Supreme Court Decision Limiting the Authority of Federal Agencies Could Have Far-Reaching Impacts for Health Policy

KFF Health News, July 2, 2024

The 'Chevron deference' standard is over. Now courts will not have to accept agency expertise in their review of challenged regulations.

This article was published on Monday, July 1, 2024 in KFF Health News.

By Kaye Pestaina, Michelle Long, and Justin Lo

The U.S. Supreme Court has again overturned longstanding precedent, this time getting rid of a 40-year- old standard for decision making that required federal courts to defer to reasonable agency decisions where federal law is silent or unclear. This "Chevron deference" standard is now gone, ushering in a new era where courts will not have to accept agency expertise in their review of challenged regulations. While the details of the rules that define administrative law often garner little attention, this decision, like the decision that overturned Roe v. Wade, will have profound effects for health care. This issue brief examines the decision and assesses what is ahead.

What the Court Said

 

As explained in the KFF brief Upcoming SCOTUS Case Could Weaken the Impact of Regulation on Key Patient and Consumer Protection, the Supreme Court took up two cases to review the question of whether Chevron deference should be overruled or changed. The two cases, Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce, decided jointly, relate to federal regulations affecting the fishing industry, but the decision will shape how courts review legal challenges to all regulations that interpret issues where a federal law is ambiguous or silent, including health care.

In a 6-3 decision, with Justice Roberts writing for the majority, the Court concluded that Chevron deference should never have been used to begin with, overturning the Chevron decision. The Court made the following major points:

  • Courts must use independent judgment to determine the meaning of federal statutes. It cannot defer to agency regulation just because the issue is not clear in a statute. According to the majority opinion the Chevron decision runs counter to the Administrative Procedure Act (APA) which incorporated prior practice that "courts decide legal questions by applying their own judgement." The APA is a 1946 law that sets parameters for how agencies function.
     
  • On the question of deferring to agency expertise to resolve an issue, the Court said that "…agencies have no special competence in resolving statutory ambiguities. Courts do." While courts can "respect" agency regulation and expertise and look to it to inform them on technical issues, "Congress expects courts to handle technical statutory questions."
     
  • While federal courts must generally follow prior Supreme Court decisions (a legal concept called stare decisis), the majority opinion said that the 1984 Chevron decision is flawed and "unworkable," because there can be different interpretations of what makes a statute ambiguous. As a result, the Court concludes that there is not "any reason to wait helplessly for Congress to correct our mistake."
     
  • The opinion notes that it does not implicate prior cases that relied on Chevron to uphold agency actions because those decisions are still subject to "statutory stare decisis" and can still be upheld even though the deference standard has changed.

Of note is a 33-page dissent by Justice Kagan (joined by Justices Sotomayor and Jackson) stating that, contrary to the majority, the APA includes no reference to how courts should review agency regulations—with or without deference to agency decisions—when courts use their authority to interpret the law. In addition, she rebukes the majority for disrupting use of a method of review (Chevron deference) that is the "cornerstone of administrative law" and "subverting every known principle of stare decisis," with no particularly significant reason "above and beyond thinking it wrong." She questions the majority’s conclusion that the decision will not implicate prior cases that have upheld agency regulations based on Chevron deference, questioning why courts would respect those prior decisions when this Court is not respecting precedent in this case. She predicts that some existing federal regulations never challenged under Chevron before will now be challenged. One quote from Justice Kagan’s dissent best sums up her opinion:

"In one fell swoop, the majority today gives itself exclusive power over every open issue—no matter how expertise-driven or policy-laden—involving the meaning of regulatory law. As if it did not have enough on its plate, the majority turns itself into the country’s administrative czar."

Implications for Health Policy

 

Criticism of the authority of administrative agencies has been an ongoing theme of commentary from some organizations concerned with overregulation of industry. Some have encouraged changes to "dismantle the administrative state," with a particular focus on the U.S. Department of Health and Human Services—the agency with most of the administrative authority over Medicare, Medicaid, the Affordable Care Act and other health statutes, and that houses key public health organizations such as the Centers for Disease Control and Prevention and the National Institutes of Health.

The decision will likely impede the ability of executive agencies to implement laws passed by Congress. As explained in the previous KFF brief, while agency final rules will still have the force of law, there will be more of an incentive to challenge these rules in a court that now will not have to give any weight to agency decisions and expertise where statutes are not clear. More regulations will be overturned, placing a real barrier on implementing key health care protections such as prescription drug affordability in Medicare, eligibility rules for Medicaid beneficiaries, infectious disease control and public safety standards, as well as consumer protections for those in self-insured private employer-sponsored plans.

A natural result will mean less agency regulation. No law passed by Congress can include every possible nuance needed to implement the law. Limitation on the ability of regulators to fill in those gaps could result in impacts to health care consumer and patient protections. Technical requirements for how plans and providers bill and code for patient service, for example, are important in executing new health care standards, from free preventive care to surprise billing protections. Without regulations to fill in technical gaps, it will be more difficult to operationalize requirements to carry out the intent of Congress.

The executive branch will not necessarily be the only place where there are implications. Congress will be challenged to be more specific in its legislation, making it more difficult to reach consensus on a range of matters. This may be a particular concern where the issue being addressed in legislation is itself a black box—such as prescription drug pricing and the role of pharmacy benefit managers—where Congress itself and the public may lack access to reliable information about a highly technical subject.

Those seeking to access the judicial branch could see barriers as lower federal courts become more crowded or backlogged with administrative actions. Also, the decision-making itself will require more technical and scientific knowledge from judges, perhaps expanding the time it takes to resolve disputes.

What Happens Now

 

The decision does not immediately change any specific health care policy, but over time all health care stakeholders will see the impact of the reduced significance of notice-and-comment rulemaking in areas where federal law is silent or unclear. Some argue that the rulemaking process is already "captured" by industry in some areas, such that industry players can influence regulation to their advantage. This will affect these stakeholders as they may no longer have an easy avenue to get their concerns heard and addressed. The decision could also impede reforms meant to help health care consumers navigate an increasingly complex and unaffordable health system, particularly in cases where agencies stretch their regulatory authority beyond the specifics in a statute.

The decision does not affect agency ability to enforce health care statutes using existing tools including audit, data collection, and administrative agency proceedings where those are available. It could mean a shift in agency resources from drafting and defending regulations to enforcement actions based on the text of a statute or a renewed focus on helping consumers recognize and act on activity that violates federal law. This could mean more informal guidance from agencies on best practices to inform consumers and monitor stakeholder activity instead of courting industry and setting new standards. Whether these actions take place, however, will be largely dependent on the priorities of the President.

Congress will still have the ability to specifically delegate to administrative agencies in legislation the task of developing regulations in certain areas. Chevron deference does not implicate this scenario. However, regulations resulting from this delegation can still be reviewed by courts without deference to the agency or could be subject to constitutional challenges claiming that Congress does not have the authority to delegate (nondelegation doctrine). The "major questions doctrine" is another legal framework courts have increasingly applied in recent years to invalidate agency regulation.

Short of unlikely Congressional action to restore Chevron deference, the Supreme Court in a single decision has shifted many policy decisions from agency technical experts to federal judges, with implications for health policy that will reverberate for years to come.

The Concierge Catch: Better Access for a Few Patients Disrupts Care for Many

KFF Health News, July 1, 2024

With the national shortage of primary care physicians projected to worsen, more Americans are paying for the privilege of seeing a doctor.

This article was published on Monday, July 1, 2024 in KFF Health News. 

"You had to pay the fee, or the doctor wasn't going to see you anymore."

That was the takeaway for Terri Marroquin of Midland, Texas, when her longtime physician began charging a membership fee in 2019. She found out about the change when someone at the physician's front desk pointed to a posted notice.

At first, she stuck with the practice; in her area, she said, it is now tough to find a primary care doctor who doesn't charge an annual membership fee from $350 to $500.

But last year, Marroquin finally left to join a practice with no membership fee where she sees a physician assistant rather than a doctor. "I had had enough. The concierge fee kept going up, and the doctor's office kept getting nicer and nicer," she said, referring to the décor.

With the national shortage of primary care physicians reaching 17,637 in 2023 and projected to worsen, more Americans are paying for the privilege of seeing a doctor — on top of insurance premiums that cover most services a doctor might provide or order. Many people seeking a new doctor are calling a long list of primary care practices only to be told they're not taking new patients.

