Why Hospitals Are Getting Into The Housing Business

KFF Health News, October 4, 2019

Hospitals cannot discharge patients if they have no safe place to go, so patients who are homeless, frail, living alone, or experiencing an unstable housing situation, can occupy hospital beds long after their acute medical problem is resolved.

This article was published by Kaiser Health News on October 4, 2019.

By Markian Hawryluk, KHN

DENVER — One patient at Denver Health, the city's largest safety net hospital, occupied a bed for more than four years—a hospital record of 1,558 days.

Another admitted for a hard-to-treat bacterial infection needed eight weeks of at-home IV antibiotics, but had no home.

A third, with dementia, came to the hospital after being released from the Denver County Jail. His family refused to take him back.

In the first half of this year alone, the hospital treated more than 100 long-term patients. All had a medical issue that led to their initial hospitalization. But none of the patients had a medical reason for remaining in the hospital for most of their stay.

Legally and morally, hospitals cannot discharge patients if they have no safe place to go. So patients who are homeless, frail or live alone, or have unstable housing, can occupy hospital beds for weeks or months—long after their acute medical problem is resolved. For hospitals, it means losing money because a patient lingering in a bed without medical problems doesn't generate much, if any, income. Meanwhile, acutely ill patients may wait days in the ER to be moved to a floor because a hospital's beds are full.

"Those people are, for lack of a better term, stranded in our hospital," said Dr. Sarah Stella, a Denver Health physician.

To address the problem, hospitals from Baltimore to St. Louis to Sacramento, Calif., are exploring ways to help patients find a home. With recent federal policy changes that encourage hospitals to allocate charity dollars for housing, many hospitals realize it's cheaper to provide a month of housing than to keep patients for a single night.

Hospital executives find the calculus works even if they have to build affordable housing units themselves. It's why Denver Health is partnering with the Denver Housing Authority to repurpose a mothballed building on the hospital campus into affordable senior housing, including about 15 apartments designated to help homeless patients transition out of the hospital.

"This is an experiment of sorts," said Peg Burnette, the hospital's chief financial officer. "We might be able to help better their lives, as well as help the financials of the hospital and help free up capacity for the patients that need to come to see us for acute care."

Spending To Save Money
 

Denver Health once used the shuttered 10-story building for office space but opted to sell it to the housing authority and grant a 99-year lease on the land for a minimal fee.

"It really lowers the construction costs for us," said Ismael Guerrero, Denver Housing Authority's executive director. "It was a great opportunity to build additional housing in a location that's obviously close to the hospital, close to public transit, near the city center."

Once the renovation is complete in late 2021, the housing group will hire a coordinator to assist tenants with housing-related issues, including helping those in the transitional units find permanent housing. The hospital will provide a case manager to help with their physical and behavioral health needs, preparing them for life on their own. Denver Health expects most patients will be able to move on from the transitional units within 90 days.

The hospital will pay for the housing portion itself. That will still be far cheaper than what the hospital currently spends.

It costs Denver Health $2,700 a night to keep someone in the hospital. Patients who are prime candidates for the transitional units stay on average 73 days, for a total cost to the hospital of nearly $200,000. The hospital estimates it would cost a fraction of that, about $10,000, to house a patient for a year instead.

"The hospital really is like the most expensive form of housing," Stella said.

Growing Interest
 

A recent report from the Urban Institute found that while most hospital officials are well aware of how poor housing affects a patient's recovery, they were stymied about how to address the issue.

"It's on the radar of almost all hospitals," said Kathryn Reynolds, who co-authored the report. "But it seemed like actually making investments in housing, providing some type of financing or an investment in land or something that has a good amount of value seems to be less widespread."

The report found housing investment has been more likely among hospitals with their own health plans or other types of arrangements in which they were receiving a fixed amount of money to care for a group of patients. Getting patients into housing could lower their costs and increase their operating margins. Others, particularly religiously affiliated and children's hospitals, sought housing solutions as part of their charitable mission.

Reynolds said the trend is due in part to the Affordable Care Act, which requires hospitals to perform a community needs assessment to help guide their charitable efforts. That prompted more hospitals to consider the social needs of their patients and pushed housing concerns up the list. Additionally, the Internal Revenue Service clarified in 2015 that hospitals could claim housing investments as charitable spending required under their tax-free status. And provisions included in the 2017 tax cut bill provided significant tax savings for investors in newly designated opportunity zones, increasing their interest in affordable housing projects.

Some hospitals, she said, may use their cash reserves to invest in housing projects that generate a lower return than other investment options because it furthers their mission, not just their profits.

In other cases, hospital systems play a facilitator role—using their access to cheap credit or serving as an anchor tenant in a larger development—to help get a project off the ground.

"Housing is not their business," Guerrero said. "It's not an easy space to get into if you don't have the experience, if you don't have a real estate development team in-house to understand how to put these deals together."

Cutting Costs
 

In the southwestern corner of Colorado, Centura Health's Mercy Regional Medical Center has partnered with Housing Solutions for the Southwest to prioritize housing vouchers for frequent users of the emergency room.

Under a program funded by the Catholic Health Initiatives, Mercy hired a social worker and a case manager to review records of frequent emergency room patients. They quickly realized how big an issue housing was for those patients. Many had diabetes and depended on insulin—which needs refrigeration. Kidney failure was one of the most costly diagnoses for the hospital.

Once patients received housing vouchers and found stable housing, though, costs began to drop.

"We now knew where they were. We knew that they had a safe place to live," said Elsa Inman, program coordinator at Mercy Regional. "We knew they would be more effective in managing their chronic conditions."

The patients with stable housing were more likely to make it to their primary care and specialist appointments, more likely to stay on top of medications and keep their chronic conditions in check.

The combination of intensive case management and patient engagement helped to halve ER visits for the first 146 patients in the program, saving nearly $495,000 in Medicaid spending in less than three years.

