HCA Healthcare's activation fees run as high as $50,000 per patient and are sometimes 10 times greater than those at other hospitals, according to publicly posted price lists.

This article was published on Monday, June 14, 2021 in Kaiser Health News.

By Jay Hancock

After falling from a ladder and cutting his arm, Ed Knight said, he found himself at Richmond, Virginia's Chippenham Hospital surrounded by nearly a dozen doctors, nurses and technicians — its crack "trauma team" charged with saving the most badly hurt victims of accidents and assaults.

But Knight's wound, while requiring about 30 stitches, wasn't life-threatening. Hospital records called it "mild." The people in white coats quickly scattered, he remembered, and he went home about three hours later.

"Basically, it was just a gash on my arm," said Knight, 71. "The emergency team that they assembled didn't really do anything."

Nevertheless, Chippenham, owned by for-profit chain HCA Healthcare, included a $17,000 trauma team "activation" fee on Knight's bill, which totaled $52,238 and included three CT scans billed at $14,000. His care should have cost closer to $3,500 total, according to claims consultant WellRithms, which analyzed the charges for KHN.

HCA Healthcare's activation fees run as high as $50,000 per patient and are sometimes 10 times greater than those at other hospitals, according to publicly posted price lists. Such charges have made trauma centers, once operated mainly by established teaching hospitals, a key part of the company's growth and profit-generating strategy, corporate officials have said. HCA's stock has doubled in three years. The biggest U.S. hospital operator along with the Department of Veterans Affairs, HCA has opened trauma centers in more than half its 179 hospitals and says it runs 1 of every 20 such facilities in the country.

And it's not slowing down.

HCA "has basically taken a position that all of their hospitals should be trauma centers," said Dr. Robert Winchell, describing conversations he had with HCA officials. Winchell is a trauma surgeon and former chairman of the trauma evaluation and planning committee at the American College of Surgeons.Bottom of Form

Trauma patients are typically those severely injured in automobile accidents or falls or wounded by knives or guns.

State or local regulators confer the designation "trauma center," often in concert with standards verified by the American College of Surgeons. The status allows a cascade of lucrative reimbursement, including activation fees billed on top of regular charges for medical care. Trauma centers are mostly exempt from 1970s-era certificate-of-need laws enacted to limit excessive hospital spending and expansion. The bills for all this — reaching into tens of thousands of dollars — go to private insurers, Medicare or Medicaid, or patients themselves.

"Once a hospital has a trauma designation, it can charge thousands of dollars in activation fees for the same care seen in the same emergency room," said Stacie Sasso, executive director of the Health Services Coalition, made up of unions and employers fighting trauma center expansion by HCA and others in Nevada.

HCA's expansion into trauma centers alarms health policy analysts who suggest its motive is more about chasing profit than improving patient care. Data collected by the state of Florida, analyzed by KHN, shows that regional trauma cases and expensive trauma bills rise sharply after HCA opens such centers, suggesting that many patients classified as trauma victims would have previously been treated less expensively in a regular emergency room.

Patients admitted to HCA and other for-profit hospitals in Florida with a trauma-team activation were far more likely to be only mildly or moderately injured than those at not-for-profit hospitals, researchers have found.

HCA is "cherry-picking patients," said Ed Jimenez, CEO of the University of Florida Health Shands, which runs a Level I trauma center, the highest designation. "What you find is an elderly person who fell and broke their hip who could be perfectly well treated at their local hospital now becomes a trauma patient."

HCA's trauma center expansion makes superior care available to more patients, providing "lifesaving clinical services while treating all critically injured patients," said company spokesperson Harlow Sumerford.

Richmond's population "is booming," said Chippenham spokesperson Jeffrey Caldwell. "This increase in demand requires that the regional healthcare system keep up."

Trauma Is Big Business

HCA's trauma center boom picked up speed in Florida a decade ago and has spread to its hospitals in Virginia, Nevada, Texas and other states. It has sparked fierce fights over who handles highly profitable trauma cases and debates over whether costs will soar and care suffer when rival centers go head-to-head competing for patients.

