go back out there, I'm done."
Santiago has reason to worry. Data on opioid addiction in his home state of Massachusetts show the overdose death rate for Latinos there has doubled in three years, growing at twice the rates of non-Hispanic whites and blacks.
Opioid overdose deaths among Latinos are surging nationwide as well. While the overall death toll is still higher for whites, it's increasing faster for Latinos and blacks, according to data from the Centers for Disease Control and Prevention. Latino fatalities increased 52.5 percent from 2014 to 2016, compared with 45.8 percent for whites. (Statisticians say Hispanic overdose counts are typically underestimated.) The most substantial hike was among blacks: 83.9 percent.
The data portray a changing face of the opioid epidemic.
"What we thought initially, that this was a problem among non-Hispanic whites, is not quite accurate," said Robert Anderson, mortality statistics branch chief at the CDC's National Center for Health Statistics. "If you go back into the data, you can see the increases over time in all of these groups, but we tended to focus on the non-Hispanic whites because the rates were so much higher."
There's little understanding about why overdose deaths are rising faster among blacks and Latinos than whites. Some physicians and outreach workers suspect the infiltration of fentanyl into cocaine is driving up fatalities among blacks.
The picture of what's happening among Latinos has been murky, but interviews with nearly two dozen current and former drug users and their family members, addiction treatment providers and physicians reveal that language and cultural barriers, even fear of deportation, could limit the access of Latinos to lifesaving treatment.
Bilingual Treatment Options Are Scarce
Irma Bermudez, 43, describes herself as a "grateful recovering addict." She's living in the women's residential unit at Casa Esperanza, a collection of day treatment, residential programs and transitional housing in Boston's Roxbury neighborhood.
Bermudez said the language barrier keeps anyone who can't read English out of treatment from the start, as they try to decipher websites or brochures that advertise options. If they call a number on the screen or walk into an office, "there's no translation — we're not going to get nothing out of it," Bermudez said.
Some of the Latinosinterviewed for this story described sitting through group counseling sessions, part of virtually every treatment program, and not being able to follow much, if any, of the conversation. They recalled waiting for a translator to arrive for their individual appointment with a doctor or counselor and missing the session when the translator is late or doesn't show up at all.
SAMHSA, the federal Substance Abuse and Mental Health Services Administration, maintains a Find Treatment website that includes listings of treatment offered in Spanish. But several Massachusetts providers listed there could not say how many translators they have or when they are available. The SAMHSA site is available only in English, with Spanish-language translators available only by phone.
At Casa Esperanza, 100 men are waiting for a spot in the male residential program, so recovery coach Richard Lopez spends a lot of time on the phone trying to get clients into a program he thinks has at least one translator.
After battling with voicemail, said Lopez, he'll eventually get a call back; the agent typically offers to put Lopez's client on another waiting list. That frustrates him.
"You're telling me that this person has to wait two to three months? I'm trying to save this person today," he said. "What am I going to do, bring these individuals to my house and handcuff them so they don't do nothing?"
Casa Esperanza Executive Director Emily Stewart said Massachusetts needs a public information campaign via Spanish-language media that explains treatment options. She'd like that to include medication-assisted treatment, which she said is not well understood.
Some research shows Latino drug users are less likely than others to have access to or use the addiction treatment medicines, methadone and buprenorphine. One study shows that may be shifting. But, Latinos with experience in the field said, access to buprenorphine (which is also known by the brand name Suboxone) is limited because there are few Spanish-speaking doctors who prescribe it.
A Matter Of Machismo: 'It's Not Cool To Call 911'
Lopez has close ties these days with health care providers, the police and EMT rescue squads. But that has changed dramatically from when he was using heroin. On the streets, he said, "it's not cool to be calling 911" when a person sees someone overdose. "I could get shot, and I won't call 911."
It's a machismo thing, said Lopez.
"To the men in the house, the word 'help' sounds, like, degrading, you know?" he said. Calling 911 "is like you're getting exiled from your community."
Santiago said not everyone feels that way. A few men called EMTs to help revive him. "I wouldn't be here today if it wasn't for them," he said.
But Santiago and others say there's growing fear among Latinos they know of asking anyone perceived as a government agent for help — especially if the person who needs the help is not a U.S. citizen.
"They fear if they get involved they're going to get deported," said Felito Diaz, 41.
Bermudez said Latina women have their own reasons to worry about calling 911 if a boyfriend or husband has stopped breathing.
"If they are in a relationship and trying to protect someone, they might hesitate as well," said Bermudez, if the man would face arrest and possible jail time.
A Tight Social Network
Another reason some Latino drug users said they've been hit especially hard by this epidemic: A 2017 DEA report on drug trafficking noted that Mexican cartels control much of the illegal drug distribution in the United States, selling the drugs through a network of local gangs and small-scale dealers.