"Hospitals are businesses and nonprofits are businesses," said Brigid Korce, program development director for Housing Solutions. "They are bottom-line, dollars-and-cents people."

Inman acknowledged that the hospital might have missed out on some revenue by reducing ER use by these patients. Hospitals are still largely paid by the number of patients they treat and the number of services they provide.

But most of those patients were covered by Medicaid, so reimbursements were low anyway. And the move freed up more ER beds for patients with more critical needs.

"We want to be prepared for life-threatening conditions," Inman said. "If you've got most of your beds taken up by someone who can be receiving patient care outside in the community, then that's the right thing to do."

That was less of an issue for the inpatients at Denver Health. Because hospitals are generally paid a fixed amount for a given diagnosis, the longer a patient stays in the hospital, the more money the hospital loses.

"They've basically exhausted their benefit under any plan because they don't meet medical necessity anymore," Burnette said. "If they had a home, they would go home. But they don't, so they stay in the hospital."

Trump Speech Offers Dizzying Preview Of His Healthcare Campaign Strategy

KFF Health News, October 4, 2019

The president took aim at the overhaul plans advocated by his Democratic opponents and claimed Republicans are committed to protecting people with preexisting conditions, before signing an executive order to expand Medicare Advantage.

This article was published by Kaiser Health News on October 3, 2019.

By Shefali Luthra, Kaiser Health News

President Donald Trump offered a preview of what his 2020 health agenda might look like in a speech Thursday—blasting Democratic proposals for reform and saying he would tackle issues such as prescription drug prices and affordability.

He outlined the pillars of his health care vision, which included protecting vulnerable patients; delivering affordable care and prescription drugs; providing choices and control; and improving care for veterans.

In the speech, delivered in The Villages, Fla., before the president signed an executive order to expand Medicare Advantage, Trump also took aim at overhaul plans being advocated by his Democratic opponents, claiming their approach would "put everyone into a single socialist government-run program that would end private insurance."

He said he and Republicans are committed to protecting people who have preexisting conditions—a claim that PolitiFact and Kaiser Health News previously rated False, because of his administration's policies.

And, in keeping with the Medicare Advantage theme, he spoke about a controversial move by the Obama administration to reduce future payments to that program by $800 billion. (This point, previously examined by PolitFact, was found to be Half True—but Trump didn't note that the reductions didn't affect the program's beneficiaries, or that he has used a similar approach in projecting future Medicare spending reductions.)

He challenged Congress to approve legislation to curb surprise medical bills and lauded improvements in the veterans' health system.

But the speech included several other claims directed at Democrats and the currently buzzy proposal of "Medicare for All" that could easily have left some people befuddled. We broke down a few.

Trump told his audience that "Democrats are draining your health care to finance the open borders."

We asked the White House for the basis of this remark and never got a specific answer. But there are various issues to examine.

In August, the president argued that Democrats "support giving illegal immigrants free healthcare at our expense." But that isn't accurate. The statement, part of a Trump 2020 television advertisement, was rated Mostly False.

That claim examined Democratic candidates who had said during one of the televised debates that their health care plans would provide coverage to undocumented immigrants. But the question posed by a debate host didn't ask whether coverage would be free. In fact, multiple candidates said coverage for undocumented people would not be free. Some, meanwhile, include copays and deductibles in their health care proposals. Plus, if any Medicare for All plan was financed through, for instance, payroll taxes, undocumented immigrants would also be subject to paying those.

Trump argued that Democratic proposals for universal health care "would totally obliterate Medicare"—adding that "whether it's single-payer or the so-called public option … they want to raid Medicare to fund a thing called socialism."

The argument here is nuanced but, fundamentally, Trump's characterization misses the mark and is misleading.

The "single-payer" bill he refers to is the Medicare for All proposal pushed by Democratic Sens. Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts. The bill would put all Americans—including the seniors currently covered by Medicare—into a single health plan. It would share Medicare's name but look dramatically different: Unlike the existing program, the proposal envisions covering virtually all medical services and eliminating cost sharing. It would not be administered by private, for-profit contractors.

Predicting what this looks like is difficult since it's grounded in hypotheticals. And one could argue that using the term "obliterates" is not completely off base because Medicare in its current form would no longer exist. But that misses the broader impact. Under the proposal as it's written, seniors would be insured through a program at least as generous—if not more—than what they currently receive.

As for "public option" proposals put forth by candidates such as former Vice President Joe Biden and South Bend, Ind., Mayor Pete Buttigieg, they would leave Medicare more or less as it is, while also creating a public health plan uninsured people could buy into.

Describing Medicare for All, Trump said the plan would "reduce Americans' household income by $17,000 a year."

We contacted the White House to find out the source of this number. The administration acknowledged receipt but never sent an answer.

That said, it's unclear where this number comes from, because the evidence simply doesn't exist to make such a precise claim. After all, many details about Medicare for All are still being worked out. That makes it exceptionally difficult to figure out how much such a system would cost—let alone how an individual household's finances might change under such a system. (This ambiguity is why the Congressional Budget Office has declined to estimate single-payer's fiscal impact.)

And different households would likely make out differently under Medicare for All. Some might end up paying more. But others would likely pay more in taxes while still seeing their health care costs go down—meaning they could ultimately save money.

Trump said, "the Democrat plans for socialized medicine will not just put doctors and hospitals out of business, they will also deny your treatment and everything that you need."

This statement relies on a talking point that's been widely debunked.

We focused on the first part of this claim. Both conservatives and moderate Democrats have argued that single-payer health care, in particular, would drive hospitals and doctors to shutter en masse. (Conservatives have made this argument about a public option as well.) In a past related fact check, we rated this as False.

The argument springs from the way Medicare currently reimburses hospitals, at 87 cents for every dollar spent on health care. But the Sanders bill does not set a reimbursement rate, and instead would charge the federal government with devising an appropriate rate.

Some hospitals might struggle under a new system—but others, health care economists have previously told us, would likely do better.

