California's AG says staff should not obstruct immigration agents but are under no obligation to assist with an arrest.

This article was published on Wednesday, Friday 26, 2025 in KFF Health News.

By Jackie Fortiér

The lobby at this St. John's Community Health clinic in South Los Angeles bustles with patients. But community health worker Ana Ruth Varela is worried that it's about to get a lot quieter. Many patients, she said, are afraid to leave their homes.

"The other day I spoke with one of the patients. She said: 'I don't know. Should I go to my appointment? Should I cancel? I don't know what to do.' And I said, 'Just come.'"

Since Donald Trump's return to the White House, fear of mass deportations carried out by U.S. Immigration and Customs Enforcement has gripped immigrant communities.

For years, a long-standing policy prevented federal immigration agents from making arrests at or near sensitive locations, including schools, places of worship, hospitals, and health centers. It was one of the first policies Trump rolled back in January, just hours after his inauguration.

Acting Department of Homeland Security Secretary Benjamine Huffman revoked the directive on Jan. 21. In an accompanying press release, a DHS spokesperson said the action would assist agents searching for immigrants who have committed crimes. "The Trump Administration will not tie the hands of our brave law enforcement, and instead trusts them to use common sense," the statement said.

The speed of the change took Darryn Harris by surprise.

"I thought we had more time," said Harris, chief government affairs and community relations officer for St. John's.

Harris is racing to teach more than 1,000 St. John's workers how to read warrants as they train for a new role — teaching patients their constitutional rights.

California Attorney General Rob Bonta, a Democrat, is advising clinics to post information about patients' right to remain silent and to provide patients with contact information for legal-aid groups.

Bonta is also urging health care providers to avoid including patients' immigration status in bills and medical records. His office directs that while staff should not physically obstruct immigration agents, they are under no obligation to assist with an arrest.

Even though immigration arrests took place in hospitals during Trump's first term, the overall policy was still one of deference to "sensitive locations." Now, however, DHS states that the previous rules hindered law enforcement efforts by creating sites where people without legal status could evade capture.

Matt Lopas, director of state advocacy and technical assistance for the National Immigration Law Center, said that in order for immigration officers to access health information or go into private spaces such as exam rooms, they must present a warrant signed by a judge.

"It's incredibly important that every health care center has somebody who is trained to be able to read those warrants" and determine their validity, Lopas said.

In the San Francisco Bay Area, Zenaida Aguilera has been tapped to read warrants for La Clínica de La Raza. She is the compliance, privacy, and risk officer for the clinic network. If immigration agents show up, she's on call for all 31 of the organization's community clinics.

Aguilera is also now in charge of training hundreds of health staffers. She has trained about 250 thus far, but the majority of that work is yet to come.

"We have about, probably, a thousand more staff," she said.

She fears the Trump administration will target California for immigration enforcement because of its approximately 2 million residents without legal status, the highest of any state, according to the Pew Research Center. In 2022, 11 million people were in the U.S. without authorization.

Aguilera said La Clínica plans to post patients' constitutional rights in clinic lobbies and will provide resources such as contact information for legal-aid groups.

"We would like to just do the work of caring for our patients rather than train our staff on what to do if there's an ICE official that tries to come into our clinics," Aguilera said.

This article is from a partnership that includes NPR and KFF Health News.

Jackie Fortiér: @JackieFortier

Democrats, hoping to block the GOP's plans and preserve Medicaid funding, are rallying support from hospitals, governors, and consumer advocates.

This article was published on Friday, February 21, 2025 in KFF Health News.

By Phil Galewitz

Medicaid is under threat — again.

Republicans, who narrowly control Congress, are pushing proposals that could sharply cut funding to the government health insurance program for poor and disabled Americans, as a way to finance President Donald Trump's agenda for tax cuts and border security.

Democrats, hoping to block the GOP's plans and preserve Medicaid funding, are rallying support from hospitals, governors, and consumer advocates.

At stake is coverage for roughly 79 million people enrolled in Medicaid and its related Children's Health Insurance Program. So, too, is the financial health of thousands of hospitals and community health centers — and a huge revenue source to all states.