In the Northeast, Dominican drug dealers tend to predominate.
"The Latinos are the ones bringing in the drugs here," said Rafael, a man who uses heroin and lives on the street in Boston, close to Casa Esperanza. "The Latinos are getting their hands in it, and they're liking it."
Kaiser Health News and NPR agreed not to use Rafael's last name because he uses illegal drugs.
"Of course, I would feel more comfortable selling to a Latino if I was a drug dealer than a Caucasian or any other, because I know how to relate and get that money off them," said Lopez.
The social networks of drug use create another layer of challenges for some Latinos, said Dr. Chinazo Cunningham, who treats many patients from Puerto Rico. She primarily works at a clinic affiliated with the Montefiore Medical Center in the Bronx, in New York City.
"The family is such an important unit — it's difficult, if there is substance use within the family, for people to stop using opioids," Cunningham said.
The Burden Of Poverty
Though Latinos are hardly a uniform community, many face an additional risk factor for addiction: poverty. About 20 percent of the community live in poverty, compared with 9 percent of whites, according to the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)
In Massachusetts, four times as many Latinos live below the poverty line as do whites. The majority of Casa Esperanza clients were recently homeless. The wait time for one of the agency's 37 individual or family housing units ranges from a year to a decade.
"If you've done all the work of getting somebody stabilized and then they leave and don't have a stable place to go, you're right back where you started," said Casa Esperanza's Stewart.
Cunningham said the Latino community has been dealing with opioid addiction for decades and it is one reason for the group's relatively high incarceration rate. In Massachusetts, Latinos are sentenced to prison at nearly five times the rate of whites.
"It's great that we're now talking about it because the opioid epidemic is affecting other populations," Cunningham said. "It's a little bit bittersweet that this hasn't been addressed years before. But it's good that we're talking about treatment rather than incarceration, and that this is a medical illness rather than a moral shortcoming."
Nationally, says the CDC's Anderson, there's no sign that the surge of overdose deaths is abating in any population.
"We've already had two years of declining life expectancy in the U.S., and I think that when we see the 2017 data we'll see a third year," said Anderson. "That hasn't happened since the great influenza pandemic in the early 1900s."
The fatality counts for 2017 are expected out by the end of this year.
The state's top cop is suing Sutter, accusing one of the nation's biggest health systems of systematically overcharging patients and illegally driving out competition.
Cooking dinner one night in March, Mark Frizzell sliced his pinkie finger while peeling a butternut squash and couldn’t stop the bleeding.
The 51-year-old businessman headed to the emergency room at Sutter Health’s California Pacific Medical Center in San Francisco. Sutter charged $1,555 for the 10 minutes it treated him, including $55 for a gel bandage and $487 for a tetanus shot.
“It was ridiculous,” he said. “Health insurance costs are through the roof because of things like this.”
California Attorney General Xavier Becerra couldn’t agree more. The state’s top cop is suing Sutter, accusing one of the nation’s biggest health systems of systematically overcharging patients and illegally driving out competition in Northern California.
For years, economists and researchers have warned of the dangers posed by large health systems across the country that are gobbling up hospitals, surgery centers and physicians’ offices — enabling them to limit competition and hike prices.
Becerra’s suit amounts to a giant test case with the potential for national repercussions. If California prevails and is able to tame prices at Northern California’s most powerful, dominant health system, regulators and politicians in other states are likely to follow.
“A major court ruling in California could be a deterrent to other hospital systems,” said Ge Bai, an assistant professor at Johns Hopkins University who has researched hospital prices nationwide. “We’re getting to a tipping point where the nation cannot afford these out-of-control prices.”
Reflecting that sense of public desperation, Sutter faces two other major suits — from employers and consumers — which are wending their way through the courts, both alleging anticompetitive conduct and inflated pricing. Meanwhile, California lawmakers are considering a bill that would ban some contracting practices used by large health systems to corner markets.
Sutter, a nonprofit chain, is pushing back hard, denying anticompetitive behavior and accusing Becerra in court papers of a “sweeping and unprecedented effort to intrude into private contracting.” Recognizing the broader implications of the suit, both the American Hospital Association and its California counterpart asked to file amicus briefs in support of Sutter.
In his 49-page complaint, Becerra cited a recent study finding that, on average, an inpatient procedure in Northern California costs 70 percent more than one in Southern California. He said there was no justification for that difference and stopped just short of dropping an expletive to make his point.
“This is a big 'F' deal,” Becerra declared at his March 30 news conference to unveil the lawsuit. In an interview last week, he said, “We don't believe it's fair to allow consolidation to end up artificially driving up prices. … This anticompetitive behavior is not only bad for consumers, it's bad for the state and for businesses.”
