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."

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."

The pattern identified in the 340B comments suggests the system can easily be manipulated. Patients may be especially vulnerable to being used.

This article first appeared September 11, 2018 on Kaiser Health News.

By Sarah Jane Tribble

A proposal to sharply cut a drug discount program that many hospitals rely on drew some 1,400 comments when the Trump administration announced its plan last year. Hundreds appeared to come from patients across the country — pleas from average Americans whose treatments for diseases such as cancer depend on costly medicines.

But a review of the responses found that some individuals were not aware they apparently had become part of an organized campaign to oppose what's known as the "340B" program. Some had no memory of signing anything, much less sending their opinions about it.

Of the 1,406 comments that specifically mentioned 340B — part of several thousand comments submitted on a broad proposal to revise medical payment systems — about half included the same or similar wording and were submitted anonymously, an analysis by Kaiser Health News found. Those comments lamented "abuse" of the drug discounts, faulted hospitals for being "greedy" and used phrasing such as "quality, affordable, and accessible."

Two that were duplicated hundreds of times made the very same grammatical mistake.

They "are clearly related," said Robert Leonard, a forensic linguistic expert at Hofstra University whose team analyzed the submissions for KHN.

In fact, the wording in the duplicate comments tracks language in a formal letter submitted to regulators by a nonprofit trade group, the Community Oncology Alliance, which receives funding from pharmaceutical companies.

Cancer survivor Janice Choiniere's name is on a public comment saying reform of the 340B program will help "those suffering from this insidious disease." But when reached by phone, the 69-year-old Florida resident said she had "no idea" what the program is and didn't recall signing a petition.

"My first thought is, I don't fill out and send in responses casually," Choiniere said. "I'm hoping nobody lifted my information."

The quarter-century-old federal program requires pharmaceutical companies to sell certain drugs at steep discounts to eligible hospitals and clinics, which don't have to share their savings with patients. Critics, including Republican lawmakers, have questioned what the facilities do with the money. Doctors in private practice, who are not eligible for the reduced rates, have warned that the program's continued growth makes it susceptible to exploitation.

The administration's plan, finalized in November, reduced by $1.6 billion annually what the Centers for Medicare & Medicaid Services pays for the targeted drugs. In late July, the agency proposed expanding those payment cuts.

As with any proposed rule, the purpose of requesting public comments is to help lawmakers and regulators consider the potential effects of their actions. But the pattern identified in the 340B comments, which were posted online by CMS, suggests the system can easily be manipulated. Patients may be especially vulnerable to being used.

"It feels like inappropriate influence," said Peter Ubel, a physician and behavioral scientist at Duke University's Fuqua School of Business. "When you have a life-threatening illness, you need to know you can trust your physician to care about your interests ahead of their own."

KHN reached 10 individuals whose names appeared in the comments — either as a signature on a personal note or on a petition also signed by others. All were patients, former patients or caregivers seen at private practices connected to the Community Oncology Alliance.

Two patients confirmed they had written notes, although they couldn't say when. Several said they must have signed or written something amid the paperwork handed to them at a doctor's office during appointments or in follow-up correspondence. A few drew mental blanks.

The name of an 84-year-old melanoma patient shows as an online signature in an individual public comment that described the program's reform as a matter of "life or death." But the Florida man, who asked not to be identified, had little recollection of writing it. His wife remembered that he signed something at his doctor's office "out front on a clipboard" before getting his biweekly cancer treatment.

"If my doctor wanted me to sign something, I would sign it for him," the man said. He "saved my life."

Julie Yarbrough, whose husband received treatment at New England Cancer Specialists in Maine, remembered signing a petition "at the [doctor's] check-in area" about hospitals abusing 340B discounts. She was the only individual contacted who had a basic understanding of the program.

The patients reached by KHN sought care at either New England Cancer Specialists, which has three locations in Maine, or Florida Cancer Specialists, which runs nearly 100 treatment centers in that state. Data posted on the federal website regulations.gov show that more than 60 percent of the 340B-specific comments originated in Florida.

"We do a good job of educating patients and letting them know how to get involved," said Michael Diaz, director of patient advocacy for Florida Cancer Specialists and vice president on the Community Oncology Alliance's executive committee. "They need to be able to contribute and give their opinion."

Steve D'Amato, executive director of New England Cancer Specialists and an Alliance board member, mentioned patients' support in a letter accompanying a petition posted multiple times to the government portal Oct. 10. The petition included the trade group's website; D'Amato noted that "patient signatures obtained in just 2 days" were attached.

When asked recently about patients who didn't recall signing something, D'Amato said he did not have the petition in front of him and referred all questions to the Alliance's executive director, Ted Okon. In an interview, Okon denied that the organization had any role in soliciting patient comments.

"We didn't do anything with patient petitions," said Okon, although talking points and material were sent to practices nationwide for them to use when submitting comments. "This is what we do in terms of advocating."

Susannah Rose, scientific director of research in the Cleveland Clinic's patient experience office, said there is "always a worry about coercion" when doctors make a request of patients, but more so when oncologists do the asking.

"Cancer patients often feel very much in the hands of their oncologists, and they are often suffering from significant distress," said Rose, who serves on the ethics committee of the American Society of Clinical Oncology.

The Washington-based Alliance represents private oncology practices as well as about 50 corporate members, according to its website. Formed in 2003 when Congress approved Medicare's prescription drug program, it was a leading critic of a controversial 2016 proposal to change how CMS paid for some drugs in Medicare. The group's revenue nearly quadrupled that year, to $16.3 million from $4.4 million in 2015, according to federal tax filings. The proposal never became reality.

Pharmaceutical giants Sanofi, Pfizer, Eli Lilly, Bristol-Myers Squibb and Merck each confirmed paying annual dues of $75,000 to the Alliance. The five companies also paid it nearly $1 million between 2014 and 2017 for research papers, conferences, filming and patient education, according to corporate transparency reports.

Walgreens and PhRMA, the pharmaceutical industry trade group, also confirmed membership but did not disclose how much they pay in dues. Okon said corporate membership fees range from $25,000 to $75,000 annually while individual oncologists and their practices pay "usually on the order of a thousand dollars, two thousand dollars."

Drug manufacturers do not influence the Alliance's position on 340B, he said, noting in an email that "correlation is not causality."

After the comment period ended, CMS slashed 340B payments to hospitals by $1.6 billion annually. Medicare had been paying hospitals 6 percent above a drug's average sales price; it now pays them 22.5 percent less than the average sales price.

CMS Administrator Seema Verma and Eric Hargan, deputy secretary of the Health and Human Services Department, emphasized that public comments played into their decision. In the 1,133-page final rule, they said they shared the concern that current Medicare payments "are well in excess of the overhead and acquisition costs" for drugs bought under the program.

"We thank the commenters for their support," they wrote.