Programs to circumvent litigation by offering prompt disclosure, apology and compensation for mistakes as an alternative to malpractice suits are becoming more popular.

Two Words Can Soothe Patients Who Have Been Harmed

KFF Health News, March 15, 2017

Programs to circumvent litigation by offering prompt disclosure, apology and compensation for mistakes as an alternative to malpractice suits are becoming more popular.

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

By Sandra G. Boodman

When Donna Helen Crisp, a 59-year-old nursing professor, entered a North Carolina teaching hospital for a routine hysterectomy in 2007, she expected to come home the next day.

Instead, Crisp spent weeks in a coma and underwent five surgeries to correct a near-fatal cascade of medical errors that left her with permanent injuries. Desperate for an explanation, Crisp, who is also a lawyer, said she repeatedly encountered a white wall of silence: The hospital and her surgeon refused to say little more than "things didn't go well." Crisp spent years piecing together what happened. "I decided I was going to find out even if it takes the rest of my life," she said.

Jack Gentry said he "went into the hospital a patient and came out a victim." In 2013, the retired Baltimore police officer suffered a catastrophic spinal cord injury during disk replacement surgery at MedStar Union Memorial Hospital that left him a quadriplegic.

But unlike Crisp, Gentry and his wife, a nurse, were immediately told what had gone wrong by his surgeon, who apologized for the error. The hospital covered Gentry's rehabilitation and other major expenses and paid an undisclosed amount in compensation, all without litigation.

"When hospitals mess up, they need to do the right thing," Gentry said. "MedStar did."

For patients and their families killed or maimed by medical errors, Crisp's experience — in which doctors clam up and hospitals deny wrongdoing and aggressively defend their care — remains standard operating procedure in most institutions.

But spurred by concerns about the "deny and defend" model — including its cost, lack of transparency and the perpetuation of errors — programs to circumvent litigation by offering prompt disclosure, apology and compensation for mistakes as an alternative to malpractice suits are becoming more popular. Researchers at Johns Hopkins University in Baltimore recently estimated that medical mistakes kill 251,000 Americans annually, which would make them the third-leading cause of death. Traditionally, the only way for patients to find out what went wrong has been to sue.

A blueprint for the approach used in Gentry's case is being promoted by the federal Agency for Healthcare Research and Quality. Called CANDOR, an acronym for Communication and Optimal Resolution, the approach is modeled on a long-standing program pioneered at the University of Michigan. It was tested in 14 hospitals around the country, including MedStar's Washington Hospital Center and Georgetown University Hospital.

Although they differ, these programs — which typically feature prompt investigation of errors whose findings are shared with the victims, as well as an apology and compensation for injuries — are operating at the University of Illinois at Chicago, Stanford and eight hospitals and outpatient groups in Massachusetts. Despite fears that the new approach would encourage lawsuits, the opposite has proved true. In Michigan, the number of lawsuits was cut nearly in half, and the hospital system saved about $2 million in litigation costs in the first year after the new model was adopted in 2001.

"The whole point of this isn't to drop malpractice costs, it's to drive patient safety," said Richard Boothman, the University of Michigan Health System's executive director of clinical safety and chief risk officer, who launched the program after a career defending doctors and hospitals. "We need to hard-wire as quickly as possible the lessons of these cases."

In most hospitals, Boothman said, patient safety experts do not routinely talk to risk managers who handle malpractice claims. As a result, valuable information about preventing errors is lost.

In The Dark
Most patients never learn they are victims of a medical error. A landmark 1991 Harvard study found that only 2 percent of people harmed by errors file a lawsuit. Those who do face daunting odds: Patients lose 80 percent of malpractice cases. Huge litigation costs, combined with laws that have reduced damage awards in many states, have left many unable to find an attorney because plaintiffs' lawyers are paid on contingency. Malpractice cases typically take three or more years to resolve. In the interim, many injured people struggle to pay for care.

Litigation "is a tortuous process for patients and health care workers," said Beth Daley Ullem, who spent five years seeking answers about the 2003 death of her newborn son from a Chicago hospital that denied any wrongdoing.

"We later learned that this had happened to a family before us and another seven months after," said Daley Ullem, a former McKinsey & Co. consultant whose ruptured uterus went untreated for an hour. She said she received a $4 million settlement before trial, which she offered to give back to the hospital to fund safety improvements. The hospital refused.

Disclosure efforts also face stiff resistance from doctors, insurers and lawyers, including defense attorneys for whom speedier resolution means fewer billable hours.

Despite laws in most states that prevent apologies from being used against doctors in lawsuits, many worry that it will make patients more likely to file suit, said Thomas Gallagher, a University of Washington professor of medicine who has written extensively about disclosure. A recent study found that 77 percent of 300 primary-care doctors would not fully disclose a delayed breast cancer diagnosis to a patient.

Doug Wojcieszak — who founded an Illinois-based disclosure advocacy group called "Sorry Works!" — said one Iowa doctor told him that if he started apologizing when things went wrong, "he'd be doing nothing else all day long."

Insurers are also leery, said Brian Atchinson, president of Physician Insurers Association of America, the trade association for liability insurers, which was involved in the development of CANDOR. "Some states are more conducive to this than others," he said. "But there are those who don't believe the benefits outweigh the risks."

Lawyer Joanne Doroshow, director of the Center for Justice & Democracy at New York Law School, expressed worry that disclosure programs may take advantage of vulnerable patients who are not represented by a lawyer. "The hospitals are in control of it, and it's still in their interest to try and limit compensation to patients," she said.

Jeffrey Catalano, a Massachusetts plaintiffs' lawyer who is president of the state bar and a participant in that state's disclosure program, says that patients should be represented early in the process. "I think if there's a good attorney present, there's no way a client is going to be shortchanged," he said. "Good attorneys know this: Medical malpractice cases are hard to take to trial. If a client can get $1 now rather than risking getting nothing [at trial] for the prospect of $1.50 later, it may be better to take the $1 now."

Doing The Right Thing
The country's first disclosure program began 30 years ago with a doctor's desire to do the right thing.

Pulmonologist Steve Kraman, newly named as chief of staff for what is now the Lexington Veterans Affairs Medical Center in Kentucky, said he faced a problem in 1987: how to handle the death of a middle-aged woman caused by an "undeniable error," a massive overdose of potassium.

"If we had said nothing, [the family] never would have known a thing," said Kraman, who was also the hospital's risk manager. "We never would have gotten sued. But I just didn't feel that was right." So he suggested to the hospital's lawyer that they come clean to the patient's two adult daughters, from whom she was estranged.

"I sat down and told them exactly what happened, that we were responsible for it, that they should hire a lawyer and we were going to negotiate a payment," he recalled. Two months later, the family was paid $250,000.

From then on, Kraman said, all cases involving errors were handled similarly. "We paid out for things that nobody could have sued for in their wildest dreams," said Kraman, who is now a professor at the University of Kentucky. Some patients declined the cash, he said, because they feared it would "ruin their relationship with the doctor." Kraman said he refused to pay a dime in cases where no injury could be proved. "That just alienates doctors and nurses who feel like you're throwing them under the bus."