"Concierge medicine potentially leads to disproportionately richer people being able to pay for the scarce resource of physician time and crowding out people who have lower incomes and are sicker," said Adam Leive, lead author of a 2023 study on concierge medicine and researcher at University of California-Berkeley's Goldman School of Public Policy.

Leive's research showed no decrease in mortality for concierge patients compared with similar patients who saw non-concierge physicians, suggesting concierge care may not notably improve some health outcomes.

A 2005 study showed concierge physicians had smaller proportions of patients with diabetes than their non-concierge counterparts and provided care for fewer Black and Hispanic patients.

There's little reliable data available on the size of the concierge medicine market. But one market research firm projects that concierge medicine revenue will grow about 10.4% annually through 2030. About 5,000 to 7,000 physicians and practices provide concierge care in the United States, most of whom are primary care providers, according to Concierge Medicine Today. (Yes, the burgeoning field already has a trade publication.)

The concierge pitch is simple: More time with your doctor, in-person or remotely, promptly and at your convenience. With many primary care physicians caring for thousands of patients each in appointments of 15 minutes or less, some people who can afford the fee say they feel forced to pay it just to maintain adequate access to their doctor.

As primary care providers convert to concierge medicine, many patients could face the financial and health consequences of a potentially lengthy search for a new provider. With fewer physicians in non-concierge practices, the pool available to people who can't or won't pay is smaller. For them, it is harder to find a doctor.

Concierge care models vary widely, but all involve paying a periodic fee to be a patient of the practice.

These fees are generally not covered by insurance nor payable with a tax-advantaged flexible spending account or health savings account. Annual fees range from $199 for Amazon's One Medical (with a discount available for Prime members) to low four figures for companies like MDVIP and SignatureMD that partner with physicians, to $10,000 or more for top-branded practices like Massachusetts General Hospital's.

Many patients are exasperated with the prospect of pay-to-play primary care. For one thing, under the Affordable Care Act, insurers are required to cover a variety of preventive services without a patient paying out-of-pocket. "Your annual physical should be free," said Caitlin Donovan, a spokesperson for the National Patient Advocate Foundation. "Why are you paying $2,000 for it?"

Liz Glatzer felt her doctor in Providence, Rhode Island, was competent but didn't have time to absorb her full health history. "I had double mastectomy 25 years ago," she said. "At my first physical, the doctor ran through my meds and whatever else, and she said, ‘Oh, you haven't had a mammogram.' I said, ‘I don't have breasts to have mammography.'"

In 2023, after repeating that same exchange during her next two physicals, Glatzer signed up to pay $1,900 a year for MDVIP, a concierge staffing service that contracts with her new doctor, who is also a friend's husband. In her first couple of visits, Glatzer's new physician took hours to get to know her, she said.

For the growing numbers of Americans who can't or won't pay when their doctor switches to concierge care, finding new primary care can mean frustration, delayed or missed tests or treatments, and fragmented health care.

"I've met so many patients who couldn't afford the concierge services and needed to look for a new primary care physician," said Yalda Jabbarpour, director of the Robert Graham Center and a practicing family physician. Separating from a doctor who's transitioning to concierge care "breaks the continuity with the provider that we know is so important for good health outcomes," she said.

That disruption has consequences. "People don't get the preventive services that they should, and they use more expensive and inefficient avenues for care that could have otherwise been provided by their doctor," said Abbie Leibowitz, chief medical officer at Health Advocate, a company that helps patients find care and resolve insurance issues.

What happens to patients who find themselves at loose ends when a physician transitions to concierge practice?

Patients who lose their doctors often give up on having an ongoing relationship with a primary care clinician. They may rely solely on a pharmacy-based clinic or urgent care center or even a hospital emergency department for primary care.

Some concierge providers say they are responding to concerns about access and equity by allowing patients to opt out of concierge care but stay with the practice group at a lower tier of service. This might entail longer waits for shorter appointments, fewer visits with a physician, and more visits with midlevel providers, for example.

Deb Gordon of Cambridge, Massachusetts, said she is searching for a new primary care doctor after hers switched to concierge medicine — a challenge that involves finding someone in her network who has admitting privileges at her preferred hospitals and is accepting new patients.

Gordon, who is co-director of the Alliance of Professional Health Advocates, which provides support services to patient advocates, said the practice that her doctor left has not assigned her a new provider, and her health plan said it was OK if she went without one. "I was shocked that they literally said, ‘You can go to urgent care,'" she said.

Some patients find themselves turning to physician assistants and other midlevel providers. But those clinicians have much less training than physicians with board certification in family medicine or internal medicine and so may not be fully qualified to treat patients with complex health problems. "The expertise of physician assistants and nurse practitioners can really vary widely," said Russell Phillips, director of the Harvard Medical School Center for Primary Care.

John Rossheim: john.rossheim@gmail.com, @johnrossheim

Medicaid for Millions in America Hinges on Deloitte-Run Systems Plagued by Errors

KFF Health News, June 24, 2024

Deloitte pulls in billions of dollars from states and the federal government for supplying technology it says will modernize Medicaid. So far, that hasn't gone very well. 

By Rachana Pradhan and Samantha Liss

Deloitte, a global consultancy that reported revenue last year of $65 billion, pulls in billions of dollars from states and the federal government for supplying technology it says will modernize Medicaid.

The company promotes itself as the industry leader in building sophisticated and efficient systems for states that, among other things, screen who is eligible for Medicaid. However, a KFF Health News investigation of eligibility systems found widespread problems.

The systems have generated incorrect notices to Medicaid beneficiaries, sent their paperwork to the wrong addresses, and been frozen for hours at a time, according to findings in state audits, allegations and declarations in court documents, and interviews. It can take months to fix problems, according to court documents from a lawsuit in federal court in Tennessee, company documents, and state agencies. Meanwhile, America’s poorest residents pay the price.

Deloitte dominates this important slice of government business: Twenty-five states have awarded it eligibility systems contracts — with 53 million Medicaid enrollees in those states as of April 1, 2023, when the unwinding of pandemic protections began, according to the Centers for Medicare & Medicaid Services. Deloitte’s contracts are worth at least $5 billion, according to a KFF Health News review of government contracts, in which Deloitte commits to design, develop, implement, or operate state systems.

State officials work hand in glove with Deloitte behind closed doors to translate policy choices into computer code that forms the backbone of eligibility systems. When things go wrong, it can be difficult to know who’s at fault, according to attorneys, consumer advocates, and union workers. Sometimes it takes a lawsuit to pull back the curtain.

Medicaid beneficiaries bear the brunt of system errors, said Steve Catanese, president of Service Employees International Union Local 668 in Pennsylvania. The union chapter represents roughly 19,000 employees — including government caseworkers who troubleshoot problems for recipients of safety-net benefits such as health coverage and cash assistance for food.

“Are you hungry? Wait. You sick? Wait,” he said. “Delays can kill people.”

KFF Health News interviewed Medicaid recipients, attorneys, and former caseworkers and government employees, and read thousands of pages from contracts, ongoing lawsuits, company materials, and state audits and documents that show problems with Deloitte-operated systems around the country — including in Arkansas, Colorado, Florida, Georgia, Kentucky, Pennsylvania, Rhode Island, Tennessee, and Texas.

In an interview, Kenneth Smith, a Deloitte executive who leads its national human services division, said Medicaid eligibility technology is state-owned and agencies “direct their operation” and “make decisions about the policies and processes that they implement.”

“They’re not Deloitte systems,” he said, noting Deloitte is one player among many who together administer Medicaid benefits.

Alleging “ongoing and nationwide” errors and “unfair and deceptive trade practices,” the National Health Law Program, a nonprofit that advocates for people with low incomes, urged the Federal Trade Commission to investigate Deloitte in a complaint filed in January.

“Systems built by Deloitte have generated numerous errors, resulting in inaccurate Medicaid eligibility determinations and loss of Medicaid coverage for eligible individuals in many states,” it argued. “The repetition of the same errors in Deloitte eligibility systems across Texas and other states and over time demonstrates that Deloitte has failed.”

FTC spokesperson Juliana Gruenwald Henderson confirmed receipt of the complaint but did not comment further.

Smith called the allegations “without merit.”