"It really depends on which hospitals you're talking about," Gerard Anderson, a health policy professor at Johns Hopkins University and an expert in hospital pricing, told Kaiser Health News in July.

Tenn. Block Grant Experiment Would Boost Federal Funding, State Medicaid Chief Says

KFF Health News, October 3, 2019

Conservatives have pursued Medicaid block grants for decades to give states more power over the program.

This article was first published on Thursday, October 3, 2019 in Kaiser Health News.

By Phil Galewitz

Tennessee wants to be the first state to test a radical approach for federal financing of Medicaid, the federal-state health care program for low-income people.

The proposal, Tennessee Medicaid Director Gabe Roberts said, would increase the federal government's contributions by millions of dollars and allow Tennessee to improve care for enrollees, perhaps offering additional services such as limited dental care for some people. But critics fear the plan will harm the poor.

Tennessee, controlled by a Republican governor and legislature, has not expanded its Medicaid program as allowed under the Affordable Care Act.

The federal government pays each state a percentage of the cost of caring for anyone eligible for Medicaid ― varying from 50% to 77%. And all who qualify get covered.

Tennessee has proposed altering its federal funding (66% of its total Medicaid budget) into an annual lump sum. (Drug expenses would be excluded from the new program.) The state said the change would give it more flexibility to run the program ― which serves 1.4 million people ― and would save money.

Conservatives have pursued Medicaid block grants for decades to give states more power over the program. But Democrats oppose such efforts, arguing block grants could result in less coverage and limit enrollment. They also stress that states, over time, could see significant drops in federal Medicaid funding because it would not be based specifically on the number of enrollees.

Tennessee's plan, which was submitted last week to the Centers for Medicare & Medicaid Services, would not change benefits or eligibility levels.

KHN senior correspondent Phil Galewitz sat down with Roberts last week to talk about the issue. His answers have been edited for clarity and length.

Q: Why are you seeking to turn Medicaid into a block grant now, especially as your state has been experiencing a budget surplus?

This isn't a traditional block grant. We are calling it a modified approach. Tennessee Gov. Bill Lee has been a fan of the block grant idea for a while but also cares deeply about making sure that any approach isn't going to reduce enrollment or services or people that we serve.

A state law passed this year instructing our administration to file a block grant waiver that would have a floor for federal dollars coming. So if enrollment fell, the money wouldn't decrease. But if enrollment increased, the amount of federal payments would be indexed to account for that.

Q: Can you discuss the shared-savings element that Tennessee is proposing?

Any savings from this program would be split in half with the federal government.

We have routinely underspent what the federal government projects for our costs by billions of dollars. So what this proposal does is to ask CMS to reimagine the state-federal funding mechanism as a value-based one, so that states that operate well and serve their populations well ― but also contain costs ― are rewarded with additional federal dollars to invest in that population without the requirement to come up with a state match. Right now, we don't keep any of the money we save.

Q: As one of the poorer states, are you willing to risk getting less money from the federal government for Medicaid?

We believe the way the waiver is designed mitigates any concerns around a traditional block grant program. We do not believe this will result in fewer federal dollars coming to the state. This is an opportunity to bring more federal dollars to spend to enhance services or perhaps to provide services to additional people we are not serving today.

Q: Some experts question the legality of the Trump administration approving a type of Medicaid block grant without congressional authority. Why do you believe this is legal?

There are a variety of ways we can reach a mutually agreeable solution with CMS on this that clearly comports to federal law.

Q: Why is turning Medicaid financing into a block grant a better idea for the poor than expanding Medicaid under the Affordable Care Act, which would provide coverage to nearly additional 300,000 residents? The federal government pays 90% of the cost of these new enrollees, bringing billions of additional federal funding into the state.

These are two different and not mutually exclusive goals. This is an approach that rewards Tennessee for a well-run program, providing high-quality care to members with high member satisfaction and underspending CMS projections. This allows us to get access to some of those federal savings. Medicaid expansion requires a significant amount of money that the state has to come up with on an ongoing basis. I don't know that it's fair to pit the two approaches against each other.

Phil Galewitz: pgalewitz@kff.org, @philgalewitz

Walmart To Give Workers Financial Incentives To Use Higher-Quality Doctors

KFF Health News, October 3, 2019

Employees who use 'featured providers' will pay less out of pocket.

This article was first published on Thursday, October 3, 2019 in Kaiser Health News.

By Phil Galewitz

Worried its employees aren't getting good enough care from doctors in their insurance networks, Walmart next year will test pointing workers in northwestern Arkansas, central Florida and the Dallas-Fort Worth area toward physicians it has found provide better service.

If the employees use these "featured providers," they will pay less out of pocket, Walmart officials said Thursday.

Walmart is working with Embold Health of Nashville, a recent startup company that uses data to analyze whether doctors provide "appropriate, effective and cost-efficient care." Embold CEO Daniel Stein was a Walmart executive from 2013 to 2017.

"Rather than relying on word of mouth or social media to find a provider, patients can get information based on actual data and proven results," said Lisa Woods, Walmart's senior director of U.S. benefits.

Walmart, the nation's largest private employer, would not disclose the percentage of its doctors in those geographic areas that have the new quality distinction or how much workers could save by using their services. The company hopes to take the program nationwide if successful, officials said.

About 60,000 employees and dependents in the three initial areas could be affected.

Ateev Mehrotra, associate professor of health care policy at Harvard Medical School, said Walmart's strategy could raise questions about whether doctors are chosen more for lower cost or higher quality.

"This sounds awesome and great in theory, to identify the best doctors you have for your employees to go to, but what is in the black box formula that Embold Health is using, and how much is it the cost and how much is quality of care?" he said.

The effort to steer workers to certain doctors mirrors a similar approach Walmart uses with hospital care. Since 2012, Walmart has directed the 1 million employees and dependents on its health plan to better-performing hospitals for high-cost services, such as heart and transplant surgery.

