How companies like EmpowerHMS were able to drive so many hospitals into the ground so quickly is a story about the fragility of health care in rural America.
This article was first published on Tuesday, August 20, 2019 in Kaiser Health News.
SWEET SPRINGS, Mo. — The money was so good in the beginning, and it seemed it might gush forever, right through tiny country hospitals in Missouri, Oklahoma, Tennessee and into the coffers of companies controlled by Jorge A. Perez, his family and business partners.
It was his "secret sauce," the rotund Miami entrepreneur would smilingly tell people in their no-stoplight towns. The money-making ventures he proposed sounded complicated, sure, but he said they would bring in enough cash to save their hospital and dozens, even hundreds, of good jobs in rural towns where gainful employment is hard to come by.
And, in town after town, the people believed him. He offered what they could not resist: hope, and the promise of survival.
Then a few major health insurance companies got suspicious, as did some government officials. How could Unionville, Mo. — a town of 1,790 — generate $92 million in hospital lab fees for blood and urine samples in just six months? Why had lab billings at a 25-bed hospital in Plymouth, N.C., nearly tripled to $32 million in the year after Perez's company took control?
The lab billings, insurers alleged, were simply fraudulent. Blue Cross Blue Shield and other insurers started filing lawsuits, stopped making reimbursements and shut off the spigot.
At the height of his operation, Perez and his Miami-based management company, EmpowerHMS, helped oversee a rural empire encompassing 18 hospitals across eight states. Perez owned or co-owned 11 of those hospitals and was CEO of the companies that provided their management and billing services. He was affiliated with companies that owned or managed the rest.
Now, with funding from the lab-billing venture dried up, 12 of the hospitals have entered bankruptcy and eight have closed their doors.
The staggering collapse left hundreds of employees without jobs and many more owed months of back pay. Only in recent months did they learn that their medical coverage had been terminated because EmpowerHMS had stopped making payments, according to interviews and bankruptcy documents.
At some of the hospitals, EmpowerHMS stopped paying employee payroll taxes, Perez acknowledged in an interview. Some of the shuttered hospitals owe hundreds of thousands in property taxes, according to local officials.
How companies run by this Miami businessman and his associates were able to drive so many hospitals into the ground so quickly, devastating their communities, is a story about the fragility of health care in rural America and the types of money-making ventures that have flourished in legal gray areas of America's complicated medical system.
Perez styled himself as a savior of rural hospitals. "My only fault is I tried everything in the world to save them," he told Kaiser Health News.
But for the townspeople left in the wreckage, the reality feels more sinister.
EmpowerHMS "is like a curse word," said Tara Brewer, head of the Chamber of Commerce in Sweet Springs, Mo., where the I-70 Community Hospital closed in February, taking with it dozens of jobs and emergency care.
The town's mayor, Francis Vaught, put it more simply: "We were robbed."
Building An Empire On Promises
Jorge Perez's company jet never seemed to take off on time.
Whether he was headed to Kansas, Missouri or Arkansas, Perez always was running late, said Scottie Collins, who joined the Empower team in 2017 with the expectation his Florida-based drug rehab program would be integrated into the burgeoning hospital group. It struck Collins as a luxury, given the flight crew charged by the hour, but neither Perez nor his entourage seemed concerned.
In September 2017, Perez and his team swooped into Fulton, Mo., days before the town's nearly 100-year-old hospital was set to close. Fulton Medical Center, with 140 staffers, was a major employer and the only hospital in Callaway County. The hospital had struggled for a quarter-century, escaping closure at least three times as the economic forces battering rural hospitals across America took their toll.
At what was supposed to have been a farewell potluck for the facility's staff, Perez appeared, announcing that he'd just bought the hospital and was keeping it open, according to media reports. From the podium, he delivered what had become his standard pitch in small towns across the Midwest: He saw a community desperately fighting to keep its hospital, and he would help them win.
"He seemed to be a nice enough guy," said LeRoy Benton, Fulton's mayor at the time, "and seemed to say the right things."
If the communities he wooed had the time or capacity to look deeper, they might have seen a red flag: Perez had no experience managing hospitals. Trained as an electrical engineer, Perez helped his father run a medical billing company in Miami that served doctors and hospitals. He repeatedly saw rural hospitals closing, he said, and felt moved to save them.
In 2015, Perez partnered with a company run by a Chicago-based emergency room physician, Dr. Seth Guterman, to take over the Campbellton-Graceville Hospital in Graceville, a town of 2,200 people in the Florida Panhandle.
Perez told the local paper the new ownership group would invest $2 million and reduce costs by 30%. "Consider Campbellton-Graceville Hospital SAVED," enthused the Jackson County Times.
A year later, he invested in a struggling hospital in Williston, Fla., and with partner David Byrns landed a management contract for Putnam County Memorial in Unionville, Mo. In 2017, Perez formed a partnership with Paul Nusbaum, a former secretary of health and human resources in West Virginia, and acquired controlling interest in 10 hospitals in Oklahoma, Kansas, Missouri, Tennessee and North Carolina, swallowing them whole.
"When you rescue a hospital, you rescue a community" was his mantra on social media.
People describe Perez as genial and courteous — "Everybody that knows me says I have a big heart," he said of himself. But his inner circle included some people with questionable backgrounds.
One of Empower's top executives,J.T. Lander, had done time in federal prison after being convicted in 2009 of mail fraud and money laundering while serving as county attorney for Florida's Dixie County. Byrns' criminal record includes an arrest for check forgery at a Louisiana hospital he managed. (Byrns returned the money, and criminal charges were dropped.)
Neither Byrns nor Lander responded to a request for comment; a woman who answered Nusbaum's phone said he was unavailable for comment.
Fernando Barroso, who worked as an assistant controller for EmpowerHMS in 2018, said the company's financial systems were a mess, even as it wrestled with massive debt accumulated through rapid-fire hospital acquisitions.
"I've been an accountant for a long time and I thought I'd seen everything, but I'd never seen anything like this," Barroso said. "It was total disorder."
A Lucrative Venture
To generate income for foundering hospitals, Jorge Perez took advantage of federal health care regulations that allow some rural hospitals to bill for laboratory tests at substantially higher rates than other providers. The goal is to keep hospitals that provide vital care in remote areas afloat, by paying generously for the relatively small number of tests needed in such locations.
But several of the Perez-affiliated hospitals established lab programs that reached well beyond the hospital doors. They contracted with outside labs, in other cities and states, to draw and process blood and urine tests for thousands of people who never set foot in the hospital. Insurers were billed using the higher rates afforded the rural hospitals, and the contractors got a portion of the proceeds.
In recent years, Perez and a handful of other rural hospital owners who have established similar operations have defended the billing setup as in alignment with federal regulations. But among some medical finance experts, it's considered legally murky and has resulted in allegations of fraud involving owners in several states.
What is not in dispute is that the strategy can be lucrative. At 14-bed Putnam County Memorial alone, the lab-billing operation generated nearly $120 million in payments to outside vendors in the first six months of 2017, according to internal documents obtained by Kaiser Health News. And a chunk of those payments — nearly $80 million in lab-related charges — went to Perez-affiliated companies, according to the documents.
In interviews, multiple employees said they had no idea what Empower did with the money their hospitals earned, since the facilities seemed perpetually starved for cash.
Melva Price Lilley, an X-ray technician at Washington County Hospital in Plymouth, N.C., recalled regularly being short of supplies. "Sometimes we wouldn't have soap to bathe patients," Lilley said. "We didn't have any crackers, orange juice. We didn't have enough staff at night to run a code."
"They never invested any money in our hospital," she said. "You have to go on top of the roof to adjust the heat or air conditioning with a broomstick."
Perez had taken control of the regional hospital in Drumright, Okla., in 2017 promising brighter days, said Tracy Byers, hospital CEO at the time. Instead, he said, the bills quickly piled up.
"I would dread Mondays as that's when all the certified letters would start showing up in the mail," Byers said. "Typically, by Thursday and Friday, you'd have an idea of what bills you could pay, if any."
Even as the hospitals struggled, Perez, on his own and through Empower-affiliated companies, was investing in real estate in 2016 and 2017, buying up nine South Florida properties that totaled more than $3.7 million, including three condos on Key Largo, according to property records.
In an interview, Perez maintained that the Florida properties were bought with earnings from unrelated software companies. He declined to get into details about his finances. "The little I have left I need to preserve and protect," he said. "I'm as broke today as anybody out there."
A Damning Report
In August 2017, Missouri State Auditor Nicole Galloway delivered a stunning blow.
A routine audit of Putnam County Memorial had uncovered questionable financial dealings. From December 2016 to May 2017, Perez and Byrns' company, Hospital Partners, had managed to generate $92 million from lab tests run through Putnam. By comparison, hospital revenue totaled $7.5 million in fiscal year 2016, according to the audit.
The analysis found 80% of that money was flowing to laboratory companies, including some in which Byrns had a financial stake; another 6% to a Perez-controlled billing company; and a major portion to 33 out-of-state phlebotomists — blood draw specialists — they had put on the hospital payroll.
