Hospitals in 32 communities around the country have converted to the rural emergency hospital designation to prevent closure.

This article was published on Friday, September 20, 2024 in KFF Health News.

By Taylor Sisk

WILLIAMSTON, N.C. — On a mid-August morning, Christopher Harrison stood in front of the shuttered Martin General Hospital recalling the day a year earlier when he snapped pictures as workers covered the facility's sign.

"Yes, sir. It was a sad day," Harrison said of the financial collapse of the small rural hospital, where all four of his children were born.

Quorum Health operated the 49-bed facility in this rural eastern North Carolina town of about 5,000 residents until it closed. The hospital had been losing money for some time. The county's population has slightly declined and is aging; it has experienced incremental economic downturns. Like many rural hospitals, those headwinds drove managers to discontinue labor and delivery services and halt intensive care during the past five years.

Prospects for reopening seemed dim.

But a new hospital designation by the Centers for Medicare & Medicaid Services that took effect last year offered hope. As of August, hospitals in 32 communities around the country have converted to the rural emergency hospital designation to prevent closure. The new program provides a federal financial boost for struggling hospitals that keep offering emergency and outpatient services but halt inpatient care.

The REH model "is not designed to replace existing, well-functioning rural hospitals," said George Pink, a senior research fellow at the University of North Carolina's Cecil G. Sheps Center for Health Services Research, which has documented 149 rural hospitals that have either closed or no longer provide inpatient care since 2010. "It really is targeted at small rural communities that are at imminent risk of a hospital closing."

The program hasn't yet been used to reopen a closed hospital.

With guidance from health consultants, Martin County officials asked federal regulators to explore the possibility of adopting the REH model and were ultimately given the go-ahead.

If successful, Martin County could become one of the first in the nation to convert a shuttered hospital to this new model.

Ask members of a community that has lost its hospital what they miss most, Pink said, and it's almost invariably emergency services. Count Harrison among them, especially after a medical crisis nearly killed him.

Harrison, who lives in a smaller crossroads community a few miles south of Williamston, began experiencing leg pain in February. Under normal circumstances, Harrison said, he would have gone to his primary care doctor if his leg began to hurt. This time he couldn't, because the practice closed when the hospital folded months earlier.

Then, one morning he awoke to find his foot turning black. It took him 45 minutes to drive to the closest hospital, in the town of Washington. There, doctors found blood clots and he was flown by helicopter to East Carolina University Health Medical Center. A doctor there told him that he'd probably had the blood clots for close to a year and that he was lucky to be alive. The medical team was able to save his foot from amputation.

Harrison, like many other community members, now had firsthand experience with the consequences of a shuttered hospital.

The state legislature's decision last year to expand Medicaid has meant fewer North Carolinians are uninsured, which means fewer hospital bills go unpaid. But health care is evolving: Many procedures that once required inpatient care are now performed as outpatient services. Dawn Carter, the founder and a senior partner of Ascendient, a health care consulting firm working with the county, said the inpatient census at Martin General in its last few years ranged from five or six a day to a dozen.

"So you're talking about a lot of cost, a lot of infrastructure to support that," she said.

With no emergency care within a half-hour radius, Martin County administrators believe a rural emergency hospital would be a good fit and a viable option. REH status allows a hospital to collect enhanced Medicare payments, an annual facility payment, and technical assistance.

Carter said the team will present to the state Department of Health and Human Services a set of drawings of the portion of the building they intend to use to see if it meets REH regulations.

"I'm hoping that process is happening in the next several weeks," she said, "and that will give us a better idea of whether we have a handful of really quick and easy things to do or if it's going to take a little more effort to reopen."

Officials then will take proposals from companies interested in running the hospital.

Carter said the expectation is that, initially, the facility will be strictly the emergency room and imaging department, "and then I think the question is, over time, where do you build beyond that?"

And the rebuilding could prove a challenge from the start. Many former staff members have taken positions at nearby health care facilities or left the area. The effects of that exodus will be compounded by the widespread difficulty in recruiting health workers to rural areas.

