Heated And Deep-Pocketed Battle Erupts Over 340B Drug Discount Program

KFF Health News, November 28, 2017

About 40% of the nation's hospitals are participating in the drug discount program. A planned cut to its funding could shutter some of them, advocates warn.

This article first appeared November 28, 2017 on Kaiser Health News.

By Sarah Jane Tribble

A 25-year-old federal drug discount program has grown so big and controversial that it faces a fight for survival as federal officials and lawmakers furiously debate the program’s reach.

The program, known as 340B, requires pharmaceutical companies to give steep discounts to hospitals and clinics that serve high volumes of low-income patients.

The Centers for Medicare & Medicaid Services struck a blow to the program this month announcing a final rule to cut Medicare payments for hospitals enrolled in the program by 28 percent, or about $1.6 billion. The American Hospital Association, the Association of American Medical Colleges, America’s Essential Hospitals and others filed suit on Nov. 13, arguing that the agency lacks the authority to slash the payments and that the rule undermines the intent Congress had when creating the program.

Several federal reports in recent years from the Medicare advisory board, as well as the Government Accountability Office and the Office of Inspector General, have evaluated 340B’s explosive growth. About 40 percent of the hospitals in the U.S. now buy drugs through the program, according to the 2015 GAO report.

Richard Sorian, of the hospital lobbying group 340B Health, said that for some small, rural hospitals the funding cut “could actually be the difference between staying open and closing.”

Northeast Ohio’s largest safety-net hospital, MetroHealth System in Cleveland, said it would see an $8 million cut in Medicare reimbursements.

In trying to explain the importance of that funding, Dr. Benjamin Li, a MetroHealth cancer surgeon, said that if the 340B program were to disappear “some of our cancer patients will not be able to have lifesaving care.”

In contrast, those supporting the cut, including drugmakers, argue that the program has grown beyond its original intent because hospitals have pocketed the discounts to pad profits — not to help indigent patients.

Stephen Ubl, president of the drug industry group PhRMA, said the program “needs fundamental reform” and that the latest rule change is merely a good first step. His group, which has deep pockets and an advertising campaign geared at pinpointing the program’s flaws, has a list of changes that Congress and the Trump administration could tackle. Those include limiting which hospitals should be eligible for 340B price breaks and making sure needy patients benefit when hospitals buy discounted drugs.

The day after the hospital groups filed suit, Joe Grogan, director of health programs at the White House’s Office of Management and Budget, called 340B “really screwed up,” according to Politico, and said the Trump administration isn’t afraid to take on the program. “We are not wimps.” Grogan led a White House task force last summer that proposed scaling back the program.

The hospitals — often the biggest employers in a congressional district — are ready for a fight. The American Hospital Association launched an advertising campaign. And hundreds of members of Congress signed a letter defending the program. On Nov. 14, two House lawmakers introduced a bill that would prevent CMS from implementing the proposed rule.

Under 340B, named after the section of the Public Health Service Act that authorizes it, eligible hospitals buy drugs at a discount from the pharmaceutical companies and then are reimbursed for those purchases from Medicare. The drugs are purchased under the Part B program, which covers expensive chemotherapy and other treatments in a hospital, doctor’s office and clinics.

The hospitals make money on the spread, using it to improve the financial stability of the hospital.

In comment letters to federal officials, a range of hospitals from St. Cloud, Minn., to Kalamazoo, Mich., said the new rule would cost them hundreds of thousands of dollars.

Yet, even as concerns arise around the impact of the cuts and a legal battle plays out, Congress has heightened scrutiny of the program. The House Energy and Commerce Committee held two hearings over the past few months, examining how hospitals use money made on 340B drugs. A key question for lawmakers was how much the patients benefited.

The new rule, according to CMS Administrator Seema Verma, addressed that concern — albeit indirectly.

While the actual price of drugs will not be lower under the rule, Verma said beneficiaries will save an estimated $320 million a year on copayments. Medicare patients typically are responsible for a percentage of coinsurance on their prescriptions. The lowered Medicare reimbursement means that an enrollee’s coinsurance would be lower at 340B hospitals because Medicare would pay hospitals less for the drug.

In one example the administration provided, if Medicare reimburses a participating hospital $2,000 a month for an individual drug, a beneficiary would save over $100 on their out-of-pocket share.

Dr. Peter Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center in New York, agreed.

“If Medicare reduces the reimbursement amount, that will directly reduce what the patients pay,” Bach said. “Patients will see lower prices.”

Allan Coukell, senior director for health programs at the Pew Charitable Trusts, said the change in how Medicare spends its money may have broader, unintended consequences for the health care system. Patients may change providers, seeking lower copays. Or, conversely, hospitals may drop out of the program because of lower reimbursements.

“The long-term impact of such a shift is unknown,” Coukell said, adding that one thing is certain: Fewer hospitals participating in the program simply “transfers the 340B revenue from the provider to the manufacturer.”

The 340B program wasn’t always so controversial. The bill, signed by Republican President George H.W. Bush in 1992, once had bipartisan support.

“Everyone loved the program. That’s why Congress expanded it on three separate occasions,” recalled William von Oehsen, who helped lobby for the initial law and is a founder of the hospital group 340BHealth. Most recently, the program was expanded under the Affordable Care Act in 2010.

“There was never any concern about its size until, basically, pharma decided it had gotten too big and started investing in a public relations and lobbying campaign to reform it,” von Oehsen said, adding, “We just don’t have the money they have, and it’s kind of discouraging.”

Taken For A Ride? Ambulances Stick Patients With Surprise Bills

KFF Health News, November 27, 2017

State laws passed to protect consumers in some situations largely ignore ground ambulance rides, which can stick patients with bills in the hundreds or even thousands of dollars.

This article first appeared November 27, 2017 on Kaiser Health News.

By Melissa Bailey
Photos by Heidi de Marco

One patient got a $3,660 bill for a 4-mile ride. Another was charged $8,460 for a trip from one hospital that could not handle his case to another that could. Still another found herself marooned at an out-of-network hospital, where she’d been taken by ambulance without her consent.

These patients all took ambulances in emergencies and got slammed with unexpected bills. Public outrage has erupted over surprise medical bills — generally out-of-network charges that a patient did not expect or could not control — prompting 21 states to pass laws protecting consumers in some situations. But these laws largely ignore ground ambulance rides, which can leave patients stuck with hundreds or even thousands of dollars in bills, with few options for recourse, finds a Kaiser Health News review of 350 consumer complaints in 32 states.

Patients usually choose to go to the doctor, but they are vulnerable when they call 911 — or get into an ambulance. The dispatcher picks the ambulance crew, which, in turn, often picks the hospital. Moreover, many ambulances are not summoned by patients. Instead, the crew arrives at the scene having heard about an accident on a scanner, or because police or a bystander called 911.

Betsy Imholz, special projects director at the Consumers Union, which has collected over 700 patient stories about surprise medical bills, said at least a quarter concern ambulances.

"It’s a huge problem," she said.

Forty years ago, most ambulances were free for patients, provided by volunteers or town fire departments using taxpayer money, said Jay Fitch, president of Fitch & Associates, an emergency services consulting firm. Today, ambulances are increasingly run by private companies and venture capital firms. Ambulance providers now often charge by the mile and sometimes for each “service,” like providing oxygen. If the ambulance is staffed by paramedics rather than emergency medical technicians, that will result in a higher charge — even if the patient didn’t need paramedic-level services. Charges range widely from zero to thousands of dollars, depending on billing practices.