Kraman said he had several advantages: Doctors were employed and insured by the VA system. Payments, which averaged $16,000, were made from the U.S. Treasury, not the hospital coffers. And the program had the support of the hospital's director and lawyer as well as the U.S. attorney for Kentucky.

"This has to be done from the top down" or it won't work, Kraman said. "The message has to be 'This is how we do business.'"

When Boothman arrived at the University of Michigan in 2001 — after two decades defending doctors, including an orthopedic surgeon who had been sued 21 times — he decided to try a similar approach. That included encouraging staff to report errors and bad outcomes; reports jumped from 2,400 a year to more than 34,000.

"You have to normalize honesty," Boothman said, "to create a culture of continuous improvement." Applying the lessons gleaned from those errors, he said, has helped make care safer.

"Litigating a case for three years and telling everybody, 'Don't talk about it and don't change anything,' is immoral and counterproductive," he added. "I don't serve my organization well by defending care we shouldn't be defending."

"Today we're often at the bedside as soon as things happen," he said. Patients and their families are interviewed as part of the hospital's investigation of the facts, something that does not happen in traditional litigation.

Like Kraman, Boothman said he worries that some hospitals are using disclosure to cherry-pick small or unwinnable cases, not as a standard approach.

A Test Case
Orthopedic surgeon P. Justin Tortolani remembers with sickening clarity the moment he realized that a device he was installing had gone too far, penetrating Jack Gentry's spine. The 60-year-old retired police officer, who once had hiked the entire Appalachian Trail, was instantly paralyzed from the neck down.

"You can't really believe it's happening," said Tortolani, Union Memorial's director of spine surgery. Summoning his years of training, the surgeon formulated a plan and steeled himself to tell Teresa Gentry what had happened. It was the first of many conversations about the accident that he would have with the family.

"We didn't want to go through litigation, we didn't need to go through litigation," said Larry Smith, MedStar's vice president for risk management. MedStar uses CANDOR in about a dozen cases with substantial damages annually.

MedStar executives "told me what had happened, why it happened, that it was directly or indirectly their fault and that whatever I needed I should ask for," Gentry recalled. MedStar paid for five months of inpatient rehab — Gentry's insurance would have covered only two weeks — modifications to the couple's home, a $45,000 wheelchair and a new wheelchair-accessible van. It provided a case manager, a home-care nurse and $15,000 for incidental medical expenses.

"Because of the nature of Jack's injury, we would have had to mortgage everything to pay for his care" otherwise, Teresa Gentry said.

Early on, Gentry said, his older brother, a Baltimore malpractice lawyer, expressed bafflement at MedStar's approach. "He said as long as we were getting what we needed, to just go with it," Gentry recalled.

At the end of two years, the case was settled with a confidential payment negotiated by lawyers for the couple, MedStar and the device manufacturer.

"I felt like it would take care of Jack for the rest of his life," said Teresa Gentry, adding that the couple had been prepared to file a lawsuit if an agreement could not be reached. "Did I get enough to pay for everybody's pain and suffering and trauma? No."

"I was very skeptical in the beginning of this whole process," she recalled, but she said she believes it has worked well, as does her husband.

Tortolani said he feels "remorse, guilt and sorrow for Jack and his family. This shakes you to your core," he said. MedStar officials have been "unbelievably supportive," Tortolani said, and he remains deeply grateful to the Gentrys. "My relationship with Jack has never been stronger."

Donna Helen Crisp says she thinks she would have been less traumatized had the North Carolina hospital and her surgeon not stonewalled her. "I would have been deeply depressed that I had such a bad experience, but I could have moved on with my life," said Crisp, who has written a book about her experience entitled "Anatomy of Medical Errors: the Patient in Room 2." Being denied the truth left her with "no way to put it into perspective."

Deciphering CBO's Estimates On The GOP Health Bill

KFF Health News, March 14, 2017

CBO estimates that 95 percent of people getting Medicaid through the health law's expansion would lose that enhanced federal funding.

This article first appeared March 13, 2017 on Kaiser Health News.

By Julie Rovner

The Congressional Budget Office is out with its estimate of what effects the Republican health bill, "The American Health Care Act," would have on the nation's health care system and how much it would cost the federal government. The GOP plan is designed to partially repeal and replace the Affordable Care Act passed during the Obama administration.

Here are some of the CBO highlights:

• $337 billion reduction in the deficit. That's CBO's estimate over the next decade, taking into account both decreased government spending in the form of less help to individuals to purchase insurance and lower payments to states for the Medicaid program. It also includes decreased revenue from the repeal of the taxes imposed by the ACA to pay for the new benefits.

• 24 million more people without insurance in a decade. The federal budget experts estimate that people will lose insurance and that the drop will kick in quickly. In 2018, they say 14 million more people would join the ranks of the uninsured. It would reach the 24 million by 2026, when "an estimated 52 million people would be uninsured, compared with 28 million who would lack insurance that year under current law."

• 15 to 20 percent increase in 2018 premiums, but relief would follow. Monthly costs for insurance would go up at first, due to the elimination of the requirement for most people to have insurance or else pay a tax penalty. After 2018, CBO estimates that average premiums would actually drop by 10 percent by 2026 compared to current law. That is because the lower prices for younger people would encourage more to sign up. By contrast, the law would "substantially [raise] premiums for older people."

• $880 billion drop in federal Medicaid spending over the decade. That comes primarily by imposing, for the first time, a cap on federal contributions to the program for those with low incomes.

• 14 million fewer Medicaid enrollees by 2026. That's 17 percent fewer than projected under current law. The projection includes people who are currently eligible and would lose coverage, as well as people who might have become eligible if more states, as expected, expanded coverage under the ACA. CBO projects that is unlikely to happen now.

• 95 percent of people who are getting Medicaid through the health law's expansion would lose that enhanced federal funding. The CBO estimates that only 5 percent of enrollees in the expansion program would remain eligible for the higher federal payments by 2024, since the bill would phase out those payments to states as patients cycle in and out of eligibility.

• 15 percent of Planned Parenthood clinic patients would "lose access to care." These patients generally live in areas without other sources of medical care for low-income people. The Republican bill would cut out Medicaid funding for Planned Parenthood for a year.

Fact-Checking The Chatter Around The GOP Health Bill

KFF Health News, March 13, 2017

In just the week since it was introduced, two committees have approved the "American Health Care Act," and a floor vote is planned before month's end.

This article first appeared March 13, 2017 on Kaiser Health News.

By Julie Rovner

Republicans are in a hurry to get their "repeal and replace" health care bill to the House floor.

In just the week since it was introduced, two committees have approved the "American Health Care Act," and a floor vote is planned before month's end.

But in the rush to legislate, some facts surrounding the bill have gotten, if not lost, a little buried. Here are five things that are commonly confused about the health overhaul effort.

1. The GOP bill would replace the health law's subsidies with tax credits.

Not really. The GOP bill would replace the Affordable Care Act's tax credits with different tax credits.

Under the ACA, people with income above the poverty line (about $12,000 for an individual in 2017) and under four times the poverty line (about $47,000) who buy their own insurance are eligible for advanceable, refundable tax credits. "Advanceable" means they don't have to wait to file their taxes, so the money is available each month to pay premiums; "refundable" means credits are available even to those with incomes too low to owe federal income tax. The ACA's tax credits are based on income and the actual price of health insurance available to each individual.