To lessen Sutter’s market power, the state’s lawsuit seeks to force Sutter to negotiate reimbursements separately for each of its hospitals — precluding an “all or nothing” approach — and to bar Sutter employees from sharing the details of those negotiations across its facilities. Becerra said Sutter has required insurers and employers to contract with its facilities systemwide or face “excessively high out-of-network rates.”
Heft In The Marketplace
Overall, Sutter has 24 hospitals, 36 surgery centers and more than 5,500 physicians in its network. The system boasts more than $12 billion in annual revenue and posted net income of $958 million last year.
The company’s heft in the marketplace is one reason why Northern California is the most expensive place in the country to have a baby, according to a 2016 report. A cesarean delivery in Sacramento, where Sutter is based, cost $27,067, nearly double what it costs in Los Angeles and New York City.
For years, doctors and consumers have also accused Sutter of cutting hospital beds and critical services in rural communities to maximize revenue. “Patients are the ones getting hurt,” said Dr. Greg Duncan, an orthopedic surgeon and former board member at Sutter Coast Hospital in Crescent City, Calif.
Sutter says patients across Northern California have plenty of providers to choose from and that it has held its average rate increases to health plans to less than 3 percent annually since 2012. It also says it does not require all facilities to be included in every contract — that insurers have excluded parts of its system from their networks.
As for emergency room patients like Frizzell, Sutter says its charges reflect the cost of maintaining services round-the-clock and that for some patients urgent-care centers are a less costly option.
“The California Attorney General’s lawsuit gets the facts wrong,” Sutter said in a statement. “Our integrated network of high-quality doctors and care centers aims to provide better, more efficient care — and has proven to help lower costs.”
Regulators in other states also have sought to block deals they view as potentially harmful.
In North Carolina, for instance, the state’s attorney general and treasurer both expressed concerns about a proposed merger between the University of North Carolina Health Care system and Charlotte-based Atrium Health. The two dropped their bid in March. The combined system would have had roughly $14 billion in revenue and more than 50 hospitals.
Last year, in Illinois, state and federal officials persuaded a judge to block the merger between Advocate Health Care and NorthShore University HealthSystem. The Federal Trade Commission said the new entity would have had 60 percent market share in Chicago’s northern suburbs. Still, Advocate won approval for a new deal with Wisconsin’s Aurora Health Care last month, creating a system with $11 billion in annual revenue.
Antitrust experts say states can deliver a meaningful counterpunch to health care monopolies, but they warn that these cases aren’t easy to win and it could be too little, too late in some markets.
“How do you unscramble the egg?” said Zack Cooper, an assistant professor of economics and health policy at Yale University. “There aren’t a lot of great solutions.”
A Seven-Year Investigation
California authorities took their time sounding the alarm over Sutter — a fact Sutter is now using against the state in court.
The state attorney general’s office, under the leadership of Democrat Kamala Harris, now a U.S. senator, started investigating Sutter seven years ago with a 2011 subpoena, court documents show. Sutter said the investigation appeared to go dormant in March 2015, just as Harris began ramping up her Senate campaign.
Becerra, a Democrat and former member of Congress, was appointed to replace Harris last year, took over the investigation and sued Sutter on March 29. His aggressive action comes as he prepares for a June 5 primary against three opponents.
Sutter faces a separate class-action suit in San Francisco state court, spearheaded by a health plan covering unionized grocery workers and representing more than 2,000 employer-funded health plans. The plaintiffs are seeking to recoup $700 million for alleged overcharges plus damages of $1.4 billion if Sutter is found liable for antitrust violations. Sutter also has been sued in federal court by five consumers who blame the health system for inflating their insurance premiums and copays. The plaintiffs are seeking class-action status.
San Francisco County Superior Court Judge Curtis E.A. Karnow granted Becerra’s request to consolidate his case with the grocery workers’ suit, which is slated for trial in June 2019.
The judge sanctioned Sutter in November after finding that Sutter was “grossly reckless” in intentionally destroying 192 boxes of evidence that were relevant to antitrust issues. As a result, Karnow said, he will consider issuing jury instructions that are adverse to Sutter.
In a note to employees, Sutter chief executive Sarah Krevans said she deeply regretted the situation but “mistakes do happen.”
In an April 27 court filing, Sutter’s lawyers criticized the state for piggybacking onto the grocery workers’ case. “The government sat on its hands for seven years, exposing the public to the alleged anticompetitive conduct. … Rather than driving the agenda, the Attorney General seeks to ride coattails.”
Outside court, California legislators are taking aim at “all or nothing” contracting terms used by Sutter and other hospital chains. The proposed law stalled last year amid opposition from the hospital industry. But consumer and labor groups are seeking to revive it this year.
In the meantime, Frizzell said he will probably wind up at one of Sutter’s hospitals again despite his disgust over his ER bill. “Most of the hospitals here are Sutter,” he said. “It’s difficult to avoid them.”