On Feb. 13, the House Budget Committee voted to seek at least $880 billion in mandatory spending cuts on programs overseen by the House Energy and Commerce Committee. That committee oversees Medicaid, which is expected to bear much of the cuts.

Senate Republicans, working on their own plan, have not proposed similar deep cuts. Sen. Ron Wyden of Oregon, the Finance Committee's top Democrat, said he expects "an effort to keep the Medicaid cuts hidden behind the curtain, but they're going to come sooner or later."

Since Trump took office, Republicans in Washington have discussed making changes to Medicaid, particularly by requiring that enrollees prove they are working. Because most enrollees already work, go to school, or serve as caregivers or have a disability, critics say such a requirement would simply add red tape to obtaining coverage, with little impact on employment.

Other GOP ideas that could gain traction toward meeting budget-cutting goals include reducing the federal government's share of costs for certain enrollees or for the program overall.

Both Trump and House Speaker Mike Johnson say they are only trying to cut what they describe as "waste, fraud, and abuse" in the program, but have yet to offer examples or specifics.

Trump has said he would "love and cherish" Medicaid along with Medicare. During a Fox News interview that aired Feb. 18, Trump repeated his assurance that Medicaid, along with Social Security and Medicare, was not "going to be touched."

Known as the workhorse of the U.S. health system, Medicaid covers Americans from the beginning of life to the end — paying for 4 in 10 births and care costs for more than 60% of nursing home residents. The program operates as a state-federal partnership, with the federal government paying most of the money and matching state funds regardless of how many people enroll.

Medicaid, which turns 60 this summer, was created as part of President Lyndon B. Johnson's "Great Society" strategy to attack poverty along with Medicare, the federal health insurance program for people 65 and older.

In today's era of extreme partisanship on Capitol Hill, few topics highlight the ideological chasm between the major political parties better than Medicaid.

Unlike Democrats who view Medicaid as a way to ensure health care is affordable and accessible regardless of income, many Republicans in Washington see Medicaid as a broken and wasteful welfare program that's grown too big and covers millions of adults who don't deserve the government assistance. Many Republicans in Congress say "able-bodied" adults could get coverage from a job or by purchasing insurance on their own.

Nearly all Republicans opposed the 2010 Affordable Care Act, which expanded Medicaid by offering coverage to millions of low-income adults and helped edge the country closer to Democrats' long-sought goal of all Americans having health coverage. In exchange for expanding Medicaid, the federal government offered states a larger funding match to cover those individuals.

But while most Republican-controlled states accepted the federal expansion dollars — some only after voters approved ballot initiatives in favor of Medicaid expansion — GOP leaders in Congress have remained steadfastly against the program's growth.

When Republicans last controlled Congress and the White House, the party sought big cuts to Medicaid as part of efforts in 2017 to repeal and replace the ACA. That campaign failed by a razor-thin margin, partly due to concerns from some congressional Republicans over how it would harm Medicaid and the private industry of health plans and hospitals that benefit from it.

Now, a more conservative GOP caucus has again put a bull's-eye on Medicaid's budget, which has grown by at least $300 billion in eight years due largely to the covid pandemic and the decision by more states to expand Medicaid. The House budget plan seeks to free up $4.5 trillion to renew Trump's 2017 tax cuts, which expire at the end of this year.

"Medicaid is increasingly caught in the middle of partisan polarization in Washington," said Jonathan Oberlander, a health policy professor at the University of North Carolina and the editor of the Journal of Health Politics, Policy and Law. "This is not just resistance to the ACA's Medicaid expansion; it is a broader change in the politics of Medicaid that puts the program in a more precarious place."

Medicaid presents a tempting target for Republicans for several reasons beyond its sheer size, Oberlander said. "The first is fiscal arithmetic: They need Medicaid savings to help pay for the costs of extending the 2017 tax cuts," he said, noting Trump has taken off the table cuts to Medicare, Social Security, and national defense — the other most costly government programs.

