In response to a Kaiser Health News investigation into the University of Virginia Health System's aggressive collection practices, Senate Finance Committee Chairman Chuck Grassley (R-Iowa) sent a letter Thursday demanding answers to questions about UVA's billing practices, financial assistance policies and even its prices.
Over six years, the state institution filed 36,000 lawsuits against patients seeking a total of more than $106 million in unpaid bills, a KHN analysis finds.
The Finance Committee oversees federal tax laws, and Grassley wrote that it is "my job to make sure that entities exempt from tax are fulfilling their tax-exempt purposes."
The KHN investigation found that UVA Health System, a taxpayer-supported and state-funded entity, filed 36,000 lawsuits for more than $106 million in six years.
"Unfortunately, I have seen a variety of news reports lately discussing what appear to be relentless debt-collection efforts by tax-exempt hospitals, including UVA Health System," Grassley wrote. "I am also concerned about how patients' hospital bills get so high in the first place."
Even though the letter questions only UVA Health System, whose practices were pegged in the investigation as particularly aggressive, it sends a signal that the Senate will be paying attention to an issue that affects all state-run and nonprofit health systems. Many medical providers pursue patients for unpaid bills, sometimes forcing them into bankruptcy. Several news stories have highlighted similar collections practices at other nonprofit hospitals.
Nonprofit hospitals get big tax breaks in exchange for providing "charity care and community benefit," though there is no clear standard about what that should mean. Experts have questioned whether those breaks are deserved, given hospitals' pricing, billing and collections practices.
In the seven-page letter, Grassley asks 19 detailed questions on various topics, including the system's charity care (free or discounted care provided to low-income patients), debt collection policies, and its rationale for the litigation threshold of $1,000, enacted in 2017. Grassley asks specific questions about UVA's list of standard prices for procedures and equipment, commonly known as the "chargemaster," which is posted on its website.
The letter was addressed to CEO Pamela Sutton-Wallace, who will depart UVA Health System for NewYork-Presbyterian Hospital next month. UVA Health System has until Nov. 19 to respond.
"UVA is committed to assisting indigent and uninsured patients and making sure they receive all necessary care," UVA Health System spokesman Eric Swensen said in an email to KHN. "We will review the letter, and look forward to working with Sen. Grassley to respond to his questions and share with him the policy changes we have announced and started implementing over the past month to better serve our patients."
In response to KHN's investigation, UVA Health System swiftly vowed to change its policies to increase financial assistance, give bigger discounts to the uninsured and reduce its use of the legal system. However, KHN reported that some critics do not think the new policies go far enough.
Suit alleges that Group Health Cooperative claimed some patients were sicker than they were, and billed for medical conditions that patients didn't have.
This article was first published on Friday, October 18, 2019 in Kaiser Health News.
Group Health Cooperative in Seattle, one of the nation's oldest and most respected nonprofit health insurance plans, is accused of bilking Medicare out of millions of dollars in a federal whistleblower case.
Teresa Ross, a former medical billing manager at the insurer, alleges that it sought to reverse financial losses in 2010 by claiming some patients were sicker than they were, or by billing for medical conditions that patients didn't actually have. As a result, the insurer retroactively collected an estimated $8 million from Medicare for 2010 services, according to the suit.
Ross filed suit in federal court in Buffalo, N.Y., in 2012, but it remained under a court seal until July and is in the initial stages. The suit also names as defendants two medical coding consultants, consulting firm DxID of East Rochester, N.Y., and Independent Health Association, an affiliated health plan in Buffalo, N.Y. All denied wrongdoing in separate court motions filed late Wednesday to dismiss the suit.
The Justice Department has thus far declined to take over the case, but said in a June 21 court filing that "an active investigation is ongoing."
The whistleblower suit is one of at least 18 such cases documented by KHN that accuse Medicare Advantage managed-care plans of ripping off the government by exaggerating how sick its patients were. The whistleblower cases have emerged as a primary tool for clawing back overpayments. While many of the cases are pending in courts, five have recovered a total of nearly $360 million.
"The fraudulent practices described in this complaint are a product of the belief, common among MA organizations, that the law can be violated without meaningful consequence," Ross alleges.
Medicare Advantage plans are a privately run alternative to traditional Medicare that often offer extra benefits such as dental and vision coverage, but limit choice of medical providers. They have exploded in popularity in recent years, enrolling more than 22 million people, just over 1 in 3 of those eligible for Medicare.
Word of another whistleblower alleging Medicare Advantage billing fraud comes as the White House is pushing to expand enrollment in the plans. On Oct. 3, President Donald Trump issued an executive order that permits the plans to offer a range of new benefits to attract patients. One, for instance, is partly covering the cost of Apple Watches as an inducement.
Group Health opened for business more than seven decades ago and was among the first managed-care plans to contract with Medicare. Formed by a coalition of unions, farmers and local activists, the HMO grew from just a few hundred families to more than 600,000 patients before its members agreedto join California-based Kaiser Permanente. That happened in early 2017, and the plan is now called Kaiser Foundation Health Plan of Washington. (Kaiser Health News is not affiliated with Kaiser Permanente.)
In an emailed statement, a Kaiser Permanente spokesperson said: "We believe that Group Health complied with the law by submitting its data in good faith, relying on the recommendations of the vendor as well as communications with the federal government, which has not intervened in the case at this time."
Ross nods to the plan's history, saying it has "traditionally catered to the public interest, often highlighting its efforts to support low-income patients and provide affordable, quality care."
The insurer's Medicare Advantage plans "have also traditionally been well regarded, receiving accolades from industry groups and Medicare itself," according to the suit.
But Ross, who worked at Group Health for more than 14 years in jobs involving billing and coding, said that from 2008 through 2010 GHC "went from an operating income of almost $57 million to an operating loss of $60 million. Ross said the losses were "due largely to poor business decisions by company management."
The lawsuit alleges that the insurer manipulated a Medicare billing formula known as a risk score. The formula is supposed to pay health plans higher rates for sicker patients, but Medicare estimatesthat overpayments triggered by inflated risk scores have cost taxpayers $30 billion over the past three years alone.
According to Ross, a GHC executive attended a meeting of the Alliance of Community Health Plans in 2011 where he heard from a colleague at Independent Health about an "exciting opportunity" to increase risk scores and revenue. The colleague said Independent Health "had made a lot of money" using its consulting company, which specializes in combing patient charts to find overlooked diseases that health plans can bill for retroactively.
In November 2011, Group Health hired the East Rochester firm DxID to review medical charts for 2010. The review resulted in $12 million in new claims, according to the suit. Under the deal, DxID took a percentage of the claims revenue it generated, which came to about $1.5 million that year, the suit says.