"What was astounding to me was that the hospital was not better off during and after this lab activity," Galloway told KHN.
The reaction was explosive. Dozens of major insurers banded together tofile lawsuits against Perez-affiliated hospitals in Missouri and other states, demanding hundreds of millions in restitution. The lawsuits, still ongoing, describe the lab-billing operation as a "widespread fraudulent scheme" that aimed to enrich Perez, some of his associates and affiliated companies, as well as participating labs.
In court documents, Perez has denied wrongdoing and asked for dismissal based on questions of jurisdiction, among other issues. In an interview, he said his billing setup was "done according to Medicare and state guidelines." He added: "I'm still waiting [to see] where we've done anything wrong."
Legal or not, as public scrutiny intensified, the revenue generated by lab tests slowed to a trickle. Blue Cross Blue Shield of Oklahoma dropped four Perez-affiliated hospitals from its network, cutting off a crucial source of funding. Lenders took Perez and his partners to court to force them out of other hospitals.
Across the Midwest, employees were living the fallout. In hospital after hospital, paychecks came late — and then not at all, according to employee interviews and bankruptcy court documents. Doctors quit. Vendors stopped delivering vital supplies.
At Haskell County Community Hospital in Stigler, Okla., former laboratory supervisor Shawna Smith recalled an alarming shortage of antibiotics and IV catheters as early as October 2018. By January 2019, she said, employees weren't getting paid. The Ladies Auxiliary set up a fund for employees who couldn't pay their utility bills. One resident brought packages of hamburger and bison for every employee.
About two hours west, the local middle school in Prague, Okla., held a drive to collect toilet paper and cleaning supplies for Prague Community Hospital. A veterinary clinic delivered medical essentials. Still, supplies fell so low, said City Manager Jim Greff, that the hospital had to stop admitting patients.
At Drumright Regional Hospital, Human Resources Director Allyson Lunsford said they ran out of oxygen and blood. By December, she said, they were so far behind on bills that the company that rented them hospital beds came to repossess them — despite patients still using them.
A Sense of Betrayal
By March 2019, seven Perez-affiliated hospitals had closed. And as bankruptcy proceedings unfolded at those and others, employees got more devastating news, according to interviews and trustee reports: Along with missing paychecks, the company had stopped funding their health insurance; their medical and dental policies had been discontinued.
Perez said in an interview that the hospitals were not making enough money to cover their expenses and debt. He said he faced constant pressure about which bills to pay.
"I had a whole executive team of experts, and they made decisions — we all made decisions — of what needed to be paid so we can live another day," Perez said. "Do we pay the medication? Do we pay the pharmacy stuff? Do we pay the doctors? Do we pay the nurse?"
"We felt at that moment we were going to be able to pull out of it in a month or two," he said of the missed payroll taxes. "Hindsight on that looks bad."
In February, the I-70 Community Hospital in Sweet Springs became one of the latest Empower hospitals to shut its doors, leaving its red-lettered "Emergency" sign shrouded in a white sheet. It marks a searing loss for a town where the last dentist recently closed shop and multiple storefronts sit abandoned.
The closure left $300,000 in unpaid property taxes that could have been spent on schools, according to the county assessor. Mayor Vaught said the town lost dozens of jobs. Medical equipment bought with money raised at hot dog fundraisers sits unused.
Brewer, the Chamber of Commerce head, worries Sweet Springs won't survive the hit. "What is it that we're going to have for our kids?" she asked.
It's not clear what recourse the towns have. Bankruptcy court documents indicate the Department of Justice is investigating Perez's companies, though DOJ officials would not comment. Perez has not been criminally charged, but federal prosecutors recently indicted one of his associates.
On July 9, Kyle Marcotte, owner of a Jacksonville Beach, Fla., addiction treatment center pleaded guilty for his part in a $57 million lab-billing scheme involving two Perez-affiliated hospitals, including Campbellton-Graceville. Marcotte admitted cooperating with unnamed hospital managers to provide urine samples from his patients for lab testing that was billed through the rural hospitals and, in exchange, getting a cut of the proceeds. His sentencing has yet to be scheduled.
Perez, who still lives in Miami, said the company jet has been sold and he is turning his attention to software development. He told KHN he is losing sleep over the possibility he could go to jail but was adamant he has operated in the best interests of the communities he sought to serve. If anything, he said, the townspeople should thank him, because he gave their dying hospitals "two to three years of life."
"I wanted to see if I could save these rural hospitals in America," Perez said. "I'm that kind of person."
FORT SCOTT, Kan. — For more than 30 minutes, Robert Findley lay unconscious in the back of an ambulance next to Mercy Hospital Fort Scott on a frigid February morning with paramedics hand-pumping oxygen into his lungs. A helipad sat just across the icy parking lot from the hospital's emergency department, which had recently shuttered its doors, like hundreds of rural hospitals nationwide.
Suspecting an intracerebral hemorrhage and knowing the ER was no longer functioning, the paramedics who had arrived at Findley's home called for air transport before leaving. For definitive treatment, Findley would need to go to a neurology center located 90 miles north in Kansas City, Mo. The ambulance crew stabilized him as they waited.
But the dispatcher for Air Methods, a private air ambulance company, checked with at least four bases before finding a pilot to accept the flight, according to a 911 tape obtained by Kaiser Health News through a Kansas Open Records Act request.
"My Nevada crew is not available and my Parsons crew has declined," the operator tells Fort Scott's emergency line about a minute after taking the call. Then she says she will be "reaching out to" another crew.
Nearly seven minutes passed before one was en route.
When Linda Findley sat at her kitchen counter in late May and listened to the 911 tape, she blinked hard: "I didn't know that they could just refuse. … I don't know what to say about that."
Both Mercy and Air Methods declined to comment on Findley's case.
When Mercy Hospital Fort Scott closed at the end of 2018, hospital president Reta Baker had been "absolutely terrified" about the possibility of not having emergency care for a community where she had raised her children and grandchildren and served as chair of the local Chamber of Commerce. Now, just a week after the ER's closure, her fears were being tested.
Nationwide, more than 110 rural hospitals have closed since 2010, and in each instance a community struggles to survive in its own way. In Fort Scott, home to 7,800, the loss of its 132-year-old hospital opened by nuns in the 19th century has wrought profound social, emotional and medical consequences. Kaiser Health News and NPR are following Fort Scott for a year to explore deeper national questions about whether small communities need a traditional hospital at all. If not, what would take its place?
Delays in emergency care present some of the thorniest dilemmas for nurses, physicians and emergency workers. Minutes can make the difference between life and death — and seconds can be crucial when it comes to surviving a heart attack, a stroke, an anaphylactic allergic reaction or a complicated birth.
Though air ambulances can transport patients quickly, the dispatch system is not coordinated in many states and regions across the country. And many air ambulance companies do not participate in insurance networks, which leads to bills of tens of thousands of dollars.
Knowing that emergency care was crucial, the hospital's owner, St. Louis-based Mercy, agreed to keep Fort Scott's emergency doors open an extra month past the hospital's Dec. 31 closure, to give Baker time to find a temporary operator. A last-minute deal was struck with a hospital about 30 miles away, but the ER still needed to be remodeled and the new operator had to meet regulatory requirements. So, it closed for 18 days — a period that proved perilous.
A Risky Experiment
During that time, Fort Scott's publicly funded ambulances responded to more than 80 calls for service and drove more than 1,300 miles for patients to get care in other communities.
Across America, rural patients spend "statistically significant" more time in an ambulance than urban patients after a hospital closes, said Alison Davis, a professor at the University of Kentucky's department of agricultural economics. Davis and research associate SuZanne Troske analyzed thousands of ambulance calls and found the average transport time for a rural patient was 14.2 minutes before a hospital closed; afterward, it increased nearly 77% to 25.1 minutes. For patients over 64, the increase was steeper, nearly doubling.
In Fort Scott this February, the hospital's closure meant people didn't "know what to expect if we come pick them up," or where they might end up, said Fort Scott paramedic Chris Rosenblad.
Barbara Woodward, 70, slipped on ice outside a downtown Fort Scott business during the early February storm. The former X-ray technician said she knew something was broken. That meant a "bumpy" and painful 30-mile drive to a nearby town, where she had emergency surgery for a shattered femur, a bone in her thigh.
During the 18 days Fort Scott's residents lived without an emergency department, Barbara Woodward slipped on ice outside a downtown Fort Scott business. The ambulance that arrived for her had to drive 30 miles out of town. "I thought to myself that the back of the ambulance isn't as comfortable as I thought it would be," Woodward says.(Christopher Smith for KHN)
About 60% of calls to the Fort Scott's ambulances in early February were transported out of town, according to the log, which KHN requested through the Kansas Open Records Act. The calls include a 41-year-old with chest pain who was taken more than 30 miles to Pittsburg, an unconscious 11-year-old driven 20 miles to Nevada, Mo., and a 19-year-old with a seizure and bleeding eyes escorted nearly 30 miles to Girard, Kan.
Those miles can harm a patient's health when they are experiencing a traumatic event, Davis said. They also prompt other, less obvious, problems for a community. The travel time keeps the crews absent from serving local needs. Plus, those miles cause expensive emergency vehicles to wear out faster.