"There's no question it's a money grab" by HCA, said Jimenez, who was part of a largely unsuccessful effort to stop HCA's trauma center expansion in Florida. "It was clear that their trauma activation fees were five or six times larger than ours."

In a process shielded from public view in Virginia, Chippenham recently applied for and won the highest trauma center designation, Level I, providing the most sophisticated care — and putting it squarely in competition with nearby VCU Health. VCU has run the region's only Level I facility for decades. In October, Chippenham announced a contract for its own helicopter ambulance, which gives it another way to increase its trauma business, by flying patients in from miles away. The Virginia Department of Health rejected KHN's request to review HCA's Chippenham trauma center application and related documents.

"This is a corporate strategy" by HCA "to grow revenue, maximize reimbursement and meet the interest of stockholders," said Dr. Arthur Kellermann, CEO of VCU Health, who says his nonprofit, state-run facility is sufficient for the region's trauma care needs. "Many people in the state should be concerned that the end result will be a dilution of care, higher costs and poorer outcomes."

Chippenham's Caldwell said the "redundancy" with VCU "allows the region to be better prepared for mass trauma events."

Studies show trauma centers need high volumes of complex cases to stay sharp. Researchers call it the "practice makes perfect" effect. Patients treated for traumatic brain injuries at hospitals seeing fewer than six such cases a year died at substantially higher rates than such patients in more experienced hospitals, according to a 2013 study published in the Journal of Neurosurgery.

Another study, published in the Annals of Surgery, showed that a decrease as small as 1% in trauma center volume — because of competition or other reasons — substantially increased the risk that patients would die.

By splitting a limited number of cases, a competing, cross-town trauma center could set the stage for subpar results at both hospitals, goes the argument. The number of VCU's admitted adult trauma patients decreased from nearly 3,600 in 2014, before Chippenham attained Level II status, to 3,200 in 2019, VCU officials said.

Chippenham was the only Level I center in Virginia that declined to disclose its trauma patient volume to KHN.

"People are trying to push the [trauma center] designation process beyond what may be good for the major hospitals that are already providing trauma care," said Dr. David Hoyt, executive director of the American College of Surgeons, speaking generally. Local authorities who make those decisions, he said, can be "pressured by a hospital system that has a lot of economic pull in a community."

Unlike regular emergency departments, Level I and Level II trauma centers make trauma surgeons, neurosurgeons and special equipment available round-the-clock. Centers with Levels III or IV designations offer fewer services but are still more capable than many emergency rooms, with round-the-clock lab services and extra training, for example.

Hospitals defend trauma team activation fees as necessary to cover the overhead of having a team of elite emergency specialists at the ready. At HCA hospitals they can run more than $40,000 per case, according to publicly posted charge lists, although the amount paid by insurers and patients is often less, depending on the coverage.

"Fees associated with trauma activation are based on our costs to immediately deploy lifesaving resources and measures 24/7," said HCA spokesperson Sumerford, adding that low-income and uninsured patients often pay nothing for trauma care. "What patients actually pay for their hospital care has more to do with their insurance plan" than the total charges, he said.

There is no standard accounting for trauma-related costs incurred by hospitals. One method involves multiplying hourly pay for members of the trauma team by the potential hours worked. Hospitals don't reveal calculations, but the wide variation in fees suggests they are often set with an eye on revenue rather than true costs, say industry analysts.

Reasonable charges for Knight's total bill would have been $3,537, not $52,238, according to the analysis by WellRithms, a claims consulting firm that examined his medical records and Chippenham's costs filed with Medicare. Given his minor injury, the $17,000 trauma activation fee "is not necessary," said Dr. Ira Weintraub, WellRithms' chief medical officer.

Often insurers pay substantially less than billed charges, especially Medicare, Knight's insurer. He paid nothing out-of-pocket, and Chippenham collected a total of $1,138 for his care, HCA officials said after this article was initially published. But hospitals can maximize revenue by charging high trauma fees to all insurers, including those required to pay a percentage of charges, say medical billing consultants.