Ross said she and a doctor who later reviewed the charts found "systematic" problems with the firm's coding practices. In one case, the plan billed for "major depression" in a patient described by his doctor as having an "amazingly sunny disposition." Overall, about three-quarters of its claims for higher charges in 2010 were not justified, according to the suit. Ross estimated that the consultants submitted some $35 million in new claims to Medicare on behalf of GHC for 2010 and 2011.
In its motion to dismiss Ross' case, GHC called the matter a "difference of opinion between her allegedly 'conservative' method for evaluating the underlying documentation for certain medical conditions and her perception of an 'aggressive' approach taken by Defendants."
Independent Health and the DxID consultants took a similar position in their court motion, arguing that Ross "seeks to manufacture a fraud case out of an honest disagreement about the meaning and applicability of unclear, complex, and often conflicting industry-wide coding criteria."
In a statement, Independent Health spokesman Frank Sava added: "We believe the coding policies being challenged here were lawful and proper and all parties were paid appropriately.
Whistleblowers sue on behalf of the federal government and can share in any money recovered. Typically, the cases remain under a court seal for years while the Justice Department investigates.
Dorothy Twigg was living on her own, cooking and walking without help until a dizzy spell landed her in the emergency room. She spent three days confined to a hospital bed, allowed to get up only to use a bedside commode. Twigg, who was in her 80s, was livid about being stuck in a bed with side rails and a motion sensor alarm, according to her cousin and caretaker, Melissa Rowley.
"They're not letting me get up out of bed," Twigg protested in phone calls, Rowley recalled.
In just a few days at the Ohio hospital, where she had no occupational or physical therapy, Twigg grew so weak that it took three months of rehab to regain the ability to walk and take care of herself, Rowley said. Twigg repeated the same pattern — three days in bed in a hospital, three months of rehab — at least five times in two years.
Falls remain the leading cause of fatal and nonfatal injuries for older Americans. Hospitals face financial penalties when they occur. Nurses and aides get blamed or reprimanded if a patient under their supervision hits the ground.
But hospitals have become so overzealous in fall prevention that they are producing an "epidemic of immobility," experts say. To ensure that patients will never fall, hospitalized patients who could benefit from activity are told not to get up on their own — their bedbound state reinforced by bed alarms and a lack of staff to help them move.
That's especially dangerous for older patients, often weak to begin with. After just a few days of bed rest, their muscles can deteriorate enough to bring severe long-term consequences.
"Older patients face staggering rates of disability after hospitalizations," said Dr. Kenneth Covinsky, a geriatrician and researcher at the University of San Francisco-California. His research found that one-third of patients age 70 and older leave the hospital more disabled than when they arrived.
The first penalties took effect in 2008, when the Centers for Medicare & Medicaid Services declared that falls in hospitals should never happen. Those penalties are not severe: If a patient gets hurt in a hospital fall, CMS still pays for the patient's care but no longer bumps up payment to a higher tier to cover treatment of fall-related conditions.
Still, Covinsky said that policy has created "a climate of fear of falling," where nurses "feel that if somebody falls on their watch, they'll be blamed for it." The result, he said, is "patients are told not to move," and they don't get the help they need. To make matters worse, he added, when patients grow weaker, they are more likely to get hurt if they fall.
Congress introduced stiffer penalties with the Affordable Care Act, and CMS began to reduce federal payments by 1% for the quartile of hospitals with the highest rates of falls and other hospital-acquired conditions. That's substantial because nearly a third of U.S. hospitals have negative operating margins, according to the American Hospital Association.
Nancy Foster, the AHA's vice president of quality and patient safety policy, said these policy changes sent "a strong signal to the hospital field about things CMS expected us to be paying attention to." Limiting patient mobility "certainly is a potential unintended consequence," she said. "It might have happened, but it's not what I'm hearing on the front line. They're getting people up and moving."
While hospitals are required to report falls, they don't typically track how often patients get up or move. One study conducted in 2006-07 of patients 65 and older who did not have dementia or delirium and were able to walk in the two weeks before admission foundthey spent, on average, 83% of their hospital stay in bed.
While lying there, older patients often find themselves tracked by alarms that bleep or shriek when they try to get up or move. These alarms are designed to alert nurses so they can supervise the patient to safely walk — but research has shown that the alarms don't prevent falls. Often stretched thin, nurses are deluged by many types of alarms and can't always dash to the bedside before a patient hits the ground.
Dr. Cynthia J. Brown, a professor at the University of Alabama at Birmingham, has identifiedcommon reasons older patients stay in bed: They feel too much pain, fatigue or weakness. They have IV lines or catheters that make it more difficult to walk. There's not enough staff to help them, or they feel they're burdening nurses if they ask for help. And walking down the hallway in flimsy gowns with messy hair can be embarrassing, she added.
Yet walking even a little can pay off. Older patients who walk just 275 steps a day in the hospital show lower rates of readmission after 30 days, researchhas found.
Across the country, efforts are afoot to encourage hospital patients to get up and move, often inside special wings called Acute Care for Elders that aim to maintain the independence of seniors and prevent hospital-acquired disabilities.
Another initiative, called the Hospital Elder Life Program, which is designed to reduce hospital-acquired delirium, also promotes mobility and has shown an added benefit of curtailing falls. In a study of HELP sites, there were no reported falls while staff or volunteers were helping patients move or walk.
Barbara King, an associate professor at the University of Wisconsin-Madison School of Nursing, studied how nurses responded to "intense messaging" from hospitals about preventing falls after the 2008 CMS policy change. She found that pressure to have zero patient falls made some nurses fearful. After a fall happened, some nurses adjusted their behavior and wouldn't let patients move on their own. CMS declined a request for an interview and did not directly answer a written question about whether its falls policy has limited patient mobility.
In 2015, King studied a nurse-driven effort to get more patients walking on a 26-bed hospital unit in the Midwest. The initiative, in which nurses encouraged patients to get out of bed and documented how often and how far they walked, boosted ambulation.
Hospitals still face barriers, such as the shortage of staff time, walking equipment and ways to record ambulation in electronic medical records, King said.
Getting more patients out of bed will also take a significant change in mindset, she said.
"If we think that a patient walking is a patient who will fall," King said, "we have to shift that culture."
Details have not been made public, and the parties declined to talk to reporters.
This story was first published on Wednesday, October 16, 2019 in Kaiser Health News.
By Jenny Gold
SAN FRANCISCO – Sutter Health has reached a tentative settlement agreement in a closely watched antitrust case brought by self-funded employers, and later joined by the California Attorney General’s Office. The agreement was announced in the San Francisco Superior Court Wednesday morning, just before opening arguments were expected to begin.
