Feds Settle Huge Whistleblower Suit Over Medicare Advantage Fraud

KFF Health News, October 2, 2018

Medicare Advantage plans, which now enroll more than 1 in 3 seniors nationwide, have faced growing government scrutiny in recent years over their billing practices.

This article first appeared October 01, 2018 on Kaiser Health News.

By Fred Schulte

One of the nation's largest dialysis providers will pay $270 million to settle a whistleblower's allegation that it helped Medicare Advantage insurance plans cheat the government for several years.

The settlement by HealthCare Partners Holdings LLC, part of giant dialysis company DaVita Inc., is believed to be the largest to date involving allegations that some Medicare Advantage plans exaggerate how sick their patients are to inflate government payments. DaVita, which is headquartered in El Segundo, Calif., did not admit fault.

"This settlement demonstrates our tireless commitment to rooting out fraud that drains too many taxpayer dollars from public health programs like Medicare," said U.S. Attorney Nick Hanna in announcing the settlement Monday.

Medicare Advantage plans, which now enroll more than 1 in 3 seniors nationwide, have faced growing government scrutiny in recent years over their billing practices. At least a half-dozen whistleblowers have filed lawsuits accusing the insurers of boosting payments by overstating how sick patients are. In May 2017, two Florida Medicare Advantage insurers agreed to pay nearly $32 million to settle a similar lawsuit.

The DaVita settlement cites improper medical coding by HealthCare Partners from early 2007 through the end of 2014. The company, according to the settlement agreement, submitted "unsupported" diagnostic codes that allowed the health plans to receive higher payments than they were due. Officials did not identify the health plans that overcharged as a result.

One such "unsupported" code was for a spinal condition known as spinal enthesopathy that was improperly diagnosed in patients in Florida, Nevada and California from Nov. 1, 2011, to Dec. 31, 2014, according to the settlement. The agreement did not say how much health plans took in from the unsupported codes.

The company also contracted with a Nevada firm from 2010 through January 2016 that sent health care providers to visit patients in their homes, a controversial practice that critics have long held is done largely to inflate Medicare payments. These house calls also generated "unsupported or undocumented" diagnostic codes, according to the settlement.

Officials said that DaVita disclosed the practices to the government. It acquired HealthCare Partners, a large California-based doctors' group, in 2012. They said the government agreed to a "favorable resolution" of the allegations payment because of the self-disclosure.

In a statement, DaVita said the settlement "reflects close cooperation with the government to address practices largely originating with HealthCare Partners." DaVita said the settlement will be paid with escrow funds set aside by the former owners.

"This case involved illegal conduct in which patients' medical conditions were improperly reported and were not corrected after further review — all for the purpose of boosting the bottom line," reads the government's statement.

The settlement also resolves allegations made by whistleblower James Swoben that HealthCare Partners knew that many of the diagnostic codes were unsupported, but failed to report them. The company reported only cases in which it deserved higher reimbursement, while ignoring codes that would slash payments, a practice known as "one-way" chart reviews.

Swoben, a former employee of a company that did business with DaVita, will receive just over $10 million for the settlement of the "one-way" allegations, under the federal False Claims Act, which rewards whistleblowers who expose fraud.

prescription drugs

Buried In Congress' Opioid Bill Is Protection For Personal Drug Imports

KFF Health News, September 28, 2018

Advocates for importation of cheaper drugs raised a red flag, noting that policies are not permanent and could be changed at any time absent legislation.

This article first appeared September 27, 2018 on Kaiser Health News.

By Michael McAuliff

WASHINGTON — The final version of the massive opioid bill Congress released Wednesday would grant the Food and Drug Administration new powers to crack down on drug imports, but it also includes a provision — nearly killed in the Senate — to shield people who are just trying to buy cheaper, needed prescription medication from other countries.

Broadly, the bill seeks to enlist the FDA in combating the opioid crisis by mandating that the agency take steps to accelerate development of non-opioid painkillers and to limit the supplies of the drugs, both illegal and legitimate, that claimed the lives of more than 49,000 people last year.

Among those steps, the bill expands the FDA's power to "debar" people "from importing or offering for import into the United States a drug" if they are violating any of a number of regulations, including importing "mislabeled" medications, which includes any from overseas.

In the original House version of the bill, there was also a provision that defined those importers to exclude regular people who were importing personal prescriptions from foreign countries. That definition had been cut without explanation from the Senate's version of the bill.

Congressional staffers who spoke on background to describe internal negotiations said the senators eliminated the protection because they believed it was unnecessary. The FDA already has discretion to look the other way on personal imports and told lawmakers it has no intention of changing the policy, staffers said.

Still, advocates for importation of cheaper drugs raised a red flag, noting that policies are not permanent and could be changed at any time absent legislation.

"I believe pharma lobbyists tried to piggyback language onto this bill to give FDA greater authority to stop importation of lower-cost, non-controlled medicines — ones having nothing to do with the opioid crisis, whether wholesale or personal," said Gabriel Levitt, the president of PharmacyChecker.com, which serves as a clearinghouse for people trying to buy prescriptions from regulated foreign pharmacies. "If that’s the case, then they did not get everything they wanted."

PhRMA, the lobbying arm of the pharmaceutical industry, could not immediately respond to questions about the shifts in the bill, but praised the overall goal of the broader measure.

"We applaud Congress for producing bipartisan, bicameral legislation that is a comprehensive approach to combating the opioid addiction crisis," spokeswoman Priscilla VanderVeer said in a statement. "We look forward to the final legislation moving swiftly through the House and Senate and then on to the President’s desk to be signed into law."

Indeed, the definition appears to have been added back to help forestall any controversy that might have interfered with swift passage of a measure that lawmakers hope to tout for the rest of campaign season. The bill is expected to be passed by the House this week and the Senate next week.

While lawmakers who at first removed the language may have seen it as unnecessary, advocates saw it, if not as a major victory, at least as a significant step in recognizing the legitimacy of importing medication from places where it is less expensive.

"That this language was put back in the bill is very helpful because now personal drug importation has greater recognition under law as different from illegal wholesale importation and worthy of protection," said Levitt. "For those people who rely on lower-cost personal imports from pharmacies in Canada and other countries, this is very good."

Millions of Americans every year seek prescriptions from overseas and Canada. Many millions more don't take or thin out their prescribed medications, often because of costs. According to the Centers for Disease Control and Prevention, almost 8 percent of Americans do not take their medication as prescribed, and more than 15 percent seek cheaper alternatives from their doctor.

The consequences of non-adherence are on a par with the opioid crisis. The failure of people to take medication properly kills about 125,000 every year and costs the health care system between $100 billion and $289 billion, according to studies.

Threat To The ACA Turns Up The Heat On Attorney General Races

KFF Health News, September 27, 2018

This will be the first major election since Republicans tore up a deal brokered with Democrats roughly two decades ago not to challenge each other's incumbents in attorney general races.

This article first appeared September 27, 2018 on Kaiser Health News.