The GOP bill also has advanceable, refundable tax credits. They are based on different criteria, though. The Republican tax credits would increase with age (from $2,000 for youngest adults to $4,000 for older adults not yet eligible for Medicare), and would gradually phase out with income (starting at $75,000 for individuals and $150,000 for families). They would not vary by geographic region or the cost of coverage. And while older adults would get credits twice as large as younger adults, another change in the bill would let insurers charge those older customers' premiums that are five times as high. In the current law, the difference is 3-to-1.

There are actual subsidies in the ACA — they help people with incomes between 100 and 250 percent of poverty ($12,060 to $30,150 for an individual) pay their deductibles and coinsurance or copays. These subsidies are the subject of an ongoing lawsuit filed by the House against the Obama administration. Those subsidies would be repealed under the GOP bill.

2. Republicans have left popular provisions of the ACA in their bill because they are popular.

Not necessarily. True, the public supports the provisions of the health law that allow adult children to stay on their parents' health plans until they turn 26 and that prohibit insurers from rejecting or charging more to people with preexisting health conditions. Those things remain in the GOP bill.

But even if Republicans had wanted to get rid of those provisions, they likely could not. That's because the budget rules Congress is using to avert a filibuster in the Senate forbid them from repealing much of the ACA that does not affect government spending.

3. This bill is one part of a three-part effort to remake the health law.

This is true; Republicans continually refer to their health care effort as having three "buckets." One is the budget bill currently under consideration. A second is the power of Health and Human Services Secretary Tom Price to make administrative changes that would undermine the ACA.

The third is follow-up legislation that would allow things like selling insurance across state lines and limiting damages in medical malpractice lawsuits. House Speaker Paul Ryan& (R-Wis.) referred to that in a Thursday press conference as "additional legislation that we feel is important and necessary to give us a truly competitive health care marketplace."

What Republicans usually don't say, though, is that the second and third parts are complicated. Changing federal regulations generally requires a cumbersome process of advertising the changes, soliciting comments and revising the rules. Controversial changes also can bring lawsuits and lengthy legal proceedings. In addition, any subsequent bills on the law would require 60 votes to pass the Senate because they would not be covered by the budget rules Republican are using for this first legislation. Republicans currently have a 52-48 vote majority in that chamber, and Democrats have so far been united in opposing the GOP's health changes.

4. The bill's Medicaid provisions just scale back the program's expansion.

In truth, the Medicaid portions of the GOP bill would fundamentally restructure the Medicaid program.

The Affordable Care Act allowed states to expand Medicaid, whose cost is shared between the states and federal government, to everyone with incomes under 138 percent of poverty. Previously, eligibility was restricted to those in specific categories (primarily low-income pregnant women, children, seniors and those with disabilities). Because Medicaid was already a significant financial burden for states, the federal government offered to pay the entire cost for the expansion population for the first three years, eventually dropping back to 90 percent, which is still more than states get for traditionally eligible populations.

The GOP bill would end new enrollment in that expanded program in 2020. It would continue to cover people who had already qualified — but since many people in Medicaid churn in and out of the program, the number of enrollees is likely to gradually decline.

But that's just the beginning of the Medicaid changes. The Republican bill would, for the first time ever, limit the amount the federal government provides to states for Medicaid spending. It would make payments based on the number of enrollees in each state and that "per-capita" cap is expected over time to shift more financial responsibility for the program to the states. The left-leaning Center on Budget and Policy Priorities estimates that states could be on the hook for an additional $370 billion over 10 years if the bill becomes law.

5. The GOP bill is a huge tax break for the wealthy.

This is technically true — the bill would provide nearly $600 billion in tax breaks over the next decade, almost all of it going to the wealthy, according to the nonpartisan Committee for a Responsible Federal Budget.

But that's not because Republicans set out to lower taxes on wealthy people. It's because they are repealing nearly all the taxes that helped pay for the health law's benefits, and the Democrats had targeted many of those to higher-income people.

HMO Doctors Take Pains To Slash Opioid Prescriptions

KFF Health News, March 13, 2017

Taking advantage of their HMO's massive health data system, a set of Kaiser Permanente physicians set about tapering the number of patients on high doses of narcotic painkillers. Five years later, prescriptions of opioids have plunged.

This article first appeared March 13, 2017 on Kaiser Health News.

By Sam Quinones

On a summer afternoon in 2009, eight Kaiser Permanente doctors met in Pasadena to review the HMO's most prescribed drugs in Southern California. Sun blasted through the windows and the room had no air conditioning, but what unsettled the doctors most were the slides a pharmacist was presenting.

"We were doing so much work treating people with hypertension and diabetes, we thought those drugs would be on the list," said Dr. Joel Hyatt, then Kaiser's quality management director in Southern California.

Instead, hydrocodone, a generic opioid painkiller, led the list. OxyContin was near the top, even though the HMO didn't subsidize it and patients had to pay for it themselves.

At the time, few if any physicians were talking about an "opioid epidemic." But to the doctors in the room, the slides told a bleak story: Narcotics were being dispensed in numbers and doses higher than any of them had ever seen. The potential for addiction and overdoses among patients was frightening, something doctors around the country would later realize.

"People [were] getting prescriptions for a thousand pills," said Steve Steinberg, a Kaiser family doctor who attended the meeting. "The numbers were so striking that it led us to look into it."

Thus began an effort by Hyatt, Steinberg and a task force of others at Kaiser Permanente-Southern California to change how their colleagues practiced, and thought about, pain management. (Kaiser Health News is not affiliated with Kaiser Permanente.)

Taking advantage of the HMO's massive health data system and its status as both insurer and health provider, the Southern California Kaiser doctors set about tapering the number of patients on high doses of narcotic painkillers. They reprogrammed computer software for doctors, developed new urine tests for patients and empowered pharmacists to question potentially excessive prescriptions.

They also pushed colleagues to expand the use of non-drug options for chronic pain sufferers: physical therapy, acupuncture, cognitive behavioral therapy, healthier diets and increased exercise.

Five years into its initiative, Kaiser's Southern California operation reports prescriptions of opioids have plunged.

Prescriptions of opioid pills such as Vicodin and Percocet in amounts greater than 200 tablets dropped from 2,500 a month to almost zero, according to the HMO. So, too, have prescriptions that include potentially dangerous combinations of muscle relaxants, anti-anxiety medications and opioids, as well as prescriptions of brand-name opioids in general.

Kaiser patients coming out of routine surgery no longer receive 60 Vicodin, a month's worth of pills for what are usually a few days of pain, Hyatt says. Now "you would probably be given no more than 18" pills of generic hydrocodone.

Kaiser is deploying these strategies across the organization, and the prescription of opioids has fallen by a third since March 2015, officials at Kaiser's Oakland headquarters said.

Researchers at the federal Centers for Disease Control and Prevention in Atlanta say in an upcoming paper that Kaiser has struck a good balance between reducing prescriptions and managing patients' pain.

"It's important to demonstrate that, yes, it's possible and that action can be taken now," said behavioral scientist Jan Losby, the paper's lead author.