Mercy donated its ambulances to the joint city and county emergency operations department. Bourbon County Commissioner Lynne Oharah said he's not sure how they will pay for upkeep and the buying of future vehicles. Mercy had previously owned and maintained the fleet, but now it falls to the taxpayers to support the crew and ambulances. "This was dropped on us," said LeRoy "Nick" Ruhl, also a county commissioner.
Even local law enforcement feel extra pressure when an ER closes down, said Bourbon County Sheriff Bill Martin. Suspects who overdose or suffer split lips and black eyes after a fight need medical attention before getting locked up — that often forces officers to escort them to another community for emergency treatment.
And Bourbon County, with its 14,600 residents, faces the same dwindling tax base as most of rural America. According to the U.S. Census Bureau, about 3.4% fewer people live in the county compared with nearly a decade ago. Before the hospital closed, Bourbon County paid Mercy $316,000 annually for emergency medical services. In April, commissioners approved an annual $1 million budget item to oversee ambulances and staffing, which the city of Fort Scott agreed to operate.
In order to make up the nearly $700,000 difference in the budget, Oharah said, the county is counting on the ambulances to transport patients to hospitals. The transports are essential because ambulance services get better reimbursement from Medicare and private insurers when they take patients to a hospital as compared with treating patients at home or at an accident scene.
Added Response Times
For time-sensitive emergencies, Fort Scott's 911 dispatch calls go to Air Methods, one of the largest for-profit air ambulance providers in the U.S. It has a base 20 miles away in Nevada, Mo., and another base in Parsons, Kan., about 60 miles away.
The company's central communications hub, known as AirCom, in Omaha, Neb., gathers initial details of an incident before contacting the pilot at the nearest base to confirm response, said Megan Smith, a spokeswoman for the company. The entire process happens in less than five minutes, Smith said in an emailed statement.
When asked how quickly the helicopter arrived for Robert Findley, Bourbon County EMS Director Robert Leisure said he was "unsure of the time the crew waited at the pad." But, he added, "the wait time was very minimal."
Rural communities nationwide are increasingly dependent on air ambulances as local hospitals close, said Rick Sherlock, president of the Association of Air Medical Services, an industry group that represents the air ambulance industry. AAMS estimates that nearly 85 million Americans rely on the mostly hospital-based and private industry to reach a high-level trauma center within 60 minutes, or what the industry calls the "golden hour."
In June, when Sherlock testifiedto Congress about high-priced air ambulance billing, he pointed to Fort Scott as a devastated rural community where air service "helped fill the gap in rural health care."
But, as Findley's case shows, the gap is often difficult to fill. After Air Methods' two bases failed to accept the flight, the AirCom operator called at least two more before finding a ride for the patient.
The 1978 Airline Deregulation Act states that airline companies cannot be regulated on "rates, routes, or services," a provision originally meant to ensure that commercial flights could move efficiently between states. Today, in practice, that means air ambulances have no mandated response times, there are no requirements that the closest aircraft will come, and they aren't legally obligated to say why a flight was declined.
The air ambulance industry has faced years of scrutiny over accidents, including investigations by the National Transportation Safety Board and stricter rules from the Federal Aviation Administration. And Air Methods' Smith said the company does not publicly report on why flights are turned down because "we don't want pilots to feel pressured to fly in unsafe conditions."
Yet a lack of accountability can lead to mostly for-profit providers sometimes putting profits first, Scott Winston, Virginia's assistant director of emergency medical services, wrote in an email. Air ambulances can be delayed because of bad weather or crew fatigue from previous runs.
Or sometimes companies accept a call knowing their closest aircraft is unavailable, rather than lose the business. "This could result in added response time," he wrote.
Air ambulances don't face the detailed reporting requirements imposed on ground ambulances. The National Emergency Medical Services Information System collects only about 50% of air ambulance events because the industry's private operators voluntarily provide the information.
Saving Lives
It took months, but Baker persuaded Ascension Via Christi's Pittsburg hospital, which sits 30 miles south of Fort Scott, to reopen the ER. "They kind of were at a point of desperation," said Randy Cason, president of Pittsburg's hospital. The two Catholic health systems signed a two-year agreement, leaving Fort Scott relieved but nervous about the long term.
As Fort Scott deals with the trauma of losing a beloved institution, deeper national questions underlie the struggle: Do small, rural communities need a traditional hospital at all? And if not, how will they get the health care they need?
Ascension has said it is looking at potential facilities in the area, but it's unclear what that means. Fort Scott Economic Development Director Rachel Pruitt said in a July 23 email, "No decisions have been made." Fort Scott City Manager Dave Martin said the city has entered into a "nondisclosure agreement" with Ascension to look into the health system's ability to continue offering health care to Fort Scott, though Martin could not confirm whether that included an emergency department.
Nancy Dickey, executive director of the Texas A&M Rural & Community Health Institute, said every community prioritizes emergency services. That's because the "first hour appears to be vitally important in terms of outcomes," she said.
And the Fort Scott ER, which reopened under Ascension on Feb. 18, has proved its value. So far, in the past six months, Ascension's Fort Scott emergency department has taken care of more than 2,500 patients, including delivering three babies. In May, a city ambulance crew had resuscitated a heart attack patient at his home and Ascension's emergency department staff treated the patient until an air ambulance arrived.
In July, Fort Scott's Deputy Fire Chief Dave Bruner read a note from that patient's grateful wife at a city commission meeting: "They gave my husband the chance to fight long enough to get to Freeman ICU. As a nurse, I know the odds of Kevin surviving the 'widow maker' were very poor. You all made the difference."
By contrast, Linda Findley believes the local paramedics did everything possible to save her husband but wonders how the lack of an ER and the air ambulance delays might have changed her husband's outcome. After being flown to Kansas City, Robert Findley died.
This is the third installment in KHN's year-long series, No Mercy, which follows how the closure of one beloved rural hospital disrupts a community's health care, economy and equilibrium.
Mary Epp awoke from a deep sleep to the "high, shrill" sound of her dialysis machine's alarm. Something was wrong.
It was 1 a.m. and Epp, 89, was alone at home in Marion Junction, Ala. No matter. Epp has been on home dialysis since 2012, and she knew what to do: Check the machine, then call the 24/7 help line at her dialysis provider in Birmingham, Ala. to talk to a nurse.
The issue Epp identified: Hours before, a woman she hired to help her out had put up two small bags of dialysis solution instead of the large ones, and the solution had run out.
The nurse reassured Epp that she'd had enough dialysis. Epp tried to detach herself from the machine, but she couldn't remove a cassette, a key part. A man on another 24/7 help line run by the machine's manufacturer helped with that problem.
Was it difficult troubleshooting these issues? "Not really: I'm used to it," Epp said, although she didn't sleep soundly again that night.
If policymakers have their way, older adults with serious, irreversible kidney disease will increasingly turn to home dialysis. In July, the Trump administration made that clear in an executive order meant to fundamentally alter how patients with kidney disease are managed in the U.S.
Changing care for the sickest patients — about 726,000 people with end-stage kidney disease — is a top priority. Of these patients, 88% receive treatment in dialysis centers and 12% get home dialysis.
By 2025, administration officials say, 80% of patients newly diagnosed with end-stage kidney disease patients should receive home dialysis or kidney transplants. Older adults are sure to be affected: Half of the 125,000 people who learn they have kidney failure each year are 65 or older.
Home dialysis has potential benefits: It's more convenient than traveling to a dialysis center; recovery times after treatment are shorter; therapy can be delivered more often and more readily individualized, putting less strain on a person's body; and "patients' quality of life tends to be much better," said Dr. Frank Liu, director of home hemodialysis at the Rogosin Institute in New York City.
But home dialysis isn't right for everyone. Seniors with bad eyesight, poor fine-motor coordination, depression or cognitive impairment generally can't undertake this therapy, specialists note. Similarly, frail older adults with multiple conditions such as diabetes, arthritis and cardiovascular disease may need significant assistance from family members or friends.
The burden of providing this care shouldn't be underestimated. In a recent survey of caregivers providing complex care to family members, friends or neighbors, 64% identified operating home dialysis equipment as hard — putting this at the top of the list of difficult tasks.
What experiences do older adults have with home dialysis? Several seniors doing well on home-based therapies were willing to discuss this, but they're a select group. Up to a third of patients who try home dialysis end up switching to dialysis centers because they suffer complications or lose motivation, among other reasons.
Bottom of Form
It takes determination. Jack Reynolds, 89, prides himself on being disciplined, which has helped him do peritoneal dialysis at home in Dublin, Ohio, seven days a week for 3½ years.
With peritoneal dialysis, the therapy that Epp also gets, a fluid called dialysate (a mix of water, electrolytes and salts) is flushed into a patient's abdomen through a surgically implanted catheter. There, it absorbs waste products and excess fluids over several hours before being drained away. This type of dialysis can be done with or without a machine, several times a day or at night.
About 10% of patients on dialysis choose peritoneal therapy, including 18,500 older adults, according to federal data.