The system problems are especially concerning as states wade through millions of Medicaid eligibility checks to disenroll people who no longer qualify — a removal process that was paused for three years to protect people from losing insurance during the covid-19 public health emergency. In that time, nationwide Medicaid enrollment grew by more than 22 million, to roughly 87 million people. At least 22.8 million have been removed as of June 4 , according to a KFF analysis of government data.

Advocates worry many lost coverage despite being eligible. A KFF survey of adults disenrolled from Medicaid during the first year of the unwinding found that nearly 1 in 4 adults who were removed are now uninsured. Nearly half who were removed were able to reenroll, the survey showed, suggesting they should not have been dropped in the first place.

“If there is a technology challenge or reason why someone can’t access health care that they're eligible for, and we're able to do something,” Smith said, “we work tirelessly to do so.”

Deloitte’s contracts with states regularly cost hundreds of millions of dollars, and the federal government pays the bulk of the cost.

“States become very dependent on the consultant for operating complex systems of all kinds” to do government business, said Michael Shaub, an accounting professor at Texas A&M University.

Georgia’s contract with Deloitte to build and maintain its system for health and social service programs, inked in 2014, as of January 2023 was worth $528 million. This January, state officials wrote in an assessment obtained by KFF Health News that its eligibility system “lacks flexibility and adaptability, limiting Georgia’s ability to serve its customers efficiently, improve the customer and worker experience across all programs, ensure data security, reduce benefit errors and fraud, and advance the state’s goal of streamlining eligibility.”

Deloitte and the Georgia Department of Community Health declined to comment.

Deloitte is looking ahead with its “path to Medicaid in 2040,” anticipating sweeping changes that will expand its own business opportunity.

“State Medicaid leaders and policymakers are hungry to know what the future of health care holds,” the company said. “Deloitte brings the innovative tools, subject matter expertise, and time-tested experience to help states.”

Trouble in Tennessee

When Medicaid eligibility systems fail, beneficiaries suffer the consequences.

DiJuana Davis had chronic anemia that required iron infusions. In 2019, the 39-year-old Nashville resident scheduled separate surgeries to prevent pregnancy and to remove the lining of her uterus, which could alleviate blood loss and ease her anemia.

Then Davis, a mom of five, received a shock: Her family’s Medicaid coverage had vanished. The hospital canceled the procedures, according to testimony in federal court in November.

Davis had kept her insurance for years without trouble. This time, Tennessee had just launched a new Deloitte-built eligibility system. It autofilled an incorrect address, where Davis had never lived, to send paperwork, an error that left her uninsured for nearly two months, according to an ongoing class-action lawsuit Davis and other beneficiaries filed against the state.

The lawsuit, which does not name Deloitte as a defendant, seeks to order Tennessee to restore coverage for those who wrongly lost it. Kimberly Hagan, Tennessee Medicaid’s director of member services, said in a court filing defending the state’s actions that many issues “reflect some unforeseen flaws or gaps” with the eligibility system and “some design errors.”

Hagan’s legal declaration in 2020 gave a view of what went wrong: Davis lost coverage because of missteps by both Tennessee and Deloitte during what’s known as the “conversion process,” when eligibility data was migrated to a new system.

Tennessee’s Medicaid agency, known as “TennCare, along with its vendor, Deloitte, designed rules to govern the logic of conversion,” Hagan said in the legal declaration. She also cited a “manual, keying error by a worker” made in 2017.

Davis’ family was “incorrectly merged with another family during conversion,” Hagan said.

Davis regained coverage, but before she could rebook the surgeries, she testified, she became pregnant and a serious complication emerged. In June 2020, Davis rushed to the hospital. A physician told her she had preeclampsia, a leading cause of maternal death. Labor was induced and her son was born prematurely.

“Preeclampsia can kill the mom. It can kill the baby. It can kill both of you,” she testified. “That’s like a death sentence.”

Deloitte’s Tennessee contract is worth $823 million. Deloitte declined to comment on Davis’ case or the litigation.

Speaking broadly, Smith said, “data conversion is incredibly challenging and difficult.”

Hagan called the problems one-time issues: “None of the Plaintiffs’ cases reflect ongoing systemic problems that have not already been addressed or are scheduled to be addressed.”

States leverage Deloitte’s technology as part of a larger push toward automation, legal aid attorneys and former caseworkers said.

“We all know that big computer projects are fraught,” said Gordon Bonnyman, co-founder of the nonprofit Tennessee Justice Center. “But a state that was concerned about inflicting collateral damage when they moved to a different automated system would have a lot of safeguards.”

TennCare spokesperson Amy Lawrence called its eligibility system “a transformative tool, streamlining processes and enhancing accessibility.”

When enrollees seek help at county offices, “you don’t get to sit down across from a real human being,” Bonnyman said. “They point you to the kiosk and say, ‘Good luck with that.’”

A Backlog of 50,000 Cases

As part of the Affordable Care Act rollout about a decade ago, states invested in technological upgrades to determine who qualifies for public programs. It was a financial boon to Deloitte and such companies as Accenture and Optum, which landed government contracts to build those complex systems.

Problems soon emerged. In Kentucky, a Deloitte-built system that launched in February 2016 erroneously sent at least 25,000 automated letters telling people they would lose benefits, according to local news reports. State officials manually worked through a backlog of 50,000 cases caused by conflicting information from newly merged systems, the reports say.

“We know that the rollout of Benefind has caused frustration and concern for families and for field staff,” senior Deloitte executive Deborah Sills said during a March 2016 news conference alongside Gov. Matt Bevin and other senior officials after Kentucky was bombarded with complaints. Within two months, roughly 600 system defects were identified, found a report by the Kentucky state auditor.

In Rhode Island, a botched rollout in September 2016 delayed tens of thousands of Social Security payments, The Providence Journal reported. Advocacy groups filed two class-action lawsuits, one related to Medicaid and the other to food stamp benefits. Both were settled, with Rhode Island officials denying wrongdoing. Neither named Deloitte as a defendant.

In a 2018 statement for a Statehouse hearing, Sills of Deloitte said, “We are very sorry for the impact that our system issues have had on your constituents, on state workers, and on service providers.” The state’s top human services official resigned.

A 2017 audit by a top Rhode Island official prepared for Gov. Gina Raimondo found that Deloitte “delivered an IT system that is not functioning effectively” and had “significant defects.” “Widespread issues,” it said, “caused a significant deterioration in the quality of service provided by the State.”

“Deloitte held itself out as the leading vendor with significant experience in developing integrated eligibility systems for other states,” the audit read. “It appears that Deloitte did not sufficiently leverage this experience and expertise.” Deloitte declined to comment further about Rhode Island and Kentucky.

Deloitte invokes the phrase “no-touch” to describe its technology — approving benefits “without any tasks performed by the State workers,” it wrote in documents vying for an Arkansas contract.

In practice, enrollee advocates and former government caseworkers say, the systems frequently have errors and require manual workarounds.

As it considered hiring Deloitte, Arkansas officials asked the company about problems, particularly in Rhode Island.

In response, the company said in 2017, “We do not believe Deloitte Consulting LLP has had to implement a corrective action plan” for any eligibility system project in the previous five years.

Arkansas awarded Deloitte a $345 million contract effective in 2019 to develop its system.

“It had a lot of bugs,” said Bianca Garcia, a program eligibility specialist for the Arkansas Department of Human Services from August 2022 to October 2023.

Garcia said it could take weeks to fix errors in a family’s details and Medicaid enrollees wouldn’t receive the state’s requests for information because of glitches. They would lose benefits because workers couldn’t confirm eligibility, she added.

The enrollees “were doing their part, but the system just failed,” Garcia said.

Arkansas Department of Human Services spokesperson Gavin Lesnick said: “With any large-scale system implementation, there occasionally are issues that need to be addressed. We have worked alongside our vendor to minimize these issues and to correct any problems.”

Deloitte declined to comment.

‘Heated’ Negotiations

In late 2020, Colorado officials were bracing for the inevitable unwinding of pandemic-era Medicaid protections.

Colorado was three years into what is now a $354.4 million contract with Deloitte to operate its eligibility system. A state-commissioned audit that September had uncovered widespread problems, and Kim Bimestefer, the state’s top Medicaid official, was in “heated” negotiations with the company.

