The Existential Threat of Greed in US Health Care
by Donald M. Berwick, MD, MPP1- JAMA - Januery 30, 2023
In the mosaic floor of the opulent atrium of a house excavated at Pompeii is a slogan ironic for being buried under 16 feet of volcanic ash: Salve Lucrum, it reads, “Hail, Profit.” That mosaic would be a fitting decoration today in many of health care’s atria.
The grip of financial self-interest in US health care is becoming a stranglehold, with dangerous and pervasive consequences. No sector of US health care is immune from the immoderate pursuit of profit, neither drug companies, nor insurers, nor hospitals, nor investors, nor physician practices.
Rapidly increasing pharmaceutical costs are now
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familiar to the public. Pharmaceutical companies have used monopoly ownership of medications to raise prices to stratospheric levels, and not just for new drugs. Flaws in US patent laws leave loopholes allowing profiteering drug companies to gain control of some simple and long-known medications and to raise prices without constraint. Eye-popping prices for new, essential biological and biosimilar drugs, enabled by the failure of any serious drug price regulation, have yielded enormous profits for drug companies even though much of the basic biological research funding has come from governmental sources.
Particularly costly has been profiteering among insurance companies participating in the Medicare Advantage (MA) program. Originally intended to give Medicare beneficiaries the choice of access to well-managed care at lower cost, MA has mushroomed into a massive program, now about to cover more than 50% of all Medicare beneficiaries and costing far more per beneficiary than
traditional Medicare ever has.1 By gaming
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Medicare risk codes and the ways in which comparative “benchmarks” are set for expected costs, MA plans have become by far the most profitable branches of large insurance companies. According to some health services research, MA will cost Medicare over $600 billion more in the next 8 years than would have been the case if the same enrollees had remained in traditional
Medicare.2 Opinions differ about whether MA enrollees experience better care and outcomes than those in traditional Medicare, but the weight of evidence is that they do not.
Hospital pricing games are also widespread. Hospitals claim large operating losses, especially in the COVID pandemic period, but large systems sit on balance sheets with tens of billions of dollars in the bank or invested. Hospital prices for the top 37 infused cancer drugs averaged 86.2% higher per
unit than in physician offices.3 A patient was billed $73 800 at the University of Chicago for 2 injections of Lupron depot, a treatment for prostate
cancer, a drug available in the UK for $260 a dose.4
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To drive up their own revenues, many hospitals serving wealthy populations take advantage of a federal subsidy program originally intended to
reduce drug costs for people with low income.5
Recent New York Times investigations have reported on nonprofit hospitals’ reducing and closing services in poor areas while opening new ones in wealthy suburbs and on their use of collection agencies for pursuing payment from
patients with low income.6 The Massachusetts Health Policy Commission reported in 2022 that hospital prices and revenues increased during a
decade at almost 4 times the rate of inflation.7
Windfall profits also appear in salaries and benefits for many health care executives. Of the 10 highest paid among all corporate executives in the US in 2020, 3 were from Oak Street Health, and salary and benefits included, reportedly, $568 million for the chief executive officer (CEO). Executives in large hospital systems commonly have salaries and
benefits of several million dollars a year.8 Some
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academic medical centers’ boards allow their CEO to serve for 6-figure stipends and multimillion- dollar stock options on outside company boards, including ones that supply products and services to the medical center.
Avarice is manifest in mergers leading to market concentration, which, despite pleas of “economies of scale,” almost always raise costs. That is what is happening as hospital consolidations proceed
largely unchecked in many urban markets9 and as physician practices are purchased by for-profit firms. Mergers, acquisitions, and public offerings have been occurring throughout health care, often at valuations that defy logic. Oak Street Health, an innovative primary care company that employs physicians and plays heavily in MA, had a $15 billion initial public offering in 2022, equivalent to $196 000 per patient in their panel.
Profit may have its place in motivating innovation and higher quality in health care, as in any industry. But kleptocapitalist behaviors that raise prices, salaries, market power, and government
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payment to extreme levels hurt patients and families, vulnerable institutions, governmental programs, small and large businesses, and workforce morale. Those behaviors, mostly legal but nonetheless wrong, have now accumulated to a level that poses an existential threat to a sustainable, equitable, and compassionate health care system.
For individuals, the costs can be extremely painful.
A total of 41% of US adults, 100 million people, bear medical debts. One of every 8 individuals owes more than $10 000. In Massachusetts, 46% of adults say they skip needed care because of costs. As of 2021, 58% of all debt collections in the US are
for medical bills.10 Health insurance premiums in Massachusetts have gone up more than 200% in 2 decades and now cost more annually per family than a car. People of lower income must choose high-deductible plans; they cannot afford more complete coverage. In no other developed nation on earth is deep medical debt as present a threat as in the US.
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Greed harms the cultures of compassion and professionalism that are bedrock to healing care. Health care executives and board members who know better nonetheless feel compelled to play the games of pricing, acquisition, and revenue maximization that others do. Professionals find themselves trapped in record keeping, coding behaviors, and productivity imperatives that belie the reasons many went into health care in the first place. “Moral injury” is the harvest, with demoralization and disengagement to follow.