But it's not clear whether Southern California Kaiser's approach can be adopted with success outside large HMOS. Many doctors operate in smaller clinics, under intense time pressure and without much opportunity to talk about alternative treatments. Not many have access to the kind of data Kaiser collects.

Some patients and their advocates worry about denying patients pain drugs they really need, a concern that has gained traction nationally.

"Not prescribing is as bad as over-prescribing," said Paul Gileno, founder and president of the Connecticut-based U.S. Pain Foundation, an advocacy organization for chronic-pain patients. "We don't want all or nothing. We want that balance."

Kaiser patient Nancy Walter, who has experienced chronic pain since a serious motorcycle accident, agrees.

"They found something that worked and then they kicked me out," said Walter, 59, of Brentwood, California. "It's utterly ridiculous. I'm not going to sell this stuff. I need it. It's hard enough to get it."

A Hard Time Saying No
After that 2009 meeting, Steinberg began to study Kaiser's centralized patient data system. The statistics showed that doctors regularly were boosting the dosage for hundreds of patients by about 30 percent every six months, Steinberg found.

Particularly disturbing was the high number of branded opioids that Kaiser doctors prescribed — Vicodin and Percocet, especially — instead of generic hydrocodone or oxycodone. Brand-name pills are more popular on the street and more likely to end up on the black market.

Soon Steinberg, Hyatt and other physicians were talking to colleagues at the health plan's 14 medical centers in the region, citing studies that connected over-prescribing to overdoses.

"We [used] the same type of strategy that Pharma used," said drug use manager Denis Matsuoka, referring to the big drug companies. To promote opioid prescribing years ago, Big Pharma offered free seminar lunches, handed out pens and other knickknacks to reinforce essential messages. Kaiser did the same — to reduce prescriptions rather than boost them.

Still, physicians had a hard time saying no while face-to-face with insistent patients. So Steinberg asked Kaiser's tech people to reprogram the computer records system for doctors to guide their decisions in the clinic.

"We're … providing the choices to the doctors, with the ones we want them to prefer at the top: Tylenol, Motrin, physical therapy, meditation, exercise," Hyatt said. "Down at the very bottom are opioids."

Today, a Kaiser physician about to prescribe OxyContin will receive an alert that the drug has a high risk of abuse. A doctor about to prescribe a benzodiazepine to a patient already receiving an opiate painkiller — a dangerous combination — gets a large yellow alert on the computer screen, along with scientific articles describing the hazards of prescribing the two classes of drugs. The physician has to override the alert to go ahead with the prescription.

Meanwhile, Kaiser developed broader urine tests for opioids allowing doctors to establish verifiable agreements with patients about how much opiate medication they would take.

The simplest change was also the most difficult. It came from a pain specialist, Dr. Quan Nguyen, and it involved leveling with patients.

Time For The Talk
"We weren't taught to have a conversation with patients," Nguyen explained. So over the years, as he worked with people on high doses of narcotics who needed to taper down, he developed what he calls The Difficult Pain Conversation — and he presented his approach to many other doctors.

A 60-year-old grandmother named Maria, who asked that her last name not be used to protect her privacy, underwent the conversation three years ago. The Riverside resident was on high doses of fentanyl and hydrocodone for chronic back pain. She felt dopey, took long naps, forgot where she was at times and gained weight due to poor exercise and eating habits.

Dr. Kim Thai, a pain specialist at Kaiser Permanente, asked her to do things to help herself as he tapered her dosage, she said. "He was on my side," Maria said. "It felt less scary."

As the dosages dropped, Thai had her enroll in physical therapy and acupuncture; she joined a wellness program. Maria began eating better and walking up to 7,000 steps a day.

Three years later, Maria reports she no longer takes hydrocodone and is down to 25 micrograms of fentanyl every three, and sometimes up to five, days. She's lost 34 pounds. She still has pain, but less than before, and said she's learned to manage it better.

"I'm back to smiling," she said. "I enjoy our grandchildren very much. I can actually go to family functions and remember what happened."

Walter, the patient who had the motorcycle accident, had a less satisfactory experience with her doctors in Northern California. At first, she said she felt well-served by Kaiser's pain management program. She liked having access to different therapies and specialized doctors who found a regimen that would work for her.

When Walter returned to her primary care doctor, she said, he prescribed enough to make her pain tolerable for a while — but when her pain increased, he refused to prescribe more narcotics, saying, "You don't need it."

She said she heard the same thing from a neurologist who was not a pain specialist. Neither doctor consulted her former pain specialist, she said. She felt she was treated like a junkie, she said, and now makes do with her original prescriptions that include methadone and muscle relaxants.

Dr. Ramana Naidu, an assistant professor of anesthesiology and pain specialist at University of California, San Francisco, agrees with the Kaiser approach overall but cautioned that weaning patients off of opioids should be done in a "slow and gradual manner" to avoid the risk of rebound pain and a withdrawal syndrome.

He said that while it's important to discern whether patients are seeking prescriptions to abuse or sell opioids, pill counting and urine drug screens may introduce distrust into the patient-doctor relationship.

Kaiser's Hyatt said the Kaiser approach is founded on building that trust. The biggest problem he sees is patients' headlong rush for relief.

"Patients in America are impatient. They want a quick fix," said Hyatt. "But I think we've made real progress. The more we can arm physicians and pharmacists with the right information and scripting, the more likely the right thing is going to happen."

This story was produced by Kaiser Health News, which publishes California Healthline, a service of the California Health Care Foundation.

California Healthline senior editor Barbara Feder Ostrov contributed to this story.

GOP Health Plan Could Be Bitter Pill For California's Obamacare Exchange

KFF Health News, March 10, 2017

The executive director of Covered California, the state's health insurance marketplace, predicts a downward spiral if only the sickest customers hang on to coverage.

This article first appeared March 10, 2017 on Kaiser Health News.

By Chad Terhune

Republicans are touting their health plan as the right medicine for ailing insurance markets across the country, from Arizona to Tennessee.

But California never landed in sick bay. Its insurance exchange, Covered California, features the healthiest mix of customers nationwide, federal data show. That's been instrumental in holding down rates and boosting enrollment to 1.5 million.

Now state and insurance industry officials fear the replacement plan for the Affordable Care Act, introduced by GOP leaders this week, would threaten those gains. They warn that the proposal, which would cut subsidies to lower-income consumers, could undermine the broader market, driving up premiums for the wide range of Californians who purchase their own coverage.

Republicans and some industry analysts say those fears are overblown and that the GOP replacement plan would strengthen the individual insurance market by lowering premiums for young, healthy people and offering more latitude on covered benefits. In any case, the Trump administration said the plan was not final, describing it as a "work in progress."

Nearly 90 percent of Covered California enrollees rely on federal premium subsidies and many could drop coverage if they lose thousands of dollars in government assistance. And the ones who do stay insured are likely to be the sickest and costliest patients, according to some experts. In response, health insurers would be forced to significantly raise rates in the individual market, both on and off the exchange. It could mark a return to the double-digit rate hikes routinely seen before the 2010 health law.

"The worst possible thing is a market that tends to just have sick people," California Insurance Commissioner Dave Jones said. "That is exactly where the Republican proposal is taking us. It's a recipe for disaster."