The core of the problem is that ambulance and private insurance companies often can't agree on a fair price, so the ambulance service doesn’t join the insurance network. That leaves patients stuck in the middle with out-of-network charges that are not negotiated, Imholz said.

This happens to patients frequently, according to one recent study of over half a million ambulance trips taken by patients with private insurance in 2014. The study found that 26 percent of these trips were billed on an out-of-network basis.

That figure is "quite jarring," said Loren Adler, associate director for the USC-Brookings Schaeffer Initiative and co-author of recent research on surprise billing.

The KHN review of complaints revealed two common scenarios leaving patients in debt: First, patients get in an ambulance after a 911 call. Second, an ambulance transfers them between hospitals. In both scenarios, patients later learn the fee is much higher because the ambulance was out-of-network, and after their insurer pays what it deems fair, they get a surprise bill for the balance, also known as a “balance bill.”

The Better Business Bureau has received nearly 1,200 consumer complaints about ambulances in the past three years; half were related to billing, and 46 mentioned out-of-network charges, spokeswoman Katherine Hutt said.

While the federal government sets reimbursement rates for patients on Medicare and Medicaid, it does not regulate ambulance fees for patients with private insurance. In the absence of federal rules, those patients are left with a fragmented system in which the cost of a similar ambulance ride can vary widely from town to town. There are about 14,000 ambulance services across the country, run by governments, volunteers, hospitals and private companies, according to the American Ambulance Association.

(Heidi de Marco/KHN)

For a glimpse into the unpredictable, fragmented system, consider the case of Roman Barshay. The 46-year-old software engineer, who lives in Brooklyn, N.Y., was visiting friends in the Boston suburb of Chestnut Hill last November when he took a nasty fall.

Barshay felt a sharp pain in his chest and back and had trouble walking. An ambulance crew responded to a 911 call at the house and drove him 4 miles to Brigham and Women's Hospital, taking his blood pressure as he lay down in the back. Doctors there determined he had sprained tendons and ligaments and a bruised foot, and released him after about four hours, he said.

After Barshay returned to Brooklyn, he got a bill totaling $3,660 — which is $915 for each mile of the ambulance ride. His insurance had paid nearly half, leaving him to pay the remaining $1,890.50.

"I thought it was a mistake," Barshay said.

But Fallon Ambulance Service, a private company, was out-of-network for his UnitedHealthcare insurance plan.

“The cost is outrageous," said Barshay, who reluctantly paid the $1,890.50 after Fallon sent it to a collection agency. If he had known what the ride would cost, he said, he would at least have been able to refuse and "crawl to the hospital myself."

"You feel horribly to send a patient a bill like that," said Peter Racicot, senior vice president of Fallon, a family-owned company based outside Boston.

But ambulance companies are "severely underfunded" by Medicare and Medicaid, Racicot said, so Fallon must balance the books by charging higher rates for patients with private insurance.

Racicot said his company has not contracted with Barshay's insurer because they couldn't agree on a fair rate. When insurers and ambulance companies can't agree, he said, "unfortunately, the subscribers wind up in the middle."

It's also unrealistic to expect EMTs and paramedics at the scene of an emergency to determine whether the company takes a patient's insurance, Racicot added.

Ambulance services have to charge enough to subsidize the cost of keeping crews ready around-the-clock even if no calls come in, said Fitch, the ambulance consultant. In a third of the cases where an ambulance crew answers a call, he added, they end up not transporting anyone and the company typically isn’t reimbursed for the trip.

In part, Barshay had bad luck. If the injury had happened just a mile away inside Boston city limits, he could have ridden a city ambulance, which would have charged $1,490, according to Boston EMS, a sum that his insurer probably would have covered in full.

Very few states have laws limiting ambulance charges, and most state laws that protect patients from surprise billing do not apply to ground ambulance rides, according to attorney Brian Werfel, consultant to the American Ambulance Association. And none of the state surprise-billing protections applies to people with self-funded employer-sponsored health insurance plans, which are regulated only by federal law. That's a huge exception: 61 percent of privately insured employees are covered by self-funded employer-sponsored plans.

Some towns that hire private companies to respond to 911 calls may regulate fees or prohibit balance billing, Werfel said, but each locality is different.

Insurance companies try to protect patients from balance billing by negotiating rates with ambulance companies, said Cathryn Donaldson, spokeswoman for America's Health Insurance Plans. But "some ambulance companies have been resistant to join plan networks" when insurance companies offer Medicare-based rates, she said.

Medicare rates vary widely by geographic area. On average, ambulance services make a small profit on Medicare payments, according to a report by the U.S. Government Accountability Office. If a patient uses a basic life support ambulance in an emergency, in an urban area, for instance, Medicare payments range from $324 to $453, plus $7.29 per mile. Medicaid rates tend to be significantly lower.

There's evidence of "waste and fraud" in the ambulance industry, Donaldson added, citing a 2015 study from the Office of Inspector General at the U.S. Department of Health and Human Services. The report concluded Medicare paid over $50 million in improper ambulance bills, including for supposedly emergency-level transport that ended at a nursing home, not a hospital. One in 5 ambulance services had "questionable billing practices," the report found.

Most complaints reviewed by Kaiser Health News did not appear to involve fraudulent charges. Instead, patients got caught in a system in which ambulance services can legally charge thousands of dollars for a single trip — even when the trip starts at an in-network hospital.

Devin Hall of Brentwood, Calif., is fighting a $7,110 bill from American Medical Response for an out-of-network ambulance ride. He has spent months calling the hospital, his insurer and the ambulance provider trying to resolve the matter. “These charges are exorbitant — I just don’t think what AMR is doing is right,” Hall says. (Heidi de Marco/KHN)

That’s what happened to Devin Hall, a 67-year-old retired postal inspector in Northern California. While he faces stage 3 prostate cancer, Hall is also fighting a $7,109.70 out-of-network ambulance bill from American Medical Response, the nation’s largest ambulance provider.

On Dec. 27, 2016, Hall went to a local hospital with rectal bleeding. Since the hospital didn’t have the right specialist to treat his symptoms, it arranged for an ambulance ride to another hospital about 20 miles away. Even though the hospital was in-network, the ambulance was not.

Hall was stunned to see that AMR billed $8,460 for the trip. His federal health plan, the Special Agents Mutual Benefit Association, paid $1,350.30 and held Hall responsible for $727.08, records show. The health plan paid that amount because AMR's charges exceeded its Medicare-based fee schedule, according to its explanation of benefits. But AMR turned over his case to a debt collector, Credence Resource Management, which sent an Aug. 25 notice seeking the full balance of $7,109.70.

“These charges are exorbitant — I just don’t think what AMR is doing is right,” said Hall, noting that he had intentionally sought treatment at an in-network hospital.

He has spent months on the phone calling the hospital, his insurer and AMR trying to resolve the matter. Given his prognosis, he worries about leaving his wife with a legal fight and a lien on their Brentwood, Calif., house for a debt they shouldn’t owe.

After being contacted by Kaiser Health News, AMR said it has pulled Hall’s case from collections while it reviews the billing. After further review, company spokesman Jason Sorrick said the charges were warranted because it was a “critical care transport, which requires a specialized nurse and equipment on board.”

Sorrick faulted Hall’s health plan for underpaying, and said Hall could receive a discount if he qualifies for AMR’s “compassionate care program” based on his financial and medical situation.

