Stakeholders call for new federal rules that among other things would prohibit debt for medically necessary care from appearing on consumer credit reports.
This story was published on Wednesday, March 8, 2023 in Kaiser Health News.
Dozens of advocates for patients and consumers, citing widespread harm caused by medical debt, are pushing the Biden administration to take more aggressive steps to protect Americans from medical bills and debt collectors.
In letters to the IRS and the Consumer Financial Protection Bureau, the groups call for new federal rules that among other things would prohibit debt for medically necessary care from appearing on consumer credit reports.
And the groups are pressing the IRS to crack down on nonprofit hospital systems that withhold financial assistance from low-income patients or make aid cumbersome to get, another common obstacle KHN documented.
"Every day people are having to make choices about housing and clothing and food because of medical debt," said Emily Stewart, executive director of Community Catalyst, a Boston nonprofit leading the effort. "It's really urgent the Biden administration take action to put protections in place."
Among the more than 50 groups supporting the initiative are national advocates such as the National Consumer Law Center, the Arthritis Foundation, and the Leukemia & Lymphoma Society.
Nationwide, 100 million people have healthcare debt, according to a KHN-NPR investigation, which has documented a crisis that is driving Americans from their homes, draining their savings, and preventing millions from accessing care they need.
While some of the debt appears on credit reports, much of it is hidden elsewhere as credit card balances, loans from relatives, or payment plans to hospitals and other medical providers.
The scale of this problem and its toll have spurred several national and state efforts.
Last spring, the White House directed federal agencies to work on relieving medical debts for veterans and to stop considering medical debt in evaluating eligibility for some federally backed mortgages.
California, Colorado, Maryland, New York, and other states have enacted new laws to expand consumer protections and require hospitals within their borders to increase financial aid. And the three largest credit agencies — Equifax, Experian, and Transunion — said they would stop including some medical debt on credit reports as of last July.
But many consumer and patient advocates say the actions, while important, still leave millions of Americans vulnerable to financial ruin if they become ill or injured. "It is critical that the CFPB take additional action," the groups wrote to the federal agency created in 2010 to bolster oversight of consumer financial products.
The major credit rating companies, for example, agreed to exclude only debts that have been paid off and unpaid debts of less than $500. Patients with larger medical bills they can't pay may still see their credit scores drop.
The groups also are asking the CFPB to eliminate deferred interest on medical credit cards. This arrangement is common for vendors such as CareCredit, whose loans carry no interest at first but can exceed 25% if patients don't pay off the loan in time.
Collection industry officials have lobbied against broader restrictions on credit reporting, saying limits would take away an important tool that hospitals, physicians' offices, and other medical providers need to collect their money and stay in business.
"We appreciate the challenges, but a broad ban on credit reporting could have some unintended consequences," said Jack Brown III, president of Florida-based Gulf Coast Collection Bureau, citing the prospect of struggling hospitals and other providers closing, which would reduce care options.
Brown, a past president of ACA International, the collection industry's leading trade association, warned that more medical providers would also start demanding upfront payment, putting additional pressure on patients.
To further protect patients from out-of-pocket costs like these, many advocates say hospitals, particularly those that are exempt from taxes because they are supposed to serve the community, must make financial aid more accessible, a key demand in the group's letters. "For too long, nonprofit hospitals have not been behaving like nonprofits," said Liz Coyle, executive director of the nonprofit Georgia Watch.
Charity care is offered at most U.S. hospitals. And nonprofit medical systems must provide aid as a condition of being tax-exempt. But at many medical centers, information about this assistance is difficult or impossible to find.
Standards also vary widely, with aid at some hospitals limited to patients with income as low as $13,590 a year. At other hospitals, people making five or six times that much can get assistance.
The result is widespread confusion that has left countless patients who should have been eligible for aid with large bills instead. A 2019 KHN analysis of hospital tax filings found that nearly half of nonprofit medical systems were billing patients with incomes low enough to qualify for charity care.
The groups are asking the IRS to issue rules that would set common standards for charity care and a uniform application across nonprofit hospitals. (Current regulations for charity care do not apply to for-profit or public hospitals.)
The advocates also want the federal agency to strengthen limits on how much nonprofit hospitals can charge and to curtail aggressive collection tactics such as foreclosing on patients' homes or denying or deferring medical care.
More than two-thirds of hospitals sue patients or take other legal action against them, such as garnishing wages or placing liens on property, according to a recent KHN investigation. A quarter sell patients' debts to debt collectors, who in turn can pursue patients for years for unpaid bills. About 1 in 5 deny nonemergency care to people with outstanding debt.
"Charitable institutions, which have other methods of collection available to them, should not be permitted to withhold needed medical care as a means to pressure patients to pay," the groups wrote.
Less than two years after opening a state-of-the-art $26 million hospital in Leadville, Colorado, St. Vincent Health nearly ran out of money.
Hospital officials said in early December that without a cash infusion they would be unable to pay their bills or meet payroll by the end of the week.
The eight-bed rural hospital had turned a $2.2 million profit in 2021, but the windfall was largely a mirage. Pandemic relief payments masked problems in the way the hospital billed for services and collected payments.
In 2022, St. Vincent lost nearly $2.3 million. It was at risk of closing and leaving the 7,400 residents of Lake County without a hospital or immediate emergency care. A $480,000 bailout from the county and an advance of more than $1 million from the state kept the doors open and the lights on.
Since 2010, 145 rural hospitals across the U.S. have closed, according to the Cecil G. Sheps Center for Health Services Research at the University of North Carolina. But COVID-19 relief measures slowed that trend. Only 10 rural hospitals shut down in 2021 and 2022 combined, after a record 19 in 2020. Two rural hospitals have closed already this year.
Now that those COVID funds are gone, many challenges that threatened rural hospitals before the pandemic have resurfaced. Industry analysts warn that rural facilities, like St. Vincent Health, are once again on shaky ground.
Jeffrey Johnson, a partner with the consulting firm Wipfli, said he has been warning hospital boards during audits not to overestimate their financial position coming out of the pandemic.
He said the influx of cash aid gave rural hospital operators a "false sense of reality."
No rural hospitals have closed in Colorado in the past decade, but 16 are operating in the red, according to Michelle Mills, CEO of the nonprofit Colorado Rural Health Center, the State Office of Rural Health. Last year, Delta County voters saved a rural hospital owned by Delta Health by passing a sales tax ballot measure to help support the facility. And state legislators are fast-tracking a $5 million payment to stabilize Denver Health, an urban safety-net hospital.
John Gardner took over as interim CEO of St. Vincent after the previous CEO resigned last year. He said the hospital's cash crunch stemmed from decisions to spend COVID funds on equipment instead of operating costs.
St. Vincent is classified by Medicare as a critical access hospital, so the federal program reimburses it based on its costs. Medicare advanced payments to hospitals in 2020, but then recouped the money by reducing payments in 2022. St. Vincent had to repay $1.2 million at the same time the hospital faced higher spending, a growing accounts-payable obligation, and falling revenue. The hospital, Gardner said, had mismanaged its billing process, hadn't updated its prices since 2018, and failed to credential new clinicians with insurance plans.
Meanwhile, the hospital began adding services, including behavioral health, home health and hospice, and genetic testing, which came with high startup costs and additional employees.
"Some businesses the hospital was looking at getting into were beyond the normal menu of critical access hospitals," Gardner said. "I think they lost their focus. There were just some bad decisions made."
Once the hospital's upside-down finances became clear, those services were dropped, and the hospital reduced staffing from 145 employees to 98.
Additionally, St. Vincent had purchased an accounting system designed for hospitals but had trouble getting it to work.
The accounting problems meant the hospital was late completing its 2021 audit and hadn't provided its board with monthly financial updates. Gardner said the hospital believes it may have underreported its costs to Medicare, and so it is updating its reports in hopes of securing additional revenue.
The hospital also ran into difficulty with equipment it purchased to perform colonoscopies. St. Vincent is believed to be the highest-elevation hospital in the U.S., at more than 10,150 feet, and the equipment used to verify that the scopes weren't leaking did not work at that altitude.
"We're peeling the onion, trying to find out what are the things that went wrong and then fixing them, so it's hopefully a ship that's running fairly smoothly," Gardner said.