By Emmarie Huetteman

For years, congressional Republicans have vowed to repeal the Affordable Care Act. Now, in a case sending shock waves through midterm election campaigns, Republican attorneys general across the country may be poised to make good on that promise.

The case, Texas v. United States, reveals just how high the stakes are for health care in this year's attorney general races, elections that rarely receive much attention but have the power to reverberate through the lives of Americans.

"It just shows that nothing is safe," said Xavier Becerra, California's attorney general, who is leading 16 states and the District of Columbia in defending the ACA in the case.

Both parties expect record-breaking fundraising for this year's 30 contested elections for state attorneys general. Democrats aim to translate public outrage over the threat to the ACA into the votes needed to seize a handful of posts currently held by Republicans.

This will be the first major election since Republicans tore up a deal brokered with Democrats roughly two decades ago not to challenge each other's incumbents in attorney general races. That gentlemen's agreement acknowledged the need for attorneys general from both parties to collaborate on investigations and lawsuits.

But some of the same partisan forces that have embittered Capitol Hill have spilled into these contests. With Republicans in control of the executive and legislative branches — and close to staking their claim on the Supreme Court — Democratic attorneys general are seen as a check on Trump administration policies. Similarly, their Republican counterparts frequently took the Obama administration to court.

That pressure is likely to increase should congressional Democrats fail to win control of at least one chamber of Congress in November.

Raphael Sonenshein, the executive director of California State University's Pat Brown Institute for Public Affairs in Los Angeles, compared the politics invigorating state attorneys general to a bar brawl.

"Two people have a fight, and then it spills out into the street, and 20 people join in," he said. "Everybody gets off the bench and joins the fight."

A banner on the Democratic Attorneys General Association's website captures their mindset, while states are busy challenging the Trump administration on issues like sanctuary cities and family separations at the border: "This office has never been more important."

Former Vice President Joe Biden recently endorsed six attorney general candidates in races Democrats think they can win, including Ohio and Wisconsin, and the association plans to raise a record-breaking $15 million for November's elections, said Lizzie Ulmer, a spokeswoman for the group.

By mid-June, the Republican Attorneys General Association had raised $26.6 million, continuing to break its fundraising records.

Of this year's 30 contested attorney general races, 18 posts are held by Republicans and 12 are held by Democrats. (Another five are in play this year, but those posts are appointed by the governor or state lawmakers.)

Unlike in Congress, there is no inherent advantage to one party claiming the majority of attorneys general posts. It takes just one attorney general to file a lawsuit.

But Democratic attorneys general see themselves as a firewall against an administration and their Republican counterparts dead set on revoking many federal protections. In that arena, every lawyer counts.

That is especially the case with health care, where fights over issues like access to abortion have multiplied since President Donald Trump took office, with others liable to end up in the courts at any time.

Earlier this month, a federal judge heard arguments in Texas v. United States on the constitutionality of the individual mandate, the ACA's requirement that all Americans obtain health insurance or pay a penalty.

Citing the law passed late last year that eliminated the penalty, the plaintiffs — a Texas-led coalition of 20 states and two individuals — argued the individual mandate was now unconstitutional. By extension, so was the rest of the ACA, they said. They asked for a preliminary injunction that could halt the sweeping ACA in its tracks — including popular provisions such as protections for people with preexisting conditions.

Ken Paxton, the attorney general of Texas, has defended his decision to challenge protections that have broad support, including among Republicans, saying he has a duty to fight laws that harm Texans and defy the U.S. Constitution.

"The least compassionate thing we could do for those with preexisting health problems is to take away their access to high-quality care from doctors of their own choosing and place them entirely at the mercy of the federal government," Matt Welch, Paxton's campaign spokesman, said in a statement.

But the idea that insurers would no longer have to cover those with preexisting conditions has proven explosive, offering Democrats a powerful rallying cry beyond even attorney general races. In Missouri and West Virginia, states that Trump won in 2016 but are represented by Democratic senators, the issue has followed the Republican attorneys general — Missouri's Josh Hawley and West Virginia's Patrick Morrisey — as they run for Senate.

"We're wasting millions and millions of dollars of taxpayer money trying to take away preexisting condition protections not just for all Texans but all Americans," said Justin Nelson, Paxton's Democratic challenger, who said he would withdraw Texas from the case should he win his long-shot bid.

In Wisconsin, the Republican attorney general, Brad Schimel, has also taken a leading role in Texas v. United States, as well as a 2016 challenge to a landmark Obama administration rule banning discrimination in health care based on a patient's gender identity, among other cases.

This year, Schimel has drawn a formidable Democratic challenger, Josh Kaul. He's a former assistant U.S. attorney who prosecuted federal drug crimes and has promised to focus on the state's backlog of untested rape kits and take a more aggressive approach to the opioid epidemic. "We're not going to beat that without ensuring our efforts are targeting large-scale drug traffickers," he said.

Experts caution a changing of the guard would not spell the end of a big case like Texas v. United States. For instance, even if Paxton were to defy expectations and lose, Texas' legal and financial backing for the case could easily be picked up by another state.

However, the message voters would send by electing a Democratic attorney general in Texas — where no Democrat has won statewide office since 1994 — could have profound implications for Republican morale.

"Without Ken Paxton leading the charge, many Republicans may soften their opposition to Obamacare," said Brandon Rottinghaus, a political science professor at the University of Houston.

Medicare Eases Readmission Penalties Against Safety-Net Hospitals

KFF Health News, September 26, 2018

Penalties will total $566 million for all hospitals. But many that serve a large share of low-income patients will lose less money than they did in previous years.

This article first appeared September 26, 2018 on Kaiser Health News.

By Jordan Rau

On orders from Congress, Medicare is easing up on its annual readmission penalties on hundreds of hospitals serving the most low-income residents, records released last week show.

Since 2012, Medicare has punished hospitals for having too many patients end up back in their care within a month. The government estimates the hospital industry will lose $566 million in the latest round of penalties that will stretch over the next 12 months. The penalties are a signature part of the Affordable Care Act's effort to encourage better care.

But starting next month, lawmakers mandated that Medicare take into account a long-standing complaint from safety-net hospitals. They have argued that their patients are more likely to suffer complications after leaving the hospital through no fault of the institutions, but rather because they cannot afford medications or don't have regular doctors to monitor their recoveries. The Medicare sanctions have been especially painful for this class of hospitals, which often struggle to stay afloat because so many of their patients carry low-paying insurance or none at all.

In a major change to its evaluation, the federal Centers for Medicare & Medicaid Services (CMS) this year ceased judging each hospital against all others. Instead, it assigned hospitals to five peer groups of facilities with similar proportions of low-income patients. Medicare then compared each hospital's readmission rates from July 2014 through June 2017 against the readmission rates of its peer group during those three years to determine if they warranted a penalty and, if so, how much it should be.

Related: Ambulatory Interventions Needed to Prevent Readmissions

Related: 30-Day Readmissions Penalty Draws Fire

Related: Clinical Pathway for Heart Failure Decreases Readmissions

The broader issue is whether medical providers that serve the poor can be fairly judged against those that care for the affluent. This has been a continuing topic of contention as the government seeks to accurately measure health care quality. It is particularly a concern in efforts to consider patient outcomes in setting pay rates for doctors, nursing homes, hospitals and other providers.

