KFF Health News

KFF Health News is a national health policy news service that is part of the nonpartisan Henry J. Kaiser Family Foundation.

In Fight Over Medicare Payments, the Hospital Lobby Shows Its Strength

KFF Health News, February 13, 2024

Hospitals argue they need the extra money because they have higher costs.

This article was published on Tuesday, February 13, 2024 in KFF Health News.

By Phil Galewitz and Colleen DeGuzman

In the battle to control healthcare costs, hospitals are deploying their political power to protect their bottom lines.

The point of contention: For decades, Medicare has paid hospitals — including hospital-owned physician practices that may not be physically located in a hospital building — about double the rates it pays other doctors and facilities for the same services, such as mammograms, colonoscopies, and blood tests.

The rationale has been that hospitals have higher fixed costs, such as 24/7 emergency rooms and uncompensated care for uninsured people.

Insurers, doctors, and consumer advocates have long complained it's an unequal and unfair arrangement that results in higher costs for patients and taxpayers. It's also a profit incentive for hospitals to buy up physician practices, which health economists say can lead to hospital consolidation and higher prices.

In December, the House passed a bill that included a provision requiring Medicare to pay the same rates for medical infusions, like chemotherapy and many treatments for autoimmune conditions, regardless of whether they're done in a doctor's office or clinic owned by a hospital or by a different entity. The policy, known as site-neutral payment, has sparked a ferocious lobbying battle in the Senate, not the first of its kind, with hospitals determined to kill such legislation.

Don't bet against them. The House legislation would save Medicare an estimated $3.7 billion over a decade, according to the Congressional Budget Office. To put this in perspective, the program is projected to pay hospitals upward of $2 trillion during that same period. But hospitals have long argued that any adoption of site-neutral payments would force them to cut jobs or services, or close facilities altogether — particularly in rural areas. And senators are listening.

"The Senate is very much attuned to rural concerns," Sen. Ron Wyden (D-Ore.), who chairs the Finance Committee, told KFF Health News. His panel has jurisdiction over Medicare, the health program for seniors and people with disabilities.

"I have heard lots of questions about how these proposals would affect rural communities and rural facilities," he said. "So we're taking a look at it."

Outpatient departments at rural hospitals can have outsize importance to their communities. Taking any funding away from stand-alone rural hospitals is seen as risky. Scores have closed in the past decade due to financial problems. With fewer patients, rural hospitals often struggle to attract doctors and update technology amid rising costs.

Sen. Bill Cassidy (R-La.), a physician who also serves on the Finance Committee, indicated he was apprehensive about the legislation.

"In some cases," he said, higher Medicare payments for hospitals are "justified."

"In some cases, it doesn't seem to be," he said. He told KFF Health News he was planning to introduce legislation on the issue but didn't provide details, and his office didn't respond to inquiries.

As the two senators show, the issue doesn't break cleanly along partisan lines. In December, the House easily passed the Lower Costs, More Transparency Act, the broader bill that included this Medicare payment change, with 166 Republicans and 154 Democrats voting in favor.

"It's more about how close different members are to the hospital industry," said Matthew Fiedler, a former White House health economist under President Barack Obama and now a senior fellow at the Brookings Institution.

The American Hospital Association describes the site-neutral policy as a "cut" to hospital Medicare payments and said in a statement to a House subcommittee that it "disregards important differences in patient safety and quality standards required in these facilities."

Chip Kahn, president and CEO of the Federation of American Hospitals, which represents for-profit hospitals, offered a similar characterization of the House-passed legislation. "This is no time for so-called ‘site neutral' Medicare cuts that could harm beneficiaries," he said in a statement. He urged lawmakers to drop the policy from the broader bill and instead prioritize access to hospital care for patients by not only protecting Medicare, but also strengthening the healthcare safety net.

Hospitals argue they need the extra money because they have higher costs, said Salama Freed, an assistant professor of health policy and management at George Washington University and a nonresident fellow at KFF. But "it doesn't necessarily warrant the amount that they end up getting paid for this," she said.

The Medicare Payment Advisory Commission, which advises Congress on the program, has recommended implementing site-neutral payments for over a decade.

"This is not a hospital cut. It is rolling back an unethical price increase," said Mark Miller, a former MedPAC executive director who's now an executive vice president at Arnold Ventures, a philanthropy founded by John and Laura Arnold, an energy industry investor and an attorney, respectively.

Large hospital systems with the money to buy physician practices, Miller said, have exploited the disparity between Medicare payments to physician offices and hospitals to increase their revenue and consolidate.

Arnold Ventures advocates for site-neutral payments and its leaders have discussed the issue with lawmakers. (The organization has also provided funding for KFF Health News.)

Miller said he's hopeful the site-neutral provision of the House bill will be part of a larger government spending bill that must be passed next month to keep the government open. If lawmakers need to offset the bill's costs, "then it is more likely to get in the funding package," he said.

Though the House-passed legislation is viewed as an "incremental" change, said Fiedler, it faces a rough path forward. Evening out Medicare payment for physician-administered drugs, hospitals fear, could lead to similar moves for other outpatient services.

"Hospitals have a lot of money at stake and will fight this hard," he said. "Hospitals feel if they lose here, down the road there will be more substantial steps."

Phil Galewitz: pgalewitz@kff.org, @philgalewitz

Colleen DeGuzman: cdeguzman@kff.org, @acolleendg

States Target Health Insurers' 'Prior Authorization' Red Tape

KFF Health News, February 12, 2024

Last year, lawmakers in 29 states and Washington, D.C., considered some 90 bills to limit prior authorization requirements.

This article was published on Monday, February 12, 2024 in KFF Health News.

By Bram Sable-Smith

Christopher Marks noticed an immediate improvement when his doctor prescribed him the Type 2 diabetes medication Mounjaro last year. The 40-year-old truck driver from Kansas City, Missouri, said his average blood sugar reading decreased significantly and that keeping it within target range took less insulin than before.

But when his doctor followed the typical prescribing pattern and increased his dose of Mounjaro — a drug with a wholesale list price of more than $1,000 a month — Marks' health insurer declined to pay for it.

Marks had Cigna insurance that he purchased on the federal health insurance marketplace, healthcare.gov. After two appeals over a month and a half, Cigna agreed to cover the higher dose. A few months later, he said, when it was time to up his dose once more, he was denied again. By November, he decided it wasn't worth sparring with Cigna anymore since the insurer was leaving the marketplace in Missouri at the start of this year. He decided to stay on the lower dose until his new insurance kicked in.

"That is beyond frustrating. People shouldn't have to be like, 'It's not worth the fight to get my medical treatment,'" Marks said.

The process Marks encountered is called "prior authorization," or sometimes "pre-certification," a tool insurers say they use to rein in costs and protect patients from unnecessary or ineffective medical treatment. But the practice has prompted backlash from patients like Marks, as well as groups representing medical professionals and hospitals that say prior authorization can interfere with treatment, cause medical provider burnout, and increase administrative costs.

In January, the Biden administration announced new rules to streamline the process for patients with certain health plans, after attempts stalled out in Congress, including a bill that passed the House in 2022. But states are considering prior authorization bills that go even further. Last year, lawmakers in 29 states and Washington, D.C., considered some 90 bills to limit prior authorization requirements, according to the American Medical Association, with notable victories in New Jersey and Washington, D.C. The physicians association expects more bills this year, many with provisions spelled out in model legislation the group drafted.

In 2018, health insurers signed a consensus statement with various medical facility and provider groups that broadly laid out areas for improving the prior authorization process. But the lack of progress since then has shown the need for legislative action, said Jack Resneck Jr., past president of the AMA and a current trustee.

"They have not lived up to their promises," Resneck said.

Resneck, a California dermatologist, emphasized pending bills in Indiana, Massachusetts, North Carolina, Oklahoma, and Wyoming that include several policies backed by the AMA, including quicker response times, requirements for public reporting of insurers' prior authorization determinations, and programs to reduce the volume of requests, sometimes called "gold carding." Legislation has come from both Democratic and Republican lawmakers, and some is bipartisan, as in Colorado.

In Missouri, legislation introduced by Republican state Rep. Melanie Stinnett aims to establish one of those gold carding programs for treatment and prescriptions. Stinnett said she regularly was frustrated by prior authorization hurdles in her work as a speech pathologist before joining the legislature in 2023.

"The stories all kind of look similar: It's a big fight to get something done on the insurance side for approval," Stinnett said. "Then sometimes, even after all of that fight, it feels like it may have not been worthwhile because some people then have a change at the beginning of the year with their insurance."

Under her bill, a medical provider's prior authorization requests during a six-month evaluation period would be reviewed. After that period, providers whose requests were approved at least 90% of the time would be exempt from having to submit requests for the next six months. The exemptions would also apply to facilities that meet that threshold. Then, she said, they would need to continue meeting the threshold to keep the "luxury" of the exemption.

