The computer systems run by the consulting giant Deloitte that millions of Americans rely on for Medicaid and other government benefits are prone to errors that can take years and hundreds of millions of dollars to update. While states wait for fixes from Deloitte, beneficiaries risk losing access to health care and food.
Changes needed to fix Deloitte-run eligibility systems often pile on costs to the government that are much higher than the original contracts, which can slow the process of fixing errors.
It has become a big problem across the country. Twenty-five states have awarded Deloitte contracts for eligibility systems, giving the company a stronghold in a lucrative segment of the government benefits business. The agreements, in which the company commits to design, develop, implement, or operate state-owned systems, are worth at least $6 billion, dwarfing any of its competitors, a KFF Health News investigation found.
Problems and delays can extend beyond Medicaid — which provides health coverage to roughly 75 million low-income people — because some state systems assess eligibility for other safety-net programs. Whether a person gets the benefits they are entitled to depends on what the computer says.
There is no automatic switch to stop errors in the system, said Elizabeth Edwards, a senior attorney with the National Health Law Program, a nonprofit that advocates for people with low incomes and medically underserved populations. The group in January filed a complaint urging the Federal Trade Commission to investigate Deloitte, alleging "ongoing and nationwide" errors and "unfair and deceptive trade practices."
"People will go without care," Edwards said, and until there's a fix or a workaround, "you will continue to have the harm over and over again."
Kenneth Smith, a Deloitte executive who leads its national human services division, previously told KFF Health News that Medicaid eligibility technology is state-owned and agencies "direct their operation" and "make decisions about the policies and processes that they implement." Smith has called the legal nonprofit's allegations "without merit."
States set aside millions of dollars to cover the cost of changes, but systems may require fixes beyond the agreed-upon work. The number of hours or updates is capped each year, so states are left to prioritize certain fixes over others. And even though Deloitte isn't reinventing the wheel for each eligibility system it builds or runs, the company addresses problems state by state rather than patching through fixes for systems across states, Smith said — a change request in one state "likely has absolutely nothing to do with another state."
"Because of the custom nature of these systems, it's never quite that simplistic as, 'Hey, a particular issue that's arisen in state of A is directly applicable to state of B,'" Smith said.
Speaking generally, Smith said, "I'm unaware of any circumstance in which a client has needed to get something done that we haven't found a way to get it done."
Deloitte's estimates show that 35 change requests for Georgia's eligibility system in 2023 would take more than 104,000 hours of work, according to a list of change requests that KFF Health News obtained in response to a public records request. That's the equivalent of 50 years of work, if someone worked 52 weeks a year at 40 hours a week.
"System changes were made to align with changing federal and state policies, as well as to meet evolving business needs," said Ellen Brown, a spokesperson for the Georgia Department of Human Services. Brown earlier said changes also were made to "improve functionality."
The federal government — that is, its taxpayers — covers 90% of states' costs to develop and implement state Medicaid eligibility systems and pays 75% of ongoing maintenance and operations expenses, according to federal regulations.
Eligibility systems for years have posed problems for states because of the dynamic between contractors and government officials, said Matt Salo, CEO of consulting firm Salo Health Strategies. The companies hold the expertise "and, quite frankly, they're kind of running circles around the state capacity," said Salo, a former executive director of the National Association of Medicaid Directors.
"For decades all I've heard from states in this arena is: We know that when we go out to contract it's going to cost us a lot of money and it is going to run over, it is going to deliver years late, it is going to deliver millions if not hundreds of millions of dollars over budget," Salo said, and "by the time it's delivered, our needs have changed and so it's just this constant process of change orders and going back and fixing."
Two advocacy groups last August sued Florida in federal court, alleging tens of thousands of people were losing coverage without proper warning. And Florida's eligibility system was cutting off Medicaid coverage for some moms after giving birth, William Roberts, a state employee who reviews Medicaid eligibility decisions, testified when the case went to trial in July.
Florida previously gave moms two months of Medicaid coverage after giving birth. Federal regulators in 2022 approved Florida's proposal to grant Medicaid benefits for 12 months. But in April 2023 state officials discovered a "glitch," Roberts said, and "the system had reverted back to only giving mothers two months instead of giving them the 12 months that they were entitled to."
What became clear in the testimony is that the state and Deloitte take different views on what constitutes a "defect" in a Deloitte-run system. Deloitte said it would fix defects without billing any additional hours for the work. Although Deloitte is not a named defendant in the lawsuit, the company was called to testify about its role in operating Florida's eligibility system.
Harikumar Kallumkal, a Deloitte managing director who oversees the Florida system, initially testified that, in this case, there was no problem and "the computer system was providing 12 months" of postpartum coverage.
Then Kallumkal said, "Even in this case, I do not believe it was a defect." Even so, "we did fix that." And for the fix, he said, Deloitte "did not charge" the state.
Rather, a separate defect may have resulted in coverage losses for mothers after childbirth, Kallumkal testified.
Some historical data "required to determine postpartum coverage" was not loading into the system, Kallumkal said. "I don't know how many cases it impacted," he said, but Deloitte fixed the problem.
The courtroom revelation confirmed what Florida advocates already knew: an eligibility system issue prevented some of the state's most vulnerable from getting care. Florida denied allegations that it terminated Medicaid coverage without providing adequate notice. The case is ongoing.
When Michigan resumed regular Medicaid eligibility checks following the covid-19 pandemic, advocates saw a concerning trend.
The computer system routinely fails to recognize when certain adults with disabilities should receive Medicaid benefits, said Dawn Calnen, executive director of The Arc of Oakland County, which provides support for those with intellectual and developmental disabilities.
Often a person who qualifies for Medicaid initially for one reason could remain eligible even when life circumstances change. Calnen said there's no question that the people her group assisted are still eligible, just in a different way than during the pandemic.
The problem is frequent enough that Calnen's group felt compelled to notify others. "We kind of shout it from the rooftop for people: Know that this is going to happen."
When asked about the problem, Chelsea Wuth, a spokesperson for Michigan's Department of Health and Human Services, said there were "no issues" with the system. Deloitte operates Michigan's eligibility system. The company said it does not comment on state-specific issues.
Tennessee hired Deloitte in 2016 to build an eligibility system after the state canceled a contract with Northrop Grumman due to chronic delays. Deloitte didn't create the Tennessee system, known as TEDS, from scratch. It built on components from Georgia's system, according to a legal declaration and a deposition of Kimberly Hagan, Tennessee Medicaid's director of member services, that were part of a class-action lawsuit that Medicaid beneficiaries filed against the state in 2020.
The lawsuit, which is ongoing and does not name Deloitte as a defendant, seeks to order Tennessee to restore coverage under its Medicaid program, known as TennCare, for those who wrongly lost it. Hagan, in a court filing, said many problems "reflect some unforeseen flaws or gaps" with the Tennessee eligibility system and "some design errors."
A federal judge on Aug. 26 sided with the Medicaid beneficiaries, ruling that Tennessee violated federal law and the U.S. Constitution. "Poor, disabled, and otherwise disadvantaged Tennesseans should not require luck, perseverance, or zealous lawyering to receive healthcare benefits they are entitled to under the law," wrote U.S. District Court Judge Waverly D. Crenshaw Jr., adding, "TEDS is flawed, and TennCare knows that it is flawed."
Tennessee Medicaid spokesperson Amy Lawrence said the state is "determining what our next steps will be."
Tennessee's $823 million contract with Deloitte shows that the budget for changes outside the contract's original scope increased by hundreds of millions of dollars. Deloitte's maximum compensation for such change orders rose to $417 million under a 2023 contract amendment, up from $103.6 million four years earlier.
Lawrence said state officials "do not and would not pay to fix vendor errors." Lawrence attributed the cost increases to "system modernization" in "an effort to enhance our citizens' interactions with the state Medicaid program." Additional funding was also needed to comply with new federal requirements related to the covid-19 pandemic, she said.
Waiting on Fixes
States sometimes wait so long for Deloitte's fixes that the staffers who worked on the problems don't see the results. Jamie Perkins was responsible for making letters easier for Colorado Medicaid enrollees to understand. The letters are generated by Colorado's Deloitte-run eligibility system. State audits have found that the notices confuse enrollees and contain errors. Perkins said she left her job in 2021, frustrated that many of her fixes hadn't been implemented.
"It feels like a really perverse reward system, frankly, for Deloitte," Perkins said. "When Deloitte is themselves making a problem that did not originate with the department, the department is still paying them to fix those problems."
The state's contract with Deloitte now outlines "protocols to address issues that are the result of the contractor," said Trish Grodzicki, a spokesperson for Colorado's Medicaid agency. As of June 30, Colorado "has made substantial improvements" and a "majority of the letters have been rewritten" and updated in the system, she said.
Deloitte spokesperson Karen Walsh said "a change request can represent a number of different things," including when states make policy decisions that would warrant system updates. Smith said Deloitte views change requests and system issues, or defects, as different things.
"We have a responsibility when there's a system issue to fix that," Walsh said. "We don't get a change request to fix an issue."
Yet in Kentucky and other places, states have submitted change orders to resolve issues. Government officials and Deloitte sometimes negotiate fixes for months before they're implemented.