VCU Health charges up to $13,455 for trauma activation, according to its charge list.

Average HCA trauma activation charges are $26,000 in states where the company does business — three times higher than those of non-HCA hospitals, according to data from Hospital Pricing Specialists, a consulting firm that analyzed trauma charges in Medicare claims for KHN.

The findings are similar to those reported by the Tampa Bay Times in 2014, early in HCA's trauma center expansion. The Times found that Florida HCA trauma centers were charging patients and insurers tens of thousands of dollars more per case than other hospitals.

Treating trauma patients in the ER is only the beginning of the revenue stream. Intensive inpatient treatment and long patient recoveries add to the income.

"We have more Level I, Level II trauma centers today than we have ever had in the company history," HCA's then-CEO, Milton Johnson, told stock analysts in 2016. "That strategy in turn feeds surgical growth. That strategy in turn feeds neurosciences growth, it feeds rehab growth." Trauma centers attract "a certain cadre of high-value patients," Dr. Jonathan Perlin, HCA's chief medical officer, told analysts at a 2017 conference.

Patients at HCA's largely suburban hospitals are more likely than those at an average hospital to carry private insurance, which pays much more than Medicare and Medicaid. More than half the company's revenue in 2020 came from private insurers, regulatory filings show. Hospitals, in general, collect a little more than a third of their revenue from private insurers, according to the Department of Health and Human Services.

HCA's trauma cases can fit the same profile. At Chippenham, in south Richmond, trauma cases are "90% blunt trauma," according to the hospital's online job posting last year for a trauma medical director. Blunt-trauma patients are generally victims of car accidents and falls and tend to have good insurance, analysts say.

VCU and other urban hospitals, on the other hand, treat a higher share of patients with gun and knife injuries — penetrating trauma — who are more often uninsured or covered by Medicaid. About 75% of VCU's trauma cases are classified as blunt trauma, hospital officials said.

The 90% figure is "not accurate today," Caldwell said. "Chippenham's current mix of trauma type is aligned with that of other trauma centers in the region, and we treat traumas ranging from motor vehicle accidents to gunshots, stabbings and other critical injuries regularly."

'Trauma Drama' in Florida and Beyond

HCA's growth strategy is part of a wider trend. From 2010 to 2020 the number of Level I and Level II trauma centers verified by the American College of Surgeons nationwide increased from 343 to 567.

Nowhere has HCA added trauma centers more aggressively or the fight over trauma center growth been more acrimonious than in Florida. The state's experience over the past decade may offer a preview of what's to come in Virginia and elsewhere.

In the thick of the controversy, legislators stepped in to broker a 2018 truce — but only after the number of HCA trauma centers in the state had grown from one to 11 over more than a decade and helped spark an explosion in trauma cases, according to Florida Department of Health data.

News headlines called it "trauma drama." Hospitals with existing centers repeatedly filed legal challenges to stop the expansion, with little effect. Florida's governor at the time was Rick Scott, former chief executive of Columbia/HCA, a predecessor company to HCA.

After launching Level II centers across the state, HCA officials urged Florida regulators not to adopt CDC guidelines recommending severely injured patients be treated at the highest level of trauma care in a region — Level I, if available.

HCA "kept on working, working, working, working for 10 years" to gain trauma center approvals over objections, said Mark Delegal, who helped broker the legislative settlement as a lobbyist for large safety-net hospitals. "Once they had what they wanted, they were happy to lock the door behind them."

HCA hospitals "serve the healthcare needs of their communities and adjust or expand services as those needs evolve," said Sumerford.

As HCA added trauma centers, trauma-activation billings and the number of trauma cases spiked, according to Florida Department of Health data analyzed by KHN. Statewide, inpatient trauma cases doubled to 35,102 in the decade leading up to 2020, even though the population rose by only 15%. HCA's share of statewide trauma cases jumped from 4% to 24%, the data shows.