US health care costs nearly twice as much as care in any other developed nation, whereas US health status, equity, and longevity lag far behind. Unchecked greed is not the only driver of that failure, but it is a major one. Few, if any, other developed nations tolerate the levels of avarice, manipulation, and profiteering in health care that the US does. Salve lucrum is the wrong answer.
What to do about greed? No answer is easy, not least because of the political lobbying might of individuals and organizations that are thriving
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under the current laxity. The cycle is vicious: unchecked greed concentrates wealth, wealth concentrates political power, and political power blocks constraints on greed.
Perhaps the demoralization of professionals, the conflicted consciences of many executives, and the anger of the public represent potential political energy that, with proper leadership, can become kinetic.
First, health care professionals in all disciplines need to become noisier about the conflict between unchecked greed and the duty to heal. Extortionate drug prices, exploitation of market consolidation, coding games, excessive executive compensation, and promulgation of unnecessary care ought not to be met with silence. Silence is assent.
Second, health care professionals should insist that their guilds and trade organizations demote the pursuit of higher payment among their priorities. They should insist that resources flow to the neediest in our society. The protection of patients— all patients—is the first and highest calling, and
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that includes protection against onerous medical debt and bankruptcy.
Third, health care leaders and professionals should lobby Congress to pass legislation to rein in greed. Reforming patent laws, changing coding and billing rules, strengthening antitrust enforcement, expanding price transparency, and accelerating global budgets for the care of populations are agendas that have languished without strong action in Congress for years because the money of incumbents drowns out the greater public interest.
Fourth, health care professionals should insist that their organizations invest actively in improving the true social influences on health. America’s hospitals should bring a fair share of their resources to mitigating the actual causes of illness, injury, and disability.
The glorification of profit, salve lucrum, is harming both care and health. Health care should not be an engine for excessive private gain.
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Article Information
Corresponding Author: Donald M. Berwick, MD, MPP, 131 Lake Ave, Newton, MA 02459 (donberwick@gmail.com).
Published Online: January 30, 2023. doi:10.1001/jama.2023.0846
Conflict of Interest Disclosures: None reported.
2.
Kronick R, Chua FM. Industry-wide and sponsor- specific estimates of Medicare Advantage coding intensity. Published November 17, 2021. SSRN. Accessed January 24, 2023. https://ssrn.com /abstract=3959446
6.
Silver-Greenberg J, Thomas K. They were entitled to free care: hospitals hounded them to pay. New York Times. September 24, 2022. Updated December 15, 2022.
Doctors Aren’t Burned Out From Overwork. We’re Demoralized by Our Health System.
Doctors have long diagnosed many of our sickest patients with “demoralization syndrome,” a condition commonly associated with terminal illness that’s characterized by a sense of helplessness and loss of purpose. American physicians are now increasingly suffering from a similar condition, except our demoralization is not a reaction to a medical condition, but rather to the diseased systems for which we work.
The United States is the only large high-income nation that doesn’t provide universal health care to its citizens. Instead, it maintains a lucrative system of for-profit medicine. For decades, at least tens of thousands of preventable deaths have occurred each year because health care here is so expensive.
During the Covid-19 pandemic, the consequences of this policy choice have intensified. One study estimates at least 338,000 Covid deaths in the United States could have been prevented by universal health care. In the wake of this generational catastrophe, many health care workers have been left shaken.
“For me, doctoring in a broken place required a sustaining belief that the place would become less broken as a result of my efforts,” wrote Dr. Rachael Bedard about her decision to quit her job at New York City’s Rikers Island prison complex during the pandemic. “I couldn’t sustain that belief any longer.”
Thousands of U.S. doctors, not just at jails but also at wealthy hospitals, now appear to feel similarly. One report estimated that in 2021 alone, about 117,000 physicians left the work force, while fewer than 40,000 joined it. This has worsened a chronic physician shortage, leaving many hospitals and clinics struggling. And the situation is set to get worse. One in five doctors says he or she plans to leave practice in the coming years.
To try to explain this phenomenon, many people have leaned on a term from pop psychology for the consequences of overwork: burnout. Nearly two-thirds of physicians report they are experiencing its symptoms.
But the burnout rhetoric misses the larger issue in this case: What’s burning out health care workers is less the grueling conditions we practice under, and more our dwindling faith in the systems for which we work. What has been identified as occupational burnout is a symptom of a deeper collapse. We are witnessing the slow death of American medical ideology.
It’s revealing to look at the crisis among health care workers as at least in part a crisis of ideology — that is, a belief system made up of interlinking political, moral and cultural narratives upon which we depend to make sense of our social world. Faith in the traditional stories American medicine has told about itself, stories that have long sustained what should have been an unsustainable system, is now dissolving.
During the pandemic, physicians have witnessed our hospitals nearly fall apart as a result of underinvestment in public health systems and uneven distribution of medical infrastructure. Long-ignored inequalities in the standard of care available to rich and poor Americans became front-page news as bodies were stacked in empty hospital rooms and makeshift morgues. Many health care workers have been traumatized by the futility of their attempts to stem recurrent waves of death, with nearly one-fifth of physicians reporting they knew a colleague who had considered, attempted or died by suicide during the first year of the pandemic alone.