Soon Gardner will hand off operations to a management company charged with getting the hospital back on track and hiring new leadership. But officials expect it could take two to three years to get the hospital on solid ground.
Some of those challenges are unique to St. Vincent, but many are not. According to the Chartis Center for Rural Health, a consulting and research firm, the average rural hospital operates with a razor-thin 1.8% margin, leaving little room for error.
Rural hospitals operating in states that have expanded Medicaid under the Affordable Care Act, as Colorado did, average a 2.6% margin, but rural hospitals in the 12 non-expansion states have a margin of minus 0.5%.
Chartis calculated that 43% of rural hospitals are operating in the red, down slightly from 45% last year. Michael Topchik, who heads the Chartis Center for Rural Health, said the rate was only 33% 10 years ago.
A hospital should be able to sustain operations with the income from patient care, he said. Additional payments — such as provider relief funds, revenues from tax levies, or other state or federal funds — should be set aside for the capital expenditures needed to keep hospitals up to date.
"That's not what we see," Topchik said, adding that hospitals use that supplemental income to pay salaries and keep the lights on.
Several years ago, the program shifted from a cost-based approach, similar to Medicare's, to one that pays per patient visit. He said a rural hospital has to staff its ER every night with at least a doctor, a nurse, and X-ray and laboratory technicians.
"If you're paid on an encounter and you have very low volumes, you can't cover your costs," he said. "Some nights, you might get only one or two patients."
Hospitals also struggle to recruit staff to rural areas and often have to pay higher salaries than they can afford. When they can't recruit, they must pay even higher wages for temporary travel nurses or doctors. And the shift to an encounter-based system, Morasko said, also complicated coding for billing , leading to difficulties in hiring competent billing staff.
On top of that, inflation has meant hospitals pay more for goods and services, said Mills, from the state's rural health center.
"Critical access hospitals and rural health clinics were established to provide care, not to be a moneymaker in the community," she said.
Even if rural hospitals manage to stay open, their financial weakness can affect patients in other ways. Chartis found the number of rural hospitals eliminating obstetrics rose from 198 in 2019 to 217 last year, and the number no longer offering chemotherapy grew from 311 to 353.
"These were two we were able to track with large data sets, but it's across the board," Topchik said. "You don't have to close to be weak."
Back in Leadville, Gardner said financial lifelines thrown to the hospital have stabilized its financial situation for now, and he doesn't anticipate needing to ask the county or state for more money.
"It gives us the cushion that we need to fix all the other things," he said. "It's not perfect, but I see light at the end of the tunnel."
After railing at the injustices of U.S. healthcare for decades, Sen. Bernie Sanders in January became the new chairman of the Senate Health, Education, Labor & Pensions Committee. The job gives the healthcare industry's biggest Washington nemesis an unprecedented opportunity to shape healthcare reform in Congress. But the sort of radical changes he seeks could prove elusive. Even Sanders concedes there are limits to the powers of his position.
President Joe Biden's State of the Union address Tuesday night showed how much of Sanders' platform has moved into the mainstream of the Democratic Party, with Biden at times sounding like his former Democratic primary foe, lashing out at Big Pharma and its "record profits." Biden bragged about measures taken to lower drug prices and halt surprise bills during his term thus far, and he urged Congress to pass a federal expansion of Medicaid.
Still, the radical changes Sanders seeks could prove elusive. During an interview with KHN at his Senate office recently, the independent from Vermont spoke about the prospects for lowering drug prices, expanding access to primary care, and his ultimate goal of "Medicare for All."
The interview has been edited for length and clarity.
Q: What do you hope to achieve as chair of the HELP Committee — in terms of legislation, but also messaging and investigations?
What I ultimately would like to accomplish is not going to happen right now. We have Republicans controlling the House. And many of the views that I hold, including Medicare for All — I think if we had a vote tomorrow, we'd get 15 to 20 votes in the Senate and would not win in the House. I realize that. But I happen to believe our current healthcare system is dysfunctional.
We spend twice as much per capita on healthcare as other countries and 85 million people have no insurance or are underinsured. It is a dysfunctional system that to my mind needs to be fundamentally changed to a Medicare for All system — but we ain't gonna get it.
Q: What can you actually accomplish?
[From] a poll a couple of months ago just among Republicans. Top concern? High cost of prescription drugs. We're long overdue to take on, in a very bold way, the greed and outrageous behavior of the pharmaceutical industry.
Q: So many parts of the system are messed up — patents, 340B, pharmacy benefit managers, insurance issues with formularies …
Right, there are a million parts to this problem.
Q: So short of a complete overhaul, what are the parts you think you can change?
Every year the U.S. government through [the National Institutes of Health] spends tens of billions of dollars on research. The Moderna vaccine was co-developed between Moderna and NIH and received billions of dollars in assistance, guaranteed sales, and you know what's happened in the last couple of years. The CEO of Moderna is now worth $6 billion. All their top executives are worth billions. And now they are threatening to quadruple prices. This is a company that was highly supported by taxpayers of this country. And that's one example of many.
What is the responsibility of a drug company that receives very significant support — financial support, intellectual support for research and development — to the consumers of this country? Right now, it is zero. "Thank you very much for your support. I will charge you any price I choose." We have to end that.
That's the starting point.
Q: But what's the mechanism? "March-in" rights, whereby the government could force a company to share its license for a drug that was developed with federal investment, allowing others to produce it?
That is one approach. Threatened by people in George W. Bush's administration, by the way. March-in is one option.
Reasonable pricing is another area. I have made two trips to Canada: once as a congressman from Vermont, took a bunch of working-class women across the border to buy a breast cancer drug; once as a presidential candidate, took people from the Midwest, and we bought insulin. The price was one-tenth of the U.S. cost in both cases.
Another area is primary healthcare. I have worked hard with other members through the Affordable Care Act and American Rescue Plan [Act] to significantly expand community health centers. FQHCs [federally qualified health centers] provide primary care, dental care, mental health counseling, and low-cost prescription drugs. About one-third of [people in Vermont] get primary care through community health centers.
Q: I was at a meeting of FDA and patent office people, hearing from biosimilars companies, patients, etc., and a lot of what they were saying is that the U.S. Patent and Trademark Office can't do that much about patent thickets, and it'd be good if Congress did something.
That is one of the disgraceful tools that pharma utilizes to make sure we pay high prices and don't get generics. Yes, it's certainly something that we should be looking at.
Q: Other priorities?
The crisis in the healthcare workforce. We don't have enough doctors, nurses, dentists, mental health counselors, pharmacists. The nursing crisis is enormous. We have a hospital in Burlington, moderate size by national standards, largest by far in Vermont. They told me they are going to spend $125 million on traveling nurses this year. One moderate-sized hospital! Meanwhile we have young people who want to become nurses, and we can't educate them. We don't have enough nurse educators. I think we get bipartisan support for that issue.
Another thing I want to look at is dental care. Not enough dentists, too expensive, whole regions don't have them.
Q: Did you agree with President Biden's decision to end the public health emergency in May?
[Frowns] I have some concerns. [Sanders appeared to be the only member of Congress wearing a mask during Biden's speech on Tuesday.] It's going to dump a lot more people into the uninsured again.
Q: And things like vaccines would not be covered anymore.
They'd go on the market. Our friends at Pfizer and Moderna want to quadruple the prices. So if you're hesitant now about getting vaccinated, and it's free, what about when it costs you $125?
Q: As you say, drug prices are a big concern for everyone. But among Republicans there seems to be more inclination to push on pharmacy benefit managers, or PBMs, as opposed to drug companies. Is that an area where there could be legislation?
You've got the insurance companies, the PBMs, and pharma. Everyone wants to blame the other guy. And yet they're all culpable. And we're going to take a hard look at it.
Q: Is Dr. Robert Califf, the FDA commissioner, a good interlocutor for you?
A lot of work has to be done with FDA. Let's just say I think it's important that we take a hard look at what they're doing. They have some responsibility for pricing. It's part of that mission that they haven't exercised.
Q: What about the 340B issue? Accusations that hospitals are gaming the system.
Yes, it is something. One of the first things [I did] when I was mayor of Burlington from 1981-89 was take away the tax-exempt status of the hospital. Because I did not believe they were fulfilling their responsibility to serve the poor and working families. We had a lot of discussions, and the situation improved. Right now the criteria to receive tax-exempt status is extremely nebulous. That's an issue somewhere down the road I want to look at. If you're not going to pay taxes, what are you, in fact, doing?