Kentucky resident Beverly Likens lost Medicaid coverage in June 2023 partly due to an error with the state's Deloitte-run system. State health officials told a legal aid group in September 2023 that a "change order has been submitted" to fix the glitch, which blocked her new coverage application from getting through online.
Likens, with the help of a lawyer, had her Medicaid benefits quickly reinstated, but that was far from the end of the saga. The problem that caused her benefits to lapse was resolved in April — 10 months later — when Kentucky implemented the first phase of a change request, Kentucky's Cabinet for Health and Family Services told KFF Health News.
Agency spokesperson Brice Mitchell said the change request was designed to address a "limitation of the system rather than technical issues." The request, for which a second phase was implemented in July, cost $522,455 and took more than 3,500 hours of work, according to Mitchell and documents obtained in response to a public records request. All such requests "are thoroughly vetted, negotiated and approved by several areas within the Cabinet," Mitchell said in an emailed statement.
"These are large, complex system implementations," Walsh, of Deloitte, said. "So in all of them, you're going to be able to find a point in time where there was an issue that needed to be fixed. And you can also find millions of people every day who are getting benefits through these systems."
In February, Georgia officials were discussing a high-priority change request to resolve an ongoing problem: A defect affected potentially tens of thousands of "cases/claims" for families in the Supplemental Nutrition Assistance Program, known as SNAP, and the Temporary Assistance for Needy Families program that, among other problems, led the state to recoup some residents' entire benefit, according to state documents KFF Health News obtained from a public records request. The programs provide monthly cash assistance to low-income people for food and housing. Georgia in 2014 inked a contract with Deloitte to build and maintain its eligibility system, known as Georgia Gateway.
Federal regulations cap how much money the government can recoup if a SNAP recipient was overpaid at 20% or $20, whichever is higher, according to legal aid attorneys and SNAP experts.
"We have plenty of clients who, that is their entire grocery budget," said Adrianne Freeman, deputy director for litigation and advocacy at the Georgia Legal Services Program.
The defect — which Georgia DHS' Brown said was identified on April 29, 2022 — created several problems, including incorrect calculations of how much to recoup and clawbacks not occurring on the correct start dates. "The Gateway system did not consistently adjust or apply the recoupment amount correctly," Brown said.
A fix was deployed the weekend of Feb. 17, the documents state, but a formal change request was needed to "allow the State Agency (SA) to correctly apply allotment reductions to all SNAP and TANF cases impacted by Defect 21068," the documents state. The change order would allow state officials to run an automated one-time mass update to fully resolve the problem.
The target date for doing so: March 1. That was nearly two years after officials were provided an "original report" noting that more than 25,000 cases may have been affected, the documents state.
Relying on Workarounds
States often face constraints on how many changes can be made in a year. In Texas, there is a years-long waitlist for changes, according to advocates, state documents, and the state health agency. "The system isn't nimble enough to meet the needs and often relies really heavily on manual workarounds," said Stacey Pogue, a senior research fellow at Georgetown University's Center on Health Insurance Reforms with expertise on Medicaid in Texas.
Texas eligibility workers use workarounds to process applications while awaiting permanent fixes. Deloitte said in its $295 million Texas contract that "there is a real need" for workarounds, which allow operations to continue "without affecting client benefits."
Many of these "temporary" fixes were implemented years ago and were still in use in 2023, according to records obtained by KFF Health News that found 45 active workarounds in Texas last year. In one instance, a workaround was implemented nearly 14 years ago. Deloitte acknowledged in its Texas contract that reducing workarounds "is one of the top priorities."
Smith of Deloitte said it doesn't always take months to fix a problem: "We have changes that get implemented in a day and changes that get implemented in a month."
Further, Smith said, Deloitte "is one part of implementing a change," noting "we're often not necessarily the constraint."
The state considers several factors when assessing which fixes to tackle first, including how many beneficiaries are affected. The more complex the workaround, "the longer it may take for staff to process eligibility," said Jennifer Ruffcorn, a spokesperson for Texas Health and Human Services.
In Florida — in addition to the lapses in coverage for maternal care — the National Health Law Program and the Florida Health Justice Project alleged in their lawsuit in federal court that notices to Medicaid beneficiaries alerting them their benefits would be terminated did not explain the basis for the decision.
In October, about a month after the lawsuit was filed, the state asked Deloitte to provide an estimate to alter the notices, Kallumkal of Deloitte testified at trial in August.
Deloitte estimated it would need roughly 28,000 hours, he said. That's more than twice the 12,600 hours the state sets aside each year to pay Deloitte for revisions. The extra hours would require an amended contract in which the state would have to agree to pay more. Florida's Department of Children and Families did not respond to requests for comment.
For Deloitte, extra hours mean more revenue, Kallumkal acknowledged during his testimony while under cross-examination. Deloitte subsequently provided the state with a new estimate for a narrower scope of work that would take 12,000 hours, he said.
One of California's two programs for training nurse-midwives has stopped admitting students while it revamps its curriculum to offer only doctoral degrees, a move that's drawn howls of protest from alumni, health policy experts, and faculty who accuse the University of California of putting profits above public health needs.
UC-San Francisco's renowned nursing school will graduate its final class of certified nurse-midwives next spring. Then the university will cancel its two-year master's program in nurse-midwifery, along with other nursing disciplines, in favor of a three-year doctor of nursing practice, or DNP, degree. The change will pause UCSF's nearly five decades-long training of nurse-midwives until at least 2025 and will more than double the cost to students.
State Assembly member Mia Bonta, who chairs the health committee, said she was "disheartened" to learn that UCSF was eliminating its master's nurse-midwifery program and feared the additional time and costs to get a doctorate would deter potential applicants. "Instead of adding hurdles, we need to be building and expanding a pipeline of culturally and racially concordant providers to support improved birth outcomes, especially for Black and Latina birthing people," she said in an email.
The switch to doctoral education is part of a national movement to require all advanced-practice registered nurses, including nurse-midwives and nurse practitioners, to earn doctoral degrees, Kristen Bole, a UCSF spokesperson, said in response to written questions. The doctoral training will feature additional classes in leadership and quality improvement.
But the movement, which dates to 2004, has not caught on the way the American Association of Colleges of Nursing envisioned when it called for doctorate-level education to be required for entry-level advanced nursing practice by 2015. That deadline came and went. Now, an acute need for maternal health practitioners has some universities moving in the other direction.
UCSF estimates tuition and fees will cost $152,000 for a three-year doctoral degree in midwifery, compared with $65,000 for a two-year master's. Studiesshow that 71% of nursing master's students and 74% of nursing doctoral students rely on student loans, and nurses with doctorates earn negligibly or no more than nurses with master's degrees.
Kim Q. Dau, who ran UCSF's nurse-midwifery program for a decade, resigned in June because she was uncomfortable with the elimination of the master's in favor of a doctoral requirement, she said, which is at odds with the state's workforce needs and unnecessary for clinical practice.
"They'll be equally prepared clinically but at more expense to the student and with a greater time investment," she said.
Nurse-midwives are registered nurses with graduate degrees in nurse-midwifery. Licensed in all 50 states, they work mostly in hospitals and can perform abortions and prescribe medications, though they are also trained in managing labor pain with showers, massage, and other natural means. Certified midwives, by contrast, study midwifery at the graduate level outside of nursing schools and are licensed only in some states. Certified professional midwives attend births outside of hospitals.
The California Nurse-Midwives Association also criticized UCSF's program change, which comes amid a national maternal mortality crisis, a serious shortage of obstetric providers, and a growing reliance on midwives. According to the 2022 "White House Blueprint for Addressing the Maternal Health Crisis" report, the U.S. has the highest maternal mortality rate of any developed nation and needs thousands more midwives and other women's health providers to bridge the swelling gap.
Ginger Breedlove, founder and CEO of Grow Midwives, a national consulting firm, likened UCSF's switch from master's to doctoral training to "an earthquake."
"Why are we delaying the entry of essential-care providers by making them go to an additional year of school, which adds nothing to their clinical preparedness or safety to serve the community?" asked Breedlove, a past president of the American College of Nurse-Midwives. "Why they have chosen this during one of the worst workforce shortages combined with the worst maternal health crisis we have had in 50 years is beyond my imagination."
A 2020 report published in Nursing Outlook failed to find that advanced-practice registered nurses with doctorates were more clinically proficient than those with master's degrees. "Unfortunately, to date, the data are sparse," it concluded.
There is no evidence that doctoral-level nurse-midwives will provide better care, Breedlove said.
"This is profit over purpose," she added.
Bole disputed Breedlove's accusation of a profit motive. Asked for reasons for the change, she offered broad statements: "The decision to upgrade our program was made to ensure that our graduates are prepared for the challenges they will face in the evolving health care landscape."
Like Breedlove, Liz Donnelly, vice chair of the health policy committee for the California Nurse-Midwives Association, worries that UCSF's switch to a doctoral degree will exacerbate the twin crises of maternal mortality and a shrinking obstetrics workforce across California and the nation.