Although deaths from Covid have slowed, the disillusionment among health workers has only increased. Recent exposés have further laid bare the structural perversity of our institutions. For instance, according to an investigation in The New York Times, ostensibly nonprofit charity hospitals have illegally saddled poor patients with debt for receiving care to which they were entitled without cost and have exploited tax incentives meant to promote care for poor communities to turn large profits. Hospitals are deliberately understaffing themselves and undercutting patient care while sitting on billions of dollars in cash reserves. Little of this is new, but doctors’ sense of our complicity in putting profits over people has grown more difficult to ignore.
Resistance to self-criticism has long been a hallmark of U.S. medicine and the industry it has shaped. From at least the 1930s through today, doctors have organized efforts to ward off the specter of “socialized medicine.” We have repeatedly defended health care as a business venture against the threat that it might become a public institution oriented around rights rather than revenue.
This is in part because doctors were told that if health care were made a public service, we would lose our professional autonomy and make less money. For a profession that had fought for more than a century to achieve elite status, this resonated.
And so doctors learned to rationalize a deeply unequal health care system that emphasizes personal, rather than public, moral responsibility for protecting health. We sit at our patients’ bed sides and counsel them on their duty to counteract the risks of obesity, heart disease and diabetes, for example, while largely ignoring how those diseases are tied to poor access to quality food because of economic inequities. Or, more recently, we find ourselves advising patients on how to modulate their personal choices to reduce their Covid risk while working in jobs with dismal safety practices and labor protections.
Part of what draws us into this norm is that doctors learn by doing — that is, via apprenticeship — in which we repeat what’s modeled for us. This is, to a degree, a necessary aspect of training in an applied technical field. It is also a fundamentally conservative model for learning that teaches us to suppress critical thinking and trust the system, even with its perverse incentives.
It becomes difficult, then, to recognize the origins of much of what we do and whose interests it serves. For example, a system of billing codes invented by the American Medical Association as part of a political strategy to protect its vision of for-profit health care now dictates nearly every aspect of medical practice, producing not just endless administrative work, but also subtly shaping treatment choices.
Addressing the failures of the health care system will require uncomfortable reflection and bold action. Any illusion that medicine and politics are, or should be, separate spheres has been crushed under the weight of over 1.1 million Americans killed by a pandemic that was in many ways a preventable disaster. And many physicians are now finding it difficult to quash the suspicion that our institutions, and much of our work inside them, primarily serve a moneymaking machine.
Doctors can no longer be passive witnesses to these harms. We have a responsibility to use our collective power to insist on changes: for universal health care and paid sick leave but also investments in community health worker programs and essential housing and social welfare systems.
Neither major political party is making universal health care a priority right now, but doctors nonetheless hold considerable power to initiate reforms in health policy. We can begin to exercise it by following the example of colleagues at Montefiore Medical Center in the Bronx who, like thousands of doctors before them, recently took steps to unionize. If we can build an organizing network through doctors’ unions, then proposals to demand universal health care through use of collective civil disobedience via physicians’ control over health care documentation and billing, for example, could move from visions to genuinely actionable plans.
Regardless of whether we act through unions or other means, the fact remains that until doctors join together to call for a fundamental reorganization of our medical system, our work won’t do what were promised it would do, nor will it prioritize the people we claim to prioritize. To be able to build the systems we need, we must face an unpleasant truth: Our health care institutions as they exist today are part of the problem rather than the solution.
https://www.nytimes.com/2023/02/05/opinion/doctors-universal-health-care.html
Ballot Measure 111 crosses the finish line, but its impact is unclear
Oregon will be the first state in the nation to enshrine the right to affordable health care in its constitution.
Ballot Measure 111 narrowly passed, with nearly 50.7% of voters in favor and 49.3% of voters opposed. The measure’s long-term impact on Oregon health care is unclear because it doesn’t prescribe how the state should ensure that everyone has affordable health care.
Measure 111 amends the Oregon constitution by adding: “It is the obligation of the state to ensure that every resident of Oregon has access to cost-effective, clinically appropriate and affordable health care as a fundamental right.”
The measure, proposed in a joint resolution by two Portland Democrats, state Rep. Rob Nosse and state Sen. Elizabeth Steiner Hayward, passed on a party-line vote in the Legislature in 2021 and went to the ballot.
Supporters of the measure say Oregon is a national leader in health care and a constitutional amendment is a next logical step to protect and expand health care access.
“I think what it signals is that there are a great number of folks in Oregon that feel very strongly that access to quality affordable health care is very important,” Sen. Deb Patterson, D-Salem and chair of the Interim Senate Health Care Committee, said in an interview. “Health care is really complicated and implementing that will be a challenge that will take everyone’s best efforts.”
Paige Spence, director of government relations for the Oregon Nurses Association, said the measure’s passage is a declaration that health care is a right to protect for the future.
“Oregon has always been a leader in health care reform, and the passage of Measure 111 is a clear indication that here, unlike other states across the country where access to health care is becoming harder and more expensive, Oregon is committed to ensuring our communities can benefit from quality affordable health care,” Spence said in a statement.
But critics warned the measure would cause expensive lawsuits that the state would have to fight using taxpayer dollars. Former Rep. Julie Parrish, now a law student at Willamette University, wrote a piece published by the American Bar Association that said lawsuits could come from a mix of people in Oregon, including those who are insured but unsatisfied with their coverage because the measure does not say if having insurance meets the amendment’s requirement of “access to” health coverage.