Peter Lee, executive director of Covered California, predicts a downward spiral if only the sickest customers hang onto coverage. The net effect of the Republican proposal "would be to increase the costs for everyone in the individual market since the lower-income people that do enroll are likely to be sicker and costlier — raising the premiums paid by everyone covered."

Under Obamacare, premium subsidies are tied to income and the local cost of coverage. The less people earn, the more financial assistance they receive. The Republican plan pegs premium tax credits only to age, starting out at $2,000 a year for people under 30 and increasing to $4,000 for those over 60. Those credits begin to phase out for people making $75,000 a year or more.

The chief executive of Molina Healthcare, an insurer in Covered California and other exchanges, said the GOP's age-based tax credits are inadequate for people to maintain insurance. Dr. J. Mario Molina said premium rate hikes could reach 30 percent next year in California and other states if Congress and the Trump administration don't do more to stabilize the marketplaces. This year's increase in California was an average of 13.2 percent.

"This bill is not making me more optimistic about the future of the marketplaces," Molina said. "There is nothing here providing any comfort or relief."

The Blue Cross Blue Shield Association, which represents California's Anthem Blue Cross and other big insurers, expressed similar concerns in a letter this week to House Republicans.

"The flat tax credit which is adjusted by age, but not by income or premium, does not give healthy people enough incentive to stay in the market, especially in absence of an individual mandate," the group wrote.

The House plan eliminates Obamacare's individual mandate to purchase coverage in favor of a 30 percent surcharge imposed on applicants who go uncovered for longer than 63 days. Some insurers fear that proposed penalty won't draw healthier customers in and might encourage more people to wait to sign up until they're seriously ill.

The Standard & Poor's ratings agency predicted that the House Republican legislation would decrease enrollment in the individual market nationwide by 2 million to 4 million people.

But the agency did not share critics' concerns about market destabilization, saying the replacement plan would improve the overall risk pool because it would lower premiums for young people, encouraging more to sign up. For instance, the average premium for a 21-year-old could drop by 20 percent — before tax credits — because the House Republican plan eases restrictions on rating by age, according to the S&P.

The Affordable Care Act limits insurers to charging older policyholders no more than three times as much as the youngest customers. But the Republican plan might allow companies to charge five times as much.

That means a 64-year-old could see annual premiums rise by nearly 30 percent. And the GOP tax credits are less generous to many older consumers, forcing them to pick up more of the tab.

"We expect the replacement plan to result in an increase in the younger insured (ages 21-35), and a higher decline in the older insured (ages 45-64)," S&P analysts wrote.

But Covered California has less of an age imbalance than many other states, and critics of the Republican plan say the Republican changes might actually damage a market that doesn't need substantial fixing.

The exchange has spent heavily on marketing to attract young people, and during the most recent open enrollment, 18- to 34-year-olds accounted for 37 percent of new enrollees. That's up from 29 percent in 2014, when the exchange launched. In January, the federal marketplace for 39 other states reported that young adults accounted for 26 percent of sign-ups.

California had the healthiest mix of enrollees among states in 2014 and 2015, according to the latest federal data. And the state's risk score, which assesses the overall health and medical needs of patients, was about 17 percent lower than the national average, according to state officials.

That has helped Covered California outperform other state exchanges in terms of rates. The average rate increase was 4 percent the first two years before the rise to 13.2 percent, on average, for 2017. That was better than the 22 percent average rate hike in exchanges nationwide.

The state launched with a better mix of enrollees by requiring participating insurers to cancel existing individual policies at the end of 2013. That unpopular decision quickly moved people into coverage that fully complied with the health law and created one giant risk pool for rating purposes.

Howard Kahn, the former chief executive of L.A. Care Health Plan, which sells on the state exchange, said the proposed cuts in subsidies would be "disastrous for Covered California. The risk mix will be worsened. Who is going to keep coverage no matter what? Those who need it most: sick people."

This story was produced by Kaiser Health News, which publishes California Healthline, a service of the California Health Care Foundation.

Trump, Dems Look for Common Ground on Drug Prices

KFF Health News, March 9, 2017

President Trump and Health and Human Services Secretary Tom Price met privately Wednesday with two members of Congress and the president of Johns Hopkins Hospital to discuss ways to combat high drug prices.

This article first appeared March 9, 2017 on Kaiser Health News.

By Sarah Jane Tribble

For years, congressional Democrats have tried to pass legislation to allow Medicare to negotiate prescription drug prices for millions of beneficiaries.

Now, they believe they have a not-so-secret weapon: President Donald Trump.

On Wednesday, U.S. Reps. Elijah Cummings (D-Md.) and Peter Welch (D-Vt.) met privately for about an hour with Trump and newly appointed Health and Human Services Secretary Tom Price to discuss ways to combat high drug prices. They were joined by Johns Hopkins Hospital President Redonda Miller.

The congressmen pitched a House bill that would expand the federal government's ability to negotiate drug prices, and they left feeling optimistic about what Trump will do.

"He made it clear to us that he wanted to do something," Cummings said, characterizing Trump as "aware of the problem" and "enthusiastic." Cummings is ranking member of the House Committee on Oversight and Government Reform.

Trump tweeted the day before the meeting with Cummings and Welch that he is "working on a new system where there will be competition" in the drug industry. After the meeting, Trump relayed his desire to work "in a bipartisan fashion to ensure prescription drug prices are more affordable for all Americans."

Allowing the federal government to negotiate drug prices is not a new idea, but Cummings and Welch painted a picture Wednesday of a political landscape that is ripe for change. They said they have a president who "gets it."

And, Welch said, "the price is starting to kill us, we just can't afford it."

The lawmakers said they handed Trump and Price a bill to review and make comments. Cummings said he hopes to file the bill in two weeks.

A summary posted on the House committee website said the HHS secretary could negotiate lower prices with drug manufacturers under Medicare Part D, which provides coverage for prescription drugs bought at pharmacies.

An estimated 41 million Americans are covered by Part D. The drug benefit is provided through private insurers who each have their own formulary and generally use pharmacy benefit managers for drug purchasing. The latest proposal would direct the HHS secretary to establish a formulary, which is a list of allowed drugs.

The formulary would be used to "leverage" the purchasing power of the government, according to the summary.

Douglas Holtz-Eakin, a former director of the Congressional Budget Office and president of the American Action Forum, said the idea of lowering prices through Medicare Part D negotiations is "completely unrealistic."

Holtz-Eakin pointed out that insurers are already used to managing health care for beneficiaries and there are formularies in those plans. Adding into the law that the HHS secretary should be part of the negotiations merely adds a "bully pulpit," he said.

"The problem with the negotiation in Part D is not a political, partisan problem, it's that it won't work," said Holtz-Eakin.

Trump himself, though, has long embraced the idea of Medicare negotiating drug prices. On the campaign trail in January 2016, he told a crowd in New Hampshire that Medicare could "save $300 billion" a year by getting discounts as the biggest buyer of prescription drugs, according to the Associated Press.

"We don't do it. Why? Because of the drug companies," Trump said.

PhRMA, the drug industry's powerful lobbying group, says price negotiation is already happening.

"Large, powerful purchasers negotiate discounts and rebates directly with manufacturers, saving money for both beneficiaries and taxpayers," PhRMA's Holly Campbell stated in an email late Wednesday.