The audit found 67% of the system notices it sampled contained errors. Notices are federally required to safeguard against eligible people being disenrolled, said MaryBeth Musumeci, an associate teaching professor in public health at George Washington University.

“This is, for many people, what’s keeping them from being uninsured,” Musumeci said.

The Colorado audit found many enrollee notices contained inaccurate response deadlines. One dated Dec. 19, 2019, requested a beneficiary return information by Sept. 27, 2011 — more than eight years earlier.

“We’re in intense negotiations with our vendor because we can’t turn around to the General Assembly and say, ‘Can I get money to fix this?’” Bimestefer told lawmakers during the 2020 legislative audit hearing. “I have to hold the vendor accountable for the tens of millions we’ve been paying them over the years, and we still have a system like this.”

She said officials had increased oversight of Deloitte. Also, dozens of initiatives were created to “improve eligibility accuracy and correspondence,” and the state renegotiated Deloitte’s contract, said Marc Williams, a state Medicaid agency spokesperson. A contract amendment shows Deloitte credited Colorado with $5 million to offset payments for additional work.

But Deloitte’s performance appeared to get worse. A 2023 state audit found problems in 90% of sampled enrollee notices. Some were violations of state Medicaid rules.

The audit blamed “flaws in system design” for populating notices with incorrect dates.

In September, Danae Davison received a confusing notice at her Arvada home stating that her daughter did not qualify for coverage.

Lydia, 11, who uses a wheelchair and is learning to communicate via a computer, has a seizure disorder that qualifies her for a Medicaid benefit for those with disabilities. The denial threatened access to nursing care, which enables her to live at home instead of in a facility. Nothing had changed with Lydia’s condition, Davison said.

“She so clearly has the need,” Davison said. “This is a system problem.”

Davison appealed. In October, a judge ruled that Lydia qualified for coverage.

The notice generated by the Deloitte-operated system was deemed “legally insufficient” because it omitted the date Lydia’s coverage would end. Her case highlights a known eligibility system problem: Beneficiary notices contain “non-compliant or inconsistent dates” and are “missing required elements and information,” according to the 2023 audit.

Deloitte declined to comment on Colorado. Speaking broadly, Smith said, “Incorrect information can come in a lot of forms.”

Last spring in Pennsylvania, Deloitte’s eligibility role expanded to include the Children’s Health Insurance Program and 126,000 enrollees.

Pennsylvania’s Department of Human Services said an error occurred when converting to the state’s eligibility system, maintained by Deloitte through a $541 million contract. DHS triaged the errors, but, for “a small window of time,” some children who still had coverage “were not able to use it.”

These issues affected 9,269 children last June and 2,422 in October, DHS said. A temporary solution was implemented in December and a permanent fix came through in April.

Catanese, the union representative, said it was another in a long history of problems. Among the most prevalent, he said: The system freezes for hours. When asked about that, Smith said “it's hyperbole.”

Instead of the efficiency that Deloitte touted, Catanese said, “the system constantly runs into errors that you have to duct tape and patchwork around.”

KFF Health News senior correspondent Renuka Rayasam and correspondents Daniel Chang, Bram Sable-Smith, and Katheryn Houghton contributed to this report.

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

Biden Administration Advances Plan To Remove Medical Debt From Credit Scores

KFF Health News, June 17, 2024

Tens of millions of Americans are struggling with medical debt. The Biden Administration is moving forward with a plan to help them.

By Noam N. Levey

JUNE 11, 2024

Americans would no longer have to worry about medical debts dragging down their credit scores under federal regulations proposed Tuesday by the Consumer Financial Protection Bureau.

If enacted, the rules would dramatically expand protections for tens of millions of Americans burdened by medical bills they can’t afford.

The regulations would also fulfill a pledge by the Biden administration to address the scourge of health care debt, a uniquely American problem that touches an estimated 100 million people, forcing many to make sacrifices such as limiting food, clothing, and other essentials.

“No one should be denied access to economic opportunity simply because they experienced a medical emergency,” Vice President Kamala Harris said Tuesday.

The administration further called on states to expand efforts to restrict debt collection by hospitals and to make hospitals provide more charity care to low-income patients, a step that could prevent more Americans from ending up with medical debt.

And Harris urged state and local governments to continue to buy up medical debt and retire it, a strategy that has become increasingly popular nationwide.

Credit reporting, a threat traditionally used by medical providers and debt collectors to induce patients to pay their bills, is the most common collection tactic used by hospitals, a KFF Health News analysis has shown.

Although a single unpaid bill on a credit report may not hugely affect some people, the impact can be devastating for those with large health care debts.

There is growing evidence, for example, that credit scores depressed by medical debt can threaten people’s access to housing and fuel homelessness. People with low credit scores can also have problems getting a loan or can be forced to borrow at higher interest rates.

“We’ve heard stories of individuals who couldn’t get jobs because their medical debt was impacting their credit score and they had low credit,” said Mona Shah, a senior director at Community Catalyst, a nonprofit that’s pushed for expanded medical debt protections for patients.

Shah said the proposed regulations would have a major impact on patients’ financial security and health. “This is a really big deal,” she said.

Administration officials said they plan to review public comments about their proposal through the rest of this year and hope to issue a final rule early next year.

CFPB researchers have found that medical debt — unlike other kinds of debt — does not accurately predict a consumer’s creditworthiness, calling into question how useful it is on a credit report.

The three largest credit agencies — Equifax, Experian, and TransUnion — said they would stop including some medical debt on credit reports as of last year. The excluded debts included paid-off bills and those less than $500.

Those moves have substantially reduced the number of people with medical debt on their credit reports, government data shows. But the agencies’ voluntary actions left out many patients with bigger medical bills on their credit reports.

A recent CFPB report found that 15 million people still have such bills on their credit reports, despite the voluntary changes. Many of these people live in low-income communities in the South, according to the report.

The proposed rules would not only bar future medical bills from appearing on credit reports; they would also remove current medical debts, according to administration officials.

Officials said the banned debt would include not only medical bills but also dental bills, a major source of Americans’ health care debt.

Even though the debts would not appear on credit scores, patients will still owe them. That means that hospitals, physicians, and other providers could still use other collection tactics to try to get patients to pay, including using the courts.

Patients who used credit cards to pay medical bills — including medical credit cards such as CareCredit — will also continue to see those debts on their credit scores as they would not be covered by the proposed regulation.

Hospital leaders and representatives of the debt collection industry have warned that restricting credit reporting may have unintended consequences, such as prompting more hospitals and physicians to require upfront payment before delivering care.

But consumer and patient advocates continue to call for more action. The National Consumer Law Center, Community Catalyst, and about 50 other groups last year sent letters to the CFPB and IRS urging stronger federal action to rein in hospital debt collection.

State leaders also have taken steps to expand consumer protections. In recent months, a growing number of states, led by Colorado and New York, have enacted legislation prohibiting medical debt from being included on residents’ credit reports or factored into their credit scores. Other states, including California, are considering similar measures.

Many groups are also urging the federal government to bar tax-exempt hospitals from selling patient debt to debt-buying companies or denying medical care to people with past-due bills, practices that remain widespread across the U.S., KFF Health News found.

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 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.

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.

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

ACA-payers-Biden

Biden’s on Target About What Repealing ACA Would Mean for Preexisting Condition Protections

KFF Health News, June 13, 2024

If the Affordable Care Act were terminated, “that would mean over a hundred million Americans will lose protections for preexisting conditions.”

By Jacob Gardenswartz

JUNE 13, 2024

President Joe Biden’s reelection campaign wants voters to contrast his record on health care policy with his predecessor’s. In May, Biden’s campaign began airing a monthlong, $14 million ad campaign targeting swing-state voters and minority groups with spots on TV, digital, and radio.

In the ad, titled “Terminate,” Biden assails former President Donald Trump for his past promises to overturn the Affordable Care Act, also known as Obamacare. Biden also warns of the potential effect if Trump is returned to office and again pursues repeal.

“That would mean over a hundred million Americans will lose protections for preexisting conditions,” Biden said in the ad.

Less than six months from Election Day, polls show Trump narrowly leading Biden in a head-to-head race in most swing states. And voters trust Trump to better handle issues such as inflation, crime, and the economy by significant margins.