Charges for trauma activations, also known as trauma alerts, for HCA's Florida hospitals averaged $26,890 for inpatients in 2019 while the same fees averaged $9,916 for non-HCA Florida hospitals, the data shows. Total average charges, including medical care, were $282,600 per case in 2019 for inpatient trauma cases at HCA hospitals, but $139,000 for non-HCA hospitals.

HCA's substantially higher charges didn't necessarily result from patients with especially severe injuries, public university research found.

Over three years ending in 2014, Florida patients with sprains, mild cuts and other non-life-threatening injuries were "significantly more likely" to be admitted under trauma alerts at HCA hospitals and other for-profit hospitals than at nonprofit hospitals, according to research by University of South Florida economist Etienne Pracht and colleagues. HCA hospitals have admitted emergency department Medicare patients at substantially higher-than-average rates since 2011, suggesting that at other hospitals many would have been sent home, new research by the Service Employees International Union found.

"What's going on with HCA is the Wall Street model they're following," said Pracht, who provided KHN with additional Florida Department of Health data showing soaring trauma cases. "And Wall Street's not happy unless you're expanding. They're driven by the motive to keep the stock price high."

Lobbying and Campaign Dollars

In Virginia, healthcare organizations need to go through a lengthy and public application process to add something as basic as a $1 million MRI imaging machine.

But to open or upgrade a trauma center, all that's needed is the approval of the health commissioner after a confidential qualification procedure. Chippenham did not seek or obtain Level I verification from the American College of Surgeons before getting Level I approval from the state. It is ACS-verified as a Level II center and, Caldwell said, is seeking Level I status with ACS.

Virginia requires an "extensive application" and "in-depth" site reviews by experts before a hospital gains status as a trauma center, Dr. M. Norman Oliver, the commissioner, said in an email. "Chippenham Hospital met the requirements" to become a Level I center, he said.

Nearly 80% of HCA's Level I and Level II trauma centers have been verified by the American College of Surgeons "and the others currently are pursuing this verification," said HCA spokesperson Sumerford.

As in other states, HCA invests heavily in Virginia in political influence. Eleven Virginia lobbyists are registered with the state to advocate on HCA's behalf. One lobbyist spent more than $5,000 from December 2019 through February 2020 treating public officials to reception spreads and meals at posh Richmond restaurants such as L'Opossum and Morton's the Steakhouse, lobbying records submitted to Virginia's Conflict of Interest and Ethics Advisory Council show. HCA's political action committee donated $160,000 to state candidates last year, according to the records.

Like other hospital systems, HCA hires former paramedics for "EMS relations" or "EMS outreach" jobs. HCA's EMS liaisons are expected to develop a "business plan, driving service line growth," according to its employment ads.

Chippenham's decision to start a helicopter ambulance operation last year to compete with others in transporting trauma patients surprised some public officials. HCA and its contractor had filed paperwork for the operation to be reimbursed by insurers when Richmond City Council members learned about it. Members "were not up to speed on this matter," council member Kristen Larson told a May 2020 meeting of the Richmond Ambulance Authority, according to the minutes.

Chippenham's air ambulance partner, private equity-owned Med-Trans, has been the subject of numerous media reports of patients saddled with tens of thousands of dollars in out-of-network surprise bills. It's not unusual for air ambulances to charge $30,000 or more for transporting a patient from a highway accident or just across town, according to news reports.

Last year, 85% of Med-Trans flights for Virginia patients with health insurance were in-network, said a company spokesperson. But Med-Trans is out of network for Virginia members of Aetna and UnitedHealthcare, two of the state's biggest carriers, said spokespeople for those companies. Med-Trans is part of Anthem Blue Cross Blue Shield's network, an Anthem spokesperson said.

HCA runs trauma centers "really well," said Winchell, who runs the Level I trauma center at NewYork-Presbyterian Weill Cornell Medical Center.

But "there are clearly areas of oversupply" for trauma centers generally, he said.

Instead of letting a drive for profits dictate trauma center expansion, health authorities need "objective and transparent metrics" to guide the designation of trauma centers, Winchell recently wrote in the Journal of the American College of Surgeons.

Free-market advocate "Adam Smith might have been a good economist," he wrote, "but he would have been a very poor designer of trauma systems."