About half of Oregon residents are insured through their employer, and about one-third are insured through the Oregon Health Plan, the state’s version of free Medicaid coverage. Only about 150,000 people have individual policies through the federal marketplace, and less than 1 million are covered by Medicare, which insures people 65 and over and those with disabilities. Currently, about 6% of Oregonians are uninsured.
It’s unclear how much it would cost to give them coverage. The measure acknowledges it could add costs to the state budget but leaves budgeting decisions up to state lawmakers, saying it “must be balanced against the public interest in funding public schools and other essential public services.” Those services are not defined.
Bernie Sanders Has Some Big Health Care Plans -- And It’s Not Just Medicare For All
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One of this year’s more intriguing political developments is a change at the helm of the Senate health, education, labor and pensions committee, where Sen. Bernie Sanders (I-Vt.) is taking the gavel. It represents a milestone of sorts for American politics ― and for Sanders himself.
The Brooklyn native and former mayor of Burlington, Vermont, first came to Washington, D.C., more than 30 years ago, when he won election for the state’s lone, at-large seat in the U.S. House. Sixteen years later, in 2006, Sanders won the U.S. Senate seat that he holds today.
For much of that time, Sanders has played the role of ideological gadfly, proudly calling himself a “democratic socialist” and just as proudly championing causes that, by American standards, sit out on the fringes of the political left. He’s also been known to throw shade at Democrats with more conservative views, especially when those views look like a form of service to wealthy campaign funders.
The quintessential Sanders cause has been his crusade to create a ‘Medicare for All’ system that would replace existing health insurance arrangements with a single government program. It would look a lot like the systems that exist in most economically advanced countries, but here in the U.S., the idea can’t even get a serious hearing ― or, at least, it couldn’t until Sanders ran for the Democratic presidential nomination in 2016 and 2020.
Although neither of his White House bids succeeded, Sanders got mainstream politicians talking about his agenda while building a movement of progressive activists ready to fight for it. Along the way, he increased his own visibility and clout.
Now Sanders leads a committee whose broad jurisdiction overlaps with his priorities almost perfectly. Health care, education, labor, pensions ― Sanders has big ideas about all of these, and you will not be surprised to hear that he’s thought a lot about how he can use the committee to promote them.
But you may be surprised to hear how he intends to go about that.
A Focus On Health Care Clinics
Yes, Sanders plans to introduce Medicare for All legislation, as he has so many times before. But, he told me in an interview last week, he doesn’t plan to make that bill a top priority for the committee.
“Unfortunately there are only about 15 or 20 members of the Senate who agree with me,” Sanders said. “We don’t have the votes to pass it.”
Sanders hopes to focus instead on legislation that would bolster federally funded community clinics, which offer primary care and related services to about 30 million people today.
These clinics are a crucial part of the nation’s safety net; by law, they must provide care to anybody, regardless of ability to pay. Many have won acclaim for their proactive, holistic approach to medicine ― an approach that emphasizes preventative care and supporting healthy lifestyles, through services like diet classes and free environmental home screenings. Many also offer dentistry, or run their own pharmacies.
“Primary care in this country should be the backbone of any rational health care system,” Sanders said. “I don’t think it’s too much to ask that in the richest country on earth, every person in their community should have access to a doctor, and get the mental health counseling they need, and get the dentistry that they need, and get low-cost prescription drugs.”
The clinic program has its origins in former President Lyndon Johnson’s War on Poverty, but it’s grown over the years, with strong support from Republicans who would rather fund direct medical services than government-run insurance. Sanders would like to see the program grow even more, and he believes a bill could get enough Republican votes to get through the Senate (where it’d probably have to overcome a filibuster) and the House (where Republicans have a narrow majority).
The idea of a bipartisan health care bill in today’s polarized political environment might seem nuts. But there’s recent precedent for it. One of the most important (and underappreciated) health care bills of recent years was an initiative from retiring Sen. Debbie Stabenow (D-Mich.) and retired Sen. Roy Blunt (R-Mo.) to expand and transform government-provided mental health care. It became law as part of the bipartisan gun bill that Congress passed and President Joe Biden signed last summer.
It helped that mental health care hasn’t been politicized in the way that, say, “Obamacare” has ― and that the need for new services was so apparent in rural America, where voters tend to be Republican. The same is true for community clinics: Nearly half are in rural counties and, in all, the clinics serve about 1 in 5 rural Americans.
“I think we’ll get bipartisan support,” Sanders said, adding that he sees similar possibilities on other issues the committee will address ― like looming workforce shortages in various health care sectors, where employers will likely push Republicans for help.
More Attention To Child Care
Sanders’ agenda for the committee also includes plenty of items that will divide his members, as well as the Senate, along more familiar partisan lines.
He hopes to push legislation for a higher minimum wage, for example, and to strengthen labor unions by making it easier to organize and protect them from corporate retaliation. He also mentioned working with his predecessor as chair, Sen. Patty Murray (D-Wash.), on expansions of child care that have been her signature cause.
The issue is not a new one for Sanders, who has his own record of support for comprehensive early childhood programs. And in theory, this could be another bipartisan cause. The shortage of workers and slots is a nationwide crisis that’s getting worse, and affecting employers who have influence with Republicans.