Overall, Medicare will dock payments to 2,599 hospitals — more than half in the nation— throughout fiscal year 2019, which begins Oct. 1, a Kaiser Health News analysis of the records found. The harshest penalty is 3 percent lower reimbursements for every Medicare patient discharged in fiscal year 2019. The number of hospitals and the average penalty — 0.7 percent of each payment — are almost the same as last year.

But the new method shifted the burden of those punishments. Penalties against safety-net hospitals will drop by a fourth on average from last year, the analysis found.

"It's pretty clear they were really penalizing those institutions more than they needed to," said Dr. Atul Grover, executive vice president of the Association of American Medical Colleges. "It's definitely a step in the right direction."

Safety-net hospitals that will see their penalties cut by half or more include many urban institutions, such as Sutter Health's Alta Bates Summit Medical Center in Oakland, Calif.; Providence Hospital in Washington, D.C.; and Hurley Medical Center in Flint, Mich. Sixty-five safety-net hospitals — including Franklin Medical Center in Winnsboro, La., Astria Toppenish Hospital in Toppenish, Wash., and Emanuel Medical Center in Swainsboro, Ga. — that had been penalized last year escaped punishment entirely this year.

Conversely, the average penalty for the hospitals with the fewest low-income patients will rise from last year, the analysis found.

Before the program began, roughly 1 in 5 Medicare beneficiaries were readmitted within a month. Hospitals were paid the same amount regardless of how their patients fared after being discharged. In fact, a readmission was financially advantageous as hospitals would be paid for the second hospital stay, even if it might have been avoidable.

Since the sanctions began, Medicare has evaluated each year rates for readmitted patients who had originally been treated for heart failure, heart attacks and pneumonia. And it has reduced its payments to more than half of hospitals based on those rates. The evaluations have since expanded to cover chronic lung disease, hip and knee replacements and coronary artery bypass graft surgeries.

Medicare counts patients who returned to a hospital within 30 days, even if it is a different hospital than the one that originally treated them. The penalty is applied to the first hospital.

Medicare exempts hospitals with too few cases, those serving veterans, children and psychiatric patients, and critical-access hospitals, which are the only hospitals within reach of some patients. In addition, Maryland hospitals are excluded because Congress lets that state set its own rules on how it distributes Medicare money.

In its revised method this year, Medicare distinguished hospitals that serve a high proportion of low-income patients by looking at how many of the hospital's Medicare patients were also eligible for Medicaid, the state-federal program for the poor. American Hospital Association officials say that while they considered this an improvement, it isn't a perfect reflection of poor patients. For one thing, they say, hospitals in states with more restrictive Medicaid coverage do not appear through this formula to have as challenging patient populations as do hospitals in states with higher Medicaid eligibility.

Akin Demehin, the association's director of quality policy, said CMS might consider linking its records to Census records that show income and education level of patients.

"It might give you a more precise adjuster," he said.

The hospital industry remains critical of the overall program, saying that stripping hospitals of revenue because of poor performance only makes it harder for them to care for patients.

Congress' Medicare Payment Advisory Commission in June concluded that the penalties from previous years successfully pressured hospitals to reduce the numbers of returning patients — and helped save Medicare about $2 billion a year.

In its analysis of the approach's effectiveness, Congress' advisory commission rejected some of the hospital industries' complaints about Medicare's Hospital Readmissions Reduction Program: that hospitals may have tried to get around the penalties by keeping patients under "observation status" and that discouraging rehospitalizations may have led to extra deaths.

The commission found that between 2010 and 2016 readmission rates fell by 3.6 percentage points for heart attacks, 3 percentage points for heart failure and 2.3 percentage points for pneumonia. At the same time, readmissions caused by conditions that do not factor into the penalties fell on average 1.4 percentage points, indicating hospitals were focusing on lowering unnecessary readmissions that could hurt them financially.

The commission wrote: "We conclude that the [penalties] contributed to a significant decline in readmission rates without causing a material increase in ED [emergency department] visits, a material increase in observation stays, or a net adverse effect on mortality rates."

This fall, Medicare will attack the readmissions from another angle by issuing penalties on skilled nursing facilities that send recently discharged residents back to the hospital too frequently.

Blood, Sweat And Workplace Wellness: Where To Draw The Line On Incentives

KFF Health News, September 24, 2018

Two recent court rulings have cast uncertainty over what is the appropriate limit for financial incentives that employers can offer workers to participate in programs that require clinical testing or disclosure of personal health data.

This article first appeared September 24, 2018 on Kaiser Health News.

By Julie Appleby

Workplace wellness programs that offer employees a financial carrot for undergoing health screenings, sticking to exercise regimens or improving their cholesterol levels have long been controversial.

Next year, they may become even more contentious. Two recent court rulings have cast uncertainty over what is the appropriate limit for financial incentives that employers can offer workers to participate in programs that require clinical testing or disclosure of personal health data. The dollar amount is subject to debate because it raises questions about when the incentives become so high that employees feel they don't have a choice about participating.

As a result, workers may find programs offer smaller incentives, consultants say. Also, programs might give employees options for qualifying for those incentives — a choice, for instance, between undergoing a medical exam or completing online health education modules.

About 4 in 10 employers participating in an informal survey by benefits firm Mercer said "they really were not sure what they would do," said Steven Noeldner, its senior consultant in total health management specialty practice. "Some are modifying … others are taking a wait-and-see-attitude."

Eighty-five percent of large employers offering health insurance included a wellness program designed to help people stop smoking, lose weight or take other healthful actions, according to a 2017 survey by the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.) Just over half of those included some type of medical screening. Rewards or incentives to participate vary. The most common are gift cards, fitness trackers or other merchandise, or discounts on what workers pay toward their health insurance coverage.

The Cleveland Clinic's version is more extensive than most, said Dr. Bruce Rogen, chief medical officer for the effort. He described it as a "population health program," with differing goals for workers who have chronic diseases like diabetes versus those who don't.

Full participation, which may mean losing weight, keeping blood sugar levels in check or hitting a gym at least 10 times a month, can save workers 30 percent in insurance premiums. That could be as much as $1,443 a year.

"Part of what makes the plan work is the fact we can offer that benefit discount," Rogen said.

That 30 percent amount is the ceiling set in a 2016 Equal Employment Opportunity Commission (EEOC) rule for what an employer can offer.

But it's also the point that leads critics to question when incentives become significant enough that employees no longer feel that participation is voluntary.

"You and I can look at the same incentive and you will find it's truly voluntary and I would say, given my financial circumstances, I feel I'm being compelled," said Tom Luetkemeyer, an attorney specializing in employment law at Hinshaw & Culbertson in Chicago.

Shortly after the EEOC's guidance was issued, the AARP challenged it in court, arguing that workers who did not want to provide medical information could feel coerced to do so because not participating would cost them substantial sums, ranging from hundreds to thousands of dollars.