It's early yet, Pink said, to assess the success of the rural emergency hospital model. "All we have are armchair anecdotes." It seems to be working well in some communities, while others "are struggling a little to make it work."

Pink has a list of questions to assess how an emergency hospital is faring in the long run:

• Is it at least breaking even? And if not, do administrators foresee a solution?
   
• How is the community responding? If someone believes they have an issue that might require inpatient care, Pink suggested, perhaps they'll bypass the REH for a hospital that can admit them. And to what extent does bypassing their doors carry over to all services?
   
• Are patients happy with the care they're receiving? Are the clinical outcomes good?

The rate of rural hospital closures rose through 2020, then dropped considerably in 2021. Congress had passed the CARES Act, and the Provider Relief Fund offered a financial lifeline, Pink said. That money has now been distributed, and the concern is that "many rural hospitals are returning to pre-covid financial stresses and unprofitability."

If the trend continues, he said, more rural hospitals may turn to the REH model.

Ben Eisner serves as Martin County's attorney and interim manager. He acknowledges that the health and well-being of this community require a lot more than a hospital. He cites, for example, a new nonprofit with a mission to address the social determinants of health.

Advancing Community Health Together was created in response to the hospital closure. Composed of community members, its focus is addressing inadequate health care access and poor health outcomes as a consequence of generational poverty, said Vickey Manning, director of Martin-Tyrrell-Washington District Health.

"We can't address rural health care in a vacuum," Carter said. Her organization, Ascendient, is part of the Rural Healthcare Initiative, a nonprofit commissioned by the North Carolina General Assembly to study sustainable models of health care for rural communities.

Like most of rural eastern North Carolina, Martin County is in transition, Eisner said. Diminishing family farms, less industry. "And so the question becomes," he said, "‘What happens for all these communities? What happens next?' And it's an answer that is not yet fully written."

Harrison, still relying on crutches to get around, recently drove 45 minutes north on U.S. 13 to the town of Ahoskie to have a doctor examine his foot. He said a hospital that offers basic emergency care isn't a perfect solution, but he'll have some peace of mind once the cover is peeled from that sign and his local hospital reopens.

Despite patient reports of poor quality, Tennessee has given 'A' grades and annual stamps of approval to Ballad that allow the monopoly to continue.

This article was published on Wednesday, September 18, 2024 in KFF Health News.

By Brett Kelman

Ballad Health, an Appalachian company with the nation's largest state-sanctioned hospital monopoly, may soon be required to improve its quality of care or face the possibility of being broken up.

Government documents obtained by KFF Health News reveal that Tennessee officials, in closed-door negotiations, are attempting to hold the monopoly more accountable after years of complaints and protests from patients and their families.

Ballad, a 20-hospital system in northeastern Tennessee and southwestern Virginia, was created six years ago through monopoly agreements negotiated with both states. Since then, Ballad has consistently fallen short of the quality-of-care goals, according to annual reports released by the Tennessee Department of Health.

Despite these failures, Tennessee has given "A" grades and annual stamps of approval to Ballad that allow the monopoly to continue. This has occurred, at least in part, because Ballad is graded against a scoring rubric that largely ignores how its hospitals actually perform.

Now that may change. In an ongoing renegotiation of Tennessee's monopoly agreement, the state health department has pushed for an eightfold increase in the importance of hospital performance, making it "the most heavily weighted" issue on which Ballad would be judged, according to state documents obtained through a public records request. The negotiations appear to be the state's most substantial response to residents who sound alarms about Ballad hospitals.

Dani Cook, a community organizer who has led efforts against Ballad for years, including an eight-month protest outside a Ballad hospital in 2019, said a renegotiated monopoly agreement could be a first step toward progress that locals have long sought, but only if it is enforced by the state.

Cook also questioned why Tennessee took years to prioritize something as fundamental as good care.

"That's what baffles me about this entire relationship: Ballad seems to never be held to account," Cook said. "And that's why, when I look at this, I say, ‘Oh that sounds great.' But let's see what happens."

