Faced with skyrocketing drug overdoses, states are cracking down on opioid prescribing. Some patients with chronic pain say they are becoming collateral damage.
It started with a rolled ankle during a routine Army training exercise. Shannon Hubbard never imagined it was the prologue to one of the most debilitating pain conditions known to exist, called complex regional pain syndrome.
The condition causes the nervous system to go haywire, creating pain disproportionate to the actual injury. It can also affect how the body regulates temperature and blood flow.
For Hubbard, it manifested years ago following surgery on her foot — a common way for it to take hold.
"My leg feels like it's on fire pretty much all the time. It spreads to different parts of your body," the 47-year-old veteran said.
Hubbard props up her leg, careful not to graze it against the kitchen table in her home east of Phoenix. It's red and swollen, still scarred from an ulcer that landed her in the hospital a few months ago.
"That started as a little blister and four days later it was like the size of a baseball," she said. "They had to cut it open and then it got infected, and because I have blood flow issues, it doesn't heal."
She knows it's likely to happen again.
"Over the past three years, I've been prescribed over 60 different medications and combinations; none have even touched the pain," she said.
Hubbard said she's had injections and even traveled across the country for infusions of ketamine, an anesthetic that can be used for pain in extreme cases. Her doctors have discussed amputating her leg because of the frequency of the infections.
"All I can do is manage the pain," she said. "Opioids have become the best solution."
For about nine months, Hubbard was on a combination of short- and long-acting opioids. She said it gave her enough relief to start leaving the house again and do physical therapy.
But in April that changed. At her monthly appointment, her pain doctor informed her the dose was being lowered. "They had to take one of the pills away," she said.
Hubbard knew the rules were part of Arizona's new opioid law, which places restrictions on prescribing and limits the maximum dose for most patients. She also knew the law wasn't supposed to affect her — an existing patient with chronic pain.
Hubbard argued with the doctor, without success. "They didn't indicate there was any medical reason for cutting me back. It was simply because of the pressure of the opioid rules."
Her dose was lowered from 100 morphine milligram equivalents daily (MME) to 90, the highest dose allowed for many new patients in Arizona. She said her pain has been "terrible" ever since.
"It just hurts," she said. "I don't want to walk, I pretty much don't want to do anything."
Hubbard's condition may be extreme, but her situation isn't unique. Faced with skyrocketing drug overdoses, states are cracking down on opioid prescribing. Increasingly, some patients with chronic pain like Hubbard say they are becoming collateral damage.
New Limits On Prescribing
More than two dozen states have implemented laws or policies limiting opioid prescriptions in some way. The most common is to restrict a patient's first prescription to a number of pills that should last a week or less. But some states like Arizona have gone further by placing a ceiling on the maximum dose for most patients.
The Arizona Opioid Epidemic Act, the culmination of months of outreach and planning by state health officials, was passedearlier this year with unanimous support.
It started in June 2017, when Arizona Gov. Doug Ducey, a Republican, declared a public health emergency, citing new data, showing that two people were dying every day in the state from opioid overdoses.
He has pledged to come after those responsible for the rising death toll.
"All bad actors will be held accountable — whether they are doctors, manufacturers or just plain drug dealers," Ducey said in his annual State of the State address, in January 2018.
The governor cited statistics from one rural county where four doctors prescribed 6 million pills in a single year, concluding "something has gone terribly, terribly wrong."
Later in January, Ducey called a special session of the Arizona legislature and in less than a week he signed the Arizona Opioid Epidemic Act into law. He called it the "most comprehensive and thoughtful package any state has passed to address this issue and crisis to date."
The law expands access to addiction treatment, ramps up oversight of prescribing and protects drug users who call 911 to report an overdose from prosecution, among other things.
Initially, Arizona's major medical associations cautioned against what they saw as too much interference in clinical practice, especially since opioid prescriptions were already on the decline.
Gov. Ducey's administration offered assurances that the law would "maintain access for chronic pain sufferers and others who rely on these drugs." Restrictions would apply only to new patients. Cancer, trauma, end-of-life and other serious cases were exempt. Ultimately, the medical establishment came out in favor of the law.
Pressure On Doctors
Since the law's passage, some doctors in Arizona report feeling pressure to lower patient doses, even for patients who have been on stable regimens of opioids for years without trouble.
Dr. Julian Grove knows the nuances of Arizona's new law better than most physicians. A pain doctor, Grove worked with the state on the prescribing rules.
"We moved the needle to a degree so that many patients wouldn't be as severely affected," said Grove, president of the Arizona Pain Society. "But I'll be the first to say this has certainly caused a lot of patients problems [and] anxiety."
"Many people who are prescribing medications have moved to a much more conservative stance and, unfortunately, pain patients are being negatively affected."
Like many states, Arizona has looked to its prescription-monitoring program as a key tool for tracking overprescribing. State law requires prescribers to check the online database. Report cards are sent out comparing each prescriber to the rest of their cohort. Clinicians consider their scores when deciding how to manage patients' care, Grove said.
"A lot of practitioners are reducing opioid medications, not from a clinical perspective, but more from a legal and regulatory perspective for fear of investigation," Grove said. "No practitioner wants to be the highest prescriber."
Arizona's new prescribing rules don't apply to board-certified pain specialists like Grove, who are trained to care for patients with complex chronic pain. But, said Grove, the reality is that doctors — even pain specialists — were already facing pressure on many fronts to curtail opioids — from the Drug Enforcement Agency to health insurers down to state medical boards.
The new state law has only made the reduction of opioids "more fast and furious," he said.
Grove traces the hypervigilance back to guidelines put out by the Centers for Disease Control and Prevention in 2016. The CDC spelled out the risks associated with higher doses of opioids and advised clinicians when starting a patient on opioids to prescribe the lowest effective dosage.
Psychiatrist Sally Satel, a fellow at the American Enterprise Institute, said those guidelines stipulated the decision to lower a patient's dose should be decided on a case-by-case basis, not by means of a blanket policy.
"[The guidelines] have been grossly misinterpreted," Satel said.
The guidelines were not intended for pain specialists, but rather for primary care physicians, a group that accounted for nearly half of all opioids dispensed from 2007 to 2012.
"There is no mandate to reduce doses on people who have been doing well," Satel said.
In the rush to address the nation's opioid overdose crisis, she said, the CDC's guidelines have become the model for many regulators and state legislatures. "It's a very, very unhealthy, deeply chilled environment in which doctors and patients who have chronic pain can no longer work together," she said.
Satel called the notion that new prescribing laws will reverse the tide of drug overdose deaths "misguided."
In Arizona, more than 1,300 people have died from opioid-related overdoses since June 2017, according to preliminary state numbers. Only a third of those deaths involved just a prescription painkiller.
Heroin is now almost as common as oxycodone in overdose cases in Arizona.
A Range Of Views
Some physicians support the new rules, said Pete Wertheim, executive director of the Arizona Osteopathic Medical Association.
"For some, it has been a welcome relief," he said. "They feel like it has given them an avenue, a means to confront patients." Some doctors tell him it's an opportunity to have a tough conversation with patients they believe to be at risk for addiction or overdose because of the medication.
The organization is striving to educate its members about Arizona's prescribing rules and the exemptions. But, he said, most doctors now feel the message is clear: "We don't want you prescribing opioids."
Long before the law passed, Wertheim said, physicians were already telling him that they had stopped prescribing, because they "didn't want the liability."
He worries the current climate around prescribing will drive doctors out of pain management, especially in rural areas. There's also a fear that some patients who can't get prescription pills will try stronger street drugs, said Dr. Gerald Harris II, an addiction treatment specialist in Glendale, Ariz.
Harris said he has seen an increase in referrals from doctors concerned that their patients with chronic pain are addicted to opioids. He receives new patients — almost daily, he said — whose doctors have stopped prescribing altogether.
"Their doctor is afraid and he's cut them off," Harris said. "Unfortunately, a great many patients turn to street heroin and other drugs to self-medicate because they couldn't get the medications they need."
Arizona's Department of Health Services is working to reassure providers and dispel the myths, said Dr. Cara Christ, who heads the agency and helped design the state's opioid response. She pointed to the recently launched Opioid Assistance and Referral Line, created to help health care providers with complex cases. The state has also released a set of detailed prescribing guidelines for doctors.
Christ characterizes this as an "adjustment period" while doctors learn the new rules.
"The intent was never to stop prescribers from utilizing opioids," she said. "It's really meant to prevent a future generation from developing opioid use disorder, while not impacting current chronic pain patients."
Christ said she just hasn't heard of many patients losing access to medicine.
It's still too early to gauge the law's success, she said, but opioid prescriptions continue to decline in Arizona.
Arizona saw a 33 percent reduction in the number of opioid prescriptions in April, compared with the same period last year, state data show. Christ's agency reports that more people are getting help for addiction: There has been about a 40 percent increase in hospitals referring patients for behavioral health treatment following an overdose.
Shannon Hubbard, the woman living with complex regional pain syndrome, considers herself fortunate that her doctors didn't cut back her painkiller dose even more.