Details have not been made public, and the parties declined to talk to reporters. Superior Court Judge Anne-Christine Massullo told the jury that details will likely be made public during the approval hearings in February or March.
There were audible cheers from the jury following the announcement that the trial, which was expected to last for three months, would not continue.
Sutter stood accused of violating California’s antitrust laws by using its market power to illegally drive up prices. Health care costs in Northern California, where Sutter is dominant, are 20% to 30% higher than in Southern California, even after adjusting for cost of living, according to a 2018 study from the Nicholas C. Petris Center at the University of California-Berkeley cited in the complaint.
The case was a massive undertaking, representing years of work and millions of pages of documents, California Attorney General Xavier Becerra said before the trial. Sutter was expected to face damages of up to $2.7 billion. Sutter Health consistently denied the allegations and argued that it used its market power to improve care for patients and expand access to people in rural areas. The nonprofit chain has 24 hospitals, 34 surgery centers and 5,500 physicians across Northern California, and had $13 billion in operating revenue in 2018.
The case was expected to have nationwide implications on how hospital systems negotiate prices with insurers. It is not yet clear what effect, if any, a settlement agreement would have on Sutter’s tactics or those of other large systems.
Gov. Gavin Newsom wrapped up his bill-signing marathon Sunday, capping the end of a legislative session that will have a big impact on Californians' health care and coverage.
Some of the most high-profile — and contentious — measures of the year were health care-related: Who hasn't heard of the bill that spawned raucous protests at the Capitol by anti-vaccine activists? Aftersome hesitation, Newsom signed SB-276 and an accompanying measure, which will give state public health officials authority to review and, in some cases, revoke questionable medical exemptions for childhood vaccinations.
In a blow to Big Pharma, the Democratic governor also signed what health advocacy groups deem this year's biggest effort to lower prescription drug costs. AB-824 will give the state attorney general more power to go after pharmaceutical companies that engage in "pay for delay," a practice in which makers of brand-name drugs pay off generic manufacturers to keep the lower-cost generic versions of their medications off the market.
And legislation adopted as part of the state budget this year will require Californians to have health insurance next year or face a penalty. The budget also funded new state-based tax credits for Californians who purchase health insurance through Covered California, including some who earn too much to qualify for federal financial aid.
Also starting next year, young adults in the country illegally will be eligible for Medi-Cal if their incomes qualify.
"This was a landmark year in health care," said Anthony Wright, executive director of the consumer advocacy group Health Access California. "Over a million Californians will be getting help to access or afford coverage."
But many lesser-known health care measures could also have a dramatic impact on Californians' lives, including college students, dialysis patients, older adults and new moms. Some of the laws put California in the forefront nationally, such as a measure to expand access to HIV prevention drugs.
Most of these measures take effect Jan. 1:
HIV Prevention
California will be the first state to allow people to access HIV prevention drugs from pharmacies without a doctor's prescription. Pre-exposure prophylaxis (PrEP) is a once-a-day pill for HIV-negative people that may keep them from becoming infected, and post-exposure prophylaxis (PEP) is medication that can help prevent the virus from taking hold if they have been exposed to it. SB-159 by state Sen. Scott Wiener (D-San Francisco) will allow pharmacists to dispense a 60-day supply of PrEP, or a 28-day course of PEP. Patients will need to see a physician to obtain more medication. The bill prohibits insurance companies from requiring patients to obtain prior authorization before obtaining the medication.
Abortion Pill
Students at California's 34 California State University and University of California campuses will have access to medication-induced abortion — commonly known as the abortion pill — at on-campus student health centers by Jan. 1, 2023. Under SB-24 by state Sen. Connie Leyva (D-Chino), students who are up to 10 weeks pregnant will be eligible. Initial costs, such as the purchase of medical equipment, will be paid for with private, not state, dollars.
Maternal Health
Black women are three to four times more likely to die during childbirth and from other pregnancy-related causes than white women, according to the Centers for Disease Control and Prevention. SB-464 by state Sen. Holly Mitchell (D-Los Angeles) will require perinatal health care providers to undergo bias training with the goal of reducing preventable maternal deaths among black women. "The disproportionate effect of the maternal mortality rate on this community is a public health crisis and a major health equity issue," Newsom said upon signing the bill.
Some new moms returning to their jobs who want to pump milk at work will face fewer barriers. SB-142 by Wiener will require employers to provide new mothers with a private space that includes a table, chair, electric outlet and nearby access to running water and refrigeration. Businesses with fewer than 50 employees may be eligible for an exemption. "Too many new mothers are unable to express milk at work or are forced to do so in a restroom or other unsuitable space," Wiener said.
Financial Abuse Of Older Adults
Investment advisers and broker-dealers will be required to report suspected financial abuse of elder or dependent adults. SB-496 by state Sen. John Moorlach (R-Costa Mesa) allows these financial experts to temporarily delay requested transactions, such as stock trades and disbursement of funds, when they suspect potential abuse. "With growing Alzheimer's and dementia concerns, it is critical that we provide safeguards to prevent financial abuse for those in the beginning stages of a difficult life journey," Moorlach said in a statement.
Smoking In State Parks
Californians will be prohibited from smoking or vaping at state beaches and parks, except for paved roads and parking areas. Violations of SB-8 by state Sen. Steve Glazer (D-Orinda) will carry a fine of up to $25. Similar efforts were vetoed by former Gov. Jerry Brown.
Nurse Staffing
State health officials who make unannounced inspections of hospitals will start reviewing nurse staffing levels. Some California hospitals disregard the state's current nurse-to-patient ratio requirements, Leyva, the bill's author, argued. SB-227 establishes penalties for violations: $15,000 for the first offense and $30,000 for each subsequent violation.
Medical Marijuana On School Grounds
Even though medicinal cannabis has been legal for years in California, it has not been allowed on school grounds. SB-223 by state Sen. Jerry Hill (D-San Mateo), will allow school boards to adopt policies that authorize parents or guardians of students with severe medical and developmental disabilities to administer medicinal cannabis on campus, as long as it is not via smoking or vaping. This allows students to "take their dose at school and then get on with their studies," Hill said.
Dialysis Industry Profits
One new law could disrupt the dialysis industry's business model. Dialysis companies often get higher reimbursements from private insurers than they do from public coverage. One way low-income patients remain on private insurance is by getting financial assistance from the American Kidney Fund, a nonprofit that receives most of its donations from the two largest dialysis companies, Fresenius Medical Care and DaVita Inc. AB-290, by Assemblyman Jim Wood (D-Santa Rosa), will limit the private-insurance reimbursement rate that dialysis companies receive for patients who get assistance from groups such as the American Kidney Fund.