Ballad Health was created in 2018 after Tennessee and Virginia officials waived federal anti-monopoly laws and approved the nation's biggest hospital merger based on what's called a Certificate of Public Advantage, or COPA, agreement. Despite the warnings of the Federal Trade Commission, the region's rival hospital systems became a single system without competition. Ballad is now the only option for hospital care for most of about 1.1 million people in a 29-county region at the nexus of Tennessee, Virginia, Kentucky, and North Carolina.

In an effort to offset the perils of the monopoly, Ballad was required to enter agreements with the states that set expectations for the company and limited its ability to raise prices or close hospitals. Each year, Tennessee grades Ballad against this agreement on a 100-point scale. If the company performs poorly, Tennessee could in theory revoke the COPA, and then enforce a plan to split Ballad into separate companies, according to the monopoly agreement.

The new negotiation documents offer a snapshot of how Tennessee hopes to reshape this agreement, detailing more than a dozen changes the health department proposed in February and a counterproposal from Ballad in May. It is unclear if or how these proposals may have changed in the subsequent months.

Tennessee Department of Health spokesperson Dean Flener said the agency would not comment on Ballad or the ongoing negotiations.

In a written statement, Ballad did not comment directly on the negotiations but said the company "enthusiastically agrees that the most important thing to our patients is the quality of care they receive." The company said in 2023 that its hospital quality slipped due to the pressure of the coronavirus pandemic and that it was in the process of rebounding.

"We strongly support a shared focus on quality of care as it relates to the COPA," Molly Luton, a Ballad spokesperson, said in the statement.

Historically, quality of care has been just a small part of how Ballad is held accountable. Twenty percent of Ballad's annual COPA score comes from measurements of hospital quality, but the company gets full credit on three-fourths of those measurements if it reports any value — even a terrible one. Only 5% of the annual score is determined by real-world hospital performance.

If quality was weighted more, Ballad would have scored much worse in past years. Annual reports released by the Tennessee Department of Health over the last two years show that Ballad failed to meet more than 74% of the state's quality-of-care benchmarks, including some about mortality rates, readmission rates, emergency room speed, surgery-related infections, and patient satisfaction.

Under Tennessee's proposed changes, all these metrics would matter much more. But Tennessee would also lower the overall standards for Ballad's monopoly and ease a charity care obligation that Ballad has repeatedly not met, according to the negotiation documents. Ballad has said it hasn't met the charity care obligation because changes to Medicaid programs have left fewer patients uninsured and in need of charity.

The documents show that:

• Tennessee has proposed increasing the share of Ballad's annual score that is attributable to real-world quality of care from 5% to 40% and no longer giving Ballad any points for merely reporting quality statistics. In a counteroffer, Ballad proposed raising this percentage to 34%, with some points still awarded to the company just for reporting.
   
• Tennessee proposed lowering the minimum overall score that Ballad needs to obtain each year for its monopoly to be considered a "clear and convincing public advantage." If Ballad falls below this threshold, the COPA agreement could be modified or "terminated." Tennessee wants to lower the threshold from 85 out of 100 to 75. In its counteroffer, Ballad proposed 70.
   
• Tennessee would reduce or weaken a requirement for Ballad charity care spending that is largely moot. Ballad has been required to provide more than $100 million in free or discounted charity care to low-income patients each year under the current monopoly agreement, but it has failed to do so five years in a row, falling short by about $194 million in total. Tennessee has waived the requirement each year.

Cook, who described the new documents as a rare glimpse into closed-door dealings that Ballad patients never get to see, said it was striking to witness the company push for lower standards.

"Why would they be pushing back on improving the quality of care that people receive?" Cook said. "If they are really among the nation's best — because that's what they tell the entire region — why do you need the standards lowered?"

Brett Kelman: bkelman@kff.org, @BrettKelman

Several large nonprofit Catholic health systems spend far less on community benefits such as free or discounted care than the estimated value of the millions they secure in tax breaks.