Five states have passed some form of gold carding program: Louisiana, Michigan, Texas, Vermont, and West Virginia. The AMA is tracking active gold carding bills in 13 states, including Missouri.

A 2022 survey of 26 health insurance plans conducted by the industry trade group AHIP found that just over half of those plans had used a gold carding program for medical services while about a fifth had done so for prescriptions. They gave mixed reviews: 23% said patient safety improved or stayed the same, while 20% said the practice increased costs without improving quality.

The new federal prior authorization rules finalized by the Centers for Medicare & Medicaid Services stop short of gold carding and don't address prior authorizations for prescription drugs, like Marks' Mounjaro prescription. Beginning in 2026, the new rules establish response time frames and public reporting requirements — and ultimately will mandate an electronic process — for some insurers participating in federal programs, such as Medicare Advantage or the health insurance marketplace. Manual submissions accounted for 39% of prior authorization requests for prescriptions and 60% of those for medical services, according to the 2022 insurance survey.

In Missouri, state and national organizations representing doctors, nurses, social workers, and hospitals, among others, back Stinnett's bill. Opposition to the plan comes largely from pharmacy benefit managers and the insurance industry, including the company whose prior authorization process Marks navigated last year. A Cigna Healthcare executive submitted testimony saying the company's experience showed gold card policies "increase inappropriate care and costs."

The St. Louis Area Business Health Coalition, which represents dozens of employers that purchase health insurance for employees, also opposes the bill. Members of the coalition include financial services firm Edward Jones, coal company Peabody Energy, and aviation giant Boeing, as well as several public school districts and the St. Louis city and county governments.

Louise Probst, the coalition's executive director, said the prior authorization process has issues but that the coalition would prefer that a solution come from insurers and providers rather than a new state law.

"The reason I hate to see things just set in stone is that you lose the flexibility and the nuance that could be helpful to patients," Probst said.

On the other side of the state, Marks purchased insurance for this year on the federal marketplace from Blue Cross and Blue Shield of Kansas City. In January, his doctor re-prescribed the higher dose of Mounjaro that Cigna had declined to cover. A little over a week later, Marks said, his new insurance approved the higher dose "without any fuss."

Cigna spokesperson Justine Sessions said the company uses prior authorizations for popular drugs such as Mounjaro to help ensure patients get the right medications and dosages.

"We strive to make authorizations quickly and correctly, but in Mr. Marks' case, we fell short and we greatly regret the stress and frustration this caused," she said. "We are reviewing this case and identifying opportunities for improvement to ensure this does not happen in the future."

Marks' aim with this higher dose of Mounjaro is to get off his other diabetes medications. He particularly hopes to stop taking insulin, which for him requires multiple injections a day and carries a risk of dangerous complications from low blood sugar.

"I don't really use the word 'life-changing,' but it kind of is," Marks said. "Getting off insulin would be great."

Do you have an experience with prior authorization you'd like to share? Click here to tell your story.

Bram Sable-Smith: brams@kff.org, @besablesBram Sable-Smith: brams@kff.org, @besables

Halfway Through 'Unwinding,' Medicaid Enrollment Is Down About 10M

KFF Health News, February 7, 2024

Two-thirds of the 48 million beneficiaries who have had their eligibility reviewed so far got their coverage renewed.

This article was published on Wednesday, February 7, 2024 in KFF Health News.

By Phil Galewitz

Halfway through what will be the biggest purge of Medicaid beneficiaries in a one-year span, enrollment in the government-run health insurance program is on track to return to roughly pre-pandemic levels.

Medicaid, which covers low-income and disabled people, and the related Children's Health Insurance Program grew to a record 94 million enrollees as a result of a rule that prohibited states from terminating coverage during the nation's public health emergency.

But since last April, states have removed more than 16 million people from the programs in a process known as the "unwinding," according to KFF estimates compiled from state-level data.

While many beneficiaries no longer qualify because their incomes rose, millions of people have been dropped from the rolls for procedural reasons like failing to respond to notices or return paperwork. But at the same time, millions have been reenrolled or signed up for the first time.

The net result: Enrollment has fallen by about 9.5 million people from the record high reached last April, according to KFF. That puts Medicaid and CHIP enrollment on track to look, by the end of the unwinding later this year, a lot like it did at the start of the coronavirus pandemic: about 71 million people.

"What we are seeing is not dissimilar to what we saw before the pandemic — it is just happening on a bigger scale and more quickly," said Larry Levitt, executive vice president for health policy at KFF.

Enrollment churn has long been a feature of Medicaid. Before the pandemic, about 1 million to 1.5 million people nationwide fell off the Medicaid rolls each month — including many who still qualified but failed to renew their coverage, Levitt said.

During the unwinding, many people have been disenrolled in a shorter time. In some ways — and in some states — it's been worse than expected.

The Biden administration predicted about 15 million people would lose coverage under Medicaid or CHIP during the unwinding period, nearly half due to procedural issues. Both predictions have proven low. Based on data reported so far, disenrollments are likely to exceed 17 million, according to KFF — 70% due to procedural reasons.

But about two-thirds of the 48 million beneficiaries who have had their eligibility reviewed so far got their coverage renewed. About one-third lost it.

The federal government has given most states 12 months to complete their unwinding, starting with the first disenrollments between last April and October.

Timothy McBride, a health economist at Washington University in St. Louis, said the nation's historically low unemployment rate means people who lose Medicaid coverage are more likely to find job-based coverage or be better able to afford plans on Obamacare marketplaces. "That is one reason why the drop in Medicaid is not a lot worse," he said.

There are big differences between states. Oregon, for example, has disenrolled just 12% of its beneficiaries. Seventy-five percent have been renewed, according to KFF. The rest are pending.

At the other end of the spectrum, Oklahoma has dumped 43% of its beneficiaries in the unwinding, renewing coverage for just 34%. About 24% are pending.

States have varying eligibility rules, and some make it easier to stay enrolled. For instance, Oregon allows children to stay on Medicaid until age 6 without having to reapply. All other enrollees get up to two years of coverage regardless of changes in income.

Jennifer Harris, senior health policy advocate for Alabama Arise, an advocacy group, said her state's Medicaid agency and other nonprofit organizations communicated well to enrollees about the need to reapply for coverage and that the state also hired more people to handle the surge. About 29% of beneficiaries in Alabama who've had eligibility reviews were disenrolled for procedural reasons, KFF found.

"Things are even keel in Alabama," she said, noting that about 66% of enrollees have been renewed.

State officials have told the legislature that about a quarter of people disenrolled during the unwinding were reenrolled within 90 days, she said.

One of a handful of states that have refused to expand Medicaid under the Affordable Care Act, Alabama had about 920,000 enrollees in Medicaid and CHIP in January 2020. That number rose to about 1.2 million in April 2023.

More than halfway into the unwinding, the state is on track for enrollment to return to pre-pandemic levels, Harris said.

Joan Alker, executive director of the Georgetown University Center for Children and Families, said she remains worried the drop in Medicaid enrollment among children is steeper than typical. That's particularly bothersome because children usually qualify for Medicaid at higher household income levels than their parents or other adults.

During the unwinding 3.8 million children have lost Medicaid coverage, according to the center's latest data. "Many more kids are falling off now than prior to the pandemic," Alker said.

And when they're dropped, many families struggle to get them back on, she said. "The whole system is backlogged and the ability of people to get back on in a timely fashion is more limited," she said.

The big question, Levitt said, is how many of the millions of people dropped from Medicaid are now uninsured.

The only state to survey those disenrolled — Utah — discovered about 30% were uninsured. Many of the rest found employer health coverage or signed up for subsidized coverage through the Affordable Care Act marketplace.

What's happened nationwide remains unclear.

Phil Galewitz: pgalewitz@kff.org, @philgalewitz

Surge in Syphilis Cases Leads Some Providers to Ration Penicillin

KFF Health News, February 1, 2024

Nationwide, syphilis rates are at a 70-year high.

This article was published on Thursday, February 1, 2024 in KFF Health News.

By Catherine Sweeney, WPLN

When Stephen Miller left his primary care practice to work in public health a little under two years ago, he said, he was shocked by how many cases of syphilis the clinic was treating.

For decades, rates of the sexually transmitted infection were low. But the Hamilton County Health Department in Chattanooga — a midsize city surrounded by national forests and nestled into the Appalachian foothills of Tennessee — was seeing several syphilis patients a day, Miller said. A nurse who had worked at the clinic for decades told Miller the wave of patients was a radical change from the norm.

What Miller observed in Chattanooga is reflective of a trend that is raising alarm bells for health departments across the country.