Health Care In Jails And Prisons
County jails and state prisons will be prohibited from charging inmates copays — usually $3 to $5 — for medical and dental services with the passage of AB-45, by state Assemblyman Mark Stone (D-Scotts Valley). Some states already prohibit copays in prison, but California is the first to eliminate copays in county jails.
Cancer Patients
Some Californians undergoing cancer treatment such as radiation or chemotherapy will have insurance coverage for fertility preservation treatments. Under SB-600 by state Sen. Anthony Portantino (D-La Cañada Flintridge), private health plans regulated by the state must cover procedures such as the freezing of eggs, sperm or embryos for patients who want to try to have children in the future.
Drugmakers fought hard against California's groundbreaking drug price transparency law, passed in 2017. Now, state health officials have released their first report on the price hikes those drug companies sought to shield.
Pharmaceutical companies raised the "wholesale acquisition cost" of their drugs — the list price for wholesalers without discounts or rebates — by a median of 25.8% from 2017 through the first quarter of 2019, according to the Office of Statewide Health Planning and Development. (The median is a value at the midpoint of data distribution.)
Generic drugs saw the largest median increase of 37.6% during that time. By comparison, the annual inflation rate during the period was 2%.
Several drugs stood out for far heftier price increases: The cost of a generic liquid version of Prozac, for example, rose from $9 to $69 in just the first quarter of 2019, an increase of 667%. Guanfacine, a generic medication for attention deficit hyperactivity disorder (ADHD), on the market since 2010, rose more than 200% in the first quarter of 2019 to $87 for 100 2-milligram pills. Amneal Pharmaceuticals, which makes Guanfacine, cited "manufacturing costs" and "market conditions" as reasons for the price hike.
"Even at a time when there is a microscope on this industry, they're going ahead with drug price increases for hundreds of drugs well above the rate of inflation," said Anthony Wright, executive director of the California advocacy group Health Access.
The national debate over exorbitant prescription drug prices — and how to relieve them — was supposed to take center stage in recent weeks, as House Speaker Nancy Pelosi released a planto negotiate prices for as many as 250 name-brand drugs, including high-priced insulin, for Medicare beneficiaries. Another planunder consideration in the Senate would set a maximum out-of-pocket cost for prescription drugs for Medicare patients and penalize drug companies if prices rose faster than inflation.
President Donald Trump has highlighted drug prices as an issue in his reelection campaign. But lawmakers' efforts to hammer out legislation are likely to be overshadowed, for now, by presidential impeachment proceedings. In Nevada, health officials in early Octoberfined companies $17 million for failing to comply with the state's two-year-old transparency law requiring diabetes drug manufacturers to disclose detailed financial and pricing information.
California's new drug law requires companies to report drug price increases quarterly. Only companies that met certain standards — they raised the price of a drug within the first quarter and the price had risen by at least 16% since January 2017 — had to submit data. The companies that met the standards were required to provide pricing data for the previous five years. In its initial report, the state focused its analysis on drug-pricing trends for about 1,000 products from January 2017 through March 2019.
California's transparency law also requires drugmakers to state why they are raising prices. Over time, that information, in addition to cost disclosures, could create "one of the more comprehensive and official drug databases on prices that we have nationwide," Wright said. "That, in itself, is progress, so that we can get better information on the rationale for drug price increases."
But the data does not reflect discounts and rebates for insurers and pharmacy benefit managers and bears little resemblance to what consumers actually pay, said Priscilla VanderVeer, a spokeswoman for the trade group Pharmaceutical Research and Manufacturers of America. The group filed a lawsuit seeking to overturn the California legislation that has not yet been resolved.
"If transparency legislation only looks at one part of the pharmaceutical supply chain, without getting into the various middlemen like insurers and pharmacy benefit managers that ultimately determine what patients have to pay at the pharmacy counter, it won't help patients access or afford their medicines," VanderVeer said in an email.
State Sen. Richard Pan (D-Sacramento), a pediatrician who chairs the Senate health committee, agrees — up to a point.
"Transparency always has value," Pan said. But policymakers need more data on how much insurers and consumers are spending on prescription drugs, he said.
And he wonders why the price of generic drugs, including those with plenty of competition, rose at higher rates.
His concerns were echoed by University of Southern California policy researchers, who recently published a studythat concluded most state-level drug-transparency laws are "insufficient" to reveal the true transaction prices for prescription drugs, or where in the distribution system excessive profits lie.
"The question is, why are these prices going up? Typically, there are competing stories for that," said Neeraj Sood, vice dean of the University of Southern California's School of Public Policy and an author of the study. "Maybe cost of production is going up," he said. "Maybe there's a drug shortage, or some competitors got eliminated. This reporting of [wholesale acquisition cost] data doesn't really tell us which of these stories is true."
For now, California's new data is not likely to be of much help to consumers, Pan said. But he said it might help state officials in their bid to overhaul the way the state purchases drugs for 13 million people served by Medi-Cal, the state's Medicaid program for low-income residents. Gov. Gavin Newsom's controversial plan to have the state, rather than individual Medi-Cal managed-care plans, negotiate directly with drugmakers would save the state an estimated $393 million a year by 2023, according to the administration.
When Ashley Pintos went to the emergency room of St. Joseph Medical Center in Tacoma, Wash., in 2016, with a sharp pain in her abdomen and no insurance, a representative demanded a $500 deposit before treating her.
"She said, 'Do you have $200?' I said no," recalled Pintos, who then earned less than $30,000 at a company that made holsters for police. "She said, 'Do you have $100?' They were not quiet about me not having money." But Pintos, a single mom with two kids who is now 29, told state officials St. Joseph never gave her a financial aid application form, even after she asked.
Pintos said she was examined and discharged with instructions to buy an over-the-counter pain medication. Then St. Joseph sent her a bill for $839. When she couldn't pay, the hospital referred the bill to a collection agency, which she said damaged her credit and resulted in a higher interest rate when she applied for a mortgage.
St. Joseph denied erecting barriers to charity care. But the hospital's owner settled a lawsuit from the state attorney general earlier this year alleging such practices and agreed to pay more than $22 million in refunds and debt forgiveness.
Under the Affordable Care Act, nonprofit hospitals like St. Joseph are required to provide free or discounted careto patients of meager incomes — or risk losing their tax-exempt status. These price breaks can help people avoid financial catastrophe.
And yet nearly half — 45% — of nonprofit hospital organizations are routinely sending medical bills to patients whose incomes are low enough to qualify for charity care, according to a Kaiser Health News analysis of reports the nonprofits submit annually to the Internal Revenue Service. Those 1,134 organizations operate 1,651 hospitals.