KHN data editor Elizabeth Lucas contributed to this report.

Jay Hancock: jhancock@kff.org, @JayHancock1

Until now, employers were required to report a hospitalization only if it came within 24 hours of a workplace exposure.

This article was published on Friday, June 11, 2021 in Kaiser Health News.

By Christina Jewett

Labor Department officials on Thursday announced a temporary emergency standard to protect healthcare workers, saying they face "grave danger" in the workplace from the ongoing coronavirus pandemic.

The new standard would require employers to remove workers who have COVID-19 from the workplace, notify workers of COVID exposure at work and strengthen requirements for employers to report worker deaths or hospitalizations to the Occupational Safety and Health Administration.

"These are the workers who continue to go into work day in and day out to take care of us, to save our lives," said Jim Frederick, acting assistant secretary of Labor for occupational safety and health. "And we must make sure we do everything in our power to return the favor to protect them."

The new rules are set to take effect immediately after publication in the Federal Register and are expected to affect about 10.3 million healthcare workers nationwide.

The government's statement of reasons for the new rules cites the work of KHN and The Guardian in tallying more than 3,600 healthcare worker COVID deaths through April 8. Journalists documented far more deaths than the limited count by the Centers for Disease Control and Prevention, which through May tallied 1,611 deaths on case-reporting forms that were often incomplete.

The Lost on the Frontline project documented early calls for better respiratory protection for healthcare workers than loose-fitting face masks, noted serious complaints to OSHA from hospital workers that went unaddressed and revealed repeated employer failures to report dozens of worker deaths. It also found that healthcare employers were often remiss in notifying workers about exposure to the coronavirus on the job.

The new standard would address some of those problems.

The rules require workers to wear N95 or elastomeric respirators when in contact with people with either suspected or confirmed COVID. They strengthen employer record-keeping requirements, saying employers must document all worker COVID cases (regardless of whether they were deemed work-related) and report work-related deaths even if they occur more than 30 days after exposure.

Until now, employers were required to report a hospitalization only if it came within 24 hours of a workplace exposure. Now all work-related COVID hospitalizations must be reported. The rules also mandate notification about exposure to a sick colleague, patient or customer if the worker was not wearing a respirator.

There is a lot to like about the new rule ― except for the timing, according to Barbara Rosen, vice president of the Health Professionals and Allied Employees union in New Jersey.

"It's a little late," she said. "If we had had this in place at the beginning, it would have saved a lot of lives and a lot of suffering that has gone on with healthcare workers and probably patients in hospitals because of the spread."

She said she was pleased with the requirement that workers be paid when they isolate with COVID and that employers formulate a detailed COVID plan with the input of non-managers.

The day after he took office, President Joe Biden issued an executive order calling on OSHA to "take swift action to reduce the risk that workers may contract COVID-19 in the workplace." The rule has been criticized for coming late — about which Labor Department officials said on a press call that such standards typically take years, not months, to formulate. It has also been derided for failing to enact requirements on employers outside of healthcare.

"OSHA's failure to issue a COVID-specific standard in other high-risk industries, like meat and poultry processing, corrections, homeless shelters and retail establishments is disappointing," according to a statement from David Michaels, a former OSHA administrator and professor with the George Washington University School of Public Health. "If exposure is not controlled in these workplaces, they will continue to be important drivers of infections."Bottom of Form

The new rule also cites 67,000 worker complaints during the pandemic, with "more complaints about healthcare settings than any other industry." The rule would protect workers from retaliation for staying home when sick with COVID, alerting their employer about a COVID hazard or exercising their rights under the emergency rule.

Through March 7, about half of healthcare workers said they had received at least their first dose of a COVID vaccine, according to a KFF-Washington Post poll. About one-third of those polled said they were unsure if they would get a vaccine. The issue has been controversial, especially in Houston, where workers at one hospital staged a protest over their employer's vaccine mandate.

The new rules exempt some office-based healthcare workplaces where all staff members are vaccinated and measures are taken to screen people with potential illness. The rule summary estimates the measures will prevent 776 deaths and 295,000 infections.