This article was published on Thursday, September 12, 2024 in KFF Health News.

By Rachana Pradhan  

When Jessica Staten's kidney stones wouldn't pass, she said, her doctor suggested a procedure to "blow 'em up." She went to have it done last November at St. Joseph Medical Center in Bellingham, Washington, one of nine hospitals that the Catholic health system PeaceHealth operates in the Pacific Northwest and Alaska.

"I was probably there a total of 3½ hours, and everything went well," said Staten, who works as an accountant and has health insurance. What came next shocked her: PeaceHealth sent a bill for $5,313.63 and, she said, told her she didn't qualify for help to lower the cost. Staten said she asked about financial assistance but was told she earned slightly too much.

PeaceHealth aims to "carry on the healing mission of Jesus Christ by promoting personal and community health, relieving pain and suffering, and treating each person in a loving and caring way," according to a 2022 tax filing.

For Staten, suffering lingered long after receiving care from the health system with the only hospital in town.

To pay off her medical bill, Staten ultimately took on more debt, using her condo as collateral to secure a line of credit of more than $5,000, according to records reviewed by KFF Health News. She said the line of credit had an 11.2% interest rate. That was cheaper than a payment plan the hospital offered through a third party, which Staten said she was told would have charged about 12.5% interest.

"It's all about the money," said Staten, who has lived in Bellingham for more than 30 years. "That's the way they think now at the hospital."

PeaceHealth spokesperson Victoria Wilson said the hospital offers patients interest-free 12-month payment plans. For some patients, the monthly obligation is unaffordable. PeaceHealth also now offers longer-term plans with a 9% interest rate "in alignment with current regulations," she said, declining to elaborate further.

"Each patient who comes to us seeking care is experiencing a vulnerable moment in their life and needs healing," Wilson said in an emailed statement. "We hold each healing opportunity sacred, so financial healing is closely aligned with our Mission."

The "Ethical and Religious Directives for Catholic Health Care Services," issued by the U.S. Conference of Catholic Bishops, outlines social responsibility principles for Catholic health facilities. One states that "a just health care system will be concerned both with promoting equity of care — to assure that the right of each person to basic health care is respected — and with promoting the good health of all in the community."

As of 2023, there were just over 600 Catholic general hospitals nationally and roughly 100 more managed by Catholic chains that place some religious limits on care, a KFF Health News investigation revealed.

Catholic nuns established many hospitals in the name of service. But modern-day practices at such facilities demonstrate how they adhere to the directives and church teaching in one way — prohibiting or limiting procedures that the church deems immoral, such as abortion and what it calls "assisted suicide" — while neglecting social responsibility standards, patients and clinicians said.

"It does show the lack of control or influence that the faith organization has over the actual company," said Shane Alderson, chair of the Baker County Board of Commissioners in Oregon. The local Catholic hospital owned by Trinity Health — Saint Alphonsus Medical Center-Baker City — last year shut down its obstetrics department. Its intensive care unit is also closed, Alderson said. "You get the feeling when you go to a Catholic hospital that the care and the vision is a lot more defined by the faith," he said, adding: "It's not really. It's corporate."

Sister Mary Haddad, president of the Catholic Health Association, said in a written statement that Catholic health systems "remain true to our origins and the missions on which we were founded through our ongoing commitment to serving those most in need." In addition to patient care, she said, this includes investing in programs to address societal problems such as homelessness and food insecurity.

Health systems like CommonSpirit Health, Ascension, PeaceHealth, Trinity Health, and Providence St. Joseph pay their chief executives millions of dollars a year — payouts that kept pace during the covid-19 pandemic emergency, according to each company's tax filings.

CommonSpirit Health's then-CEO Lloyd Dean earned roughly $28 million in 2022; he was among nearly three dozen executives who pulled down more than $1 million that fiscal year, according to the health system's tax filings.