On average, 10 to 12 nurse-midwives graduated from the UCSF master's program each year over the past decade, Bole said. California's remaining master's program in nurse-midwifery is at California State University in Fullerton, south of Los Angeles, and it graduated eight nurse-midwives last year and 11 this year.
In some parts of California, expectant mothers must drive two hours for care, said Bethany Sasaki, who runs Midtown Nurse Midwives, a Sacramento birth center. It has had to stop accepting new clients because it cannot find midwives.
Donnelly predicted the closure of UCSF's midwifery program will significantly reduce the number of nurse-midwives entering the workforce and will inhibit people with fewer resources from attending the program. "Specifically, I think it's going to reduce folks of color, people from rural communities, people from poor communities," she said.
UCSF's change will also likely undercut efforts to train providers from diverse backgrounds.
Natasha, a 37-year-old Afro-Puerto Rican mother of two, has spent a decade preparing to train as a nurse-midwife so she could help women like herself through pregnancy and childbirth. She asked to be identified only by her first name out of fear of reducing her chances of graduate school admission.
The UCSF program's pause, plus the added time and expense to get a doctoral degree, has muddied her career path.
"The master's was just the perfect program," said Natasha, who lives in the Bay Area and cannot travel to the other end of the state to attend CSU-Fullerton. "I'm frustrated, and I feel deflated. I now have to find another career path."
A decade ago, federal officials drafted a plan to discourage Medicare Advantage health insurers from overcharging the government by billions of dollars — only to abruptly back off amid an "uproar" from the industry, newly released court filings show.
The Centers for Medicare & Medicaid Services published the draft regulation in January 2014. The rule would have required health plans, when examining patient's medical records, to identify overpayments by CMS and refund them to the government.
But in May 2014, CMS dropped the idea without any public explanation. Newly released court depositions show that agency officials repeatedly cited concern about pressure from the industry.
The 2014 decision by CMS, and events related to it, are at the center of a multibillion-dollar Justice Department civil fraud case against UnitedHealth Group pending in federal court in Los Angeles.
The Justice Department alleges the giant health insurer cheated Medicare out of more than $2 billion by reviewing patients' records to find additional diagnoses, adding revenue while ignoring overcharges that might reduce bills. The company "buried its head in the sand and did nothing but keep the money," DOJ said in a court filing.
Medicare pays health plans higher rates for sicker patients but requires that the plans bill only for conditions that are properly documented in a patient's medical records.
In a court filing, UnitedHealth Group denies wrongdoing and argues it shouldn't be penalized for "failing to follow a rule that CMS considered a decade ago but declined to adopt."
This month, the parties in the court case made public thousands of pages of depositions and other records that offer a rare glimpse inside the Medicare agency's long-running struggle to keep the private health plans from taking taxpayers for a multibillion-dollar ride.
"It's easy to dump on Medicare Advantage plans, but CMS made a complete boondoggle out of this," said Richard Lieberman, a Colorado health data analytics expert.
Spokespeople for the Justice Department and CMS declined to comment for this article. In an email, UnitedHealth Group spokesperson Heather Soule said the company's "business practices have always been transparent, lawful and compliant with CMS regulations."
Missed Diagnoses
Medicare Advantage insurance plans have grown explosively in recent years and now enroll about 33 million members, more than half of people eligible for Medicare. Along the way, the industry has been the target of dozens of whistleblower lawsuits, government audits, and other investigations alleging the health plans often exaggerate how sick patients are to rake in undeserved Medicare payments — including by doing what are called chart reviews, intended to find allegedly missed diagnosis codes.
By 2013, CMS officials knew some Medicare health plans were hiring medical coding and analytics consultants to aggressively mine patient files — but they doubted the agency's authority to demand that health plans also look for and delete unsupported diagnoses.
The proposed January 2014 regulation mandated that chart reviews "cannot be designed only to identify diagnoses that would trigger additional payments" to health plans.
CMS officials backed down in May 2014 because of "stakeholder concern and pushback," Cheri Rice, then director of the CMS Medicare plan payment group, testified in a 2022 deposition made public this month. A second CMS official, Anne Hornsby, described the industry's reaction as an "uproar."
Exactly who made the call to withdraw the chart review proposal isn't clear from court filings so far.
"The direction that we received was that the rule, the final rule, needed to include only those provisions that had wide, you know, widespread stakeholder support," Rice testified.
"So we did not move forward then," she said. "Not because we didn't think it was the right thing to do or the right policy, but because it had mixed reactions from stakeholders."
The CMS press office declined to make Rice available for an interview. Hornsby, who has since left the agency, declined to comment.
But Erin Fuse Brown, a professor at the Brown University School of Public Health, said the decision reflects a pattern of timid CMS oversight of the popular health plans for seniors.
"CMS saving money for taxpayers isn't enough of a reason to face the wrath of very powerful health plans," Fuse Brown said.
"That is extremely alarming."
Invalid Codes
The fraud case against UnitedHealth Group, which runs the nation's largest Medicare Advantage plan, was filed in 2011 by a former company employee. The DOJ took over the whistleblower suit in 2017.
DOJ alleges Medicare paid the insurer more than $7.2 billion from 2009 through 2016 solely based on chart reviews; the company would have received $2.1 billion less if it had deleted unsupported billing codes, the government says.
The government argues that UnitedHealth Group knew that many conditions it had billed for were not supported by medical records but chose to pocket the overpayments. For instance, the insurer billed Medicare nearly $28,000 in 2011 to treat a patient for cancer, congestive heart failure, and other serious health problems that weren't recorded in the person's medical record, DOJ alleged in a 2017 filing.
In all, DOJ contends that UnitedHealth Group should have deleted more than 2 million invalid codes.
Instead, company executives signed annual statements attesting that the billing data submitted to CMS was "accurate, complete, and truthful." Those actions violated the False Claims Act, a federal law that makes it illegal to submit bogus bills to the government, DOJ alleges.
The complex case has featured years of legal jockeying, even pitting the recollections of key CMS staff members — including several who have since departed government for jobs in the industry — against those of UnitedHealthcare executives.
'Red Herring'
Court filings describe a 45-minute video conference arranged by then-CMS administrator Marilyn Tavenner on April 29, 2014. Tavenner testified she set up the meeting between UnitedHealth and CMS staff at the request of Larry Renfro, a senior UnitedHealth Group executive, to discuss implications of the draft rule. Neither Tavenner nor Renfro attended.
Two UnitedHealth Group executives on the call said in depositions that CMS staffers told them the company had no obligation at the time to uncover erroneous codes. One of the executives, Steve Nelson, called it a "very clear answer" to the question. Nelson has since left the company.
For their part, four of the five CMS staffers on the call said in depositions that they didn't remember what was said. Unlike the company's team, none of the government officials took detailed notes.
"All I can tell you is I remember feeling very uncomfortable in the meeting," Rice said in her 2022 deposition.
Yet Rice and one other CMS staffer said they did recall reminding the executives that even without the chart review rule, the company was obligated to make a good-faith effort to bill only for verified codes — or face possible penalties under the False Claims Act. And CMS officials reinforced that view in follow-up emails, according to court filings.
DOJ called the flap over the ill-fated regulation a "red herring" in a court filing and alleges that when UnitedHealth asked for the April 2014 meeting, it knew its chart reviews had been under investigation for two years. In addition, the company was "grappling with a projected $500 million budget deficit," according to DOJ.
Data Miners
Medicare Advantage plans defend chart reviews against criticism that they do little but artificially inflate the government's costs.
"Chart reviews are one of many tools Medicare Advantage plans use to support patients, identify chronic conditions, and prevent those conditions from becoming more serious," said Chris Bond, a spokesperson for AHIP, a health insurance trade group.
Whistleblowers have argued that the cottage industry of analytics firms and coders that sprang up to conduct these reviews pitched their services as a huge moneymaking exercise for health plans — and little else.
"It was never legitimate," said William Hanagami, a California attorney who represented whistleblower James Swoben in a 2009 case that alleged chart reviews improperly inflated Medicare payments. In a 2016 decision, the 9th Circuit Court of Appeals wrote that health plans must exercise "due diligence" to ensure they submit accurate data.
Since then, other insurers have settled DOJ allegations that they billed Medicare for unconfirmed diagnoses stemming from chart reviews. In July 2023, Martin's Point Health Plan, a Portland, Maine, insurer, paid $22,485,000 to settle whistleblower allegations that it improperly billed for conditions ranging from diabetes with complications to morbid obesity. The plan denied any liability.
A December 2019 report by the Health and Human Services Inspector General found that 99% of chart reviews added new medical diagnoses at a cost to Medicare of an estimated $6.7 billion for 2017 alone.
Federal regulators have blocked two private sector enrollment websites from accessing consumer information through the federal Obamacare marketplace, citing "anomalous activity."
The unusual step comes as the Centers for Medicare & Medicaid Services is under the gun to curb unauthorized enrollment and switching of Affordable Care Act plans by rogue agents. The agency received more than 200,000 complaints in the first six months of the year about such actions.
CMS said in a written statement that it had suspended the two sites — Benefitalign and Inshura — "while the anomalous activity is researched to ensure the EDE partners are in compliance with CMS data standards." EDE stands for "enhanced direct enrollment" and refers to websites approved to integrate with healthcare.gov.