The GOP cuts would also help scale back the program, which covered 93 million people at its apex during the covid pandemic, when states were prohibited for three years from terminating coverage for any enrollee. Oberlander said the cuts also would allow Republicans to strike a blow against the ACA, often called Obamacare.

Republicans' latest revamping effort comes as Medicaid expansion has become entrenched in most states — and their budgets — over the past decade. Without federal expansion dollars, states would struggle to afford coverage for low-income people on the program without raising taxes, cutting benefits, or slashing spending on other programs such as education.

And since Trump's first-term effort to cut Medicaid, additional red states such as Utah, Oklahoma, Idaho, and Missouri have expanded the program, helping drop the nation's uninsured rate to a record low in recent years.

Medicaid is popular. About 3 in 4 Americans view the program favorably, according to a January 2025 KFF poll. That's similar to polling from 2017.

Here are a few strategies the GOP reportedly is considering to reduce the size of Medicaid:

Cutting ACA Medicaid funding. Through Medicaid expansion, the ACA provided financing for the program to cover adults with incomes up to 138% of the federal poverty level, or $21,597 for an individual. The federal government pays 90% of the cost for adults covered through the expansion, which 40 states and Washington, D.C., have adopted. The GOP could lower that funding to the same match rate the federal government pays states for everyone else in the program, which averages about 60%.

Shifting to block or per capita grants. Either of these two proposals could lower federal funding for states to operate Medicaid while giving states more discretion over how to spend the money. Annual block grants would give states a set amount, regardless of the number of enrollees. Per capita grants would pay the states based on the number of enrollees in each state. Currently, the federal government matches a certain percentage of state spending each year with no cap. Limiting the federal funding would hamper Medicaid's ability to help states during difficult economic times, when demand for coverage rises with falling employment and incomes, while states also have fewer tax dollars to spend.

Adding work requirements. Republicans in Washington are looking to insert work requirements into federal law. During Trump's first term, his administration allowed several states to condition coverage for adults on whether they were working, unless they met exemptions such as caregiving or going to school. Arkansas became the first to implement the measure, leading to 18,000 people losing coverage there. Federal judges ruled in 2018 that Medicaid law does not allow for work requirements in the program, which stopped efforts by Trump and several states to impose them in his first term. Several states are taking steps to add a requirement, including Ohio and Montana.

Lawrence Jacobs, founder and director of the University of Minnesota's Center for the Study of Politics and Governance, said Republicans will face challenges within their own ranks to make major Medicaid cuts, noting House members may be hesitant to cut Medicaid if warned it could lead to hospital closures in their district.

America's Essential Hospitals, a trade group representing safety-net hospitals that treat the disadvantaged, is encouraging its members to reach out to their lawmakers to make sure they know not only the cuts' potential impact on patients, but also how they could lead to job cuts and service reductions affecting entire communities.

"The level of cuts being discussed would be incredibly damaging and catastrophic for our hospitals," said Beth Feldpush, the group's senior vice president of policy and advocacy.

Said Jacobs: "The politics of cutting Medicaid is really quite fraught, and it's hard to make a prediction about what will happen at this point."

We'd like to speak with current and former personnel from the Department of Health and Human Services or its component agencies who believe the public should understand the impact of what's happening within the federal health bureaucracy. Please message KFF Health News on Signal at (415) 519-8778 or get in touch here.

Phil Galewitz: pgalewitz@kff.org, @philgalewitz

Pain MD's injections have been proved in court to be part of a decade-long fraud scheme.

This article was published on Tuesday, February 18, 2023 in KFF Health News.

By Brett Kelman

McMINNVILLE, Tenn. — Each month, Michelle Shaw went to a pain clinic to get the shots that made her back feel worse — so she could get the pills that made her back feel better.

Shaw, 56, who has been dependent on opioid painkillers since she injured her back in a fall a decade ago, said in both an interview with KFF Health News and in sworn courtroom testimony that the Tennessee clinic would write the prescriptions only if she first agreed to receive three or four "very painful" injections of another medicine along her spine.

The clinic claimed the injections were steroids that would relieve her pain, Shaw said, but with each shot her agony would grow. Shaw said she eventually tried to decline the shots, then the clinic issued an ultimatum: Take the injections or get her painkillers somewhere else.