Q: Do you have particular allies in either party?
I talked today with a conservative GOP senator who will work with me on issue X, but not issue Y. It depends on the issue. If we're going to be successful, we're going to need bipartisan support. And there is that level of support. I've talked to now four out of the 10 or 11 Republicans on the committee, and I'll talk to the rest.
Q: Do you have a policy for dealing with the lobbyists?
I don't have lobbyists flooding through my door. These lobbyists are effective, well paid, and they help shape the culture of where you're going. My culture is shaped by going out and talking to ordinary people. I've talked to too many elderly people who cut their prescription drugs in half.
I'm not worried about the lobbyists. Worry about the people who are dying because they can't afford prescription drugs.
I don't have to have some guy who makes seven figures a year telling me about problems of the drug companies. They have to explain to American people why they made $80 billion last year and people can't afford medicine.
Q: Are you going to bring in pharma executives for hearings?
NEW YORK — The fear started when a few patients saw their nurses and dietitians posting job searches on LinkedIn.
Word spread to Facebook groups, and patients started calling Coram CVS, a major U.S. supplier of the compounded IV nutrients on which they rely for survival. To their dismay, CVS Health confirmed the rumors on June 1: It was closing 36 of the 71 branches of its Coram home infusion business and laying off about 2,000 nurses, dietitians, pharmacists, and other employees.
Many of the patients left in the lurch have life-threatening digestive disorders that render them unable to eat or drink. They depend on parenteral nutrition, or PN — in which amino acids, sugars, fats, vitamins, and electrolytes are pumped, in most cases, through a specialized catheter directly into a large vein near the heart.
The day after CVS' move, another big supplier, Optum Rx, announced its own consolidation. Suddenly, thousands would be without their highly complex, shortage-plagued, essential drugs and nutrients.
"With this kind of disruption, patients can't get through on the phones. They panic," said Cynthia Reddick, a senior nutritionist who was let go in the CVS restructuring.
"It was very difficult. Many emails, many phone calls, acting as a liaison between my doctor and the company," said Elizabeth Fisher Smith, a 32-year-old public health instructor in New York City, whose Coram branch closed. A rare medical disorder has forced her to rely on PN for survival since 2017. "In the end, I got my supplies, but it added to my mental burden. And I'm someone who has worked in healthcare nearly my entire adult life."
CVS had abandoned most of its less lucrative market in home parenteral nutrition, or HPN, and "acute care" drugs like IV antibiotics. Instead, it would focus on high-dollar, specialty intravenous medications like Remicade, which is used for arthritis and other autoimmune conditions.
Home and outpatient infusions are a growing business in the United States, as new drugs for chronic illness enable patients, healthcare providers, and insurers to bypass in-person treatment. Even the wellness industry is cashing in, with spa storefronts and home hydration services.
But while reimbursement for expensive new drugs has drawn the interest of big corporations and private equity, the industry is strained by a lack of nurses and pharmacists. And the less profitable parts of the business — as well as the vulnerable patients they serve — are at serious risk.
This includes the 30,000-plus Americans who rely for survival on parenteral nutrition, which has 72 ingredients. Among those patients are premature infants and post-surgery patients with digestive problems, and people with short or damaged bowels, often the result of genetic defects.
While some specialty infusion drugs are billed through pharmacy benefit managers that typically pay suppliers in a few weeks, medical plans that cover HPN, IV antibiotics, and some other infusion drugs can take 90 days to pay, said Dan Manchise, president of Mann Medical Consultants, a home care consulting company.
In the 2010s, CVS bought Coram, and Optum bought up smaller home infusion companies, both with the hope that consolidation and scale would offer more negotiating power with insurers and manufacturers, leading to a more stable market. But the level of patient care required was too high for them to make money, industry officials said.
"With the margins seen in the industry," Manchise said, "if you've taken on expensive patients and you don't get paid, you're dead."
In September, CVS announced its purchase of Signify Health, a high-tech company that sends out home health workers to evaluate billing rates for "high-priority" Medicare Advantage patients, according to an analyst's report. In other words, as CVS shed one group of patients whose care yields low margins, it was spending $8 billion to seek more profitable ones.
CVS "pivots when necessary," spokesperson Mike DeAngelis told KHN. "We decided to focus more resources on patients who receive infusion services for specialty medications" that "continue to see sustained growth." Optum declined to discuss its move, but a spokesperson said the company was "steadfastly committed to serving the needs" of more than 2,000 HPN patients.
DeAngelis said CVS worked with its HPN patients to "seamlessly transition their care" to new companies.
However, several Coram patients interviewed about the transition indicated it was hardly smooth. Other HPN businesses were strained by the new demand for services, and frightening disruptions occurred.
Smith had to convince her new supplier that she still needed two IV pumps — one for HPN, the other for hydration. Without two, she'd rely partly on "gravity" infusion, in which the IV bag hangs from a pole that must move with the patient, making it impossible for her to keep her job.
"They just blatantly told her they weren't giving her a pump because it was more expensive, she didn't need it, and that's why Coram went out of business," Smith said.
Many patients who were hospitalized at the time of the switch — several inpatient stays a year are not unusual for HPN patients — had to remain in the hospital until they could find new suppliers. Such hospitalizations typically cost at least $3,000 a day.
"The biggest problem was getting people out of the hospital until other companies had ramped up," said Dr. David Seres, a professor of medicine at the Institute of Human Nutrition at Columbia University Medical Center. Even over a few days, he said, "there was a lot of emotional hardship and fear over losing long-term relationships."
To address HPN patients' nutritional needs, a team of physicians, nurses, and dietitians must work with their supplier, Seres said. The companies conduct weekly bloodwork and adjust the contents of the HPN bags, all under sterile conditions because these patients are at risk of blood infections, which can be grave.
As for Coram, "it's pretty obvious they had to trim down business that was not making money," Reddick said, adding that it was noteworthy both Coram and Optum Rx "pivoted the same way to focus on higher-dollar, higher-reimbursement, high-margin populations."
"I get it, from the business perspective," Smith said. "At the same time, they left a lot of patients in a not great situation."
Smith shares a postage-stamp Queens apartment with her husband, Matt; his enormous flight simulator (he's an amateur pilot); cabinets and fridges full of medical supplies; and two large, friendly dogs, Caspian and Gretl. On a recent morning, she went about her routine: detaching the bag of milky IV fluid that had pumped all night through a central line implanted in her chest, flushing the line with saline, injecting medications into another saline bag, and then hooking it through a paperback-sized pump into her central line.
Smith has a connective tissue disorder called Ehlers-Danlos syndrome, which can cause many health problems. As a child, Smith had frequent issues such as a torn Achilles tendon and shoulder dislocations. In her 20s, while working as an EMT, she developed severe gut blockages and became progressively less able to digest food. In 2017, she went on HPN and takes nothing by mouth except for an occasional sip of liquid or bite of soft food, in hopes of preventing the total atrophy of her intestines. HPN enabled her to commute to George Washington University in Washington, D.C., where in 2020 she completed a master's in public health.
On days when she teaches at LaGuardia Community College — she had 35 students this semester — Smith is up at 6 a.m. to tend to her medical care, leaves the house at 9:15 for class, comes home in the afternoon for a bag of IV hydration, then returns for a late afternoon or evening class. In the evening she gets more hydration, then hooks up the HPN bag for the night. On rare occasions she skips the HPN, "but then I regret it," she said. The next day she'll have headaches and feel dizzy, sometimes losing her train of thought in class.
Smith describes a "love-hate relationship" with HPN. She hates being dependent on it, the sour smell of the stuff when it spills, and the mountains of unrecyclable garbage from the 120 pounds of supplies couriered to her apartment weekly. She worries about blood clots and infections. She finds the smell of food disconcerting; Matt tries not to cook when she's home. Other HPN patients speak of sudden cravings for pasta or Frosted Mini-Wheats.
Yet HPN "has given me my life back," Smith said.
She is a zealous self-caretaker, but some dangers are beyond her control. IV feeding over time is associated with liver damage. The assemblage of HPN bags by compounding pharmacists is risky. If the ingredients aren't mixed in the right order, they can crystallize and kill a patient, said Seres, Smith's doctor.