In his first ruling, D.C. Circuit Court Judge John Bates noted that the EEOC had failed to provide justification for how it settled on that percentage. He also pointed out that 30 percent of a worker's health insurance costs could be "the equivalent of several months' worth of food for the average family, two months of child care in most states, and roughly two months' rent."

Bates ultimately ordered the 30 percent limit vacated as of Jan. 1, 2019, after the EEOC said it would not produce that justification or a new number until 2021.

Employers now putting together next year's health benefit programs don't have specific rules to follow.

The advice they are receiving from benefit consultants ranges widely, from "drop all incentives and penalties" to "stay the course."

Few expect employers will outright stop offering wellness programs because they hope the programs will hold down health costs by getting workers to take steps to improve their well-being. Critics, however, point out that studies show little evidence that workplace wellness programs achieve these goals.

The ruling does not affect some wellness program efforts, such as offering financial incentives for going to the gym or walking a certain number of steps per day. Substantial financial incentives to get people to quit tobacco are also not covered by the ruling, so long as there is no medical test required to check for nicotine use.

But "you can't fine them for not getting their weight down, because then you have to measure their weight and that becomes clinical," said Al Lewis, a frequent critic of workplace wellness programs who runs a company that offers an alternative.

Some employers say they will stick with their existing programs — even if they hit the 30 percent level — because the EEOC is unlikely to challenge those that stick with the rescinded percentage until new rules come out.

The Cleveland Clinic's Rogen, who credits the wellness program for holding medical costs almost flat for the past five years, said clinic officials plan to leave it at that level next year, despite the uncertainty.

Not all benefit consultants would agree with that choice.

"The way we interpret the ruling is that financial incentives that relate to physical exams, including questions about health history, would not be allowed starting Jan. 1," said Noeldner, of Mercer.

Others suggest that is taking the judge's ruling too far. After all, the Affordable Care Act provides a precedent for the 30 percent threshold — and the EEOC may well come back with a rule that reaffirms that amount. The ACA included a provision that raised the limit on health-contingent wellness incentives to that amount.

"People may be overreacting to this by saying with these rules null and void, we are out in the Wild West," said Todd Hlasney, senior vice president and director of health risk solutions at Lockton Companies, a benefits consultancy. "We are advising clients to be more conservative … but don't panic and say [you] can't do anything because of EEOC."

Woman Receiving Dental Exam Dentist

'Physicians Of The Mouth'? Dentists Absorb The Medical Billing Drill

KFF Health News, September 24, 2018

There's a growing trend in dental offices, as providers seek greater reimbursement for expensive services. Around the internet, firms have popped up claiming expertise in medical billing for dentists and offering courses and consulting services.

This article first appeared September 24, 2018 on Kaiser Health News.

By David Tuller

DUBLIN, Calif. — On a recent Friday morning, more than 30 dentists and dental staffers gathered in a conference room to learn an arcane new skill: how to bill medical insurers.

Pacing back and forth, the Florida dentist leading the two-day course advised the participants to stop thinking of themselves as tooth technicians and reposition themselves as "physicians of the mouth."

"There is a medical part of our practice and a dental part," said the presenter, Chris Farrugia, as audience members tapped on their keyboards or scribbled notes. "You have teeth, [and] you got the 'other stuff.' It's the other stuff that medical insurance pays for."

Faruggia's seminar is a sign of a growing trend in dental offices, as providers seek greater reimbursement for expensive services and patients balk at big bills. Around the internet, firms have popped up claiming expertise in medical billing for dentists and offering courses and consulting services.

The reason is simple: Medical insurance is generally much more generous in its coverage than dental insurance.

Unlike medical coverage, dental insurance is mostly geared to the healthy — something many people don't realize until they experience serious oral problems and get socked with unexpected costs. Standard dental insurance covers cleanings, fillings and other routine care. But major work like a crown or a bridge is often covered only at 50 percent and implants generally aren't covered at all. And dental insurance is usually capped at $1,000 or $1,500 per year.

As a result, people who require extensive reconstructive work often pay many thousands of dollars, or sometimes tens of thousands, in out-of-pocket expenses. Many other people, even with dental coverage, go without care because they cannot afford the large balances or co-pays for crowns, root canals and other major procedures.

Because of these differences in reimbursement, Farrugia told his seminar attendees, dentists should first consider what medical insurance might cover and then bill the dental plan for the rest.

For example, he said, dentists should seek medical coverage for the full head, neck and mouth exams they perform when they see a new patient, since the goal is to assess more than just the teeth. Medical insurers should also cover oral problems attributable to an underlying medical condition, such as diabetes or dry mouth, a common side effect of many medications, Farrugia said.

Besides sparing patients the pain of big bills, the strategy can also boost income for dentists, said Farrugia, who estimated that revenues for his practice rose almost 10 percent the first year he fully implemented medical billing. Patients, too, can learn to file claims for medical reimbursement if their dentists won't, he said.

On its website, the California Dental Association explains that health insurance should cover costs that are "medically necessary" and lists more than a dozen categories of procedures that could qualify. Among them: treatment related to inflammation and infection, dental repair due to injury, certain periodontal surgery procedures and appliances for sleep apnea.

Kristine Grow, a spokeswoman for America's Health Insurance Plans, the industry trade association, did not dispute that some dental procedures could be covered by medical insurance. However, she cautioned that medical insurers were always on the lookout for abuse.

"Claims that are billed inappropriately or submitted fraudulently hurt everyone because they raise costs," Grow said. "It's important to note that procedures not related to an emergency event or trauma may not be medically necessary, and therefore would not be covered by medical insurance," she added.

Asked about the potential for abuse, Farrugia said: "There are unethical providers in all health care services, and dentistry is not immune to that. You will always have some that try to game the system."

Farrugia adopted medical billing several years ago after paying more than $100,000 for a CT scanner that produces 3-D images of the bone in the mouth and jaws.

"It occurred to me that this was a medical device," he said of the CT scanner. "I'm a licensed health care provider, I'm providing this within the scope of my license. They can't discriminate against me."

Once he investigated the matter, Farrugia discovered that medical insurance could be asked to cover not just CT scans but a wide range of services regularly performed by dentists. He buried himself in the arcana of coding, ultimately writing three workbooks for dentists about medical billing.

At first it was trial-and-error, and Farrugia learned that claims often get rejected if they do not cite a medically legitimate reason for the procedure as well as the appropriate code.

These days, Farrugia bills medical plans $744 for a CT scan (medical code: CPT 70486), receiving an average reimbursement of about $500. Medical plans generally require pre-authorization for non-emergency CT scans, he said, so his office staff had to learn how to explain why the scan was medically required — such as to assess bone quality.

The same procedure can be billed to a dental plan (dental code: D0367), but the average reimbursement is $125 — if the plan covers CT scans at all.

Others are following his example. Iowa dentist Richard Downs attended one of Farrugia's medical billing seminars last year in Chicago. "I'd never heard these things before," he said.

He said he recently sought and received prior authorization from a medical insurer for $60,000 to cover multiple implants and other costs for a woman whose dental woes stemmed from severe atrophy of the jaw and other medical problems.