But there are still some profound disagreements between the parties over how to design a national child care program, or whether to have one at all. Murray’s initiative in the last Congress failed in part because it would have required a hefty new federal investment that was way too much for Republican senators ― and at least one Democrat too.
Finding money isn’t going to be any easier now that Republicans control the House, Sanders acknowledged. “Obviously, when you’re dealing with child care, we’re talking about community health centers, you’re talking about real dollars,” he said.
“We will see what happens, but I believe these are issues where Republicans at least understand that there are serious problems that have to be addressed,” Sanders added.
The Difficulties Of Dual Messages
When Sanders talks about health care, it’s never long before he brings up the high price of prescription drugs, the burden it places on Americans who can’t afford them and his determination to do something about that.
Now that he’s in charge of a committee with direct jurisdiction, he hopes to introduce legislation tying U.S. prices to the lower prices in other developed countries, while holding hearings that put pharmaceutical companies’ financial and marketing practices under scrutiny.
“The pharmaceutical industry makes tens of billions of profits per year, their CEOs get exorbitant compensation and we pay the highest prices in the world for prescription drugs,” Sanders said. “They’re going to have to answer to this committee as to why that’s the case.”
You may recall that the Inflation Reduction Act that Democrats passed and Biden signed included prescription drug reforms, among them a provision giving the federal government new leverage over drug prices. The leverage is a lot smaller than Democratic leaders wanted; they had to pare back the bill in order to satisfy industry-friendly holdouts like Sen. Kyrsten Sinema (I-Ariz.).
At the same time, the changes represent a historic breakthrough, as Sanders himself has said, and already a provision capping the price of insulin for seniors on Medicare is taking effect.
Sanders says it’s possible to celebrate those accomplishments while making the case for more action. But that kind of dual messaging can be tricky. During the 2016 campaign, when Sanders was campaigning on Medicare for All, many Democrats feared he was undermining their attempts to defend the similarly flawed, similarly historic Affordable Care Act from repeal.
A Difference Between Left And Right
At the same time, Sanders has frequently been a good team player, even if he doesn’t formally identify as a member of the team. His role in enactment of the Affordable Care Act is as good an example as any. In 2009, he was one of the last three senators to promise a “yes” vote on legislation. But his big demand was for community clinic funding, which was fully consistent with the goals of health care reform.
Neither the White House nor Senate leaders ever worried about Sanders holding the bill hostage in the way that, say, today’s Republicans are threatening to create an economic crisis by demanding spending cuts in exchange for an increase in the government’s borrowing authority.
That’s one of the obvious ways Sanders and his allies on the Democratic left are different from their right-wing counterparts pulling the Republican Party. The progressives have an ambitious vision for America that involves what would be, by U.S. standards, truly dramatic change. They are not shy about promoting it, and they spend lots of time trying to build a movement behind it.
But these progressives also understand the real-life constraints of policy and politics, take the time to understand and think about substance, and embrace even small progress toward their goals when it’s the most they can get.
It’s safe to assume Sanders will continue to give Democrats grief from time to time, and safe to assume he sees it as part of his job as a progressive leader. But in his role as a committee chair, he’s talking like somebody focused on what he can get done in a time of divided government, including the enactment of bipartisan legislation that could make a real difference in people’s lives. He might not succeed, but if he does, don’t be surprised.
'End the scam': Democrats unveil bill to change name of 'Medicare Advantage'
In an effort to crack down on the misleading practices of Medicare Advantage providers, Democratic Reps. Mark Pocan, Ro Khanna, and Jan Schakowsky reintroduced legislation Tuesday that would ban private insurers from using the "Medicare" label in the names of their health plans.
The legislation, titled the Save Medicare Act, would formally change the name of the Medicare Advantage program to the Alternative Private Health Plan, an attempt to make clear to seniors that the plans are run by private entities such as Anthem, Humana, Cigna, and UnitedHealthcare.
"Only Medicare is Medicare," Pocan (D-Wis.) said in a statement. "It is one of the most popular and important services the government provides. These non-Medicare plans run by private insurers undermine traditional Medicare. They often leave patients without the benefits they need while overcharging the federal government for corporate profit."
Khanna (D-Calif.) declared that "it's time to call out 'Medicare Advantage' for what it is: private insurance that profits by denying coverage and the name is being used to trick seniors into enrolling."
"That's not right," he added. "This bill will end the scam by preventing private insurers from profiting off the Medicare brand. Our focus should be on strengthening and expanding real Medicare."
The bill, which faces long odds in the Republican-controlled House, was introduced as GOP lawmakers push for cuts to traditional Medicare as part of their broader austerity campaign.
It also comes as the Biden administration is moving ahead with a Medicare privatization scheme known as ACO REACH, a pilot program that critics warn could fully engulf traditional Medicare in a matter of years.
The Democratic trio's legislation does not specifically address ACO REACH, opting to zero in on Medicare Advantage plans that are notorious for denying necessary care to vulnerable seniors and overbilling the federal government.
The measure would impose a $100,000 penalty each time a private insurer uses the Medicare name in the title of one of their plans.
"So-called Medicare Advantage is neither Medicare nor an advantage. It is simply another scheme by the insurance companies to line their pockets."