In a separate development, the two websites, which insurance brokers use instead of the federal healthcare.gov site to enroll clients in Affordable Care Act plans, are mentioned in an ongoing civil lawsuit filed by attorneys representing consumers and agents who claim they've been harmed by enrollment schemes.
CMS posted on Aug. 9 an updated list of websites approved to integrate with the federal Obamacare marketplace that no longer included Benefitalign and Inshura. As a result, insurance agents can't use the websites to enroll customers in or make changes to their Obamacare plans.
Private sector enrollment sites were first allowed to integrate with healthcare.gov data under the Trump administration. About a dozen such sites are now approved to connect with the federal system.
Thwarting enrollment schemes and rogue insurance agents without making it too difficult for consumers and legitimate agents to enroll in health plans has become a political problem for the Biden administration. President Joe Biden has claimed record-breaking enrollment under the ACA as one of his administration's major accomplishments.
In recent weeks, lawmakers have called on CMS to do more and introduced legislation to increase penalties for agents who enroll people in plans without authorization. The large number of complaints from victims of the schemes have caught the attention of House Republicans, who on June 28 requested investigations by the Government Accountability Office and the Office of Inspector General at the Department of Health and Human Services.
CMS has since taken actions to short-circuit unscrupulous agents and call centers.
Until last month, agents using the approved private sector enrollment sites could access consumer information via healthcare.gov with only a name, birth date, and state of residence. CMS now requires three-way calls among agents, consumers, and the healthcare.gov helpline when agents new to a policy try to make a change. Many legitimate insurance agents are urging an additional fix used widely by state Obamacare enrollment systems: requiring two-factor authentication before consumer information can be accessed or changed by agents.
Meanwhile, the move to suspend the two enrollment websites baffled the companies, said Catherine Riedel, a spokesperson for TrueCoverage, an insurance call center that also does business as Inshura. TrueCoverage and Benefitalign are subsidiaries of Speridian Global Holdings of California.
"We don't know what they want us to do differently," she said.
The websites, she said, are cooperating with CMS, and they conducted an internal review that found no security issues. Very few details, other than "it is related to a potential technical anomaly reported by an outside party" were given, Riedel wrote, and the firms have not been provided "any specific, actionable information related to the alleged anomaly."
Both firms are mentioned in the lawsuit first filed in April in the U.S. District Court for the Southern District of Florida. The suit alleges that people and organizations engaged in misleading advertising, or made changes to ACA policies, without the express permission of consumers — all with a goal of racking up commissions.
Late on Aug. 16, that case was amended to add allegations and defendants, including Benefitalign. The other enrollment website, Inshura, is not listed as a defendant, although it is run by TrueCoverage, which is.
Riedel said TrueCoverage disputes the lawsuit's claims.
The case "is founded on misinformation and technical naivety that seems to have been connected to create a sensational and false narrative," she said.
The Aug. 16 filing alleges that TrueCoverage or Speridian Technologies, another subsidiary of Speridian Global Holdings, used the Benefitalign or Inshura websites to access U.S. consumers' personal information, then sent it to marketers in India and Pakistan. The allegation, if true, would violate agreements the private sector websites made with the federal government to gain approval to operate, the suit contends.
Riedel said there is no evidence to support the allegations and that it is technically impossible to move "bulk amounts of consumer data" from the Obamacare marketplace.
"Like many technology companies, some of TrueCoverage's marketing efforts have been based in India. However, as part of that marketing work, TrueCoverage did not move any customer data out of the EDE platform," she said.
The 185-page amended complaint added as a defendant Bain Capital Insurance Fund, part of one of the world's leading private investment companies, saying it "aided and abetted" Florida-based Enhance Health, which describes itself as a large broker of ACA plans. Bain helped launch Enhance with a $150 million investment in 2021 and appointed its CEO.
After initially planning to market Medicare Advantage plans, the lawsuit says, Enhance Health and Bain decided to shift to ACA plans, which were seen as more profitable. The suit alleges Enhance Health participated in unauthorized agent changes or switching of ACA policies.
Bain knew "what was going on" at Enhance "and ultimately supported it," the lawsuit says, noting that Bain executives sat on Enhance's board, controlled the hiring of executives, and were often at its Sunrise, Florida, offices. The firm hoped to sell the company once it showed how profitable it could be, the suit alleges.
In a written statement, Enhance Health said that "upholding the highest standards of compliance and controls is a core focus in all aspects of our operation and we will vigorously defend against these baseless claims."
Bain Capital Insurance did not reply to a request for comment.
The additional allegations expand on the initial April filing, which outlined a complex web of activities aimed at capitalizing changes to the ACA under Biden that resulted in broader availability of zero-premium plans for lower-income applicants. In some cases, consumers were lured to call centers through misleading ads touting nonexistent cash cards. Some call centers or agents filed duplicate coverage for the same individuals, without consumer permission, or split family members among multiple policies, the suit alleges.
Because the customers don't pay monthly premiums for the plans, they may not notice they've been enrolled until they try to obtain care.
Some consumers whose plans were switched lost access to their doctors or medications. Some face tax consequences if they were enrolled in duplicative coverage or in subsidized plans for which they did not qualify.
One victim added to the case, Paula Langley of Texas, initially responded to an advertisement promising a cash card. She called the number advertised and was enrolled in ACA coverage in February 2023 but never received the promised incentive, according to the lawsuit.
She and her husband began receiving multiple insurance cards from different insurers, the suit says. She would show up for a doctor's visit or to pick up a prescription only to find her coverage had been canceled, leaving her with unpaid medical bills.
All in all, she was switched among plans and agents at least 22 times in just over a year, the lawsuit alleges.
Attorneys Jason Kellogg of Miami and Jason Doss of Atlanta said they amended the lawsuit based on dozens of interviews with former employees of the named firms. They're seeking class-action status on behalf of affected consumers and agents who have lost business to the unauthorized plan-switching, and the suit alleges violations of the federal Racketeer Influenced and Corrupt Organizations — or RICO — Act.
"The scheme is bad enough because it's so large," Kellogg said. "But it's much worse given that it preys upon Americans who are at the lowest levels of the income scale, who may be desperate, are most vulnerable."
JACKSON, Ga. — Ed Whitehouse stood alongside a state highway in rural Butts County, Georgia, and surveyed acres of rolling fields and forests near Interstate 75. Instead of farmland and trees, he envisioned a hospital.
Whitehouse, a consultant for a local healthcare company that wants to build a hospital there with at least 150 beds, said the group could break ground within a year. The idea, he said, is to provide medical services beyond those currently provided by Wellstar Sylvan Grove Medical Center, an aging, nonprofit "critical access" hospital that offers limited services, including emergency care, rehabilitation, wound care, and imaging.
But it took a new law, pushed by the state's powerful Republican lieutenant governor, Burt Jones, to clear the way for construction. The land is partly owned by his father, Bill Jones, a successful businessman whose interest in developing a hospital in his home county drew attention from state Democrats and the hospital industry.
The situation has been portrayed as "this billionaire entrepreneur, Bill Jones, exploiting the legal system through his son, imposing his will on people and trying to cash in," Whitehouse said. "Nothing could be further from the truth."
Woven through the drama in Butts County are arcane but consequential rules that require state approval for hospital construction and expansion. The rules, used nearly nationwide until the 1980s, require potential builders to apply for permission for new projects. State officials evaluate need based on criteria such as population growth and existing hospital capacity.
This year, Georgia lawmakers joined several other states in targeting those "certificate of need," or CON, regulations for dramatic change. Some states have exempted certain medical providers from the process; others have been more dramatic, including South Carolina, which is sunsetting most of its rules.
Attempts to pave the way for a new hospital in Butts County show how debate over certificate of need laws can intensify as legislatures try to reconcile the often conflicting priorities of politicians, the health care industry, and communities.
The laws have been criticized for limiting competition, and some health care analysts, like Matthew Mitchell, a senior research fellow at West Virginia University, feel everyday people may get the short end of the stick.
"This kind of a regulation is often there because powerful businesses want them," Mitchell said, "not because they protect consumers."
Bill Jones, a 79-year-old former state legislator, supported a 2022 legislative push to open a new hospital in Butts County. But the effort ran into formidable opposition from Wellstar Health System, which operates Sylvan Grove and 10 other hospitals in Georgia.
"As a nonprofit health system, we are always exploring partnerships that expand our mission of enhancing wellbeing in the communities we serve," said Matthew O'Connor, a Wellstar spokesperson. "Our analysis indicates that another hospital in this area is not needed at this time."
This year, Georgia Democrats thought they could leverage Republicans' interest in loosening the rules to gain support for Medicaid expansion. But Democrats were outnumbered in the legislature, and lawmakers eased several rules without that trade-off.
For example, certain hospital projects in rural counties are now exempt. Jones' project and his home county look likely to benefit.
Burt Jones, Georgia's lieutenant governor, who is being investigated for his role as a fake elector for Donald Trump in the 2020 presidential election, maintains his push for changes to the rules isn't about helping his father.
"It will give people access to health care in a reasonable travel time and convenience for them as well," Burt Jones said.
