Editorial- Tampa Bay Times - December 29, 2021
Forget car dealers; Americans are flummoxed by the marketplace for health care. Two new reports published last week show that consumers are increasingly anxious about medical costs and access to care, with record numbers signing up for subsidized health coverage. The system is not working for the majority of Americans, and the inequities are only getting worse.
A new national survey released last week shows the frustration that Americans are feeling amid the continuing grind of the pandemic. An estimated 100 million Americans would describe the health care system as either “expensive” or “broken,” according to the West Health-Gallup 2021 Healthcare in America Report. Almost half say their view of the system has worsened in the era of COVID-19. And as the Tampa Bay Times’ Margo Snipe reports, the nation’s outlook is equally grim, with nine in 10 of those surveyed saying they expect their health care costs to increase.
The United States spends nearly $4 trillion on health care, making it the most expensive system in the world. Yet it produces the worst outcomes in categories such as life expectancy, obesity rates, chronic disease burdens and suicide rates, compared to other high-income countries, according to the Commonwealth Fund. While the nation’s top one percent experience the best health outcomes, according to one West Health executive, those outcomes worsen as income decreases.
The survey, billed as the largest of its kind on health care since the start of the pandemic, shows that COVID amplified the worries that Americans have about the cost of health services and prescription drugs. Seven in 10 Americans say their household pays too much for the quality of care they receive. And the findings in Florida matched the national mood. Nearly 30 percent of Floridians report health care costs are a major financial burden. Consumers are skipping doctor’s visits because they cannot afford them. And the number foregoing care is also spiking, to about one-third of the respondents, the highest that level has reached since the start of the pandemic. And health disparities are mounting for Americans of color; while 60 percent of the survey respondents said access was an issue, that concern rose to 75 percent among Black Americans.
The concern over affordability comes as the Biden administration announced last week that a record 13.6 million Americans have signed up for health coverage for 2022 on the Affordable Care Act marketplaces, with nearly a month remaining to enroll in most states. White House advisors credited increased government subsidies, which lowered out-of-pocket costs, for the surge in enrollment. They also said enhanced outreach efforts resulted in connecting more people to insurance options.
The spike in enrollments reflects the demand for coverage in Florida, Texas and other states that have not expanded Medicaid under the Affordable Care Act. Through mid-December, enrollment in Florida had jumped to 2.6 million people, up from 2.1 million in the same period a year earlier. The program has made a dent in covering more of the uninsured. But the experience shows how prices drive a family’s medical decisions, and of how even basic care is getting out of reach for many.
Cost-shifting to government and private insurers has hidden the growing crisis in medical costs for years. And America’s bloated health care bureaucracy has never seriously confronted the middlemen who simultaneously siphon profit and limit choice. Consumers are pinched, stressed out and foregoing care, and two years of COVID has only fueled greater uncertainty. West Health and Gallup have provided a valuable snapshot of the burden and pessimism consumers are carrying. Expensive, broken, unfair — that’s hardly a health system for America or a model for the world.
https://www.tampabay.com/opinion/2021/12/29/americas-sick-and-costly-health-care-system-editorial/
'Get that money!' Dermatologist says patient care suffered after private equity-backed firm bought her practice
The email to the health care workers was like something out of “The Wolf of Wall Street.” “We are in the last few days of the month and are only 217 appointments away from meeting our budget,” the August 2020 memo stated. “Don’t forget the August bonus incentive for all patients scheduled in August! That’s the easiest money you can make. Get that money!!”
The “Get that money!!” entreaty wasn’t addressed to a bunch of hard-charging, coke-snorting stockbrokers. It went to Michigan-based employees of Pinnacle Dermatology, a private equity-owned group of 90 dermatology practices across America.
The memo was shared with NBC News by a former Pinnacle employee, Dr. Allison Brown, a board-certified dermatologist and dermatopathologist. Brown says Pinnacle terminated her shortly after she advised management of questionable practices that she contends were hurting patients.
Among the practices Brown alleges: overlooked diagnoses, lost patient biopsies, questionable quality control in the company-owned lab and overbooking of patients without sufficient support staff.
Physicians have a duty to put their patients’ interests first. But when aggressive financiers take over medical operations, the push for profits can take precedence, doctors in an array of specialties have told NBC News. Paying bonuses for increased patient visits may result in unnecessary appointments and costs, for example.
Among the most aggressive health care financiers in the market today are private equity firms. The new titans of finance, these firms have taken over broad swaths of U.S. industry in recent years. Using large amounts of debt to finance their acquisitions, private equity firms acquire companies, aim to increase their profits and then try to resell them a few years later for more than they paid.
Outside investors, such as public pension funds and endowments, commit big money to the deals in hope of generating high returns.
Private equity is reshaping the health care industry, practitioners, economists and academic researchers contend. Private equity funds dedicated solely to health care operations have been especially busy, raising $350 billion from investors over the past decade, according to Preqin, a private equity data source. Last year, almost $50 billion was raised from investors for health care buyouts, up from $8 billion in 2010.
A focal point in such takeovers has been physician-owned dermatology practices, a highly fragmented sector of small operations that private equity firms have considered ripe for consolidation over the past decade. Just before the pandemic, researchers counted more than 30 private equity-backed dermatology groups in the country and said about 15 percent of dermatology practices were private equity-owned. The number has probably grown, the researchers say.
Private equity firms contend that they create jobs, support businesses and help provide comfortable retirements for pensioners invested in the strategy. But many outside the industry are especially critical of the industry’s involvement in health care. One private equity-owned hospital staffing company, for example, was behind many of the surprise emergency department bills that outraged hospital patients and resulted in a new law to curb the practices. It takes effect next month.