Earlier this week, the Biden administration proposed a new rulethat would strengthen audits of Medicare Advantage plans, which are paid an annual per-person rate by the federal government. Recent investigations have exposed how Medicare Advantage plans frequently overcharge the government by making patients appear sicker than they are, resulting in a higher payment.
The federal government currently expects to pay Medicare Advantage providers more than $6 trillion over the next eight years.
"Medicare reimburses Medicare Advantage plans using a complex formula called a risk score that computes higher rates for sicker patients and lower ones for healthier people," Kaiser Health Newsreported in December. "But federal officials rarely demand documentation to verify that patients have these conditions, or that they are as serious as claimed. Only about 5% of Medicare Advantage plans are audited yearly."
Medicare Advantage has grown rapidly over the past decade, with more than 28 million people in the U.S. enrolled in such plans as of 2022. MA plans often provide coverage for hearing, vision, and dental—benefits not offered by traditional Medicare, despite the efforts of progressive lawmakers to expand the program.
Some Democratic lawmakers have warned that part of the massive growth rate of Medicare Advantage plans could be due to their deceptive advertising practices.
In November, Senate Finance Committee Chair Ron Wyden (D-Ore.) released an investigative report laying out evidence of a range of "predatory actions" by private insurance companies that offer Medicare Advantage plans.
"Agents were found to sign up beneficiaries for plans under false pretenses, such as telling a beneficiary that coverage networks include preferred providers even when they do not," the investigation found. "Of particular concern to the committee were reports across states of agents changing vulnerable seniors' and people with disabilities' health plans without their consent."
Wendell Potter, president of the Center for Health and Democracy, said Tuesday that "so-called Medicare Advantage is neither Medicare nor an advantage."
"It is simply another scheme by the insurance companies to line their pockets at the expense of consumers," said Potter, a former health insurance executive with first-hand experience of the industry's misleading practices. "I applaud Congressman Pocan and Congressman Khanna for introducing this vital legislation. The healthcare market is confusing for consumers and misleading branding like so-called Medicare Advantage just makes it worse."
Government Lets Health Plans That Ripped Off Medicare Keep the Money
Medicare Advantage plans for seniors dodged a major financial bullet Monday as government officials gave them a reprieve for returning hundreds of millions of dollars or more in government overpayments — some dating back a decade or more.
The health insurance industry had long feared the Centers for Medicare & Medicaid Services would demand repayment of billions of dollars in overcharges the popular health plans received as far back as 2011.
But in a surprise action, CMS announced it would require next to nothing from insurers for any excess payments they received from 2011 through 2017. CMS will not impose major penalties until audits for payment years 2018 and beyond are conducted, which have yet to be started.
While the decision could cost Medicare plans billions of dollars in the future, it will take years before any penalty comes due. And health plans will be allowed to pocket hundreds of millions of dollars in overcharges and possibly much more for audits before 2018. Exactly how much is not clear because audits as far back as 2011 have yet to be completed.
In late 2018, CMS officials said the agency would collect an estimated $650 million in overpayments from 90 Medicare Advantage audits conducted for 2011 through 2013, the most recent ones available. Some analysts calculated overpayments to plans of at least twice that much for the three-year period. CMS is now conducting audits for 2014 and 2015.
The estimate for the 2011-13 audits was based on an extrapolation of overpayments found in a sampling of patients at each health plan. In these reviews, auditors examine medical records to confirm whether patients had the diseases for which the government reimbursed health plans to treat.
Through the years, those audits — and others conducted by government watchdogs — have found that health plans often cannot document that they deserved extra payments for patients they said were sicker than average.
The decision to take earlier audit findings off the table means that CMS has spent tens of millions of dollars conducting audits as far back as 2011 — much more than the government will be able to recoup.
In 2018, CMS said it pays $54 million annually to conduct 30 of the audits. Without extrapolation for years 2011-17, CMS won’t come near to recouping that much.
CMS Deputy Administrator Dara Corrigan called the final rule a “commonsense approach to oversight.” Corrigan said she did not know how much money would go uncollected from years prior to 2018.
Health and Human Services Secretary Xavier Becerra said the rule takes “long overdue steps to move in the direction of accountability.”
“Going forward, this is good news. We should all be happy that they are doing that [extrapolation],” said former CMS official Ted Doolittle. But he added: “I do wish they were pushing back further [and extrapolating earlier years]. That would seem to be fair game,” he said.
David Lipschutz, an attorney with the Center for Medicare Advocacy, said he was still evaluating the rule, but noted: “It is our hope that CMS would use everything within their discretion to recoup overpayments made to Medicare Advantage plans.” He said that “it is unclear if they are using all of their authority.”
Mark Miller, who is the executive vice president of health care policy for Arnold Ventures and formerly worked at the Medicare Payment Advisory Commission, a congressional advisory board, said extrapolating errors found in medical coding have always been a part of government auditing. “It strikes me as ridiculous to run a sample and find an error rate and then only collect the sample error rate as opposed to what it presents to the entire population or pool of claims,” he said. (KHN receives funding support from Arnold Ventures.)
Last week, KHN released details of the 90 audits from 2011-2013, which were obtained through a Freedom of Information Act lawsuit. The audits found about $12 million in net overpayments for the care of 18,090 patients sampled for the three-year period.