“In this case, it appears the patient’s insurance company simply made up a price they wanted to pay,” Sorrick said.

In July, a California law went into effect that protects consumers from surprise medical bills from out-of-network providers, including some ambulance transport between hospitals. But Hall’s case occurred before that, and the state law doesn’t apply to his federal insurance plan.

Hall, a retired postal inspector in Northern California, receives radiation treatment for his stage 3 prostate cancer in October 2017. (Heidi de Marco/KHN)

Given his prognosis, Hall says he worries about leaving his wife with a legal fight and a lien on their Brentwood, Calif., house for a debt they shouldn’t owe. (Heidi de Marco/KHN)

The consumer complaints reviewed by Kaiser Health News reveal a wide variety of ways that patients are left fighting big bills:

  • An older patient in California said debt collectors called incessantly, including on Sunday mornings and at night, demanding an extra $500 on top of the $1,000 that his insurance had paid for an ambulance trip.
  • Two ambulance services responded to a New Jersey man’s 911 call when he felt burning in his chest. One charged him $2,100 for treating him on the scene for less than 30 minutes — even though he never rode in that company's ambulance.
  • A woman who rolled over in her Jeep in Texas received a bill for a $26,400 "trauma activation fee" — a fee triggered when the ambulance service called ahead to the emergency department to assemble a trauma team. The woman, who did not require trauma care, fought the hospital to get the fee waived.

In other cases, patients face financial hardship when ambulances take them to out-of-network hospitals. Patients don’t always have a choice in where to seek care; that’s up to the ambulance crew and depends on the protocols written by the medical director of each ambulance service, said Werfel, the ambulance association consultant.

Sarah Wilson, a 36-year-old microbiologist, had a seizure at her grandmother’s house in rural Ohio on March 18, 2016, the day after having hip surgery at Akron City Hospital. When her husband called 911, the private ambulance crew that responded refused to take her back to Akron City Hospital, instead driving her to an out-of-network hospital that was 22 miles closer. Wilson refused care because the hospital was out-of-network, she said. Wilson wanted to leave. But “I was literally trapped in my stretcher," without the crutches she needed to walk, she said. Her husband, who had followed by car, wasn't allowed to see her right away. She ended up leaving against medical advice at 4 a.m. She landed in collections for a $202 hospital bill for a medical examination, which damaged her credit score, she said.

Ken Joseph, chief paramedic of Emergency Medical Transport Inc., the private ambulance company that transported Wilson, said company protocol is to take patients to the "closest appropriate facility." Serving a wide rural area with just two ambulances, the company has to get each ambulance back to its station quickly so it can be ready for the next call, he said.

Patients like Wilson are often left to battle these bills alone, because there are no federal protections for patients with private insurance.

Rep. Lloyd Doggett (D-Texas), who has been pushing for federal legislation protecting patients from surprise hospital bills, said in a statement that he supports doing the same for ambulance bills.

Meanwhile, patients do have the right to refuse an ambulance ride, as long as they are over 18 and mentally capable.

"You could just take an Uber," said Adler, of the Schaeffer Initiative. But if you need an ambulance, there's little recourse to avoid surprise bills, he said, "other than yelling at the insurance company after the fact, or yelling at the ambulance company."

Years Before Heading Offshore, Herpes Researcher Experimented On People In U.S.

KFF Health News, November 22, 2017

According to the emails between Halford and the patients and extensive interviews with the participant, Halford did not procure written informed consent as required by federal law when testing a live virus on humans.

This article first appeared November 21, 2017 on Kaiser Health News.

By Marisa Taylor

Three years before launching an offshore herpes vaccine trial, an American researcher vaccinated patients in U.S. hotel rooms in brazen violation of U.S. law, a Kaiser Health News investigation has found.

Southern Illinois University associate professor William Halford administered the shots himself at a Holiday Inn Express and a Crowne Plaza Hotel that were a 15-minute drive from the researcher’s SIU lab. Halford injected at least eight herpes patients on four separate occasions in the summer and fall of 2013 with a virus that he created, according to emails from seven participants and interviews with one participant.

The 2013 experiments raise further questions of misconduct by Halford, who pursued a herpes vaccine for years while working at Southern Illinois University, which claims to have been unaware of his unorthodox research practices.

Halford, who died this summer from cancer, ran a clinical trial out of a house on St. Kitts in 2016 to test the experimental vaccine and did not alert U.S. or St. Kitts and Nevis authorities.

Following a KHN report that Halford completed the 2016 trial with no independent safety oversight, the Department of Health and Human Services demanded the university account for the research.

SIU, in an initial response to U.S. authorities, said the university’s institutional review board found “serious noncompliance with regulatory requirements and institutional policies and procedures.”

SIU, like many universities receiving federal research funds, pledged to follow U.S. standards for all clinical trials.

In 2013, Halford, who was a microbiologist not a physician, noted a need for secrecy in one email to a participant, writing that it would be “suicide” if he became too public about how he was conducting his research.

Many email exchanges with participants in 2013 — asking them to send photographs of rashes, blisters and other reactions — were sent from Halford’s university email account. He used the university phone for communication and he referred to a graduate student as assisting in the experiment and to using the lab.

“Furtive unregulated live virus vaccine injections in a Holiday Inn? This is really, really out there,” said Jonathan Zenilman, a doctor and an expert on sexually transmitted diseases at Johns Hopkins University. “Someone in the university had to know that this stuff was going on. If they didn’t, they should have.”

According to the emails between Halford and the patients and extensive interviews with the participant, Halford did not procure written informed consent as required by federal law when testing a live virus on humans. Medical researchers, such as Halford, may not inject patients without oversight by a physician or a nurse practitioner, Zenilman said.

SIU refused to comment on revelations about Halford’s 2013 experiments.

It has previously said it had no role or responsibility for Halford’s work in 2016 in the Caribbean. The university has maintained it didn’t know about the offshore trial because he pursued that through Rational Vaccines, a company the professor co-founded in 2015.

But criticism has been raised about the university’s ties to Halford’s commercial venture.

SIU, based in Springfield, Ill., shared in a patent on the prospective vaccine with Rational Vaccines, which was formed to market and research the product. The university promoted Halford’s vaccine research on its website. And when a company owned by Peter Thiel, a supporter of President Donald Trump’s, invested millions of dollars into the research this April, SIU publicly trumpeted Halford and Rational Vaccines.

The Food and Drug Administration, which oversees the safety of vaccine research in the U.S., declined to comment on the 2013 experiments. It previously declined comment on the 2016 trial.

Since Halford’s death in June, several participants who received the vaccine in 2013 and 2016 have told KHN they have informed the university about what they fear may be side effects from the vaccine.

One participant who says he received the injections in Illinois fears that the vaccine, which contains a live virus, may have given him a new and different type of herpes he did not have, a scenario that experts who reviewed his medical details for KHN said was possible.

In recent weeks, that participant from Texas and a woman from Colorado who took part in the St. Kitts trial have separately electronically reported to the FDA their possible side effects, also known as “adverse events.”

They said SIU and the FDA have not adequately addressed their inquiries.

“It makes me angry that Halford went ahead with the offshore trial anyway,” said the man from Texas who did not want to be publicly identified because of the sensitive nature of his disease. “I hope more people weren’t hurt.”