“The private equity business model is fundamentally incompatible with sound health care that serves patients,” concluded a paper in May co-authored by Richard M. Scheffler, professor of health economics and public policy at the University of California, Berkeley; Laura M. Alexander, the vice president of policy at the American Antitrust Institute, a nonprofit organization; and James R. Godwin, a Ph.D. candidate at the UCLA Fielding School of Public Health.
The researchers found that private equity’s focus on short-term profits “leads to pressure to prioritize revenue over quality of care, to overburden health-care companies with debt, strip their assets, and put them at risk of long-term failure, and to engage in anticompetitive and unethical billing practices.”
In addition, economists and practitioners who have studied private equity-backed health care entities say they often try to increase revenue by providing services typically outsourced to third parties. For example, many dermatology practices backed by private equity acquire their own labs to analyze specimens. They can be a source of additional revenue, research shows, and may provide incentives for the practices to run extra tests, presenting possible conflicts of interest.
Pinnacle Dermatology, which is based in Brentwood, Tennessee, and operates in 11 states, has been buying small physician-owned practices and outpatient services.
Dr. Jose Rios, Pinnacle’s president and chief medical officer, provided the following statement: “Our top priorities are always patient safety and clinical quality. Pinnacle Dermatology’s compliance and quality assurance programs lead the industry. We are proud of our track record, our high levels of patient satisfaction and the equally high patient loyalty that results and will continue to provide valuable dermatological care at the highest possible levels.”
Backing Pinnacle is Chicago Pacific Capital, a private equity firm founded in 2014. The firm “invests in companies that it believes are positioned to lead innovations in health-care delivery and in caring for aging populations,” a regulatory filing says. Chicago Pacific had $1.8 billion under management, including borrowings, as of December 2020.
Chicago Pacific didn’t respond to a phone call and a detailed email seeking comment about Pinnacle.
Brown, the former Pinnacle physician, who has also taught dermatology at two medical schools, said she decided to share her experience at the company out of concern for patient safety. “I worked in an office that was physician-owned until the physician passed away and we were bought out,” Brown said. “I experienced from the inside what happened to the practice” after private equity arrived.
Among the changes Brown said she saw after Pinnacle took over were an increase in patient biopsies that got lost and a drop in the quality and number of instruments purchased for the practice. She said the office booked her for 40 patient appointments a day without adequate support staff. Brown also described cases of patients were seen multiple times for problems that could have been resolved in single visits, raising the patients’ costs.
Even worse, Brown said, patient diagnoses fell through the cracks; for months, the office didn’t follow through on treating a patient’s melanoma, for example. “If you miss a melanoma and you’re not being treated, there could be significant morbidity and mortality with that,” she said.
A letter Brown’s lawyer sent to Pinnacle in the fall of 2020 and reviewed by NBC News detailed her criticisms. Shortly after the letter went out, Brown was let go.
The company contended that she had behaved unethically, Brown said, but she said she and her lawyer obtained her personnel file and found nothing in it to support the claim. “They started targeting me,” Brown said. “They weren’t happy with me sending emails up the chain about stuff going wrong.”
Pinnacle declined to answer detailed questions about Brown’s criticisms and termination.
Brown said she got along well with her associates in the practice, some of whom called her Dr. Awesome and gave her a drinking glass with that title embossed on it.
The company’s laboratory in Lombard, Illinois, where Pinnacle offices sent specimens for analysis, was also problematic, Brown said. The operation was very disorganized; slides and specimens sent for second opinions and quality control got lost more than once, she said. She filed a complaint with the Illinois Public Health Department.
Rios, of Pinnacle, said Brown’s criticisms of Pinnacle’s lab “are baseless allegations brought by a disgruntled former employee.” He added that Pinnacle’s lab is accredited by the College of American Pathologists and certified under federal regulations associated with the Clinical Laboratory Improvement Amendments.
Dr. Sailesh Konda is a Mohs surgeon — someone who performs a type of surgery used to treat skin cancer — and an associate clinical professor of dermatology at the University of Florida. He has also conducted extensive research into private equity’s impact on the dermatology field.
Konda said Brown’s experience isn’t unusual. “Dermatologists from all over the country have shared with me their experiences with private equity-backed groups promoting profits over patient care,” he said. “Many are shackled with non-disparagement agreements and are afraid to publicly share their experiences. These stories need to be told.”
Independent academic research also indicates that negative outcomes have resulted from private equity firms’ involvement in dermatology. A main source of problems is the tendency among private equity-owned practices to hire more “physician extenders” to see dermatology patients, including physician assistants and nurse practitioners who cost less to employ. An academic study from last year in the Journal of the American Academy of Dermatology concluded that private equity-backed dermatology practices employ greater numbers of physician assistants and a higher rate of such professionals to physicians. Rios declined to discuss the company’s reliance on physician extenders.
Physician extenders’ lack of experience can pose problems for patients by not identifying skin cancers, a 2018 investigation published in the Journal of the American Medical Association found. The study, which examined more than 33,000 skin cancer screenings among 20,000 patients, found that physician extenders failed to identify cancers significantly more often than doctors did.
The extenders also ordered more biopsies than doctors, generating increased fees for their patients. Physician extenders are supposed to be monitored by doctors, but private equity-backed companies often assign remote supervising physicians, in far-off locations, who have never met the people they are supervising. That diminishes effective oversight.
Research in the Journal of the American Academy of Dermatology in 2018 found physician extenders working at a private equity-backed group performing “dermatologic procedures of questionable medical necessity” on nursing home patients in Michigan. In the study, 75 percent of the treated patients had diagnoses of Alzheimer’s disease.
Another study published in the Journal of the American Medical Association Dermatology found that private equity-backed practices were more likely to offer appointments with physician extenders than with doctors. If physician extenders fail to make appropriate diagnoses, it can be a problem.