The new rule also says it will "enable OSHA to issue more meaningful penalties for willful or egregious violations, thus facilitating better enforcement and more effective deterrence against employers who intentionally disregard … employee safety."

Kristin Carbone said the measure came too late for her mother, Barbara Birchenough, 65, a New Jersey hospital nurse who'd asked family members to gather gardening gloves and trash bags to serve as makeshift personal protective equipment before she fell ill and later died on April 15, 2020. Still, she said, it's a necessary step.

"If there is a silver lining," she said, "I'm glad that out of this tragedy come positives for the people that are left behind."

Christina Jewett: ChristinaJ@kff.org, @by_cjewett

Medi-Cal paid for a whopping 2.4 million phone appointments from March 1, 2020, to April 30, 2021.

This article was published on Friday, June 11, 2021 in Kaiser Health News.

By Rachel Bluth

It took COVID-19 to give millions of Americans the option of telling their doctor about their aches and pains by phone.

But now that more doctors and patients are returning to in-person appointments, policymakers across the country are divided over how much taxpayer money to keep spending on phone appointments. Although they were a lifeline for Medicaid and Medicare patients who don't have the technology for video visits, critics say they don't provide the same level of patient care and aren't worth the same price.

In California, the Democratic-controlled legislature wants the state's Medicaid program for low-income people — called Medi-Cal — to keep paying for phone calls at the same rate as for video and in-person visits, a policy that began during the pandemic. But Democratic Gov. Gavin Newsom's budget plan directs Medi-Cal to reduce the rate.

Medi-Cal paid for a whopping 2.4 million phone appointments from March 1, 2020, to April 30, 2021, according to the state Department of Healthcare Services.

"Prior to the pandemic, audio-only visits weren't a thing," said Chris Perrone, director of the California Healthcare Foundation's Improving Access team. "No one considered them telehealth." (California Healthline is an editorially independent publication of the foundation.)

The federal Medicare program — which covers older Americans and people with disabilities — and most state Medicaid programs rarely paid for phone visits before the pandemic. But after doctors shuttered their offices last year and patients stayed home, Medicare and nearly every state Medicaid program began paying for phone visits when it became clear that many patients didn't have access to video. More private insurers began counting phone calls as telemedicine visits, too.

The use of audio and video appointments — generally known as telehealth — has exploded during the pandemic. In California, there were about 10,500 telehealth visits a week per 100,000 Medi-Cal patients in 2020, compared with about 300 in 2019, according to the state Department of Healthcare Services.

Medicare saw a similar explosion. Before the pandemic, about 17,000 enrollees used telemedicine each week. That shot up to 1.1 million weekly during the pandemic, according to a Medicare spokesperson.

While most state Medicaid programs began paying for phone visits during the pandemic, they are weighing how to proceed as it wanes. New Hampshire passed a law in March 2020 requiring Medicaid and private plans to pay for phone visits at the same rate as video and in-person visits. This March, Vermont extended emergency rules to pay for phone visits at the same rate as other types of appointments through 2022, and a state working group recommended keeping them permanently. Connecticut, Delaware, New York, Colorado and other states passed laws that define phone visits as telehealth, and all are continuing to pay for them to varying degrees.

Congress held hearings in April to determine whether Medicare should keep paying for phone visits, which it started doing in March 2020 but is set to stop after the federally declared public health emergency ends. A nonpartisan legislative agency has recommended extending the payments for a year or two after the emergency.

Because audio appointments are new, there's little evidence on quality. The California Health Benefits Review Program analyzed studies on the effectiveness of telehealth and found that, generally, telephone visits were "at least as effective as in-person" ones. The few studies that directly compare video and audio visits looked at behavioral healthcare and determined that outcomes were about the same.

Phone visits were important to Taryn Keane, 63, who lost her job as a massage therapist in Venice, California. Keane can't afford internet service at home and didn't have a laptop until the Venice Family Clinic gave her an old one and a Wi-Fi hot spot so she could participate in patient forums.