"I had nowhere else to go at the time," Shaw testified, according to a federal court transcript. "I was stuck."

Shaw was among thousands of patients of Pain MD, a multistate pain management company that was once among the nation's most prolific users of what it referred to as "tendon origin injections," which normally inject a single dose of steroids to relieve stiff or painful joints. As many doctors were scaling back their use of prescription painkillers due to the opioid crisis, Pain MD paired opioids with monthly injections into patients' backs, claiming the shots could ease pain and potentially lessen reliance on painkillers, according to federal court documents.

Now, years later, Pain MD's injections have been proved in court to be part of a decade-long fraud scheme that made millions by capitalizing on patients' dependence on opioids. The Department of Justice has successfully argued at trial that Pain MD's "unnecessary and expensive injections" were largely ineffective because they targeted the wrong body part, contained short-lived numbing medications but no steroids, and appeared to be based on test shots given to cadavers — people who felt neither pain nor relief because they were dead.

Four Pain MD employees have pleaded guilty or been convicted of health care fraud, including company president Michael Kestner, who was found guilty of 13 felonies at an October trial in Nashville, Tennessee. According to a transcript from Kestner's trial that became public in December, witnesses testified that the company documented giving patients about 700,000 total injections over about eight years and said some patients got as many as 24 shots at once.

"The defendant, Michael Kestner, found out about an injection that could be billed a lot and paid well," said federal prosecutor James V. Hayes as the trial began, according to the transcript. "And they turned some patients into human pin cushions."

The Department of Justice declined to comment for this article. Kestner's attorneys either declined to comment or did not respond to requests for an interview. At trial, Kestner's attorneys argued that he was a well-intentioned businessman who wanted to run pain clinics that offered more than just pills. He is scheduled to be sentenced on April 21 in a federal court in Nashville.

According to the transcript of Kestner's trial, Shaw and three other former patients testified that Pain MD's injections did not ease their pain and sometimes made it worse. The patients said they tolerated the shots only so Pain MD wouldn't cut off their prescriptions, without which they might have spiraled into withdrawal.

"They told me that if I didn't take the shots — because I said they didn't help — I would not get my medication," testified Patricia McNeil, a former patient in Tennessee, according to the trial transcript. "I took the shots to get my medication."

In her interview with KFF Health News, Shaw said that often she would arrive at the Pain MD clinic walking with a cane but would leave in a wheelchair because the injections left her in too much pain to walk.

"That was the pain clinic that was supposed to be helping me," Shaw said in her interview. "I would come home crying. It just felt like they were using me."

'Not Actually Injections Into Tendons at All'

Pain MD, which sometimes operated under the name Mid-South Pain Management, ran as many as 20 clinics in Tennessee, Virginia, and North Carolina throughout much of the 2010s. Some clinics averaged more than 12 injections per patient each month, and at least two patients each received more than 500 shots in total, according to federal court documents.

All those injections added up. According to Medicare data filed in federal court, Pain MD and Mid-South Pain Management billed Medicare for more than 290,000 "tendon origin injections" from January 2010 to May 2018, which is about seven times that of any other Medicare biller in the U.S. over the same period.

Tens of thousands of additional injections were billed to Medicaid and Tricare during those same years, according to federal court documents. Pain MD billed these government programs for about $111 per injection and collected more than $5 million from the government for the shots, according to the court documents.

More injections were billed to private insurance too. Christy Wallace, an audit manager for BlueCross BlueShield of Tennessee, testified that Pain MD billed the insurance company about $40 million for more than 380,000 injections from January 2010 to March 2013. BlueCross paid out about $7 million before it cut off Pain MD, Wallace said.

These kinds of enormous billing allegations are not uncommon in health care fraud cases, in which fraudsters sometimes find a legitimate treatment that insurance will pay for and then overuse it to the point of absurdity, said Don Cochran, a former U.S. attorney for the Middle District of Tennessee.