While using these hospitals — including Mayo Clinic and Cleveland Clinic — may cost more than a local alternative, Walmart officials have said the strategy saves money by averting complications and unnecessary care. Several other large employers have followed a similar "centers of excellence" strategy.

Earlier this year, Walmart became the first large employer to direct its employees to diagnostic imaging facilities that it found provide more accurate care.

Employer health experts said Walmart's initiative with physicians is a groundbreaking step — but is also fraught with risks such as alienating doctors and upsetting employees who don't want to change doctors.

"It's a bold move to use the data they have and share it with employees for their benefit," said Steve Wojcik, vice president of public policy at the National Business Group on Health, a trade group of large employers. "It's part of Walmart's pattern to disrupt and transform health care for the better."

Stein of Embold Health said his company uses various quality metrics that vary by specialty to rate physicians. The company shares its criteria with physicians, he said, so they know what areas they need to improve to get the quality distinction. This includes such measures as rates of cesarean sections for patients with low-risk pregnancies and infection rates for patients after elective knee or hip replacement, according to Embold Health.

Mehrotra noted, however, that it's often difficult to identify which doctors provide the highest quality of care because most work in large groups where patients may see multiple physicians.

The initiative to identify better-performing doctors, he suggested, "can only be seen as a failure of their health plans," noting that employers typically rely on the insurance companies that administer their plans to identify the best doctors for their networks.

Walmart's test will include physicians specializing in primary care, cardiology, gastroenterology, endocrinology, obstetrics, oncology, orthopedics and pulmonology.

Walmart officials said the initiative is aimed at helping reduce the large amount of unnecessary care that doctors provide, which some studies say is as high as 30%.

"We hope to get a meaningful chunk of that removed from our costs and our associates' costs," said Adam Stavisky, Walmart's senior vice president of U.S. benefits. "How much we can save? We don't know, but we think it's material."

The initiative is one of several announced by Walmart officials Thursday, including pilot projects to expand access to telehealth doctors managing chronic care in Colorado, Minnesota and Wisconsin, and to help workers in North Carolina and South Carolina find doctors, provide assistance on billing questions or complex medical issues.

Phil Galewitz: pgalewitz@kff.org, @philgalewitz

New Round of Medicare Readmission Penalties Hits 2,583 Hospitals

KFF Health News, October 1, 2019

Of the 3,129 general hospitals evaluated in the Hospital Readmission Reduction Program, 83% received a penalty.

This article was first published on Tuesday, October 1, 2019 in Kaiser Health News.

By Jordan Rau

Medicare cut payments to 2,583 hospitals Tuesday, continuing the Affordable Care Act's eight-year campaign to financially pressure hospitals into reducing the number of patients who return for a second stay within a month.

The severity and broad application of the penalties, which Medicare estimates will cost hospitals $563 million over a year, follows the trend of the past few years. Of the 3,129 general hospitals evaluated in the Hospital Readmission Reduction Program, 83% received a penalty, which will be deducted from each payment for a Medicare patient stay over the fiscal year that begins today.

Although Medicare began applying the penalties in 2012, disagreements continue about whether they have improved patient safety. On the positive side, they have encouraged hospitals to focus on how their patients recuperate, and some now assist them in procuring medications and follow-up appointments.

But the hospital industry and some academics have raised concerns that some hospitals may be avoiding readmitting patients who require additional inpatient care out of fear of the financial repercussions, while others have said the program is not showing major benefits.

"A lot of hard work has gone into trying to reduce readmissions, and the needle has not moved very far," said Dr. Karen Joynt Maddox, co-director of the Center for Health Economics and Policy at Washington University in St. Louis, who has been skeptical of the initiative. "It's been a huge investment by hospitals but not very much in outcomes, but some good things have come out of it."

A few studies have even found an increase in mortality since the penalties took effect, but other studies, including a recent one by the Medicare Payment Advisory Commission (MedPAC), an independent body that helped devise the approach for Congress, identified no such link.

"I don't believe the HRRP kills people," David Grabowski, a commission member and health policy professor at Harvard Medical School, said at the commission's meeting last month, using the acronym for the penalty program.

The MedPAC staff's preliminary analysis, made public last month, found that the frequency of Medicare patients being readmitted within 30 days of discharge dropped from 16.7% in 2010 to 15.7% in 2017. However, the analysis said the decrease was more significant once it took into consideration that the average patient was frailer in 2017 than in 2010 and thus more likely to end up back in the hospital, with all other things being equal.

"On a risk-adjusted basis, it appears that readmissions have declined in 2010 to 2018 without causing a material increase in mortality," Jeff Stensland, a MedPAC analyst, told the commission.

The penalties are based on the frequency of readmissions of Medicare patients who had originally been treated for heart failure, heart attack, pneumonia, chronic lung disease, hip and knee replacement or coronary artery bypass graft surgery. Readmissions that were scheduled to occur are not counted.

Medicare counts the readmission of patients who returned to a hospital within 30 days even if that hospital is not the one that originally treated them. In those cases, the penalty is applied to the first hospital. This year's penalties are based on discharges from July 1, 2015, to June 30, 2018.

"This is like driving your car by looking in the rearview mirror of the car three cars behind you," Dr. Jonathan Perlin, the chief medical officer of HCA Healthcare in Nashville and a MedPAC commission member, said at last month's meeting. "It's very difficult to operationalize."

The average penalty will be a 0.71% decrease in payment for each Medicare patient who leaves the hospital over the next year, according to a Kaiser Health News analysis. The KHN analysis also found:

  • 1,177 hospitals received a higher penalty than they did last year.
     
  • 1,148 hospitals received a lower one than last year.
     
  • 64 hospitals received the same penalty as last year.
     
  • 194 hospitals that had not been penalized last year are being punished this year.
     
  • The maximum penalty — a 3% reduction in payments — was assessed against 56 hospitals.
     
  • 372 hospitals avoided penalties in both years.