Reynolds prefers to administer peritoneal dialysis while he sleeps — a popular option. His routine: After dinner, Reynolds sets out two bags of dialysate, ointments, sterile solutions, gauze bandages and a fresh cassette for his dialysis machine with four tubes attached: two for the dialysate bags, one for his catheter and one to expel dialysate at the end.
Altogether, it takes him 23 minutes to gather everything, clean the area around his catheter and sterilize equipment; it takes about as much time to take things down in the morning. (Yes, he has timed it.) Just before going to sleep, Reynolds hooks up to his dialysis machine, which runs for 7.5 hours. (The amount and frequency of therapy varies according to an individual's needs.)
"I live a normal, productive life, and I'm determined to make this work," Reynolds said.
It took five surgeries to successfully implant a catheter on Reynolds' left side because of scarring from previous abdominal surgeries. He has had to replace three malfunctioning dialysis machines and learn how to sleep on his right side, so the tube connected to his catheter isn't compressed.
In the morning, his wife, Norma, cleans the area around his catheter, applies a gauze bandage and tapes an 18-inch extender attached to the catheter to his chest. He could do this himself, Reynolds said, but "I wanted her to have some part in all this."
Training is demanding. In December 2003, when Letisha Wadsworth started home hemodialysis in Brooklyn, N.Y., she was working as an administrator at a social service agency and wanted to keep her job. Doing dialysis in the evening made that possible.
Home hemodialysis requires one to two months of education and training for both the patient and, usually, a care partner. With each treatment, two needles are stuck into an access point, usually in a vein in a patient's arm. Through lines connected to the needles, blood is pumped out of the patient and through a machine, where it's cleansed and waste products are removed, before being pumped back into the body.
Only 2% of dialysis patients chose this option in 2016, including 2,800 older adults.
The training was "rigorous" and "pretty scary for both of us," said Wadsworth, now 70, whose husband, Damon, accompanied her. "We learned a lot about dialysis, but we still didn't know about issues that could arise when we got home."
Issues that Wadsworth has had to deal with: learning what to do if air got into one of the lines. Adjusting the rate at which her blood was pumped and flowed through the machine. And, recently, getting a medical procedure to fix the access site for her needles, which had clotted with blood.
Another issue: finding space for 30 large boxes of supplies (fluids, filters, needles, syringes and more) that Wadsworth orders each month. They're stored in two rooms in her house.
Over the years, Wadsworth has talked a lot to family members and friends about kidney failure and dialysis. "I wish I'd known about the relationship between blood pressure and kidney failure a lot earlier," she said. "I guess I thought all black people have high blood pressure: It just comes with the territory as opposed to what we can do to prevent it." (High blood pressure puts people at risk of kidney failure.)
In 2013, Wadsworth had a stroke, which temporarily paralyzed her left side. "I used to set up the [dialysis] machine, but now I use a walker and I can't really stand and set everything up the way I used to." Damon, 73, does this for her.
Wadsworth's current routine: Dialysis starts around 8 p.m. and goes for five hours, four days a week, in a dedicated room in her house. She passes the time eating dinner, watching TV, reading on her Kindle, talking on the phone, visiting with friends or playing Scrabble with Damon.
Like most patients on home dialysis, she gets blood tests once a month and visits her nephrologist two weeks later to review how she's doing. A nurse, dietitian and social worker are also part of her team at the Rogosin Institute.
Damon, a psychotherapist, admits it isn't easy to stick his wife with needles. "A lot of times, it hurts her, and it's not fun for me to be the person doing that," he said. "But it's just part of my life now. We're thankful that home dialysis exists and we're lucky enough to be able to do it."
It can be overwhelming. Sharon Sanders, 76, thought she had the flu last year when she had trouble breathing and keeping food down. But when she landed in the hospital, doctors told her that her kidneys were shutting down.
About half of the time, this is what happens to people who end up on dialysis: They learn suddenly that their kidneys aren't working reliably anymore.
Like many people, Sanders was shocked. After going to classes and talking to a niece who's a registered nurse, she decided on peritoneal dialysis. "I liked that I can do it at home, by myself, and I don't have to stick myself with needles," she said.
Training took about a week at a clinic in Mesa, Ariz. "It came very easy for me," said Sanders, who lives in Gold Canyon, Ariz., and who began her nightly routine of six hours of peritoneal dialysis, five days a week, last August.
She doesn't pay anything for the therapy, which is covered for her by Medicare and Tricare insurance, a benefit Sanders has because of her husband's military service. (He died in 2017). Medicare Part B pays 80% of the cost of dialysis at home, and supplemental coverage (including, for instance, a Medigap policy, a retiree policy from an employer or Medicaid) generally picks up the remainder.
Even though Sanders, who has arthritis of the spine, doesn't find her dialysis routine especially burdensome, she sometimes gets overwhelmed. "I don't have any energy too much of the time," she said. "I find myself thinking, 'What's my purpose for doing this? Is it worth it if we're all going to die anyway?'"
Finding needed help. Until last November, when her husband of 68 years died, Mary Epp relied on him to get her ready for peritoneal dialysis, which she receives every night while she sleeps for nine hours.
Now, an aide comes in a 7 p.m. to help Epp take a bath and set things up before dialysis begins an hour later. Another woman comes in at 5 a.m. to take her off dialysis, clean everything up and fix her breakfast.
"I've gotten a lot more feeble than I was" when home dialysis began in 2012, said Epp, who admitted she was "terrified" when a physician diagnosed her with kidney failure.
But the benefits of home therapy, which is overseen by a team at a dialysis clinic 90 miles away in Birmingham, remain worth it, she said. "You just go to bed and wake up the next morning and you're ready to go and meet the day."
After guidelines for operations were issued in October 2017, surgeons in Michigan reduced by nearly one-third the number of pills they prescribed, with no reported drop in patient satisfaction.
This article was first published on Wednesday, August 14, 2019 in Kaiser Health News.
When they started practicing medicine, most surgeons say, there was little or no information about just how many pain pills patients needed after specific procedures.
As a result, patients often were sent home with the equivalent of handfuls of powerful and addictive medications. Then the opioid crisis hit, along with studies showing one possible side effect of surgery is long-term dependence on pain pills. These findings prompted some medical centers and groups of physicians to establish surgery-specific guidelines.
But questions remained: Would anyone pay attention to the guidelines and would smaller amounts be sufficient to control patients' pain?
Yes, appears to be the answer to both — in some measure — according to a study that encompassed nearly 12,000 patients in 43 hospitals across Michigan. The researchers publisheddetails of their work in a letter Wednesday in the New England Journal of Medicine.
Seven months after specific guidelines for certain operations were issued in October 2017, surgeons reduced by nearly one-third the number of pills they prescribed patients, with no reported drop in patient satisfaction or increase in reported pain, according to the research.
"We're not trying to deny patients narcotics," said Dr. Joceline Vu, one of the paper's authors and a general surgery resident at the University of Michigan. "But there's an acceptable level where people are still happy and still have their pain under control, but we have dropped the number to a minimum."
Overall, doctors prescribed eight fewer pills per patient — from 26 to 18 — across nine common surgical procedures, including hernia repair, appendectomy and hysterectomy, based on guidelines from the Michigan Opioid Prescribing Engagement Network (Michigan OPEN), a collaboration of hospitals, doctors and insurers.
Patients also reported taking fewer pills, dropping from 12 to nine on average across those procedures, possibly because they were prescribed fewer in the first place.
Still, while researchers say the study offers considerable reason for encouragement, it illustrates how hard it is to change prescribing habits. In May 2018, at the study's conclusion, the average number of pills prescribed exceeded the most up-to-date recommendations for all nine procedures.
And that's in Michigan, where there has been a concerted push to change prescribing habits. Most states don't have such a broad effort ongoing.
"There is a misconception that this is all fixed," said Dr. Chad Brummett, co-director of Michigan OPEN and one of the researchers on this study. "I do think people are still overprescribing. Definitely."
The guidelines come amid ongoing concern about the opioid crisis and a continued examination of the role prescription drugs played in its escalation.
The likelihood of persistent opioid use rises with the number of pills and the length of time opioids are taken during recuperation from surgery. But there's another avenue of concern. When doctors write scripts with a generous number of pills, the chance that patients won't take them all increases, along with the potential for the unused pills to make their way from medicine cabinets to the street, or to fall into the hands of other family members.
"That can be a bigger concern for many of us," said Vu. "It seems that in surgery, for whatever reason, we wrote prescriptions for a lot more opioids than people actually needed."
The Michigan OPEN guidelines recommended amounts based on how much pain medication patients actually took following surgery.
Other institutions developed their own surgery-specific prescribing principles, including Johns Hopkins Medicine in Baltimore and the Mayo Clinic in Minnesota. Although they use different methods to determine the number of pills, most ended up with similar parameters, often in the range of zero to 20 pills, depending on the procedure.
All the prescribing directives apply to patients with acute pain, such as those who had surgery, not people with chronic pain, Vu and other researchers emphasized. Even so, chronic-pain patients argue that the focus on setting postsurgical prescribing levels has made it far more difficult for them to get treatment.