Rios declined to comment on the research showing negative outcomes among dermatology practices backed by private equity firms.
Five other former Pinnacle workers shared concerns about the company’s practices but asked not to be identified for fear of retribution or because they had signed non-disparagement agreements. They corroborated Brown’s experience of the push for more appointments, not ordering enough or high-quality supplies and problems with the lab.
Such agreements are common among medical practices bought by private equity firms. That’s why it’s so rare, practitioners say, for a physician like Brown to speak out about her experiences. Brown never signed such an agreement with Pinnacle, she said.
Brown and her lawyer continue to fight for three months of back pay she says she is owed, as well as reimbursement for insurance coverage that she paid out of her own pocket. The company’s most recent offer, Brown said, was $5,000 plus her signature on a non-disparagement agreement. She rejected the deal.
“Dermatology is often not a life-and-death situation,” Brown said. “But it’s still a specialty, it still requires expertise, and patients deserve to see the best-trained professionals at all times.”
Layers of Subcontracted Services Confuse and Frustrate Medi-Cal Patients
Theresa Grant, a resident of Culver City, California, has endured debilitating pain for the past year from a mysterious bulge protruding from her lower rib cage.
She takes multiple painkillers every day. And the cause of her agony remains undiagnosed because, despite her tenacious efforts, she hasn’t been able to get a referral to a suitable doctor. Grant, 63, is in Medi-Cal, California’s version of Medicaid, the program for people with low incomes. She is enrolled in L.A. Care, one of two managed-care Medi-Cal health plans in Los Angeles County and the largest one in the state, with 2.4 million members.
L.A. Care and many of the other 24 Medi-Cal managed-care plans across the state outsource responsibility for their patients to independent physician associations and in many cases to other health plans. The subcontracted plans also delegate to IPAs, physician networks that in turn often hire outside management firms to handle medical authorizations and claims.
This multilayered, delegated care works in many instances and is common in managed-care Medi-Cal, which covers over 80% of the program’s 14 million enrollees. But advocates, state regulators and even some health plan executives agree it is confusing and creates obstacles for many Medi-Cal patients, who tend to be poor and from minority communities, often face language barriers and have high rates of chronic illness.
“You’re on Medi-Cal, your last 10 bucks is for the bus, and when you need something, you don’t know who to ask,” said Alex Briscoe, head of the California Children’s Trust and former director of the Alameda County Health Care Services Agency. “The complexity is like salt in the wounds of people trying to navigate the health care system.”
Moreover, health plans often exercise weak oversight of subcontractors, allowing some to get away with inferior care or unwarranted denials. The state has promised to tighten the rules for Medi-Cal plans and providers in new managed-care contracts scheduled to take effect in 2024.
Although spending on Medi-Cal is projected to reach a record $124 billion this fiscal year, medical providers frequently complain that its payments are insufficient — and critics say each layer of administration diminishes the pool of dollars available for health care.
The worst part is the physical toll such a confounding system can take on enrollees. Grant, who describes herself as a person of color, spends most of her time sequestered at home and has to gird herself with extra pain medication just to shop or do her laundry. “I was muscular. I always used my body. Now, I can’t even recognize myself,” she said.
Although L.A. Care is ultimately responsible for Grant, it delegates her care to a physician network called Prospect Medical Group. Prospect, in turn, contracts with a medical management company called MedPoint Management.
Grant said she’s gone from Prospect to MedPoint to L.A. Care and ultimately to the Department of Managed Health Care, one of the state’s two health insurance regulators, seeking authorization to see a thoracic surgeon about her rib cage. But the doctors to whom she’s been referred were either the wrong type, had already unsuccessfully treated her or had been sued repeatedly for malpractice. Some, she said, were no longer in practice or had moved out of state.
L.A. Care said in a statement that it “takes seriously all member concerns that are brought to the health plan’s attention” and is “troubled to learn when any resident in Los Angeles County is not getting needed medical care.”
L.A. Care, which relies on delegation more than any other Medi-Cal plan in the state, has about 58 subcontractors under its umbrella. That group includes three health plans — Kaiser Permanente, Anthem Blue Cross and Blue Shield of California — as well as about 55 physician networks. Community health clinics and the county’s public health system are also in L.A. Care’s network.
CalOptima, which runs Medi-Cal for Orange County’s 860,000 beneficiaries, subcontracts with Kaiser Permanente and 11 physician associations, said its chief operating officer, Yunkyung Kim.
The Alameda Alliance for Health, one of two Medi-Cal health plans in Alameda County, delegates full responsibility for about 43,000 of its 300,000 enrollees to Kaiser Permanente, said Scott Coffin, its CEO. It also subcontracts varying degrees of responsibility to a chain of community health clinics, a pediatric medical group and the county’s public health system, he said.
Typically, the health plans pay their subcontractors a fixed monthly fee per enrollee. The plans take a percentage of the money they receive from the state to cover the oversight of their subcontractors and are generally off the hook financially for care of those patients.
“It’s a reliable portion of our bottom line and gives some stability to our finances,” said John Baackes, L.A. Care’s CEO.
Health plan executives say subcontracting gives patients more choices.
In Los Angeles County, for example, the state contracts with two health plans: L.A. Care and Health Net. Because L.A. Care subcontracts with three other health plans and Health Net with one — Molina Healthcare — Medi-Cal enrollees can actually choose from six plans.
Skeptics say the idea of broader choice is illusory because whichever plan patients choose, they end up with specific physician networks and are usually restricted to their providers.
“They operate as these mini-plans within a plan, and their networks are very narrow,” said Abigail Coursolle, a senior attorney at the National Health Law Program in Los Angeles.
Medi-Cal enrollees can change providers every month if they wish, Baackes said. But some might not know they have that right, and others, like Grant, may not want to change. “I am reluctant to join another IPA because I’d lose my primary care doctor, and I’d have to start from scratch,” she said.