An ABC News/Ipsos poll of about 2,200 adults, released in early May, shows the only major policy issues on which Biden received higher marks than Trump were health care and abortion access. It’s no surprise, then, that the campaign is making those topics central to Biden’s pitch to voters.

As such, we dug into the facts surrounding Biden’s claim.

Preexisting Condition Calculations

The idea that 100 million Americans are living with one or more preexisting conditions is not new. It was the subject of a back-and-forth between then-candidate Biden and then-President Trump during their previous race, in 2020. After Biden cited that statistic in a presidential debate, Trump responded, “There aren’t a hundred million people with preexisting conditions.”

A KFF Health News/PolitiFact HealthCheck at the time rated Biden’s claim to be “mostly true,” finding a fairly large range of estimates — from 54 million to 135 million — of the number of Americans with preexisting conditions. Estimates on the lower end tend to consider “preexisting conditions” to be more severe chronic conditions such as cancer or cystic fibrosis. Estimates at the spectrum’s higher end include people with more common health problems such as asthma and obesity, and behavioral health disorders such as substance use disorder or depression.

Biden’s May ad focuses on how many people would be vulnerable if protections for people with preexisting conditions were lost. This is a matter of some debate. To understand it, we need to break down the protections put in place by the ACA, and those that exist separately.

Before and After

Before the ACA’s preexisting condition protections took effect in 2014, insurers in the individual market — people buying coverage for themselves or their families — could charge higher premiums to people with particular conditions, restrict coverage of specific procedures or medications, set annual and lifetime coverage limits on benefits, or deny people coverage.

“There were a number of practices used by insurance companies to essentially protect themselves from the costs associated with people who have preexisting conditions,” said Sabrina Corlette, a co-director of the Center on Health Insurance Reforms at Georgetown University and an expert on the health insurance marketplace.

Insurers providing coverage to large employers could impose long waiting periods before employees’ benefits kicked in. And though employer-sponsored plans couldn’t discriminate against individual employees based on their health conditions, small-group plans for businesses with fewer than 50 employees could raise costs across the board if large numbers of employees in a given company had such conditions. That could prompt some employers to stop offering coverage.

“The insurer would say, ‘Well, because you have three people with cancer, we are going to raise your premium dramatically,’ and therefore make it hard for the small employer to continue to offer coverage to its workers because the coverage is simply unaffordable,” recalled Edwin Park, a research professor at Georgetown University’s McCourt School of Public Policy who researches public health insurance markets.

As a result, many people with preexisting conditions experienced what some researchers dubbed “job lock.” People felt trapped in their jobs because they feared they wouldn’t be able to get health insurance anywhere else.

Some basic preexisting condition protections exist independent of the ACA. The 1996 Health Insurance Portability and Accountability Act, for example, restricted how insurers could limit coverage and mandated that employer-sponsored group plans can’t refuse to cover someone because of a health condition. Medicare and Medicaid similarly can’t deny coverage based on health background, though age and income-based eligibility requirements mean many Americans don’t qualify for that coverage.

Once the ACA’s preexisting condition protections kicked in, plans sold on the individual market had to provide a comprehensive package of benefits to all purchasers, no matter their health status.

Still, some conservatives say Biden’s claim overstates how many people are affected by Obamacare protections.

Even if you consider the broadest definition of the number of Americans living with such conditions, “there is zero way you could justify that 100 million people would lose coverage” without ACA protections, said Theo Merkel, who was a Trump administration health policy adviser and is now a senior research fellow with the Paragon Health Institute and a senior fellow at the Manhattan Institute for Policy Research, a conservative think tank.

Joseph Antos, a senior fellow at the American Enterprise Institute, a conservative think tank, called the ad’s preexisting conditions claim “the usual bluster.” To reach 100 million people affected, he said, “you have to assume that a large number of people would lose coverage.” And that’s unlikely to happen, he said.

That’s because most people — about 55% of Americans, according to the most recent government data — receive health insurance through their employers. As such, they’re protected by the Health Insurance Portability and Accountability Act rules, and their plans likely wouldn’t change, at least in the short term, if the ACA went away.

Antos said major insurance companies, which have operated under the ACA for more than a decade, would likely maintain the status quo even without such protections. “The negative publicity would be amazing,” he said.

People who lose their jobs, he said, would be vulnerable.

But Corlette argued that losing ACA protections could lead to Americans being priced out of their plans, as health insurers again begin medical underwriting in the individual market.

Park predicted that many businesses could also gradually find themselves priced out of their policies.

“For those firms with older, less healthy workers than other small employers, they would see their premiums rise,” he told KFF Health News.

Moreover, Park said, anytime people lost work or switched jobs, they’d risk losing their insurance, reverting to the old days of job lock.

“In any given year, the number [of people affected] will be much smaller than the 100 million, but all of those 100 million would be at risk of being discriminated against because of their preexisting condition,” Park said.

Our Ruling

We previously ruled Biden’s claim that 100 million Americans have preexisting conditions as in the ballpark, and nothing suggests that’s changed. Depending on the definition, the number could be smaller, but it also could be even greater and is likely to have increased since 2014.

Though Biden’s claim about the number of people who would be affected if those protections went away seems accurate, it is unclear how a return to the pre-ACA situation would manifest.

On the campaign trail this year, Trump has promised — as he did many times in the past — to replace the health law with something better. But he’s never produced a replacement plan. Biden’s claim shouldn’t be judged based on his lack of specificity.

We rate Biden’s claim Mostly True.

2024 Medical Loss Ratio Rebates

KFF Health News, June 10, 2024

Rebates for 2024 are based on preliminary estimates from insurers. In some years, final rebates are higher than expected and in other years, final rebates are lower.

Jared Ortaliza and Cynthia Cox
Published: Jun 05, 2024

The Medical Loss Ratio (MLR) provision of the Affordable Care Act (ACA) limits the amount of premium income that insurers can keep for administration, marketing, and profits. Insurers that fail to meet the applicable MLR threshold are required to pay back excess profits or margins in the form of rebates to individuals and employers that purchased coverage.

In the individual and small group markets, insurers must spend at least 80% of their premium income on health care claims and quality improvement efforts, leaving the remaining 20% for administration, marketing expenses, and profit. The MLR threshold is higher for large group insurers, which must spend at least 85% of their premium income on health care claims and quality improvement efforts. MLR rebates are based on a 3-year average, meaning that rebates issued in 2024 will be calculated using insurers’ financial data in 2021, 2022 and 2023 and will go to people and businesses who bought health coverage in 2023.

This analysis, using preliminary data reported by insurers to state regulators and compiled by Mark Farrah Associates, finds that insurers estimate they will issue a total of about $1.1 billion in MLR rebates across all commercial markets in 2024. Since the ACA began requiring insurers to issue these rebates in 2012, a total of $11.8 billion in rebates have already been issued to individuals and employers, and this analysis suggests the 2012-2024 total will rise to about $13 billion when rebates are issued later this year.

Estimated total rebates across all commercial markets in 2024 ($1.1 billion) are similar to total rebates issued in 2022 ($1.0 billion) and in 2023 ($950 million). In 2023, rebates were issued to 1.7 million people with individual coverage and 4.1 million people with employer coverage. In the individual market, the 2023 average rebate per person was $196, while the average rebates per person for the small group market and the large group market were $201 and $104, respectively (though enrollees could receive only a portion of this as rebates may be shared between the employer and employee or be used to offset premiums for the following year).

The estimated $1.1 billion in rebates to be issued later this year will be larger than those issued in most prior years but fall far short of recent record-high rebate totals of $2.5 billion issued in 2020 and $2.0 billion issued in 2021, which coincided with the onset of the pandemic.

In 2023, the average individual market simple loss ratio (meaning that there’s no adjustment for quality improvement expenses or taxes and therefore, don’t align perfectly with ACA MLR thresholds) was 84%, meaning these insurers spent an average of 84% of their premium income in the form of health claims in 2023. However, rebates issued in 2024 are based on a three-year average of insurers’ experience in 2021-2023. Consequently, even insurers with high loss ratios in 2023 may expect to owe rebates if they were highly profitable in the prior two years.

In the small and large group markets, 2023 average simple loss ratios were 84% and 88%, respectively. Only fully-insured group plans are subject to the ACA MLR rule; about two thirds of covered workers are in self-funded plans, to which the MLR threshold does not apply.