"I'm actually kind of lucky that I have such a severe case because at least they can't say I'm crazy or it's in my head," she said.
Hubbard is well aware that people are dying every day from opioids. One of her family members struggles with heroin addiction and she's helping raise his daughter. But she's adamant that there's a better way to address the crisis.
"What they are doing is not working. They are having no effect on the guy who is on the street shooting heroin and is really in danger of overdosing." she said. "Instead they are hurting people that are actually helped by the drugs."
The Trump administration announced a plan Friday that would affect about 40 percent of the payments physicians receive from Medicare. Not everybody's pleased.
The Centers for Medicare & Medicaid Services calls its proposed plan a historic effort to reduce paperwork and improve patient care. But some doctors and advocates for patients fear it could be a disaster.
The CMS plan, published in Friday's Federal Register, is now open for public comment until early September. It would combine four levels of paperwork required for reimbursement, and four levels of payments, into one form and one flat fee for each doctor's appointment (although there would still be separate filing systems for new and established patients).
In a letter previewing the plan to doctors earlier this month, CMS Administrator Seema Verma said that physicians waste too much time on mindless administrative tasks that take time away from patients.
"We believe you should be able to focus on delivering care to patients," Verma wrote, "not sitting in front of a computer screen."
Initially, that sounded pretty good to Dr. Angus Worthing, a rheumatologist in Washington, D.C. Then he tested the claim with his own analysis.
During a typical 15- to 45-minute appointment with a patient, Worthing figured, "I might spend one to two minutes less in front of the computer, documenting and typing."
Dr. Kate Goodrich, CMS' chief medical officer, noted that "saving one to two minutes per patient adds up pretty quickly over time."
But Worthing said the small savings in time is not worth the reduced payment he'd get. The CMS plan would offer a flat fee for each office visit with a patient, whether the doctor is a primary care physician or a specialist.
Rheumatologists, in general, could expect a 3 percent reduction in Medicare's reimbursement because they typically see and bill for more complicated patients, said Worthing, who chairs the government affairs committee for the American College of Rheumatology.
And he noted that his personal net income from Medicare patients would drop even more — by about 10 percent. That's because 70 percent of his costs — for rent, payroll and other expenses — are fixed or rising.
Worthing is leading efforts by rheumatologists to persuade CMS to adjust its funding formula before the plan goes into effect in January.
"The proposal is well-intentioned but it might cause a disaster," he said, if it leads to fewer medical students going into rheumatology and other specialties that require doctors to manage complex patients. And physicians might stop taking Medicare patients altogether, or avoid those with more difficult problems.
Al Norman, a 71-year-old Medicare patient, said he can see that disaster coming.
"If you're frail or if you are very healthy, you're worth the same to a doctor [under the proposed plan], and obviously that means that the people who are more disabled or frail are less desirable patients," said Norman, who worked on elder care issues in Massachusetts before retiring last year.
Many doctors predict that the proposed payment changes would establish a financial incentive to see fewer Medicare patients. Goodrich, the Medicare official, disagrees.
"That's an unintended consequence we wanted to mitigate on the front end and avoid," Goodrich said. Under the proposed system, doctors who need more time with patients could file for an "add-on" payment of $67 per appointment. That would require a small amount of additional documentation, she admitted, but would still reduce a doctor's keyboard time, according to CMS estimates.
This "add-on" payment is "intended to ensure that physicians are being appropriately compensated for seeing the most complex patients," Goodrich said.
Still, critics of the plan say there are other unintended consequences CMS may not have anticipated.
Dr. Paul Birnbaum, who has been practicing dermatology in the Boston area for 32 years, said he's worried that paying doctors a reduced fee per appointment would translate to lots of short visits.
"You would just see more people," Birnbaum said. "You'd move people through faster. And so you have somebody come back for repeat office visits. And that, over time, would be inflationary."
More frequent trips to the doctor would mean more copays for patients and higher costs for Medicare, he said.
The Trump administration is not suggesting the payment changes would save Medicare money. In her letter to doctors, Verma said some physicians would see their Medicare payments increase.
And it's not just doctors who treat elderly patients who are likely to be affected. If the Medicare payment changes take effect, private insurers might follow suit, in part because it's easier for all insurers to use common billing procedures.
Theoretically, obstetrician-gynecologists would be among the biggest winners; they treat fewer complex Medicare patients. Still, many OB-GYNs are worried about the coming changes, too.
"There will be winners and losers, and my real fear is it's not the physicians [who will lose the most]. My real fear is that it's the Medicare beneficiaries," said Dr. Barbara Levy, vice president for health policy at the American College of Obstetricians and Gynecologists.
Some Medicare advocates are urging CMS to postpone these changes and consider a trial run.
"If we're going to talk about this kind of wholesale, large-scale reconfiguration of the way reimbursement is given to doctors," said Joe Baker, president of the Medicare Rights Center, "it's probably best to do that in a demonstration project where we can closely study the ramifications."
CMS hopes to enact any changes to Medicare fee schedules on Jan. 1, 2019.
The main challenge remains convincing patients and physicians that the changes are worth doing in the first place.
Medicare is reviewing whether seniors should undergo spine surgeries at same-day surgery centers, the government-run health program announced Wednesday, five months after a USA Today Network-Kaiser Health News investigation revealed a spate of patient deaths following the procedures.
The proposal states that Medicare officials will examine whether these procedures "pose a significant safety risk" to patients and continue to "meet the criteria" for Medicare payment.
The news investigation found that in 2015 and in 2017 Medicare approved same-day spine operations for seniors even though at least 14 patients had died since 2008 after such procedures.
Some suffocated from a well-known complication of upper-spine surgery that can generally be reversed if caught immediately and treated properly.
The investigation also found that some medical professionals urging Medicare to pay surgery centers to operate on seniors' spines failed to mention recent incidents of death at their own or an affiliated facility.
Dr. Nancy Epstein, a chief of neurosurgical and spine education at New York University Winthrop Hospital, lauded the proposal, saying patients face extensive risks after spine surgery.
"It's about time," Epstein said of the review proposal, which she expects to rankle some doctors who have a financial stake in a spine surgery center.
Bill Prentice, executive director of the Ambulatory Surgery Center Association, which represents the centers in policymaking discussions, said he supports Medicare stepping up its efforts to perform an internal and external review of the procedures it pays for at surgery centers.
"The more resources they use, the better," Prentice said. "I think that the more data points they have, the more likely they are to make the right decision. … We believe these procedures can be performed very safely in the ambulatory surgery center space."
Medicare announced the plan to re-evaluate its decision to pay for seniors' spine procedures in an annual rule-making document released Wednesday. The agency is accepting comments on the proposed changes through Sept. 24 and is expected to release a final decision late in the year.
The nation's 5,600-plus Medicare-certified surgery centers are required to have an internal governing body that decides which surgeries it will perform on the center's patients. However, the federal agency decides which operations it will pay for in surgery centers, continuously proposing and adding some procedures during annual rule-making.
The recent proposal aims to review 38 procedures added since 2015, of which 25 involve spine surgery, and create an ongoing plan to continually review approved procedures. The proposal says that because "Medicare beneficiaries tend to be frailer and exhibit a higher number of comorbidities than other populations, we believe it may be appropriate to reevaluate recently-added procedures."
The proposal also says Medicare will use "all available data," "prevailing medical practice" and any public comments it receives to assess whether to keep paying for the procedures.
The USA Today-KHN investigation, involving reporters based in California, Indiana, Florida and New Jersey, included a review of thousands of pages of lawsuits, state records and Medicare's own inspection reports. It found that spinal surgery patients suffered tragic complications in surgery centers or soon after they left.
The cases include a Florida man, then 53, whose doctors left soon after an upper-spine surgery. Soon afterward, he had difficulty breathing. A nurse called 911, and paramedics who rushed to the surgery center initially hit a locked door, the family's lawsuit says. The man remains in a vegetative state.
A California woman, Paulina Tam, 56, told a nurse she was having trouble breathing after her upper-spine surgery, a Medicare inspection report says. Her medical team had also left for the day. The doctor who happened to be at the center after 6 p.m. later told a state inspector he "wasn't prepared" to perform an emergency surgery to insert an airway through the front of her throat. Tam died the following morning.
Her son, Dr. Eric Tam, a New York City physician, said Medicare's proposal is "overall very good news — someone is looking into something at least."
However, he said one concern about the effort is that "I'm not really sure how much data they have to examine."
Health databases for many under-65 patients would make it difficult to link injuries that happen after a patient leaves a surgery center. The investigation found court records showing that some upper-spine surgery patients developed fatal complications the day they left a surgery center.
They include a San Diego man whose wife said he gasped "like a fish" waiting for an ambulance after his surgery in 2016, a Dallas man who collapsed in his father's arms in a similar scenario in 2011 and a Portland man who pounded the roof of a car as his wife sped to the hospital.
None of them survived.
In emails sent last year, Medicare officials said when they approved similar spine surgeries for seniors, they did not get any public comments that the procedures would put patients at risk.
Dr. Tony Asher, director of the national neurosurgery quality and outcomes database who is also a surgery center association board member, acknowledged that he was "appalled" by some cases in the news investigation.