"These patients feel besieged … and say, 'I need these pills to get out of bed in the morning'," said Vu. "This project and study is not about chronic pain. It's about preventing harm to healthy people coming in for surgery."
What are some of the guidelines? Michigan, in its initial recommendation, called for no more than 10 pills equivalent to 5 milligrams of oxycodone for a minor hernia repair, and no more than 20 for a minimally invasive hysterectomy.
The resulting changes offer important context.
Before the guidelines, for instance, patients with minor hernia repair operations were being prescribed 29 pills, according to the study. That fell to 14 by May 2018, which is still four more pills than the guidelines suggest.
For a hysterectomy, though, patients received 31 pills before the guidelines and 19 after, just below the "no more than 20" recommended. And following their initial guidelines, Michigan OPEN revised its recommendations, further lowering the range amounts to zero to 10 for hernia repair and 0 to 15 for a hysterectomy.
In sheer numbers, opioid prescribing rates in the U.S. peaked in 2010, but remain among the highest in the world, according to studies and other data. The postsurgical prescribing falloff seen in Michigan does not likely reflect a broader trend, especially where there is less emphasis on such guidelines.
An analysis of national Medicare data by Kaiser Health News and Johns Hopkins Bloomberg School of Public Health, for example, found only a small drop — one to two pills on average, per patient — in postsurgical prescribing across seven different procedures from 2016 to 2017.
The KHN/Hopkins analysisoriginally found that prescribing from 2011 to 2016 was well above levels now recommended by organizations like Michigan OPEN and the Hopkins medical center. For example, Medicare patients took home 48 pills in the week following coronary artery bypass; 31 following laparoscopic gallbladder removal; 28 after a lumpectomy; and 34 after minimally invasive hysterectomies.
According to postsurgical guidelines spearheaded by Hopkins last year, those surgeries should require at most 30 pills for a bypass; 10 pills for minimally invasive gallbladder removal, lumpectomy and minimally invasive hysterectomy.
In July, when 2017 Medicare data became available, KHN and Hopkins did an additional analysis, which showed, on average, small decreases in the number of pills taken home from the pharmacy by patients in the first week after leaving the hospital. But the drop was smaller than the reductions seen in Michigan.
For example, nationwide prescribing following bypass surgery averaged 45 pills, a drop of three; after a hysterectomy, the drop was four pills from the six-year average, to 30; and lumpectomy patients took home five fewer pills, for an average of 23.
"Those reductions are not sufficient," said Dr. Marty Makary, the surgeon who spearheaded the development of guidelines at Johns Hopkins Bloomberg School and whose staff helped perform the Medicare analysis for KHN. "The data represents prescriptions as recent as a year and a half ago, and we're three years into the opioid crisis. We're talking about mopping up the floor while the spigot is still on."
(Use our interactive tool
Search individual prescribing habits by doctor name or associated hospitals based on data analysis by Kaiser Health News and Johns Hopkins Bloomberg School of Public Health. Read our methodology)
Critics worry the delays come at a steep cost: Medicare paying for millions of unnecessary exams and patients subject to radiation for no medical benefit.
This article was first published on Wednesday, August 14, 2019 in Kaiser Health News.
Five years after Congress passed a law to reduce unnecessary MRIs, CT scans and other expensive diagnostic imaging tests that could harm patients and waste money, federal officials have yet to implement it.
The law requires that doctors consult clinical guidelines set by the medical industry before Medicare will pay for many common exams for enrollees. Health care providers who go way beyond clinical guidelines in ordering these scans (the 5% who order the most tests that are inappropriate) will, under the law, be required after that to get prior approval from Medicare for their diagnostic imaging.
But after physicians argued the provision would interfere with their practices, the Trump administration delayed putting the 2014 law in place until January 2020, two years later than originally planned.
Even then, the Centers for Medicare & Medicaid Services (CMS) slated next year as a "testing" period, which means even if physicians don't check the guidelines, Medicare will still pay for an exam. CMS also said it won't decide until 2022 or 2023 when physician penalties will begin.
Critics worry the delays come at a steep cost: Medicare paying for millions of unnecessary exams and patients subject to radiation for no medical benefit.
A Harvard study published in 2011 in the Journal of Urology found "widespread overuse" of imaging tests for men on Medicare who were at low risk for prostate cancer. And a University of Washington study in the Journal of the American College of Radiology that reviewed 459 CT and MRI exams at a large academic medical center found 26% of the tests were inappropriate.
"These delays mean that many more inappropriate imaging procedures will be performed, wasting financial resources and subjecting patients to services they do not need," said Gary Young, director of the Northeastern University Center for Health Policy and Healthcare Research in Boston. "If this program were implemented stringently, you would certainly reduce inappropriate imaging to some degree."
Doctors order unnecessary tests for a variety of reasons: to seize a potential financial advantage for them or their health system, to ease fears of malpractice suits or to appease patients who insist on them.
The law applies to doctors treating patients enrolled in the traditional fee-for-service Medicare system. Health insurers, including those that operate the private Medicare Advantage plans, have for many years refused to pay for the exams unless doctors get authorization from them beforehand. That process can take days or weeks, which irks physicians and patients.
CMS would not make Verma or other officials available and answered questions only by email.
A spokeswoman said CMS has no idea how many unnecessary imaging tests are ordered for Medicare beneficiaries.
"CMS expects to learn more about the prevalence of imaging orders identified as 'not appropriate' under this program when we begin to identify outlier ordering professionals," she said.
'It Takes Four Clicks On A Computer'
An influential congressional advisory board in 2011 cited the rapid growth of MRIs, CT scans and other imaging and recommended requiring doctors who order more tests than their peers to be forced to get authorization from Medicare before sending patients for such exams. In the 2014 law, Congress tried to soften the effect by asking doctors billing Medicare to follow protocols to confirm that imaging would be appropriate for the patient.
A growing number of health systems have used clinical guidelines to better manage imaging services, studies show. The University of Virginia Health System found that unnecessary testing fell by between 5% and 11% after implementing such recommendations.
Virginia Mason Health System in Seattle in 2011 set up a system requiring its physicians — most of whom are on salary — to consult imaging guidelines. It would deny claims for any tests that did not meet appropriate criteria, except in rare circumstances. A study foundthe intervention led to a 23% drop in MRIs for lower back issues and headaches.
Dr. Craig Blackmore, a radiologist at Virginia Mason, said he worries that, unlike the efforts at his hospital, many doctors could be confused by the Medicare program because they have not received the proper training about the guidelines.
"My fear is that it will be a huge disruption in workflow and show no benefit," he said.
In 2014, AtlantiCare, a large New Jersey hospital system, began grading physicians on whether they consult its guidelines.
"Some doctors see this tool as additional work, but it takes four clicks on a computer or less than a minute," said Ernesto Cerdena, director of radiology services at AtlantiCare.
Not all Medicare imaging tests will be subject to the requirements. Emergency patients are exempt, as well as patients admitted to hospitals. CMS has identified some of the most common conditions for which doctors will have to consult guidelines. Those include heart disease, headache and pain in the lower back, neck or shoulders.
Robert Tennant, director of health information technology for the Medical Group Management Association, which represents large physician groups, said the law will unfairly affect all doctors merely to identify the few who order inappropriately.
"For the most part, doctors are well trained and know exactly what tests to perform," Tennant said.
The association is one of several medical groups pushing Congress to repeal the provision.
American College Of Radiology's Role
The law required the federal government to designate health societies or health systems to develop guidelines and companies that would sell software to embed that information into doctors' electronic health record systems.
Among the leaders in that effort is the American College of Radiology, which lobbied for the 2014 law and has been issuing imaging guidelines since the 1990s. It is one of about 20 medical organizations and health systems certified by CMS to publish separate guidelines for doctors.
The college wanted "to get ahead of the train and come up with a policy that was preferable to prior authorization," said Cynthia Moran, an executive vice president of the radiology group. About 2,000 hospitals use the college's licensed guidelines, more than any others, she said. And the college profits from that.
Moran said the licensing money helps the college defer the costs of developing the guidelines, which must be updated regularly based on new research. She said the college gives away the guidelines to individual doctors upon request and sells them only to large institutions, although she notes they are not as easy to access that way compared with being embedded in a doctor's medical records.
alifornia hospitals are providing significantly less free and discounted care to low-income patients since the Affordable Care Act took effect.
As a proportion of their operating expenses, the state's general acute-care hospitals spent less than half on these patients in 2017 than they did in 2013, according to data the hospitals reported to California's Office of Statewide Health Planning and Development.
The biggest decline in charity care spending occurred from 2013 to 2015, when it dropped from just over 2% to just under 1%. The spending has continued to decline, though less dramatically, since then.
The decline was true of for-profit hospitals, so-called nonprofit hospitals and those designated as city, county, district or state hospitals.
Health experts attribute the drop in charity care spending largely to the implementation of the federal Affordable Care Act, popularly known as Obamacare. The law expanded insurance coverage to millions of Californians, starting in 2014, and hospitals are now treating far fewer uninsured patients who cannot pay for the care they receive.