During a break in the seminar, San Ramon, Calif., dentist Rashpal Deol said Farrugia's approach made sense. "We look at the soft tissues in the mouth, the muscles, the bone, the TM [temporomandibular] joint, and the head and neck area," he said. "You always check the lymph nodes, we do oral cancer screening, so that is a comprehensive medical exam."

Other seminar attendees also were enthusiastic, if a bit daunted. "People go to school to learn medical coding," said Kelly Bradshaw, a staff member at a Santa Rosa, Calif., dental practice. "To try to bridge that gap in order to help our patients is intimidating. You have to be open-minded to look at things in different ways."

Margaret Busch, an office manager for an Arizona dentist, said she planned to start medical billing as soon as she returned from the seminar.

"I've been making a list of people that we can go back and probably get money for," she said, mentioning patients who have had CT scans and those with dental problems related to medical conditions like diabetes.

"I think they'll be excited," she said.

As States Try To Rein In Drug Spending, Feds Slap Down One Bold Medicaid Move

KFF Health News, September 21, 2018

Massachusetts wanted to negotiate prices for about 1% of the highest-priced drugs and stop covering some of them. CMS rejected the proposal.

This article first appeared September 21, 2018 on Kaiser Health News.

By Martha Bebinger, WBUR

States serve as "laboratories of democracy," as U.S. Supreme Court Justice Louis Brandeis famously said. And states are also labs for health policy, launching all kinds of experiments lately to temper spending on pharmaceuticals.

No wonder. Drugs are among the fastest-rising health care costs for many consumers and are a key reason health care spending dominates many state budgets — crowding out roads, schools and other priorities.

Consider Vermont, California and Oregon, states that are beginning to implement drug price transparency laws. In Nevada, the push for transparency includes the markup charged by pharmacy benefit managers (PBMs). In May, Louisiana joined a growing list of states banning "gag rules" that prevent pharmacists from discussing drug prices with patients.

State-based experiments may carry even greater weight for Medicaid, the federal-state partnership that covers roughly 75 million low-income or disabled Americans.

Ohio is targeting the fees charged to its Medicaid program by PBMs. New York has established a Medicaid spending drug cap. In late June, Oklahoma's Medicaid program was approved by the federal Centers for Medicare & Medicaid Services to begin "value-based purchasing" for some newer, more expensive drugs: When drugs don't work, the state would pay less for them.

But around the same time, CMS denied a proposal from Massachusetts that was seen as the boldest attempt yet to control Medicaid drug spending.

Massachusetts planned to exclude expensive drugs that weren't proven to work better than existing alternatives. The state said Medicaid drug spending had doubled in five years. Massachusetts wanted to negotiate prices for about 1 percent of the highest-priced drugs and stop covering some of them. CMS rejected the proposal without much explanation, beyond saying Massachusetts couldn't do what it wanted and continue to receive the deep discounts drugmakers are required by law to give state Medicaid programs.

The Medicaid discounts were established in 1990 law based on a grand bargain that drugmakers say guaranteed coverage of all medicines approved by the Food and Drug Administration in exchange for favorable prices.

The New England Journal of Medicine dives into the CMS decision regarding Massachusetts and its implications for other state Medicaid programs in a commentary by Rachel Sachs, an associate professor of law at Washington University in St. Louis, and co-author Nicholas Bagley. They dispute the Trump administration's claim that Massachusetts' plan would violate the grand bargain.

We talked with Sachs about Massachusetts' proposal and the implications for the rest of the country. Her answers have been edited for length and clarity.

Q: Why do you think states, such as Massachusetts, should be allowed to exclude some drugs, a move the pharmaceutical industry has said would break the deal reached back in 1990?

In our view, there's a way to frame it where the bargain has been broken and Massachusetts is simply trying to restore the balance. The problem is that the meaning of FDA approval has changed significantly over the last almost 30 years. Now we have a lot more drugs that are being approved more quickly, on the basis of less evidence — smaller trials, using surrogate endpoints — where the state has real questions about whether these drugs work at all, not only whether they are good value for the money.

Q: You suggest that Massachusetts could make a reasonable case if it chose to challenge the CMS denial. How?

CMS did not explain why it didn't grant Massachusetts' waiver. It needs to give reasons for denying something that Massachusetts, in our view, has the legal ability to do. CMS' failure to give reasons in this case resembles their failure to give reasons in a number of other cases that have recently led courts to strike down actions by the Trump administration for failure to explain the actions that they were taking.

(Note: A spokeswoman for Health and Human Services in Massachusetts says the state is not going to challenge the CMS decision.)

Q: While CMS blocked the Massachusetts experiment, it has approved the value-based purchasing plan in Oklahoma, and New York has capped its Medicaid drug spending. Aren't those signs of flexibility for states?

In some ways, yes, and in other ways, no. New York passed a cap on state Medicaid pharmaceutical spending. But once the state hits that cap, it doesn't mean the state will stop paying for prescription drugs. It just means the state is empowered to negotiate with some of these companies and seek additional discounts. They didn't need CMS approval for this. New York doesn't have the ability to say "If you don't take this deal, we're not going to cover this product."

Oklahoma is pursuing outcomes-based pricing, which is of interest. It's the first state to express interest in doing so. However, there are a lot of observers who are skeptical that outcomes agreements of this kind will materially lower prices or if they just provide companies cover to charge higher prices in the first instance.

Q: So what options do you see ahead for states given what happened in Massachusetts with the Medicaid waiver?

Unfortunately, states are quite limited in what they're able to do on their own, in terms of controlling prescription drug costs — both costs that are borne by the state in its capacity as a public employer and its capacity as an insurer for the Medicaid population. and then more generally for the many citizens who are on private insurance plans throughout the state.

This is a real problem, this concern of federal pre-emption where states' ability to go beyond federal law is often limited. So what we're seeing now is more states like Massachusetts and Vermont taking action that forces the federal government to do something or say something. States are increasingly putting pressure on the federal government because they know that their ability to act on this problem of drug pricing is limited.

Despite Red Flags At Surgery Centers, Overseers Award Gold Seals

KFF Health News, September 20, 2018

California is the only state with more than 1,000 surgery centers that has given private accreditors a lead role in oversight. Those accreditors are typically paid by the same centers they evaluate.

This article first appeared September 20, 2018 on Kaiser Health News.

By Christina Jewett

At his surgery center near San Diego, Rodney Davis wore scrubs, was referred to as "Dr. Rod" and carried the title of director of surgery. But he was a physician assistant, not a doctor, who anesthetized patients and performed liposuction with little input from his supervising doctor, court records show.

So it was perhaps no surprise, in 2016, when an administrative judge stripped Davis of his license, concluding it was the only way to "protect the public." State officials also accused two former medical directors of Pacific Liposculpture of enabling Davis to act as a doctor.

One powerful authority in California took a different view. The state-approved private accreditation agency that oversees the center left its approval in place. So the center is still operating and Davis remains an owner and administrator, state records show.