He said spine surgeons need to embrace more transparency on safety outcomes related to specific procedures — and specific surgery centers.
"In an optimal setting, it is possible to do these things effectively and safely," he said. "On an ongoing basis, we have to show we are providing that."
In 2010, before the Affordable Care Act was passed by Congress, the pharmaceutical industry's top lobbying group was a very public supporter of the measure. It even helped fund a multimillion-dollar TV ad campaign backing passage of the law.
But last year, when Republicans mounted an aggressive effort to repeal and replace the law, the group made a point of staying outside the fray.
"We've not taken a position," said Stephen Ubl, head of the organization, the Pharmaceutical Research and Manufacturers of America, known as PhRMA, in a March 2017 interview.
That stance, however, was at odds with its financial support of another group, the American Action Network, which was heavily involved in that effort to put an end to the ACA, often referred to as Obamacare, spending an estimated $10 million on an ad campaign designed to build voter support for its elimination.
"Urge him to repeal and replace the Affordable Care Act now," one ad running in early 2017 advised viewers to tell their congressman. That and similar material (including robocalls) paid for by the American Action Network ran numerous times last year in 75 congressional districts.
PhRMA was one of AAN's biggest donors the previous year, giving it $6.1 million, federal regulatory filings show. And PhRMA had a substantial interest in the outcome of the repeal efforts. Among other actions, the GOP-backed health bill would have eliminated a federal fee paid by pharmaceutical companies, one estimated at $28 billion over a decade.
But there was no way the public could have known at the time about PhRMA's support of AAN or the identity of other deep-pocketed financiers behind the group.
Unlike groups receiving its funds, PhRMA and similar nonprofits must report the grants in their own filings to the Internal Revenue Service. But the disclosures don't occur until months or sometimes more than a year after the donation.
The conservative-leaning AAN has become one of the most prominent nonprofits for funneling "dark money" — difficult-to-trace funds behind TV ads, phone calls, grass-roots organizing and other investments used to influence politics. Such groups have thrived since the Supreme Court's Citizens United decision in 2010, which loosened rules for corporate political spending, and amid what critics say is nonexistent policing of remaining rules by the IRS.
(It's impossible to know from public records whether PhRMA donated before or after President Donald Trump's victory, which made repealing the health law a substantial possibility. In any case, most donations to dark-money groups are not earmarked for a particular program.)
Generally speaking, dark-money groups are politically active organizations, often nonprofits, that are not required to disclose identities of their donors. Under IRS regulations, donors may fund a nonprofit group such as AAN, which is allowed to engage in political activities and is not required to reveal its funding sources.
Dark-money groups are often chartered under Section 501(c)(4) of the tax law, which grants tax exemption to "social welfare organizations." For those seeking to influence politics but stay in the background, 501(c)(4) designations offer two big advantages: tax exemption and no requirement to disclose donors.
Against the backdrop of high drug prices and its heaviest political expenditures in years, the pharmaceutical industry is directing substantial resources through AAN and other such groups that hide the identity of their donors and have few if any limits on fundraising.
"PhRMA has always been very aggressive and very effective in their influence efforts," said Michael Beckel, research manager at Issue One, a nonprofit devoted to campaign-finance transparency. "That includes using these new, dark-money vehicles to influence policy and elections."
PhRMA's $6.1 million, unrestricted donation to AAN was its single-biggest grant in 2016, dwarfing its $130,000 contribution to the same group the year before. Closely associated with House Republicans — AAN has a former Republican senator and two former Republican House members on its board — the group backed the failed GOP health bill intended to replace the Affordable Care Act. It also supported the successful Tax Cuts and Jobs Act of 2017, which reduced corporate taxes by hundreds of billions of dollars over a decade.
So far in this election cycle, AAN has given more than $19 million to the Congressional Leadership Fund, a Republican super PAC with which it shares an address and staff, according to the Center for Responsive Politics. The fund recently ran ads opposing Democratic candidates in high-profile special congressional elections in Georgia and Pennsylvania.
PhRMA disputes the suggestion that it backs particular actions by the recipients of its donations. "PhRMA engages with groups and organizations that have a wide array of health care opinions and policy priorities," said its spokesman, Robert Zirkelbach. "It is inaccurate and would be inappropriate for you to attribute those grants to a specific campaign."
AAN declined several requests for comment.
Including AAN, PhRMA gave nearly $10 million in 2016 to politically active groups that don't have to disclose donors, its most recent filing with the IRS shows. By contrast, PhRMA and its political action committee, or PAC, made only about $1 million in comparatively transparent political donations in 2015 and 2016 that were disclosed to regulators and reported by the Center for Responsive Politics.
PhRMA's 2016 political activities included support for the Republican National Convention. Rather than directly support the Cleveland convention, which several companies pulled out of after it became clear that Donald Trump was going to be the presidential nominee, PhRMA routed $150,000 through limited liability companies with names like Convention Services 2016 and Friends of the House 2016.
Like 501(c)(4)s, LLCs do not have to disclose their donors. PhRMA's support was revealed in IRS filings more than a year later. (Donations by PhRMA and other groups to Friends of the House, which financed a luxury lounge for convention dignitaries, were first reported by the Center for Public Integrity last fall.)
PhRMA's surge in donations to AAN coincides with the arrival of Ubl, who took over as president and CEO in 2015 and has long-standing ties to Norm Coleman, a former U.S. senator from Minnesota who is now AAN's chairman. Ubl once ran the lobby for makers of knee implants, heart stents and other medical devices, one of whose most powerful members, Medtronic, is based in Minneapolis.
Dues paid by member drug companies rose by 50 percent after he got there. PhRMA's total revenue increased by nearly a fourth in 2016, according to IRS filings.
PhRMA's 2016 dark-money contributions included $150,000 to Americans for Prosperity, a conservative group associated with billionaires Charles and David Koch. Their group has already signaled it will be active in November's elections, running attack ads against Sen. Jon Tester, a vulnerable Montana Democrat, for not supporting ACA repeal.
PhRMA also gave $50,000 to Americans for Tax Reform, run by conservative anti-tax activist Grover Norquist.
PhRMA and other trade associations donate to such groups "to avoid attracting attention" amid the political fray, said Bruce Freed, president of the Center for Political Accountability, which seeks to shed light on corporate political spending. Nevertheless "they're achieving their goals by giving money to these folks and helping elect members that are going to be in support of them."
Mostly smaller amounts went to centrist and liberal groups. Center Forward, which claims to seek bipartisan, common ground on drug policy and other issues, got $300,000 directly from PhRMA and another $179,000 from a PhRMA-backed group called the Campaign for Medical Discovery, according to tax filings.
Zirkelbach disputed the notion that PhRMA donations to AAN and other groups were intended to achieve specific goals, saying, "We seek to work with organizations we agree with as well as those where we have disagreements on public policy issues."
Much of the work by PhRMA-linked, dark-money groups touches health policy and harmonizes with PhRMA's positions.
During debates over the tax overhaul, Center Forward worked to preserve a tax credit for researching rare-disease medicines known as orphan drugs. PhRMA took a similar stance, encouraging Congress "to maintain incentives" for rare-disease drugs.
Americans for Tax Reform ran similar ads in local markets opposing "price controls" on prescription drugs.
PhRMA's dark-money allies push its agenda without disclosing its role, critics say.
PhRMA is "spending millions of dollars on politics every cycle, and they're splitting it up between the state and federal level," said Robert Maguire, political nonprofits investigator for the Center for Responsive Politics, which tracks political donations. "They're just not running the political ads themselves," which keeps their name off the product, he said.
A group called Caregiver Voices United, which got $720,000 from PhRMA in 2016, backed a secret effort to generate letters opposing a drug-transparency bill in Oregon. The campaign surfaced when an employee leaked phone-script documents to a lawmaker, as reported in February by The Register-Guard newspaper in Eugene.
Caregiver Voices United is "not influenced" by PhRMA or any other outside group, said John Schall, its president.
Dark-money groups received pharmaceutical industry money from individual companies as well, not just the PhRMA trade organization.
In 2016, Amgen gave $7,500 to Third Way, a center-left group that supports reimbursement for drugs and medical devices based on their results, according to the Center for Political Accountability. Johnson & Johnson gave $35,000 that year to the Republican Main Street Partnership, a 501(c)(4) that describes itself as a coalition of lawmakers committed to "conservative, pragmatic government," the CPA data show.
But CPA's research also reveals that many pharmaceutical companies don't disclose donations made to 501(c)(4) organizations, nor are they legally required to.
Corporations "could dump millions into one of these (c)(4)s and nobody would ever know where it came from," said Steven Billet, a former AT&T lobbyist who teaches PAC management at George Washington University.
Prescription drug prices were soaring. Angry policymakers swore they'd take action. Pharma giant Merck responded by promising to address the problem voluntarily, vowing to keep price increases under the overall rate of inflation.
"We believe these moderate increases are a responsible approach, which will help to contain costs," the Merck CEO said at the annual shareholders meeting.