Tennessee alone has seen fraud allegations for unnecessary billing of urine testing, skin creams, and other injections in just the past decade. Federal authorities have also investigated an alleged fraud scheme involving a Tennessee company and hundreds of thousands of catheters billed to Medicare, according to The Washington Post, citing anonymous sources.

Cochran said the Pain MD case felt especially "nefarious" because it used opioids to make patients play along.

"A scheme where you get Medicare or Medicaid money to provide a medically unnecessary treatment is always going to be out there," Cochran said. "The opioid piece just gives you a universe of compliant people who are not going to question what you are doing."

"It was only opioids that made those folks come back," he said.

The allegations against Pain MD became public in 2018 when Cochran and the Department of Justice filed a civil lawsuit against the company, Kestner, and several associated clinics, alleging that Pain MD defrauded taxpayers and government insurance programs by billing for "tendon origin injections" that were "not actually injections into tendons at all."

Kestner, Pain MD, and several associated clinics have each denied all allegations in that lawsuit, which is ongoing.

Scott Kreiner, an expert on spine care and pain medicine who testified at Kestner's criminal trial, said that true tendon origin injections (or TOIs) typically are used to treat inflamed joints, like the condition known as "tennis elbow," by injecting steroids or platelet-rich plasma into a tendon. Kreiner said most patients need only one shot at a time, according to the transcript.

But Pain MD made repeated injections into patients' backs that contained only lidocaine or Marcaine, which are anesthetic medications that cause numbness for mere hours, Kreiner testified. Pain MD also used needles that were often too short to reach back tendons, Kreiner said, and there was no imaging technology used to aim the needle anyway. Kreiner said he didn't find any injections in Pain MD's records that appeared medically necessary, and even if they had been, no one could need so many.

"I simply cannot fathom a scenario where the sheer quantity of TOIs that I observed in the patient records would ever be medically necessary," Kreiner said, according to the trial transcript. "This is not even a close call."

Jonathan White, a physician assistant who administered injections at Pain MD and trained other employees to do so, then later testified against Kestner as part of a plea deal, said at trial that he believed Pain MD's injection technique was based on a "cadaveric investigation."

According to the trial transcript, White said that while working at Pain MD he realized he could find no medical research that supported performing tendon origin injections on patients' backs instead of their joints. When he asked if Pain MD had any such research, White said, an employee responded with a two-paragraph letter from a Tennessee anatomy professor — not a medical doctor — that said it was possible to reach the region of back tendons in a cadaver by injecting "within two fingerbreadths" of the spine. This process was "exactly the procedure" that was taught at Pain MD, White said.

During his own testimony, Kreiner said it was "potentially dangerous" to inject a patient as described in the letter, which should not have been used to justify medical care.

"This was done on a dead person," Kreiner said, according to the trial transcript. "So the letter says nothing about how effective the treatment is."

Over-Injecting 'Killed My Hand'

Pain MD collapsed into bankruptcy in 2019, leaving some patients unable to get new prescriptions because their medical records were stuck in locked storage units, according to federal court records.

At the time, Pain MD defended the injections and its practice of discharging patients who declined the shots. When a former patient publicly accused the company of treating his back "like a dartboard," Pain MD filed a defamation lawsuit, then dropped the suit about a month later.

"These are interventional clinics, so that's what they offer," Jay Bowen, a then-attorney for Pain MD, told The Tennessean newspaper in 2019. "If you don't want to consider acupuncture, don't go to an acupuncture clinic. If you don't want to buy shoes, don't go to a shoe store."

Kestner's trial told another story. According to the trial transcript, eight former Pain MD medical providers testified that the driving force behind Pain MD's injections was Kestner himself, who is not a medical professional and yet regularly pressured employees to give more shots.

One nurse practitioner testified that she received emails "every single workday" pushing for more injections. Others said Kestner openly ranked employees by their injection rates, and implied that those who ranked low might be fired.

"He told me that if I had to feed my family based on my productivity, that they would starve," testified Amanda Fryer, a nurse practitioner who was not charged with any crime.

Brian Richey, a former Pain MD nurse practitioner who at times led the company's injection rankings, and has since taken a plea deal that required him to testify in court, said at the trial that he "performed so many injections" that his hand became chronically inflamed and required surgery.