Rebate Payment Logistics

The 2024 rebate amounts in this analysis are still preliminary. Rebates or rebate notices are mailed out by the end of September and the federal government will post a summary of the total amount owed by each issuer in each state later in the year.

Insurers in the individual market may either issue rebates in the form of a check or premium credit. For people with employer coverage, the rebate may be shared between the employer and the employee depending on the way in which the employer and employee share premium costs.

If the amount of the rebate is exceptionally small (less than $5 for individual rebates and less than $20 for group rebates), insurers are not required to process the rebate, as it may not warrant the administrative burden required to do so.

Methods

This analysis is based on insurer-reported financial data from Health Coverage Portal TM, a market database maintained by Mark Farrah Associates, which includes information from the National Association of Insurance Commissioners. The Supplemental Health Care Exhibit dataset analyzed in this report does not include data from California HMOs regulated by California’s Department of Managed Health Care. All individual market figures in this analysis are for major medical insurance plans sold both on and off exchange. Simple loss ratios are calculated as the ratio of the sum of total incurred claims to the sum of health premiums earned.

Rebates for 2024 are based on preliminary estimates from insurers. In some years, final rebates are higher than expected and in other years, final rebates are lower.

 

 

California Becomes Latest State To Try Capping Health Care Spending

KFF Health News, June 7, 2024

California is the ninth state — after Connecticut, Delaware, Massachusetts, Nevada, New Jersey, Oregon, Rhode Island, and Washington — to set annual health spending targets

By Bernard J. Wolfson

California’s Office of Health Care Affordability faces a herculean task in its plan to slow runaway health care spending.

The goal of the agency, established in 2022, is to make care more affordable and accessible while improving health outcomes, especially for the most disadvantaged state residents. That will require a sustained wrestling match with a sprawling, often dysfunctional health system and powerful industry players who have lots of experience fighting one another and the state.

Can the new agency get insurers, hospitals, and medical groups to collaborate on containing costs even as they jockey for position in the state’s $405 billion health care economy? Can the system be transformed so that financial rewards are tied more to providing quality care than to charging, often exorbitantly, for a seemingly limitless number of services and procedures?

The jury is out, and it could be for many years.

California is the ninth state — after Connecticut, Delaware, Massachusetts, Nevada, New Jersey, Oregon, Rhode Island, and Washington — to set annual health spending targets.

Massachusetts, which started annual spending targets in 2013, was the first state to do so. It’s the only one old enough to have a substantial pre-pandemic track record, and its results are mixed: The annual health spending increases were below the target in three of the first five years and dropped beneath the national average. But more recently, health spending has greatly increased.

In 2022, growth in health care expenditures exceeded Massachusetts’ target by a wide margin. The Health Policy Commission, the state agency established to oversee the spending control efforts, warned that “there are many alarming trends which, if unaddressed, will result in a health care system that is unaffordable.”

Neighboring Rhode Island, despite a preexisting policy of limiting hospital price increases, exceeded its overall health care spending growth target in 2019, the year it took effect. In 2020 and 2021, spending was largely skewed by the pandemic. In 2022, the spending increase came in at half the state’s target rate. Connecticut and Delaware, by contrast, both overshot their 2022 targets.

It’s all a work in progress, and California’s agency will, to some extent, be playing it by ear in the face of state policies and demographic realities that require more spending on health care.

And it will inevitably face pushback from the industry as it confronts unreasonably high prices, unnecessary medical treatments, overuse of high-cost care, administrative waste, and the inflationary concentration of a growing number of hospitals in a small number of hands.

“If you’re telling an industry we need to slow down spending growth, you’re telling them we need to slow down your revenue growth,” says Michael Bailit, president of Bailit Health, a Massachusetts-based consulting group, who has consulted for various states, including California. “And maybe that’s going to be heard as ‘we have to restrain your margins.’ These are very difficult conversations.”

Some of California’s most significant health care sectors have voiced disagreement with the fledgling affordability agency, even as they avoid overtly opposing its goals.

In April, when the affordability office was considering an annual per capita spending growth target of 3%, the California Hospital Association sent it a letter saying hospitals “stand ready to work with” the agency. But the proposed number was far too low, the association argued, because it failed to account for California’s aging population, new investments in Medi-Cal, and other cost pressures.

The hospital group suggested a spending increase target averaging 5.3% over five years, 2025-29. That’s slightly higher than the 5.2% average annual increase in per capita health spending over the five years from 2015 to 2020.

Five days after the hospital association sent its letter, the affordability board approved a slightly less aggressive target that starts at 3.5% in 2025 and drops to 3% by 2029. Carmela Coyle, the association’s chief executive, said in a statement that the board’s decision still failed to account for an aging population, the growing need for mental health and addiction treatment, and a labor shortage.

The California Medical Association, which represents the state’s doctors, expressed similar concerns. The new phased-in target, it said, was “less unreasonable” than the original plan, but the group would “continue to advocate against an artificially low spending target that will have real-life negative impacts on patient access and quality of care.”

But let’s give the state some credit here. The mission on which it is embarking is very ambitious, and it’s hard to argue with the motivation behind it: to interject some financial reason and provide relief for millions of Californians who forgo needed medical care or nix other important household expenses to afford it.

Sushmita Morris, a 38-year-old Pasadena resident, was shocked by a bill she received for an outpatient procedure last July at the University of Southern California’s Keck Hospital, following a miscarriage. The procedure lasted all of 30 minutes, Morris says, and when she received a bill from the doctor for slightly over $700, she paid it. But then a bill from the hospital arrived, totaling nearly $9,000, and her share was over $4,600.

Morris called the Keck billing office multiple times asking for an itemization of the charges but got nowhere. “I got a robotic answer, ‘You have a high-deductible plan,’” she says. “But I should still receive a bill within reason for what was done.” She has refused to pay that bill and expects to hear soon from a collection agency.

The road to more affordable health care will be long and chock-full of big challenges and unforeseen events that could alter the landscape and require considerable flexibility.

Some flexibility is built in. For one thing, the state cap on spending increases may not apply to health care institutions, industry segments, or geographic regions that can show their circumstances justify higher spending — for example, older, sicker patients or sharp increases in the cost of labor.

For those that exceed the limit without such justification, the first step will be a performance improvement plan. If that doesn’t work, at some point — yet to be determined — the affordability office can levy financial penalties up to the full amount by which an organization exceeds the target. But that is unlikely to happen until at least 2030, given the time lag of data collection, followed by conversations with those who exceed the target, and potential improvement plans.

In California, officials, consumer advocates, and health care experts say engagement among all the players, informed by robust and institution-specific data on cost trends, will yield greater transparency and, ultimately, accountability.

Richard Kronick, a public health professor at the University of California-San Diego and a member of the affordability board, notes there is scant public data about cost trends at specific health care institutions. However, “we will know that in the future,” he says, “and I think that knowing it and having that information in the public will put some pressure on those organizations.”

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

 

Presidential Election Could Decide Fate of Extra Obamacare Subsidies

KFF Health News, June 3, 2024

1.3 million people are enrolled in health coverage this year through the ACA marketplace in Georgia, which has seen a 181% increase in enrollment since 2020.

by Andy Miller

When Cassie Cox ended up in the emergency room in January, the Bainbridge, Georgia, resident was grateful for the Obamacare insurance policy she had recently selected for coverage in 2024.

Cox, 40, qualified for an Affordable Care Act marketplace plan with no monthly premium due to her relatively low income. And after she cut her hand severely, the 35 stitches she received in the ER led to an out-of-pocket expense of about $300, she said.

“I can’t imagine what the ER visit would have cost if I was uninsured,” she said.

Cox is among 1.3 million people enrolled in health coverage this year through the ACA marketplace in Georgia, which has seen a 181% increase in enrollment since 2020.

Many people with low incomes have been drawn to plans offering $0 premiums and low out-of-pocket costs, which have become increasingly common because of the enhanced federal subsidies introduced by President Joe Biden.

Southern states have seen the biggest enrollment bump of any region. Ten of the 15 states that more than doubled their marketplace numbers from 2020 to 2024 are in the South, according to a KFF policy brief. And the five states with the largest increases in enrollment — Texas, Mississippi, Georgia, Tennessee, and South Carolina, all in the South — have yet to expand Medicaid under the Affordable Care Act, driving many residents to the premium-free health plans.