That assurance wasn't made last week, when multiple drug companies offered similar pledges amid similar criticism. It was nearly three decades ago, in 1990.
Promises by the pharmaceutical industry to contain prices are a familiar — and fleeting — phenomenon, say analysts who have watched the unstoppable rise in drug costs over the years.
History's lesson, they say, is that price-restraint vows last only as long as it is politically necessary for companies to make them. Recent pharma pledges are unlikely to be any different, they predict.
"These things are always very temporary," said Paul Ginsburg, director of the University of Southern California-Brookings Schaeffer Initiative for Health Policy. "I don't think anyone considers this significant."
Last week, Swiss drugmaker Novartis said it would not raise prices on U.S. products between now and the end of the year. Pfizer, Merck, Sanofi and Roche have all made similar announcements in the wake of repeated criticism from policymakers, especially President Donald Trump.
The current assurances come as the administration floats proposals that could contain costs at the margins, such as promoting competition from generic drugs or changing Medicare drug-purchase policies, some analysts believe.
"The president is using the bully pulpit to make some change, and that is certainly one aspect of using the power of the presidency," said Dan Mendelson, who founded consultancy Avalere Health and oversaw the health division at the Office of Management and Budget under President Bill Clinton. "If you make changes to regulation and law, those are certainly more durable … over the long term."
One big wave of pharma price vows came in the early 1990s. Expensive new drugs such as antidepressants and statins to lower cholesterol were quickly driving up costs — although overall prices were far lower than they are now.
Ethicists and consumer advocates were outraged that lifesaving AZT, which counteracted the HIV virus, cost about $8,000 a year when it launched in the late 1980s. These days the cost of some medicines exceeds $1 million a year.
Criticism from policymakers back then might also sound familiar.
"There is no question that we face a growing crisis in the United States due to rising prescription drug prices," Sen. David Pryor, an Arkansas Democrat who was chairman of the Aging Committee, said in 1990.
In response came a cascade of public promises to limit drug price increases to no more than the rate of inflation.
Merck was one of the first, taking what became known as "the Rahway pledge," referring to the New Jersey location of its headquarters. Pfizer made a similar promise in 1992, saying it would limit increases to 4 percent or less.
"Pfizer is mindful of the needs of the broader public," Pfizer chief executive William Steere Jr. told industry analysts in a presidential election year in which both Democrats and Republicans were discussing health care reform.
Bristol-Myers Squibb and Glaxo also said they would keep price increases below inflation, according to a 1992 Newsday story that quoted an analyst referring to "pharmapolitically correct" price promises.
Just two years later, Pryor said many manufacturers were raising prices far faster than the inflation rate. He found that prices for especially profitable and high-volume drugs went up sharply. That echoes today's criticism of the industry.
Merck recently announced it would cut prices by 10 percent on half a dozen drugs, a seemingly significant concession. But those medicines together account for less than 0.1 percent of the company's sales, calculated Umer Raffat, an analyst at Evercore ISI. That suggests the move was "just optics" rather than substance, Raffat said in a note to clients.
"We commit to not increase the average net price across our portfolio of products by more than inflation annually," Merck said last week.
"Every now and then senior company executives decide that there is so much anger and pressure, and they will show they are good citizens" by promising to restrain prices, said Donald Light, health policy professor at Rowan University's School of Osteopathic Medicine in New Jersey. "But it only happens for a year or two."
On the other hand, industry watchers say, the political and economic environment has shifted since the 1990s. Drug prices are higher than ever. Because of high-deductible insurance plans and other cost-shifting, "consumers are responsible for a much larger burden" in paying for drugs, Mendelson said.
That's why some are not ruling out at least peripheral regulation and perhaps new laws to address pharma prices.
The administration's drug "blueprint" has proposed lowering Medicare reimbursement on hospital- and doctor-administrated drugs. Last week, the administration proposed altering a rule on drug rebates used when pharmacy benefit managers negotiate prices with insurers and drug companies.
Avalere President Matt Brow said there is a political reason to make something happen before the November midterm elections.
"I think this administration is willing to take action that most administrations in our memory haven't been willing to do," Brow said.
The woman arrived at the emergency department at Huntington Hospital on New York's Long Island after she was hit by her boyfriend during an argument. Her situation raised concerns among the medical staff, which had recently been trained to be on the lookout for signs of sex trafficking.
An undocumented immigrant from El Salvador, she worked at a local "cantina" frequented by immigrants. Her job was to get patrons drinks and to dance with them, but many workers in those jobs are expected to offer sex, too. Her boyfriend didn't want her to work there, and that led to the fight, one doctor recalled.
As part of the intake process, the emergency staff asked the 36-year-old woman a series of questions about whether she'd ever had sex for money, or whether she had to give someone else part of what she earns, among other things. The screening questions were part of a new program at Northwell Health, a 23-hospital system in the New York metro area that includes Huntington Hospital, to train staff and provide them with tools to identify and support victims of human trafficking.
There are no hard figures for how many people are involved in human trafficking, the term used when individuals are forced to work or have sex for someone else's commercial benefit. Polaris, a Washington, D.C.-based nonprofit that advocates for these people and runs help lines for them, said calls and texts to its national hotlines have steadily ticked up in recent years, increasing the number of cases 13 percent between 2016 and 2017, to 8,759.
But health care providers frequently fail to recognize these patients' situation. According to a 2014 survey of about 100 survivors of sex trafficking, 88 percent said that while they were being trafficked they had contact with a health care provider, typically someone in an emergency department.
"When trafficking victims come through the health care system but we don't identify them, it's a big missed opportunity," said Dr. Santhosh Paulus, a family physician who is the site director of the Huntington Hospital's family medicine residency program and who started the program at Northwell.
Northwell is one of a growing number of hospitals and health care systems that are putting such programs in place. They want to alert staff to be on the lookout for trafficking, much as they watch for signs of child abuse, domestic violence and elder abuse.
Since last spring, nearly 300 staff members at Huntington Hospital and a family clinic have received training in how to spot trafficking victims and how to help them.
Training is given not only to doctors and nurses but also to registration and reception staff, social workers and security guards. Restore NYC, an organization that assists people caught up in sex trafficking, provided the initial training to key staff, and a hospital task force trains the others. During the next few years, similar efforts will be rolled out at all of Northwell's 23 hospitals, Paulus said.
Identifying victims of trafficking is not unlike identifying victims of other forms of violence, said Dr. Wendy Macias-Konstantopoulos, director of the human trafficking initiative at Massachusetts General Hospital.
One of the big red flags is when people delay coming in for medical care, such as waiting weeks to come in to get an injured ankle or sexually transmitted infection checked out, Macias-Konstantopoulos said. Or it may be a pattern of injuries that don't make sense. Sometimes people are reluctant to explain their injury, or they come in with someone who seems overbearing.
"Having a high index of suspicion is the first step," she said. "If we're not asking about it, we're just not going to see it."
Starting in October, health care providers can also use new diagnosis codes in their records that differentiate trafficking from other types of abuse. This will help track the number of victims and provide appropriate treatment.
Asking may not be enough, however. Depending on what's going on in their lives, these patients may not be willing or ready to acknowledge that they need help, said Holly Gibbs, human trafficking response program director for Dignity Health, a health care system with nearly 40 hospitals in California, Nevada and Arizona.
Gibbs knows the issue well. She was forced briefly into prostitution in Atlantic City, N.J., after meeting a man at a shopping mall as a 14-year-old and running away with him. The man persuaded Gibbs to go with him with promises of a new, glamorous life as a musician or model. At the time, Gibbs said, she thought that what happened to her was her own fault, a result of choices she made. No health care or law enforcement professional connected her to social services that could have helped her understand otherwise. She was reunited with her family by law enforcement personnel, who arrested the man. He was was later convicted.
Dignity Health has implemented a human trafficking response program in the emergency departments and labor and delivery areas of each of its hospitals. Now it's rolling out the program at clinics and physicians' offices as well.
A key priority is to help clinicians know how to talk to patients about any violence they may be facing and to connect the patients with outside sources of help.
But in the end, if these patients don't want assistance, "you respect their wishes," Gibbs said. "They may not be ready to accept help now, but you may plant seeds so they'll be able to accept it later on."
Industry analysts say for-profit hospital companies are poised to grow more rapidly as they buy up both for-profits and nonprofits, potentially altering the character and role of public health-oriented nonprofits.
Mission Health, the largest hospital system in western North Carolina, provided $100 million in free charity care last year. This year, it has partnered with 17 civic organizations to deliver substance abuse care to low-income people.
Based in bucolic Asheville, the six-hospital system also screens residents for food insecurity; provides free dental care to children in rural areas via the "ToothBus" mobile clinic; helps the homeless find permanent housing, and encourages its 12,000 employees to volunteer at schools, churches and nonprofit groups.
Asheville residents say the hospital is an essential resource.
"Mission Health helped saved my life," said Susan ReMine, 68, an Asheville resident for 30 years who now lives in nearby Fletcher, N.C. Suffering from kidney failure, she was in Mission Health's main hospital in Asheville for three weeks last fall. And, from 2006 to 2008, a Mission Health-supported program called Project Access provided her with free care after she lost her job because of illness.