Together, they estimated they had given up collecting $2.7 billion in bills sent to patients who probably would have qualified for financial assistance under the hospitals' own policies if they had filled out the applications.
These written-off bills, known as bad debt, represented a tenth of all nonprofit hospital bad debt reported to the IRS in either 2017 or the most recent year for which data is available. That sum may represent an undercount because it is based on self-reported estimates from hospitals and is not independently audited. And it does not include money that financially struggling patients eventually paid.
"People, including me, had the impression that these new protections under the ACA would prevent people who should be getting help from being financially devastated," said Sayeh Nikpay, an assistant health policy professor at Vanderbilt University School of Medicine. "Clearly, this policy isn't working, and that's a major failing."
About 56% of American community hospitals have nonprofit status, which frees them of paying most taxes and allows them to float tax-exempt bonds. In return, they are supposed to provide community benefits including free or discounted care for patients who can't afford to pay.
The IRS leaves it up to each hospital to decide the qualifying criteria. A comparatively generous hospital may give free care to people earning less than twice the federal poverty level — around $25,000 for an individual and $50,000 for a family of four — and may provide discounts for people earning up to double that.
For those who do not qualify, hospitals often offer payment plans. But they can turn to aggressive tactics if bills are not resolved. Patients can be pestered by debt collectors, and some hospitals sue them or try to garnish their wages. Medical debt can damage credit ratings — one study calculated Americans had $81 billion in collections in 2016 — and forces some people into bankruptcy.
When hospitals give up on collecting a bill, they categorize it as bad debt and absorb the cost of the care, which is indirectly subsidized by the rates they charge private insurers.
It became this moneymaking system. People would be crying at registration desks, people would be upset, people would walk out.
Rachael Murphy, a former St. Joseph's Medical Center employee
Charity Options Often Thwarted
In 2017, BJC HealthCare, a large St. Louis-based system, estimated $77 million of its $134 million in bad debt was owed by patients who probably would have qualified for free or discounted care.
Hospitals now owned by Ballad Health, in Tennessee, estimated that $60 million of bad debt in 2016, or 70%, came from patients who might have been eligible for help.
The Hospital of the University of Pennsylvania said $43 million of its bad debt, or 52%, might have involved patients who could have been excused in 2016 from being billed.
While some hospitals say they write off the debt of poor patients without ever resorting to collection measures, several hospitals whose practices were highlighted in news reports this year for aggressively suing patients admitted to the IRS they knew many unpaid bills might have been averted through their financial assistance policies.
A quarter of bad debt at Mary Washington Healthcare, which sued so many patients that a Virginia court convened special sessions to hear the cases, involved candidates for free or discounted care, according to its IRS filing.
So did half of the bad debt at Methodist Le Bonheur Healthcare in Memphis, called out by news organizations for frequently garnishing wages, its filing said.
CHI Franciscan, which owns St. Joseph, said in multiple IRS filings that none of its bad debt arose from billing indigent patients. While Franciscan admitted no wrongdoing in its settlement with the Washington attorney general, the agreement bars the practice of discouraging charity care in the ways alleged in the lawsuit.
"We are exceeding the requirements of state law and providing charity care compensation to patients who may be in most need, even if they never applied for charity care or did not actually qualify at the time of service," Cary Evans, a Franciscan spokesman, said in a statement. Franciscan declined to discuss individual patients.
According to the lawsuit and interviews with former employees, St. Joseph's workers were told never to voluntarily offer patients a charity care application. If asked for one, they were instructed to insist on a deposit at least three times. Even when submitted, applications required so much documentation that half of the requests were rejected, the lawsuit alleged.
Internal hospital training documents the attorney general submitted as part of the case showed that St. Joseph workers were advised on how to best collect money from patients before they left the hospital. Instead of saying, "Can you pay today?" employees were told to use phrases like "How would you like to pay for that today? Cash, check or credit card?" according to the documents.
"It became this moneymaking system," Rachael Murphy, a former employee, recalled in an interview. "People would be crying at registration desks, people would be upset, people would walk out."
Pintos, who signed a written statement for the attorney general and was listed as a potential witness in the case, said the hospital never gave her an application even though she had qualified for charity care the previous year. "They made me feel like I wasn't good enough to be there," she said.
St. Joseph recently erased the $839 debt from her credit, but Pintos still owes $1,611 for care from the ER doctors, who have their own practice group and do not have to follow the hospital's charity care policies, according to Franciscan. That bill remains in collections.
'A Gap In Trust'
Nonprofit hospitals provide roughly $14 billion worth of charity care a year, about 2% of their operating costs. But their policies can have notable exemptions, such as excluding bills from doctors who are not on the hospital payrolls.
However, information about hospital charity care, often included in the reams of admissions documents or posted on hospital walls, can easily get overlooked by patients and families focused on medical emergencies.
"The signage might be a little hard to find, applications are complicated, documentation is complicated," said Keith Hearle, a consultant who advised the IRS on collecting hospitals' charity care data. "You could probably come up with 15 reasons people didn't apply."
In their IRS filings explaining the bad debt and in interviews, hospitals said that even when they give applications to patients, some fail to submit them or do not provide complete records of their finances, which can include tax returns and bank statements.
"There is a gap in trust where our patients must not believe that if they are willing to share information, that it will be to their benefit," said June McAllister Fowler, a spokeswoman for BJC HealthCare.
Shana Tate, senior vice president of revenue cycle at Ballad Health, said Ballad is looking to be more proactive.
"We made the assumption that, 'We give you the information. What more do you need?' But we realize a lot of patients don't read it, don't pay attention," Tate said. "They need someone to hold their hand through this process."
Methodist Le Bonheur, which erased more than 6,000 unpaid bills last month, said it is "increasing access to financial assistance information upfront and throughout the patient care journey" and "enhancing the screening process."
Penn Medicine said that, as a safety-net hospital system, it has many patients who are poor or coping with other problems. These people, Penn said, face "barriers to completing the process for aid" and their bills are typically "left unpaid."
Mary Washington did not respond to requests for comment, but after critical news reports last June it announced that it was suspending its lawsuits over unpaid bills and reevaluating its practices.
Laurie Jinkins, a state representative from Tacoma and author of legislation to strengthen Washington's charity care laws, said, "The drive for dollars in the health care system, and the drive for dollars to expand, causes our nonprofit health systems to lose sight of why they're actually here." She said St. Joseph had "really gone off the deep end" in its focus on money.
St. Joseph's practices hark back years, according to the attorney general's lawsuit and interviews with employees and patients.
After Alisha Colyer's husband went to the St. Joseph emergency room with pneumonia in 2007, she said, she tried to apply for help, but the charity care application "was like a book you had to fill out."