Still, Keane doesn't like video calls. She has dental problems that make her uncomfortable showing her face on video and a learning disability that makes it hard to focus if there are too many visual distractions. It was easier for her to talk through her mental health issues, and get consultations before and after wrist surgery, over the phone.

"I'm not good on the computer," Keane said. "It's just another uncomfortable barrier for me."

California lawmakers are debating a bill, AB 32, that would require Medi-Cal to keep reimbursing phone, video and in-person visits at the same rate in most settings. The measure, passed by the state Assembly, is now being debated in the Senate and as part of budget negotiations.

An analysis of the bill from the California Health Benefits Review Program found evidence that patients of color and those who are older or rural were more likely to use phone visits than video visits during the pandemic.

"It's obvious that video [appointments] will not be going to all rural residents and seniors anytime soon," said state Assembly member Cecilia Aguiar-Curry (D-Winters), author of the measure. "My No. 1 goal is to have access for all."

Doctors at safety-net clinics that serve Medi-Cal enrollees and uninsured people report that phone visits have been instrumental in keeping patients healthy during the pandemic. They have proved effective with patients with behavioral health issues like substance use disorders, and those with chronic diseases like diabetes, which require monthly check-ins.

Dr. Grace Floutsis, CEO of White Memorial Community Health Center in Los Angeles, used video and phone appointments for the first time during the pandemic. Like all federally qualified health centers, White Memorial generally wasn't allowed to use telehealth until then.

"What surprised us the most was how many more people had access to care because that was provided," Floutsis said. "I'm not sure that changes that much after the pandemic."

Patients have stopped skipping appointments, she said. The no-show rate for pediatrics (now in person) is higher than for adult primary care (still virtual). The no-show rate for behavioral health, once high, has dwindled to nearly zero.

California's Department of Healthcare Services argues that phone appointments aren't as good as in-person or even video visits and wants to pay for some phone visits at 65% of in-person or video rates, beginning July 1 or when the federal public health emergency ends.

"There are inherent limitations on the types of services and quality provided," department spokesperson Tony Cava wrote in an email. "They are not typically viewed as equivalent to in-person visits, do not require the same level of resources to manage, and special equipment or broadband internet connections aren't required."

Despite multiple requests, the department did not provide data on how much it paid for phone appointments during the pandemic.

Under the department's proposal, it would no longer pay for phone appointments at community health centers because the health centers receive a flat rate for every visit by a Medicaid patient. The department left the door open to work with health centers and the federal government to pay some amount for audio visits in the future.

The average community clinic appointment in California is reimbursed at $215, but some can be several hundred dollars.

"While I think it's a really valuable service, I don't think it's a really valuable service at that cost," said Assembly member Jim Wood (D-Santa Rosa), who chairs the Assembly Health Committee.

His committee discussed cost in April when it considered AB 32, the bill to keep rates for phone visits equal to the rates for other visits, and amended it to stop reimbursing audio visits at community clinics altogether after five years.

West County Health Centers in Sonoma County is already losing money on phone appointments for Medicare patients, and will take an even bigger hit if Medi-Cal cuts rates, said CEO Jason Cunningham.

But ending phone appointments completely isn't an option, he said. Phone calls allow patients to conference in family members, eliminate travel time for patients in remote parts of the county, and enabled clinics to keep operating when their buildings were closed for wildfires last summer, he said.

"How can I ask someone to drive an hour to see me, wait in the waiting room for 20 minutes and drive an hour back home when their neighbor with a laptop can see me virtually?" he asked.

This story was produced by KHN, which publishes California Healthline, an editorially independent service of the California Healthcare Foundation.

Rachel Bluth: rbluth@kff.org, @RachelHBluth

Direct primary care practices have been emerging around the country, but they are often criticized for not offering the patient safeguards of traditional insurance.

This article was published on Thursday, June 10, 2021 in Kaiser Health News.

By Andrea Halland

When Paul Rana's primary care physician left the VA clinic in Kalispell to open her own practice, he followed her. But instead of picking up a new health insurance policy, Rana and his partner agreed to pay a monthly fee that came with the promise of better access.