After 130 years as a nonprofit with deep roots in the community, Mission Health announced in March that it was seeking to be bought by HCA Healthcare, the nation’s largest for-profit hospital chain. HCA owns 178 hospitals in 20 states and the United Kingdom.
The pending sale reflects a controversial national trend as hospitals consolidate at an accelerating pace and the cost of health care continues to rise.
"We understand the business reasons [for the deal], but our overwhelming concern is the price of health care," said Ron Freeman, chief financial officer at Ingles Markets, a supermarket chain headquartered in Asheville with 200 stores in six states. "Will HCA after a few years start to press the hospital to make more profit by raising prices? We don’t know."
And the local newspaper, the Citizen Times, editorialized in March: "How does it help to join a corporation where nearly $3 billion that could have gone to health care instead was recorded as profit? … We would feel better were Western North Carolina’s leading health-care provider to remain master of its own fate."
Merger Mania
From 2013 to 2017, nearly 1 in 5 of the nation’s 5,500-plus hospitals were acquired or merged with another hospital, according to Irving Levin Associates, a health care analytics firm in Norwalk, Conn. Industry analysts say for-profit hospital companies are poised to grow more rapidly as they buy up both for-profits and nonprofits — potentially altering the character and role of public health-oriented nonprofits. Nonprofit hospitals are exempt from state and local taxes. In return, they must provide community services and care to poor and uninsured patients —a commitment that is honored to varying degrees nationwide.
Of the nation’s 4,840 non-federal, general hospitals, 2,849 are nonprofit, 1,035 are for-profit and 956 are owned by state or local governments, according to the American Hospital Association.
In 2017, 29 for-profit companies bought 11 not-for-profits and 18 for-profit hospitals, according to an Irving Levin Associates analysis for Kaiser Health News.
Sales can go the other way, too: 53 nonprofit hospital companies bought 18 for-profits as well as 35 nonprofits in 2017.
A recent report by Moody’s Investors Service predicted stable growth for for-profit hospital companies, saying they are well-positioned to demand higher rates from insurers and have less exposure to the lower rates paid by government insurance programs such as Medicare and Medicaid. In contrast, a second Moody’s report downgraded from stable to negative its 2018 forecast for the not-for-profit hospital sector.
"The main motivation of for-profit companies is to grow so they can cut costs, get paid more and maximize profits," said Suzanne Delbanco, executive director of the Catalyst for Payment Reform, an employer-led health care think tank and advocacy group. "They are not as focused on improving access to care or the community’s overall health."
'We Wanted To Thrive'
Ron Paulus, Mission Health’s president and CEO, said he and the hospital’s 19-member board concluded last year that the future of Mission Health was iffy at best without a merger.
HCA declined to make anyone available for an interview but provided this statement: "We are excited about the prospect of a transaction that would allow us to support the caliber of care they [Mission Health hospitals] have been providing."
Driving Mission Health’s decision, Paulus said, were strained finances and the board’s strong feeling that the hospital needed to invest in new technology, modern data management tools and top clinical talent.
"We wanted to thrive and not just survive," he said. "I had a healthy dose of skepticism about HCA at first. But I think we made the right decision."
During the past four years, Paulus said, the company has had to cut costs $50 million to $80 million a year to preserve an "acceptable operating margin." The forecast for 2019 and 2020, he said, saw the gap between revenue and expenses rising to $150 million a year.
Miriam Schwarz, executive director of the Western Carolina Medical Society, said many area physicians were surprised by the move and "are trying to grapple with the shift."
"There’s concern about the community benefits, but also job loss," said Schwarz. "But [doctors] do recognize that the hospital must become more financially secure."
Weighed against community concerns is the prospect of a large nonprofit foundation created by the deal. Depending on the final price, the foundation could have close to $2 billion in assets.
Creation of such foundations is common when for-profit companies buy nonprofit hospitals or insurance companies. Paulus said the foundation created from Mission Health could generate $50 million or more a year to — among other initiatives — "test new care models such as home-based care … and address the causes of poor health in the community in the first place."
In addition, HCA will have to pay upward of $10 million in state and local taxes.
Mixed Results
Industry analysts say the hospital merger and consolidation trend nationwide is inevitable given the powerful forces afoot in health care.
That includes pressure to lower prices and costs; improve quality, safety and efficiency; modernize IT systems and equipment; and do more to improve overall health.
But academics and consumer advocates say hospital consolidation yields mixed results. While mergers—especially purchases by for-profit companies—provide much-needed capital and financial stability, competition is stifled, often leading to higher prices.
Martin Gaynor, a professor of economics and health policy at Carnegie Mellon University, and colleagues examined 366 hospital mergers from 2007 to 2011 and found that prices were on average 12 percent higher in areas where one hospital dominated the market versus areas with at least four rivals. Another recent study found that 90 percent of U.S. cities today have a "highly concentrated" hospital market. Asheville is one, with Mission Health being dominant.
"The evidence is overwhelming at this point: Mergers solve some problems for hospitals, but they don’t make health care less expensive or better," said Gaynor. "In fact, prices usually go up."
Mission Health CEO Paulus said he believed HCA is committed to restraining price increases and cost growth.
If no obstacles arise, Paulus said, HCA’s purchase of Mission Health would be formalized in August and finalized in November or December, pending state regulatory approval.
Update (July 20, 2018): After this story was published, Zuckerberg San Francisco General Hospital agreed to waive the $15,666 trauma response fee charged for Park Jeong-whan’s visit to the hospital. In a letter, the hospital’s patient experience manager said the hospital did a clinical review and offered "a sincere apology for any distress the family experienced over this bill." Further, the hospital manager wrote that the case "offered us an opportunity to review our system and consider changes."
On the first morning of Jang Yeo Im's vacation to San Francisco in 2016, her 8-month-old son, Park Jeong Whan, fell off the bed in the family's hotel room and hit his head.
There was no blood, but the baby was inconsolable. Jang and her husband worried he might have an injury they couldn't see, so they called 911, and an ambulance took the family — tourists from South Korea — to Zuckerberg San Francisco General Hospital (SFGH).
The doctors at the hospital quickly determined that baby Jeong Whan was fine — just a little bruising on his nose and forehead. He took a short nap in his mother's arms, drank some infant formula and was discharged a few hours later with a clean bill of health. The family continued their vacation, and the incident was quickly forgotten.
Two years later, the bill finally arrived at their home: They owed the hospital $18,836 for a visit lasting three hours and 22 minutes, the bulk of which was for a mysterious fee for $15,666 labeled "trauma activation," also known as "a trauma response fee."
It's a huge amount of money for my family," said Jang, whose family had travel insurance that would cover only $5,000. "If my baby got special treatment, OK. That would be OK. But he didn't. So why should I have to pay the bill? They did nothing for my son."
American hospital bills are today littered with multiplying fees, many of which don't even exist in other countries: fees for blood draws, fees for checking the blood oxygen level with a skin probe, fees for putting on a cast, minute-by-minute fees for lying in the recovery room.
But perhaps the pinnacle is the "trauma fee," in part because it often runs more than $10,000 and in part because it seems to be applied so arbitrarily.
A trauma fee is the price a trauma center charges when it activates and assembles a team of medical professionals that can meet a patient with potentially serious injuries in the ER. It is billed on top of the hospital's emergency room physician charge and procedures, equipment and facility fees.
Emergency room bills collected by Vox and Kaiser Health News show that trauma fees are expensive and vary widely from one hospital to another.
Charges ranged from $1,112 at a hospital in Missouri to $50,659 at a hospital in California, according to Medliminal, a company that helps insurers and employers around the country identify medical billing errors.
"It's like the Wild West. Any trauma center can decide what their activation fee is," says Dr. Renee Hsia, director of health policy studies in the emergency medicine department at the University of California-San Francisco.
Hsia is also an emergency medicine doctor at Zuckerberg San Francisco General Hospital, but was not involved in the care of the patients discussed in the story — and spoke about the fees generally.
Comprehensive data from the Health Care Cost Institute shows that the average price that health insurers paid hospitals for trauma response (which is often lower than what the hospital charges) was $3,968 in 2016. But hospitals in the lowest 10 percent of prices received an average of $725 — while hospitals in the most expensive 10 percent were paid $13,525.
Data from Amino, a health cost transparency company, shows the same trend. On average, Medicare pays just $957.50 for the fee.
According to Medicare guidelines, the fee can be charged only when the patient receives at least 30 minutes of critical care provided by a trauma team — but hospitals do not appear to be following that rule when billing non-Medicare patients.
At the turn of the century such fees didn't even exist.
But today many insurers willingly pay them, albeit at negotiated rates for hospitals in their networks. Six insurers and industry groups declined to discuss the fees, and a spokeswoman for America's Health Insurance Plans, the industry trade group, said, "We have not seen any concerning trends surrounding trauma center fees."
Trauma centers argue that these fees are necessary to train and maintain a full roster of trauma doctors, from surgeons to anesthesiologists, on-call and able to respond to medical emergencies at all times.