Nationwide, syphilis rates are at a 70-year high. The Centers for Disease Control and Prevention said Jan. 30 that 207,255 cases were reported in 2022, continuing a steep increase over five years. Between 2018 and 2022, syphilis rates rose about 80%. The epidemic of sexually transmitted infections — especially syphilis — is "out of control," said the National Coalition of STD Directors.

The surge has been even more pronounced in Tennessee, where infection rates for the first two stages of syphilis grew 86% between 2017 and 2021.

But this already difficult situation was complicated last spring by a shortage of a specific penicillin injection that is the go-to treatment for syphilis. The ongoing shortage is so severe that public health agencies have recommended that providers ration the drug — prioritizing pregnant patients, since it is the only syphilis treatment considered safe for them. Congenital syphilis, which happens when the mom spreads the disease to the fetus, can cause birth defects, miscarriages, and stillbirths.

Across the country, 3,755 cases of congenital syphilis were reported to the CDC in 2022 — that's 10 times as high as the number a decade before, the recent data shows. Of those cases, 231 resulted in stillbirth and 51 led to infant death. The number of cases in babies swelled by 183% between 2018 and 2022.

"Lack of timely testing and adequate treatment during pregnancy contributed to 88% of cases of congenital syphilis," said a report from the CDC released in November. "Testing and treatment gaps were present in the majority of cases across all races, ethnicities, and U.S. Census Bureau regions."

Hamilton County's syphilis rates have mirrored the national trend, with an increase in cases for all groups, including infants.

In November, the maternal and infant health advocacy organization March of Dimes released its annual report on states' health outcomes. It found that, nationwide, about 15.5% of pregnant people received care beginning in the fifth month of pregnancy or later — or attended fewer than half the recommended prenatal visits. In Tennessee, the rate was even worse, 17.4%.

But Miller said even those who attend every recommended appointment can run into problems because providers are required to test for syphilis only at the beginning of a pregnancy. The idea is that if you test a few weeks before birth, there is time to treat the infection.

However, that recommendation hinges on whether the provider suspects the patient was exposed to the bacterium that causes syphilis, which may not be obvious for people who say their relationships are monogamous.

"What we found is, a lot of times their partner was not as monogamous, and they were bringing it into the relationship," Miller said.

Even if the patient tested negative initially, they may have contracted syphilis later in pregnancy, when testing for the disease is not routine, he said.

Two antibiotics are used to treat syphilis, the injectable penicillin and an oral drug called doxycycline.

Patients allergic to penicillin are often prescribed the oral antibiotic. But the World Health Organization strongly advises pregnant patients to avoid doxycycline because it can cause severe bone and teeth deformities in the infant.

As a result, pregnant syphilis patients are often given penicillin, even when they're allergic, using a technique called desensitization, said Mark Turrentine, a Houston OB-GYN. Patients are given low doses in a hospital setting to help their bodies get used to the drug and to check for a severe reaction. The penicillin shot is a one-and-done technique, unlike an antibiotic, which requires sticking to a two-week regimen.

"It's tough to take a medication for a long period of time," Turrentine said. The single injection can provide patients and their clinicians peace of mind. "If they don't come back for whatever reason, you're not worried about it," he said.

The Metro Public Health Department in Nashville, Tennessee, began giving all nonpregnant adults with syphilis the oral antibiotic in July, said Laura Varnier, nursing and clinical director.

Turrentine said he started seeing advisories about the injectable penicillin shortage in April, around the time the antibiotic amoxicillin became difficult to find and physicians were using penicillin as a substitute, potentially precipitating the shortage, he said.

The rise in syphilis has created demand for the injection that manufacturer Pfizer can't keep up with, according to the American Society of Health-System Pharmacists. "There is insufficient supply for usual ordering," the ASHP said in a memo.

Even though penicillin has been around a long time, manufacturing it is difficult, largely because so many people are allergic, said Erin Fox, associate chief pharmacy officer for the University of Utah health system and an adjunct professor at the university, who studies drug shortages.

"That means you can't make other drugs on that manufacturing line," she said. Only major manufacturers like Pfizer have the resources to build and operate such a specialized, cordoned-off facility. "It's not necessarily efficient — or necessarily profitable," Fox said.

In a statement, Pfizer confirmed the amoxicillin shortage and surge in syphilis increased demand for injectable penicillin by about 70%. Representatives said the company invested $38 million in the facility that produces this form of penicillin, hiring more staff and expanding the production line.

"This ramp up will take some time to be felt in the market, as product cycle time is 3-6 months from when product is manufactured to when it is available to be released to customers," the statement reads. The company estimated the shortage would be significantly alleviated by spring.

In the meantime, Miller said, his clinic in Chattanooga is continuing to strategize. Each dose of injectable penicillin can cost hundreds of dollars. Plus, it has to be placed in cold storage, and it expires after 48 months.

Even with the dramatic increase in cases, syphilis is still relatively rare. More than 7 million people live in Tennessee, and in 2019, providers statewide reported 683 cases of syphilis.

Health departments like Miller's treat the bulk of syphilis patients. Many patients are sent by their provider to the health department, which works with contact tracers to identify and notify sexual partners who might be affected and tests patients for other sexually transmitted infections, including HIV.

"When you diagnose in the office, think of it as just seeing the tip of the iceberg," Miller said. "You need a team of individuals to be able to explore and look at the rest of the iceberg."

This story is part of a partnership that includes WPLN, NPR, and KFF Health News.

Catherine Sweeney, WPLN: csweeney@wpln.org, @CathJSweeney

The FTC Is Attacking Drugmakers' 'Patent Thickets'

KFF Health News, January 31, 2024

Regulators say drugmakers illegitimately use the patents to prevent competitors from offering cheaper generics.

This article was published on Wednesday, January 31, 2024 in KFF Health News.

By Elisabeth Rosenthal

The Federal Trade Commission has challenged the validity of over 100 drug product patents, focusing on devices used to deliver medicines, like inhalers and autoinjectors, in an effort to increase competition and potentially lower some prices.

The FTC says drugmakers illegitimately use the patents to prevent competitors from offering cheaper generic alternatives.

It's the first time the FTC has tried the tactic, said Hannah Garden-Monheit, director of the FTC's Office of Policy Planning.

"We are using all the tools we have to bring down drug prices and reduce barriers to generic competition," she said in an interview.

President Joe Biden has instructed his Federal Trade Commission to be more aggressive in reining in the pharmaceutical industry. Under its chairperson, Lina Khan, the agency is aggressively testing the limits of its powers in pursuit of that goal.

The targeted patents cover devices that propel medicines for asthma and emphysema into the lungs or inject epinephrine to treat a severe allergic attack. Drugmakers list them in the FDA's "Orange Book," which can afford the products greater protection from generic competition.

Many of the medicines delivered by the devices are decades old, years off patent. But manufacturers have long tweaked the delivery methods, patenting the changes, in ways that sometimes make the drugs more convenient to administer.

They might, for example, change the propellant in an inhaler or add a counter that tells a patient how many doses are left. Autoinjectors mean patients don't see a needle or syringe but merely press a device with a hidden needle against the skin to deliver the medicine. Some autoinjectors even talk patients through the process.

Though there has long been a procedure for disputing the validity of Orange Book-listed patents, it is rarely used.

In challenging Orange Book listings, the FTC is trying to cut away at what are known as patent thickets. While a single patent once would cover a single active medicine, many drugs today are protected by half a dozen patents or more, creating additional obstacles for cheaper generics seeking to enter the market.

The move is critically important because drugmakers frequently extend the 20-year patent protection of a drug by changing the delivery device or method. For example, instead of a pill, they make a capsule. Or instead of a dose every six hours, they create a longer-acting, once-a-day version. They can also alter the process by which a drug is made — so-called "process patents."

Each tweak gets a new patent, which the manufacturer then adds to its official compendium of drug patents. There is no advance scrutiny of listings by regulators.

Generic drugmakers wishing to make a copycat version of a branded drug generally have to challenge the patents in court. But merely listing a patent in the Orange Book automatically triggers a 2½-year delay of FDA approval of a litigating generic competitor.

The FTC says patent law protects active ingredients, not delivery methods.

The pharmaceutical industry, already battling the Biden administration's plan to negotiate prices of some drugs for Medicare patients, says it wants more clarity about which aspects of its products can be patented.

"The underlying statute is not clear about listing certain types of drug delivery device patents, and the industry has long asked for the FDA to provide guidance," said Megan Van Etten, a spokesperson for Pharmaceutical Research and Manufacturers of America, the industry trade group, in an email. "We're disappointed that the FTC has characterized companies as acting inappropriately rather than help seek the clarity the industry needs to ensure compliance."

After an FTC challenge, companies have 30 days to withdraw or amend the patent or show it is valid. Some have already backed down.