Their provider, Dr. Lexi Tabor-Manaker, opened Glacier Direct Primary Care clinic in 2018. The model known as DPC, which can also stand for direct patient care, furnishes basic healthcare to patients for a set fee, often billed monthly like a subscription. The arrangement offers patients unlimited access to their doctors and allows them to communicate by phone or email. But the costs are all out-of-pocket.

"We have been pleased to be able to communicate with her instantly without going through an administrative gauntlet," as he might with the Department of Veterans Affairs, Rana said.

Direct primary care practices have been emerging around the country, but they are often criticized for not offering the patient safeguards of traditional insurance. State legislators this year, however, sought to preserve the approach and passed two new laws that prohibit direct primary care practices or healthcare sharing ministries — religious or ethical groups whose members pool money to cover medical costs — from being regulated as insurance.

Such arrangements, according to supporters, afford greater flexibility and lower costs for healthcare compared with traditional health insurance. Without these laws, "a future commissioner of insurance may deem them to be insurance and require them to come under the health insurance regulatory scheme, thus destroying their value and defining characteristics," said Sen. Tom McGillvray (R-Billings), sponsor of the bill on healthcare sharing ministries.

Lack of regulation comes with risks. Patients in direct primary care and healthcare sharing ministries mostly miss out on consumer protections mandated by the Affordable Care Act, such as coverage of preexisting conditions and prohibitions against charging more based on gender.

Some healthcare sharing ministries have developed into large nationwide organizations, such as Medi-Share and Trinity HealthShare. Critics of that model say the unregulated ministries aren't required to cap out-of-pocket costs or pay claims and can refuse coverage for certain treatments. They can also have annual and lifetime benefit caps.

In Montana, a pastor filed a lawsuit in 2007 after Medi-Share refused to pay for expenses for a member's heart condition. A state judge ruled the group was selling insurance without registering in the state, effectively banning healthcare sharing ministries. That changed in 2017 when Matthew Rosendale, then insurance commissioner, declared the programs weren't health insurance and could operate in the state.

McGillvray's bill cements Rosendale's ruling into state law.

Eight direct primary care facilities operate in Montana with out-of-pocket fees that typically range from $70 to $120 per month for an adult, according to DPC Frontier.

Supporters of direct primary care said the model lets doctors spend more time with patients. Physicians told lawmakers that when working with traditional insurance plans they might spend a significant chunk of their days on administrative tasks instead of patient care, according to Sen. Cary Smith (R-Billings), sponsor of the direct primary care bill.

That bill allows for any form of healthcare practice — therapists, dentists, physical therapists, etc. — to operate under the direct primary care model.

Direct primary care agreements don't cover hospital visits, prescription drugs, surgery or specialized care, such as cancer treatment. Providers and supporters recommend people sign up for health insurance to cover those costs.

Another criticism, one leveled by traditional health insurers, is that the monthly fee often doesn't save people money. Patients would have to go to the doctor several times a year to make the direct primary care monthly payments worthwhile, and people usually don't make that many visits, said Richard Miltenberger, CEO of Mountain Health Co-Op, a nonprofit health insurance cooperative that sells health insurance in Montana, Idaho and Wyoming.

"So, it's actually often, for many consumers, more cost-effective to just pay for the service [that isn't covered by insurance] when you utilize it, as you utilize it, as opposed to paying a monthly membership fee," Miltenberger said.

Rana, a retired Army veteran who lives in Woods Bay, doesn't fully depend on direct primary care for his healthcare. He still uses the VA clinic for regular checkups. He also has Medicare and Tricare — a health program for military members and their families — for larger procedures he gets outside of the VA, such as when he had knee surgery in 2020.

But his first stop when he noticed something wrong with his knee was with Tabor-Manaker, who saw him quickly and referred him to a specialist. That makes the expense worth it, he said.

"I knew going in that this was all out-of-pocket for me, and I accepted that because the quality of service is far greater in its value to me than the hundred bucks a month," Rana said.