SFGH spokesman Brent Andrew defended the hospital's fee of over $15,000 even though the baby didn't require those services.
"We are the trauma center for a very large, very densely populated area. We deal with so many traumas in this city — car accidents, mass shootings, multiple vehicle collisions," said Andrew. "It's expensive to prepare for that."
At What Cost Trauma?
Experts who've studied trauma fees say that at some hospitals there's little rationale behind how hospitals calculate the charge and when the fee is billed. But, of course, those decisions have tremendous financial implications.
After Alexa Sulvetta, a 30-year-old nurse, broke her ankle while rock climbing at a San Francisco gym in January, she faced an out-of-pocket bill of $31,250 bill.
An ambulance also brought Sulvetta to Zuckerberg San Francisco General Hospital, where, she recalled, "my foot was twisted sideways. I had been given morphine in the ambulance."
Sulvetta was evaluated by an emergency medicine doctor and sent for emergency surgery. She was discharged the next day.
SFGH also charged Sulvetta a $15,666 trauma response fee, a hefty chunk of her $113,338 bill. Her insurance decided that the hospital fees for the one-day stay were too high, and — after negotiations — agreed to pay only a charge it deemed reasonable. The hospital then went after Sulvetta for $31,250.
"My husband and I were starting to think about buying a house, but we keep putting that off because we might need to use our life savings to pay this bill," she said.
SFGH spokesman Andrew, meanwhile, said that the hospital is justified in pursuing the bill. "It's fairly typical for us to pursue patients when there are unpaid balances," he said. "This is not an uncommon thing."
‘I Feel Like I Created A Monster'
Trauma response fees were first approved by the National Uniform Billing Committee in January 2002, following a push by a national consulting firm specializing in trauma care. The high costs of staffing a trauma team available at all hours, the firm argued, threatened to shut down trauma centers across the country.
Trauma centers require special certification to provide emergency care for patients suffering very serious injuries above and beyond a regular emergency department.
"We were keeping an ongoing list of trauma centers that were closing all over the country," said Connie Potter, who was executive director of the firm that succeeded in getting the fee approved. She now consults with hospital trauma centers on how to bill appropriately.
Trauma teams are activated by medics in the field, who radio the hospital to announce they are arriving with a trauma patient. The physician or nurse who receives the call then decides whether a full or partial trauma team is needed, which results in different fees. Potter said that person can also activate the trauma team based on the consultation with the EMTs.
But reports from the field are often fragmentary and there is much discretion in when to alert the trauma team.
An alert means paging a wide range of medical staff to stand at the ready, which may include a trauma surgeon, who may not be in the hospital.
Potter said if the patient arrives and does not require at least 30 minutes of critical care, the trauma center is supposed to downgrade the fee to a regular emergency room visit and bill at a lower rate, but many do not do so.
Hospitals were supposed to come up with the fee for this service by looking at the actual costs of activating the trauma team, and then dividing it over the amount that their patients are likely to pay. Hospitals that see a lot of uninsured and Medicaid patients might charge more to patients with private insurance to make up for possible losses.
But soon, Potter said, some hospitals began abusing the fee by charging an exorbitant amount that seemed to be based on the whims of executives rather than actual costs.
"To a degree, I feel like I created a monster," Potter said. "Some hospitals are turning this into a cash cow on the backs of patients."
The $15,666 is San Francisco General's low-level trauma response fee. The high-level response fee in which the trauma surgeon is called into action is $30,206. The hospital would not provide a breakdown of how these fees are calculated.
Unfortunately, outside of Medicare and state hospitals, regulators have little sway over how much is charged. And at public hospitals, such fees may be a way to balance government budgets. At SFGH, the $30,206 higher-level trauma response fee, which increased by about $2,000 last year, was approved by the San Francisco Board of Supervisors.
An Ibuprofen, Two Medical Staples — And A $26,998 Bill
Some patients question whether their particular cases ought to include a trauma fee at all — and experts think they're right to do so.
Sam Hausen, 28, was charged a $22,550 trauma response fee for his visit to Queen of the Valley Medical Center in Napa, Calif., in January.
An ambulance brought him to the Level 3 trauma center after a minor motorcycle accident, when he took a turn too quickly and fell from his bike. Records show that he was alert with normal vital signs during the 4-mile ambulance ride, and that the ambulance staff alerted the hospital that the incoming patient had traumatic injuries.
He was at the hospital for only about half an hour for a minor cut on his head, and he didn't even need X-rays, CAT scans or a blood test.
"The only things I got were ibuprofen, two staples and a saline injection. Those were the only services rendered. I was conscious and lucid for the whole thing," said Hausen.
But because the ambulance medics called for a trauma team, the total for the visit came to $26,998 — and the vast majority of that was the $22,550 trauma response fee.
Queen of the Valley Medical Center defended the charge. "Trauma team activation does not mean every patient will consult with and/or be cared for by a trauma surgeon," spokeswoman Vanessa deGier said over email. "The activation engages a team of medical professionals. Which professional assesses and cares for a trauma patient depends on the needs and injury/illness of the patient."
Guidelines for trauma activation are written broadly on purpose, in order to make sure they don't miss any emergencies that could otherwise kill patients, said Dr. Daniel Margulies, a trauma surgeon at Cedars-Sinai in Los Angeles and chair of the American College of Surgeons committee on trauma center verification and review. Internal injuries, for example, can be difficult to diagnose at the scene of an accident.
"If you had someone who needed a trauma team and didn't get called, they could die," he said.
Medics err on the side of caution when calling in trauma patients to avoid missing a true emergency. To that end, the American College of Surgeons says it is acceptable to "overtriage," summoning the trauma team for 25-35 percent of patients who don't end up needing it.
But that logic leaves health consumers like Jang, Sulvetta and Hausen with tens of thousands in potential debt for care they didn't ask for or need, care that is ordered out of an abundance of caution — a judgment call by an ambulance worker, a triage nurse or a physician — based on scant information received over a phone.
Jeong Whan had fallen 3 feet from a hotel bed onto a carpeted floor when his nervous parents summoned an ambulance. By the time the EMTs arrived, Jeong Whan was "crawling on the bed, not appearing to be in any distress," according to the ambulance records. The EMTs called SFGH and, after a consultation with a physician, transported Jeong Whan as a trauma patient, likely because of the baby's young age.
At the hospital, Jeong Whan was evaluated briefly by a triage nurse and sent to an emergency department resuscitation bay.
Jang recalls being greeted by nine or 10 providers at the hospital, but the baby's medical records from the visit do not mention a trauma team being present, according to Teresa Brown of Medliminal, who reviewed the case.
The baby appeared to have no signs of major injury, and no critical care was required. Five minutes later, the family was transferred to an exam room for observation before being released a few hours later. Brown said she would dispute the $15,666 trauma response fee because the family does not appear to have received 30 minutes of critical care from a trauma team.
Jang currently has a patient advocate working on her behalf to try to negotiate the bill with the hospital. She said she fears that the pending medical debt could prevent her from getting a visa to visit New York and Chicago, which she hopes to do in the next few years.
She said her experience with the U.S. health care system and its fees has been shocking. "I like the USA. There are many things to see when traveling," she said. "But the health care system in USA was very bad."
Premiums in California's health insurance exchange will rise by an average of 8.7 percent next year, marking a return to more modest increases despite ongoing threats to the Affordable Care Act.
The state marketplace, Covered California, said the rate increase for 2019 would have been closer to 5 percent if the federal penalty for going without health coverage had not been repealed in last year's Republican tax bill.
The average increase in California is smaller than the double-digit hikes expected around the nation, due largely to a healthier mix of enrollees and more competition in its marketplace. Still, health insurance prices keep growing faster than wages and general inflation as a result of rising medical costs overall, squeezing many middle-class families who are struggling to pay their household bills.
The 8.7 percent increase in California ends two consecutive years of double-digit rate increases for the state marketplace.
"It's not great that health care costs are still increasing that much, but the individual market is not sticking out like a sore thumb like it has in other years," said Kathy Hempstead, senior adviser at the Robert Wood Johnson Foundation. "It's falling back to earth."
The future may be less bright. An estimated 262,000 Californians, or about 10 percent of individual policyholders in and outside the exchange, are expected to drop their coverage next year because the ACA fines were eliminated, according to the state. Peter Lee, executive director of Covered California, warned that the exodus of healthier consumers will drive up insurance costs beyond 2019 — not just for individual policyholders but for California employers and their workers.
"We are paying, in essence, a surcharge for federal policies that are making coverage more expensive than it should be," Lee said in an interview. "There will be more of the uninsured and more uncompensated costs passed along to all of us."
Critics of the Affordable Care Act say it has failed to contain medical costs and left consumers and taxpayers with heavy tabs . Nearly 90 percent of Covered California's 1.4 million enrollees qualify for federal subsidies to help them afford coverage.
Foiled in its attempt to repeal Obamacare outright, the Trump administration has taken to rolling back key parts of the law and has slashed federal marketing dollars intended to boost enrollment. Instead, the administration backs cheaper alternatives, such as short-term coverage or association health plans, which don't comply fully with ACA rules and tend to offer skimpier benefits with fewer consumer protections.