"‘Over injecting killed my hand,'" Richey said on the witness stand, reading a text message he sent to another Pain MD employee in 2017, according to the trial transcript. "‘I was in so much pain Injecting people that didnt want it but took it to stay a patient.'"

"Why would they want to stay there?" a prosecutor asked.

"To keep getting their narcotics," Richey responded, according to the trial transcript.

Throughout the trial, defense attorney Peter Strianse argued that Pain MD's focus on injections was a result of Kestner's "obsession" with ensuring that the company "would never be called a pill mill."

Strianse said that Kestner "stayed up at night worrying" about patients coming to clinics only to get opioid prescriptions, so he pushed his employees to administer injections, too.

"Employers motivating employees is not a crime," Strianse said at closing arguments, according to the court transcript. "We get pushed every day to perform. It's not fraud; it's a fact of life."

Prosecutors insisted that this defense rang hollow. During the trial, former employees had testified that most patients' opioid dosages remained steady or increased while at Pain MD, and that the clinics did not taper off the painkillers no matter how many injections were given.

"Giving them injections does not fix the pill mill problem," federal prosecutor Katherine Payerle said during closing arguments, according to the trial transcript. "The way to fix being a pill mill is to stop giving the drugs or taper the drugs."

Brett Kelman: bkelman@kff.org, @BrettKelman

As prescription drug prices continue to spiral and federal efforts to control them stall, state lawmakers are focusing on PBMs.

This article was published on Thursday, February 13, 2025 in KFF Health News.

By Christine Mai-Duc

California Gov. Gavin Newsom and state legislators in Sacramento seem to agree: Prescription drug prices are too high. But lawmakers and the second-term governor are at odds over what to do about it, and a recent proposal could trigger one of the biggest healthcare battles in Sacramento this year.

A California bill awaiting its first hearing would subject drug industry intermediaries known as pharmacy benefit managers, or PBMs, to licensing by the state Department of Insurance. And it would require them to pass along 100% of the rebates they get from drug companies to the health plans and insurers that hire them to oversee prescription drug benefits.

But the proposal, which would impose some of the toughest PBM regulations in the nation, faces at least one major hurdle: Newsom. He vetoed a similar measure last year, unconvinced it would lower consumer costs. He signaled his intent to offer an alternative but has yet to reveal it.

Any fight over PBM reform promises to be a pricey one. Interest groups on both sides spent at least $7 million combined lobbying California lawmakers and the Newsom administration on healthcare last year, according to records filed with the secretary of state.

"This bill directly threatens the profitability of PBMs going forward," said Ge Bai, a health policy professor at Johns Hopkins University who has tracked similar bills in other states. "These bills are really the result of an interindustry dog fight, and these are ridiculously fierce fights because PBMs control revenue for pharmacies, as well as for manufacturers."

The country's top three PBMs —CVS Caremark, affiliated with Aetna; UnitedHealth Group's Optum Rx; and Express Scripts, owned by Cigna — control roughly 80% of prescriptions in the United States, according to the Federal Trade Commission. In theory, they leverage their buying power to extract steep discounts from drug manufacturers and pass savings along to insurance companies and employers who provide health coverage.

But as prescription drug prices continue to spiral and federal efforts to control them stall, state lawmakers are focusing on PBMs, which help insurers decide which drugs their plans cover and how much patients will pay out-of-pocket to get them. However, they have been stymied by the drug industry's secretive ecosystem of rebates, reimbursements, and obscure fees, thwarting efforts to lower drug costs.

In addition to California, PBM proposals have been introduced this legislative session in Arkansas, Iowa, and at least 20 other states as of Feb. 10, according to the National Academy for State Health Policy. All 50 states and Washington, D.C., have some sort of PBM regulation on the books.

And although President Donald Trump has criticized PBMs and vowed to "knock out the middleman," his recent actions undoing moves to lower prescription drug prices have left some healthcare experts skeptical that meaningful reform will come from Washington, D.C.

Meanwhile, state data shows California health plan drug costs have grown by more than 50% since 2017. California insurers spent 11% more on pharmaceuticals in 2023 than in 2022, with specialty and brand-name drugs driving the increase.