In all, 71 of the 90 audits uncovered net overpayments, which topped $1,000 per patient on average in 23 audits. CMS paid the remaining plans too little on average, anywhere from $8 to $773 per patient, the records showed.
Since 2010, the federal Centers for Medicare & Medicaid services has threatened to crack down on billing abuses in the popular health plans, which now cover more than 30 millionAmericans. Medicare Advantage, a fast-growing alternative to original Medicare, is run primarily by major insurance companies including Humana, UnitedHealthcare, Centene, and CVS/Aetna.
But the industry has succeeded in opposing extrapolation of overpayments, even though the audit tool is widely used to recover overcharges in other parts of the Medicare program.
That has happened despite dozens of audits, investigations, and whistleblower lawsuits alleging that Medicare Advantage overcharges cost taxpayers billions of dollars a year.
Corrigan said Monday that CMS expected to collect $479 million from overpayments in 2018, the first year of extrapolation. Over the next decade, it could recoup $4.7 billion, she said.
Medicare Advantage plans also face potentially hundreds of millions of dollars in clawbacks from a set of unrelated audits conducted by the Health and Human Services inspector general.
The audits include an April 2021 review alleging that a Humana Medicare Advantage plan in Florida had overcharged the government by nearly $200 million in 2015.
Carolyn Kapustij, the Office of the Inspector General’s senior adviser for managed care, said the agency has conducted 17 such audits that found widespread payment errors — on average 69% for some medical diagnoses. In these cases, the health plans “did not have the necessary support [for these conditions] in the medical records, which has caused overpayments.”
“Although the MA organizations usually disagreed with us, they almost always had little disagreement with our finding that their diagnoses were not supported,” she said.
While CMS has taken years to conduct the Medicare Advantage audits, it also has faced criticism for permitting lengthy appeals that can drag on for years. These delays have drawn sharp criticism from the Government Accountability Office, the watchdog arm of Congress.
Leslie Gordon, an acting director of the GAO health team, said that until CMS speeds up the process, it “will fail to recover improper payments of hundreds of millions of dollars annually.”
KHN senior correspondent Phil Galewitz contributed to this report.
KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. Together with Policy Analysis and Polling, KHN is one of the three major operating programs at KFF (Kaiser Family Foundation). KFF is an endowed nonprofit organization providing information on health issues to the nation.
How a Drug Company Made $114 Billion by Gaming the U.S. Patent System
In 2016, a blockbuster drug called Humira was poised to become a lot less valuable.
The key patent on the best-selling anti-inflammatory medication, used to treat conditions like arthritis, was expiring at the end of the year. Regulators had blessed a rival version of the drug, and more copycats were close behind. The onset of competition seemed likely to push down the medication’s $50,000-a-year list price.
Instead, the opposite happened.
Through its savvy but legal exploitation of the U.S. patent system, Humira’s manufacturer, AbbVie, blocked competitors from entering the market. For the next six years, the drug’s price kept rising. Today, Humira is the most lucrative franchise in pharmaceutical history.
Next week, the curtain is expected to come down on a monopoly that has generated $114 billion in revenue for AbbVie just since the end of 2016. The knockoff drug that regulators authorized more than six years ago, Amgen’s Amjevita, will come to market in the United States, and as many as nine more Humira competitors will follow this year from pharmaceutical giants including Pfizer. Prices are likely to tumble.
The reason that it has taken so long to get to this point is a case study in how drug companies artificially prop up prices on their best-selling drugs.
AbbVie orchestrated the delay by building a formidable wall of intellectual property protection and suing would-be competitors before settling with them to delay their product launches until this year.
The strategy has been a gold mine for AbbVie, at the expense of patients and taxpayers.
Over the past 20 years, AbbVie and its former parent company increased Humira’s price about 30 times, most recently by 8 percent this month. Since the end of 2016, the drug’s list price has gone up 60 percent to over $80,000 a year, according to SSR Health, a research firm.
One analysis found that Medicare, which in 2020 covered the cost of Humira for 42,000 patients, spent $2.2 billion more on the drug from 2016 to 2019 than it would have if competitors had been allowed to start selling their drugs promptly. In interviews, patients said they either had to forgo treatment or were planning to delay their retirement in the face of enormous out-of-pocket costs for Humira.
AbbVie did not invent these patent-prolonging strategies; companies like Bristol Myers Squibb and AstraZeneca have deployed similar tactics to maximize profits on drugs for the treatment of cancer, anxiety and heartburn. But AbbVie’s success with Humira stands out even in an industry adept at manipulating the U.S. intellectual-property regime.
“Humira is the poster child for many of the biggest concerns with the pharmaceutical industry,” said Rachel Sachs, a drug pricing expert at Washington University in St. Louis. “AbbVie and Humira showed other companies what it was possible to do.”
Following AbbVie’s footsteps, Amgen has piled up patents for its anti-inflammatory drug Enbrel, delaying a copycat version by an expected 13 years after it won regulatory approval. Merck and its partners have sought 180 patents, by one count, related to its blockbuster cancer drug Keytruda, and the company is working on a new formulation that could extend its monopoly further.