Switching providers every month is not conducive to good health, said William Barcellona, executive vice president of government affairs at America’s Physician Groups, which represents IPAs and medical groups.
When people first enter managed care, they need to be assessed for chronic illnesses and mental health and then given the care they need, he said. “You can’t do that when somebody can just move around the system every 30 days.”
When delegation is done right, it can be a more efficient way of delivering care, especially in large, populous counties with diverse communities.
“It’s like a contractor on a house. Would it make sense for the contractor to be doing the wiring and the plumbing and the drywall himself?” asked Jennifer Kent, who ran the Department of Health Care Services, which administers Medi-Cal, from 2015 to 2019. “He could, and if he’s good at it, great. But he’s probably not as efficient as if he’s overseeing the drywall guy and the plumber and he’s monitoring the quality.”
But it becomes a problem when the health plans’ oversight of the medical groups is lacking, Kent said. And that’s a big problem in Medi-Cal, agree advocates, patients and state health officials.
The new Medi-Cal contracts will “significantly strengthen and clarify requirements and expectations” on the managed-care plans with regard to oversight and compliance of their subcontractors, said Anthony Cava, a spokesperson for the Department of Health Care Services.
The contracts will specify which requirements to include in subcontractor agreements and designate certain functions that the managed-care plans may not delegate, Cava said. The contracts also will require the plans to report on timely access and quality of care for each of their subcontractors.
Currently, plans report data only in the aggregate, which hides wide variations in performance and enables subpar performers to evade detection. This means the health plan quality scores published by the state do not always reflect the real-life experiences of patients. Health plans have a hard time getting reports on patient visits from their physician groups, which in turn often have difficulty getting it from the doctors in their networks.
To be sure, some plans have already made efforts to measure the performance of their subcontractors.
The Alameda Alliance created a committee to monitor its subcontractors, Coffin said. It oversees annual audits and posts “dashboards” to track subcontractors’ performance.
Baackes said that when he first took the helm at L.A. Care in 2015, its physician groups offered care of inconsistent quality. He implemented a report card for all subcontractors, and since then, the laggards have upped their game, he said.
But Baackes is not a big fan of the sprawling delegated system he inherited. The administrative layers make it expensive, and each one “adds an opportunity for someone to drop the ball,” he said.
Grant and other enrollees who feel ill-served by Medi-Cal would certainly agree.
Last week, Grant finally saw a UCLA surgeon she thought could help her. The surgeon, who specialized in cardiovascular issues, didn’t have an answer for her ribcage problem but found a spot on her lung. Once again, Grant was left to her own devices and had to make several phone calls to arrange for a CT scan of the growth.
She praised her primary care doctor and his assistant as “caring and good people” who have tried to help her. But she feels betrayed by the system.
“It’s like they purposefully confuse you so they have the upper hand,” she said. “That’s how I see it. How could I not?”
‘The Charges Seem Crazy’: Hospitals Impose a ‘Facility Fee’ — For a Video Visit
by Michelle Andrews - KHN - December 17, 2021
When Arielle Harrison’s 9-year-old needed to see a pediatric specialist at Yale New Haven Health System in June, a telehealth visit seemed like a great option. Since her son wasn’t yet eligible to be vaccinated against covid-19, they could connect with the doctor via video and avoid venturing into a germy medical facility.
Days before the appointment, she got a notice from the hospital informing her that she would receive two bills for the visit. One would be for the doctor’s services. The second would be for a hospital facility fee, even though she and her son would be at home in Cheshire, Connecticut, and never set foot in any hospital-affiliated building.
Harrison, 40, who works in nonprofit communications, posted on Twitter about the unwelcome fee, including an image of Marge Simpson of TV’s The Simpsons with a disgusted look on her face, captioned “GROANS.”
She called the billing office the next morning and was told the facility fee is based on where the doctor is located. Since the doctor would be on hospital property, the hospital would charge a facility fee of between $50 and $350, depending on her insurance coverage.
“It’s just one of many examples of how this is a very difficult system to use,” Harrison said, referring to the intricacies of U.S. health care.
Hospital facility fees have long come under criticism from patients and consumer advocates. Hospitals say the fees, which can add hundreds of dollars or even more than $1,000 to a patient’s bill, are necessary to cover the high cost of keeping a hospital open and ready to provide care 24/7.
But it’s not only hospital visits that result in facility fees. Over the past several years, hospitals have been on a buying binge, snapping up physician practices that often then begin charging the fees, too. Patients seeing the same doctor for the same care as at earlier visits are now on the hook for the extra fee — because of a change in ownership.
Charging a facility fee for a video visit where the patient logs in from their living room is even more of a head-scratcher.
“The charges seem crazy,” said Ted Doolittle, who heads up Connecticut’s Office of the Healthcare Advocate, which provides help to consumers with health coverage issues. “It rankles, and it should.”
Facility fees for video appointments remain rare, health finance experts say, even as the use of telehealth has soared during the covid pandemic. Medicare has allowed hospitals to assess a small fee for certain beneficiaries who get telehealth care at home during the ongoing national public health emergency, and people in private health plans may also be charged for them.
Harrison, however, was lucky. Doolittle reached out to her after seeing her tweet to offer his office’s assistance. In Connecticut, hospitals are prohibited from charging facility fees for telehealth visits.
Connecticut imposed what may be the only state ban on telehealth facility fees as part of a broader law passed in May that was intended to help residents access telehealth during the pandemic. The prohibition on facility fees sunsets at the end of June 2023.