These figures do not include 2,142 hospitals that Medicare exempted from the program this year, either because they had too few cases to judge; served veterans, children or psychiatric patients; or were critical-access hospitals, which are the only hospitals within reach of some patients.

Also, Maryland hospitals were excluded because Congress lets that state set its own rules on how to distribute Medicare money and handle readmissions.

The Centers for Medicare & Medicaid Services determines its penalties by looking at national averages for each of the conditions, so hospitals that have reduced their readmissions from previous years can still take a hit. The hospital industry argues it may be approaching the limits of how much it can do to prevent readmissions. A repeat stay, hospitals say, is sometimes necessary no matter what precautions are taken.

Akin Demehin, director of policy at the American Hospital Association, said: "It raises the question: Is the value of the program to improve care or just to enact penalties on hospitals?"

Look Up Tool
Here are the hospitals hit with readmissions penalties for 2020. You can filter by location, hospital name or year.

Historical Data
Here are links to articles and data since 2015.

Jordan Rau: jrau@kff.org, @JordanRau

KHN Files Lawsuit To Force CMS To Disclose Medicare Advantage Audits

KFF Health News, September 27, 2019

KHN seeks copies of 90 government audits of Medicare Advantage health plans conducted for 2011, 2012 and 2013 but never made public.

The article was first published on Friday, September 27, 2019 in Kaiser Health News.

By Fred Schulte

Kaiser Health News is suing the U.S. Centers for Medicare & Medicaid Services to release dozens of audits that the agency says reveal hundreds of millions of dollars in overcharges by Medicare Advantage health plans.

The suit, filed late Thursday in U.S. District Court in San Francisco under the Freedom of Information Act, seeks copies of 90 government audits of Medicare Advantage health plans conducted for 2011, 2012 and 2013 but never made public. CMS officials have said they expect to collect $650 million in overpayments from the audits. Although the agency has disclosed the names of the health plans under scrutiny, it has not released any other details.

"This action is about accountability for hundreds of millions of public dollars misspent," said Elisabeth Rosenthal, KHN's editor-in-chief. "The public deserves details about the overpayments, since many of these private companies are presumably still providing services to patients and we need to make sure it can't happen again."

Medicare Advantage, mostly run by private insurance companies, has enrolled more than 22 million seniors and people with disabilities, more than 1 in 3 people on Medicare.

On July 3, KHN reporters filed a FOIA requesting copies of the CMS audits, which are known as Risk Adjustment Data Validation, or RADV, and include the audit spreadsheets, payment error calculations and other records. CMS has yet to respond to that request, according to the suit.

"By this FOIA action, KHN seeks to shine a public light on CMS's activities on behalf of millions of Americans and their families," the suit states. The suit asks the court to find that CMS violated the FOIA law and order the agency to "immediately disclose the requested records."

While Medicare publicly discloses audits of other medical businesses, Medicare Advantage insurers "are being treated differently," according to the suit. "These audits are improperly being withheld by CMS, even though CMS estimates that these audits have identified some $650 million in improper charges," the suit alleges.

While proving popular with seniors, the Medicare Advantage industry has long faced criticism that it overcharges the government by billions of dollars every year.

Medicare pays the health plans higher rates for sicker patients and less for those in good health. However, the RADV audits have shown that health plans often cannot document whether many patients actually had the medical conditions the government paid them to treat, generating overpayments. The secretive RADV audits are the primary means for CMS to hold the industry accountable and claw back overcharges for the U.S. Treasury.

In July, KHN reported that Medicare Advantage plans have overcharged the government by nearly $30 billion in the past three years alone, money federal officials have struggled to recoup.

This month, U.S. Sen. Sherrod Brown, an Ohio Democrat, and five other senators sent a letter to CMS Administrator Seema Verma asking her to investigate Medicare Advantage overbilling. "In many cases, CMS has known for years about the tendency for some MA plans to overbill the government yet, despite this, CMS has taken little to no action to course correct. It is critical that CMS act immediately to recoup these overpayments and prevent future overbilling by MA plans," Brown wrote.

The insurance industry is fighting a proposal by CMS to expand the impact of RADV by extrapolating error rates found in a random sample of patients to the plan's full membership — a technique expected to trigger many multimillion-dollar penalties.

America's Health Insurance Plans, the industry's trade association, said in an Aug. 28 statement that the CMS proposals "violate numerous statutory requirements and are fundamentally unfair and ill-conceived."

Stepping up RADV penalties "could lead to higher costs, reduced benefits, and fewer MA plan options for seniors," the group argued.

The FOIA lawsuit is the second by a media organization to compel CMS to disclose RADV audit findings. In 2014, the Center for Public Integrity sued CMS and won a court order forcing the release of RADV audits for the first time. The audits showed that 35 of 37 plans had been overpaid, in some cases by as much as $10,000 per patient in a year.

Fred Schulte: fschulte@kff.org, @fredschulte

Insurers Test New Way To Cut Maternity Care Costs: Bundling

KFF Health News, September 27, 2019

A handful of insurers and state Medicaid programs are experimenting with bundled models, sometimes incorporating hospitals and other health providers.

This article was first published on Friday, September 27, 2019 in Kaiser Health News.

By Carmen Heredia Rodriguez

The thrill of delivering newborns helped pull Dr. Jack Feltz into the field of obstetrics and gynecology.

More than 30 years later, he still enjoys treating patients, he said. But now, Feltz is also working to change the way doctors are paid for maternity care.

Feltz's New Jersey-based practice, Lifeline Medical Associates, recently partnered with the insurer UnitedHealthcare to test a new payment model. The insurer sets a budget with the practice to pay doctors one lump sum for prenatal services, delivery and 60 days of care afterward. If the costs come in below that amount, the medical practice gets to keep some of the savings. (Hospitals aren't a part of this contract; the insurer pays them separately for their services.)

"We've always been taught to take care of patients as if they were our mothers and our daughters," said Feltz, who also leads a coalition of obstetricians called the U.S. Women's Health Alliance that advocates for high-quality, affordable care. "But now we have to take care of our patients as if they were our mothers and our daughters, and as if it was our money."