Elsewhere, Rod Hochman, CEO of Providence St. Joseph Health, earned $12.1 million. Ascension CEO Joseph Impicciche was paid $9.1 million, according to corporate tax filings.

Spokespeople for Providence and Ascension said CEO compensation levels are market-competitive; CommonSpirit spokesperson Felicity Simmons said that Dean, who retired in July 2022, like other retiring executives "received standard deferred compensation benefits consistent with their many years of service." (CommonSpirit's 2021 tax filing showed Dean earned $35.5 million that year.)

To maintain their tax-exempt status, all nonprofit hospitals are required to spend on community benefits, but federal law doesn't specify how much or which services qualify.

Several large nonprofit Catholic health systems spend far less on community benefits such as free or discounted care to eligible patients and community health improvement services than the estimated value of the millions they secure in tax breaks, according to research by the nonpartisan Lown Institute.

Based on 2021 data, the think tank found that five of the 10 health systems with the greatest "fair share deficits" are Catholic: Providence, CommonSpirit Health, Trinity Health, Ascension, and Bon Secours Mercy Health's deficits were between $488 million and $1 billion.

Research by Community Catalyst, a consumer advocacy group, found that Catholic hospitals treat fewer Medicaid patients than other nonprofit hospitals, something at odds with their mission of prioritizing health care needs of the poor and underprivileged. And like other hospitals nationwide, many large Catholic health systems allow aggressive tactics against patients for unpaid medical bills such as using third-party collections, filing lawsuits, placing liens, garnishing wages, reporting bad debt to credit bureaus, or restricting care to people who owe, a KFF Health News investigation found.

Catholic bishops are "quite zealous for making sure that the reproductive and end-of-life care components of the ERDs are followed," said Patricia Gabow, a physician who led a Denver safety net health system for two decades and has written about the evolution of Catholic healthcare in the U.S. She said "they should be as zealous" on enforcing the directives outlining Catholic healthcare's social responsibilities.

Among those directives is this: "Catholic health care should distinguish itself by service to and advocacy for those people whose social condition puts them at the margins of our society and makes them particularly vulnerable to discrimination" including "the poor; the uninsured and the underinsured"; and "children and the unborn." The U.S. Conference of Catholic Bishops declined to comment for this article, referring questions to the Catholic Health Association.

PeaceHealth's first hospital was founded in the 1890s by nuns from New Jersey who ventured to the West to care for loggers, millworkers, fishers, and their families in the country's remote frontier. Seven nuns and a cook staffed St. Joseph Hospital in Whatcom County, Washington, where Bellingham is located. St. Joseph is the Catholic patron saint of families, workers, and the dying.

Now no nuns serve on St. Joseph Medical Center's or PeaceHealth's leadership teams; two are on the health system's 11-person board of directors. PeaceHealth CEO Liz Dunne earned $3.6 million in the fiscal year that ended June 30, 2023, tax filings show, and the Lown Institute estimates the health system spent $108.7 million less on community investments than the value of its tax exemptions. PeaceHealth declined to comment on executive compensation or the Lown Institute's findings.

In 2023, the health system was forced to refund up to $13.4 million to more than 15,000 low-income patients after the Washington attorney general's office found it billed patients who should have received financial help.

Catholic health systems "set a standard for themselves which is higher" than other U.S. hospitals, Gabow said. "Do they reach what they set for themselves? And there's a fair amount of data to say probably not."

Shutting Down Maternity Care

For more than a century, a Catholic hospital now named Saint Alphonsus Medical Center has provided care in Baker City, Oregon, a 10,000-person town less than 100 miles from the Idaho border.

The hospital was founded in 1897 by nuns from Philadelphia. They treated 115 patients in the first year, "many of whom were loggers, ranchers, and gold miners," according to a document detailing its history. Patients "received complete health coverage" for $1 a month.