He and other doctors would like to transition patients to food, but this isn't always possible. Some eventually seek drastic treatments such as bowel lengthening or even transplants of the entire digestive tract.
"When they run out of options, they could die," said Dr. Ryan Hurt, a Mayo Clinic physician and president of the American Society for Parenteral and Enteral Nutrition.
And then there are the shortages.
In 2017, Hurricane Maria crippled dozens of labs and factories making IV components in Puerto Rico; next came the COVID-19 emergency, which shifted vital supplies to gravely ill hospital patients.
Prices for vital HPN ingredients can fluctuate unpredictably as companies making them come and go. For example, in recent years the cost of the sodium acetate used as an electrolyte in a bag of HPN ballooned from $2 to $25, then briefly to $300, said Michael Rigas, a co-founder of the home infusion pharmacy KabaFusion.
"There may be 50 different companies involved in producing everything in an HPN bag," Rigas said. "They're all doing their own thing — expanding, contracting, looking for ways to make money." This leaves patients struggling to deal with various shortages from saline and IV bags to special tubing and vitamins.
"In the last five years I've seen more things out of stock or on shortage than the previous 35 years combined," said Rigas.
The sudden retrenchment of CVS and Optum Rx made things worse. Another, infuriating source of worry: the steady rise of IV spas and concierge services, staffed by moonlighting or burned-out hospital nurses, offering IV vitamins and hydration to well-off people who enjoy the rush of infusions to relieve symptoms of a cold, morning sickness, a hangover, or just a case of the blahs.
In January, infusion professionals urged FDA Commissioner Robert Califf to examine spa and concierge services' use of IV products as an "emerging contributing factor" to shortages.
Bracha Banayan's concierge service, called IVDRIPS, started in 2017 in New York City and now employs 90 people, including 60 registered nurses, in four states, she said. They visit about 5,000 patrons each year, providing IV hydration and vitamins in sessions of an hour or two for up to $600 a visit. The goal is "to hydrate and be healthy" with a "boost that makes us feel better," Banayan said.
Although experts don't recommend IV hydration outside of medical settings, the market has exploded, Banayan said: "Every med spa is like, ‘We want to bring in IV services.' Every single paramedic I know is opening an IV center."
Matt Smith, Elizabeth's husband, isn't surprised. Educated as a lawyer, he is a paramedic who trains others at Columbia University Irving Medical Center. "You give someone a choice of go up to some rich person's apartment and start an IV on them, or carry a 500-pound person living in squalor down from their apartment," he said. "There's one that's going to be very hard on your body and one very easy on your body."
The very existence of IV spa companies can feel like an insult.
"These people are using resources that are literally a matter of life or death to us," Elizabeth Smith said.
For five months last year, Rylee Cornwell, 18 and living in Spokane, Washington, could rarely procure lipids for her HPN treatment. She grew dizzy or fainted when she tried to stand, so she mostly slept. Eventually she moved to Phoenix, where the Mayo Clinic has many Ehlers-Danlos patients and supplies are easier to access.
Mike Sherels was a University of Minnesota Gophers football coach when an allergic reaction caused him to lose most of his intestines. At times he's had to rely on an ethanol solution that damages the ports on his central line, a potentially deadly problem "since you can only have so many central access sites put into your body during your life," he said.
When Faith Johnson, a 22-year-old Las Vegas student, was unable to get IV multivitamins, she tried crushing vitamin pills and swallowing the powder, but couldn't keep the substance down and became malnourished. She has been hospitalized five times this past year.
Dread stalks Matt Smith, who daily fears that Elizabeth will call to say she has a headache, which could mean a minor allergic or viral issue — or a bloodstream infection that will land her in the hospital.
Even more worrying, he said: "What happens if all these companies stop doing it? What is the alternative? I don't know what the economics of HPN are. All I know is the stuff either comes or it doesn't."
After more than five decades of trying, the drug industry is on the verge of providing effective immunizations against the respiratory syncytial virus, which has put an estimated 90,000 U.S. infants and small children in the hospital since the start of October.
But only one of the shots is designed to be given to babies, and a glitch in congressional language may make it difficult to allow children from low-income families to get it as readily as the well-insured.
Since 1994, routine vaccination has been a childhood entitlement under the Vaccines for Children program, through which the federal government buys millions of vaccines and provides them free through pediatricians and clinics to children who are uninsured, underinsured, or on Medicaid — more than half of all American kids.
The 1993 law creating the program didn't specifically include antibody shots, which were used only as rare emergency therapy at the time the bill was written.
But the first medication of its kind likely to be available to babies, called nirsevimab (it was approved in Europe in December, and FDA approval is expected this summer), is not a vaccine but rather a monoclonal antibody that neutralizes RSV in the bloodstream.
The Centers for Disease Control and Prevention's Advisory Committee on Immunization Practices is certain to recommend giving the antibody to infants, said Dr. Kelly Moore, president of the advocacy group Immunize.org. The CDC is currently assessing whether nirsevimab would be eligible for the Vaccines for Children program, agency spokesperson Kristen Nordlund told KHN.
Failing to do so would "consign thousands upon thousands of infants to hospitalization and serious illness for semantic reasons despite existence of an immunization that functionally performs just like a seasonal vaccine," Moore said.
Officials from Sanofi, which is producing the nirsevimab injection along with AstraZeneca, declined to state a price but said the range would be similar to that of a pediatric vaccine course. The CDC pays about $650 for the most expensive routine vaccine, the four shots against pneumococcal infection. In other words, FDA approval would make nirsevimab a blockbuster drug worth billions annually if it's given to a large share of the 3.7 million or so children born in the U.S. each year.
Pfizer and GSK are making traditional vaccines against RSV and expect FDA approval later this year. Pfizer's shot initially would be given to pregnant women — to shield their babies from the disease — while GSK's would be given to the elderly.
Vaccines designed for infants are in the pipeline, but some experts are still nervous about them. A 1966 RSV vaccine trial failed spectacularly, killing two toddlers, and immunologists aren't totally in agreement over the cause, said Dr. Barney Graham, the retired National Institutes of Health scientist whose studies of the episode contributed to successful COVID-19 and RSV vaccines.
After two years of COVID lockdowns and masking slowed its transmission, RSV exploded across the United States this year, swamping pediatric intensive care units.
Sanofi and AstraZeneca hope to have nirsevimab approved by the FDA, recommended by the CDC, and deployed nationwide by fall to prevent future RSV epidemics.
Their product is designed to be provided before a baby's first winter RSV season. In clinical trials, the antibodies provided up to five months of protection. Most children wouldn't need a second dose because the virus is not a mortal danger to healthy kids over a year old, said Jon Heinrichs, a senior member of Sanofi's vaccines division.
If the antibody treatment is not accepted for the Vaccines for Children program, that will limit access to the shot for the uninsured and those on Medicaid, the majority of whom represent racial or ethnic minorities, Moore said. The drugmakers would have to negotiate with each state's Medicaid program to get it on their formularies.
Excluding the shot from Vaccines for Children "would only worsen existing health disparities," said Dr. Sean O'Leary, a professor of pediatrics at the University of Colorado and chair of the infectious diseases committee of the American Academy of Pediatrics.
RSV affects babies of all social classes but tends to hit poor, crowded households hardest, said Graham. "Family history of asthma or allergy makes it worse," he said, and premature babies are also at higher risk.
While 2% to 3% of U.S. infants are hospitalized with RSV each year, only a few hundred don't survive. But as many as 10,000 people 65 and older perish because of an infection every year, and a little-discussed legal change will make RSV and other vaccines more available to this group.
A section of the 2022 Inflation Reduction Act that went into effect Jan. 1 ends out-of-pocket payments for all vaccines by Medicare patients — including RSV vaccines, if they are licensed for this group.
Before, "if you hadn't met your deductible, it could be very expensive," said Dr. Leonard Friedland, vice president for scientific affairs and public health in GSK's vaccines division, which also makes shingles and combination tetanus-diphtheria-whooping cough boosters covered by the new law. "It's a tremendously important advance."
Of course, high levels of vaccine hesitancy are likely to blunt uptake of the shots regardless of who pays, said Jennifer Reich, a University of Colorado sociologist who studies vaccination attitudes.