This new program, announced in May, is a first step by the insurer to bundle physician payments for maternity care into a single flat fee that covers all care and procedures. A handful of insurers and state Medicaid programs are experimenting with similar models, sometimes incorporating hospitals and other health providers as well.

By moving from paying for maternity care in a piecemeal way to relying on bundled payments, insurers and doctors say they hope to cut costs and improve the quality of care for pregnant women. The lump sums are also seen by doctors and insurers as a possible way to improve outcomes, including driving down the number of cesarean sections in the United States.

About one-third of all deliveries in the U.S. occur through C-sections, even though the World Health Organization estimates they are medically required in only 10% to 15% of births. The rate varies dramatically among individual hospitals.

These surgeries can increase the risk of infections or other medical problems for the mother and baby. And they are more expensive than a vaginal delivery.

"The way we've been doing things is just not justifiable," said David Lansky, a senior adviser at the Pacific Business Group on Health, a San Francisco-based coalition of private and public organizations that collectively purchase health care for 10 million Americans. "The shift we're talking about is to say someone is accountable for all the care that needs to be provided to support a family through this experience."

The professional association that represents obstetricians, however, is approaching the new payment strategy with caution because it could expose doctors to financial risks.

And even fans of such a model acknowledge there are still significant obstacles to be worked out before this sort of flat-fee system could be implemented broadly.

The bundled-payment model is relatively new in maternity care, and its structure can differ by insurer. Some insurers could pay a single amount to one doctor, who uses that to cover the hospital care. Other plans can opt to negotiate a separate contract with the hospital. Insurers can choose to pay doctors before or after patients receive services. The length of care, eligibility and services included in the bundle can also vary.

Patients generally are not even aware their care is being handled under a bundled payment.

In traditional coverage, insurance payments for some women are delivered as bundled payments for portions of their prenatal care, said Suzanne Delbanco, executive director of Catalyst for Payment Reform, an organization that helps advise employers and other organizations that buy health coverage. However, the latest version is different because insurers are adding quality measures that increase accountability and additional services, such as delivery costs, to the bundle.

UnitedHealthcare began testing the option with Feltz's practice and another in Texas. The insurer said it hopes to expand to as many as 20 practices by the end of the year. Cigna and Humana are also piloting bundled maternity care programs. A few Medicaid programs, including those in Arkansas, Ohio and Tennessee, have experimented with it.

Expanding the rarely used model to include maternity care could represent a major shift in health care finance. Births were the most common cause of hospitalizations among patients discharged in 2016, according to government data.

"Maternity care is kind of the sleeper of health care services," said Dr. Neel Shah, an assistant professor of obstetrics, gynecology and reproductive biology at Harvard Medical School.

The pivot in payments is being made as the quality of maternity care in the United States comes under renewed scrutiny. An estimated 700 women in the U.S. die each year because of pregnancy-related complications, the federal Centers for Disease Control and Prevention reported. The rate of deaths in the U.S. is worse than that of many other affluent countries, NPR and ProPublica reported in 2017.

And C-sections cost more. In the Denver area, for instance, the average vaginal delivery costs $7,716 while the average C-section costs $14,274, according to 2019 data from the Health Care Cost Institute. On average, commercial and Medicaid insurers pay 50% more for C-sections than for vaginal deliveries, according to a 2013 report by Truven Health Analytics, a health industry consulting group.

Lansky's group tested bundled payments for births in 2014 in Southern California. According to their report, the rate of C-sections in first-time, low-risk pregnancies dropped by nearly 20% in less than one year among the first three participating hospitals.

However, some of the bundled-payment models fall short of aspirations. Tennessee saved money in 2017 after adopting the payment model for Medicaid beneficiaries. But the rate of C-sections remained unchanged, according to a report by the Medicaid and CHIP Payment and Access Commission (MACPAC), a nonpartisan advisory group for Congress.

In Ohio, where the Medicaid program covered complicated pregnancies as well as those that were low-risk, bundling payments into a lump sum for OB-GYNs cost the state more than expected, the advisory group found.

Bundling raises other concerns, too. Because some bundled-payment programs assign the total cost of care to a single physician, the financial burden falls on that physician. Dr. Lisa Hollier, the immediate past president of the American College of Obstetricians and Gynecologists, is concerned that these models may discourage team-based care.

If the physician providing prenatal care overlooks a problem that a different doctor must treat during delivery, for example, it wouldn't be fair for the OB-GYN delivering the baby to bear the financial burden, Hollier said.

How payers define a low-risk pregnancy is also unclear, she said. If the target price for the suite of services in the model is not risk-adjusted for the cost of treating conditions like gestational diabetes, she said, doctors could be penalized for treating these patients.

Gestational diabetes occurs in up to 10% of pregnancies in the U.S. annually, according to the CDC, and patients with the condition need additional tests, checkups and insulin.

Julianne Pantaleone, national director of bundled payments and strategy at UnitedHealthcare, said the insurer, as it works through its pilot program, will not penalize physicians for providing care beyond the initial budget.

The lack of robust data systems built for bundled payments also poses a potential barrier to successfully adopting the model, said Blair Barrett Dudley, a senior manager at the Pacific Business Group on Health.

Insurers and doctors need real-time data to ensure they are meeting the model's quality measures. However, these information banks are expensive to build, Dudley said, and many of the existing ones aren't structured for this payment structure.

Feltz agreed that getting such data will be imperative to a successful bundled payment program. Without the information, he said, "it's like launching a ship and not knowing where it's going to go."

Carmen Heredia Rodriguez: CarmenH@kff.org, @ByCHRodriguez

As Healthcare Costs Rise, Workers At Low-Wage Firms May Pay A Larger Share

KFF Health News, September 26, 2019

People at companies with large numbers of lower-wage employees faced bigger deductibles for single coverage and were asked to pony up a larger share of their incomes to pay premiums than those at firms with fewer people with low earnings, according to the  annual employer health benefits survey by the Kaiser Family Foundation.