Like many of its peers across the nation, the small rural hospital would become part of larger Catholic health systems. In 2010 it settled in as part of Trinity Health, the nation's fourth-largest hospital system by number of beds, according to federal data. Trinity Health operates 101 hospitals, plus other care sites, in 27 states. CEO Michael Slubowski's most recently reported salary was $5.3 million in the company's 2023 fiscal year, when Trinity had an operating margin of -2%, according to financial statements and tax filings. Operating margins are a measure of a hospital's financial health.

Trinity Health spokesperson Melissa Lander said Slubowski's compensation is based on factors including experience and performance, and pay "must be market competitive to attract and sustain talented people."

Baker City was given a jolt in 2023. Blaming staffing shortages and a decline in births, hospital executives announced that Saint Alphonsus would close its obstetrics unit, the only one in the county. The move caused an uproar locally and pushback by Oregon's two Democratic senators.

"What they were doing is essentially getting rid of the unit that made no money and cost a lot," said Cathie Roach, a nurse who worked in Saint Alphonsus Medical Center's obstetrics unit for roughly a decade before retiring last year.

Roach said the staffing shortages were "pretty much of their making." Hospital management rotated nurses among departments in ways that made some feel "really uncomfortable," and the hospital didn't consider alternative ways of staffing the OB unit, she said.

For months, she said, nurses were getting hints that executives might close the birth center and began looking for jobs elsewhere. "Out here if you want to be an OB nurse and this is the only hospital, and they start talking about closing," she said, "then, time to get out."

Hospital leaders said its obstetric deliveries had "declined at a record rate." However, birth data from the Oregon Health Authority tells a different story.

Births at the Baker City hospital declined to 103 in 2015, a nearly 30% drop from 2013, before rebounding. Annual births were in the 120s or 130s until the covid-19 pandemic took hold, when they fell 25% from 2019 to 2020. Still, from 2020 to 2022, between 100 and 112 babies were delivered each year.

Saint Alphonsus Health System and Trinity Health declined to comment.

Now the closest hospital where a person can give birth is over 40 miles away. In the winter in eastern Oregon, roads to get there are often closed.

In 2023, 54% of Baker County resident births were paid for by Medicaid, the health coverage program for people with low incomes, according to Oregon Health Authority statistics. That's a higher share than Medicaid-covered births statewide.

"They really lost their charity," Roach said, "when the old nuns disappeared."

The Reach of Market Power

The actions of Catholic health systems can have an outsize impact because of their reach, fueled by mergers in recent years: Four of the 10 largest U.S. hospital chains by number of beds are Catholic, according to federal data from the Agency for Healthcare Research and Quality.

Haddad noted that that power has worked for the good of vulnerable populations.

The association and most of the Catholic health systems criticized the Lown Institute report on community benefit spending as flawed for excluding several categories reported to the IRS, including uncompensated care costs and spending on health professional education. Haddad called the research an effort "to disparage the work of Catholic health care by publishing misleading and biased reports that cherry-pick data."

The Lown Institute considers five categories of community investments, including financial assistance for patients, community health services, and health services such as free clinics and addiction treatment.

Ascension spokesperson Sean Fitzpatrick called the report an "exercise in misinformation"; Trinity Health's Lander said it "gives inaccurate and, unfortunately, misleading conclusions." Bon Secours Mercy Health spokesperson Maureen Richmond said that the report "utilizes flawed high-level assumptions and incomplete data" and that the health system's community benefit spending in 2021 exceeded the value of its tax exemptions by more than $274 million — while Lown calculated that its benefit fell short of tax exemptions by $488 million. Providence spokesperson Melissa Tizon said Lown's methodology "falls short."

The CHA and multiple health systems declined to answer questions about whether certain business practices raised by this story were consistent with the mission of Catholic health care.

Years ago, Catholic hospital mergers were motivated primarily by ministry, said Lawrence Singer, a retired associate professor who was affiliated with Loyola University Chicago School of Law. But things have changed.

"It really isn't ‘save the ministry' any longer," he said. "It's really business that's driving a lot of this now."

Consolidation raises market power, and several studies have found that it leads to higher prices for patients while the quality of care remains steady or declines.