Pat McCabe, senior vice president of finance at Yale New Haven Health System, said he can’t explain why Harrison received a notice that she’d be charged a facility fee for a telehealth visit. He speculated that her son’s appointment might have been coded incorrectly. Under the new law, he said, the health system hasn’t charged any telehealth patients a facility fee.
But such fees are justified, McCabe said.
“It offsets the cost of the software we use to facilitate the telehealth visits, and we do still have to keep the lights on,” he said, noting that the providers doing telehealth visits are on hospital sites that incur heat and power and maintenance charges.
The American Hospital Association didn’t respond to requests for comment about the rationale for facility fees for telehealth care.
As the pandemic began overwhelming the health system last year, hospitals essentially closed their doors to most non-covid patients.
Telehealth visits, which made up about 1% of medical visits before the pandemic, jumped to roughly 50% at its height last year, said Kyle Zebley, vice president of public policy at the nonprofit American Telemedicine Association, which promotes this type of care. Those appointments have dropped off and now make up roughly 15% of medical visits across all types of coverage.
Before the pandemic, the Centers for Medicare & Medicaid Services severely limited telehealth coverage for Medicare fee-for-service beneficiaries. But with seniors more vulnerable during the pandemic, the agency loosened telehealth rules temporarily. As long as the public health emergency continues, the agency is allowing Medicare beneficiaries in urban areas to receive such care, which was previously covered only in rural areas. And patients can get telehealth care at home rather than having to go to a medical facility for the video appointment, as was previously required. The agency also beefed up covered telehealth services and expanded the types of providers who are allowed to offer them.
Medicare lets hospital outpatient departments bill about $27 for telehealth visits for certain beneficiaries receiving care at home. Patients are generally responsible for 20% of that amount, or about $5, although providers can waive patient cost sharing for telehealth, said Juliette Cubanski, deputy director of the Program on Medicare Policy at KFF.
At the beginning of the pandemic, patients with commercial health plans were often not charged a copay for telehealth visits, said Rick Gundling, a senior vice president at the Healthcare Financial Management Association, a membership group for health care finance professionals. But lately, “those fees have been coming back,” he said.
Facility fees for telehealth visits in commercial plans averaged $55 for the year that ended June 30, before insurance discounts, according to data from Fair Health, a national independent nonprofit that maintains a large database of insurance claims. In 2020, just 1.1% of commercial telehealth claims included a facility fee, according to Fair Health. That’s lower than for 2019, when the figure was 2.5%.
Experts predict telehealth will remain popular, but it’s unclear how those visits and any accompanying facility fees will be handled in the future.
McCabe said he expects the Yale New Haven Health System to reinstitute the facility fees when state law permits it.
“There are real costs in the health system to provide those services,” he said.
https://khn.org/news/article/telemedicine-hospital-facility-fees-video-visit/?
Will the Biden administration use ‘march-in’ to protect prostate cancer patients from excessive drug prices?
Astellas Pharma, a drug company headquartered in Japan, is charging U.S. patients $156,000 a year for the prostate cancer drug Xtandi (enzalutamide) — more than three to five times what it charges residents of other wealthy countries, and five times more than it charges in Japan. Adding insult to injury, Xtandi was discovered by scientists at the University of California, Los Angeles, with grants from the National Institutes of Health (NIH) and the U.S. Army.
A petition that has languished before the Army since 2019 was recently forwarded to the Department of Health and Human Services (HHS). It asks the government to protect taxpayers from Xtandi’s excessive price by exercising “march-in rights” for the drug. This would require HHS to make a modest determination: that it is unreasonable to force Americans to pay three to five times more than people in other high-income countries for a drug developed with U.S. taxpayers’ dollars.
It’s hard to dispute that the U.S. price of Xtandi is unreasonable. But with federal agencies heavily lobbied by the pharmaceutical industry, what appears straightforward is not. The Xtandi case is thus a litmus test of whether the Biden administration will exercise its existing legal authority to restrain unreasonable drug prices. While by no means mutually exclusive with President Biden’s “Build Back Better” drug pricing provisions, march-in authority offers an opportunity to take action now on drug prices, without enacting any new federal legislation.
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An earlier petition to march-in on Xtandi’s patents was filed in 2016 with HHS, the Department of Defense (DoD), and the NIH. The NIH rejected it without a hearing on the grounds that making the drug publicly available at any price was acceptable.
In 2019, Vietnam War veteran Clare Love and former MIT scientist David Reed submitted an updated march-in petition on Xtandi to the Army. In April 2021, one of us (R.S.), a former chair of the National Coalition for Cancer Survivorship who is also battling prostate cancer, joined the 2019 petition. Seven months later, having received no response from the U.S. Army or the Department of Defense, Sachs and Love redirected their petition to HHS. A few weeks later, HIV activist Eric Sawyer, who also is contending with prostate cancer, joined the Sachs and Love petition. All of the petitioners simply seek the opportunity to present their case at an evidentiary hearing. On Dec. 23, 2021, the petitioners were advised that their request has been referred to the NIH for review.
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The petition has strong legal underpinnings. Under the Bayh-Dole Act, also known as the Patent and Trademark Law Amendments Act of 1980, the federal government can exercise march-in rights to remedy unreasonable drug pricing. The term “march-in rights” refers to the government’s authority, under Section 203 of the Bayh-Dole Act, to authorize third-party licenses to federally funded patents if the original patent holder fails to make the invention “available to the public on reasonable terms.” If the government were to exercise march-in rights for Xtandi, other manufacturers would be able to produce a generic version of the drug, reducing its price substantially.
Prostate cancer is the most common cancer among American men. This year, nearly 250,000 men will be diagnosed with it. The racial/ethnic disparities are dramatic: African American men experience among the highest prostate cancer rates in the world. Prostate cancer is also the most common cancer diagnosis in Hispanic or Latino men in the U.S., amounting to more than 20% of new diagnoses.