But with the federal incentives introduced by the Biden administration set to expire at the end of 2025, and the possibility of a second Donald Trump presidency, the South could be on track to see a significant dip in ACA enrollment, policy analysts say.

“Georgia and the Southern states generally have lower per-capita income and higher uninsured rates,” said Gideon Lukens, a senior fellow and the director of research and data analysis for the Center on Budget and Policy Priorities, a nonpartisan, Washington, D.C.-based research organization. If the enhanced subsidies go away, he said, the South, especially states that haven’t expanded Medicaid, will likely feel a bigger effect than other states. “There’s no other safety net” for many people losing coverage in non-expansion states, Lukens said.

When Cox was enrolling in Obamacare last fall, she qualified for premium tax credits that were added to two major congressional legislative packages: the American Rescue Plan Act in 2021, and the Inflation Reduction Act in 2022. Those incentives — which gave rise to many plans with no premiums and low out-of-pocket costs — have helped power this year’s record Obamacare enrollment of 21 million. The extra subsidies were added to the already existing subsidies for marketplace coverage.

The states that didn’t expand Medicaid and have high uninsured rates “got most of the free plans,” said Cynthia Cox, a KFF vice president who directs the health policy nonprofit’s program on the ACA. Zero-premium plans existed before the new subsidies, she added, but they generally came with high deductibles that potentially would lead to higher costs for consumers.

A Trump presidency could jeopardize those extra subsidies. Brian Blase, a former Trump administration official who advised him on health care policy, said that eliminating the extra subsidies would bring the marketplace back to the ACA’s original intent.

“It’s not sustainable or wise to have fully taxpayer-subsidized coverage,” said Blase, who is now president of the Paragon Health Institute, a health policy research firm. People would still qualify for discounts, he said, but they wouldn’t be as generous.

Karoline Leavitt, a spokesperson for Trump, did not answer a reporter’s questions on the future of the enhanced subsidies under a new Trump administration. Despite his comments at the end of last year that he is “seriously looking at alternatives” to Obamacare, Leavitt said Trump is not campaigning to terminate the Affordable Care Act.

“He is running to make health care actually affordable, in addition to bringing down inflation, cutting taxes, and reducing regulations to put more money back in the pockets of all Americans,” she said.

While views on Obamacare may be divided, the wide support for subsidies crosses political lines, according to a KFF Health Tracking Poll released in May.

About 7 in 10 voters support the extension of enhanced federal financial assistance for people who purchase ACA marketplace coverage, the poll found. That support included 90% of Democrats, 73% of independents, and 57% of Republicans surveyed.

The enhanced assistance also allowed many people with incomes higher than 400% of the poverty level, or $58,320 for an individual in 2023, to get tax credits for coverage for the first time.

Besides the financial incentives, other reasons cited for the explosion in ACA enrollment include the end of continuous Medicaid coverage protections related to the covid public health emergency. About a year ago, states started redetermining eligibility, known as the “unwinding.”

Roughly one-quarter of those who lost Medicaid coverage moved to the ACA marketplace, said Edwin Park, a research professor at the Georgetown University Center for Children and Families.

In Georgia, Republican political leaders haven’t talked much about the effect of the Biden administration’s premium incentives on enrollment increases.

Instead, Georgia Gov. Brian Kemp, among others, has touted the performance of Georgia Access, an online portal that links consumers directly to the ACA marketplace’s website or to an agent or broker. That agent link can create a more personal connection, said Bryce Rawson, a spokesperson for the state’s insurance department, which runs the portal. Employees from the agency and from consulting firms helped market the no-premium plans throughout the state, he said.

Yet Georgia Access didn’t become fully operational until last fall, during open enrollment for the marketplace. Republicans also credit a reinsurance waiver that, according to Rawson, increased the number of health insurers offering marketplace coverage in the state, leading to more competition.

Reinsurance is likely not a major reason for a state’s increased Obamacare enrollment, said Georgetown’s Park. And a study published in Health Affairs found that Georgia’s reinsurance program had the unintended consequences of increasing the minimum cost of subsidized ACA coverage and reducing enrollment among individuals at a certain income level, the Atlanta Journal-Constitution recently reported.

The state’s insurance department said the study “does not accurately reflect the overall benefits the reinsurance program has brought to Georgia consumers.”

When asked whether the governor would support renewal of the enhanced subsidies, Garrison Douglas, Kemp’s spokesperson, said the matter is up to Congress to decide.

Another reason for the soaring ACA enrollment is the 2023 fix to the “family glitch” that had prevented dependents of workers who were offered unaffordable family coverage by employers from getting marketplace subsidies.

States that have run their own marketplaces, though, generally have not seen the same level of enrollment increases. Those 18 states, plus the District of Columbia, have expanded Medicaid. Georgia will join the list of states running their own exchanges this fall, making it the only state to operate one that has not expanded Medicaid.

The federal Centers for Medicare & Medicaid Services credits a national marketing campaign and more federal funding for navigators, the insurance counselors who provide education about marketplace health coverage and free help with enrollment.

That level of financial support for navigators may be in jeopardy if Trump returns to the White House.

The Biden administration injected nearly $100 million in funding for navigators in the enrollment period for coverage this year. The Trump administration, on the other hand, awarded just $10 million a year for navigators from 2018 to 2020.

The marketplace is usually “a transitional place” for people coming in and out of coverage, KFF’s Cox said. “That marketing and outreach is pretty essential to help people literally navigate the process.”

Andy Miller: @gahealthnews

 

Tennessee Gives This Hospital Monopoly an A Grade—Even When It Reports Failure

KFF Health News, May 29, 2024

A Tennessee agency that is supposed to hold accountable and grade the nation’s largest state-sanctioned hospital monopoly awards full credit on dozens of quality-of-care measurements as long as it reports any value, regardless of how its hospitals actually perform.

Ballad Health, a 20-hospital system in northeast Tennessee and southwest Virginia, has received A grades and an annual stamp of approval from the Tennessee Department of Health. This has occurred as Ballad hospitals consistently fall short of performance targets established by the state, according to health department documents.

Because the state’s scoring rubric largely ignores the hospitals’ performance, only 5% of Ballad’s final score is based on actual quality of care, and Ballad has suffered no penalty for failing to meet the state’s goals in about 50 areas — including surgery complications, emergency room speed, and patient satisfaction.

“It doesn’t make any sense,” said Ron Allgood, 75, of Kingsport, Tennessee, who said he had a heart attack in a Ballad ER in 2022 after waiting for three hours with chest pains. “It seems that nobody listens to the patients.”

Ballad Health was created six years ago after Tennessee and Virginia lawmakers waived federal anti-monopoly laws so two competing hospital companies could merge. The monopoly agreement established two quality measures to compare Ballad’s care against the state’s baseline expectations: about 17 “target” measures, on which hospitals are expected to improve and their performance factors into their grade; and more than 50 “monitoring” measures, which Ballad must report, but how the hospitals perform on them is not factored into Ballad’s grade.

Ballad has failed to meet the baseline values on 75% or more of all quality measures in recent years — and some are not even close — according to reports the company has submitted to the health department.

Since the merger, Ballad has become the only option for hospital care for most of about 1.1 million residents in a 29-county region at the nexus of Tennessee, Virginia, Kentucky, and North Carolina. Critics are vocal. Protesters rallied outside a Ballad hospital for months. For years, longtime residents like Allgood have alleged Ballad’s leadership has diminished the hospitals they’ve relied on their entire lives.

“It’s a shadow of the hospital we used to have,” Allgood said.

And yet, every year since the merger, the Tennessee health department has reported that the benefits of the hospital merger outweigh the risks of a monopoly, and that Ballad “continues to provide a Public Advantage.” Tennessee has also given Ballad an A grade in every year but two, when the scoring system was suspended due to the covid-19 pandemic and no grade issued.

The department’s latest report, released this month, awarded Ballad 93.6 of 100 possible points, including 15 points just for reporting the monitoring measures. If Tennessee rescored Ballad based on its performance, its score would drop from 93.6 to about 79.7, based on the scoring rubric described in health department documents. Tennessee considers scores of 85 or higher to be “satisfactory,” the documents state.