Uber And Lyft Ride-Sharing Services Hitch Onto Medicaid

KFF Health News, September 26, 2019

Arizona became the first state to revamp its Medicaid regulations to make it easier for ride-sharing companies to participate in its nonemergency transportation benefit.

This article was first published on Thursday, September 26, 2019 in Kaiser Health News.

By Phil Galewitz

Arizona Medicaid Director Jami Snyder heard many complaints about enrollees missing medical appointments because the transportation provided by the state didn't show or came too late.

So this summer she hatched a solution familiar to millions of Americans looking for an efficient ride: She turned to Uber and Lyft.

Arizona became the first state to revamp its Medicaid regulations to make it easier for ride-sharing companies to participate in its nonemergency transportation benefit. Under the changes, Arizona eliminated several safety rules such as requiring all drivers to undergo drug testing and first aid training.

The strategy has added thousands of vehicles to the fleet serving Arizonans on Medicaid, nearly 24% of the state's 7 million residents.

"It seemed like an obvious solution," Snyder said. "So far, our anecdotal reports have been very positive."

As they seek to lower costs and improve care, Medicaid and other insurers have begun to examine the transportation needs of patients — along with other so-called social determinants of health such as adequate food and housing. Whether states save money remains to be seen.

In 2017, more than 2 million Medicaid enrollees under age 65 ― about 4% of the program's members — delayed care because they lacked transportation, according to a federal survey.

Lyft is working with about 35 state Medicaid programs, according to LogistiCare, one of the nation's largest Medicaid transportation brokers. Uber works with Medicaid only in Arizona.

Lawmakers in Florida and Texas this year also relaxed state regulations to make it easier for Uber and Lyft to provide services for appropriate Medicaid patients. That service is expected to begin early next year.

Uber and Lyft can't handle all Medicaid transportation demands because they generally don't have enough drivers with cars fit to ferry people with serious disabilities, such as those who use a wheelchair. But Arizona's Snyder said many Medicaid enrollees are healthy enough to use a typical ride-sharing service.

Van Means, executive director of a company that Arizona pays to arrange transportation for Medicaid enrollees, said the expanded options help even some patients who can't use them.

"It gives us way more supply, it's faster and frees up space [in specialized transportation] for people who need more substantial help such as those in wheelchairs," he said.

In most traditional Medicaid transportation programs, patients need to reserve rides days ahead and then often must share a van. In contrast, the ride-sharing companies need little advance notice and can easily take solo passengers.

To ease the use of Uber and Lyft, states generally waive safety requirements that are standard for more traditional transportation. Those include mandates that drivers undergo drug testing and learn first aid and CPR. State officials said such mandates are not necessary since Uber and Lyft serve ambulatory enrollees who likely are in better health than those needing specialized transportation.

The ride-sharing companies already work with hospitals and health systems across the country, but participating in Medicaid could bring them millions of more riders.

Unlike typical Uber or Lyft riders, Medicaid enrollees don't order rides on their smartphones. Instead, these patients will continue to request transportation services by phone or computer through their health plan or a Medicaid transportation broker.

The Medical Transportation Brokerage of Arizona said about 15% of rides taken by Medicaid recipients this summer relied on Uber and Lyft.

So far, though, Means said the brokerage hasn't found the service substantially cheaper in most areas of the state.

Arizona officials did not have an estimate of cost savings.

Officials at Atlanta-based LogistiCare said working with Lyft in dozens of cities has added vehicles and helped speed service.

"The ride-sharing companies are cost-effective and for curb-to-curb, urban or suburban short-distance trips," said Effie Carlson, a LogistiCare executive vice president.

But she cautioned that the companies are not the ideal option for enrollees who need extra time getting in and out of their house because drivers typically leave within five minutes of arriving.

Uber and Lyft are often cheaper than using taxis or other private transportation companies, but not always. She noted that when companies raise prices during peak-traffic hours, alternatives may be less expensive.

Carlson said her company decides whether ride-sharing services or more traditional transportation is most appropriate based on the health information provided about each Medicaid enrollee.

The Medicaid transportation benefit varies by state but typically includes rides by taxi services, wheelchair vans, private vehicles and public transportation. Enrollees are eligible for the services if they do not have another means of transport.

Despite states' growing interest in expanding transportation options, a University of Pennsylvania study, published last year in JAMA Internal Medicine, found providing ride-sharing services did not improve the no-show rate for primary care appointments among Medicaid patients in West Philadelphia. The no-show rate among patients offered free rides was 36.5%, compared with 36.7% for those who weren't offered free rides.

Krisda Chaiyachati, co-author of the study and a University of Pennsylvania associate professor of medicine, said reliability of transportation is not the only factor determining whether Medicaid enrollees show for medical appointments. "People on Medicaid tend to live more chaotic lives, so they may be more OK with missing primary care appointments," he said, referring to how low-income people often fear missing work, or have difficulties arranging child care and other necessities.

Still, Chaiyachati envisions Uber and Lyft playing larger roles for Medicaid.

"Their cars can be everywhere, and having a dispatcher draw upon that network is a no-brainer," he said. "It may not solve the transportation needs for everybody, but it's certainly an answer for many."

Megan Callahan, vice president of health care at Lyft, said she expects more states to adopt ride-sharing.

"I think what we are seeing is the beginning of a domino effect," she said. "Our overall driver availability and speed are the big advantages that will have an impact on Medicaid members' satisfaction."

Uber officials said in about dozen cities they are developing a fleet of drivers trained to work with patients who must travel with fold-up wheelchairs, walkers and scooters.

"From a cost standpoint, we can save states significant dollars," said Dan Trigub, head of Uber Health.