Rational Vaccines has vowed to proceed with the research. The company, founded by Halford and Hollywood filmmaker Agustín Fernández III, has said it considers the 2016 trial a success — though it is unclear what data it used to support that claim. In a statement, Rational Vaccines said that Fernández was not involved with Halford’s work before the company was formed but that Fernández was aware of “individuals who experienced positive outcomes from the vaccine.”

“Their stories are what sparked Mr. [Fernández’] future involvement,” the company stated. It did not address specific questions from KHN about the 2013 injections.

A representative for billionaire PayPal co-founder Thiel did not respond to questions about his investment in the vaccine. Thiel and other backers share libertarian political views that are critical of the FDA’s regulations.

The 2013 emails and interview with a participant show Halford began unregulated human experiments while working as an associate professor in the medical school’s department of microbiology.

The Texas patient said he first learned of Halford’s work through a members-only Facebook account. According to the emails, one woman helped Halford recruit patients and organize injections. This woman identified herself to KHN in an email as a herpes patient who was injected with Halford’s vaccine. She claims she was cured as a result.

KHN attempted to contact the other participants who received injections in 2013. They either declined to comment or did not respond.

In the emails, Halford describes some of his methods, including that he was varying the doses — as well as the number of shots. He communicated regularly with participants using a familiar tone.

“Just wanted to pass along that I immunized someone with the higher dose of the HSV-2 vaccine on Monday, and I attach the photos of the injection site at 48 hours to give you and everyone else an idea of what to expect …” he wrote on Sept. 19, 2013. “This individual requested that I give him two immunizations to double the effect … one immunization per leg.”

“Everyone’s vaccines contained ~150 million infectious units of the HSV-2 vaccine strain …” Halford wrote four days later, on Sept. 23, saying the first injection of the group represented about a thirty- to fortyfold increase over what others had received in August 2013.

In the same email, Halford said he believed the experiments were important to demonstrating that his vaccine worked.

“Saturday Sept. 21 definitely represents a milestone in my career,” he wrote. “Don’t know how it will turn out, but I undoubtedly feel like this was a real test of the (a) safety / tolerability of the HSV-2 vaccine and (b) an opportunity to see if it has any therapeutic potential.

“I am indebted to all of you.”

Halford also refers to using his university’s resources in the emails.

“My lab currently consists of myself and 1 graduate student and anything I do with you guys or your blood is extra and on top of what I get paid to do …,” he wrote in a Nov. 3, 2013, email. “If my graduate student gets to it before I do, I will pass along the results.” Attempts by KHN to reach the graduate student, who was not named in the email, were unsuccessful.

When discussing the possible effects of the vaccine in emails dated Oct. 2, 2013, Halford openly speculated about possible results, calling his analysis “nothing more than an educated guess.”

“The proof is in the pudding … let’s see if your problems with outbreaks dial back or not.”

The participants treated Halford with deference and were eager to receive the injections, the emails show.

The Texas man said he did not know how the trial was financially supported, adding that Halford wouldn’t accept money from participants because, as he told them, “it would get him in more trouble if he was ever caught.”

But Halford told participants they could donate money to SIU for his research, the Texas man said. SIU has confirmed that it set up a business account for donations to Halford, but the university has refused to say how the money was used.

When Halford invited them for dinner and drinks at his house, they agreed. “I’ll do whatever he wants,” the Dallas man wrote about the dinner.

In the emails, the participants, who ranged in age from their 20s to 50s, were enthusiastic about the potential for the vaccine and freedom from often excruciating chronic symptoms. “I do believe [it’s] safe,” the Texas man wrote Halford on Sept. 15.

But months later, on Feb. 24, 2014, he said, he was frightened by a reaction to the vaccine, after his second shot. “I got a large rash on my leg and it burned and swelled,” he wrote to Halford. “… then a blister popped up.”

The Texas man has HSV-1, which usually emerges in sores on the face. Halford’s vaccine was a weakened version of HSV-2, which is genital herpes, according to descriptions he uses in the emails. “I did not think the HSV-2 vaccine strain would be capable of reactivation, but perhaps I will have to reconsider that,” Halford wrote in response in an email.

Anna Wald, a leading herpes expert at the University of Washington, said Halford should have informed the Texas man before testing that he was vulnerable to having side effects because he had a different herpes virus type than the vaccine Halford prepared.

Wald said Halford’s research — without oversight — jeopardized the patients.

“We’re not allowed to do this to guinea pigs in this country let alone human subjects,” Wald said.

But Wald said she could understand the participants’ desire for a chance at a cure. “People underestimate how desperate people with genital HSV are,” she said. “This is what drives even the possibility of a study such as Halford’s.”

SIU continues to be under scrutiny. Jerry Kruse, the dean of SIU’s medical school, responded to the HHS inquiry into the 2016 trial on Oct. 6 and indicated that the university has more to discover.

In his letter, obtained by KHN under the Freedom of Information Act, the dean said “if deemed necessary, SIU will develop an effective corrective action plan.” Some of the letter is redacted.

Several participants from both trials told KHN they have asked SIU for help.

The Colorado woman from the 2016 trial who reported a possible side effect from the vaccine to the FDA said she found university officials “dismissive.”

One participant, a Californian in his 30s, said he wanted the university to continue the vaccine work with safety oversight while “taking responsibility” for any improprieties.

SIU did not adequately address his questions, and he said: “It was obvious they want nothing to do with us.”

Massachusetts Grabs Spotlight By Proposing New Twist on Medicaid Drug Coverage

KFF Health News, November 21, 2017

If HHS approves the Bay State's plan, others will likely take similar action.

This article first appeared November 21, 2017 on Kaiser Health News.

By Shefali Luthra

In the absence of new federal policies to tame break-the-bank drug prices, Massachusetts’ state Medicaid program hopes to road-test an idea both radical and market-driven. It wants the power to negotiate discounts for the drugs it purchases and to exclude drugs with limited treatment value.

“This is a serious demonstration proposal,” said Sara Rosenbaum, a health policy expert and professor at George Washington University. “They’re not simply using [this idea] as an excuse to cut Medicaid. They’re trying to take a step toward efficiency.”

If the Department of Health and Human Services approves the Bay State’s plan, others will likely take similar action. According to the most recent federal data, Medicaid spending on prescription drugs increased about 25 percent in 2014 and nearly 14 percent in 2015.

Currently, state Medicaid programs are required to cover almost all drugs that have received Food and Drug Administration approval, including multiple drugs from different manufacturers used for the same purpose and in the same category. In exchange, manufacturers must discount those drugs — typically based on a set percentage of the list price, specified by federal law. The idea is Medicaid’s vulnerable beneficiaries get medications they need and the state doesn’t go broke paying for them.

As drug prices soar, states say, those fractional rebates no longer suffice to defray the burden of rising costs.

Take, for instance, the hepatitis C cures released in recent years. The price tags come in tens or even hundreds of thousands of dollars and — even after rebates — have cost Medicaid billions. In turn, some states tried to restrict access, so only the sickest patients could get the drugs. Advocates filed suit in response and won based on the argument that such limits violated Medicaid’s statutory drug benefit.

State officials contend that the current Medicaid rebate system may encourage drug price inflation, since a set percentage of a higher price yields a greater profit. Also, the legal requirement to cover most prescriptions leaves little wiggle room to negotiate a better price.