Larry Fitzgerald, who monitored Ballad for the Tennessee government before retiring this year, said it was obvious the state’s scoring rubric should be changed.

Fitzgerald likened Ballad to a student getting 15 free points on a test for writing any answer.

“Do I think Ballad should be required to show improvement on those measures? Yes, absolutely,” Fitzgerald said. “I think any human being you spoke with would give the same answer.”

Ballad Health declined to comment. Tennessee Department of Health spokesperson Dean Flener declined an interview request and directed all questions about Ballad to the Tennessee Attorney General’s Office, which also has a role in regulating the monopoly. Amy Wilhite, a spokesperson for the AG’s office, directed those questions back to the health department and provided documents showing it is the agency responsible for how Ballad is scored.

The Virginia Department of Health, which is also supposed to perform “active supervision” of Ballad as part of the monopoly agreement, has fallen several years behind schedule. Its most recent assessment of the company was for fiscal year 2020, when it found that the benefits of the monopoly “outweigh the disadvantages.” Erik Bodin, a Virginia official who oversees the agreement, said more recent reports are not yet ready to be released.

Ballad Health was formed in 2018 after state officials approved the nation’s biggest so-called Certificate of Public Advantage, or COPA, agreement, allowing a merger of the Tri-Cities region’s only two hospital systems — Mountain States Health Alliance and Wellmont Health System. Nationwide, COPAs have been used in about 10 hospital mergers over the past three decades, but none has involved as many hospitals as Ballad’s.

The Federal Trade Commission has warned that hospital monopolies lead to increased prices and decreased quality of care. To offset the perils of Ballad’s monopoly, officials required the new company to agree to more robust regulation by state health officials and a long list of special conditions, including the state’s quality-of-care measurements.

Ballad failed to meet the baseline on about 80% of those quality measures from July 2021 to June 2022, according to a report the company submitted to the health department. The following year, Ballad fell short on about 75% of the quality measures, and some got dramatically worse, another company report shows.

For example, the median time Ballad patients spend in the ER before being admitted to the hospital has risen each year and is now nearly 11 hours, according to the latest Ballad report. That’s more than three times what it was when the monopoly began, and more than 2.5 times the state baseline.

And yet Ballad’s grade is not lowered by the lack of speed in its ERs.

Fitzgerald, Tennessee’s former Ballad monitor, who previously served as an executive in the University of Virginia Health System, said a hospital company with competitors would have more reason than Ballad to improve its ER speeds.

“When I was at UVA, we monitored this stuff passionately because — and I think this is the key point here — we had competition,” Fitzgerald said. “And if we didn’t score well, the competition took advantage.”

by Brett Kelman May 29, 2024

Midwest correspondent Samantha Liss contributed to this report.

Florida Allows Doctors To Perform C-Sections Outside of Hospitals

KFF Health News, May 28, 2024

Florida has become the first state to allow doctors to perform cesarean sections outside of hospitals, siding with a private equity-owned physicians group that says the change will lower costs and give pregnant women the homier birthing atmosphere that many desire.

But the hospital industry and the nation’s leading obstetricians’ association say that even though some Florida hospitals have closed their maternity wards in recent years, performing C-sections in doctor-run clinics will increase the risks for women and babies when complications arise.

“A pregnant patient that is considered low-risk in one moment can suddenly need lifesaving care in the next,” Cole Greves, an Orlando perinatologist who chairs the Florida chapter of the American College of Obstetricians and Gynecologists, said in an email to KFF Health News. The new birth clinics, “even with increased regulation, cannot guarantee the level of safety patients would receive within a hospital.”

This spring, a law was enacted allowing “advanced birth centers,” where physicians can deliver babies vaginally or by C-section to women deemed at low risk of complications. Women would be able to stay overnight at the clinics.

Women’s Care Enterprises, a private equity-owned physicians group with locations mostly in Florida along with California and Kentucky, lobbied the state legislature to make the change. BC Partners, a London-based investment firm, bought Women’s Care in 2020.

“We have patients who don’t want to deliver in a hospital, and that breaks our heart,” said Stephen Snow, who recently retired as an OB-GYN with Women’s Care and testified before the Florida Legislature advocating for the change in 2018.

Brittany Miller, vice president of strategic initiatives with Women’s Care, said the group would not comment on the issue.

Health experts are leery.

“What this looks like is a poor substitute for quality obstetrical care effectively being billed as something that gives people more choices,” said Alice Abernathy, an assistant professor of obstetrics and gynecology at the University of Pennsylvania Perelman School of Medicine. “This feels like a bad band-aid on a chronic issue that will make outcomes worse rather than better,” Abernathy said.

Nearly one-third of U.S. births occur via C-section, the surgical delivery of a baby through an incision in the mother’s abdomen and uterus. Generally, doctors use the procedure when they believe it is safer than vaginal delivery for the parent, the baby, or both. Such medical decisions can take place months before birth, or in an emergency.

Florida state Sen. Gayle Harrell, the Republican who sponsored the birth center bill, said having a C-section outside of a hospital may seem like a radical change, but so was the opening of outpatient surgery centers in the late 1980s.

Harrell, who managed her husband’s OB-GYN practice, said birth centers will have to meet the same high standards for staffing, infection control, and other aspects as those at outpatient surgery centers.

“Given where we are with the need, and maternity deserts across the state, this is something that will help us and help moms get the best care,” she said.

Seventeen hospitals in the state have closed their maternity units since 2019, with many citing low insurance reimbursement and high malpractice costs, according to the Florida Hospital Association.

Mary Mayhew, CEO of the Florida Hospital Association, said it is wrong to compare birth centers to ambulatory surgery centers because of the many risks associated with C-sections, such as hemorrhaging.

The Florida law requires advanced birth centers to have a transfer agreement with a hospital, but it does not dictate where the facilities can open nor their proximity to a hospital.

“We have serious concerns about the impact this model has on our collective efforts to improve maternal and infant health,” Mayhew said. “Our hospitals do not see this in the best interest of providing quality and safety in labor and delivery.”

Despite its opposition to the new birth centers, the Florida Hospital Association did not fight passage of the overall bill because it also included a major increase in the amount Medicaid pays hospitals for maternity care.

Mayhew said it is unlikely that the birth centers would help address care shortages. Hospitals are already struggling with a shortage of OB-GYNs, she said, and it is unrealistic to expect advanced birth centers to open in rural areas with a large proportion of people on Medicaid, which pays the lowest reimbursement for labor and delivery care.

It is unclear whether insurers will cover the advanced birth centers, though most insurers and Medicaid cover care at midwife-run birth centers. The advanced birth centers will not accept emergency walk-ins and will treat only patients whose insurance contracts with the facilities, making them in-network.

Snow, the retired OB-GYN with Women’s Care, said the group plans to open an advanced birth center in the Tampa or Orlando area.

The advanced birth center concept is an improvement on midwife care that enables deliveries outside of hospitals, he said, as the centers allow women to stay overnight and, if necessary, offer anesthesia and C-sections.

Snow acknowledged that, with a private equity firm invested in Women’s Care, the birth center idea is also about making money. But he said hospitals have the same profit incentive and, like midwives, likely oppose the idea of centers that can provide C-sections because they could cut into hospital revenue.

“We are trying to reduce the cost of medicine, and this would be more cost-effective and more pleasant for patients,” he said.

Kate Bauer, executive director of the American Association of Birth Centers, said patients could confuse advanced birth centers with the existing, free-standing birth centers for low-risk births that have been run by midwives for decades. There are currently 31 licensed birth centers in Florida and 411 free-standing birth centers in the United States, she said.

“This is a radical departure from the standard of care,” Bauer said. “It’s a bad idea,” she said, because it could increase risks to mom and baby.

No other state allows C-sections outside of hospitals. The only facility that offers similar care is a birth clinic in Wichita, Kansas, which is connected by a short walkway to a hospital, Wesley Medical Center.

The clinic provides “hotel-like” maternity suites where staffers deliver about 100 babies a month, compared with 500 per month in the hospital itself.

Morgan Tracy, a maternity nurse navigator at the center, said the concept works largely because the hospital and birthing suites can share staff and pharmacy access, plus patients can be quickly transferred to the main hospital if complications arise.

“The beauty is there are team members on both sides of the street,” Tracy said.

by Phil Galewitz, KFF Health News May 28, 2024

Pages