Taken together, those moves are likely to draw healthier, less expensive customers out of the ACA exchanges and leave sicker ones behind.
Nationally, 2019 premiums for silver plans — the second-cheapest and most popular plans offered — are expected to jump by 15 percent, on average, according to an analysis of 10 states and the District of Columbia by the Avalere consulting firm. Prices vary widely across the country, however. Decreases are expected in Minnesota while insurers in Maryland are seeking 30 percent increases.
In California, exchange officials emphasized, consumers who shop around could pay the same rate as this year, or even a little less.
Christy McConville of Arcadia already spends about $1,800 a month on a Blue Shield plan for her family of four, opting for "platinum" coverage, the most expensive type. Her family doesn't qualify for federal subsidies in Covered California.
She's worried about further increases and doesn't want to switch plans and risk losing access to the doctors she trusts. "We're getting right up to the limit," McConville said.
Amanda Malachesky, a nutrition coach in the Northern California town of Petrolia, said the elimination of the penalty for being uninsured makes dropping coverage more palatable. Her family of four pays almost $400 a month for a highly subsidized Anthem Blue Cross plan that has a $5,000 deductible.
"I've wanted to opt out of the insurance model forever just because they provide so little value for the exorbitant amount of money that we pay," said Malachesky, who recently paid several hundred dollars out-of-pocket for a mammogram. "I'm probably going to disenroll … and not give any more money to these big bad insurance companies."
Covered California is aiming to stem any enrollment losses by spending more than $100 million on advertising and outreach in the coming year. In contrast, the Trump administration spent only $10 million last year for advertising the federal exchange across the 34 states that use it.
Also, California lawmakers are looking at ways to fortify the state exchange. State legislators are considering bills that would limit the sale of short-term insurance and prevent people from joining association health plans that don't have robust consumer protections.
However, California hasn't pursued an insurance mandate and penalty at the state level, which both health plans and consumer advocates support. New Jersey and Vermont have enacted such measures.
Lee said it's up to lawmakers to decide whether a state mandate makes sense.
David Panush, a Sacramento health care consultant and a former Covered California official, said some lawmakers may be reluctant to push the idea, even in deep-blue California.
"The individual mandate has always been the least popular piece of the Affordable Care Act," he said.
Despite the constant uncertainty surrounding the health law, many insurers nationally are posting profits from their ACA business and some plans are looking to expand further on the exchanges.
In California, the same 11 insurers are returning, led by Kaiser Permanente and Blue Shield of California. Together, those two insurers control two-thirds of exchange enrollment. (Kaiser Health News, which publishes California Healthline, is not affiliated with Kaiser Permanente.)
The Covered California rate increases are fairly uniform across the state. Premiums are climbing 9 percent across most of Southern California as well as in San Francisco. Monterey, San Benito and Santa Cruz counties faced the highest increase at 16 percent, on average.
The rates are subject to state regulatory review but are unlikely to change significantly. Open enrollment on the exchange starts Oct. 15.
The ACA's expansion of coverage has dramatically cut the number of uninsured Californians. The proportion of Californians lacking health insurance fell to 6.8 percent at the end of last year, down from 17 percent in 2013, federal data show.
Without any public scrutiny, insurers and data brokers are predicting health costs based on data about things like race, marital status, how much TV consumers watch, whether they pay their bills on time or even buy plus-size clothing.
This article was first co-published by ProPublica and NPR on July 17, 2018.
To an outsider, the fancy booths at last month's health insurance industry gathering in San Diego aren't very compelling. A handful of companies pitching "lifestyle" data and salespeople touting jargony phrases like "social determinants of health."
But dig deeper and the implications of what they're selling might give many patients pause: A future in which everything you do — the things you buy, the food you eat, the time you spend watching TV — may help determine how much you pay for health insurance.
With little public scrutiny, the health insurance industry has joined forces with data brokers to vacuum up personal details about hundreds of millions of Americans, including, odds are, many readers of this story. The companies are tracking your race, education level, TV habits, marital status, net worth. They're collecting what you post on social media, whether you're behind on your bills, what you order online. Then they feed this information into complicated computer algorithms that spit out predictions about how much your health care could cost them.
Are you a woman who recently changed your name? You could be newly married and have a pricey pregnancy pending. Or maybe you're stressed and anxious from a recent divorce. That, too, the computer models predict, may run up your medical bills.
Are you a woman who's purchased plus-size clothing? You're considered at risk of depression. Mental health care can be expensive.
Low-income and a minority? That means, the data brokers say, you are more likely to live in a dilapidated and dangerous neighborhood, increasing your health risks.Bottom of Form
"We sit on oceans of data," said Eric McCulley, director of strategic solutions for LexisNexis Risk Solutions, during a conversation at the data firm's booth. And he isn't apologetic about using it. "The fact is, our data is in the public domain," he said. "We didn't put it out there."
Insurers contend they use the information to spot health issues in their clients — and flag them so they get services they need. And companies like LexisNexis say the data shouldn't be used to set prices. But as a research scientist from one company told me: "I can't say it hasn't happened."
At a time when every week brings a new privacy scandal and worries abound about the misuse of personal information, patient advocates and privacy scholars say the insurance industry's data gathering runs counter to its touted, and federally required, allegiance to patients' medical privacy. The Health Insurance Portability and Accountability Act, or HIPAA, only protects medical information.
"We have a health privacy machine that's in crisis," said Frank Pasquale, a professor at the University of Maryland Carey School of Law who specializes in issues related to machine learning and algorithms. "We have a law that only covers one source of health information. They are rapidly developing another source."
Patient advocates warn that using unverified, error-prone "lifestyle" data to make medical assumptions could lead insurers to improperly price plans — for instance raising rates based on false information — or discriminate against anyone tagged as high cost. And, they say, the use of the data raises thorny questions that should be debated publicly, such as: Should a person's rates be raised because algorithms say they are more likely to run up medical bills? Such questions would be moot in Europe, where a strict law took effect in May that bans trading in personal data.
"We have a health privacy machine that's in crisis."
—Frank Pasquale
This year, ProPublica and NPR are investigating the various tactics the health insurance industry uses to maximize its profits. Understanding these strategies is important because patients — through taxes, cash payments and insurance premiums — are the ones funding the entire health care system. Yet the industry's bewildering web of strategies and inside deals often have little to do with patients' needs. As the series' first story showed, contrary to popular belief, lower bills aren't health insurers' top priority.
Inside the San Diego Convention Center last month, there were few qualms about the way insurance companies were mining Americans' lives for information — or what they planned to do with the data.
The sprawling convention center was a balmy draw for one of America's Health Insurance Plans' marquee gatherings. Insurance executives and managers wandered through the exhibit hall, sampling chocolate-covered strawberries, champagne and other delectables designed to encourage deal-making.
Up front, the prime real estate belonged to the big guns in health data: The booths of Optum, IBM Watson Health and LexisNexis stretched toward the ceiling, with flat screen monitors and some comfy seating. (NPR collaborates with IBM Watson Health on national polls about consumer health topics.)
To understand the scope of what they were offering, consider Optum. The company, owned by the massive UnitedHealth Group, has collected the medical diagnoses, tests, prescriptions, costs and socioeconomic data of 150 million Americans going back to 1993, according to its marketing materials. (UnitedHealth Group provides financial support to NPR.) The company says it uses the information to link patients' medical outcomes and costs to details like their level of education, net worth, family structure and race. An Optum spokesman said the socioeconomic data is de-identified and is not used for pricing health plans.
Optum's marketing materials also boast that it now has access to even more. In 2016, the company filed a patent application to gather what people share on platforms like Facebook and Twitter, and link this material to the person's clinical and payment information. A company spokesman said in an email that the patent application never went anywhere. But the company's current marketing materials say it combines claims and clinical information with social media interactions.
I had a lot of questions about this and first reached out to Optum in May, but the company didn't connect me with any of its experts as promised. At the conference, Optum salespeople said they weren't allowed to talk to me about how the company uses this information.
It isn't hard to understand the appeal of all this data to insurers. Merging information from data brokers with people's clinical and payment records is a no-brainer if you overlook potential patient concerns. Electronic medical records now make it easy for insurers to analyze massive amounts of information and combine it with the personal details scooped up by data brokers.
It also makes sense given the shifts in how providers are getting paid. Doctors and hospitals have typically been paid based on the quantity of care they provide. But the industry is moving toward paying them in lump sums for caring for a patient, or for an event, like a knee surgery. In those cases, the medical providers can profit more when patients stay healthy. More money at stake means more interest in the social factors that might affect a patient's health.
Some insurance companies are already using socioeconomic data to help patients get appropriate care, such as programs to help patients with chronic diseases stay healthy. Studies show social and economic aspects of people's lives play an important role in their health. Knowing these personal details can help them identify those who may need help paying for medication or help getting to the doctor.
But patient advocates are skeptical health insurers have altruistic designs on people's personal information.