Because prostate cancer tends to affect older men regardless of ethnicity, the price of Xtandi drains the Medicare budget, harming all U.S. taxpayers. From 2015 to 2019, the last year for which data are available, Medicare spent $5.2 billion on Xtandi. This is extraordinary given that the tablet is easy to manufacture, and a Canadian company has offered to supply enzalutamide to Medicare for $4,380 a year, a savings of more than 97%.
March-in would be an effective remedy for Astella’s price gouging, which is enabled by a monopoly on the drug’s patents.
As background, UCLA, where Xtandi was invented, exclusively licensed the rights to Xtandi’s patents to a company called Medivation in 2005. Four years later, Medivation partnered with Astellas to commercialize Xtandi, which the FDA approved in 2012. Four years after that, Pfizer acquired Medivation and, through the acquisition, the company’s partnership with Astellas on Xtandi. Astellas holds exclusive rights in Xtandi’s patents through at least 2027.
So far, the march-in petition on Xtandi has not generated any government action. The real obstacle to the petition’s success is not the strength of the case it presents — it is the government’s failure to have exercised its statutory authority when it comes to abusive pricing of taxpayer-funded drugs.
No agency has held a hearing on a march-in petition since 2004 hearings on the HIV drug Norvir (ritonavir), which drew public scrutiny when Abbott Laboratories increased its price by 400%. Facing an outcry over the price hike in the U.S., Abbott agreed to roll back the entire price increase for patients on federal programs and, during the hearing on the march-in petition, promised to “permanently freeze the price” to federal programs and made commitments on its patient-assistance program.
In the past, the NIH has justified its failure to exercise march-in authority by asserting that march-in rights are not an appropriate method for dealing with excessive prices. Not only is that contrary to the specific mandate of the Bayh-Dole Act, it’s also out of sync with American consumers who, after the Trump administration issued a last-minute proposal to eliminate pricing as a basis for march in, filed more than 80,000 public comments in opposition to the proposal.
The Biden administration has issued statements seeming to support march-in rights, including the president’s Executive Order on Promoting Competition in the American Economy and HHS’s Comprehensive Plan for Addressing High Drug Prices, but it has yet to act.
How the Biden administration responds to the Xtandi petitions will have consequences for all Americans. Xtandi is certainly not the only pharmaceutical product invented with federal funds.
Many drugs, vaccines, and gene or cell therapies for the treatment of cancer, rare diseases, HIV, Covid-19, and more were developed using patented inventions that benefited from federal funding. Some of these products have more complicated patent landscapes or present other challenges to the introduction of generic competition, but the Xtandi case is particularly straightforward and one that provides a clear test of the willingness of the government to enforce Bayh-Dole Act safeguards.
Exercising march-in rights for Xtandi would send a strong message to the public and the pharmaceutical industry: If a drug company gouges Americans on a taxpayer-funded drug, there will be repercussions. Failing to grant a hearing on the Xtandi petitions would signal that the federal government will continue to be a paper tiger when it comes to demonstrably unreasonable drug pricing, letting pharmaceutical companies be even more confident that there’s one tried-and-true patient group they can always price gouge: American consumers.
Billions of dollars potentially at stake for consumers, taxpayers in new probe of PBM fees
In a surprise move, a top federal regulator promises to delve into extensive fees assessed on pharmacies by drug-chain middlemen in what could be the first nation-wide crackdown on pharmacy benefit managers.
At stake are billions of dollars in prescription drug costs born by consumers and taxpayers.
The probe by the Centers for Medicare and Medicaid Services (CMS) will center on huge increases in direct and indirect remuneration fees that PBMs charge pharmacies on Medicare prescriptions. These DIR fees were implemented as a way to incentivize U.S. pharmacies collecting millions of Medicare dollars to do more than simply push pills.
But the assessment — charged well after a prescription drug sale is supposedly complete — evolved into a system that today offers pharmacies only penalties through higher and higher fees, even if every PBM performance standard is achieved. The fees now total $11.2 billion a year, up from $200 million in 2013
Administrator Chiquita Brooks-LaSure said in a four-paragraph letter Tuesday that "CMS agrees that the significant growth in DIR amounts is troubling and is planning to use our administrative authority to issue proposed rulemaking addressing (pharmacy) price concessions and DIR."
A stunning 91,500% increase in DIR fees from PBMs over just nine years
"I am cautiously optimistic," said Scott Knoer, CEO of the American Pharmacists Association, the largest pharmacist group in the U.S. "Them acknowledging it publicly is a big deal. With all the PBM lobbying money it’s always a challenge."
Ted Okon, executive director of the Community Oncology Alliance, said, "On the surface, it’s certainly a positive that CMS has awoken and realized that the 91,500% increase in DIR fees from 2010 to 2019 more than suggests that there is a problem. However, what they intend to do about it will only be clear when the agency releases a proposed rule.
"And if they intend to do anything meaningful, the PBMs will fight it in the courts. Their business model is a house of cards and if DIR fees are taken away, or even moderated, the house of cards will come tumbling down."
One major question remains unanswered: Will CMS take a look at another PBM retroactive billing: clawbacks? That's a cousin of DIR fees, collected via convoluted PBM "effective rate" contracts. Ohio Medicaid Director Maureen Corcoran has acknowledged that those charges occur after the transaction is recorded by the state, and thus are not included in drug spending data sent to the federal government.
But since those false data are included in calculations to set rates charged to taxpayers, she says taxpayers nationwide likely are being overcharged for Medicaid prescription benefits.
Sen. Sherrod Brown part of bipartisan group that sparked new federal review
The new look at PBM fees was sparked by a letter Oct. 14 from Ohio Democratic Sen. Sherrod Brown and fellow Democratic Sen. Jon Tester of Montana, along with GOP Sens. Shelly Moore Capito of West Virginia and James Langford of Oklahoma.