New types of shots, like the Sanofi-AstraZeneca antibodies, often alarm parents, and Pfizer's shot for pregnant women is likely to push fear buttons as well, she said.
Public health officials "don't seem very savvy about how to get ahead" of claims that vaccines undermine fertility or otherwise harm people, said Reich.
On the other hand, this winter's RSV epidemic will be persuasive to many parents, said Heidi Larson, leader of the Vaccine Confidence Project and a professor of anthropology at the London School of Hygiene and Tropical Medicine.
"It's a scary thing to have your kid hospitalized with RSV," she said.
While unfortunate, "the high number of children who died or were admitted to the ICU in the past season with RSV — in some ways that's helpful," said Dr. Laura Riley, chair of obstetrics and gynecology at Weill Cornell Medicine in New York City.
Specialists in her field haven't really started talking about how to communicate with women about the vaccine, said Riley, who chairs the immunization group at the American College of Obstetricians and Gynecologists.
"Everyone's been waiting to see if it gets approved," she said. "The education has to start soon, but it's hard to roll out education before you roll out the shot."
States face steep challenges: making sure they don't disenroll people who are still entitled to Medicaid and connecting the rest to other sources of coverage.
The upheaval, which begins in April, will put millions of low-income Americans at risk of losing health coverage, threatening their access to care and potentially exposing them to large medical bills.
It will also put pressure on the finances of hospitals, doctors, and others relying on payments from Medicaid, a state-federal program that covers lower-income people and people with disabilities.
Almost three years ago, as COVID sent the economy into free fall, the federal government agreed to send billions of dollars in extra Medicaid funding to states on the condition that they stop dropping people from their rolls.
But legislation enacted in December will be phasing out that money over the next year and calls for states to resume cutting off from Medicaid people who no longer qualify.
Now, states face steep challenges: making sure they don't disenroll people who are still entitled to Medicaid and connecting the rest to other sources of coverage.
Even before the pandemic, states struggled to stay in contact with Medicaid recipients, who in some cases lack a stable address or internet service, do not speak English, or don't prioritize health insurance over more pressing needs.
"We have no illusion that this will be beautiful or graceful, but we will be doing everything we can not to lose anyone in the process," Dana Hittle, Oregon's interim Medicaid director, said of the so-called Medicaid unwinding.
With the rate of uninsured Americans at an all-time low, 8%, the course reversal will be painful.
The Biden administration has predicted that 15 million people — 17% of enrollees — will lose coverage through Medicaid or CHIP, the closely related Children's Health Insurance Program, as the programs return to normal operations. While many of the 15 million will fall off because they no longer qualify, nearly half will be dropped for procedural reasons, such as failing to respond to requests for updated personal information, a federal report said.
Certain states may be hit particularly hard: Nevada's enrollment in Medicaid and CHIP has risen 47% since February 2020. Many signed up toward the start of the pandemic, when the state's unemployment rate spiked to nearly 30%.
Ordinarily, people move in and out of Medicaid all the time. States, which have significant flexibility in how they run their Medicaid programs, typically experience significant "churn" as people's incomes change and they gain or lose eligibility.
The unwinding will play out over more than a year.
People who lose Medicaid coverage — in the more than 30 states covered by the federal marketplace — will have until July 31, 2024, to sign up for ACA coverage, CMS announced on Jan. 27. It's unclear whether the state-based marketplaces will offer the same extended open-enrollment period.
Even states that are taking far-reaching action to make sure people don't end up uninsured worry the transition will be rough.
In California alone, the state government forecasts that at least 2 million people out of 15 million in the program today will lose Medicaid coverage because of loss of eligibility or failure to reenroll.
"We acknowledge that this is going to be a bumpy road," California Health and Human Services Secretary Mark Ghaly said. "We're doing all we can to be prepared."
In an all-hands-on-deck effort, states are enlisting Medicaid health plans, doctors, hospitals, state insurance marketplaces, and an assortment of nonprofit groups, including schools and churches, to reach out to people at risk of losing coverage.
States will also use social media, television, radio, and billboards, as well as websites and mobile phone apps, to connect with enrollees. That's in addition to letters and emails.
Nevada has developed a mobile app to communicate with members, but only 15,000 of its 900,000 Medicaid enrollees have signed up so far.
"[T]he transient nature of Nevada's population means that maintaining proper contact information has been difficult," a state report said in November. At least 1 in 4 letters sent to enrollees were returned on account of a wrong address.
The law that allows states to begin disenrolling ineligible Medicaid recipients on April 1 bars states from disenrolling anyone because mail was returned as undeliverable until the state has made a "good faith effort" to contact the person at least one other way, such as by phone or email.
To further reduce disruption, the law requires states to cover children in Medicaid and CHIP for 12 months regardless of changes in circumstances, but that provision doesn't take effect for almost a year.
States will give Medicaid recipients at least 60 days to respond to requests for information before dropping them, said Jack Rollins, director of federal policy at the National Association of Medicaid Directors.
States will use government databases such as those from the IRS and Social Security Administration to check enrollees' income eligibility so they can renew some people's coverage automatically without having to contact them. But some states aren't taking full advantage of the databases.
States have until February to submit their unwinding plans to the federal Centers for Medicare & Medicaid Services, which will monitor the process.
But it is already clear that some states are doing much more than others to keep people insured.
Oregon plans to allow children to stay on Medicaid until age 6 and allow everyone else up to two years of eligibility regardless of changes in income and without having to reapply. No other state provides more than one year of guaranteed eligibility.
Oregon is also creating a subsidized health plan that would cover anyone who no longer qualifies for Medicaid but has an annual income below 200% of the federal poverty level, which amounts to about $29,000 for an individual, state officials said. The program will have benefits similar to Medicaid's at little or no cost to enrollees.
Rhode Island will automatically move people who are no longer eligible for Medicaid — and with annual incomes below 200% of the poverty rate — into an Affordable Care Act plan and pay their first two months of premiums. State officials hope the shift will be seamless for many enrollees because they'll be moving between health plans run by the same company.
California will move some people to a subsidized private plan on the state's marketplace, Covered California. Enrollees will have to agree and pay a premium if they don't qualify for a free plan. However, the premium could be as low as $10 a month, said Jessica Altman, executive director of Covered California. (Altman's father, Drew Altman, is president and CEO of KFF. KHN is an editorially independent program of KFF.)
"We want to make it easier to say yes to coverage," Altman said.
But experts worry about what will become of Florida Medicaid enrollees.
Florida doesn't have its own ACA marketplace. As in most states, its residents use the federal exchange to shop for ACA plans. As a result, the handoff of people from Medicaid to marketplace may not be as efficient as it would be if it involved two state agencies that regularly work together, said Jodi Ray, director of Florida Covering Kids and Families, a nonprofit that helps people find coverage.
Another concern for advocates is that Florida makes less use of government databases than other states to check enrollees' incomes. "We make everyone jump through hoops to get reenrolled instead of utilizing all the acceptable data," Ray said.
Florida typically takes weeks to process Medicaid applications, while some states do it in a day, she said.
Florida's unwinding plan illustrates the difficulty of reaching enrollees. The plan said that, since 2020, the state has identified 850,000 cases in which Medicaid recipients did not respond to requests for information.
Florida Medicaid officials did not return calls for comment.
While state officials struggle to manage the unwinding, healthcare providers are bracing for the fallout.
Dennis Sulser, chief executive of Billings, Montana-based Youth Dynamics, which provides mental health services to many children on Medicaid, expects some will lose coverage because they get lost in the process.
That could leave patients unable to pay and the nonprofit financially stretching to try to avoid children facing an interruption in treatment.
"If we had to discharge a child who is in our group home care, and they're only halfway through it and don't have all of the fundamentals of the care support needed, that could be tragic," Sulser said.
KHN correspondents Daniel Chang in Hollywood, Florida; Angela Hart in Sacramento, California; Katheryn Houghton in Missoula, Montana; Bram Sable-Smith in St. Louis; and Sam Whitehead in Atlanta contributed to this report.
Some nursing home owners moved money from their facilities through corporate arrangements that are widespread, and legal, in every state.
This article was published on Wednesday, February 1, 2023 in Kaiser Health News.
By Jordan Rau
After the nursing home where Leann Sample worked was bought by private investors, it started falling apart. Literally.