The industry has a history of boosting profits by signing up healthy people and finding ways to avoid sick people — called "cherry-picking" and "lemon-dropping," experts say. Among the classic examples: A company was accused of putting its enrollment office on the third floor of a building without an elevator, so only healthy patients could make the trek to sign up. Another tried to appeal to spry seniors by holding square dances.
The Affordable Care Act prohibits insurers from denying people coverage based on pre-existing health conditions or charging sick people more for individual or small group plans. But experts said patients' personal information could still be used for marketing, and to assess risks and determine the prices of certain plans. And the Trump administration is promoting short-term health plans, which do allow insurers to deny coverage to sick patients.
Robert Greenwald, faculty director of Harvard Law School's Center for Health Law and Policy Innovation, said insurance companies still cherry-pick, but now they're subtler. The center analyzes health insurance plans to see if they discriminate. He said insurers will do things like failing to include enough information about which drugs a plan covers — which pushes sick people who need specific medications elsewhere. Or they may change the things a plan covers, or how much a patient has to pay for a type of care, after a patient has enrolled. Or, Greenwald added, they might exclude or limit certain types of providers from their networks — like those who have skill caring for patients with HIV or hepatitis C.
If there were concerns that personal data might be used to cherry-pick or lemon-drop, they weren't raised at the conference.
At the IBM Watson Health booth, Kevin Ruane, a senior consulting scientist, told me that the company surveys 80,000 Americans a year to assess lifestyle, attitudes and behaviors that could relate to health care. Participants are asked whether they trust their doctor, have financial problems, go online, or own a Fitbit and similar questions. The responses of hundreds of adjacent households are analyzed together to identify social and economic factors for an area.
Ruane said he has used IBM Watson Health's socioeconomic analysis to help insurance companies assess a potential market. The ACA increased the value of such assessments, experts say, because companies often don't know the medical history of people seeking coverage. A region with too many sick people, or with patients who don't take care of themselves, might not be worth the risk.
Ruane acknowledged that the information his company gathers may not be accurate for every person. "We talk to our clients and tell them to be careful about this," he said. "Use it as a data insight. But it's not necessarily a fact."
In a separate conversation, a salesman from a different company joked about the potential for error. "God forbid you live on the wrong street these days," he said. "You're going to get lumped in with a lot of bad things."
The LexisNexis booth was emblazoned with the slogan "Data. Insight. Action." The company said it uses 442 non-medical personal attributes to predict a person's medical costs. Its cache includes more than 78 billion records from more than 10,000 public and proprietary sources, including people's cellphone numbers, criminal records, bankruptcies, property records, neighborhood safety and more. The information is used to predict patients' health risks and costs in eight areas, including how often they are likely to visit emergency rooms, their total cost, their pharmacy costs, their motivation to stay healthy and their stress levels.
People who downsize their homes tend to have higher health care costs, the company says. As do those whose parents didn't finish high school. Patients who own more valuable homes are less likely to land back in the hospital within 30 days of their discharge. The company says it has validated its scores against insurance claims and clinical data. But it won't share its methods and hasn't published the work in peer-reviewed journals.
McCulley, LexisNexis' director of strategic solutions, said predictions made by the algorithms about patients are based on the combination of the personal attributes. He gave a hypothetical example: A high school dropout who had a recent income loss and doesn't have a relative nearby might have higher than expected health costs.
But couldn't that same type of person be healthy? I asked.
"Sure," McCulley said, with no apparent dismay at the possibility that the predictions could be wrong.
McCulley and others at LexisNexis insist the scores are only used to help patients get the care they need and not to determine how much someone would pay for their health insurance. The company cited three different federal laws that restricted them and their clients from using the scores in that way. But privacy experts said none of the laws cited by the company bar the practice. The company backed off the assertions when I pointed that the laws did not seem to apply.
LexisNexis officials also said the company's contracts expressly prohibit using the analysis to help price insurance plans. They would not provide a contract. But I knew that in at least one instance a company was already testing whether the scores could be used as a pricing tool.
Before the conference, I'd seen a press release announcing that the largest health actuarial firm in the world, Milliman, was now using the LexisNexis scores. I tracked down Marcos Dachary, who works in business development for Milliman. Actuaries calculate health care risks and help set the price of premiums for insurers. I asked Dachary if Milliman was using the LexisNexis scores to price health plans and he said: "There could be an opportunity."
The scores could allow an insurance company to assess the risks posed by individual patients and make adjustments to protect themselves from losses, he said. For example, he said, the company could raise premiums, or revise contracts with providers.
"No one gave anyone permission to do this."
—Erin Kaufman
It's too early to tell whether the LexisNexis scores will actually be useful for pricing, he said. But he was excited about the possibilities. "One thing about social determinants data — it piques your mind," he said.
Dachary acknowledged the scores could also be used to discriminate. Others, he said, have raised that concern. As much as there could be positive potential, he said, "there could also be negative potential."
It's that negative potential that still bothers data analyst Erin Kaufman, who left the health insurance industry in January. The 35-year-old from Atlanta had earned her doctorate in public health because she wanted to help people, but one day at Aetna, her boss told her to work with a new data set.
To her surprise, the company had obtained personal information from a data broker on millions of Americans. The data contained each person's habits and hobbies, like whether they owned a gun, and if so, what type, she said. It included whether they had magazine subscriptions, liked to ride bikes or run marathons. It had hundreds of personal details about each person.
The Aetna data team merged the data with the information it had on patients it insured. The goal was to see how people's personal interests and hobbies might relate to their health care costs. But Kaufman said it felt wrong: The information about the people who knitted or crocheted made her think of her grandmother. And the details about individuals who liked camping made her think of herself. What business did the insurance company have looking at this information? "It was a dataset that really dug into our clients' lives," she said. "No one gave anyone permission to do this."
In a statement, Aetna said it uses consumer marketing information to supplement its claims and clinical information. The combined data helps predict the risk of repeat emergency room visits or hospital admissions. The information is used to reach out to members and help them and plays no role in pricing plans or underwriting, the statement said.
Kaufman said she had concerns about the accuracy of drawing inferences about an individual's health from an analysis of a group of people with similar traits. Health scores generated from arrest records, home ownership and similar material may be wrong, she said.
Pam Dixon, executive director of the World Privacy Forum, a nonprofit that advocates for privacy in the digital age, shares Kaufman's concerns. She points to a study by the analytics company SAS, which worked in 2012 with an unnamed major health insurance company to predict a person's health care costs using 1,500 data elements, including the investments and types of cars people owned.
The SAS study said higher health care costs could be predicted by looking at things like ethnicity, watching TV and mail order purchases.
"I find that enormously offensive as a list," Dixon said. "This is not health data. This is inferred data."
Data scientist Cathy O'Neil said drawing conclusions about health risks on such data could lead to a bias against some poor people. It would be easy to infer they are prone to costly illnesses based on their backgrounds and living conditions, said O'Neil, author of the book "Weapons of Math Destruction," which looked at how algorithms can increase inequality. That could lead to poor people being charged more, making it harder for them to get the care they need, she said. Employers, she said, could even decide not to hire people with data points that could indicate high medical costs in the future.
O'Neil said the companies should also measure how the scores might discriminate against the poor, sick or minorities.
American policymakers could do more to protect people's information, experts said. In the United States, companies can harvest personal data unless a specific law bans it, although California just passed legislation that could create restrictions, said William McGeveran, a professor at the University of Minnesota Law School. Europe, in contrast, passed a strict law called the General Data Protection Regulation, which went into effect in May.
"In Europe, data protection is a constitutional right," McGeveran said.
Pasquale, the University of Maryland law professor, said health scores should be treated like credit scores. Federal law gives people the right to know their credit scores and how they're calculated. If people are going to be rated by whether they listen to sad songs on Spotify or look up information about AIDS online, they should know, Pasquale said. "The risk of improper use is extremely high. And data scores are not properly vetted and validated and available for scrutiny."
As I reported this story I wondered how the data vendors might be using my personal information to score my potential health costs. So, I filled out a request on the LexisNexis website for the company to send me some of the personal information it has on me. A week later a somewhat creepy, 182-page walk down memory lane arrived in the mail. Federal law only requires the company to provide a subset of the information it collected about me. So that's all I got.
LexisNexis had captured details about my life going back 25 years, many that I'd forgotten. It had my phone numbers going back decades and my home addresses going back to my childhood in Golden, Colorado. Each location had a field to show whether the address was "high risk." Mine were all blank. The company also collects records of any liens and criminal activity, which, thankfully, I didn't have.
My report was boring, which isn't a surprise. I've lived a middle-class life and grown up in good neighborhoods. But it made me wonder: What if I had lived in "high risk" neighborhoods? Could that ever be used by insurers to jack up my rates — or to avoid me altogether?
I wanted to see more. If LexisNexis had health risk scores on me, I wanted to see how they were calculated and, more importantly, whether they were accurate. But the company told me that if it had calculated my scores it would have done so on behalf of their client, my insurance company. So, I couldn't have them.
Senior research fellow Claire Perlman contributed to this story.
Editor's note: HealthLeaders Media secured permission from ProPublica to republish this article with a modified headline.