California is the only state with more than 1,000 surgery centers that has given private accreditors a lead role in oversight. Those accreditors are typically paid by the same centers they evaluate.

That approach to oversight has created a troubling legacy of laxity, an investigation by Kaiser Health News shows. In case after case, as federal or state authorities waved red flags, state-approved accreditation agencies affixed gold seals of approval, according to a KHN review of hundreds of pages of doctors' disciplinary records, court files and accreditor reports — which are public only for California surgery centers.

One accreditation inspector called a doctor's anesthesia technique "impressive" just months before the state medical board accused her of "gross negligence" for putting patients in deep sedation without the training to save them if they stopped breathing. Another doctor who is fighting a medical board accusation of "gross negligence" over two patient deaths in 2014 and 2015 got his own surgery center approved by an accreditor in 2016.

In yet another case, Medicare officials declared a state of "immediate jeopardy" at a center that put an untrained receptionist in charge of disinfecting surgical scopes, a Medicare inspection report says. Its accreditor renewed its approval within a week.

Patient deaths after care in a California surgery center reached a 14-year high with 18 cases in 2016, though the total dipped to 14 the following year, according to state records based on reports filed by the centers. Since 2010, at least 102 patients have died after care in the state's surgery centers. Such facilities perform a variety of outpatient surgeries and now outnumber hospitals nationally.

State Sen. Jerry Hill, a San Francisco Bay Area Democrat, chairs the committee that oversees the state medical board, which reviews and approves the state's surgery center accreditation agencies every three years.

Briefed on the investigation's findings, Hill said this "definitely warrants a deeper examination into what's going on at the surgery centers and how the accreditation process is working today — and [whether it's] providing the patient protection I was hoping for when we established it."

'Impressive' Or Negligent?

California's oversight of surgery centers was upended about a decade ago when a physician's legal victory led the Department of Public Health to conclude it could no longer license doctor-owned surgery centers. The doctor had filed suit, challenging the requirement that he and his surgery center both maintain a license. He prevailed, putting state oversight of the doctor-owned centers in flux.

In 2011, state lawmakers came up with a solution, mandating that the state medical board approve the private accreditors that would be on the front lines of oversight. Today, five accreditors are allowed to both inspect surgery centers and to grant or deny surgery centers approval to operate. (Centers can also operate with just Medicare approval.)

State medical board officials denied a request for death reports that included centers' names, making a more comprehensive review of the centers or their accreditors difficult. Some of the same accreditation agencies that approve surgery centers, though, have been under fire with members of Congress after a Wall Street Journal report pinpointed gaps in their oversight of hospitals.

With the change in California, the state-approved accreditation agencies got a guaranteed source of income, since the centers each pay their accrediting agency about $15,000 every three years for their oversight role. In turn, the accreditors made a first-of-its kind concession: They agreed to make their inspection reports open to the public on a state website.

Those reports show that accreditors, at times, were at odds with other officials.

On May 1, 2012, the Institute for Medical Quality, or IMQ, a San Francisco-based accreditor, inspected Advanced Medical Spa in Rocklin, Calif. The inspectors were required to check whether the person administering anesthesia was "qualified and working within their scope of practice."

The inspector's note says the surgeon's wife, a pediatrician, was performing "conscious sedation" anesthesia and said her technique with the drug propofol was "impressive." The standard was marked as "met" and accreditation was awarded through 2015.

A month later, the state medical board launched an investigation of the pediatrician, Dr. Yessennia Candelaria, over complaints that she was handling anesthesia for plastic surgery procedures without "requisite training in anesthesia, including Propofol," the board's records show.

Investigators for the Medical Board of California found that before and after the accreditor's review, Candelaria was using propofol to put patients in a state of "deep sedation" even though she didn't have the "advanced airway" training in how to rescue them if their breathing shut down. Medical board authorities deemed the lapse "gross negligence" in an accusation filed in 2014 that also accused her of abusing controlled drugs. Her medical license was put on probation for seven years. Medical board authorities recently moved to revoke her license over unauthorized prescribing, and she has not yet filed a written response.

An attorney for Candelaria declined to comment and Candelaria did not respond to a request for comment.

In February 2013, IMQ revoked its approval of Advanced Medical Spa. The following month, Candelaria and her husband, Dr. Efrain Gonzalez, were arrested in a separate criminal case. Gonzalez was charged with 37 felony counts that included mayhem and conspiracy for allegedly disfiguring the women he operated on at the center. Candelaria was charged with 24 felony counts, including mayhem and grand theft by false pretense.

Gonzalez pleaded guilty to three felonies and was sentenced to three months of house arrest in the criminal case and surrendered his medical license. Charges were ultimately dismissed against Candelaria, who pleaded not guilty.

Victoria Samper, vice president of ambulatory programs with IMQ, said she could not comment on specific facilities. But she did note that California law allows doctors to practice outside of the field they initially train in. She also said if a doctor is doing so, an inspector would be expected to "drill down" into the physician's practices.

The medical board said in a statement that the private accreditor who dubbed Candelaria's technique "impressive" reviewed her work with a different patient than those cited in the board's accusation.

"If the Board becomes aware that there is an accreditation agency that is not following the law when accrediting outpatient surgery settings, the Board would look into it," the statement said.

Decertified, Yet Still Operating

Accreditation agencies have stood by eight California surgery centers facing the federal Medicare program's harshest consequence — "involuntary decertification." It's a rare sanction that amounts to being deemed unfit to care for seniors.

On March 22, 2016, California Department of Public of Health inspectors notified federal authorities about a state of "immediate jeopardy" at Digestive Diagnostic Center, a small endoscopy center south of San Francisco.

A state inspection report said the center had pressed its new receptionist into duty to disinfect medical devices that probe patients' colons — with no formal training. The center failed to protect patients and had "ineffective infection-control policies which did not address hiring … of qualified individuals," the report concluded.

Something else happened that day as well. The Accreditation Association for Ambulatory Health Care, or AAAHC, renewed its approval of the center, which the agency describes as a "widely recognized symbol of quality" to patients and health insurers.

Medicare involuntarily decertified the facility a month later, which meant the federal agency would no longer pay for seniors' care at the center. But with private accreditation still in place, private insurers would be likely to continue funding care there.

Dr. Michael Bishop, a former California medical board member, said the case exposes a gap in state oversight if a center falls below one overseer's standard but meets another's. "You want no one to have easier [approval] process than any other one," he said. "That's quite egregious."

Kevin Calisher, president of the surgery center management firm Calisher & Associates, said his company took over management of the center in 2017, and that he could not comment on Medicare's findings.

AAAHC said in a statement that it could not discuss individual facilities.

The medical board's statement said Medicare is not required to notify the board when it decertifies a surgical center. "Now that this situation has been brought to the Board's attention, however, the Board will be looking into the matter," the statement said.

The Case Of 'Doctor' Davis

On April 9, 2015, an inspector from AAAHC arrived to perform an initial inspection of Pacific Liposculpture, which had been operating since 2011.