"We've had some significant wins," Garden-Monheit said. After the FTC's challenge, drugmaker GSK, formerly GlaxoSmithKline, withdrew all patents on two popular inhalers for asthma, Advair and Flovent, both of which contained old off-patent medicines but nonetheless cost hundreds of dollars. Amneal Pharmaceuticals withdrew patents on its epinephrine injector.

Still, the deadline for companies to respond to the first set of warning letters has passed and only about 30% of those that received them answered, leaving the commission to ponder its next steps. The FTC could take a drugmaker to court to seek a cease-and-desist order.

And Garden-Monheit said the agency is poised to look at other types of patents that may be invalid, which pile up to add to the thicket. There are thousands of patents in the Orange Book.

"We are taking a close and active look at this," Garden-Monheit said. "Companies who haven't received a letter from us challenging a patent shouldn't think they're off the hook."

Elisabeth Rosenthal: erosenthal@kff.org, @RosenthalHealth

Where Are the Nation's Primary Care Providers? It's Not an Easy Answer

KFF Health News, January 30, 2024

The federal government counts only physicians, not other clinicians who now provide much of our nation's primary care.

This article was published on Tuesday, January 30, 2024 in KFF Health News.

By Rae Ellen Bichell

Clinicians at Valley-Wide Health Systems never know who will appear at their clinic in San Luis, a town of about 600 people in southern Colorado.

"If someone's in labor, they'll show up. If someone has a laceration, they'll show up," said nurse practitioner Emelin Martinez, the chief medical officer for the health care system serving 13 rural Colorado counties.

But she struggled to find a full-time medical provider for that clinic, the only one in Costilla County. Born and raised in the area, Martinez filled some of the gap by driving about 45 minutes from Alamosa, the nearest city, once a week for months. A physician assistant from another town chipped in, too.

As one of the nation's more than 1,000 federally designated primary care shortage areas, Costilla County has many carrots to dangle in front of medical providers willing to practice there, including federal student loan repayments, bonus Medicare payments, and expedited visas for foreign clinicians. Still, Martinez said, its latest opening remained unfilled for more than a year. Not a single physician applied.

Policymakers have long tried to lure more primary care providers to the areas of the nation that have fewer than one physician for every 3,500 residents. Recent examples include the Biden administration boosting funding in 2022 to address shortages and Sen. Bernie Sanders (I-Vt.) pushing sweeping primary care legislation in 2023.

But researchers steeped in the issue have a persistent frustration: It's hard to know if any policy is working given that the data the federal government collects on primary care shortage areas has been flawed for a long time. One of the biggest gaps is that the system counts only physicians, not the myriad other health care professionals who now provide much of our nation's primary care.

Additionally, a Health Affairs study shows the federal designations, which help allocate an estimated $1 billion in annual funding through at least 20 federal programs aimed at boosting primary care capacity, haven't helped much.

In fact, Costilla County is among more than 180 federally designated areas that have remained stuck on the primary care shortage list for at least 40 years, according to a KFF Health News analysis. That's even as the overall number of licensed U.S. physicians more than doubled from 1990 to 2022 to over 1 million, according to the Federation of State Medical Boards, outpacing overall population growth.

No one disputes that much of the nation is starved for primary care clinicians, with patients having to wait weeks to get appointments or travel long distances for basic preventive care. Many doctors decide against primary care career paths, let alone practicing in isolated communities, because those jobs entail heavy workloads and earn less money and respect than specialists. But how does the nation solve the problem without knowing exactly where it is? And what tools must be used? Does a physician need to be the one providing the care?

Whitney Zahnd, president of the board of the Iowa Rural Health Association, said the fact that some rural areas have had such federal shortage designations for decades doesn't prove they are ineffective. "Had the program not been there, would it have been even worse?" she said.

Federal funding supports 18,000 primary care doctors, nurse practitioners, and physician assistants to provide care to more than 18 million patients in the highest-need urban and rural communities across the country, said David Bowman, a spokesperson for the Health Resources and Services Administration, which manages the shortage designations. He said more than 80% of clinicians who get such scholarships or loan repayments continue to practice in shortage areas beyond their obligation of several years.

But that doesn't mean they stick around forever.

Justin Markowski, a Yale School of Public Health doctoral student, co-authored the Health Affairs study that found the federal shortage designation makes no difference in upping physician density long-term. He is skeptical of policy ideas that promise big primary care fixes. That includes the Biden administration's investment in more scholarships and loan repayments through the National Health Service Corps.

"You're just throwing more money at a set of programs that don't really seem to work," he said. "We'll see in a few years, but I'll be shocked if it actually moved any physicians or any other advanced practice providers."

One possible explanation for the persistence of shortage areas is that such incentives are too small or too fleeting.

But another issue is how shortages are measured. The government considers geographic shortage areas, now numbering just over 1,000, but also population groups such as migrant farmworkers and individual facilities such as prisons that lack enough providers. Yet it's up to state offices to identify populations and locations that might qualify as shortage areas and submit them to HRSA, which then scores the extent of any shortages. The funding and staffing for those state offices vary, creating an uneven foundation from which to map actual shortages.

"Some states became very adept at the equivalent of gerrymandering, where they were piecing together census blocks or census tracts in odd shapes in order to maximize the areas that are eligible," said Stephen Petterson, a senior scholar at the Robert Graham Center, a policy think tank in Washington, D.C., that focuses on primary care.

The federal Government Accountability Office has highlighted such issues since at least 1995, when it released a report identifying widespread data problems with the shortage area system and concluding it had "little assurance that federal funds are used where most needed." The report noted one of the persistent shortcomings is that the system counts only physicians, not other key primary care providers.

Since 1998, federal officials have made three attempts to update the 1970s-era rules that define what counts as a shortage area. The authors of the Affordable Care Act tried most recently, tasking a committee of experts to decide on an update.

Among other things, the committee concluded in its 2011 report that nurse practitioners, physician assistants, and certified nurse midwives should be counted as primary care providers. But the recommendations fell short by just a handful of votes.

"We failed and the committee as a whole failed and HRSA failed by not moving the process forward," said Petterson, who presented to the committee on how to comprehensively measure primary care needs.

Steve Holloway, who directs the Colorado health department's Primary Care Office, served on the committee. Without action at the federal level, he then led a team to create Colorado's own health professional shortage area designations that factor in nurse practitioners and physician assistants, not just doctors.

He said it's taken about six years to create a tool and map of Colorado to answer a deceptively simple question: "How many actual flesh-and-blood, live clinicians are seeing patients?"

Ed Salsberg, who was the lead federal government representative on that committee and who headed HRSA's National Center for Health Workforce Analysis, said the rest of the nation needs more precise data, too.

"It's so important for the nation to target its resources to the highest-need communities," he said. "It's time again to try one more time to develop an improved methodology."

In the past few years, more readily available data from insurance claims has allowed researchers to distinguish the medical providers who are practicing primary care from those who have specialized or retired.

Candice Chen, an associate professor of health policy and management at George Washington University's Fitzhugh Mullan Institute for Health Workforce Equity, used claims data that reflects one large slice of the American population — about 66 million Medicaid beneficiaries — to map the primary care workforce.

Meanwhile, Monica O'Reilly-Jacob, a nurse-scientist who recently moved from Boston College to Columbia University's School of Nursing, studied Medicare claims to conclude that fewer than 70% of physicians typically considered primary care providers were actually providing primary care. The rest, she said, often find more lucrative positions, such as subspecializing or working in hospitals. By contrast, nurse practitioners are likely undercounted. Her study found that close to half are providing primary care.

But such publicly available data leaves out much of the country, given that fewer than 40% of Americans are insured through Medicaid or Medicare.

"There's no government organization that's tracking: Who trained in what, where, and where are they now, and what are they practicing," said Alison Huffstetler, medical director of the Robert Graham Center. "And if we don't know who is doing what kind of care — and where — then there is no way for us to equitably manage the patient-to-clinician ratio across every state."

In Costilla County, Martinez finally found someone to provide primary care: an experienced physician assistant who moved from Texas in December.

The physician assistant's presence should bump the county out of its dire shortage, according to Colorado's measure. But since he isn't a physician, he'll remain invisible in the national data and Costilla County will likely remain on the books as a federal shortage area.

Data reporter Hannah Recht, data editor Holly K. Hacker, and rural editor/correspondent Tony Leys contributed to this report.

Rae Ellen Bichell: rbichell@kff.org, @raelnb

Records Show Publix Opioid Sales Grew Even as Addiction Crisis Prompted Other Chains' Pullback

KFF Health News, January 29, 2024

While national pharmacy chains like CVS and Walgreens were dispensing fewer of the highly addictive drugs, Publix's sales were soaring.

This article was published on Monday, January 29, 2024 in KFF Health News.