With fewer uninsured patients, fewer patients seek financial assistance through the charity care programs, according to the California Hospital Association.
Cori Racela, deputy director at the Western Center on Law & Poverty, countered that many people still need financial assistance because — even with insurance — they struggle to pay their premiums, copays and deductibles.
"The need for charity care has changed," she said, "but it still exists."
The data on charity care comes from most of the state's general acute-care hospitals but does not include Kaiser Permanente hospitals, which are not required by the state to report their charity care totals. (Kaiser Health News, which produces California Healthline, has no affiliation with Kaiser Permanente.)
For 2017, California Healthline used data from 177 nonprofit hospitals, 80 for-profit hospitals and 54 city, county, district or state hospitals. The breakdown was similar for the other years, with slight fluctuations.
Nonprofit hospitals, whose charity care spending dropped from 2.02% of operating expenses to 0.91% over the five-year period, are required by state and federal law to provide "community benefits" in exchange for their tax-exempt status.
They can meet that requirement beyond providing free and discounted care in a variety of ways: They can offer community public health programs, write off uncollected patient debt and claim the difference between what it costs to provide care and the amount that they are reimbursed by government insurance programs.
Nonprofit "hospitals get tax-exempt status, but they don't get it for free," said Ge Bai, associate professor of accounting and health policy at Johns Hopkins University. Charity care "is part of the implicit contract between hospital and taxpayers."
Bai sees the reduced spending on charity care as part of a trend of nonprofit hospitals acting more like their for-profit counterparts.
Many nonprofit hospitals "no longer consider charity care their primary mission," she said. "They are making more and more money but they are dropping their charity care."
The state and federal governments set no minimum requirements for charity spending by hospitals, although the California Attorney General has created standards for a few nonprofit hospitals that have changed ownership in recent years.
Jan Emerson-Shea, a spokeswoman for the California Hospital Association, said hospitals are giving back to their communities in ways beyond charity care.
"You see charity care declining, but Medi-Cal losses are increasing," Emerson-Shea said. She pointed to the growing shortfalls many hospitals report from caring for more patients covered by the public insurance program. "Every Medi-Cal patient we treat we lose money on."
Racela, of the Western Center on Law & Poverty, would like to see changes in California's charity care rules to address high out-of-pocket costs.
And she wants hospitals to abide by the state law that requires them to inform patients that they may be eligible for charity care based on their income.
"There is still a big unmet need for charity care across the state," Racela said.
Observation patients may have to pay a larger share of the hospital bill than if they were admitted to the hospital. Plus, they have to pick up the tab for any nursing home care.
This article was first published on Monday, August 12, 2019 in Kaiser Health News.
Medicare paid for Betty Gordon's knee replacement surgery in March, but the 72-year-old former high school teacher needed a nursing home stay and care at home to recover.
Yet Medicare wouldn't pay for that. So Gordon is stuck with a $7,000 bill she can't afford — and, as if that were not bad enough, she can't appeal.
The reasons Medicare won't pay have frustrated the Rhode Island woman and many others trapped in the maze of regulations surrounding something called "observation care."
Patients, like Gordon, receive observation care in the hospital when their doctors think they are too sick to go home but not sick enough to be admitted. They stay overnight or longer, usually in regular hospital rooms, getting some of the same services and treatment (often for the same problems) as an admitted patient — intravenous fluids, medications and other treatment, diagnostic tests and round-the-clock care they can get only in a hospital.
But observation care is considered an outpatient service under Medicare rules, like a doctor's appointment or a lab test. Observation patients may have topay a larger shareof the hospital bill than if they were officially admitted to the hospital. Plus, they have to pick up the tab for any nursing home care.
Medicare's nursing home benefit is available only to those admitted to the hospital for three consecutive days. Gordon spent three days in the hospital after her surgery, but because she was getting observation care, that time didn't count.
There's another twist: Patients might want to file an appeal, as they can with many other Medicare decisions. But that is not allowed if the dispute involves observation care.
Monday, a trial begins in federal court in Hartford, Conn., where patients who were denied Medicare's nursing home benefit are hoping to force the government to eliminate that exception. A victory would clear the way for appeals from hundreds of thousands of people.
The class-action lawsuit was filed in 2011 by seven Medicare observation patients and their families against the Department of Health and Human Services. Seven more plaintiffs later joined the case.
"This is about whether the government can take away healthcare coverage you may be entitled to and leave you no opportunity to fight for it," said Alice Bers, litigation director at the Center for Medicare Advocacy, one of the groups representing the plaintiffs.
If they win, people with traditional Medicare who received observation care services for three days or longer since Jan. 1, 2009, could file appeals seeking reimbursement for bills Medicare would have paid had they been admitted to the hospital. More than 1.3 million observation claims meet these criteria for the 10-year period through 2017, according to the most recently available government data.
Gordon is not a plaintiff in the case, but she said the rules forced her to borrow money to pay for the care. "It doesn't seem fair that after paying for Medicare all these years, you're told you're not going to be covered now for nursing home care," Gordon said.
No one has explained to Gordon, who has hypoglycemia and an immune disease, why she wasn't admitted. The federal notice hospitals are required to give Medicare observation patients didn't provide answers.
Even Seema Verma, the head of the Centers for Medicare & Medicaid Services, is puzzled by the policy. "Better be admitted for at least 3 days in the hospital first if you want the nursing home paid for," she said ina tweet Aug. 4. "Govt doesn't always make sense. We're listening to feedback." Her office declined to provide further explanation.
Patients and their families can try to persuade the physician or hospital administrators to change their status, and sometimes that strategy works. If not, they can leave the hospital to avoid the extra expenses, even if doing so is against medical advice.days as a hospital inpatient to qualify for nursing home coverage is written into the Medicare law. But there are exemptions. Medicare officials don't apply it to beneficiaries in some pilot programs and allow private Medicare Advantage insurers to waive it for their patients.
Concerned about the growing number of people affected by observation care, Medicare officials created a "two-midnight" rule in 2013. If a doctor expects a patient will be sick enough to stay in the hospital through two midnights, then it says the patient should generally be admitted as an inpatient.
Yet observation claims have increased by about 70% since 2008, to more than 2 million in 2017. Claims for observation care patients who stay in the hospital for longer than 48 hours — who likely would qualify for nursing home coverage had they been admitted —rose by nearly 159%, according to data Kaiser Health News obtained from CMS. Yet the overall growth in traditional Medicare enrollment was just under 9%.
Justice Department lawyers handling the case declined to be interviewed, but in court filings they argue that the lawsuit accuses the wrong culprit.
The government can't be blamed, the lawyers said, because the "two-midnight" rule gives hospitals and doctors — not the government — the final word on whether a patient should be admitted.
The government's lawyers argue that since Medicare "has not established any fixed or objective criteria for inpatient admission," any decision to admit a patient is not "fairly traceable" to the government.
Like Gordon, some doctors also complain about observation care rules. An American Medical Association spokesman, who spoke on condition of not being named, said the "two-midnight" policy "is challenging and illogical" and should be rescinded. "CMS should instead rely on physicians' clinical judgment to determine a patient's inpatient or outpatient status," he added.
HHS' Office of Inspector General urged CMS to count observation care days toward the three-day minimum needed for nursing home coverage. It's No. 1 on a list issued last month of the 25 most important inspector general's recommendations the agency has failed to implement.
The Medicare Payment Advisory Commission, which counsels Congress, has made a similar suggestion.
However, Colin Milligan, a spokesman for the American Hospital Association, is more positive about the "two-midnight" rule. It "recognizes the important role of physician judgment," he said.
Medicare isn't dictating what physicians must do, said a physician who has researched the effects of observation care. "It's a benchmark upon which to base your decisions, not a standard or a mandate," said Dr. Michael Ross, a professor of emergency medicine at Emory University School of Medicine in Atlanta. He supervises observation care units at Emory's five hospitals and was chairman of a CMS advisory subcommittee on observation care.
Other physicians claim that since HHS pays hospitals and doctors to treat Medicare patients, the agency's policies weigh on their decisions.
"One of the hardest things to do is to get physicians to predict what will happen with patients — we like to hedge our bets and account for all possibilities," said Dr. Tipu Puri, a physician adviser and medical director at the University of Chicago's medical center. "But we're being forced to interpret the rules and read between the lines."
In the meantime, observation care patients who get follow-up care at a nursing home may soon receive a puzzling notice. A Medicare fact sheet issued last month "strongly encourages" nursing home operators to give an "advance beneficiary notice of non-coverage" to patients who arrive without the required prior three-day hospital admission.
But that notice says they can choose to seek reimbursement by submitting an appeal to Medicare — an option government lawyers will argue in court is impossible.
Hospital costs in the U.S. are so high that it made financial sense for a surgeon from Milwaukee and a patient from Mississippi to meet at a private Mexican hospital.
This article was first published on Monday, August 12, 2019 inKaiser Health News.
CANCUN, Mexico — Donna Ferguson awoke in the resort city of Cancun before sunrise on a sweltering Saturday in July.
She wasn't headed to the beach. Instead, she walked down a short hallway from her Sheraton hotel and into Galenia Hospital.