Bill Jones has used Butts County as the home base to build his business network, which includes petroleum distribution, retail convenience stores, and fast-food restaurants. In a recent interview, he complained about media coverage of his son's legislative connection to the hospital project.
He said his interest in opening another local hospital is about community need and, at least in part, stems from his personal experience. His wife gets medical services at Emory Healthcare, more than 40 miles away in Atlanta.
"You're not going to get the attention you need medically" at the 25-bed Sylvan Grove hospital in Jackson, he said. "Health care ought not to be about politics."
But the lieutenant governor had to be somewhat aware that legislation he was pushing could be seen as financially benefiting a close family member, said Josh McLaurin, a Democratic state senator whose district runs from Atlanta into its northern suburbs. Fellow members of the Democratic Party were encouraged to support the certificate of need bill, even though the GOP has a majority in the Georgia Legislature, he said.
"If they want Democrats on board on a bill they could probably pass without our votes, that tends to suggest that there's a concern about the narrative," McLaurin said.
Hospital industry lobbyists, aware of the Jones-Butts County connection, watched the debate with fear of wholesale repeal of the certificate of need laws, which ultimately didn't happen.
The final bill doesn't name Butts County specifically. But it does exempt "a new general acute care hospital in a rural county" from having to obtain a certificate of need. With a population of about 27,000, Butts County meets the definition of "rural" outlined in Georgia law.
Now, the small local company for which Whitehouse works — Interstate Health Systems, which is partly owned by Bill Jones — is moving forward. Land is being cleared for medical office buildings, potentially to lure providers to the area.
Whitehouse said major hospital systems already operating in Georgia are interested in partnering on construction and operation of a new facility.
Members of the Butts County Hospital Authority, which oversees Sylvan Grove, declined to comment. But last year, county commissioners passed a resolution encouraging the hospital authority to pursue a new facility.
Byrd Garland, a retired attorney and former hospital authority member, said he'd appreciate any project that gives people local access to health care, "so they don't have to drive an hour or two hours to get to it."
Garland said he's received both good and bad care at Sylvan Grove, and sometimes would rather make the trek to Atlanta to a better-resourced hospital.
"You get that kind of mindset when you've grown up out here in this medical desert that we're in now," he said.
ATLANTA — At the shuttered Atlanta Medical Center, a "Stronger Together" mural sends a hopeful message near a summer spray of hydrangeas. The campus was mostly quiet on a recent weekend, since AMC closed almost two years ago. A lone security vehicle sat behind a chain-link fence, and pedestrians passed by without even a glance.
In the town of Cuthbert, some 160 miles away, the Southwest Georgia Regional Medical Center also remains shut after closing four years ago, another Southern hospital casualty in a region dotted with them. Even a smaller facility replacing the former Cuthbert hospital "would be tremendous for the county," said Steve Whatley, chair of the Randolph County Hospital Authority.
The two hospitals — one inner-city, the other rural — faced some of the same financial pressures, including not having enough patients with private insurance.
This year, they also shared the attention of some of Georgia's most powerful lawmakers. Legislation signed in April by Gov. Brian Kemp, a Republican, included a provision pushed by U.S. Sen. Jon Ossoff, a Democrat.
The law amends the state's "certificate of need" system, which allows existing hospitals and other health facilities to block would-be competitors' plans to expand by arguing there's insufficient need for their services.
Certificate of need laws exist in 35 states and Washington D.C., according to the National Conference of State Legislatures. The hospital industry, especially nonprofit facilities, generally support the rules, and have argued they reduce health care costs and preserve access to quality medical services. Under CON requirements, health providers must obtain approval from the state before offering some new services or before building or expanding facilities.
Whether the laws improve care or reduce costs is questionable, researchers have found, and critics say more competition would decrease spending by insurers and consumers. In 2018, the Trump administration issued a report recommending that states repeal or revise their certificate of need requirements, arguing they increase health care costs.
"The evidence is pretty darn overwhelming that CON laws don't achieve the initially stated goals of increasing access, lowering costs, and improving quality," said Matthew Mitchell, a senior research fellow at West Virginia University.
Dan Sullivan, a Georgia-based consultant who often helps hospitals and other medical providers in their effort to preserve the laws, said that by limiting the number of providers offering very specialized health services, such as organ transplants, states can better maintain high quality of care.
Certificate of need laws can reduce fraud, Sullivan said. Florida repealed its certificate of need requirements for hospitals and many other health providers following the Trump administration's recommendation. Fraud accelerated in the state after regulations were phased out, he said.
"At least when you file a CON, there's at least a minimum of investigation," Sullivan said.
He argued another benefit of the laws is that they frequently mandate a baseline level of charity care.
Other Southern states recently peeled back their certificate of need laws. Tennessee's legislature passed a bill this year exempting more medical providers from needing to apply for a certificate. North Carolina rolled back some restrictions in an overhaul that paved the way for Medicaid expansion last year. South Carolina made a significant change to its rules last year.
This year, Republicans in Georgia's legislature attempted to repeal the state's certificate of need rules. The effort fell short in the face of fervent hospital opposition.
The narrower legislation that Kemp signed would instead ease the rules for building rural hospitals and exempts a potential new hospital that would partner with Morehouse School of Medicine, one of the country's few historically Black medical schools.
That could potentially fill much of the gap left by Atlanta Medical Center's closing.
Hospital industry officials said Morehouse would probably need a well-heeled partner, and Atrium Health, part of Charlotte, North Carolina-based Advocate Health, may be a logical match. The growth-oriented nonprofit health system has partnered with Morehouse Healthcare to run a clinic in East Point, south of Atlanta, and has a growing presence in the state. Both Morehouse and Atrium declined to discuss a potential hospital partnership with KFF Health News.
The shuttered AMC main campus, meanwhile, is ensnared in a moratorium the city imposed on redeveloping the site — a response to the jolting decision by its owner, Wellstar Health System, to close the hospital.
In 2022, Mayor Andre Dickens issued an executive order temporarily halting any new development on the site. He has criticized the "unusually abrupt closure of one of Atlanta's most important medical centers."
Atlanta's city council extended the ban another 120 days in June.
A new inner-city hospital "would be a heavy lift financially," said Josh Berlin, CEO of rule of three, an Atlanta-based health care consulting firm. That's because it would draw largely from the area's high level of uninsured and Medicaid patients. Georgia is one of 10 states that have not fully expanded Medicaid, and thus has a high rate of uninsured patients.
"You've got a community that is struggling to find care in the wake of the Atlanta Medical Center closure," he said.
Grady Memorial Hospital and other Atlanta facilities have seen a bump in patient volume since the closure of AMC. Grady is regularly deemed "dangerously overcrowded" in one state dashboard.
The need to handle additional patients has sped up expansion plans for Grady, including adding more than 150 beds, said its chief strategy officer, Shannon Sale. "We knew that was going to be needed over time. The Atlanta Medical Center closure sped up that process," she said.
In southwestern Georgia, plans are more modest.
Community leaders, including Whatley, are awaiting the results of a feasibility study that is expected to propose a downsized "rural emergency hospital," a new federal designation that directs extra funding to eligible facilities.
The program guarantees hospitals in rural communities extra Medicare payments and an additional payment of about $3.2 million a year if they close costly inpatient services and offer only emergency and outpatient care.
Ossoff won almost $12 million in three different appropriations bills to support a rural emergency hospital in Cuthbert. He said he met with state leaders to secure the provision in the Georgia certificate of need bill that would allow it to reopen. Southwest Georgia Regional Medical Center would also have to get an exemption from federal officials to qualify for a rural emergency hospital because of its closing date.
"This is a very challenging thing to do, and we've still got significant hurdles to clear," Ossoff told KFF Health News.
Even if it reopens, the Cuthbert facility will face the same pressures that led to its shuttering in the first place — what Ossoff called "failures of state policy." At the time, he cited Georgia's decision not to fully expand Medicaid in the wake of the closure.
Brenda Clark, who works in a wellness center across the street from the closed Cuthbert hospital, said some locals are skeptical about the facility reopening.
"It's much needed. People are hoping and praying we get it back," she said. But "there are some people who say, ‘We'll believe it when we see it.'"
Trisha Byers left behind one crucial item when she moved to North Carolina last year to be closer to her family after suffering a brain injury: health insurance.
In Massachusetts, Byers, 39, was enrolled in Medicaid, the government health program that covers low-income people. But she was ineligible in North Carolina, which had not yet expanded Medicaid coverage under the Affordable Care Act. She said she racked up thousands of dollars in unpaid emergency room bills while uninsured for several months after her move.
Then in December, North Carolina joined 39 other states and Washington, D.C., in widening Medicaid eligibility to include adults with incomes up to 138% of the federal poverty level, or $20,783 for an individual.
"I could finally get all the doctor appointments I needed," said Byers, one of more than 500,000 North Carolinians who gained coverage.
The North Carolina expansion came amid the biggest upheaval in Medicaid's nearly six-decade history. Since April 2023 — when protections that had blocked states from disenrolling Medicaid beneficiaries during the pandemic expired — states have disenrolled more than 24 million people whom they said no longer qualified or had failed to renew coverage.