"I remember them asking me what make and model my car was, and I was like, 'You want me to sell my car to pay my hospital bill?' " recalled Colyer, who now works at the hospital as a dietary aide.
In a statement, Franciscan noted that St. Joseph and its other hospitals now use a simplified two-page application designed by the state hospital association and have agreed to make charity care easier to obtain. It also offers free care for medically necessary services to patients earning up to three times the poverty level, which is more than most hospitals do.
It is too early to assess how the policy changes translate into results. The most recent Washington state analysis, for 2017, found St. Joseph lagged behind the regional average in the amount of charity care it provided.
KHN data editor Elizabeth Lucas contributed to this report.
METHODOLOGY
Bad debt figures were derived from the IRS 990 tax returns filed electronically by nonprofit hospital organizations. That information was downloaded in data form from the IRS website on May 7, 2019, by Jacob Fenton, an independent consultant, and analyzed by Kaiser Health News. Returns that included Schedule H, which only hospital-owning nonprofits must file, were analyzed.
For each organization identification number, we selected the return with the most recent tax period end date. In case of duplicates such as amended returns, only the return with the most recent end date and the most recent signature filing date was selected. Because there were still a few duplicates, the one with the largest unique return identifier was selected. The most recent tax returns for 2,508 nonprofits were identified.
Organizations must report their bad debt — bills they have given up on collecting — and, separately, estimate the bad debt "that reasonably is attributable to patients who likely would qualify for financial assistance under the hospital's financial assistance policy … but for whom insufficient information was obtained to determine their eligibility." Generally, both figures are greater than the actual cost of providing the services: They are the amount the hospital expected to be paid. For our analysis, we calculated the percentage of bad debt that the organization attributed to patients who might qualify for financial assistance.
A handful of bad debt figures were reported as negative numbers. Those were converted to positives. The amounts were not significant enough to substantially affect aggregates or the analysis's conclusions.
VCU Health, the major Richmond medical system that includes the state’s largest teaching hospital, said it will no longer file lawsuits against its patients.
This article was first published on Wednesday, October 9, 2019 in Kaiser Health News.
VCU Health, the major Richmond medical system that includes the state's largest teaching hospital, said it will no longer file lawsuits against its patients, ending a practice that has affected tens of thousands of people over the years.
VCU's in-house physician group filed more than 56,000 lawsuits against patients for $81 million over the seven years ending in 2018, according to a Kaiser Health News analysis of district court data. Those suits will end and VCU will increase financial assistance for lower-income families treated at the $2.16 billion system, according to Melinda Hancock, VCU's chief administrative and financial officer.
Kaiser Health News recently reported that UVA Health, the University of Virginia system, had filed more than 36,000 suits over six years against patients who could not pay their bills. That revelation, published last month inThe Washington Post, led UVA to pledge to "positively, drastically" reduce patient lawsuits.
VCU's new stance on lawsuits goes beyond UVA's, which promised to stop suing only patients whose income is below 400% of poverty guidelines. UVA officials did not respond to requests for comment.
VCU's flagship hospital, VCU Medical Center, hasn't filed patient suits in at least seven years, Hancock said in an interview this week. But its in-house physician group continued to sue patients and families for overdue bills.
That approach stopped as of last month, she said. VCU Health, a state-operated system including Richmond's VCU School of Medicine and Community Memorial Hospital in South Hill, Va., will stop suing patients "as part of normal debt collection," she said. It is also ending garnishment of patient wages and attaching liens to patient homes, she said.
Hancock said VCU has been considering changing its policies since last year but recent revelations about UVA "expedited" the decision. Starting in June, KHN had requested comment from VCU officials about the health system's financial assistance and lawsuits.
"We don't want to be part of that," she said about patient lawsuits, which are a standard tool for many hospitals seeking to maximize revenue. "We feel that taking care of the patient's financial health is taking care of their holistic health."
The system, affiliated with Virginia Commonwealth University, is also considering "how we should address pending lawsuits and retrospective cases," said spokeswoman Laura Rossacher.
VCU Health will continue to send unpaid debts to collections and report patients with overdue bills to credit agencies.
"We still need to get our bills paid," Hancock said. "We do need to deploy reasonable collection efforts."
Policy scholars said the new guidelines, which would make VCU's collection and billing practices among the most liberal for Virginia hospitals, would still leave many patients vulnerable to credit downgrades, financial hardship and bankruptcy.
"This certainly seems like progress," said Sara Rosenbaum, a health law professor at George Washington University. But even if no lawsuit is filed, "being an apparent deadbeat on a bill written off as bad debt has terrible and enduring consequences on folks."
Negative credit reports from a hospital, even without a court case, can send families into a downward spiral, said Gerard Anderson, director of the Johns Hopkins Center for Hospital Finance and Management.
"If they send you to a collection agency, you're not able to borrow any money because that's going to put you in such a poor credit rating," he said. "You cannot expect somebody to pay a $10,000 or $20,000 bill if they don't have insurance."
Analysts also criticized as inadequate VCU's new discounts to the uninsured. Last year, the system started reducing list prices by 45% for those lacking coverage. The previous discount was 25%. Almost nobody pays list charges, which hospitals typically use as a starting point for negotiations with insurers.
But VCU's average cost of care is 77% below list charges, according to 2017 government filings. That means the uninsured are still paying a big markup under the new policy.
"Most uninsured have very little income, and asking them to pay twice as much as it costs to deliver care is not appropriate," Anderson said. "It is no wonder why so many cannot pay the bills."
Uninsured patients paying promptly can receive discounts of up to 55%, Rossacher said. But few are able to do that.
Like UVA, VCU is raising the income threshold for patients seeking financial assistance ― in its case, awarding aid to families with income up to 300% above the federal poverty level, or $77,000 for a family of four. For most patients, the previous cutoff was 200%, or $52,000, for a family of four.
That aid threshold takes effect in November. VCU officials declined to give an estimate of what the new policies would cost the system.
KHN analyzed lawsuits filed by VCU and other hospitals using civil court data collected by Code for Hampton Roads, a nonprofit focusing on improving government technology.
"VCU Health System and its affiliated physicians are making important policy changes that are long overdue," said Jill Hanken, a health care attorney for the Virginia Poverty Law Center. She urged "further and ongoing oversight" from lawmakers to ensure appropriate indigent care policies.
Virginia Gov. Ralph Northam, a physician, has said little publicly about the state hospitals and doctors under his leadership that often pursue patients for all they are worth.
"No one should go bankrupt because they get sick," said Northam spokeswoman Alena Yarmosky. "Gov. Northam is glad to see health systems taking real steps to put Virginians first and address aggressive bill collection practices."