By Ian Hodgson, Tampa Bay Times and Christopher O'Donnell, Tampa Bay Times

An executive at Teva Pharmaceuticals flagged Publix Super Markets in October 2015 after detecting what he called in an email "serious red flags" with the grocery chain's orders of powerful opioids.

The share of high-strength oxycodone orders was well above normal for a chain of grocery store pharmacies, and the total number of pills sent to Publix stores was "significantly above their peers," Teva's head of federal compliance wrote in the email to his supervisors, according to court records in a federal lawsuit pending in Ohio against Publix and other companies.

"This is high-strength oxycodone ultimately going to Florida, a well-established hot spot for oxycodone abuse in the U.S.," wrote the compliance officer, Joseph Tomkiewicz, in the email explaining why he halted Teva-manufactured prescription opioids to Florida's Publix pharmacies.

The volume of prescription opioids dispensed in Florida fell 56% from 2011 to 2019 as the pharmaceutical industry was hit by lawsuits for its role in the national opioid crisis, according to a Tampa Bay Times analysis of Drug Enforcement Administration data recently released by a federal court. But while national pharmacy chains like CVS and Walgreens were dispensing fewer of the highly addictive drugs, Publix's sales were soaring.

The Lakeland-based grocer's sales of oxycodone climbed from 26 million pills per year in 2011 to 43.5 million in 2019, the data shows. The increase in sales, which far outpaced the chain's addition of stores in Florida, saw its market share rise to 14%, enough to overtake CVS to become Florida's second-largest dispenser of all opioid medications, behind only Walgreens, which dispensed 28% of opioids in the state in 2019. The analysis excludes drugs like methadone prescribed for addiction treatment. Opioid sales at Publix dipped slightly in 2018 and 2019, the last two years of available data.

Even as its market share grew, however, Publix was not among the 15 national manufacturers, distributors, and pharmacies that Florida sued in 2018. That lawsuit claimed other pharmacies had flooded America with painkillers such as OxyContin, fueling debilitating addictions that strained communities' first responders and medical providers.

The state's lawsuit was a boon for Florida. While admitting to no wrongdoing, the companies agreed to settlement payments to the state, including $177 million from Teva, $440 million from CVS, and $620 million from Walgreens. The state didn't sue Walmart but in 2022 negotiated a $215 million settlement from the retail giant, which also denied any wrongdoing.

However, there is no mention of Publix's role on a state webpage touting the 10 opioid settlements reached during Ashley Moody's tenure as attorney general.

That's despite Publix being the third-biggest dispenser of opioids in the state, selling nearly twice the amount of the drugs as Walmart from 2006 to 2012, according to earlier DEA data made public in July 2019, more than two years before Florida prosecutors reached settlements with other pharmacy chains.

Moody, a Republican, took over as the state's top legal official in January 2019. Her office declined to specifically address why Florida has not included Publix in any of its legal actions over opioids.

"We are proud of the more than $3 billion recovered through the historic opioid litigation, and since the filing of the amended complaint, the Department of Legal Affairs has and will continue to take action when merited by the evidence — as we did in the more recent actions with Walmart and McKinsey," said Moody's communications director, Kylie Mason, in an email.

The grocery chain made $10.6 million in political donations in Florida from 2016 to 2022 when the state was preparing and pursuing its litigation, state election data shows. Most of the donations were for Republican committees and candidates, including $125,000 donated to the Friends of Ashley Moody political action committee.

In Florida, Walgreens made $637,000 in political donations, including $8,000 to Moody, over the same period. CVS made $208,500 in donations, none of which went to Moody.

Other local communities in Florida and beyond did sue Publix. The federal suit naming Publix that prompted the release of the federal data was filed by Georgia's Cobb County. It has been earmarked as a test case for dozens of other lawsuits brought by cities and counties in the Southeast. Those include more than 20 Florida communities, among them St. Petersburg and Pinellas and Pasco counties.

While Walgreens and other national companies paid billions to settle their lawsuits and agreed to stricter drug controls, Publix is still contesting the cases.

Those communities claim that the grocery chain failed to operate an "effective suspicious ordering monitoring program" and that when Publix did limit orders to its own pharmacies, those pharmacies could bypass the check by going to a third-party distributor such as AmerisourceBergen.

Publix also should have known that its pharmacies in Georgia, Florida, Alabama, Tennessee, and South Carolina, were filling multiple prescriptions written for the same patient by the same doctor or by multiple doctors, the federal lawsuit alleges. As part of the national opioid settlement, other pharmacy chains were required to be more compliant with laws regulating opioids, including checks on suspicious orders and prescriptions from "blocked and potentially problematic" doctors.

"It's a heck of a lot cheaper to distribute and dispense controlled substances without all these checks," said Jayne Conroy, an attorney with New York law firm Simmons Hanly Conroy who is representing the Florida communities and has served as co-lead counsel in the national opioid litigation that has secured more than $50 billion in settlements and verdicts.

Publix did not respond to three emails and three phone calls to its communications office seeking comment.

In its responses to the lawsuits, it has repeatedly denied allegations of wrongdoing.

In seeking to get the Ohio case dismissed, Publix attorneys argued that it can't be considered "a public nuisance" to legally distribute and dispense opioids. The judge in the case denied the company's motion and another legal brief that sought to prevent the release of the more recent DEA data.

In November 2022, Publix sued more than a dozen of its insurers in federal court in Tampa, claiming they had not honored policies that would protect it from opioid litigation claims.

It also countersued Cobb County in 2023, saying the Georgia community's lawsuit was "motivated by promises of a windfall." The case is still pending.

"Publix takes great pride in its relationship with its valued customers and the communities it serves," that lawsuit states. "These novel and unprecedented claims are baseless, false, and belied by Publix's decades of service."

DEA officials declined to comment on Publix's opioid record. No enforcement actions against Publix are listed in the federal registry.

A Growing Player

Since its 1930 start as a food store in Winter Haven, Florida, Publix has grown into a massive company with more than 250,000 employees and nearly 900 stores in Florida alone. Revered for its free cookies for kids, chicken tender subs, fresh produce, birthday cakes, and BOGO deals, the grocery chain has become one-stop shopping for customers.

And, increasingly, "Where Shopping Is a Pleasure" — Publix's slogan since 1954 — includes powerful prescription drugs.

Publix was a smaller player in Florida's opioid market before 2011, responsible for fewer than 5% of all opioid medications distributed to pharmacies across the state, according to the Times analysis of federal opioid data.

That year marked a turning point for opioid sales in Florida. As the scale of the opioid epidemic came to public attention, and litigation followed, most chain pharmacies began to back off their orders for pills, the data shows.

Many companies ultimately agreed to pay billions of dollars to settle lawsuits filed across the country by state and local governments. That included a $683 million settlement between Florida and Walgreens in May stating the pharmacy, which denied any wrongdoing, must pay for community treatment, education, and prevention programs, plus litigation costs.

In addition to hefty payouts, some settlement agreements required companies to adopt stricter controls to bring operations into fuller compliance with the Controlled Substances Act, a federal law that governs the manufacture, distribution, and use of drugs considered to have a high risk of being abused.

Distributors were required to adopt automated software that would flag suspicious orders from pharmacies such as quantities well above a store's average. Pharmacy companies were required to conduct checks on doctors to ensure the prescribers are registered with the Drug Enforcement Administration.

Those measures and others put the brakes on opioid distribution nationwide. Meanwhile, the distribution in Florida's Publix stores went in the opposite direction: From 2011 to 2019, the grocery chain increased its dispensing of all opioid medication by 35%, according to the Times' analysis of the data.

That growth far exceeded any increase in sales that would correspond to the grocer's net addition of 146 pharmacies from 2011 to 2019.

As Publix's distribution increased, so too did the number of orders that should have been flagged as suspicious, according to plaintiffs in multiple lawsuits. Drug distributor McKesson instructed its employees to investigate any pharmacy ordering more than 8,000 oxycodone pills in a single month as part of the company's "Lifestyle Drug Monitoring Program," according to 2018 congressional testimony.

Publix pharmacies' orders surpassed that threshold almost 1,500 times in 2019, the Times analysis found, more than triple the number in 2011. The benchmark has been repeatedly used in opioid litigation as evidence of inadequate monitoring of drug distribution.

'Red Flags' Missed

As Tomkiewicz faced pressure from Teva management to fulfill Publix's orders, he mined the data to back up his concerns, court records show. During a heated phone call, one Teva executive stressed that Publix was an increasingly important player in the opioid distribution market, Tomkiewicz said at his deposition, and an important client for the world's largest generic drug manufacturer.

Tomkiewicz requested data from Publix's 10 largest pharmacies by opioid sales, all located in Florida.