She pointed to a Congressional Budget Office report that said HHS would not be able to negotiate lower prices than already exist.

Trump met with pharmaceutical executives in January and told them "we have to get prices down for a lot of reasons, we have no choice."

Umer Raffat, a research analyst at Evercore ISI, said the industry felt less jittery after that meeting. They walked away understanding that Trump wants to "promote innovation" while addressing prices.

KHN's coverage of prescription drug development, costs and pricing is supported in part by the Laura and John Arnold Foundation.

Five Ways The GOP Health Bill Would Reverse Course From The ACA

Five Ways The GOP Health Bill Would Reverse Course From The ACA

KFF Health News, March 8, 2017

Still missing is an estimate from the Congressional Budget Office that will detail not only how much the proposal will cost, but also how many people would gain or lose health insurance.

This article first appeared March 8, 2017 on Kaiser Health News.

By Julie Rovner

After literally years of promises, House Republicans finally have a bill they say will "repeal and replace" the Affordable Care Act.

Some conservative Republicans have derided the new proposal — the American Health Care Act — calling it "Obamacare Lite." It keeps intact some of the more popular features of the ACA, such as allowing adult children to stay on their parents' health plans to age 26 and, at least in theory, ensuring that people with preexisting conditions will still have access to insurance.

In some cases the elements of the law that remain are due to political popularity. In others, it's because the special budget rules Congress is using — so Republicans can avoid a Senate filibuster — do not allow them to repeal the entire law.

But there are some major changes in how people would choose and pay for health care and insurance. Here are some of the biggest:

Tax Credits To Help Buy Insurance
Both the GOP bill and the ACA provide tax credits to help some people pay their premiums if they don't get insurance through work or government programs. And in both, the credits are refundable (meaning people who owe no taxes still get the money) and advanceable (so people don't have to wait until they file their taxes to get them). But the GOP's tax credits would work very differently from those already in place.

Under current law, the amount of the credit is tied to a person's income (the less you earn the more you get) and the cost of insurance where you live.

The GOP tax credits would be tied largely to age, with older people getting twice as much ($4,000 per year) as younger people ($2,000). But the Republican plan would also let insurers charge those older adults five times as much as younger adults, so even a credit twice as big might not make up the difference in the new, higher premiums.

The GOP credits also do not vary by location, so they would be worth more in places where health care and health insurance is less expensive.

The GOP credits do phase out gradually, starting with incomes above $75,000 for an individual and $150,000 for families.

Medicaid
The biggest changes the Republican bill would make are to the Medicaid program. Starting in 2020, it would roll back federal funding for the ACA's expansion that allowed states — if they so chose — to provide Medicaid coverage to all low-income individuals under 138 percent of the poverty level, rather than just the specific categories of poor people (children, pregnant women, elderly, disabled) who were previously eligible. Thirty-one states opted to pursue this ACA provision. People who are covered under the expansion would continue to be funded by the federal government after that, but states would no longer be allowed to enroll anyone under those expanded criteria. And an enrollee who loses eligibility for the expansion program could not re-enroll.

But the bill would go further as well, making changes to the underlying Medicaid program that House Energy and Commerce Committee Chairman Greg Walden (R-Ore.) described as "the biggest entitlement reform in the last 20 years."

Currently, Medicaid costs are shared between states and the federal government, but the funding is open-ended, so the federal government pays its percentage of whatever states spend. Under the proposed bill, the amount of federal funding would be capped on a per-person basis, so funding would go up as more people qualify. But that per-capita amount might not grow as fast as Medicaid costs, which could leave states on the hook for an ever-increasing share of the costs of the program.

"Capping federal contributions to the Medicaid program will likely force states with already tight budgets to limit eligibility and cut benefits to at-risk Americans," said the American Public Health Association in a statement.

Help For Wealthier People
If you earn a lot of money, or even just enough to put aside something extra for health expenses, the GOP bill will provide a lot to like.

First, it would repeal almost all of the taxes that were increased by the ACA to pay for the expansion of health coverage. Those include higher Medicare taxes for high-income earners, a tax on investment income, and various taxes on health care providers, including insurance companies, makers of medical devices and even tanning salons.

The bill would also provide new tax advantages for those who can afford to save — including allowing more money to be deposited into health savings accounts, and lower penalties for those who use those accounts to pay for non-medical needs.

In addition, the plan would lower the threshold for deducting medical expenses on income taxes and allow people with job-based tax-preferred "flexible spending accounts" to put away more money pre-tax. It would also restore over-the-counter drugs as eligible for reimbursement from those accounts.

Mandates To Buy Or Provide Coverage
The GOP plan doesn't actually repeal either the requirement for individuals to have coverage or for employers to provide it. That's because it can't under budget rules. Instead, the bill would reduce the penalties in both cases to zero, rendering the requirements moot.

The individual requirement was used by the health law to force healthy people into buying coverage to help improve insurers' risk pools since they could no longer bar customers with preexisting conditions. Instead of the requirement that most people obtain health insurance or pay a penalty, the Republican plan would provide a penalty for those who do not maintain "continuous coverage." Those with a break in insurance coverage of more than 63 days could still purchase insurance without regard to preexisting health conditions, but they would be required to pay premiums that are 30 percent higher for 12 months.

The employer "mandate," which requires firms with 50 or more workers to offer coverage or pay a fine, has actually had relatively little impact on insurance coverage, analysts have concluded, and probably is not necessary to prevent employers from dropping coverage. In both the ACA and the GOP bill, however, workers whose employers offer coverage could not decline that coverage and get a tax credit instead.

How To Pay For It
With all the taxes and fees stripped from the ACA, how will Republicans pay for their tax credits? The answer is not clear yet.

"We are still discussing details, but we are committed to repealing Obamacare and replacing it with fiscally responsible policies that restore the free market and protect taxpayers," said the Republican fact sheet that accompanied the release of the bill.

Also still missing is an estimate from the Congressional Budget Office that will detail not only how much the proposal will cost, but also how many people would gain or lose health insurance. Republicans insist that estimate will be available before the full House votes on the bill.

Three Senators Ask GAO To Investigate Possible Abuses Of The Orphan Drug Act

KFF Health News, March 7, 2017

Reports of five- and six-figure annual price tags for orphan drugs have amplified long-simmering concerns–and the lawmakers' letter reflects that sentiment.

This article first appeared March 7, 2017 on Kaiser Health News.

By Sarah Jane Tribble and Sydney Lupkin

Building on weeks of mounting pressure to address high prescription drug prices, three influential U.S. senators have asked the government's accountability arm to investigate potential abuses of the Orphan Drug Act.

In a March 3 letter to the U.S. Government Accountability Office, Sens. Orrin Hatch (R-Utah), Chuck Grassley (R-Iowa) and Tom Cotton (R-Ark.) raised the possibility that regulatory or legislative changes might be needed "to preserve the intent of this vital law" that gives drugmakers lucrative incentives to develop drugs for rare diseases.

"While few will argue against the importance of the development of these drugs, several recent press reports suggest that some pharmaceutical manufacturers might be taking advantage of the multiple designation allowance in the orphan drug approval process," the letter states.