VCU will continue reviewing its collections and assistance policies, Hancock said. "This is an ongoing process," she said. "It doesn't' stop here."
One impetus to dropping lawsuits was an increasing number of patients with health insurance who still have trouble paying, she said.
"With the rise of high-deductible plans," in which patients pay thousands before insurance kicks in, she said, "we just felt that there are other collection efforts that were more suitable now."
Methodology KHN analyzed civil case records from the Virginia district courts from 2012 to 2018, based on the date the case was filed. The case records were part of a dataset KHN acquired from Ben Schoenfeld, a volunteer for Code for Hampton Roads, a nonprofit focused on improving government technology. Schoenfeld compiled court records available directly from Virginia's court system (from both circuit and district courts) and posted them on the website VirginiaCourtData.org. The analysis included all "warrant in debt" cases where the plaintiff was listed as MCV Physicians.
Imagine a government program that would mobilize volunteers to help older adults across the nation age in place. One is on the way.
The Administration for Community Living, part of the Department of Health and Human Services, is taking steps to establish a National Volunteer Care Corps.
If it's successful, healthy retirees and young adults would take seniors to doctor appointments, shop for groceries, shovel snowy sidewalks, make a bed or mop the floor, or simply visit a few times a week.
Older adults would not only get a hand with household tasks, but also companionship and relief from social isolation. And family caregivers could get a break.
Younger volunteers might get class credit at a community college or small stipends. Older volunteers could enjoy a satisfying sense of purpose.
There's no question the need is enormous, as the ranks of the oldest Americans ― those age 85 and up, who tend to have multiple chronic illnesses and difficulty performing daily tasks ― are set to swell to 14.6 million in 2040, up from more than 6 million now.
Who will care for these seniors? More than 34 million unpaid family caregivers currently shoulder that responsibility, along with 3.3 million paid personal care and home health aides. (Medicare does not pay for long-term care services or non-medical services in the home.)
According to the Bureau of Labor Statistics, more than 1.2 million new paid jobs of this kind will be needed by 2028. But filling them will be hard, given low pay, difficult work conditions, limited opportunities for professional advancement and high turnover.
This notion of a domestic Peace Corps for caregiving, if you will, has been circulating since2013, when it surfaced in a Twitter chat on elder care. In 2017and 2018, bills introduced in Congress proposed a demonstration project, unsuccessfully.
Now, four organizations will spearhead the Care Corps project: the Oasis Institute, which runs the nation's largest volunteer intergenerational tutoring program; the Caregiver Action Network; the National Association of Area Agencies on Aging; and the Altarum Institute, which works to improve care for vulnerable older adults.
The initial grant to the group is $3.8 million; total funding for the five-year project is expected to be $19 million, according to Greg Link, director of the ACL's office of supportive and caregiver services.
This fall, project leaders will invite organizations across the country to submit proposals to serve "non-medical" needs of older adults and younger adults with disabilities. Next spring, up to 30 organizations will get 18-month grants of $30,000 to $250,000, according to Juliet Simone, director of national health at the Oasis Institute.
The goal is to discover innovative, effective programs that offer services to diverse communities (geographic, racial and ethnic) and that can be replicated in multiple locations.
"We want the organizations that apply to be very flexible and creative," said Anne Montgomery, deputy director of Altarum's Program to Improve Eldercare. "And we're aiming to create a volunteer infrastructure that can last and be sustainable."
All volunteers will undergo background checks and training, and there will be an emphasis on evaluating program results.
"We want to be able to say, 'Here are the services that people really need, and these are the types of things that work well for specific populations,'" said John Schall, CEO of the Caregiver Action Network. Services could include preparing meals, taking seniors to church or home-based tech support for computer users, among many other possibilities.
Care Corps faces several challenges. A big one: The grant is tiny, compared with the trillions of dollars spent on health care. It could take a long time to build it into a national effort that attracts more investment.
Project leaders are optimistic. To nonprofit organizations working in the aging field, "it's a lot of money ― they can do quite a lot with these grants," said Sandy Markwood, CEO of the National Association of Area Agencies on Aging. Programs may find ways to license successful models, and local and national foundations may step in with additional support, Simone said.
Recruiting volunteers could be another challenge. At the Center for Volunteer Caregiving in Cary, N.C., which has been providing "friendly visiting," transportation and caregiver respite services for 27 years, "it's the biggest issue we face," said executive director Elaine Whitford.
Because her organization focuses on building relationships with seniors, it asks volunteers to commit to at least a year. "We get a lot of interest," Whitford said, "then people realize that this just isn't going to fit into their schedule."
Helen Anderson, 86, has sickle cell disease, lupus and chronic pain. She lives alone in a Cary apartment. Without help from the center's volunteers, three women and a man who've taken her shopping, cleaned her apartment and done her laundry since 2008, she said, "I could not live independently."
Scores of volunteer programs serving seniors and people with disabilities already exist, but most are small and many older adults and their families don't know about them. How they'll interact with the Care Corps is not yet clear.
One of the largest is Seniors Corps, run by the Corporation for National and Community Service. Through its Senior Companion program, volunteers age 55 and older visit needy older adults and help them with tasks such as shopping or paying bills. About 10,500 volunteers spend 15 to 20 hours a week, on average, serving 33,000 seniors through this program.
Recent research from Senior Corps demonstrates that volunteers receive benefits while giving to others ― a finding confirmed by a large body of research. After two years of service, 88% of Senior Corps volunteers reported feeling less isolated, while 78% said they felt less depressed.
To learn if Service Corps' companion program is available near you, use this new tool on its website. The group also offers less intensive services to 300,000 older adults and people with disabilities through its Retired Senior Volunteer Program.
To learn about other volunteer programs in your community, contact a local senior center, a nearby Area Agency on Aging or your county's department of aging, experts suggest. ACL's Eldercare Locator can help you identify these organizations.
Another source is the National Volunteer Caregiving Network, which lists about 700 programs, most of them church-based, on its website.
"Volunteer caregiving can make the difference between someone having quality of life and not having any at all," said Inez Russell, board chair of the organization. She's also the founder of Friends for Life, a Texas program that offers volunteer aid to seniors trying to live independently and that reaches out to seniors who don't have family members on birthdays and holidays, among other services. Altogether, the two programs reach about 4,000 people a year.
In Montpelier, Vt., Joan Black, who's 88 and lives alone in a one-bedroom apartment, has been a member of Onion River Exchange ― a time bank ― for 10 years. Onion River members contribute goods and services (a ride to the airport, a homemade casserole, a newly knit baby sweater) to the time bank and receive goods and services in exchange. For years, Black gave out information about the exchange at farmers markets and other community events ― her way of banking credits.