So, Massachusetts wants to go a different route, requesting a federal exemption known as a Section 1115 waiver, which is meant to let states test ways of improving Medicaid. It wants to pick which drugs it covers based on most beneficiaries’ medical needs and which medicines demonstrate the highest rates of cost effectiveness.

It says it will be able to negotiate better prices as a result, saving public dollars while maintaining patients’ access to needed therapies.

The federal Centers for Medicare & Medicaid Services, which will ultimately approve or reject Massachusetts’ proposal, has no deadline for its decision. A Massachusetts spokeswoman said officials are pushing for an answer by year’s end.

Already, though, the pitch is turning heads.

“This is absolutely something a lot of other states are looking very closely at,” said Matt Salo, executive director of the National Association of Medicaid Directors.

If the request is approved, agreed Jane Horvath, a senior policy fellow at the National Academy for State Health Policy, other states would follow suit “in about five minutes.”

Critics worry this change could make it harder for low-income people to get needed medications, without necessarily providing them an alternative. In the past decade, though, it has become commonplace for people with commercial insurance to have limited drug choices — meaning only those medicines listed on a plan’s formulary are covered.

The Pharmaceutical Research and Manufacturers of America (PhRMA), the drug industry’s trade group, has already lodged its displeasure, saying this would limit consumer access and is unnecessary on top of the rebates Medicaid programs receive.

“The pharmaceutical industry has a reputation for being litigious. This would be a big deal for them,” said Andy Schneider, a Medicaid expert at Georgetown University, who worked at CMS under the Obama administration. If CMS approves the waiver, analysts said, the industry would likely sue, though PhRMA wouldn’t comment on potential legal action.

But federal approval is no sure thing.

On one hand, the Trump administration has encouraged states to test changes that would run Medicaid more like a private insurance plan. Through that frame, Massachusetts’ approach seems a logical fit. Though a formal strategy has not been released, President Donald Trump has said his administration intends to bring drug prices “way down.”

On the other hand, analysts said, CMS’ decision-making regarding waivers has proven unpredictable. The agency declined to comment beyond confirming it was reviewing Massachusetts’ request.

It’s clear why states are interested. On average, between 25 and 30 percent of state budgets go to Medicaid, and program directors across the country identify rising drug costs as a major contributor to spending increases, according to a recent survey by the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)

In Massachusetts, Medicaid accounts for about 40 percent of the state’s budget. Prescription-drug spending has in the past seven years more than doubled — from about $917 million in 2010 to about $1.94 billion last year, according to figures provided by the state health department.

If the waiver is approved, the state’s Medicaid program would cover at least one medication per therapeutic class — that is, per specific medical need.

It also would have an appeals process for people to get their off-formulary drugs covered, if they’re medically necessary.

Number crunchers say it’s hard to estimate what this would save. It depends on how the state negotiates, how industry responds and what the program covers. The potential result is significant, though.

“You’d have to be foolish not to consider this,” said Ameet Sarpatwari, an epidemiologist and lawyer at Harvard Medical School, who studies drug pricing and related legislation.

But consumer groups worry about Medicaid’s low-income beneficiaries, even as they acknowledge that rising drug costs are unsupportable for state budgets.

“The Medicaid population is different from the commercially insured — they’re more vulnerable and have a lot more going on in their lives, and are generally poorer. So they have fewer resources to try to get the services and prescription drugs they need,” said Suzanne Curry, associate director of policy and government relations at Health Care For All, a Massachusetts-based advocacy group.

Although Massachusetts, a state with a long history of innovation, has committed to making sure patients get needed medicine, “you have to ask what will real-world implementation looks like,” said Benjamin Sommers, an associate professor of health policy and economics at Harvard’s public health school. Appeals processes, he noted, can be onerous or restrictive.

And even if Massachusetts receives federal approval, it still couldn’t challenge the cost of certain expensive drugs that are the only offering in their therapeutic class. For instance, Spinraza, which treats the rare but debilitating disease of spinal muscular atrophy, has a price tag of $750,000 for an initial year of treatment. With no therapeutic equivalent, it would still have to be covered.

But states are desperate to push back in new ways and however they can. “We have seen in the past year … drugs that have almost bankrupted state budgets,” Sarpatwari said. “There will be many other states that will be interested in following this lead.”

Health Giant Sutter Destroys Evidence In Crucial Antitrust Case Over High Prices

KFF Health News, November 20, 2017

Sutter, which has 24 hospitals and nearly $12 billion in annual revenue, said the destruction was a regrettable mistake.

This article first appeared November 17, 2017 on Kaiser Health News.

By Chad Terhune

Sutter Health intentionally destroyed 192 boxes of documents that employers and labor unions were seeking in a lawsuit that accuses the giant Northern California health system of abusing its market power and charging inflated prices, according to a state judge.

In a ruling this week, San Francisco County Superior Court Judge Curtis E.A. Karnow said Sutter destroyed documents “knowing that the evidence was relevant to antitrust issues. … There is no good explanation for the specific and unusual destruction here.”

Karnow cited an internal email by a Sutter employee who said she was “running and hiding” after ordering the records destroyed in 2015. “The most generous interpretation to Sutter is that it was grossly reckless,” the judge wrote in his 12-page ruling.

Sutter, which has 24 hospitals and nearly $12 billion in annual revenue, said the destruction was a regrettable mistake.

Employers and policymakers across the country are closely watching this legal fight amid growing concern about the financial implications of industry consolidation. Large health systems are gaining market clout and the ability to raise prices by acquiring more hospitals, outpatient surgery centers and physician offices.

"It’s stunning what Sutter did to cover up incriminating documents in this case," said Richard Grossman, the lead plaintiffs’ lawyer representing a class of more than 1,500 employer-funded health plans.

In April 2014, a grocery workers’ health plan sued Sutter and alleged it was violating antitrust and unfair competition laws. The plaintiffs began requesting documents related to contracting practices, such as "gag clauses” that prevent patients from seeing negotiated rates and choosing a cheaper provider and "all-or-nothing” terms that require every facility in a health system to be included in insurance networks.

Sutter disputes the broader allegations in the lawsuit over its market conduct and said its charges are in line with its competitors'.

The judge said that in 2015 Melissa Brendt, Sutter’s chief contracting officer in the managed-care department, and an assistant general counsel, Daniela Almeida, authorized Brendt’s executive assistant to destroy 10 years' worth of managed-care documents going back to 1995. The company earlier had scheduled the documents to be destroyed in 2035 — 20 years later.

The executive assistant, Sina Santagata, testified in a deposition she wasn’t aware of any other time in her 17 years at Sutter when the managed-care department destroyed records held in storage.

In his Nov. 13 ruling against Sutter, the judge singled out an email by Santagata as "particularly noteworthy.”

The executive assistant emailed Brendt, the chief contracting officer, on July 30, 2015, after sending the order to destroy the records. She wrote, "I’ve pushed the button … if someone is in need of a box between 3/15/95 & 11/23/05 … I’m running and hiding. … ‘Fingers crossed’ that I haven’t authorized something the FTC will hunt me down for.”

The Federal Trade Commission (FTC) enforces antitrust laws in health care to prevent hospitals, drugmakers and other industry players from engaging in anti-competitive behavior that could harm consumers.

Santagata testified that she was being "sarcastic” in her email, and Sutter told the judge that the FTC reference was just a "joke.”

Karnow saw no humor in it. "There are infinite topics for jokes, and the choice of this one is strong evidence” in the plaintiffs’ favor, he wrote in his order Monday.