A little later that morning, a surgeon, Dr. Thomas Parisi, who had flown in from Wisconsin the day before, stood by Ferguson's hospital bed and used a black marker to note which knee needed repair. "I'm ready," Ferguson, 56, told him just before being taken to the operating room for her total knee replacement. For this surgery, she would not only receive free care but would receive a check when she got home.
The hospital costs of the American medical system are so high that it made financial sense for both a highly trained orthopedist from Milwaukee and a patient from Mississippi to leave the country and meet at an upscale private Mexican hospital for the surgery.
Ferguson gets her health coverage through her husband's employer, Ashley Furniture Industries. The cost to Ashley was less than half of what a knee replacement in the United States would have been. That's why its employees and dependents who use this option have no out-of-pocket copayments or deductibles for the procedure; in fact, they receive a $5,000 payment from the company, and all their travel costs are covered.
Parisi, who spent less than 24 hours in Cancun, was paid $2,700, or three times what he would get from Medicare, the largest single payer of hospital costs in the United States. Private health plans and hospitals often negotiate payment schedules using the Medicare reimbursement rate as a floor.
Ferguson is one of hundreds of thousands of Americans who seek lower-cost care outside the United States each year, with many going to Caribbean and Central American countries. A key consideration for them is whether the facility offers quality care.
In a new twist on medical tourism, North American Specialty Hospital, known as NASH and based in Denver, has organized treatment for a couple of dozen American patients at Galenia Hospital since 2017.
Parisi, a graduate of the Mayo Clinic, is one of about 40 orthopedic surgeons in the United States who have signed up with NASH to travel to Cancun on their days off to treat American patients. NASH is betting that having an American surgeon will alleviate concerns some people have about going outside the country, and persuade self-insured American employers to offer this option to their workers to save money and still provide high-quality care.
NASH, a for-profit company that charges a fixed amount for each case, is paid by the employer or an intermediary that arranged the treatment.
"It was a big selling point, having an American doctor," Ferguson said.
The American surgeons work closely with a Mexican counterpart and local nurses. NASH buys additional malpractice coverage for the American physicians, who could be sued in the United States by patients unhappy with their results.
"In the past, medical tourism has been mostly a blind leap to a country far away, to unknown hospitals and unknown doctors with unknown supplies, to a place without U.S. medical malpractice insurance," said James Polsfut, the chief executive of NASH. "We are making the experience completely different and removing as much uncertainty as we can."
Medical tourism has been around for decades but has become more common in the past 20 years as more countries and hospitals around the world market themselves to foreigners.
There are, of course, risks to going outside the country, including the headache of travel and the possibility that the standards of care may be lower than at home. If something goes wrong, patients will be far from family and friends who can help — and it might be more difficult to sue providers in other countries.
Chasing Lower Costs
The high prices charged at American hospitals make it relatively easy to offer surgical bargains in Mexico: In the United States, knee replacement surgery costs an average of about $30,000 — sometimes double or triple that — but at Galenia, it is only $12,000, said Dr. Gabriela Flores Teón, medical director of the facility.
The standard charge for a night in the hospital is $300 at Galenia, Flores said, compared with $2,000 on average at hospitals in the United States.
The other big savings is the cost of the medical device — made by a subsidiary of the New Jersey-based Johnson & Johnson — used in Ferguson's knee replacement surgery. The very same implant she would have received at home costs $3,500 at Galenia, compared with nearly $8,000 in the United States, Flores said.
Galenia is accredited by the international affiliation of the Joint Commission, which sets hospital standards in the U.S. But to help doctors and patients feel comfortable with surgery here, NASH and Galenia worked to go beyond those standards.
That included adding an extra autoclave to sterilize instruments more quickly, using spacesuit-like gowns for doctors to reduce infection risk and having patients start physical therapy just hours after knee- or hip-replacement surgery.
I. Glenn Cohen, a law professor at Harvard and an expert on medical tourism, called the model used by NASH and a few other similar operations a "clever strategy" to attack some of the perceived risks about medical tourism.
"It doesn't answer all concerns, but I will say it's a big step forward," he said. "It's a very good marketing strategy."
Still, he added, patients should be concerned with whether the hospital is equipped for all contingencies, the skills of other surgical team members and how their care is handed off when they return home.
Officials at Ashley Furniture, where Ferguson's husband, Terry, is a longtime employee, said they had been impressed so far. The company offers the option of overseas surgery through NASH at no cost — and with an incentive.
"We've had an overwhelming positive reaction from employees who have gone," said Marcus Gagnon, manager of global benefits and health at Ashley, a Wisconsin-based company with 17,000 employees. Ferguson was the company's 10th insured person to go to Cancun.
Ashley also has sent about 140 employees or dependents for treatments at a hospital in Costa Rica, and together the foreign medical facilities have saved the firm $3.2 million in health costs since 2016, he said.
"Even after the incentive payments and travel expenses, we still save about half the cost of paying for care in the United States," Gagnon said. "It's been a nice option — not a magic bullet — but a nice option."
NASH's strategy has its skeptics.
"Building a familiar culture in a foreign destination may be appealing to some American consumers, but I do not see it as a sustainable business," said Irving Stackpole, a health consultant in Rhode Island. "It's not unusual for people thinking about this to have doctors, family and friends who will see this as a high-risk undertaking."
Stackpole said only a limited number of Americans were willing — even with a financial incentive — to travel abroad because most perceive the care won't be as good.
'You Are Nuts For Doing This'
Ferguson's knee started causing her trouble two years ago, and last fall a doctor recommended replacing it. She is on her feet most of the day assembling furniture toolkits at her job at American Furniture Manufacturing in Ecru, Miss. Terry Ferguson mentioned the Cancun option he had heard about at work. The couple pay $300 a month in premiums for family health coverage.
"I had a friend say, 'You are nuts for doing this,' but Dr. Parisi trained at Mayo, and you can't do any better than that," Ferguson said before the surgery. Also, having an American doctor meant that if something went wrong, she could file a malpractice suit in the United States, she added.
IndusHealth, Ashley's medical travel plan administrator, arranged for her to get a physical exam, knee X-rays and heart tests near her home to make sure she was a good candidate for surgery. It even had her see a dentist to make sure she didn't have an infection that could complicate her recovery. Parisi reviewed some of those records before Ferguson headed to Cancun.
The company also coordinated her medical care and made travel arrangements, including obtaining passports, airline tickets, hotel and meals for the couple.
In Mexico, the day before surgery, Ferguson had more X-rays and had her blood drawn. After lunch, the couple met with Noemi Osorio, a nurse, who reviewed Ferguson's schedule and showed her the physical therapy facilities. Later, they met Parisi and the rest of the medical team.
"My job is pretty easy," Parisi told her. "How you do over the next five or 10 years depends on how well you work with the physical therapy."
The surgery began at 8:20 the next morning. Dr. Daniel Rios, an orthopedic surgeon who practices full time in Cancun, worked with Parisi. Rios, who had done a fellowship at Brigham and Women's Hospital in Boston, checked on Ferguson for several days after the operation.
By 9:30 a.m., the operation was over, and at 11 a.m. she left the recovery area. Parisi checked on her there. "Everything went great," he told her before heading to the airport for his 2:30 flight home.
Parisi said that the lack of English proficiency among some surgical staff members created "momentary delays" but that the bilingual surgical assistant helped.
A little more than three hours after the surgery, Ferguson was in her hospital room, and a physical therapist came and helped her out of bed. Using a walker, she gingerly took some steps to test out her new knee. By the next morning, she was on crutches walking the hallway and was discharged before noon. She stayed at her hotel 10 additional days while having physical therapy twice a day at the hospital.
"It's been a great experience," she said two days after the surgery. "Even if I had to pay, I would come back here because it's just a different level of care — they treat you like family."
In an area where average emergency room claims reached 842% of Medicare rates, residents of a Colorado county found relief by joining forces and negotiating prices directly with the local hospital.
This article was first published on Friday, August 9, 2019 inKaiser Health News.
Colorado's ski resort areas in Summit County have a high cost of living, among the highest in the country. The people who visit these places — Keystone, Breckenridge and Copper Mountain — can afford it.
Many of those who live and work there can't, especially when they get sick.
In addition to expensive rent, they pay some of the steepest health insurance premiums in the nation. Hospital costs are also pricey, with most business generated by tourists, skiers and outdoors enthusiasts.
But locals may soon get a break after a group, fed up with the costs, negotiated a deal with the hospital system. The group, which came to be known as the Peak Health Alliance, expects to be able to offer its members premiums next year that are at least 20% less than current rates.
About 6,000 people, among them individuals as well as employees of local businesses and the county government, can buy coverage through the alliance, which cut a deal for a discount of about one-third off the local hospital's list prices (although at least one expert thinks they could have done a lot better).
"It wasn't for the faint of heart," said Tamara Drangstveit, who ran a county social services organization before becoming Peak's executive director and, effectively, one of the lead
Fed up with high hospital prices even after insurers' negotiated discount, more employers are cutting out insurance middlemen and engaging in what is known as "direct contracting" with medical providers. They cut their own deals.