Part of a ceiling collapsed on a nurse, the air conditioning conked out regularly, and a toilet once burst on Sample while she was helping a resident in the bathroom, she recalled in a court deposition.
"It's a disgusting place," Sample, a nurse aide, testified in 2021.
The decrepit conditions Sample described weren't due to a lack of money. Over seven years, The Villages of Orleans Health & Rehabilitation Center, located in western New York near Lake Ontario, paid nearly $16 million in rent to its landlord — a company that was owned by the same investors who owned the nursing home, court records show. From those coffers, the owners paid themselves and family members nearly $10 million, while residents injured themselves falling, developed bedsores, missed medications, and stewed in their urine and feces because of a shortage of aides, New York authorities allege.
At the height of the pandemic, lavish payments flowed into real estate, management, and staffing companies financially linked to nursing home owners throughout New York, which requires facilities to file the nation's most detailed financial reports. Nearly half the state's 600-plus nursing homes hired companies run or controlled by their owners, frequently paying them well above the cost of services, a KHN analysis found, while the federal government was giving the facilities hundreds of millions in fiscal relief.
In 2020, these affiliated corporations collectively amassed profits of $269 million, yielding average margins of 27%, while the nursing homes that hired them were strained by staff shortages, harrowing injuries, and mounting COVID deaths, state records reveal.
"Even during the worst year of New York's pandemic, when homes were desperately short of staffing and their residents were dying by the thousands, some owners managed to come out millions of dollars ahead," said Bill Hammond, a senior fellow at the Empire Center for Public Policy, a think tank in Albany, New York.
Some nursing home owners moved money from their facilities through corporate arrangements that are widespread, and legal, in every state. Nationally, nearly 9,000 for-profit nursing homes — the majority — outsource crucial services such as nursing staff, management, and medical supplies to affiliated corporations, known as "related parties," that their owners own, invest in, or control, federal records show. Many homes don't even own their buildings but rent them from a related company. Homes pay related parties more than $12 billion a year, but federal regulators do not make them reveal how much they charge above the cost of services, and how much money ends up in owners' bank accounts.
In some instances, draining nursing home coffers through related parties may amount to fraud: Along with The Villages' investors, a handful of other New York owners are facing lawsuits from Attorney General Letitia James that claim they pocketed millions from their enterprises that the authorities say should have been used for patient care.
Deciphering these financial practices is timely because the Centers for Medicare & Medicaid Services is weighing what kind of stringent staffing levels it may mandate, potentially the biggest change to the industry in decades. A proposal due this spring is sure to spark debate about what homes can additionally afford to spend versus what changes would require greater government support. Federal Medicaid experts warned in January that related-party transactions "may artificially inflate" the true cost of nursing home care in reports that facilities file to the government. And the U.S. Department of Health and Human Services' inspector general is investigating whether homes properly report related-party costs.
'A Dog Would Get Better Care'
Beth Martino, a spokesperson for the American healthcare Association, said there is no evidence that related companies charge more than independent contractors do for the same services. "The real story is that nursing homes are struggling right now — to recruit and retain caregivers and to keep their doors open," Martino said.
Lawyers for The Villages and its investors have asked the judge in the case for a delay until April to respond to the allegations of fraud and resident neglect in the lawsuit that the attorney general filed last November. One of the lawyers, Cornelius Murray, said in court papers that many allegations of short-staffing occurred during the pandemic when workers were out sick and the facility was required to accept any patient with COVID-19. Lawyers declined to discuss the case with KHN.
In a deposition for that case, Ephram "Mordy" Lahasky, one of Fulton's owners, disputed that he and fellow investors improperly depleted The Villages' resources to the detriment of residents.
"I can assure you there was a lot of money left in the facility to make sure that it was not running on a shoestring budget," he testified. The Villages, Lahasky said, was a "beautiful facility" with "beautiful gardens" where "residents look great" and employee morale was strong.
That wasn't the opinion of Margarette Volkmar. She said in an affidavit filed with the state lawsuit that her husband was left in his bed with only a diaper on, was bruised by a fall, choked by another resident, given the wrong medication doses, dressed in other residents' clothes, and covered in unexplainable bruises. After she moved him to another home, he gained back the 60 pounds he had lost and never fell at the new facility, she testified.
"I wouldn't put a dog in Villages," she said. "A dog would get better care than he did."
Owners Invested in Hundreds of Homes
Both The Villages and its related real estate corporation, Telegraph Realty, were controlled by the same trio of investors, although they arranged for the nursing home to be listed in regulatory filings as solely owned by a silent partner and did not disclose their co-ownership of The Villages, court records show. One co-owner, David Gast, disclosed his net worth was $22 million and revealed that he had shares in more than 100 nursing homes, according to a loan application included in court records. Lahasky, whose disclosed net worth was nearly $73 million, said in a deposition he was the biggest nursing home proprietor in Pennsylvania and owned one of New York's largest ambulance companies.
A third co-owner, Sam Halper, who reported a net worth of about $23 million, is under federal criminal indictment in Pennsylvania on charges of submitting false reports to the government about staffing and patient health at two nursing homes. He has pleaded not guilty. Added together, all the investors in corporations tied to The Villages have stakes or official roles in 275 other facilities across 28 states, federal records show.
The lease that The Villages had with Telegraph Realty required the home to pay up to $1 million in profits on top of the costs of debts and $50,000 a month for rent, according to a copy filed with the lawsuit. The attorney general alleged that, over seven years, the owners gave themselves and other investors more than $18 million from outsized rent profits, management fees, and proceeds from refinancing the property, an act that saddled The Villages with higher debt.
Lindsay Heckler, a supervising attorney at Center for Elder Law & Justice in Buffalo, which provides free legal help to older, disabled, and low-income adults, said she is concerned other nursing home owners in the state fail to provide quality care after purchasing facilities.
"When you see quality of care decline after an ownership change, the question needs to be asked: What's going on with the finances?" she said.
Inflated Rents and a Plea to Die
Separating a nursing home operation and its building into two corporations is a common practice around the country. In New York, for-profit nursing homes with related-party realty companies spent 19% more of their operating revenue toward rent in 2020 than did for-profits that leased from unaffiliated firms, KHN found.
Fulton Commons Care Center, a nursing home on Long Island, spent nearly a third of its 2020 revenue on rent, a higher portion than all but three other facilities in New York, financial records show. In a lawsuit filed in December, the attorney general charged that the rent paid to Fulton Commons Realty, the company that owned its East Meadow, New York, building, was grossly inflated. Both the home and real estate company were owned by Moshe Kalter and his extended family, according to documents filed with the lawsuit.
In 2020, the nursing home paid nearly $10 million in rent to Fulton Realty, but an auditor for the attorney general calculated the property expenses that year were less than $6 million. The owners of Fulton and their families gave themselves nearly $16 million over four years from inflated rent, substantial management fees, and "no-show" jobs for Kalter's eight children, the attorney general alleged.
"Rather than honor their legal duty to ensure the highest possible quality of life for the residents in their care, the Fulton Commons owners allegedly maintained insufficient staffing so they could take more money for their own personal gain," James said in a statement.
Raul Tabora Jr. and David Yaffe, lawyers for Kalter, called the lawsuit's charges "one-sided" in a written statement to KHN. They said that the payments to the children were not for jobs but because they were shareholders, and that Fulton kept an average balance of $3 million on hand to cover any pressing needs. "The evidence will demonstrate that any time resources are needed, they are provided by Mr. Kalter," the lawyers wrote.
Residents' families told investigators that staff shortages existed well before the pandemic. In an affidavit filed with the lawsuit, Frank Hoerauf Jr. said workers left his father sitting in adult diapers without pants and let his hair grow so long it covered his eyes. Another time, they left him screaming in pain from a urinary tract infection, he said.
"Fulton Commons seems like it was operated to be a cash machine for the owners where the care and the quality of life for residents there was very poor," Hoerauf said.
Another resident, Elena Milack, who had lost one foot to diabetes, complained about poor care for years, including having to ring the call bell for an hour to get help to get to the bathroom, according to an affidavit filed by her daughter-in-law and health proxy. "GET ME OUT OF HERE OR TELL ME WHAT I CAN TAKE TO KILL MYSELF," she texted her son in summer 2019. In 2020, she contracted an infection that turned her remaining foot black.