This Medicaid "unwinding" led to fears that the number of people without insurance would spike. But it also coincided with moves in more than a dozen states to expand health coverage for lower-income people, including children, pregnant women, and the incarcerated.
These expansions will mitigate the effects of the unwinding to some degree, though it's still unclear how much. Five states have not finished culling their rolls, and the effect on the uninsured rate won't be clear until the U.S. Census Bureau releases official figures in September of next year.
"The pandemic was destructive and concerning and clearly demonstrated that Medicaid is so crucially important for our national safety net," said Jennifer Babcock, senior vice president for Medicaid policy at the Association for Community Affiliated Plans, a trade group representing nonprofit health insurers that cover people on Medicaid. "These expansions are incredibly meaningful."
Unwinding-era expansions include:
South Dakota, like North Carolina, expanded Medicaid coverage under the Affordable Care Act last year. About 22,000 people enrolled in the first eight months.
In July, Oregon launched a Medicaid-like coverage option for those who earn too much to qualify for Medicaid under federal limits. The plan is available to all adults with incomes between 138% and 200% — up to $30,120 for an individual — of the federal poverty level. More than 50,000 people have enrolled so far, Oregon officials say.
In January, a new federal law required states to allow children to stay covered under Medicaid for at least a year after signing up. Several states are going beyond that: Oregon, New Mexico, and Washington, for example, allow children to stay covered up to age 6. California passed legislation to expand continuous eligibility for children up to age 4 but has not yet implemented the policy.
Three states widened income eligibility for children to qualify for Medicaid: Arizona, Maine, and North Dakota.
This year, Utah began offering a Medicaid-like coverage option for children regardless of immigration status, though the program is capped at about 2,000 children.
Several states expanded coverage for pregnant women. Nevada, North Dakota, and Tennessee widened income eligibility to make it easier for pregnant women to qualify for Medicaid. Alabama and Maryland expanded eligibility to cover those who are pregnant regardless of immigration status. And Maine, Oregon, and Vermont extended postpartum coverage to 12 months, up from two. With those changes, 47 states now offer one year of postpartum coverage.
In June, five states — Illinois, Kentucky, Oregon, Utah, and Vermont — received approval from the Biden administration to extend Medicaid coverage to incarcerated people up to 90 days before their release. Those states will join several states, including California, Massachusetts, Montana, and Washington, in offering that coverage.
States, which split funding of Medicaid with the federal government, typically expand Medicaid eligibility during times of economic growth when they have more revenue. But several other factors have contributed to the expansion trend. These include heightened awareness over rising maternal mortality rates and new restrictions on abortion, which have reinforced the need for expansions for pregnant women, said Allison Orris, a senior fellow with the left-leaning Center on Budget and Policy Priorities.
In particular, the pandemic showed how important health coverage is to ensure people's health and communities' safety from infectious diseases, Orris said. "It is not surprising to see states look at their Medicaid programs and find ways to strengthen in the midst of the unwinding," she said.
For example, while federal Medicaid funding cannot be used for people living in the country unlawfully, a small but growing number of states have used their money to expand coverage to residents lacking legal status.
During the pandemic, as a requirement to gain extra federal funding, states were prohibited from cutting off Medicaid coverage even for those no longer eligible. The experience showed states the benefits of keeping people enrolled, rather than churning them in and out as their income fluctuates, Orris said. It also brought the nation's uninsured rate to a record-low 7.7%.
Some advocates fear the unwinding of that pandemic-era policy will reverse key gains. A KFF survey published in April found 23% of adults reported being uninsured after they were disenrolled from Medicaid in 2023. A Centers for Disease Control and Prevention report released Aug. 6 found the uninsured rate rose to 8.2% in the first quarter of 2024, from 7.7% in the same quarter in 2023.
Enrollment increased by about 23 million people during the pandemic. As of Aug. 1, with about 85% of the unwinding completed, roughly 14.8 million people have been removed from Medicaid rolls. As a result, it's unlikely the uninsured rate will rise as sharply as some advocates feared a year ago, said Jennifer Tolbert, deputy director of the Program on Medicaid and the Uninsured at KFF, a health information nonprofit that includes KFF Health News.
"We have seen some amazing coverage expansion in places like Oregon and California," said Ben Anderson, deputy senior director of health policy at Families USA, a consumer advocacy group. "But if you live in Texas, Florida, and Georgia, since the pandemic your health coverage has been disrupted in ways that were preventable by state leaders." Those three states are among the 10 that have chosen not to expand Medicaid under the ACA.
Still, Anderson said, the effect of the expansions, even in a limited number of states, will ensure some people can better afford health care and avoid medical debt.
The unwinding process has been rife with fumbling, particularly in states that didn't steer enough resources to connect people with coverage. A study by the federal Government Accountability Office released in July revealed a Centers for Medicare & Medicaid Services' finding that almost all states made mistakes that led to eligible individuals losing Medicaid coverage.
The recent Medicaid expansions provide examples of how some states prioritize health coverage, particularly for certain vulnerable groups.
Tricia Brooks, a Medicaid expert at Georgetown University, noted that some states are "targeting little pockets of coverage and doing it for a variety of reasons."
Getting and keeping children insured means they are more likely to have a regular health provider and be ready to learn in school, she said. "There is no doubt there is a return on investment," she said.
Medicaid advocates wonder, though, whether a second Trump administration would curtail coverage expansions. Republicans have signaled they do not want to extend the federal subsidies that reduce what lower-income people pay for ACA marketplace plans and that are scheduled to expire in 2025.
"We are bracing for that potential impact," said Erin Delaney, director of healthcare policy at the Progressive Policy Institute.
n 2016, medical device giant Abbott issued a recall for its MitraClip cardiac device — "a Class I recall, the most serious type," the FDA said.
"Use of this device may cause serious injuries or death," an FDA notice about the recall said.
But neither the manufacturer nor the FDA actually recalled the device or suspended its use. They allowed doctors to continue implanting the clips in leaky heart valves in what has become a common procedure.
In a notice, the manufacturer explained, "Abbott is not removing product from commercial distribution." Rather, Abbott revised instructions for use and required doctors who implant the clips to undergo training.
When it comes to medical devices, recalls can include not only "removals," in which the device is removed from where it is used or sold, but also "corrections," which address the problem in the field — for instance, by repairing, adjusting, relabeling, or inspecting a device.
"It's very oxymoronic," said Rita Redberg, a cardiologist at the University of California-San Francisco and former editor-in-chief of the journal JAMA Internal Medicine. "A recall makes it sound like it's recalled. But that is not actually what it means."
Though the FDA and federal regulations call these actions recalls, they might be described more aptly as "non-recalls." And they have happened repeatedly in recent years. For instance, in addition to other Abbott devices, products made by Medtronic, Abiomed, and Getinge have had recalls that left them in use.
Safeguarding the Public
Recalls that leave what the FDA identifies as potentially dangerous products in the marketplace can raise the question: Do they do enough to protect the public?
There are other ways to handle recalls. In announcements about products as varied as crib bumpers, pool drain covers, bicycle helmets, and coffee mugs, the Consumer Product Safety Commission routinely alerts consumers to stop using recalled products and contact the manufacturers for refunds, repairs, or replacements. The National Highway Traffic Safety Administration regularly advises consumers to bring recalled cars back to the dealer to have them fixed. When the U.S. Department of Agriculture and the FDA announce food recalls, they routinely tell consumers to return or discard the food.
In some cases, a medical device that is the subject of a recall can be kept on the market safely because there is a simple fix, said Sanket Dhruva, a cardiologist and an associate professor at UCSF who has studied FDA oversight of devices. In other cases, recalls that don't remove devices from the market can provide unwarranted reassurance and leave the public at risk, Dhruva said.
From 2019 through 2023, there were 338 Class I medical device recalls, 164 of which were corrections and 174 of which were removals, FDA spokesperson Amanda Hils said.
Some products undergo recall after recall while they remain on the market. Products in the MitraClip line have been the subject of three rounds of recalls, none of which removed devices from use.
"When deciding whether a recall warrants device removal from the field, the FDA considers the frequency and severity of adverse events, effectiveness of the corrective actions that have been executed, and the benefits and risks of preserving patient access to the device," FDA spokesperson Audra Harrison said.
Where recalled devices have already been implanted, "removal" doesn't necessarily mean removing them from patients' bodies. "When an implanted device has the potential to fail unexpectedly, companies often tell doctors to contact their patients to discuss the risk of removing the device compared to the risk of leaving it in place," the FDA website says.
The FDA allowed the recalled MitraClip devices to remain in use "because the agency believed that the overall benefits of the device continued to outweigh the risks and the firm's recall strategy was appropriate and adequate," Harrison said.
The FDA reviews the recall strategies that manufacturers propose and often provides input to ensure the public will be protected, Hils said. The agency also monitors the effectiveness of recalls and, before terminating them, makes sure the strategy was carried out, Hils said.
Abbott, the maker of MitraClip, said the device has been proven safe and effective "based on more than 20 years of clinical evidence and has profoundly improved the lives of people living with mitral regurgitation," a condition in which blood flows backward through the heart's mitral valve. The condition can lead to heart failure and death.