Phil Galewitz: pgalewitz@kff.org, @philgalewitz

As Off-Label Use Spreads, Supplies Of Niche Drugs And Patients' Patience Grow Short

KFF Health News, September 24, 2019

Nationwide, drug shortages of all kinds — from antibiotics to heart drugs to saline solution — are increasing and having a high impact on public health.

This article was first published on Tuesday, September 24, 2019 in Kaiser Health News.

By Julie Appleby

Medical treatment has knocked down tumors in 6-year-old Easton Daniels' brain, but the drug used also wiped out his immune system.

To bolster his immune function and help keep him healthy, he has visited a hospital for intravenous infusions of immune globulin about every month for the past year and a half.

But in early July, his family was stunned by a letter from Cincinnati Children's Hospital: "All of Easton's appointments canceled until further notice," said his dad, Jeremy Daniels, who works in custodial services for a school.

Like Cincinnati Children's, hospitals and clinics nationwide report a shortage of the medication, whose long manufacturing process starts with donated blood plasma. Often referred to as IVIG, intravenous immune globulin is used for a wide variety of medical conditions, beyond those for which it was first targeted — some treatments proven effective and some not. It is rich in antibodies, which are proteins that help fight off infection.

With IVIG in short supply, hospitals are left to make tough choices about who receives it, setting up a type of triage, like that faced by Easton's family, who find themselves caught in a gray area over which conditions qualify.

"IVIG can be a useful treatment for evidence-based purposes, but it's also often used as a last-chance, nothing-is-working Hail Mary kind of approach for myriad conditions even when there is not clear evidence that it helps the patient," wrote Dr. Jerry Avorn, a professor of medicine at Harvard Medical School, in an email. He was speaking in general, not about any specific patient.

Nationwide, drug shortages of all kinds — from antibiotics to heart drugs to saline solution — are increasing and having a high impact on public health, the Food and Drug Administration said in a November public meeting. They often result from manufacturing problems — such as when a factory shuts down or too few suppliers exist to meet demand.

But the reasons for shortages of expensive infused drugs are particularly complicated, involving complex manufacturing processes, scientific uncertainty and financial motivations.

In the case of IVIG, the expensive treatment may be a victim of its own widening use.

Dating to the 1950s, immune globulin is often the only therapy for certain genetic, life-threatening conditions that disable the body's infection-fighting function. Its intravenous form is FDA-licensed for six conditions, including primary immunodeficiencies; Kawasaki disease, which causes inflammation in the blood vessels; preventive care after bone marrow transplants; and a neurological condition called chronic inflammatory demyelinating polyneuropathy.

Today, it is prescribed for patients whose immune systems have been compromised by viruses or treatments for cancer, so-called secondary immunodeficiency, although there may be other medicines for reinvigorating the immune system in those cases.

Prescribing a medicine for a purpose not approved by the FDA — known as off-label use — is legal and common. It sometimes leads to new and effective uses of a drug.

Some evidence shows that expanding the use of immune globulin to patients with a wider variety of illnesses, including types of cancers or recurrent infections, is helpful. But it is also being tried for conditions "where it is ineffectual and may actually increase the risks to patients," the American Academy of Allergy, Asthma and Immunology warned in a March 2017 journal article that weighs the clinical rationale for various uses of the therapy.

In part as a result of this expanding off-label use, the industry's trade group shows a 66% increase in distribution of the treatment from 2012 to 2018 across North America and Europe.

And Avorn said a portion of these uses may be encouraged by financial motivations. Cincinnati Children's, for example, charges $6,800 to $10,000 for every 10-gram dose, according to the hospital's list prices, which are generally higher than insurers pay. Adults often get more than 10 grams per infusion.

"And anytime an extremely costly infusion medicine is used in any setting, it's worth looking at who benefits economically from its use, especially for conditions in which data on effectiveness is limited or absent," Avorn said.

Nonetheless, increasing demand helped create the shortages, say pharmacists and others who study shortfalls. Immune globulin takes up to a year to produce, which includes plasma collection from healthy donors, processing, packaging and shipping — often at overseas manufacturing centers.

There are several manufacturers, with combined global sales of about $22.6 billion.

Aside from trying to boost plasma collection to deal with a shortfall, "the other piece is stewardship [of the supply], and that really is up to the hospitals, by and large," said John Boyle, CEO of the Immune Deficiency Foundation, a group that advocates on behalf of people with genetic defects of the immune system. "Hospitals use an enormous portion of the plasma products out there."

Many are scrambling to come up with ways to stretch their supplies.

Some, like Cincinnati Children's, give top priority to patients with no other alternatives, often those with primary immune deficiencies, and those for whom not getting the treatment would be life-threatening.

Others, whose indications "were not as clear-cut or it was not necessarily dangerous to them to forgo it were placed on the bottom of the list," said Dr. Derek Wheeler, chief of staff at Cincinnati Children's.

Shortages are not affecting every hospital or clinic. That variation occurs because facilities have contracts with specific distributors or manufacturers, each of which can have a different supply line.

Dr. Cristina Porch-Curren, an immunologist in Camarillo, Calif., said her patients have not run into problems getting the treatment, although one had to change brands.

She is concerned about the increasing use of immune globulin for "off-label" conditions.

"Off-label doesn't always mean bad. If you have someone who is really sick, with some terrible infection, on occasion that may be OK," she said. But with limited supplies, she worries about growing interest by researchers and some physicians in using immune globulin for more widespread or ongoing conditions, such as dementia.

"That's concerning, especially for patients with primary immune deficiencies [who have no other alternatives]," she said.

Back in Cincinnati, a temporary solution has been found for Easton.

FFS Enterprises offered to supply his family with a different type of immune globulin after Easton's father reached out to the company, which is one of the largest distributors of the therapy. Instead of an intravenous dose, it has given Easton a subcutaneous form, injected as a shot at home. His doctor approved the switch, said Daniels, and the drug distributor said it would pick up the cost if his insurer, the state's Medicaid program, balks.

Julie Appleby: jappleby@kff.org, @Julie_Appleby

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