The inspectors' checklist included a review of complaints filed against the center by a state "licensure board." Davis had already been publicly accused by the state physician assistant board of engaging in the unlawful practice of medicine and gross negligence for failing to appropriately care for patients who experienced complications.

The inspector checked the box for "substantial compliance" and awarded the center approval through April 2018.

That decision was "enraging actually, outrageous," said Todd Glanz, a San Diego-area attorney. He represents a patient, Cecilia O'Neill, who went to the center for liposuction a few weeks after it was accredited.

O'Neill returned a few days after her May 28, 2015, procedure, complaining of pain, dizziness and signs of infection, her lawsuit alleges. But she claims her condition got worse. On June 9, 2015, she went to an emergency room, where she was told she had sepsis and needed emergency surgery followed by a stay in the ICU, according to her lawsuit.

Glanz said O'Neill was left with a hospital bill of nearly $200,000 and ongoing disfigurement. Davis and Dr. Harrison Robbins, the facility's former medical director and other owner, have denied wrongdoing and are fighting the ongoing lawsuit.

The following year, in February 2016, Davis faced an eight-day administrative hearing over whether he should keep his license as a physician assistant. A central issue was whether he truly worked under a doctor's supervision, as the law requires, or hired a figurehead who would exert little control.

One 2010 email discussed in court was by Davis, saying he hoped his new supervising physician, Dr. Jerrell Borup, would not be "another clumsy physician getting in the way."

His attorney presented experts and argued that he should keep his license. At its conclusion, the administrative judge revoked his license and reached a searing conclusion.

Davis "purposefully and intentionally set out to create a business arrangement that looked legitimate on paper," Judge Susan Boyle wrote, "but allowed him to manipulate the system and run a liposuction business without the interference of a physician."

The two former medical directors of the center were accused by the Medical Board of California of "aiding and abetting" Davis' unlicensed practice of medicine. Neither doctor actively supervised Davis, who performed all the procedures, the accusations say.

Davis has denied wrongdoing in each proceeding and declined to comment for this report through an attorney. One of the former medical directors, Borup, surrendered his license in 2016. The other, Dr. Harrison Robbins, is fighting the medical board's similar case against him. The controversy did not deter AAAHC, which earlier this year approved the center through April 2021.

Robert Frank, a San Diego attorney who represented Davis and Robbins, said Robbins has retired and the public should have no concerns about Davis' ongoing administrative role at Pacific Liposculpture.

"[Davis] knows the business, he knows the procedure and he knows he's being watched and scrutinized" during the ongoing legal case, Frank said.

Davis contested his license revocation but lost that case in Sacramento Superior Court. He's now challenging that decision in appeals court.

Betsy Imholz, former director of special projects for Consumers Union, who reviewed the findings for this report, said the case was shocking. "There are huge gaps in California law, clearly," she said.

Two Deaths — And Then A Green Light

The families of two women in their 40s sued Diamond Surgery Center in Encino, Calif., and its surgeon, alleging wrongdoing in their 2014 and 2015 deaths.

The incidents did not stop the facility from getting accreditation in 2017 from the Chicago-based Joint Commission, the nation's most prominent accreditor.

Oneyda Mata, 40, was the first to die, on March 29, 2014. According to her autopsy, she called 911 from her car, struggling to breathe. Although her liposuction at the surgery center was 22 days earlier, the autopsy lists Diamond Surgery Center as the "place of injury" in her death from a blood clot lodged in her lung.

Dr. Roya Dardashti admitted no fault, but reached a $200,000 settlement in the family's lawsuit. The sum became public only because the family filed legal records saying Dardashti failed to make some payments.

MaryCruz Elizalde, 42, was the second to die, on Dec. 10, 2015. She was in recovery after a tummy tuck and liposuction at Diamond Surgery Center when she went into cardiac arrest and was taken to a hospital. Her autopsy says she died from internal bleeding and shock "as a consequence of complications of surgery."

Elizalde's partner's lawsuit alleged that an unlicensed anesthesia provider at the center was involved in her care. The case was voluntarily dismissed after the partner was imprisoned in an unrelated fraud case.

State law bars doctors from operating in an unapproved facility at levels of anesthesia that rob people of their "life-preserving" reflexes.

Whether the facility operated outside of that limit or erred in either woman's care wasn't noted when the center got its initial approval to operate in 2017.

With a slightly different, new name, Diamond Surgical Institute, the same location and same lead doctor, the facility now appears to have full accreditation on the state's website for surgery centers.

Joint Commission spokeswoman Katherine Bronk said the center was awarded "limited temporary accreditation" in 2017 and 2018 after "limited" inspections. Those limited inspections did not include a check of patient medical records because they're designed for facilities "not actively caring for patients."

Bronk said in an email that past problems might not affect an accreditation decision.

"If the surgery center had not been following the law but made compliance with the law part of its corrective action plan, it would not necessarily be denied accreditation," she wrote. "As a private accreditor, our goal is to help organizations identify deficiencies in care and correct them as quickly and sustainably as possible."

Dardashti did not respond to calls or email requests for an interview. The medical board declined to say whether it has received a report of a patient death from the facility since 2014, saying the information is "confidential."

State law requires accreditors to perform a "reasonable investigation" of a surgery center's past, which includes a check to see if its doctors have a license, which Dardashti did. The checks should go deeper, said Imholz, of Consumers Union.

"If past is prologue, we should be looking at what the key players, owners and doctors involved, what they have in their records," she said. "It's relevant; it should be looked at."

Senators Unveil Legislation To Protect Patients Against Surprise Medical Bills

KFF Health News, September 19, 2018

Federal law does not prohibit balance billing in self-funded health plans, which 61% of privately insured employees have.

This article first appeared September 19, 2018 on Kaiser Health News.

By Rachel Bluth

With frustration growing among Americans who are being charged exorbitant prices for medical treatment, a bipartisan group of senators Tuesday unveiled a plan to protect patients from surprise bills and high charges from hospitals or doctors who are not in their insurance networks.

The draft legislation, which sponsors said is designed to prevent medical bankruptcies, targets three key consumer concerns:

  • Treatment for an emergency by a doctor who is not part of the patient's insurance network at a hospital that is also outside that network. The patients would be required to pay out-of-pocket the amount required by their insurance plan. The hospital or doctor could not bill the patient for the remainder of the bill, a practice known as "balance billing." The hospital and doctor could seek additional payments from the patient's insurer under state regulations or through a formula established in the legislation.
  • Treatment by an out-of-network doctor or other provider at a hospital that is in the patient's insurance network. Patients would pay only what is required by their plans. Again, the doctors could seek more payments from the plans based on formulas set up by state rules or through the federal formula.
  • Mandated notification to emergency patients, once they are stabilized, that they could run up excess charges if they are in an out-of-network hospital. The patients would be required to sign a statement acknowledging that they had been told their insurance might not cover their expenses, and they could seek treatment elsewhere.

"Our proposal protects patients in those emergency situations where current law does not, so that they don't receive a surprise bill that is basically uncapped by anything but a sense of shame," Sen. Bill Cassidy (R-La.) said in his announcement about the legislation.