"With MitraClip, we're addressing the needs of people with MR who often have no other options," company spokesperson Brent Tippen said.
Speaking of the MitraClip recalls, Redberg said, "So hard to imagine these are effective actions in protecting patients."
In 2021, for Medtronic's StealthStation S7 cranial software, the company and the FDA sent a different message.
StealthStation is an elaborate system of screens and other equipment that guides neurosurgeons using instruments in the brain — for instance, to biopsy or cut out tumors. Drawing from CT scans, MRIs, and other imaging, it's meant to show the location of the surgical instruments.
In connection with a Class I November 2021 recall, the FDA website said potential inaccuracies in a biopsy depth gauge could result in "life-threatening injury (such as hemorrhage, unintended tissue damage, or permanent neurological injury), which could lead to death."
The FDA website explained what Medtronic was doing about it.
"The recalling firm will provide a warning and instructional placard to be applied to impacted systems," the website said. "Until a software update is available, ensure you are following the instructions below to prevent the issue from occurring," it advised doctors.
In a statement to KFF Health News, Medtronic spokesperson Erika Winkels said the safety and well-being of patients is the company's primary concern, and certain issues "can be safely and effectively remedied with a correction on site."
Richard Everson, a neurosurgeon and an assistant professor at UCLA, noted that the 2021 recall allowed doctors to continue using unaffected StealthStation features, a benefit for patients and facilities depending on them.
"But, I mean, then you could ask, ‘Well, why don't they just disable the view [of the brain] that's bugged?'" Everson said. "Why would they give you the option of looking at an inaccurate one?"
"That's kind of a strange solution," he said.
The FDA lists the 2021 recall as still open, explaining "not all products have been corrected or removed."
That recall was not the last word on problems with StealthStation. Since then, the manufacturer has submitted adverse event reports to the FDA describing trouble in cases involving various versions of StealthStation.
In a September 2022 case, guidance provided by a StealthStation device was allegedly off the mark, a procedure was aborted, and, when the patient awoke, they "had almost no speech for two days," according to a Medtronic report. In the report, Medtronic said there was "insufficient information to determine the relationship of the software to the reported issue."
In a February 2024 case, after brain surgery, an MRI found that the operation "missed the tumor" and that other tissue was removed instead, according to a report Medtronic submitted to the FDA. In the report, Medtronic said that when a company representative tested the system, it performed as intended.
In March 2024, Medtronic recalled versions of StealthStation S8 without removing them from hospitals. The company said at the time that it would provide a software update.
"Software updates are available to correct the anomalies identified in the 2021 S7 and 2024 S8 recalls and are actively being deployed," Medtronic's Winkels told KFF Health News in a July email. "While the software updates for the 2021 S7 recall are complete in the US, they remain ongoing in some international regions."
In June 2023, Abiomed issued an urgent medical device correction for its Impella 2.5 intravascular micro axial blood pump, which supports the heart. In patients with a certain type of replacement heart valve, there was a risk of "destruction of the impeller blades," which could cause "low flow" and "embolization of the fractured impeller material," an entry on the FDA website said.
"Clinicians are cautioned to position the Impella system carefully in patients," the FDA website said, among other instructions.
The updated instructions "provide technical guidance to mitigate the risk of rare complications," Abiomed spokesperson Ryan Carbain said. There were no product removals and no reports of adverse events "related to product design or manufacturing," Carbain said.
Another set of medical devices, Cardiosave Hybrid and Rescue Intra-Aortic Balloon Pumps made by Getinge of Sweden, have failed persistently, according to FDA records.
The devices — which are placed in the aorta, a major artery, to assist the heart — were the subject of eight Class I recalls from December 2022 to July 2023. All were corrections rather than removals, a KFF Health News analysis found.
In a May 2024 letter to health care providers, the FDA said that, in the previous 12 months, it had received almost 3,000 adverse event reports related to the balloon pumps. It was referring to reports of malfunctions and cases in which the products might have caused or contributed to a death or injury. Of those, 15 reportedly involved serious injury or death, the FDA said.
During the summer of 2023, the FDA noted that "alternative treatments are limited" and said the devices could continue to be used.
But, in May, the FDA changed its stance. The agency advised health care facilities to "transition away from these devices and seek alternatives, if possible."
"These recommendations are based on our continued concerns" that the manufacturer "has not sufficiently addressed the problems and risks with these recalled devices."
Getinge sent KFF Health News written answers from Elin Frostehav, the company's president of Acute Care Therapies.
"There is no question that we would have liked to have solved these issues in full much earlier," she said.
As a result of the FDA's May action, the company "immediately paused proactive marketing" of the balloon pumps in the United States, and it is selling them only to customers who have no alternatives, Frostehav said.
"We are working with the agency to finalize remediation and product update solutions," Frostehav said.
'Known Possible Complications'
Abbott's MitraClip system includes tiny clips implanted in the heart's mitral valve and the equipment used to implant them. The apparatus features a steering mechanism with hand controls and a catheter that is threaded through a major vein, typically from an incision in the groin, to place one or more clips in the heart.
Worldwide, more than 200,000 people have been treated with MitraClip, according to an Abbott website.
The 2016 MitraClip recall described cases in which "the user was unable to separate the implantable Clip from the delivery system."
In a news release at the time, Abbott said it had "received a small number of reports" in which that happened.
Those cases "resulted in surgical interventions to remove the delivery system or replace the mitral valve, and it is expected that any future similar incidents would also require surgery to correct the problem," the FDA said in a 2016 notice. "There was one patient death in these cases as a result of severe comorbidities following surgery."
Years later, something similar happened.
In February 2021, a clip was implanted in an 81-year-old patient but the doctor couldn't separate the clip from the delivery system, according to a report Abbott filed with the FDA. The patient was transferred to surgery, where the delivery system "had to be cut down in order to detach the clip."
The patient then underwent an operation to replace the mitral valve, and, hours later, the patient was brought back to surgery to address bleeding, the report said.
The patient "coded" the next day and died from an aortic bleed, the report said.
In the report to the FDA, the manufacturer blamed "case-specific circumstances."
"Cardiac arrest, hemorrhage and death are listed" in the device instructions "as known possible complications associated with mitraclip procedures," the company said. "There is no indication of a product issue with respect to manufacture, design or labeling."
The third MitraClip recall, initiated in September 2022, cited an "increase in clip locking malfunctions."
Most of the reported malfunctions were not associated with adverse outcomes, the FDA said then. Treatment with MitraClip "remains within the anticipated risk levels," the company told customers.
As with the two earlier recalls, the third advised doctors to follow the device's instructions. But the 2022 recall identified a contributing factor: the way the device was made.
"Abbott has identified a contributing cause … as a change in the material properties of one of the Clip locking components," the company said in a 2022 letter to customers.
"Abbott is working on producing new lots with updated manufacturing processing and raw material," the company wrote. In the same letter, Abbott told doctors that, in the meantime, they could use the devices they had in stock.
Six days later, a clip opened while locked and a patient died, according to a report the manufacturer submitted to the FDA.
"There is no evidence that death was related to the device but it was likely related to the procedure," Abbott wrote.
Now, almost two years later, the 2022 recall remains open, according to the FDA website, and "not all products have been corrected or removed."
KFF Health News data editor Holly K. Hacker contributed to this report.
If you've had an experience with a medical device and would like to tell KFF Health News about it, click here to contact our reporting team.
MOUND BAYOU, Miss. — In the center of this historically Black city, once deemed "the jewel of the Delta" by President Theodore Roosevelt, dreams to revitalize an abandoned hospital building have all but dried up.
An art deco sign still marks the main entrance, but the front doors are locked, and the parking lot is empty. These days, a convenience store across North Edwards Avenue is far busier than the old Taborian Hospital, which first shut down more than 40 years ago.
Myrna Smith-Thompson, who serves as executive director of the civic group that owns the property, lives 100 miles away in Memphis, Tennessee, and doesn't know what's to become of the deteriorating building.
"I am open to suggestions," said Smith-Thompson, whose grandfather led a Black fraternal organization now called the Knights and Daughters of Tabor. In 1942, that group established Taborian Hospital, a place staffed by Black doctors and nurses that exclusively admitted Black patients, during a time when Jim Crow laws barred them from accessing the same health care facilities as white patients.
"This is a very painful conversation," said Smith-Thompson, who was born at Taborian Hospital in 1949. "It's a part of my being."
A similar scenario has played out in hundreds of other rural communities across the United States, where hospitals have faced closure over the past 40 years. In that regard, the story of Mound Bayou's hospital isn't unique.
But there's more to this hospital closure than the loss of inpatient beds, historians say. It's also a tale of how hundreds of Black hospitals across the U.S. fell casualty to social progress.
The Civil Rights Act of 1964 and the enactment of Medicare and Medicaid in 1965 benefited millions of people. The federal campaign to desegregate hospitals, culminating in a 1969 court case out of Charleston, South Carolina, guaranteed Black patients across the South access to the same health care facilities as white patients. No longer were Black doctors and nurses prohibited from training or practicing medicine in white hospitals. But the end of legal racial segregation precipitated the demise of many Black hospitals, which were a major source of employment and a center of pride for Black Americans.