The Federal Trade Commission has blocked certain deals it predicts could reduce competition. Historically the agency has targeted transactions in which hospitals operate in the same market, according to antitrust law experts. State regulators have broader authority than the federal government, but most states can't reject proposed mergers without going to court, according to researchers at the University of California Law-San Francisco.

Some of the largest Catholic health systems, including CommonSpirit Health, Providence St. Joseph Health, and Trinity Health, achieved their size due to a different strategy: combining companies with little to no geographic overlap. Such "cross-market mergers" are traditionally harder for the FTC to block, according to health care antitrust experts.

When hospitals in the same market try to merge, "in some ways it's a lot easier to quantify what's going on" and the potential harm to competition, said Kevin Hahm, an antitrust attorney at Hunton Andrews Kurth and a former FTC official who investigated health care transactions.

But deals involving hospitals in different regions are increasingly drawing scrutiny. Researchers at the University of California-Berkeley, UC Law-San Francisco, and the University of Auckland found that health systems that acquired hospitals more than 50 miles away increased prices by 12.9% after six years compared with hospitals not involved in mergers or acquisitions.

"The new frontier," said Thomas Greaney, one of that merger study's authors, "is whether we'll go after what we've called system power."

'We're a Captive Audience'

Bellingham is one of the nation's least competitive hospital markets: In 2021, it was the fifth most concentrated in the U.S. and had the highest health care prices of metro areas in Washington, according to the nonprofit Health Care Cost Institute.

The nuns who established PeaceHealth's first hospital would open or operate others throughout the 20th century. PeaceHealth also acquired hospitals through mergers, including Southwest Medical Center in Vancouver and United General Hospital in Sedro-Woolley.

"PeaceHealth is the leader in all three of its markets, with decided market share leads in its Northwest and Oregon markets," credit ratings firm Fitch Ratings reported in March. PeaceHealth declined to answer questions about whether a desire to charge higher prices drives market decisions.

Its hospitals stand out for what they're paid. Rand Corp. researchers told KFF Health News that commercial health plans in 2022 paid PeaceHealth's Washington hospitals 314% of what Medicare would have paid for the same services. Those are the highest-priced rates among health systems in the state, according to Rand's analysis. PeaceHealth declined to comment.

Staten's medical bill from PeaceHealth is gone: She used the home equity line of credit to pay it off. Now she's paying more on her mortgage every month.

She said she can't afford to have another experience like her kidney stone surgery, which she was told involved a laser to break the stones into smaller pieces.

"It's not like you've got three hospitals to choose from," Staten said. "We're a captive audience."

Rachana Pradhan: rpradhan@kff.org, @rachanadpradhan

CMS told Speridian Global Holdings that they were suspended after the agency identified 'a serious lapse in the security posture.'

This article was published on Tuesday, September 10, 2024 in KFF Health News.

By Julie Appleby

Suspicions that U.S. consumers' personal information could be accessed from India led regulators to abruptly bar two large private sector enrollment websites from accessing the Affordable Care Act marketplace in August.

New details about the suspensions come in legal filings made late Friday stemming from an effort by the two to regain access to the Obamacare marketplace before the upcoming ACA open enrollment period, which starts Nov. 1.

The Centers for Medicare & Medicaid Services wrote in a Sept. 2 letter to the companies that they were suspended after the agency identified "a serious lapse in the security posture" that could have led to marketplace data, including consumers' personal information, being accessed from overseas.

The letter, included in the court filings, also noted that regulators will audit the two companies because they have "reasonable suspicion" that they are players in a separate problem: signing people up for Obamacare coverage — or changing their policies — without the consumers' permission.

Whether those legal issues will be resolved before the upcoming enrollment period is an open question. Currently, the concerns raised about the companies remain allegations, with none of the legal challenges or the audit close to a ruling or conclusion.

Still, the larger issue of fraudulent ACA enrollment by rogue insurance agents seeking commissions will continue to pose a headache for regulators, with more than 200,000 complaints filed by consumers in the first six months of 2024. And it has become a political problem for the Biden administration. GOP lawmakers blamed the schemes partly on Biden-backed expanded Obamacare premium subsidies.