In January, Kaiser Health News published an investigation that found the orphan drug program is being manipulated by drugmakers to maximize profits and to protect niche markets for medicines being taken by millions.

Congress overwhelmingly passed the 1983 Orphan Drug Act to motivate pharmaceutical companies to develop drugs for people whose rare diseases had been ignored. Drugs approved as orphans are granted tax incentives and seven years of exclusive rights to a market that affects fewer than 200,000 patients in the U.S.

In recent months, reports of five- and six-figure annual price tags for orphan drugs have amplified long-simmering concerns — and the letter reflects that sentiment.

The senators' letter asked for a list of drugs approved and denied orphan status by the Food and Drug Administration. It also asked whether resources at the FDA, which oversees the law, have "kept up with the number of requests" from drugmakers and whether there is consistency in the department's reviews.

KHN's investigation, which was also published and aired by NPR, found that many drugs that now have orphan status aren't entirely new. More than 70 were drugs first approved by the FDA for mass-market use. Those include cholesterol blockbuster Crestor, Abilify for psychiatric disorders and rheumatoid arthritis drug Humira, the world's best-selling drug.

Others are drugs that have received multiple exclusivity periods for two or more rare conditions. About 80 drugs fall into this latter category, including cancer drug Gleevec and wrinkle-fighting drug Botox.

Few senators are better positioned to alter the law, if they want to. Hatch, a longtime advocate of the rare disease community, said late Monday in a statement that there was little evidence to suggest the Orphan Drug Act needs to change.

Hatch is chairman of the Senate Finance Committee, which oversees 50 percent of the federal budget, including Medicaid and Medicare spending. He said the letter is requesting "the first GAO study exclusively reviewing the Orphan Drug Act, and such oversight will ensure those critical innovations are continued into the future."

Grassley, the senior senator from Iowa, chairs the Judiciary Committee and has jurisdiction over anti-competitive and patent-related issues. Grassley last month announced an inquiry into the Orphan Drug Act in response to KHN's investigation.

Cotton, a strong conservative voice, chairs the subcommittee on economic policy under the committee on banking, housing and urban affairs. In a floor speech last month, he announced that he would find a legislative solution to price hikes associated with the orphan drug program.

Cotton focused on an orphan drug that has been a flashpoint in the recent national dialogue about drug prices, arguing that the seven-year marketing exclusivity offered by the law should not have been given to Emflaza, a corticosteroid approved to treat Duchenne muscular dystrophy. Emflaza was not mentioned in the letter to the GAO.

"Monopoly rights are not merit badges," Cotton said in his speech. "They're not a reward for business smarts. They're supposed to serve the interests of patients."

Drugmaker Marathon Pharmaceuticals triggered an uproar when it announced an $89,000 annual list price for the drug, which many U.S. patients have purchased overseas for $1,000 to $1,600 a year.

Marathon responded in February by delaying the rollout of the drug, saying it will talk with stakeholders, including patients, about the price.

Last Friday, seven Democratic senators — including Sen. Elizabeth Warren of Massachusetts — and one independent sent a letter to Marathon CEO Jeff Aronin demanding information on the private drugmaker's pricing strategy.

Marathon spokeswoman Wanda Moebius released a statement saying the company is committed to ensuring that all patients who need this drug have access to it and will continue to work with the Duchenne community.

The three top senators asking the GAO to investigate the orphan drug program also expressed concern about patients, saying in their letter that "we feel it is important to include the patient voice in your review."

KHN's coverage of prescription drug development, costs and pricing is supported in part by the Laura and John Arnold Foundation.

The GOP bill maintains tax credits to encourage consumers to purchase coverage, but would configure the program much differently than the current law

House GOP Health Bill Jettisons Insurance Mandate, Much Of Medicaid Expansion

KFF Health News, March 7, 2017

The GOP bill maintains tax credits to encourage consumers to purchase coverage, but would configure the program much differently than the current law.

This article first appeared March 6, 2017 on Kaiser Health News.

By Mary Agnes Carey and Phil Galewitz

House Republicans unveiled their much anticipated health law replacement plan Monday, slashing the law's Medicaid expansion and scrapping the requirement that individuals purchase coverage or pay a fine.

But they opted to continue providing tax credits to encourage consumers to purchase coverage, although they would configure the program much differently than the current law.

The legislation would keep the health law's provisions allowing adult children to stay on their parents' health insurance plan until age 26 and prohibiting insurers from charging people with preexisting medical conditions more for coverage as long as they don't let their insurance lapse.

If they do, insurers can charge a flat 30 percent late-enrollment surcharge on top of the base premium, under the Republican bill.

In a statement, House Speaker Paul Ryan (R-Wis.) said the proposal would "drive down costs, encourage competition, and give every American access to quality, affordable health insurance. It protects young adults, patients with preexisting conditions, and provides a stable transition so that no one has the rug pulled out from under them."

The GOP plan, as predicted, kills most of the law's taxes and fees and would not enforce the so-called employer mandate, which requires certain employers to provide a set level of health coverage to workers or pay a penalty.

Democrats quickly condemned the bill. "Tonight, Republicans revealed a Make America Sick Again bill that hands billionaires a massive new tax break while shifting huge costs and burdens onto working families across American," House Minority Leader Nancy Pelosi tweeted.

"Republican will force tens of millions of families to pay more for worse coverage — and push millions of Americans off of health coverage entirely."

The legislation has been the focus of intense negotiations among different factions of the Republican Party and the Trump administration since January.

The Affordable Care Act passed in 2010 without a single Republican vote, and the party has strongly denounced it ever since, with the House voting more than 60 times to repeal Obamacare.

But more than 20 million people have gained coverage under the law, and President Donald Trump and some congressional Republicans have said they don't want anyone to lose their insurance.

When Republicans took control of both Congress and the White House this year, they did not have an agreement on the path for replacement, with some lawmakers from states that have expanded Medicaid concerned about the effect of repeal and the party's conservative wing pushing hard to jettison the entire law.

Sen. Rand Paul (R-Ky.), one of those favoring a full repeal, tweeted: "Still have not seen an official version of the House Obamacare replacement bill, but from media reports this sure looks like Obamacare Lite!"

Complicating the effort is the fact that Republicans have only 52 seats in the Senate so they cannot muster the 60 necessary to overcome a Democratic filibuster.

That means they must use a complicated legislative strategy called budget reconciliation that allows them to repeal only part of the ACA that affect federal spending.

Beginning in 2020, the GOP plan would provide tax credits to help people pay for health insurance based on household income and age, with a limit of $14,000 per family. Each member of the family would accumulate credits, ranging from $2,000 for an individual under 30 to $4,000 for people ages 60 and higher. 

The credits would begin to diminish after individuals reached an income of $75,000 — or $150,000 for joint filers.

Consumers also would be allowed to put more money into tax-free health savings accounts and would lift the $2,500 cap on flexible savings accounts beginning in 2018.

The legislation would allow insurers to charge older consumers as much as five times more for coverage than younger people. The health law currently permits a three-to-one ratio.

Community health centers would receive $422 million in additional funding in 2017 under the legislation, which also places a one-year freeze on funding for Planned Parenthood and prohibits the use of tax credits to purchase health insurance that covers abortion.