As part of his sanctions against Sutter, the judge ordered the health system to examine email backup tapes covering 2002 through 2005 to search for documents on some of the same topics as the destroyed records. Also, Karnow said he will consider a plaintiffs’ motion for issuing jury instructions that are adverse to Sutter in light of the document destruction. The trial is scheduled for June 2019.

"The record shows that Sutter’s conduct was more than just an inadvertent error,” Karnow wrote.

Sutter spokeswoman Karen Garner said the incident was a "mistake made as part of a routine destruction of old paper records” and the Sacramento-based health system disclosed the error as soon as it was discovered.

"We regret that as part of a routine archiving process we failed to preserve some boxes of decades-old hard-copy documents,” Garner said.

The United Food and Commercial Workers and its Employers Benefit Trust initially filed the case against Sutter in 2014. The joint employer-union health plan represents more than 60,000 employees, dependents and retirees. The court certified the case as a class action in August, allowing hundreds of other employers and self-funded health plans to potentially benefit from the litigation.

In addition to its 24 hospitals, Sutter’s nonprofit health system has 35 surgery centers and more than 5,000 physicians in its network. It reported $11.9 billion in revenue last year and income of $554 million.

Grossman, the plaintiffs’ counsel, said he welcomed the judge’s ruling. But he said much of the evidence is irreplaceable, particularly handwritten notes from negotiating sessions and meetings involving key Sutter executives.

He said those records covered a critical period in the early 2000s when there was a "sea change in Sutter’s contracting strategy” and it implemented provisions that insulated the health system from price competition.

"This was groundbreaking in the industry,” Grossman said. "Until we address the anti-competitive behavior of entities like Sutter, we will not solve the problem of high costs in health care.”

The plaintiffs are seeking to recover hundreds of millions of dollars from Sutter from what it claims are illegally inflated prices. The lawsuit alleges that an overnight hospital stay at Sutter hospitals in San Francisco or Sacramento costs at least 38 percent more than a comparable stay in the more competitive Los Angeles market.

A study published last year found that hospital prices at Sutter and Dignity Health, the two biggest hospital chains in California, were 25 percent higher than at other hospitals around the state. Researchers at the University of Southern California said the giant health systems used their market power to drive up prices — making the average patient admission at both chains nearly $4,000 more expensive.

"Sutter is a pretty extreme case of market power, but health care consolidation has become a really important issue across the country,” said Kathy Hempstead, a health care researcher at the Robert Wood Johnson Foundation. "It’s been on the back burner somewhat because of the debate over the Affordable Care Act, but there is bipartisan interest in tackling this.”

Canadians Root For An Underdog U.S. Health Policy Idea

KFF Health News, November 20, 2017

Canadians highly regard a little-known ACA initiative: the federal Center for Medicare & Medicaid Innovation.

This article first appeared November 20, 2017 on Kaiser Health News.

By Shefali Luthra

TORONTO — Ask people in Canada what they make of American health care, and the answer typically falls between bewilderment and outrage.

Canada, after all, prides itself on a health system that guarantees government insurance for everyone. And many Canadians find it baffling that there’s anybody in the United States who can’t afford a visit to the doctor.

So even as Canadians throw shade at the American hodgepodge of public plans, private insurance, deductibles and copays, they hold in high esteem a little-known Affordable Care Act initiative: the federal Center for Medicare & Medicaid Innovation (CMMI).

It was a hot topic on a reporter’s recent visit to Toronto to study the single-payer health care system.

Wonky as it seems, the center’s mission — testing innovations to hold down health care costs while increasing quality — has gotten noticed. Researchers and clinicians talk about its potential to foster experimentation and how it has led the United States to think out of the box regarding payment and reimbursement models.

“It is gaining traction in many circles here,” said Robert Reid, who researches health care quality at the University of Toronto.

“There have been some good efforts … they have tried more things than we have,” agreed Dr. Kaveh Shojania, a Toronto-based internist who studies health care quality and safety.

Despite the praise emanating from north of the border, the program doesn’t get the same love on the homefront.

Through the ACA, CMMI is armed with $10 billion each decade and sponsors on-the-ground experiments with doctors, health systems and payers. The idea is to devise and implement payment approaches that reward health care quality and efficiency, rather than the number of procedures performed.

Since taking office, though, President Donald Trump has rolled back its reach.

Canada has its own reasons for seeing potential in this sort of systemic test kitchen.

Health care’s growing price tag — and a payment system that doesn’t necessarily reward keeping people healthy — is hardly just an American problem. The vast majority of Canadian doctors are paid through what Americans call the “fee-for-service” model. And Canadian policymakers are also looking for strategies to curb health care costs — which, while greater in the United States, are a big budget here, too.

“The whole world is confronting the same issue, which is, ‘How do you pay and incentivize doctors to keep people out of the hospital and keep them healthy?’” said Ezekiel Emanuel, a former adviser to President Barack Obama who pushed for the center’s initial development. “Different places are looking at how to break out of that system, because everyone knows its perversions. This is one place where … we are in the world among the most innovative groups.”

Emanuel added that he wasn’t surprised to hear of the center’s appeal in Canada. He has received similar feedback from health ministers in Belgium and France, he said.

Even so, U.S. critics say CMMI’s work is a waste of money or a federal overreach.

And, so far, the Trump administration has reduced by half the size of one high-profile Obama administration project that would have bundled payments for hip and knee replacements — so that the hospitals performing those were paid a set amount, rather than for individual services. It also canceled other scheduled “bundling” projects targeting payment for cardiac care and other joint replacements.

CMS Administrator Seema Verma wrote in The Wall Street Journal in September that the Innovation Center was going to begin moving “in a new direction.”

A follow-up “request for information” from the federal government suggested that the center would emphasize cutting health care costs through strategies like market competition, eliminating fraud and helping consumers actually shop for care. It also suggested the Innovation Center would favor smaller-scale projects.

At least for now, it’s hard to interpret what this means, said Jack Hoadley, a health policy analyst at Georgetown University who has previously worked at the Department of Health and Human Services.

Limiting CMMI’s footprint would be problematic, Emanuel argued, while discussing CMMI’s status in the U.S.

The footprint in Canada, though, seems to be growing.

“We definitely looked to it as a model as something we can do. Like look, this happened, and why can’t we do the same thing here?” said Dr. Tara Kiran, a Toronto-based primary care doctor who also researches health care quality.

KHN ACA Poll

About A Third Of Americans Unaware Of Obamacare Open Enrollment

KFF Health News, November 17, 2017

Advocates fear enrollment will decline this year because President Donald Trump has cut funding for publicity and repeatedly said the health law is 'dead.'

This article first appeared November 17, 2017 on Kaiser Health News.

By Phil Galewitz

While the Affordable Care Act’s fifth open enrollment season is off to a surprisingly good start, many uninsured people said they weren’t even aware of it, according to a survey released Friday.

Nearly a third of people overall — including a third of people without health insurance — said they had not heard anything about the sign-up period for individuals who buy health plans on their own, according to the survey by the Kaiser Family Foundation (KFF). (Kaiser Health News is an editorially independent program of the foundation.)

Open enrollment started Nov. 1 and runs through Dec. 15 in most states. Advocates fear enrollment will decline this year because President Donald Trump has been repeatedly saying the health law is “dead,” and his administration severely cut funding for publicity and in-person assistance.