Both Newsom and bill author Sen. Scott Wiener (D-San Francisco) have said PBMs play a role in high drug prices. While Wiener wants to ban some of their practices outright, Newsom has so far taken a more measured approach, calling for more disclosure and pointing to his plan for the state to manufacture its own generic drugs, which has yet to get off the ground.

In vetoing Wiener's 2024 bill, which passed in a near-unanimous bipartisan vote, Newsom said he was unconvinced that licensing PBMs would improve affordability for patients and instead directed his administration to "propose a legislative approach" to gather more data from PBMs. In a statement, Newsom spokesperson Elana Ross noted that "Big Pharma backed the vetoed bill" and said the Democratic governor, in partnership with the legislature, will take action to address PBMs this year. She declined to elaborate.

In his January budget proposal, Newsom said his administration was "exploring approaches to increase transparency" in the entire drug supply chain, not just PBMs.

Industry representatives say they're being unfairly targeted with transparency laws and regulations and blame pharmaceutical companies for setting high drug prices.

"The PBM is taking the risk on price variation, and it allows the client to have certainty on what they're going to be paying," said Bill Head, an assistant vice president of state affairs for the Pharmaceutical Care Management Association, which represents PBMs. "We're hired because it works. It saves money at the end of the day."

He said PBMs pass on more than 95% of the rebates they receive from drugmakers — a number health policy researchers say is hard to verify.

Consumer advocates say drugmakers simply raise their prices to maintain profits and PBMs charge insurers far more for many medicines than pharmacies are paid to actually dispense them, a practice known as spread pricing.

A January report by the Federal Trade Commission found the three biggest PBMs appeared to steer the most profitable prescriptions away from competitors and to their affiliated pharmacies, which they reimbursed at markups exceeding 1,000% for some drugs, including some used to treat cancer, multiple sclerosis, and serious lung conditions. Over a six-year period, the analysis found, those PBMs and their affiliated pharmacies made roughly $8.7 billion in additional revenue by marking up prices on a sample of 51 specialty drugs.

Wiener's latest bill, SB 41, would ban such markups, as well as spread pricing, and bar PBMs from receiving performance bonuses based on drug rebates. Similar provisions were stripped out of last year's bill in the final days before its passage.

"These are practices that only PBMs are engaging in and they're causing harm, reducing consumer choice, increasing drug costs, and it's time to address them," Wiener said. "I'm not going to let that idea just evaporate because of one veto."

Clint Hopkins, who has co-owned Pucci's Pharmacy in Sacramento since 2016, said he often deals with complaints from frustrated patients who don't understand drug pricing schemes and restrictions set by pharmacy benefit managers.

He's had to turn away customers whose drugs can cost him hundreds of dollars in losses each time they're filled and says spread pricing is helping drive independent pharmacies out of business.

"I'm not asking to be paid more. I am asking to be paid fairly — at cost or above."

Under current law, California requires PBMs to disclose some information about drug rebates, and other information, to its clients. That data is often labeled as proprietary to the companies, leaving an incomplete picture of the supply chain, said Maureen Hensley-Quinn, a senior program director at the National Academy for State Health Policy.

PBM representatives say pharmacies, insurers, and other actors in the supply chain should have to disclose information about their profits and practices, too.

"You want to look under the hood?" Head said. "We're open to that, but let's look under everybody's hood."

Bai said lawmakers are likely going after PBMs because insurers are one portion of the supply chain that they have the power to regulate. But she warned such legislation could cost consumers more if drugmakers and pharmacies remain unchecked. A better approach, Bai suggested, would be to bar PBMs entirely from managing benefits for generic drugs, one of their biggest revenue sources.

"In healthcare, there's no saint and there's no villain. Everybody's trying to make money," Bai said. "These fights will bring no benefit to patients unless we go to the root."

This article was produced by KFF Health News, which publishes California Healthline, an editorially independent service of the California Healthcare Foundation. 

Christine Mai-Duc: CMaiDuc@kff.org, @cmaiduc