By law, Publix was required to keep tabs on the physicians whose prescriptions it filled. But it took Tomkiewicz just one day of searching the internet to find problems, according to time stamps on emails submitted in the court records.

Among the top prescribers at two Publix locations in Melbourne was Thomas Velleff, according to Tomkiewicz's email. Public records and a newspaper report showed "significant anecdotal evidence of pill mill activity," Tomkiewicz wrote. He said he found a 2010 article in the Treasure Coast Palm, in which a city employee claimed Velleff's prior pain clinic in Palm City attracted "carloads" of patients, often with out-of-state license plates.

Complaints filed with the state Department of Health dating to 2010 allege that Velleff overprescribed opioids and failed to monitor his patients' usage for signs of abuse. One 2017 complaint alleges that Velleff pressured one patient into loaning him money. The state Board of Medicine revoked Velleff's medical license in December 2020. Velleff did not appear at his medical board hearing, according to the final order revoking his license. He did not respond to emails seeking comment.

A top prescriber at one Ocala store had been disciplined in 2011 for injecting herself with a sedative while leaving an anesthetized patient unsupervised. Other pharmacies repeatedly filled prescriptions from "cash-only" pain clinics or written by physicians located hundreds of miles away with no license to practice in Florida, Tomkiewicz wrote in the email. It is legal to do so, but drug diversion experts consider out-of-state prescriptions a red flag that should prompt additional checks for possible drug abuse.

Tomkiewicz had amassed a list of nine doctors among Publix's top prescribers who made him wonder: "Why the hell do they still have a license and are still registered with the DEA?" according to his deposition.

Tomkiewicz also said in his deposition he was troubled by not just the volume of opioids Publix was selling, but that they were handing out a disproportionate share of 30-milligram instant-release oxycodone pills — another red flag for abuse. In an email to Teva's director of compliance, he compared that with the Moffitt Cancer Center in Tampa, where cancer patients were mostly being prescribed 5 mg instant-release pills, court records show.

As the strongest dose on the market, the 30 mg pills have limited use in retail pharmacies and are highly sought-after among abusers, Tomkiewicz wrote in the email. Stronger doses of oxycodone are available, but only in long-release capsules such as OxyContin, according to the U.S. National Institutes of Health.

Publix sold 4.8 million of the highly addictive high-dose pills in 2019 — roughly 1 in 10 of all oxycodone pills dispensed by the pharmacy chain that year, according to the Times analysis of the federal data.

Eventually, Tomkiewicz relented, he said in his deposition. As long as Publix promised not to send Teva products to nine locations that he'd picked out, he would let the shipment go ahead. Teva did not notify federal authorities, according to his deposition.

A Times review of court documents found no written record indicating that Publix responded to Tomkiewicz's concerns at the time. An expert report submitted in the lawsuit came to the same conclusion.

Tampa Bay Times staff writer Ian Hodgson previously worked for a research company, Cornerstone Research, that had a client relationship with Teva Pharmaceuticals. This article was produced in partnership with the Tampa Bay Times.

Methodology

For comparison and dosing purposes, it is standard practice to convert opioid medications to an equivalent dose of morphine. Every shipment of opioids in the federal database is reported as both the number of pills and its morphine milligram equivalent, or "MME." This story uses that standard to calculate increases in the number of pills dispensed and compare the volume of pills prescribed by different pharmacy chains.

Ian Hodgson, Tampa Bay Times: ihodgson@tampabay.com, @IanJHodgson

New York City Joins Local Governments in Erasing Billions in Medical Debt

KFF Health News, January 25, 2024

The idea of local government erasing debt emerged a couple of years ago in Chicago.

This article was published on Thursday, January 25, 2024 in KFF Health News.

By Yuki Noguchi, NPR News

New York City pledged this week to pay down $2 billion worth of residents' medical debt. In doing so, it has come around to an innovation, started in the Midwest, that's ridding millions of Americans of healthcare debt.

The idea of local government erasing debt emerged a couple of years ago in Cook County, Illinois, home to Chicago. Toni Preckwinkle, president of the county board of commissioners, says two staffers came to her with a bold proposal: The county could spend a portion of its federal pandemic rescue funds to ease a serious burden on its residents.

In 2022, Cook County became the first local government to partner with RIP Medical Debt, a nonprofit group that uses private donor funds to buy up and forgive patient debt.

RIP's model turns debt collection on its head. Normally, debt collectors buy unpaid bills and then try to collect the money owed. RIP identifies unpaid hospital bills owed by people making up to four times the federal poverty level, then buys that debt on secondary markets or directly from hospitals at a small fraction of the original value. Instead of trying to collect, RIP forgives it — so it simply disappears for the patients.

In the Chicago area, as across the country, medical debt is an ongoing problem, causing mental and financial strain that can follow patients for years. An estimated 100 million people in the U.S. carry some form of healthcare debt, KFF Health News and NPR reported in 2022.

Preckwinkle said the RIP model dovetailed nicely with Cook County's healthcare mission. For nearly two centuries, the county has funded its own hospital and health system, Cook County Health, in part to provide care to all residents, regardless of income.

"We have a legacy commitment to delivering quality healthcare to people without regard to their ability to pay," Preckwinkle said.

She said that healthcare mission eats up nearly half of the county's $9.3 billion annual budget. It is now in the process of spending $12 million — a tiny portion of its budget — to retire $1 billion worth of hospital bills for residents.

Since Cook County announced its program, seven other local governments have followed suit, including Ohio cities Akron, Cleveland, and Toledo; New Orleans; Wayne County, Michigan; Washington, D.C.; and now New York City, which announced its commitment Jan. 22.

During his announcement, New York Mayor Eric Adams noted that medical debt disproportionately affects Black and Hispanic people, who are more likely to be uninsured or underinsured. For the city's low-income residents, he said, "taking on medical debt isn't a choice."

"Working-class families often have to choose between paying their medical bills or some of the basic essentials that they need to go through life," he said.

RIP is in talks with 30 other municipalities and states, including Connecticut, New Jersey, and Michigan.

Typically, RIP can retire at least $100 worth of debt for every $1 of government funds, so the local initiatives could end up wiping out several billion dollars in medical debt. The software selects eligible patients who remain anonymous, so it's hard to know what the impact of eliminating that debt might be across a community, or for the families that benefit.

Allison Sesso, CEO of RIP Medical Debt, acknowledged that debt is one of many factors contributing to unequal access to healthcare, and as hospital costs continue to rise, new debts are also piling up perhaps faster than her group can retire it. She said RIP hopes to retire $2.5 billion worth of unpaid medical bills through various government initiatives this year, but that's a drop in the bucket of the $195 billion estimated medical debt held by Americans.

"I'm under no illusions," Sesso said. "I don't think what I'm doing is the solution to getting rid of medical debt, writ large."

An Unusual Move for Local Government

Amber Clapsaddle said having the city of Toledo eliminate a $1,500 medical bill of hers from three years ago has given her hope.

In the past, Clapsaddle said, she looked down on those who didn't pay their bills. "I was like, ‘I'll never do that,' and I judged people really hard," she said.

Then, several years ago, her entire family of five each got sick one after another, requiring numerous surgeries, ultrasounds, and diagnostic tests. She had insurance, but she and her husband, a warehouse worker, couldn't meet the $6,000 deductible. Clapsaddle, a social worker, realized why medical debt is such a prevalent problem: "It just takes one bill, one bad insurance plan, just one extra diagnosis to have it all fall apart."

When Toledo's program with RIP forgave some of her family's debt two months ago, she cried with joy and relief. She said that motivated her to negotiate with doctors' offices and her insurance company to try to prevent herself from getting into debt again. "It's the spark that lights the fire of getting out of medical debt," she said.

Debt forgiveness is an unusual solution for local governments. More are taking it on, aided by access to federal pandemic rescue funds through the American Rescue Plan Act of 2021, and RIP Medical Debt offered a quick and easy fix to distribute those funds to those most burdened by medical expenses.

Nationally, medical debt is shown to disproportionately affect people of color and people who earn less. It also contributes to a vicious health cycle, discouraging patients from seeking preventive or follow-up care, leading to worse and more expensive outcomes.

Cook County's Preckwinkle said the pandemic only deepened racial and income gaps that affect people's access to healthcare.

"I always talk about the fact that medical debt is the leading cause of bankruptcy in the United States," she said.

Getting Down to the Root Causes of Debt

Medical debt is being created at high rates, Sesso said, and stronger policies — such as protecting consumers and strengthening insurance coverage — are needed to stop it at its source.

Often that boils down to high prices charged by hospitals and providers.

As Adams, the New York City mayor, put it: "You know, not only do you hold your breath when you go into a hospital or a doctor's office and wait for a diagnosis, you continue to hold your breath when you see the bill and what it costs, particularly for low-income New Yorkers."