Noting the huge fee increases, the bipartisan quartet wrote: "These astounding DIR increases are contributing to higher senior out-of-pocket costs and to the permanent closure of 2,200 pharmacies nationwide between December 2017 and December 2020. These trends are unacceptable and cannot continue."
Brown said Thursday, “Pharmacy middlemen should be passing along their negotiated discounts to consumers, not pocketing the difference to pay their CEOs more. I am glad the Centers for Medicare and Medicaid has agreed to take action to address this issue and provide relief to seniors and the pharmacies that serve them.”
Senate Finance Committee Chair Ron Wyden, D-Oregon, sent a separate letter Oct. 20, citing a recent announcement by a regional pharmacy chain that it's begun closing 56 pharmacies in the Pacific Northwest.
In response to the CMS reply, he said, “These developments take an encouraging first step toward reforming unjust practices that undermine patient access to prescription drugs, patient education, management of chronic disease, preventative care and life-saving vaccines.”
PBMs say if their fees are reduced, consumers will pay more for drugs
Charles Cote, spokesman for the Pharmaceutical Care Management Association, trade group for pharmacy benefit managers, said the group looks forward to the CMS review.
"Pharmacy direct and indirect renumeration (DIR) is an important tool for keeping independent drugstores accountable for doing their part to improve beneficiary health outcomes, increase access, and lower prescription drug costs," he said.
"Barring pharmacy DIR in Medicare Part D would increase premiums for seniors and raise costs for taxpayers, while decreasing the quality of pharmacy care for beneficiaries. According to a CMS analysis, eliminating pharmacy DIR will increase Part D premiums by $5.7 billion and taxpayer costs by $16.6 billion over 10 years."
One pharmacy chain pays nearly $5 out of every $100 in revenue to PBMs
Fruth Pharmacy, which operates several outlets in Appalachian Ohio, Kentucky and West Virginia, is part of a lawsuit against the federal government for allow the skyrocketing DIR fees.
A Fruth executive told The Dispatch for a July story on DIR fees that the payments leaped from just under $1 million in 2017 to more than $4.5 million in 2020 — equal to nearly 4.5% its total revenue. That forced Fruth to close five locations since 2014, "all of which were providing essential services to underserved communities with older, sicker populations," the lawsuit says.
Meanwhile, Brown is one of the few Democrats active in attempting to hold PBMs accountable; most others in his party emphasize only the role of major drug manufacturers. Democrats on the House Oversight Committee boycotted a hearing earlier this fall spotlighting PBMs' questionable practices.
In 2019, Brown helped add provisions in the bipartisan drug-pricing bill passed by the Senate Finance Committee that would have increased transparency requirements for PBMs and banned the practice of “spread pricing.” In June, he proposed a bipartisan measure that would prevent PBMs from retroactively assessing fees on pharmacies.
The Simpson’s Explain Healthcare
by Kim Bellard - The Washington Post - January 4, 2022
Happy New Year! We’re starting 2022 full of hope and renewed optimism. Oh, wait; not so much. We’re not only still in a pandemic, the Omicron variant is the most infectious one yet. Daily cases are setting new records. Our hospitals are full again. Our beleaguered healthcare workers – the ones who haven’t already thrown in the towel – are at their breaking points. Two years in, and we still don’t have enough tests. We’re in the greatest public health crisis in a century, yet our legislators are taking power away from public health officials, and their angry constituents are forcing many of those officials to quit. We have effective vaccines, but millions still refuse to take them.
The Simpsons – especially, Homer — has the right word for this: D’oh!
Even those who are not Simpsons fans – and I don’t know who these people are – are probably aware of the show. With over 700 episodes and 33 seasons, it is the longest-running American animated series, sitcom, and primetime television series. The titular head of the family is the hapless, impulse-driven Homer, who is most associated with the expression “D’oh.”
Merriam-Webster defines “Doh” as an interjection “used to express sudden recognition of a foolish blunder or an ironic turn of events.” One analysis found that if Homer were a real person, his various healthcare experiences over the years would have cost him over $143m, giving him plenty of opportunity for D’oh.
Got a medical bill that seems outrageously high? D’oh! Your insurance won’t cover some procedure that you or a family member needs? D’oh! Can’t afford to see a doctor, fill a prescription, or buy insurance? D’oh! Have to wait days, weeks, even months to get a medical appointment? D’oh! Have to carry your health records around on a CD or paper because your doctor’s/health system’s EHR doesn’t communicate with your other doctors’/health systems’ EHRs? D’oh!
You have your own stories. You’ve had your own frustrations. You may even have your own favorite expression (or expletive) to use when running up against the healthcare system. But I prefer “D’oh,” because, as with Homer Simpson, at the end of the day we have ourselves to blame for the mess we’re in.
There’s another Simpsons clip that may help explain. You can watch the clip below, but, briefly, Homer gets his arm stuck in a vending machine trying to get a free soda. Emergency personnel are summoned, and they literally are about to cut his arm off when an EMS worker realizes that the problem is that Homer has refused to let go of the soda can.
The question for us is, what is the metaphorical soda can in our healthcare system that we so tenaciously continue to hold onto, even at the risk to our health and lives?
Some might say it is our failure to implement universal healthcare, as almost every other developed country has done. It’s baffling that, even after ACA, we’ve got close to 30 million people without coverage, and there’s no political will to change that. It’s worse than baffling – it’s horrifying – that 12 states still haven’t expanded Medicaid, as ACA allowed/paid for, which would protect their most vulnerable citizens. But, even in states that have expanded Medicaid, affordable coverage is available to everyone, yet not everyone takes it.