"And not just for physicians," said Vanessa Northington Gamble, a medical doctor and historian at George Washington University. "They were social institutions, financial institutions, and also medical institutions."
In Charleston, staff members at a historically Black hospital on Cannon Street started publishing a monthly journal in 1899 called The Hospital Herald, which focused on hospital work and public hygiene, among other topics. When Kansas City, Missouri, opened a hospital for Black patients in 1918, people held a parade. Taborian Hospital in Mound Bayou included two operating rooms and state-of-the-art equipment. It's also where famed civil rights activist Fannie Lou Hamer died in 1977.
"There were Swedish hospitals. There were Jewish hospitals. There were Catholic hospitals. That's also part of the story," said Gamble, author of "Making a Place for Ourselves: The Black Hospital Movement, 1920-1945."
"But racism in medicine was the main reason why there was an establishment of Black hospitals," she said.
By the early 1990s, Gamble estimated, there were only eight left.
"It has ripple effects in a way that affect the fabric of the community," said Bizu Gelaye, an epidemiologist and program director of Harvard University's Mississippi Delta Partnership in Public Health.
Researchers have largely concluded that hospital desegregation improved the health of Black patients over the long term.
One 2009 study focusing on motor vehicle accidents in Mississippi in the '60s and '70s found that Black people were less likely to die after hospital desegregation. They could access hospitals closer to the scene of a crash, reducing the distance they would have otherwise traveled by approximately 50 miles.
An analysis of infant mortality, published in 2006 by economists at the Massachusetts Institute of Technology, found that hospital desegregation in the South substantially helped close the mortality gap between Black and white infants. That's partly because Black infants suffering from illnesses such as diarrhea and pneumonia got better access to hospitals, the researchers found.
A new analysis, recently accepted for publication in the Review of Economics and Statistics, suggests that racism continued to harm the health of Black patients in the years after hospital integration. White hospitals were compelled to integrate starting in the mid-1960s if they wanted to receive Medicare funding. But they didn't necessarily provide the same quality of care to Black and white patients, said Mark Anderson, an economics professor at Montana State University and co-author of the paper. His analysis found that hospital desegregation had "little, if any, effect on Black postneonatal mortality" in the South between 1959 and 1973.
Nearly 3,000 babies were born at Taborian Hospital before it closed its doors in 1983. The building remained vacant for decades until 10 years ago, when a $3 million federal grant helped renovate the facility into a short-lived urgent care center. It closed again only one year later amid a legal battle over its ownership, Smith-Thompson said, and has since deteriorated.
"We would need at least millions, probably," she said, estimating the cost of reopening the building. "Now, we're back where we were prior to the renovation."
In 2000, the hospital was listed as one of the most endangered historic places in Mississippi by the Mississippi Heritage Trust. That's why some people would like to see it reopened in any capacity that ensures its survival as an important historical site.
Hermon Johnson Jr., director of the Mound Bayou Museum, who was born at Taborian Hospital in 1956, suggested the building could be used as a meeting space or museum. "It would be a huge boost to the community," he said.
Meanwhile, most of the hospital's former patients have died or left Mound Bayou. The city's population has dropped by roughly half since 1980, U.S. Census Bureau records show. Bolivar County ranks among the poorest in the nation and life expectancy is a decade shorter than the national average.
A community health center is still open in Mound Bayou, but the closest hospital is in Cleveland, Mississippi, a 15-minute drive.
Mound Bayou Mayor Leighton Aldridge, also a board member of the Knights and Daughters of Tabor, said he wants Taborian Hospital to remain a health care facility, suggesting it might be considered for a new children's hospital or a rehabilitation center.
"We need to get something back in there as soon as possible," he said.
Smith-Thompson agreed and feels the situation is urgent. "The health care services that are available to folks in the Mississippi Delta are deplorable," she said. "People are really, really sick."
A bill pending in California's legislature to ratchet up oversight of private equity investments in healthcare is receiving enthusiastic backing from consumer advocates, labor unions, and the California Medical Association, but drawing heavy fire from hospitals concerned about losing a potential funding source.
The legislation, sponsored by Attorney General Rob Bonta, would require private equity groups and hedge funds to notify his office of planned purchases of many types of healthcare businesses and obtain its consent. It also reinforces state laws that bar nonphysicians from directly employing doctors or directing their activities, which is a primary reason for the doctor association's support.
Private equity firms raise money from institutional investors such as pension funds and typically acquire companies they believe can be run more profitably. Then they look to boost earnings and sell the assets for multiples of what they paid for them.
That can be good for future retirees and sometimes for mismanaged companies that need a capital infusion and a new direction. But critics say the profit-first approach isn't good for healthcare. Private equity deals in the sector are coming under increased scrutiny around the country amid mounting evidence that they often lead to higher prices, lower-quality care, and reduced access to core health services.
Opponents of the bill, led by the state's hospital association, the California Chamber of Commerce, and a national private equity advocacy group, say it would discourage much-needed investment. The hospital industry has already persuaded lawmakers to exempt sales of for-profit hospitals from the proposed law.
"We preferred not to make that amendment," Bonta said in an interview. "But we still have a strong bill that provides very important protections."
The legislation would still apply to a broad swath of medical businesses, including clinics, physician groups, nursing homes, testing labs, and outpatient facilities, among others. Nonprofit hospital deals are already subject to the attorney general's review.
A final vote on the bill could come this month if a state Senate committee moves it forward.
Nationally, private equity investors have spent $1 trillion on healthcare acquisitions in the past decade, according to a report by The Commonwealth Fund. Physician practices have been especially attractive to them, with transactions growing sixfold in a decade and often leading to significant price increases. Other types of outpatient services, as well as clinics, have also been targets.
In California, the value of private equity healthcare deals grew more than twentyfold from 2005 to 2021, from less than $1 billion to $20 billion, according to the California healthcare Foundation. Private equity firms are tracking the pending legislation closely but so far haven't slowed investment in California, according to a new report from the research firm PitchBook.
Multiple studies, as well as a series of reports by KFF Health News, have documented some of the difficulties created by private equity in healthcare.
Research published last December in the Journal of the American Medical Association showed a larger likelihood of adverse events such as patient infections and falls at private equity hospitals compared with others. Analysts say more research is needed on how patient care is being affected but that the impact on cost is clear.
"We can be almost certain that after a private equity acquisition, we're going to be paying more for the same thing or for something that's gotten worse," said Kristof Stremikis, director of Market Analysis and Insight at the California Healthcare Foundation.
Most private equity deals in healthcare are below the $119.5 million threshold that triggers a requirement to notify federal regulators, so they often slide under the government radar. The Federal Trade Commission is stepping up scrutiny, and last year it sued a private equity-backed anesthesia group for anticompetitive practices in Texas.
Lawmakers in several other states, including Connecticut, Minnesota, and Massachusetts, have proposed legislation that would subject private equity deals to greater transparency.
Not all private equity firms are bad operators, said Assembly member Jim Wood, a Democrat from Healdsburg, but review is essential: "If you are a good entity, you shouldn't fear this."
The bill would require the attorney general to examine proposed transactions to determine their impact on the quality and accessibility of care, as well as on regional competition and prices.
Critics note that private equity deals are often financed with debt that is then owed by the acquired company. In many cases, private equity groups sell off real estate to generate immediate returns for investors and the new owners of the property then charge the acquired company rent.
That was a factor in the financial collapse of Steward Health Care, a multistate hospital system that was owned by the private equity firm Cerberus Capital Management from 2010 to 2020, according to a report by the Private Equity Stakeholder Project, a nonprofit that supports the California bill. Steward filed for Chapter 11 bankruptcy in May. "Almost all of the most distressed U.S. healthcare companies are owned by private equity firms," according to another study by the group.
Opponents of the legislation argue it would dampen much-needed investment in an industry with soaring operating costs. "Our concern is that it will cut off funding that can improve healthcare," said Ned Wigglesworth, a spokesperson for Californians to Protect Community healthcare, a coalition of groups fighting the legislation. The prospect of having to submit to a lengthy review by the attorney general, he said, would create "a chilling effect on private funders."
Proponents of private equity investment point to what they say are notable successes in California healthcare.
Children's Choice Dental Care, for example, said in a letter to state senators that it logs over 227,000 dental visits annually, mostly with children on Medi-Cal, the health insurance program for low-income Californians. "We have been able to expand to 25 locations, because we have been able to access capital from a private equity firm," the group wrote.
Ivy Fertility, with clinics in California and eight other states, said in a letter to state senators that private investment has expanded its ability to provide fertility treatments at a time when demand for them is increasing.
Researchers note that private equity investors are hardly alone when it comes to healthcare profiteering, which extends even to nonprofits. Sutter Health, a major nonprofit hospital chain, for example, settled for $575 million in a lawsuit brought by then-Attorney General Xavier Becerra, for unfair contracting and pricing.
"It's helpful to look at ownership classes like private equity, but at the end of the day we should look at behavior, and anyone can do the things that private equity firms do," said Christopher Cai, a physician and health policy researcher at Harvard Medical School. He added, though, that private equity investors are "more likely to engage in financially risky or purely profit-driven behavior."