Both the Energy and Commerce and Ways and Means Committees are scheduled to mark up the legislation Wednesday. The committees do not yet have any Congressional Budget Office analysis of how much the legislation would cost or how many people it would cover.

Party leaders have said they want to have the bill to President Trump next month.

In a statement, senior Democrats on both panels said the measure would charge consumers "more money for less care. It would dramatically drive up health care costs for seniors. And repeal would ration care for more than 70 million Americans, including seniors in nursing homes, pregnant women and children living with disabilities by arbitrarily cutting and capping Medicaid," said Rep. Frank Pallone of New Jersey and Rep. Richard Neal of Massachusetts.

The House GOP plan makes dramatic changes to Medicaid, the state-federal health insurance program that covers 70 million low-income Americans. The program began in 1965 as an entitlement — which means federal and state funding is ensured regardless of cost and enrollment.

But the Republican bill would cap federal funding for Medicaid for the first time.

The federal government picks up between half and 70 percent of Medicaid costs. The percentage varies based on the relative wealth of the state.

Under the GOP plan, federal funding would be based on what the government spent in the fiscal year that ended Sept. 30. Those amounts would be adjusted annually based on a state's enrollment and medical inflation.

Currently, federal payments to states also take into account how generous the state's benefits are and what rate it uses to pay providers. That means states like New York and Vermont get higher funding than states like Nevada and New Hampshire and those differences would be locked in for future years.

Republicans have pushed to cap federal funding to states in return for giving them more control in running the program.

The legislation also affects the health law's expansion of Medicaid, in which the federal government provided enhanced funding to states to widen eligibility. The bill would also end that extra funding for anyone enrolling under the expansion guidelines starting in 2020.

But the legislation would let states keep the extra funding Obamacare provided for individuals already in the expansion program who stay enrolled.

About 11 million Americans have gained Medicaid coverage since 2014.

Changing the expansion program is a delicate balance for the Republicans. Four GOP senators from states that took that option said Monday they would oppose any legislation that repealed the expansion.

"We are concerned that any poorly implemented or poorly timed change in the current funding structure in Medicaid could result in a reduction in access to life-saving health care services," Sens. Rob Portman of Ohio, Shelley Moore Capito of West Virginia, Cory Gardner of Colorado and Lisa Murkowski of Alaska wrote in a letter to Majority Leader Mitch McConnell.

While telehealth services may boost access to a physician, they don't necessarily reduce healthcare spending, contrary to assertions by telehealth companies, research suggests

Are Virtual Doctor Visits Really Cost-Effective?

KFF Health News, March 7, 2017

While telehealth services may boost access to a physician, they don't necessarily reduce healthcare spending, contrary to assertions by telehealth companies, research suggests.

This article first appeared March 7, 2017 on Kaiser Health News.

By Ana B. Ibarra

Consultations with doctors by phone or video conference appear to be catching on, with well over a million virtual visits reported in 2015.

The convenience of "telehealth" appeals to patients, and the notion that it costs less than an in-office visit would make it attractive to employers and health plans.

But a new study suggests that while telehealth services may boost access to a physician, they don't necessarily reduce health care spending, contrary to assertions by telehealth companies.

The study, published Monday in the journal Health Affairs, shows that telehealth prompts patients to seek care for minor illnesses that otherwise would not have induced them to visit a doctor's office.

Telehealth has been around for more than a decade, but its growth has been fueled more recently by the ubiquity of smartphones and laptops, said Lori Uscher-Pines, one of the study's authors who is a policy researcher at the Rand Corp., a nonprofit think tank based in Santa Monica, Calif.

These virtual consultations are designed to replace more expensive visits to a doctor's office or emergency room. On average, a telehealth visit costs about $79, compared with about $146 for an office visit, according to the study. But it found that virtual visits generate additional medical use.

"What we found is contrary to what [telehealth] companies often say," Uscher-Pines told California Healthline. "We found an increase in spending for the payer."

The researchers found that only 12 percent of telemedicine visits replaced an in-person provider visit, while 88 percent represented new demand.

The researchers examined 2011-13 utilization data of 300,000 people enrolled in the Blue Shield of California Health Maintenance Organization plan offered by the California Public Employees Retirement System, which covers current and former state employees and their families. CalPERS' Blue Shield HMO started offering telehealth services, available 24/7 to its beneficiaries, in April 2012.

The researchers focused on virtual visits for respiratory illnesses, which include sinusitis, bronchitis, pneumonia and tonsillitis, among others.

While a single telehealth visit for a respiratory illness costs less than an in-person visit, it often results in more follow-up appointments, lab tests and prescriptions, which increases spending in the long run. Liability concerns may prompt telehealth physicians to recommend that a patient go in for a face-to-face appointment with a doctor, the study notes.

Researchers estimated that annual spending for respiratory illnesses increased about $45 per telehealth user, compared with patients who did not take advantage of such virtual consultations.

Jason Gorevic, the CEO at Teladoc, the operator that provides telehealth services for CalPERS Blue Shield members, said the new study doesn't square with Teladoc data showing the cost savings of telemedicine.

According to 2016 data, Gorevic said, only 13 percent of Teladoc visits represent new medical use. He noted that the Rand study uses older data, and that many things have changed since then — including the technology, the rate at which these services are being adopted and patient engagement.

"In fact, other more comprehensive studies — using six times the amount of claims data including the same population as the [Rand] study — have found tremendous value of telehealth, with consistently repeatable results," Gorevic said. These other studies have shown that telehealth decreases overall health care spending, he said. But Uscher-Pines said the Rand findings were not surprising.

When Rand researchers studied retail clinics last year, they found that making access to health care more convenient triggers new use and additional costs. That study found 58 percent of visits to in-store clinics represented new use of medical services rather than a substitute for doctor office visits.

Yet the fact that telehealth services are more affordable per visit than a trip to a physician's office shows that there is still a pathway to cost savings, Uscher-Pines said.

To achieve cost savings, telehealth services would have to replace costlier visits, the researcher said. Insurers could increase telehealth visit costs for patients to deter unnecessary use. Another way to increase the health system value of virtual doctor visits is to target specific groups of patients — such as those who often use emergency rooms for less severe illnesses. An emergency room visit costs an estimated $1,734.

"You could take these people in the emergency department and offer them this cheaper option. That would be a direct replacement," Uscher-Pines said.

Gorevic said that a challenge for telehealth is engaging consumers, so the comparatively low fees provide a financial incentive.

"Because a telehealth visit is much cheaper than an in-person visit, the cost sharing should be reflective of that," he said.

Marcus Thygeson, senior vice president and chief health officer at Blue Shield, which also provides virtual doctor visits through Teladoc, in a statement said that "increased convenience can increase utilization, so overall healthcare costs may increase or stay the same. Blue Shield supports the use of telemedicine to improve access for both primary and specialty healthcare, especially in rural communities."

The researchers noted several limitations to the Rand study. For example, researchers examined only one telehealth company and studied only visits for respiratory illnesses. In addition, the patients whose data were scrutinized had commercial insurance, and it is possible the use of telehealth would differ among people with government insurance, high-deductible plans or no insurance at all, the study said.

This story was produced by Kaiser Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.

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