Direct contracting is a hot topic among employers because they are "up in arms about insurers not keeping prices in check," said Chapin White, a Rand Corp. researcher who studies the tremendous variation in hospital prices. The citizens here in Colorado are taking the approach to the grassroots level.
What Peak did — starting with painstakingly gathering data about exactly what hospitals in the region were being paid by insurers, employers and consumers — might be an answer for some.
Such efforts may be helped byCongress, which is considering barring secrecy clauses in hospital and insurance contracts that can prevent employers from learning exactly how much insurers pay. The Trump administration is also considering proposalsto require more public disclosure of negotiated hospital prices.
And, according to press reports, the experience with Peak may go statewide. Colorado's insurance commissioner and Gov. Jared Polis say they are considering an alliance that could bring together state employees, individuals and private employers in a similar health care purchasing network.
"It feels like the curtain is going up on health care costs and prices," said Cheryl DeMars, CEO of The Alliance, a group of 240 self-insured private sector employers that directly contracts with hospitals in Wisconsin, northern Illinois and eastern Iowa.
While interest is growing, experts caution that direct contracting won't work in many places.
"It won't have impact in urban areas where no one has significant market share, but it could work in rural areas where there is a dominant employer or some other large group," said Gerard Anderson, a professor at Johns Hopkins University in Baltimore who researches health care costs.
First Step: Get Price Information
It takes a great deal of effort — and some luck — to peer behind the curtain.
"The people buying the plans, employers and workers, are often barred from viewing the contracts insurers have negotiated on their behalf … so they don't know if they are reasonable," said White at Rand.
The Peak Health Alliance in Colorado was lucky that the state is one of at least 18 that have made public some medical care price information from insurers. It also gathered similar information from local self-insured employers' insurance plans.
Peak was able to compare the payments made to Centura Health, which owns the local hospital and others in the state, to what Medicare would pay.
"We found the average emergency room claim was 842% of what Medicare would pay — and our outpatient rates were 505% higher than Medicare," Drangstveit said.
That helps drive up premium costs. It isn't unusual, Drangstveit said, for families who don't qualify for a federal subsidy through the Affordable Care Act to face $2,500 monthly premiums with an $8,000 annual deductible. Many area residents go uninsured or are forced to make hard financial choices.
"The stories we hear are heartbreaking," said Drangstveit.
Second Step: Negotiate With The Hospital
Lee Boyles, CEO of Centura Health's St. Anthony Summit Medical Center in Frisco, said he wasn't surprised by the findings of Peak's analysis.
Charges are high, he said, reflecting the cost of living, as well as the need to maintain round-the-clock trauma coverage, emergency helicopter service and physicians who specialize in the kind of head and limb injuries that can result from mountain sports.
Plus it's the only hospital in town. Others are a 70-mile drive down the mountain in Denver.
Unlike some hospitals elsewhere with similar exclusivity, Centura was willing to bargain.
"We were going to do what's right for our community," said Boyles.
It also helped that granting discounts to locals wouldn't affect the bottom line much.
Residents account for only about 15% of the hospital's business, Boyles said, which is a far smaller portion than at a typical hospital.
Tourists and sports enthusiasts — many well-heeled, with good insurance — make up the largest share of the hospital's business. Thus, any new prices negotiated with Peak would not apply to most of the hospital's business.
The deal reached with Peak, Boyles said, represents a discount of about one-third off the hospital's "list prices."
Third Step: Keep Pushing
Anderson at Johns Hopkins said shaving this amount from already high charges isn't much of a break. A discount pegged to Medicare rates, plus a bit for overhead and profit, would be better, he said.
In a report released in May, Rand used claims data from employers in 25 states to show a huge variation in prices paid to specific hospitals and show a huge variation between the prices paid by employers to those facilities and how much Medicare would allow for the same services.
To be sure, hospitals have long argued that Medicare doesn't cover their costs. The Rand study found that employers paid an average of 241% of Medicare rates in 2017, but some saw rates three times those paid by the federal program or more.
Gloria Sachdev, CEO of the Employers' Forum of Indiana, a group working to lower health care spending there, cautioned that price transparency alone is not a panacea.
Her organization, which commissioned the study, is pressing for more quality and cost data as well as tougher negotiations by its insurers.
"We need to take the driver's seat," said Sachdev.
Public health advocates say new HPV guidelines don't provide doctors and patients clear guidance about who in this expansive age group are good candidates.
This article was first published on Thursday, August 8, 2019 in Kaiser Health News.
Vaccination decisions are usually pretty straightforward. People either meet the criteria for the vaccine based on their age or other factors or they don't. But when a federal panel recently recommended an update to the human papillomavirus (HPV) vaccine guidelines, it left a lot of uncertainty.
The panel recommended that men and women between ages 27 and 45 decide — in discussion with their health care providers — whether the HPV vaccine makes sense for them.
But some public health advocates criticize that advice because it doesn't provide doctors and patients clear guidance about who in this expansive age group are good candidates. They worry that many people may get immunized who won't benefit, adding needless cost to the health care system and possibly shortchanging people overseas, where the vaccine is in short supply.
"My concern is that there will be a whole lot of people or doctors recommending this vaccine," said Debbie Saslow, managing director of HPV and gynecological cancers for the American Cancer Society. "But I think that the benefit is so small and we just don't have guidance."
The human papillomavirus is the most common sexually transmitted infection in the United States; nearly everyone who's sexually active will get it at some point. People typically clear the virus on their own and often don't even realize they've been infected. But in some people, HPV remains in the body and may cause several types of cancer as well as genital warts.
Every year, HPV causes more than 33,000 cancers, including more than 90% of cervical cancers as well as cancers of the vagina, vulva, penis, anus and the area at the back of the throat called the oropharynx, according to the Centers for Disease Control and Prevention.
More than 40 types of HPV affect the genital area. Merck's Gardasil 9, the vaccine used in the United States, provides protection against nine types, which together are associated with the majority of HPV-related cancers and cause 90% of genital warts.
Because HPV is so common among people who are sexually active, the best time to vaccinate is before people start having sex and risk being exposed to the virus. The CDC's Advisory Committee on Immunization Practices recommends HPV vaccination for all 11- and 12-year-old girls and boys. Catch-up immunizations for young people outside that age window are recommended through age 21 for men and 26 for women (the proposed HPV vaccine update would change the catch-up vaccination guideline for men to align it with the age-26 cutoff for women).
In its June meeting, the immunization committee, which includes public health experts, recommended widening the vaccination window to include adults between 27 and 45.
But rather than give the thumbs-up for everyone in that age group, the panel said people should engage in "shared clinical decision-making" with their health care professional to decide if the vaccine is right for them.
"ACIP made this type of recommendation because most people in this age group are not likely to benefit from getting the vaccine," Kristen Nordlund, a spokeswoman for the CDC, wrote in an email.
The vaccine won't protect people against types of HPV to which they've already been exposed, and many sexually active people have been exposed to at least some HPV types by their late 20s.
That makes it tougher for the vaccine to have an impact in this age group. According to an economic modeling study presented at the ACIP meeting, under current guidelines that recommend immunization through age 26, 202 people would have to be vaccinated to prevent one case of HPV-related cancer. When the recommendations are broadened to include people through age 45, the number that would have to be vaccinated to prevent one case of cancer increases exponentially to 6,500.
However, it's unlikely that people in the older group have been exposed to all nine types of HPV the vaccine protects against.
"There's some sense that you can get some protection against some future cancers," said Dr. William Schaffner, professor of preventive medicine and infectious diseases at Vanderbilt University School of Medicine, who is the ACIP liaison for the National Foundation for Infectious Diseases.
Yet, patients — and their doctors — would be hard pressed to know if immunization would be beneficial.
"The problem is that no individual person is likely to know which individual type of HPV they've been exposed to," said Dr. Christopher Zahn, vice president of practice activities at the American College of Obstetricians and Gynecologists.
Vaccine experts have some suggestions about which people older than 26 might consider getting the three-shot series. They include people with multiple sex partners and those who are newly single and dating after being in a monogamous marriage or relationship.
Jennifer Sienko is in a better position than most people to evaluate whether to get the vaccine. She is co-director of the National HPV Vaccination Roundtable, a coalition of groups aimed at reducing HPV cancers that is hosted by the American Cancer Society.
But she was recently surprised when a new doctor asked the 40-year-old if she wanted the vaccine. She opted against it.
Sienko, who lives in Chicago, has been married to her second husband for three years, and that contributed to her decision. But perhaps, she said, it would have been different when she was single for a time.
"So there may have been a window where, had the vaccine been indicated for older women, perhaps between my marriages I would have looked into that," she said.
The CDC is reviewing the ACIP recommendation. If it approves the recommendation, experts hope the CDC will provide further guidance on determining who the vaccine is appropriate for.
If the CDC approves broadening the age for the vaccine in consultation with a health care provider, most insurers would cover the costs, which can run a few hundred dollars per dose. Under the Affordable Care Act's preventive coverage rules, patients generally won't have to pay anything out of pocket for it.