Nonetheless, nearly 1.5 million people have enrolled on the federal health insurance exchange healthcare.gov, which handles coverage in 39 states, federal officials reported Wednesday.

One factor that could be pushing more people to sign up earlier this year is the open enrollment season was cut in half from three months to 45 days for the states relying on the federal exchange. Some state exchanges allow enrollment into January.

Several state health insurance exchanges have also said early sign ups are running higher than last year. The Colorado insurance exchange on Thursday said it has enrolled more than 22,000 people in the first two weeks — a 33 percent jump from last year’s first weeks.

In the previous open-enrollment season, 12.2 million people nationwide selected individual market plans through the marketplaces. The number dropped off during the year because not everyone paid and some found coverage elsewhere.

Forty-five percent of all respondents to the KFF survey and 52 percent who said they were uninsured said they have heard less about open enrollment this year compared to previous years.

Insurers are trying to pick up some of the challenges of publicizing enrollment, and some of those ads are getting noticed.

The percentage of survey respondents who said they saw ads attempting to sell health insurance increased from 34 percent to 41 percent between the October and November KFF tracking polls. The share who say they saw ads that provided information about how to get health insurance under the ACA increased from 20 percent to 32 percent.

The poll found that nearly 8 in 10 Americans were aware the Affordable Care Act was still in effect.

The survey of 1,201 adults, which was conducted Nov. 8-13, has a margin of error +/-3 percent.

Despite ACA Cost Protections, Most Adolescents Skip Regular Checkups

KFF Health News, November 17, 2017

Caregivers saw a 'moderate' increase in the number of children ages 10-17 undergoing well-child visits after the ACA's passage. The gains were greatest among minority and low-income groups.

This article first appeared Noverber 17, 2017 on Kaiser Health News.

By Michelle Andrews

As children move through adolescence, some face health hurdles like obesity, sexually transmitted infections, depression and drug abuse. Regular checkups could help families address such problems, and the Affordable Care Act paved the way by requiring insurers to fully cover well-child visits, at no charge to patients.

But, both before and after the ACA was established, fewer than half of kids ages 10 to 17 were getting routine annual physical exams, according to a recent study.

"Most adolescents are pretty healthy, but a lot of them are headed for trouble with obesity” and mental illness and substance use, said Sally Adams, a research specialist on adolescents and young adults at the University of California-San Francisco, the study’s lead author. "These are things that can be caught early and treated, or at least managed.”

For the study, published online this month in JAMA Pediatrics, researchers analyzed data from the federal Medical Expenditure Panel Survey, which tracks health insurance coverage and health care use and spending. Researchers used data from 25,695 people who were caregivers of adolescents ages 10-17. About half were surveyed from 2007 to 2009 and the rest from 2012 to 2014.

Before the health law passed in 2010, caregivers reported that 41 percent of children had a well-child visit in the previous year. After the ACA’s preventive services protections became effective, typically in 2011, the rate climbed to 48 percent, a "moderate” increase, Adams said. The increase was greatest for minority and low-income groups.

Still, more than half of children in the survey didn’t go to the doctor for routine care over the course of a year, even though many families gained insurance and wouldn’t have owed anything for the visits.

That’s cause for concern, Adams said. A primary care provider can screen youngsters for risky behaviors and treat them if necessary. A checkup is also an opportunity to educate patients on health.

"The behaviors they pick up as adolescents have a strong influence on their adult health across their life course,” she said. For example, she noted, "if you can keep them from starting to smoke, then they probably won’t smoke.”

Young children typically have regular pediatrician visits for recommended vaccines, hearing and vision tests as well as school checkups. But those needs may change as children get older, and state requirements that kids get physicals before entering school vary. Some may require a checkup every year, others only at intervals.

"Healthcare professionals have told us that rates of well-child visits tend to be lower after the early childhood years," Adams said.

The ACA required that most health plans cover preventive services recommended by four medical and scientific expert groups without charging consumers anything out-of-pocket. For children, many of these services are spelled out in the Bright Futures project guidelines, sponsored by the American Academy of Pediatrics and supported by the federal government, and by the U.S. Preventive Services Task Force, an independent group of medical experts that evaluates the evidence for clinical care.

About a fifth of adolescents ages 12 to 19 are obese, and between 13 and 20 percent of children have a mental disorder in any given year, according to the Centers for Disease Control and Prevention.

Some research has shown that parents may believe that adolescents do not need to go to the doctor unless they’re sick and that they can’t afford to pay for checkups, Adams said.

"What we would like is for families to understand that this is a right families have and that these are valuable services that can help their children,” she said.

California Fines Anthem $5M For Failing to Address Consumer Grievances

KFF Health News, November 16, 2017

Officials identified 245 grievance-system violations during this latest investigation of consumer complaints at Anthem from 2013 to 2016.

This article first appeared November 15, 2017 on Kaiser Health News.

By Chad Terhune

California’s managed-care regulator announced Wednesday it has fined insurance giant Anthem Blue Cross $5 million for repeatedly failing to resolve consumer grievances in a timely manner.

The state Department of Managed Health Care criticized Anthem, the nation’s second-largest health insurer, for systemic violations and a long history of flouting the law in regard to consumer complaints.

“Anthem Blue Cross’ failures to comply with the law surrounding grievance and appeals rights are long-standing, ongoing and unacceptable,” said Shelley Rouillard, director of the Department of Managed Health Care. “Anthem knows this is a huge problem, but they haven’t addressed it.”

Before this latest action, California had already fined Anthem more than $6 million collectively for grievance-system violations since 2002.

The state said it identified 245 grievance-system violations during this latest investigation of consumer complaints at Anthem from 2013 to 2016.

Rouillard cited one example in which Anthem denied a submitted claim for an extensive surgical procedure, even though it had issued prior approval for the operation. Twenty-two calls contesting the denial — placed by the patient, the patient’s spouse, the couple’s insurance broker and the medical provider — failed to resolve the complaint. It was not until the patient sought help from the managed-care agency, more than six months after the treatment, that Anthem paid the claim.

In a statement, Anthem acknowledged there are some legitimate findings in the audit, but it strongly disagreed with the state’s assertion that the problems are “systemic and ongoing.” The company said it will contest the fine.

“Anthem has taken responsibility for errors in the past and has made significant changes in our grievance and appeals process, as well as investments in system improvements,” the company said. “We remain committed to putting the needs of our members first.”

Anthem Inc., based in Indianapolis, sells Blue Cross policies in California and 13 other states.

California is known for having tough consumer protection laws on health coverage and for assisting policyholders when they exhaust their appeals with insurers. In other actions, the state has fined insurers for overstating the extent of their doctor networks and for denying patients timely access to mental health treatment.

Jamie Court, president of Consumer Watchdog, an advocacy group in Santa Monica, Calif., said the regulatory response to these problems varies greatly by state. He singled out New York, Washington and Kansas as some of the states with good track records of holding health insurers accountable.

“The real problem is when states don’t act there is not a great avenue for the consumer. It’s very hard to bring legal action,” Court said. “Anthem definitely needed a wake-up call. But this will also send a message to other insurers.”

Nationally, consumers continue to express their displeasure with health insurers over a wide range of issues, including denials for treatment, billing disputes and the lack of in-network doctors.

Verified complaints related to health insurance and accident coverage rose 12 percent in 2016 compared to the previous year, totaling 53,680, according to data compiled by the National Association of Insurance Commissioners. The data only includes incidents in which state regulators confirmed there was a violation or error by the insurer involved.