"Toes are all infected now," Milack, a retired law school secretary, texted. "[M]y upper foot is dying and will soon fall off. I am hoping the good Lord will take me before that happens." She died in November 2020.
Kalter said in a deposition he had never stepped inside his nursing home and did not supervise the quality of the care. He testified he granted full authority over the facility to its administrator and relied on his nephew, who was the controller of the home, to interact with the home's leadership, according to court records.
In his deposition, Kalter said: "I have no personal knowledge of anything that's going on in the nursing home."
According to an affidavit from an auditor for the attorney general's office, over the course of four years, Kalter deposited nearly $12 million from Fulton into his joint bank account with his wife, Frady.
KHN data editor Holly K. Hacker contributed to this report.
Payers have long feared CMS would demand repayment of billions of dollars in overcharges.
This article was published on Monday, January 30, 2023 in Kaiser Health News.
By Fred Schulte
Medicare Advantage plans for seniors dodged a major financial bullet Monday as government officials gave them a reprieve for returning hundreds of millions of dollars or more in government overpayments — some dating back a decade or more.
The health insurance industry had long feared the Centers for Medicare & Medicaid Services would demand repayment of billions of dollars in overcharges the popular health plans received as far back as 2011.
But in a surprise action, CMS announced it would require next to nothing from insurers for any excess payments they received from 2011 through 2017. CMS will not impose major penalties until audits for payment years 2018 and beyond are conducted, which have yet to be started.
While the decision could cost Medicare plans billions of dollars in the future, it will take years before any penalty comes due. And health plans will be allowed to pocket hundreds of millions of dollars in overcharges and possibly much more for audits before 2018. Exactly how much is not clear because audits as far back as 2011 have yet to be completed.
In late 2018, CMS officials said the agency would collect an estimated $650 million in overpayments from 90 Medicare Advantage audits conducted for 2011 through 2013, the most recent ones available. Some analysts calculated overpayments to plans of at least twice that much for the three-year period. CMS is now conducting audits for 2014 and 2015.
The estimate for the 2011-13 audits was based on an extrapolation of overpayments found in a sampling of patients at each health plan. In these reviews, auditors examine medical records to confirm whether patients had the diseases for which the government reimbursed health plans to treat.
Through the years, those audits — and others conducted by government watchdogs — have found that health plans often cannot document that they deserved extra payments for patients they said were sicker than average.
The decision to take earlier audit findings off the table means that CMS has spent tens of millions of dollars conducting audits as far back as 2011 — much more than the government will be able to recoup.
In 2018, CMS said it pays $54 million annually to conduct 30 of the audits. Without extrapolation for years 2011-17, CMS won't come near to recouping that much.
CMS Deputy Administrator Dara Corrigan called the final rule a "commonsense approach to oversight." Corrigan said she did not know how much money would go uncollected from years prior to 2018.
Health and Human Services Secretary Xavier Becerra said the rule takes "long overdue steps to move in the direction of accountability."
"Going forward, this is good news. We should all be happy that they are doing that [extrapolation]," said former CMS official Ted Doolittle. But he added: "I do wish they were pushing back further [and extrapolating earlier years]. That would seem to be fair game," he said.
David Lipschutz, an attorney with the Center for Medicare Advocacy, said he was still evaluating the rule, but noted: "It is our hope that CMS would use everything within their discretion to recoup overpayments made to Medicare Advantage plans." He said that "it is unclear if they are using all of their authority."
Mark Miller, who is the executive vice president of healthcare policy for Arnold Ventures and formerly worked at the Medicare Payment Advisory Commission, a congressional advisory board, said extrapolating errors found in medical coding have always been a part of government auditing. "It strikes me as ridiculous to run a sample and find an error rate and then only collect the sample error rate as opposed to what it presents to the entire population or pool of claims," he said. (KHN receives funding support from Arnold Ventures.)
Last week, KHN released details of the 90 audits from 2011-2013, which were obtained through a Freedom of Information Act lawsuit. The audits found about $12 million in net overpayments for the care of 18,090 patients sampled for the three-year period.
In all, 71 of the 90 audits uncovered net overpayments, which topped $1,000 per patient on average in 23 audits. CMS paid the remaining plans too little on average, anywhere from $8 to $773 per patient, the records showed.
Since 2010, the federal Centers for Medicare & Medicaid services has threatened to crack down on billing abuses in the popular health plans, which now cover more than 30 million Americans. Medicare Advantage, a fast-growing alternative to original Medicare, is run primarily by major insurance companies including Humana, UnitedHealthcare, Centene, and CVS/Aetna.
But the industry has succeeded in opposing extrapolation of overpayments, even though the audit tool is widely used to recover overcharges in other parts of the Medicare program.
That has happened despite dozens of audits, investigations, and whistleblower lawsuits alleging that Medicare Advantage overcharges cost taxpayers billions of dollars a year.
Corrigan said Monday that CMS expected to collect $479 million from overpayments in 2018, the first year of extrapolation. Over the next decade, it could recoup $4.7 billion, she said.
Medicare Advantage plans also face potentially hundreds of millions of dollars in clawbacks from a set of unrelated audits conducted by the Health and Human Services inspector general.
The audits include an April 2021 review alleging that a Humana Medicare Advantage plan in Florida had overcharged the government by nearly $200 million in 2015.
Carolyn Kapustij, the Office of the Inspector General's senior adviser for managed care, said the agency has conducted 17 such audits that found widespread payment errors — on average 69% for some medical diagnoses. In these cases, the health plans "did not have the necessary support [for these conditions] in the medical records, which has caused overpayments."
"Although the MA organizations usually disagreed with us, they almost always had little disagreement with our finding that their diagnoses were not supported," she said.
While CMS has taken years to conduct the Medicare Advantage audits, it also has faced criticism for permitting lengthy appeals that can drag on for years. These delays have drawn sharp criticism from the Government Accountability Office, the watchdog arm of Congress.
Leslie Gordon, an acting director of the GAO health team, said that until CMS speeds up the process, it "will fail to recover improper payments of hundreds of millions of dollars annually."
KHN senior correspondent Phil Galewitz contributed to this report.
The $1.7 trillion spending package Congress passed in December included a two-year extension for telehealth, but also signaled reluctance to make the changes permanent.
This article was published on Tuesday, January 31, 2023 in Kaiser Health News.
When the COVID-19 pandemic hit, Dr. Corey Siegel was more prepared than most of his peers.
Half of Siegel's patients — many with private insurance and Medicaid — were already using telehealth, logging onto appointments through phones or computers. "You get to meet their family members; you get to meet their pets," Siegel said. "You see more into their lives than you do when they come to you."
Siegel's Medicare patients weren't covered for telehealth visits until the pandemic drove Congress and regulators to temporarily pay for remote medical treatment just as they would in-person care.
Siegel, section chief for gastroenterology and hepatology at Dartmouth-Hitchcock Medical Center, is licensed in three states and many of his Medicare patients were frequently driving two to three hours round trip for appointments, "which isn't a small feat," he said.
The $1.7 trillion spending package Congress passed in December included a two-year extension of key telehealth provisions, such as coverage for Medicare beneficiaries to have phone or video medical appointments at home. But it also signaled political reluctance to make the payment changes permanent, requiring federal regulators to study how Medicare enrollees use telehealth.
The federal extension "basically just kicked the can down the road for two years," said Julia Harris, associate director for the health program at the D.C.-based Bipartisan Policy Center think tank. At issue are questions about the value and cost of telehealth, who will benefit from its use, and whether audio and video appointments should continue to be reimbursed at the same rate as face-to-face care.
Before the pandemic, Medicare paid for only narrow uses of remote medicine, such as emergency stroke care provided at hospitals. Medicare also covered telehealth for patients in rural areas but not in their homes — patients were required to travel to a designated site such as a hospital or doctor's office.
But the pandemic brought a "seismic change in perception" and telehealth "became a household term," said Kyle Zebley, senior vice president of public policy at the American Telemedicine Association.
The omnibus bill's provisions include: paying for audio-only and home care; allowing for a variety of doctors and others, such as occupational therapists, to use telehealth; delaying in-person requirements for mental health patients; and continuing existing telehealth services for federally qualified health clinics and rural health clinics.