Others might say it is our continued reliance on fee-for-service payment, which critics believe encourages overuse. We’ve tried capitation, we’re still trying value-based payment, and yet fee-for-service continues to dominate. But that doesn’t make our healthcare system different than most other countries’ systems.
Maybe it is that we act as though quality is a given: “my doctor is the best,” “our hospital is just fine for any care,” when, in fact, quality of care varies greatly and it very much matters what care you get and from whom you get it. “Quality” in healthcare is surprisingly amorphous; similar to Justice Potter Stewart’s belief about obscenity: we think we know it when we see it. We don’t. But, again, that’s true in every healthcare system.
A strong argument can be made that the foolish thing we persist in is allowing so many payors to each negotiate their own rates with health care providers. It’s well documented that Americans pay far more for healthcare products and services than anywhere else. We don’t have too many doctors, we don’t have too many hospitals, we don’t get too many procedures or tests, we don’t take too many prescriptions. We just pay way too much each of the times we do any of these. As Dan Munro, author of Casino Healthcare, likes to say, we don’t need a single payor, we need single pricing. But, then again, we don’t have that kind of single pricing for anything else – not food, not energy, not water, or any other essential products and services.
And therein, I think, lies our real problem, the soda can to which we persist in holding on to no matter what. America preaches individualism, of the ability for anyone to “make it” here. We claim to treasure self-reliance and look skeptically at government help (except, of course, Social Security, Medicare, or disaster relief).
We know we should lead healthier lives, but most of us don’t. We know we should listen to the experts, including our doctors, but as the current pandemic is proving, too many of us don’t. We know healthcare and health insurance are way too expensive, but we continue to shrug at their costs. So we have an out-of-control healthcare system – and, for similar reasons, exploding deficits, crumbling infrastructure, and climate change that will soon drastically change our existence.
D’oh, indeed.
The Simpsons is a cartoon. It’s satire. Homer isn’t going to have to pay that $143m. Homer won’t suffer any consequences past the end of the episode. We’re not so lucky. We have to live with – or die from – the consequences of the foolish blunders we make or the ironic turns of events we find ourselves in, especially when it comes to healthcare
It’s 2022. Let’s stop accepting the unacceptable. Here’s what our New Year’s Resolution should be: no more healthcare D’ohs.
https://thehWashington Post ealthcareblog.com/blog/2022/01/04/the-simpsons-explain-healthcare/?
Medicare must soon say whether it will cover the pricey new Alzheimer's drug
It’s a massive week for the pricey, new Alzheimer’s drug.
Medicare officials are bumping up against a critical Wednesday deadline to issue a proposal on whether — and how — to cover Aduhelm. Controversy has swirled over the medicine ever since the Food and Drug Administration approved it in June despite unclear evidence the treatment works.
The FDA’s decision this summer sparked fierce backlash and has already affected how much seniors pay for Medicare. For instance:
- Three of the agency’s outside advisers quit over the decision.
- A government watchdog is investigating how Aduhelm was approved.
- Seniors saw a surprising 14.5 percent hike in their monthly premiums for outpatient care this year, partly due to Aduhelm. (That decision was made before drugmaker Biogen nearly halved the price to $28,200 this year, which is still higher than some critics say is necessary.)
The complex dynamics at play have put the Centers for Medicare and Medicaid Services (CMS) in a tricky position. Back in July, the agency launched a rare months-long review of how Medicare should cover the drug, which could create clinical guidelines narrowing who can access the treatment.
- Time’s up: The deadline to release a proposed decision is Wednesday, and the agency then has another three months to finalize it. CMS didn’t say when a proposal will be unveiled, but a spokesperson said the agency expects to release more information on the coverage determination by mid-January.
The agency’s decision has broader implications. Aduhelm was the first drug cleared for Alzheimer’s in nearly 20 years, and more are in the pipeline. The treatment is designed to reduce a hallmark of the disease — toxic clumps of amyloid beta in the brain.
CMS is deciding whether to cover future Alzheimer’s drugs that function similar to Aduhelm. This comes amid a long-simmering debate among researchers about whether targeting amyloid clumps in the brain actually helps patients, our colleague Laurie McGinley reported this summer.
Potential pathways
Afflicting over 6 million Americans, Alzheimer’s is a devastating disease — and one that’s immensely difficult for the patient’s family and friends. That’s one reason why the decisions over Aduhelm have been so fraught.
What Medicare is deciding boils down to this: Is the drug “reasonable and necessary” for treating the disease? The answer to that question determines whether Medicare pays for the expensive drug.
There are multiple paths the agency can take. CMS could simply decide not to cover the drug. Or it could cover Aduhelm in full. It could cover the drug for a specific patient population or let local Medicare contractors decide.
- Another possible path is known as coverage with evidence development. That means Medicare will cover the product if a patient participates in a clinical study or a patient registry that collects data.
- “We might see CMS start to push back here to say that just because the FDA decides the drug meets their standard of ‘safe and effective’ doesn't mean it meets the Medicare standard of ‘reasonable and necessary,’” said Rachel Sachs, a professor at Washington University in St. Louis School of Law.
CMS received more than 130 comments as it began weighing its decision last year. The varying opinions have also been reflected on Twitter, in op-eds and in conversations with The Health 202.
For instance: The Alzheimer’s Association, a patient advocacy group, is advocating for full coverage of drugs in this class, said Robert Egge, the group’s chief public policy officer. (The association receives funding from drug companies, including Biogen, but its website says contributions don’t impact the group’s positions.)
But not all are convinced. Joseph Ross, a pharmaceutical policy expert at the Yale School of Medicine who sits on a committee advising Medicare on some coverage decisions, remains concerned about the drug’s safety. He predicts coverage with evidence is the most likely route.
- “I'm on the edge of my seat, kind of like everybody else,” Ross said.
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