Court and other advocates welcomed the significant fine in California and said this is just the latest example of Anthem’s failure to uphold basic consumer protections.

Overall, state officials said that calls to Anthem’s customer service department often led to repeated transfers and that the company failed to follow up with enrollees.

“If you look at the history of Anthem and the penalties assessed over the years, they are definitely an outlier compared to other health plans,” Rouillard said.

“All the plans have some issues with grievances, but nothing to the degree we are seeing with Anthem.”

The managed-care department said a health plan’s grievance program is critical, so that consumers know they have the right to pursue an independent medical review or file a complaint with regulators if they are dissatisfied with the insurer’s decision. The grievance system can also help insurers identify systemic problems and improve customer service, state officials said.

The state’s independent medical review program allows consumers to have their case heard by doctors who are not tied to their health plan. The cases often arise when an insurer denies a patient’s request for treatment or a prescription drug.

In 2016, insurance company denials were overturned in nearly 70 percent of medical review cases and patients received the requested treatment, according to state officials.

Trump Administration Plan to Add Medicaid Work Requirement Stirs Fears

KFF Health News, November 15, 2017

Advocates fear the changes are a way for states to kick millions of adults off the program and undermine its mission of providing health coverage to the poor.

This article first appeared November 15, 2017 on Kaiser Health News.

By Phil Galewitz

The Trump administration’s recent endorsement of work requirements in Medicaid and increased state flexibility is part of broader strategy to shrink the fast-growing program for the poor and advance conservative ideas that Republicans failed to get through Congress.

Seema Verma, administrator of the Centers for Medicare & Medicaid Services, laid out her vision for the state-federal program in two appearances last week, saying her new course give states wide latitude over eligibility and benefits.

In a speech Nov. 7 to state Medicaid directors, Verma said the program needs to give people "hope that they can achieve a better future for themselves and their families, hope that they can one day break the chains of generational poverty and no longer need public assistance."

She has noted other government assistance programs such as food stamps, have similar requirements.

But her outline scares advocates who see the changes as a way for states to kick millions of adults off the program and undermine its mission of providing health coverage to the poor. They note most nondisabled adults on Medicaid already work. Many who don’t are either too sick, go to school or care for relatives.

“Medicaid coverage is not something that should be earned,” said Robert Doherty, senior vice president at the American College of Physicians. “Medicaid is not a welfare program. It is a health care entitlement program, and anyone who meets the requirements should be able to have coverage.”

Verma’s plan to greenlight work requirements is only just the beginning of dramatic changes, these advocates said. They expect that she would allow more states to charge monthly premiums, as Indiana has proposed; approve drug testing of enrollees, as Wisconsin has requested; and putting a time limit on coverage, as Arizona has asked.

Katherine Howitt, associate director of policy at the Community Catalyst, a consumer health advocacy group that backs the federal health law and expansion of Medicaid, said Verma has thrown open the door to allowing states to add more restrictions on coverage.

“This new approach is not really about promoting work or improving care or improving state flexibility,” she added. “At the end of the day, it is making it harder for low-income people to access health coverage.”

Nearly 75 million people are covered by Medicaid, including 16 million added since 31 states and the District of Columbia expanded their programs under the Affordable Care Act.

Verma said her goal for Medicaid is to move people out of the program by getting them into jobs that offer coverage or provide enough income so they buy it on their own.

“Her comments show she doesn’t understand the reality that many low-wage jobs don’t offer benefits,” Howitt said.

Several states, including Arkansas, Kentucky and Maine, have asked CMS to allow them to require Medicaid recipients to work or do volunteer work as a condition of enrollment. The Obama administration turned down such proposals.

Even some right-leaning pundits say work requirements could backfire because taking away health coverage could make individuals sicker and less likely to hold down jobs.

“This could run counter to the goal of Republicans to help put people to work,” said Jason Fichtner, a health policy expert at the conservative Mercatus Center at George Mason University in Fairfax, Va.

But Josh Archambault, senior fellow for the conservative Foundation for Government Accountability, said he was encouraged by Verma’s approach.

“I think the intent of the program depends on different populations it serves,” he said. “For someone in a nursing home, it’s a health program. But for people in the Medicaid expansion, it is more like a welfare program where able-bodied people are expected to move back into the workforce.”

Congress, with the blessing of President Donald Trump, tried earlier this year to make substantial changes to Medicaid as part of the bills to replace the ACA. Those efforts stalled.

The changes included offering states more flexibility, but federal funding would not be as generous. The nonpartisan Congressional Budget Office said millions fewer people would eventually be covered.

Verma, a former health consultant who helped Indiana expand Medicaid in 2015 under Obamacare, said the law should never have allowed so-called able-bodied adults into the program. That’s because Medicaid already had too many problems, including not enough doctors and wait lists for some people seeking coverage, she said.

Before the ACA, Medicaid mainly covered children, disabled people and pregnant women.

The health law broadened Medicaid to all low-income people, opening up the program to cover nondisabled adults without children with incomes up to 138 percent of the federal poverty level (about $16,600 for an individual).

“We put people on the Medicaid program — able-bodied individuals — in a program that is essentially designed for people that are going to be on the program for the rest of their lives,” Verma said Nov. 9 at an event sponsored by The Wall Street Journal.

Two-thirds of people on Medicaid are disenrolled within three years, according to a U.S. Census Bureau report.

Verma’s pointed criticism of Medicaid, the Affordable Care Act’s expansion and even state officials who helped implement that effort drew rebukes from state Medicaid directors.

Critics said her remarks were misguided and showed she doesn’t understand the program she runs.

Doherty said that by law Medicaid allows states to conduct experiments in how they run the program, but not by making it harder for people to get covered.

Nothing stops states, he added, from offering job training and other programs to help people on Medicaid get back to work. “But we can’t deny them access to health care just because they happen to be poor,” he said.

Robin Rudowitz, a Kaiser Family Foundation policy analyst, said Verma appears willing to let states experiment as never before.

“Some proposals [like work requirements] could create barriers to coverage for eligible beneficiaries and result in losses of coverage for Medicaid enrollees,” she said. (Kaiser Health News is an editorially independent program of the foundation.)

Some health experts said they see many contradictions in Verma’s approach. They said she wants Medicaid to focus only on the most needy — but she has been unwilling to criticize Congress for failing to reauthorize the Children’s Health Insurance Program (CHIP) that covers 9 million children. Federal CHIP funding ran out Sept. 30.

Verma also questioned why some states spend significantly more per enrollee than other states on Medicaid. But the reason, these experts note, is because states have flexibility to vary their benefits, eligibility rules and payments to providers.

As Medicaid has grown to cover more than 1 in 5 Americans, it has become more popular among beneficiaries, health care providers and even among some Republican governors who agreed to expand it. Howitt said the Trump plan would take Medicaid back to the 1980s when it was often linked to cash assistance welfare and carried a stigma.

Joan Alker, director of the Georgetown University Center for Children and Families, said backing work-requirement proposals helps the Trump administration further its ideological message that Medicaid is a welfare program and not a health program.

Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities, which supports the ACA, said Verma’s vision is simple: to undo the health law’s coverage gains.

“In 2010, Congress decided to expand Medicaid as the vehicle for low-wage workers to have coverage as part of health reform,” she said. “That is still the law and she [Verma] doesn’t get to disagree with that, she has to follow the law not sabotage it.”

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