The idea of forgiving medical debt has broad political support, said Sesso, perhaps because the issue affects people of all political stripes. A recent RIP survey, she said, showed that "84% of people agreed that it is the responsibility of government to ensure healthcare is affordable, and that position is held by people on the left and the right."

The enduring benefit of the recent local government initiatives is that they have helped draw more attention to the problem, raising its profile in useful ways, she said. "I think the issue of medical debt is becoming a priority, local governments are talking about it," and that is leading to other conversations about what else they can do to get more eligible families insured through Medicaid, or through the Affordable Care Act insurance marketplace, for example.

It is also inspiring programs like one recently adopted by Milwaukee County, in which it's urging more hospitals and health systems to use credit reports to screen and automatically enroll eligible patients in financial assistance programs. These programs already exist to help reduce medical expenses for patients making up to three times the poverty level, but often patients are unaware or not told to apply for them.

By automating the process, as many as 50% more patients may receive free or reduced-cost care, so they have a better chance of avoiding incurring medical debt in the first place, said Shawn Rolland, a member of Milwaukee County's board of supervisors.

"Why make it more difficult than necessary to get enrolled?" he said. "Because ultimately this will make it more likely that they'll come back for preventative care."

About This Project

"Diagnosis: Debt" is a reporting partnership between KFF Health News and NPR exploring the scale, impact, and causes of medical debt in America.

The series draws on original polling by KFF, court records, federal data on hospital finances, contracts obtained through public records requests, data on international health systems, and a yearlong investigation into the financial assistance and collection policies of more than 500 hospitals across the country.

Additional research was conducted by the Urban Institute, which analyzed credit bureau and other demographic data on poverty, race, and health status for KFF Health News to explore where medical debt is concentrated in the U.S. and what factors are associated with high debt levels.

The JPMorgan Chase Institute analyzed records from a sampling of Chase credit card holders to look at how customers' balances may be affected by major medical expenses. And the CED Project, a Denver nonprofit, worked with KFF Health News on a survey of its clients to explore links between medical debt and housing instability.

KFF Health News journalists worked with KFF public opinion researchers to design and analyze the "KFF healthcare Debt Survey." The survey was conducted Feb. 25 through March 20, 2022, online and via telephone, in English and Spanish, among a nationally representative sample of 2,375 U.S. adults, including 1,292 adults with current healthcare debt and 382 adults who had healthcare debt in the past five years. The margin of sampling error is plus or minus 3 percentage points for the full sample and 3 percentage points for those with current debt. For results based on subgroups, the margin of sampling error may be higher.

Reporters from KFF Health News and NPR also conducted hundreds of interviews with patients across the country; spoke with physicians, health industry leaders, consumer advocates, debt lawyers, and researchers; and reviewed scores of studies and surveys about medical debt.

What the Healthcare Sector Was Selling at the J.P. Morgan Confab

KFF Health News, January 22, 2024

After a few years of pandemic slack, the swanky conference regained its full vigor.

This article was published on Monday, January 22, 2024 at KFF Health News.

By Molly Castle Work and Arthur Allen

SAN FRANCISCO — Every year, thousands of bankers, venture capitalists, private equity investors, and other moneybags flock to San Francisco's Union Square to pursue deals. Scores of security guards keep the homeless, the snoops, and the patent-stealers at bay, while the dealmakers pack into the cramped Westin St. Francis hotel and its surrounds to meet with cash-hungry executives from biotech and other healthcare companies. After a few years of pandemic slack, the 2024 J.P. Morgan Healthcare Conference regained its full vigor, drawing 8,304 attendees in early January to talk science, medicine, and, especially, money.

1. Artificial Intelligence: Revolutionary or Not?

Of the 624 companies that pitched at the four-day conference, the biggest overflow crowd may have belonged to Nvidia, which unlike the others isn't a healthcare company. Nvidia makes the silicon chips whose computing power, when paired with ginormous catalogs of genes, proteins, chemical sequences, and other data, will "revolutionize" drug-making, according to Kimberly Powell, the company's vice president of healthcare. Soon, she said, computers will customize drugs as "healthcare becomes a technology industry." One might think that such advances could save money, but Powell's emphasis was on their potential for wealth creation. "The world's first trillion-dollar drug company is out there somewhere," she dreamily opined.

Some healthcare systems are also hyping AI. The Mayo Clinic, for example, highlighted AI's capacity to improve the accuracy of patient diagnoses. The nonprofit hospital system presented an electrocardiogram algorithm that can predict atrial fibrillation three months before an official diagnosis; another Mayo AI model can detect pancreatic cancer on scans earlier than a provider could, said Matthew Callstrom, chair of radiology at the Mayo Clinic in Rochester, Minnesota.

No one really knows how far — or where — AI will take healthcare, but Nvidia's recently announced $100 million deal with Amgen, which has access to 500 million human genomes, made some conference attendees uneasy. If Big Pharma can discover its own drugs, "biotech will disappear," said Sherif Hanala of Seqens, a contract drug manufacturing company, during a lunch-table chat with KFF Health News and others. Others shrugged off that notion. The first AI algorithms beat clinicians at analyzing radiological scans in 2014. But since that year, "I haven't seen a single AI company partner with pharma and complete a phase I human clinical trial," said Alex Zhavoronkov, founder and CEO of Insilico Medicine — one of the companies using AI to do drug development. "Biology is hard."

2. Weight Loss Pill Profits and Doubts

With predictions of a $100 billion annual market for GLP-1 agonists, the new class of weight loss drugs, many investors were asking their favorite biotech entrepreneurs whether they had a new Ozempic or Mounjaro in the wings this year, Zhavoronkov noted. In response, he opened his parlays with investors by saying, "I have a very cool product that helps you lose weight and gain muscle." Then he would hand the person a pair of Insilico Medicine-embossed bicycle racing gloves.

More conventional discussions about the GLP-1s focused on how insurance will cover the current $13,000 annual cost for the estimated 40% of Americans who are obese and might want to go on the drugs. Sarah Emond, president of the Institute for Clinical and Economic Review, which calculates the cost and effectiveness of medical treatments, said that in the United Kingdom the National Health Service began paying in 2022 for obese patients to receive two years of semaglutide — something neither Medicare nor many insurers are covering in the U.S. even now.

But studies show people who go off the drugs typically regain two-thirds of what they lose, said Diana Thiara, medical director for the University of California-San Francisco weight management program. Recent research shows that the use of these drugs for three years reduces the risk of death, heart attack, and stroke in non-diabetic overweight patients. To do right by them, the U.S. healthcare system will have to reckon with the need for long-term use, she said. "I've never heard an insurer say, ‘After two years of treating this diabetes, I hope you're finished,'" she said. "Is there a bias against those with obesity?"

3. Spotlight on Tax-Exempt Hospitals

Nonprofit hospitals showed off their investment appeal at the conference. Fifteen health systems representing major players across the country touted their value and the audience was intrigued: When headliners like the Mayo Clinic and the Cleveland Clinic took the stage, chairs were filled, and late arrivals crowded in the back of the room.

These hospitals, which are supposed to provide community benefits in exchange for not paying taxes, were eager to demonstrate financial stability and showcase money-making mechanisms besides patient care — they call it "revenue diversification." PowerPoints skimmed through recent operating losses and lingered on the hospital systems' vast cash reserves, expansion plans, and for-profit partnerships to commercialize research discoveries.

At Mass General Brigham, such research has led to the development of 36 drugs currently in clinical trials, according to the hospital's presentation. The Boston-based health system, which has $4 billion in committed research funding, said its findings have led to the formation of more than 300 companies in the past decade.

Hospital executives thanked existing bondholders and welcomed new investors.

"For those of you who hold our debt, taxable and tax-exempt, thank you," John Mordach, chief financial officer of Jefferson Health, a health system in Pennsylvania and New Jersey. "For those who don't, I think we're a great, undervalued investment, and we get a great return."

Other nonprofit hospitals talked up institutes to draw new patients and expand into lucrative territories. Sutter Health, based in California, said it plans to add 30 facilities in attractive markets across Northern California in the next three years. It expanded to the Central Coast in October after acquiring the Sansum Clinic. 

4. Money From New — And Old — Treatments for Autoimmune Disease

Autoimmunity drugs, which earn the industry $200 billion globally each year, were another hot theme, with various companies talking up development programs aimed at using current cancer drug platforms to create remedies for conditions like lupus and rheumatoid arthritis. AbbVie, which has led the sector with its $200 billion Humira, the world's best-selling drug, had pride of place at the conference with a presentation in the hotel's 10,000-square-foot Grand Ballroom.