Telehealth use among Medicare beneficiaries grew from less than 1% before the pandemic to more than 32% in April 2020. By July 2021, the use of remote appointments retreated somewhat, settling at 13% to 17% of claims submitted, according to a fee-for-service claims analysis by McKinsey & Co.
Fears over potential fraud and the cost of expanding telehealth have made politicians hesitant, said Josh LaRosa, vice president at the Wynne Health Group, which focuses on payment and care delivery reform. The report required in the omnibus package "is really going to help to provide more clarity," LaRosa said.
In a 2021 report, the Government Accountability Office warned that using telehealth could increase spending in Medicare and Medicaid, and historically the Congressional Budget Office has said telehealth could make it easier for people to use more healthcare, which would lead to more spending.
Advocates like Zebley counter that remote care doesn't necessarily cost more. "If the priority is preventative care and expanding access, that should be taken into account when considering costs," Zebley said, explaining that increased use of preventative care could drive down more expensive spending.
Siegel and his colleagues at Dartmouth see remote care as a tool for helping chronically ill patients receive ongoing care and preventing expensive emergency episodes. It "allows patients to not be burdened by their illnesses," he said. "It's critical that we keep this going."
Some of Seigel's work is funded by The Leona M. and Harry B. Helmsley Charitable Trust. (The Helmsley Charitable Trust also contributes to KHN.)
For the past nine months, Dartmouth Health's telehealth visits plateaued at more than 500 per day. That's 10% to 15% of all outpatient visits, said Katelyn Darling, director of operations for Dartmouth's virtual care center.
"Patients like it and they want to continue doing it," Darling said, adding that doctors — especially psychologists — like telehealth too. If Congress decides not to continue funding for remote at-home visits after 2024, Darling said, she fears patients will have to drive again for appointments that could have been handled remotely.
The same fears are worrying leaders at Sanford Health, which provides services across the Upper Midwest.
"We absolutely need those provisions to become permanent," said Brad Schipper, president of virtual care at Sanford, which has health plan members, hospitals, clinics, and other facilities in the Dakotas, Iowa, and Minnesota. In addition to the provisions, Sanford is closely watching whether physicians will continue to get paid for providing care across state lines.
During the pandemic, licensing requirements in states were often relaxed to enable doctors to practice in other states and many of those requirements are set to expire at the end of the public health emergency.
Licensing requirements were not addressed in the omnibus, and to ensure telehealth access, states need to allow physicians to treat patients across state lines, said Dr. Jeremy Cauwels, Sanford Health's chief physician. This has been particularly important in providing mental healthcare, he said; virtual visits now account for about 20% of Sanford's appointments.
Sanford is based in Sioux Falls, South Dakota, and Cauwels recalled one case in which a patient lived four hours from the closest child-adolescent psychiatrist and was "on the wrong side of the border." Because of the current licensing waivers, Cauwels said, the patient's wait for an appointment was cut from several weeks to six days.
"We were able to get that kid seen without Mom taking a day off to drive back and forth, without a six-week delay, and we were able to do all the things virtually for that family," Cauwels said.
Psychiatrist Dr. Sara Gibson has used telehealth for decades in rural Apache County, Arizona. "There are some people who have no access to care without telehealth," she said. "That has to be added into the equation."
Gibson, who is also medical director for Little Colorado Behavioral Health Centers in Arizona, said one key question for policymakers as they look ahead is not whether telehealth is better than face-to-face. It's "telehealth vs. no care," she said.
This story was produced by KHN (Kaiser Health News), a national newsroom that produces in-depth journalism about health issues. Together with Policy Analysis and Polling, KHN is one of the three major operating programs at KFF (Kaiser Family Foundation). KFF is an endowed nonprofit organization providing information on health issues to the nation.
Panel disagrees with FDA proposal that everyone get at least one shot a year, saying more information is needed.
This article was published on Friday, January 27, 2023 in Kaiser Health News.
By Arthur Allen, Kaiser Health News
At a meeting to simplify the nation's COVID vaccination policy, the FDA's panel of experts could agree on only one thing: Information is woefully lacking about how often different groups of Americans need to be vaccinated. That data gap has contributed to widespread skepticism, undervaccination, and ultimately unnecessary deaths from COVID-19.
The committee voted unanimously Thursday to support the FDA's proposal for all vaccine-makers to adopt the same strain of the virus when making changes in their vaccines, and suggested they might meet in May or June to select a strain for the vaccines that would be rolled out this fall.
However, the panel members disagreed with the FDA's proposal that everyone get at least one shot a year, saying more information was needed to make such a declaration. Several panelists noted that in recent studies, only about a third of people hospitalized with a positive COVID test actually were there because of COVID illness. That's because everyone entering a hospital is tested for COVID, so deaths of patients with incidental infections are counted as COVID deaths even when it isn't the cause.
The experts questioned the rationale for annual shots for everyone, given that current vaccines do not seem to protect against infection for more than a few months. Yet even a single booster seems to prevent death and hospitalization in most people, except for the very old and people with certain medical conditions.
"We need the CDC to tell us exactly who is getting hospitalized and dying of this virus — the ages, vulnerability, the type of immune compromise, and whether they were treated with antivirals. And we need immunological data to indicate who's at risk," said Dr. Paul Offit, director of the Vaccine Education Center and a pediatrician at Children's Hospital of Philadelphia. "Only then can we decide who gets vaccinated with what and when."
Offit and others have expressed frustration over the lack of clear government messaging on what the public can expect from COVID vaccines. While regular boosters might be important for keeping the elderly and medically frail out of the hospital, he said, the annual boosters suggested by the FDA and the drug companies may not be necessary for everyone.
"The goal is to keep people out of the hospital," he said. "For the vulnerable, it would be important for vaccines to keep up with circulating strains. But for the general population, we already have a vaccine that prevents hospitalization."
Other panelists said the government needs to push research harder to get better vaccines. Pamela McGinnis, a retired official of the National Institutes of Health, said she had trouble explaining to her two young-adult sons why they promptly got sick after venturing out to bars one night only weeks after getting their bivalent booster.
"'Think how sick you would have gotten if you weren't fully vaccinated' is not a great message," she said. "I'm not sure ‘You would have landed in the hospital' resonates with recipients of the disease."
Members of the FDA's advisory committee have been irked in recent months, saying the agency didn't present them with all the data it had on the bivalent vaccine before it was released in September. And some critics have said the FDA should have instructed drug companies to include only the newer strains of the virus in the shot.
Asked about that Thursday, Jerry Weir, a senior FDA vaccine officer, said his "gut feeling" was that a vaccine matched to a single omicron strain would have performed better than the bivalent shot, which also contains the original COVID strain. "But the real question is where we're headed," he said, "and I don't know the answer."
Perhaps the most important presentation Thursday was from Heather Scobie, who keeps tabs on COVID at the Centers for Disease Control and Prevention. She reported that fewer than half of Americans 65 and older had gotten the latest booster, and that only two-thirds of that age group had gotten even a single booster.
Yet evidence continues to mount that it's mostly the elderly who are at serious risk from COVID. Death rates from the disease have declined in every age group except those over 75 since April, despite the uptick in new strains. Except for the very old, the death rate has hovered around 1 in 100,000 since April. Earlier in 2022, babies 6 months old and younger were hospitalized and died at relatively high rates. Vaccination levels in the 4-and-under group hover at about 10%.
While acknowledging the FDA's desire to regularize its COVID vaccine policy, panel members said it's still too early to know for sure whether COVID will surge only in the winter, like flu, respiratory syncytial virus, and other respiratory infections.
"For the next few years we may not know how often we need to make a strain change in the vaccine," said Dr. Steven Pergam, medical director of infection prevention at the Seattle Cancer Care Alliance. Or even if people who are not in poor health or elderly need additional boosters.
One vaccine-maker represented at the meeting, Novavax, said it would need to know by the end of March which strain to include in its vaccine for fall. Companies with mRNA vaccines like Pfizer and Moderna can change their formulas faster, but their products aren't clearly better than Novavax's.
All three of those vaccine-makers revealed at the meeting that they are developing single-dose vials or prefilled syringes. Up to now, they've delivered their vaccines in multidose vials, but since the government has run out of money to buy vaccines, individual pediatricians may order them in the future. Since the vaccine must be used quickly once a vial is open, doctors are leery of wasting vaccine and losing money.