"It's a form of volunteerism that "creates a sense of community for many people," said Edisa Muller, chairwoman of the Onion River board.
For Black, who lives on a small fixed income and can't vacuum, scrub her tub, dust her wooden furniture or shovel the driveway that leads to her apartment, participating in the time bank has become a way to meet new people and remain integrated with the community.
"I like a tidy house: When things are out of order, I'm out or order," she said. "I don't believe I'd be able to do everything I do or live the way I do without their help."
Dean Ernest had been living in a nursing home about a year when his son, John, got a call last winter asking if his father was experiencing back pain and would like a free orthotic brace.
The caller said he was with Medicare. John Ernest didn't believe him, said "no" to the brace and hung up. He didn't give out his father's Medicare number.
And yet, not just one, but 13 braces arrived soon afterward at Ernest's house in central Pennsylvania.
Medicare, the federal taxpayer-supported health care insurance program for older Americans, had paid over $4,000 for 10 of the braces: a back brace, two knee braces, two arm braces, two suspension sleeves, an ankle brace, a wrist brace and a heel stabilizer.
The orders came from four medical equipment companies and were prescribed by four separate health care professionals — a prescription being required to receive an orthotic brace. But Ernest said he didn't talk to any doctors during the phone call.
That's how the latest Medicare frauds work, said Ariel Rabinovic, who works with Pennsylvania's Center for Advocacy for the Rights & Interests of the Elderly. He helped report Ernest's fraud case to authorities at Medicare. Rabinovic said the fraudsters enlist health professionals — doctors, physician assistants, nurse practitioners — to contact people they've never met by telephone or video chat under the guise of a telemedicine consultation.
"Sometimes the teledoctors will come on the line and ask real Mickey Mouse questions, stuff like, "Do you have any pain?" explained Rabinovic. "But oftentimes, there is no contact between the doctor and the patient before they get the braces. And in almost all of the cases, the person prescribing the braces is somebody the Medicare beneficiaries don't know."
While prescriptions for durable medical equipment, such as orthotic braces or wheelchairs, have long been a staple of Medicare fraud schemes, the manipulation of telemedicine is relatively new. The practice appears to be increasing as the telemedicine industry grows.
"This has put telemedicine scams on Medicare's radar with growing urgency," said James Quiggle, director of communications for the Coalition Against Insurance Fraud.
In the past year, the Department of Health and Human Services Office of Inspector General, the Department of Justice and, in some cases, the FBI, have busted at least five health care fraud schemes that involved telemedicine. Typically in these schemes, scammers use sham telemedicine companies to scale up their operations quickly and cheaply — they can have a couple of doctors remotely writing a large number of prescriptions.
Often the doctors working for these outfits don't perform medical consultations, but rather write prescriptions without talking to patients, as in Ernest's case. Of course, that is not how telemedicine is designed to work.
In April 2019, the DOJ announced investigators had disrupted what they called "one of the largest Medicare fraud schemes in U.S. history." Operation Brace Yourself cracked an international scheme allegedly defrauding Medicare of more than $1.2 billion by using telemedicine doctors to prescribe unnecessary back, shoulder, wrist and knee braces to beneficiaries.
The DOJ charged 24 people, including three medical professionals and the corporate executives of five telemedicine companies.
According to federal court documents, Willie McNeal of Spring Hill, Fla., owned two of the "purported" telemedicine companies, WebDoctors Plus and Integrated Support Plus.
Federal investigators allege that through Integrated Support Plus, McNeal hired and paid a New Jersey doctor, Joseph DeCorso, to write prescriptions for braces. DeCorso recently pleaded guilty to one count of conspiracy to commit health care fraud.
DeCorso admitted to writing medically unnecessary brace orders for telemedicine companies without speaking to beneficiaries or doing physical exams. He also admitted that his conduct resulted in a $13 million loss to Medicare. He has agreed to pay over $7 million in restitution to the federal government.
McNeal got the Medicare beneficiaries' information for DeCorso to write the prescriptions from telemarketing companies, according to the indictment. Then, authorities allege, McNeal sent the prescriptions back to the same telemarketing companies in exchange for payments described as kickbacks and bribes.
Federal investigators allege these telemarketing companies sold the prescriptions to the durable medical equipment companies, who in turn billed Medicare for the braces.
McNeal's lawyer said he could not discuss his client's case because it is pending. DeCorso's lawyer did not respond to multiple requests for comment.
The U.S. attorneys allege the money made from the scheme was hidden through international shell corporations and used to buy luxury real estate, exotic automobiles and yachts.
It's clearly a profitable business. Taxpayers are the ones who ultimately pay for Medicare fraud, which often leads to higher health care premiums and out-of-pocket costs.
Medicare spending on back, knee and ankle braces highlighted in the inspector general's investigationsincreased by over $200 million from 2013 to 2017, according to an analysis of Medicare data by Kaiser Health News. While the number of Medicare fee-for-service beneficiaries increased slightly, by 5%, from 2013 to 2017, spending on the three types of braces increased by 51% during that same period.
In an April news release about Operation Brace Yourself, Assistant Attorney General Brian Benczkowski of the DOJ's Criminal Division called the Medicare scheme "an expansive and sophisticated fraud to exploit telemedicine technology meant for patients otherwise unable to access health care."
Nathaniel Lacktman, a lawyer who represents telemedicine companies and organizations, was quick to point out that the industry does not recognize the fraudsters involved in these schemes as legitimate businesses.
"These are actually really sketchy online marketing companies participating in these schemes who are billing themselves as telemedicine," said Lacktman, who works in the Tampa office of the law firm Foley & Lardner. "But in fact, they're companies we've never heard of."
All of this comes at a time when Medicare and Medicare Advantage are expanding telemedicine, though the programs have been slower to adopt it than the private sector, said Laura Laemmle-Weidenfeld, a health care lawyer at the law firm Jones Day.
"I would hate for Medicare to fall even further behind with telehealth," said Laemmle-Weidenfeld, who previously worked in the Fraud Section of the DOJ's Civil Division. "The vast majority of telehealth providers are legitimate, but as with anything there are a few bad apples," she said.
Even with the recent federal busts, the scams continue.
Travis Trumitch, who works for the Illinois nonprofit AgeOptions, which helps report Medicare fraud in the state, said he received three voicemails over a recent weekend reporting suspected durable medical equipment scams.
John Ernest said he still receives calls every day with individuals on the line who say they work for Medicare and ask for Dean Ernest's information — though his father died in April.
But Ernest can't change his phone number because it's the main line associated with his painting business.
"It really drives me crazy," said Ernest. "How many people are they ripping off?"
KHN data editor Elizabeth Lucas contributed to this report.