President Robert Michael crowed about the company's newer autoimmune drugs, Skyrizi and Rinvoq, and bragged that sales of two-decades-old Humira were going "better than anticipated." Although nine biosimilar — essentially, generic — versions of the drug, adalimumab, entered the market last year, AbbVie expects to earn more than $7 billion on Humira this year since the "vast majority" of patients will remain on the market leader.

In its own presentation, biosimilar-maker Coherus BioSciences conceded that sales of Yusimry, its Humira knockoff listed at one-seventh the price of the original, would be flat until 2025, when Medicare changes take effect that could push health plans toward using cheaper drugs.

Biosimilars could save the U.S. healthcare system $100 billion a year, said Stefan Glombitza, CEO of Munich-based Formycon, another biosimilar-maker, but there are challenges since each biosimilar costs $150 million to $250 million to develop. Seeing nine companies enter the market to challenge Humira "was shocking," he said. "I don't think this will happen again."

This article was produced by KFF Health News, which publishes California Healthline, an editorially independent service of the California healthcare Foundation.

Molly Castle Work: mwork@kff.org, @mollycastlework

Arthur Allen: ArthurA@kff.org, @ArthurAllen202

In This Oklahoma Town, Most Everyone Knows Someone Who's Been Sued by the Hospital

KFF Health News, January 19, 2024

Some of McAlester's 18,000 residents have been taken to court multiple times.

This article was published on Friday, January 19, 2024 in KFF Health News.

By Mitchell Black and Noam N. Levey

McALESTER, Okla. — It took little more than an hour for Deborah Hackler to dispense with the tall stack of debt collection lawsuits that McAlester Regional Medical Center recently brought to small-claims court in this Oklahoma farm community.

Hackler, a lawyer who sues patients on behalf of the hospital, buzzed through 51 cases, all but a handful uncontested, as is often the case. She bantered with the judge as she secured nearly $40,000 in judgments, plus 10% in fees for herself, according to court records.

It's a payday the hospital and Hackler have shared frequently over the past three decades, records show. The records indicate McAlester Regional Medical Center and an affiliated clinic have filed close to 5,000 debt collection cases since the early 1990s, most often represented by the father-daughter law firm of Hackler & Hackler.

Some of McAlester's 18,000 residents have been taken to court multiple times. A deputy at the county jail and her adult son were each sued recently, court records show. New mothers said they compare stories of their legal run-ins with the medical center.

"There's a lot that's not right," Sherry McKee, a dorm monitor at a tribal boarding school outside McAlester, said on the courthouse steps after the hearing. The hospital has sued her three times, most recently over a $3,375 bill for what she said turned out to be vertigo.

In recent years, major health systems in Virginia, North Carolina, and elsewhere have stopped suing patients following news reports about lawsuits. And several states, such as Maryland and New York, have restricted the legal actions hospitals can take against patients.

But with some 100 million people in the U.S. burdened by health care debt, medical collection cases still clog courtrooms across the country, researchers have found. In places like McAlester, a hospital's debt collection machine can hum away quietly for years, helped along by powerful people in town. An effort to limit hospital lawsuits failed in the Oklahoma Legislature in 2021.

In McAlester, the lawsuits have provided business for some, such as the Adjustment Bureau, a local collection agency run out of a squat concrete building down the street from the courthouse, and for Hackler, a former president of the McAlester Area Chamber of Commerce. But for many patients and their families, the lawsuits can take a devastating toll, sapping wages, emptying retirement accounts, and upending lives.

McKee said she wasn't sure how long it would take to pay off the recent judgment. Her $3,375 debt exceeds her monthly salary, she said.

"This affects a large number of people in a small community," said Janet Roloff, an attorney who has spent years assisting low-income clients with legal issues such as evictions in and around McAlester. "The impact is great."

Settled more than a century ago by fortune seekers who secured land from the Choctaw Nation to mine coal in the nearby hills, McAlester was once a boom town. Vestiges of that era remain, including a mammoth, 140-foot-tall Masonic temple that looms over the city.

Recent times have been tougher for McAlester, now home by one count to 12 marijuana dispensaries and the state's death row. The downtown is pockmarked by empty storefronts, including the OKLA theater, which has been dark for decades. Nearly 1 in 5 residents in McAlester and the surrounding county live below the federal poverty line.

The hospital, operated by a public trust under the city's authority, faces its own struggles. Paint is peeling off the front portico, and weeds poke up through the parking lots. The hospital has operated in the red for years, according to independent audit reports available on the state auditor's website.

"I'm trying to find ways to get the entire community better care and more care," said Shawn Howard, the hospital's chief executive. Howard grew up in McAlester and proudly noted he started his career as a receptionist in the hospital's physical therapy department. "This is my hometown," he said. "I am not trying to keep people out of getting care."

The hospital operates a clinic for low-income patients, whose webpage notes it has "limited appointments" at no cost for patients who are approved for aid. But data from the audits shows the hospital offers very little financial assistance, despite its purported mission to serve the community.

In the 2022 fiscal year, it provided just $114,000 in charity care, out of a total operating budget of more than $100 million, hospital records show. Charity care totaling $2 million or $3 million out of a $100 million budget would be more in line with other U.S. hospitals.

While audits show few McAlester patients get financial aid, many get taken to court.

Renee Montgomery, the city treasurer in an adjoining town and mother of a local police officer, said she dipped into savings she'd reserved for her children and grandchildren after the hospital sued her last year for more than $5,500. She'd gone to the emergency room for chest pain.

Dusty Powell, a truck driver, said he lost his pickup and motorcycle when his wages were garnished after the hospital sued him for almost $9,000. He'd gone to the emergency department for what turned out to be gastritis and didn't have insurance, he said.

"Everyone in this town probably has a story about McAlester Regional," said another former patient who spoke on the condition she not be named, fearful to publicly criticize the hospital in such a small city. "It's not even a secret."

The woman, who works at an Army munitions plant outside town, was sued twice over bills she incurred giving birth. Her sister-in-law has been sued as well.

"It's a good-old-boy system," said the woman, who lowered her voice when the mayor walked into the coffee shop where she was meeting with KFF Health News. Now, she said, she avoids the hospital if her children need care.

Nationwide, most people sued in debt collection cases never challenge them, a response experts say reflects widespread misunderstanding of the legal process and anxiety about coming to court.

At the center of the McAlester hospital's collection efforts for decades has been Hackler & Hackler.

Donald Hackler was city attorney in McAlester for 13 years in the '70s and '80s and a longtime member of the local Lions Club and the Scottish Rite Freemasons.

Daughter Deborah Hackler, who joined the family firm 30 years ago, has been a deacon at the First Presbyterian Church of McAlester and served on the board of the local Girl Scouts chapter, according to the McAlester News-Capital newspaper, which named her "Woman of the Year" in 2007. Since 2001, she also has been a municipal judge in McAlester, hearing traffic cases, including some involving people she has sued on behalf of the hospital, municipal and county court records show.

For years, the Hacklers' debt collection cases were often heard by Judge James Bland, who has retired from the bench and now sits on the hospital board. Bland didn't respond to an inquiry for interview.

Hackler declined to speak with KFF Health News after her recent court appearance. "I'm not going to visit with you about a current client," she said before leaving the courthouse.

Howard, the hospital CEO, said he couldn't discuss the lawsuits either. He said he didn't know the hospital took its patients to court. "I had to call and ask if we sue people," he said.

Howard also said he didn't know Deborah Hackler. "I never heard her name before," he said.

Despite repeated public records requests from KFF Health News since September, the hospital did not provide detailed information about its financial arrangement with Hackler.

McAlester Mayor John Browne, who appoints the hospital's board of trustees, said he, too, didn't know about the lawsuits. "I hadn't heard anything about them suing," he said.

At the century-old courthouse in downtown McAlester, it's not hard to find the lawsuits, though. Every month or two, another batch fills the docket in the small-claims court, now presided over by Judge Brian McLaughlin.

After court recently, McLaughlin, who is not from McAlester, shook his head at the stream of cases and patients who almost never show up to defend themselves, leaving him to issue judgment after judgment in the hospital's favor.

"All I can do is follow the law," said McLaughlin. "It doesn't mean I like it."

About This Project

"Diagnosis: Debt" is a reporting partnership between KFF Health News and NPR exploring the scale, impact, and causes of medical debt in America.

KFF Health News journalists worked with KFF public opinion researchers to design and analyze the "KFF Health Care Debt Survey." The survey was conducted Feb. 25 through March 20, 2022, online and via telephone, in English and Spanish, among a nationally representative sample of 2,375 U.S. adults, including 1,292 adults with current health care debt and 382 adults who had health care debt in the past five years. The margin of sampling error is plus or minus 3 percentage points for the full sample and 3 percentage points for those with current debt. For results based on subgroups, the margin of sampling error may be higher.

Noam N. Levey: nlevey@kff.org, @NoamLevey

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