Kevin Lucia, a senior research professor at Georgetown University's Center on Health Insurance Reforms who had not yet read the draft legislation, said the measure was aimed at a big problem.

"Balance billing is ripe for a federal solution," he said. States regulate only some health plans and that "leaves open a vast number of people that aren't covered by those laws."

Federal law regulates health plans offered by many larger companies and unions that are "self-funded." Sixty-one percent of privately insured employees get their insurance this way. Those plans pay claims out of their own funds, rather than buying an insurance policy. Federal law does not prohibit balance billing in these plans.

Related: Send Us Your Medical Bill

Cassidy's office said, however, that this legislation would plug that gap.

In addition to Cassidy, the legislation is being offered by Sens. Michael Bennet (D-Colo.), Chuck Grassley (R-Iowa), Tom Carper (D-Del.), Todd Young (R-Ind.) and Claire McCaskill (D-Mo.).

Cassidy's announcement cited two recent articles from Kaiser Health News and NPR's "Bill of the Month" series, including a $17,850 urine test and a $109,000 bill after a heart attack.

In a statement to Kaiser Health News, Bennet said, "In Colorado, we hear from patients facing unexpected bills with astronomical costs even when they've received a service from an in-network provider. That's why Senator Cassidy and I are leading a bipartisan group of senators to address this all-too-common byproduct of limited price transparency."

Emergency rooms and out-of-network hospitals aren't the only sources of balance bills, Lucia said. He mentioned that both ground and air ambulances can leave patients responsible for surprisingly high costs as well.

Lucia said he was encouraged that both Democrats and Republicans signed on to the draft legislation.

"Any effort at the federal level is encouraging because this has been a challenging issue at the state level to make progress on," Lucia said.

New Medicare Advantage Tool To Lower Drug Prices Puts Crimp In Patients' Choices

KFF Health News, September 17, 2018

Starting next year, Medicare Advantage plans will be able to add restrictions on expensive, injectable drugs administered by doctors to treat cancer, rheumatoid arthritis, macular degeneration and other serious diseases. Under the new rules, these private Medicare insurance plans could require patients to try cheaper drugs first. If those are not effective, then the patients could receive the more expensive medication prescribed by their doctors.

This article first appeared September 17, 2018 on Kaiser Health News.

By Susan Jaffe

Starting next year, Medicare Advantage plans will be able to add restrictions on expensive, injectable drugs administered by doctors to treat cancer, rheumatoid arthritis, macular degeneration and other serious diseases.

Under the new rules, these private Medicare insurance plans could require patients to try cheaper drugs first. If those are not effective, then the patients could receive the more expensive medication prescribed by their doctors.

Insurers use such "step therapy" to control drug costs in the employer-based insurance market as well as in Medicare's stand-alone Part D prescription drug benefit, which generally covers medicine purchased at retail pharmacies or through the mail. The new option allows Advantage plans — an alternative to traditional, government-run Medicare — to extend that cost-control strategy to these physician-administered drugs.

In traditional Medicare, which covers 40 million older or disabled adults, those medications given by doctors are covered under Medicare Part B, which includes outpatient services, and step therapy is not allowed.

About 20 million people have private Medicare Advantage policies, which include coverage for Part D and Part B medications.

Some physicians and patient advocates are concerned that the pursuit of lower Part B drug prices could endanger very sick Medicare Advantage patients if they can't be treated promptly with the medicine that was their doctor’s first choice.

Critics of the new policy, part of the administration’s efforts to fulfill President Donald Trump's promise to cut drug prices, say it lacks some crucial details, including how to determine when a less expensive drug isn't effective.

"Do you have to lose vision before you are allowed to use” medication approved by the Food and Drug Administration, asked Richard O'Neal, vice president for market access for Regeneron, which makes Eylea, a medicine that is injected into the eye to treat macular degeneration. In 2016, Medicare paid $2.2 billion for Eylea prescriptions for patients in traditional Medicare, more than any other Part B drug, according to government data.

Medicare Advantage insurers spend about $12 billion on Part B drugs, compared to the $25.7 billion traditional Medicare spent in 2016 on such drugs. Insurers that adopt the step therapy policy can apply it only to new prescriptions — medicine a patient hasn't received in the past 108 days.

The change in policy gives insurers a new bargaining tool: Pharmaceutical makers may want to compete by cutting prices to get their product on the plans’ list of preferred lists, allowing patients to receive the medicines without step therapy pre-conditions. That "strengthens their negotiating position with the manufacturers," Medicare chief Seema Verma said when she unveiled the policy last month.

It could also save patients money since they usually pay a portion of the Part B prescription cost. In addition, Medicare is requiring plans to share the savings with enrollees.

"Competition is a big factor in price concessions," said Daniel Nam, executive director of federal programs at America's Health Insurance Plans, an industry trade group. But insurers haven't had much leverage to negotiate lower prices for these drugs without strategies like step therapy, he said.

Federal health officials told insurers in a memo last month that they could substitute a less expensive Part B drug to treat a medical condition the FDA has not approved it for, if insurers can document that it is safe and effective. Yet coverage for a Part D drug is usually denied for a condition that doesn’t have FDA approval, according to the Center for Medicare Advocacy, which helps beneficiaries with appeals.

Several representatives of medical specialty groups recently met with Alex Azar, the secretary of the Department of Health and Human Services, to express their concerns.

Dr. Stephen Grubbs, vice president of clinical affairs at the American Society of Clinical Oncology, was among them. He said Azar told then the new step therapy policy would not have a big impact on cancer treatment.

Patients and their physicians who encounter problems getting specific Part B drugs can appeal using the “process that we have throughout the Medicare Advantage program and Part D plans," advised Verma.

Under this system, if patients don't want to follow their insurance plans' requirements to try a less expensive medication first, they can request an exception to step therapy.

"They need their doctor's support," said Francine Chuchanis, director of entitlement rights at Direction Home, an Area Agencies on Aging organization that serves older adults and people with disabilities in northeastern Ohio. The physician must tell the plan why its restrictions should be lifted and provide extensive documentation.

The plans have 24 hours to respond to an expedited exception request and 72 hours for a regular one. During this time, "people are going without their drugs," said Sarah Jane Blake, a Medicare counselor for New York’s StateWide Senior Action Council.

However, Dr. David Daikh, president of the American College of Rheumatology, said plans frequently do not meet the 72-hour deadline.

"We raised this point with the secretary and his staff," he said. "They replied that they felt that there would not be a backlog for this program."

If a plan denies the exemption, patients can file a "reconsideration" appeal. During this process, patients still can't get their medicine unless they pay for it out-of-pocket.

Only a tiny fraction of Medicare Advantage beneficiaries filed a reconsideration appeal last year. Of the 3,498 cases that were decided, just 1 in 10 beneficiaries won decisions fully or partially in their favor, according to Medicare statistics.

"That's disheartening to say the least," said Blake, but she wasn't surprised. "Beneficiaries are intimidated by the hoops they have to go through and often give up trying to purchase the drugs prescribed for them."

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