President Joe Biden has claimed record-breaking enrollment under the ACA as one of his administration's major accomplishments, and regulators are looking to thwart deceptive enrollment schemes without slowing legitimate sign-ups. In recent weeks they've removed at least 200 agents' access to the federal ACA marketplace, and in July began requiring, in many circumstances, that brokers participate in three-way calls with their clients and the healthcare.gov help center before changes can be finalized.

The CMS letter now adds another layer. It is the first time this year the agency has called out a company over questionable enrollments, saying it suspects "the Speridian Companies" might have "directed its employees and other agents to change Marketplace enrollees' coverage and enroll insured and uninsured consumers without the enrollees' consent."

California-based Speridian Global Holdings owns the companies in question, which include enrollment platform Benefitalign and TrueCoverage, doing business as the Inshura enrollment site. It has a data center in India.

The now-suspended Benefitalign site handled at least 1.2 million applications for ACA coverage during the last open enrollment period, according to court documents, which would rank it among the largest of the private enrollment sites allowed to integrate with healthcare.gov, the federal marketplace.

Previously, CMS had said publicly only that it suspended the websites for "anomalous activity."

The suspended companies deny any wrongdoing related to enrollment schemes. Spokesperson Catherine Riedel declined comment beyond their court filings.

In late August they filed a complaint against CMS over the suspensions in U.S. District Court for the District of Columbia, seeking a restraining order. They added to that complaint on Sept. 6, calling CMS' suspension action "lawless."

On Aug. 8, CMS suspended the two websites from accessing healthcare.gov information.

It did so, according to the Sept. 2 letter, over concerns that some consumer information "is processed and/or stored" in India, citing "suspicions" that the data is "being accessed from outside of the United States."

That's a problem, the letter says, because marketplace data must stay in the U.S. to "eliminate the possibility that foreign powers might obtain access." Additionally, websites approved by CMS to integrate with the federal marketplace cannot transmit data outside of the U.S. or allow access from outside the country, under the terms of agreements such companies sign to get CMS approval to operate.

CMS did not spell out what consumer information might have been included, but ACA applications can contain information including a person's name, date of birth, address, and detailed household income information.

Speridian companies were suspended, then reinstated, from the marketplace in prior years over other concerns, including problems with false Social Security Numbers submitted with some TrueCoverage ACA applications in 2018, and for a 2023 effort by Benefitalign to access the federal marketplace's "software testing environment" from India, according to the CMS letter.

In seeking a restraining order against CMS, the companies argue that the agency's action to suspend them now is arbitrary and capricious and violates its own regulations as well as the due process clause of the Constitution.

The filing calls the Sept. 2 CMS letter explaining the reasons for the suspensions "a post hoc justification" that includes a litany of "'concerns,' suspicions,' 'allegations.'" The filing also asserts "these intimations of violations are made without evidence of any actual violation."

The court documents say the suspensions will prevent the companies from participating in the upcoming open enrollment period, harming them and "the thousands of brokers" and "millions of consumers who count on brokers" using those websites to sign up for ACA coverage.

The suspension remains in place, the CMS letter says, partly because its concerns have not been allayed by information provided by the companies, but also while the audit is conducted.

CMS has "reasonable suspicion, based on credible evidence it has considered," that the companies were involved in enrolling consumers or changing their coverage without specific permission, the letter stated, noting that such allegations are included in a civil lawsuit filed by private sector lawyers in U.S. District Court for the Southern District of Florida.

The firms have previously said the allegations in the civil lawsuit are without merit.

Brokers who have used the suspended websites in the past have other options to enroll clients, including several other websites currently approved to integrate with the federal Obamacare marketplace. Consumers can also go directly to the federal or state ACA websites and enroll themselves or get assistance from call centers associated with those marketplaces.

Julie Appleby: jappleby@kff.org, @Julie_appleby