Humira has earned $208 billion globally since it was first approved in 2002 to ease the symptoms of rheumatoid arthritis. It has since been authorized to treat more autoimmune conditions, including Crohn’s disease and ulcerative colitis. Patients administer it themselves, typically every week or two, injecting it with a pen or syringe. In 2021, sales of Humira accounted for more than a third of AbbVie’s total revenue.
An AbbVie spokesman declined to comment. The company’s lawyers have previously said it is acting within the parameters of the U.S. patent system. Federal courts have upheld the legality of AbbVie’s patent strategy with Humira, though lawmakers and regulators over the years have proposed changes to the U.S. patent system to discourage such tactics.
In 2010, the Affordable Care Act created a pathway for the approval of so-called biosimilars, which are competitors to complex biologic drugs like Humira that are made inside living cells. Unlike generic equivalents of traditional synthetic medications, biosimilars usually are not identical to their branded counterparts and cannot be swapped out by a pharmacist.
The hope was that biosimilars would drastically drive down the cost of pricey brand-name biologics. That is what has happened in Europe. But it has not worked out that way in the United States.
Patents are good for 20 years after an application is filed. Because they protect patent holders’ right to profit off their inventions, they are supposed to incentivize the expensive risk-taking that sometimes yields breakthrough innovations. But drug companies have turned patents into weapons to thwart competition.
AbbVie and its affiliates have applied for 311 patents, of which 165 have been granted, related to Humira, according to the Initiative for Medicines, Access and Knowledge, which tracks drug patents. A vast majority were filed after Humidor was on the market.
Some of Humira’s patents covered innovations that benefited patients, like a formulation of the drug that reduced the pain from injections. But many of them simply elaborated on previous patents.
For example, an early Humira patent, which expired in 2016, claimed that the drug could treat a condition known as ankylosing spondylitis, a type of arthritis that causes inflammation in the joints, among other diseases. In 2014, AbbVie applied for another patent for a method of treating ankylosing spondylitis with a specific dosing of 40 milligrams of Humira. The application was approved, adding 11 years of patent protection beyond 2016.
The patent strategy for Humira was designed to “make it more difficult for a biosimilar to follow behind,” Bill Chase, an AbbVie executive, said at a conference in 2014.
AbbVie has been aggressive about suing rivals that have tried to introduce biosimilar versions of Humira. In 2016, with Amgen’s copycat product on the verge of winning regulatory approval, AbbVie sued Amgen, alleging that it was violating 10 of its patents. Amgen argued that most of AbbVie’s patents were invalid, but the two sides reached a settlement in which Amgen agreed not to begin selling its drug until 2023.
Over the next five years, AbbVie reached similar settlements with nine other manufacturersseeking to launch their own versions of Humira. All of them agreed to delay their market entry until 2023.
Some Medicare patients have been suffering as a result.
Sue Lee, 80, of Crestwood, Ky., had been taking Humira for years to prevent painful sores caused by a chronic skin condition known as psoriasis. Her employer’s insurance plan had helped keep her annual payments to $60. Then she retired. Under Medicare rules, she would have to pay about $8,000 a year, which she could not afford.
“I cried a long time,” she said.
For months, Ms. Lee stopped taking any medication. The sores “came back with a vengeance,” she said. She joined a clinical trial to temporarily get access to another medication. Now she is relying on free samples of another drug provided by her doctor. She doesn’t know what she’ll do if that supply runs out.
Barb Teron, a book buyer in Brook Park, Ohio, plans to delay her retirement because she is worried about Humira’s cost. Ms. Teron, who takes Humira for Crohn’s disease and colitis, has never had to pay more than $5 for a refill of the drug because her employer’s insurance plan picks up most of the tab. The cost, according to a pharmacy app on Ms. Teron’s phone, was $88,766 in the past year.
Ms. Teron, who turns 64 in March, would have liked to retire next year, but that would have meant relying on Medicare. She fears that her out-of-pocket costs will spiral higher. “When I look at that $88,000 charge for a year, there’s no way,” Ms. Teron said.
AbbVie executives have acknowledged that Medicare patients often pay much more than privately insured people, but they said the blame lay with Medicare. In 2021 testimony to a congressional committee investigating drug prices, AbbVie’s chief executive, Richard Gonzalez, said the average Medicare patient had to pay $5,800 out of pocket annually. (AbbVie declined to provide updated figures.) He said AbbVie provided the drug for virtually nothing to nearly 40 percent of Medicare patients.
The drug’s high price is also taxing employers.
Soon after she started taking Humira, Melissa Andersen, an occupational therapist from Camdenton, Mo., got a call from a human resources representative at her company. The company directly covers its employees’ health claims, rather than paying premiums to an insurer. Her Humira was costing the company well over $70,000 a year — more than Ms. Andersen’s salary.
The H.R. employee asked if Ms. Andersen would be willing to obtain the drug in an unconventional way to save money. She said yes.
As soon as March, her company plans to fly Ms. Andersen, 48, to the Bahamas, so that a doctor can prescribe her a four-month supply of Humira that she can pick up at a pharmacy there. Humira is much cheaper in the Bahamas, where the industry has less influence than in it does in Washington and the government proactively controls drug pricing.
It is not yet clear how much the knockoff products will cost and how quickly patients will switch over to them. Billions of dollars in drug spending will ride on the answers to those questions.
“We price our products according to the value they deliver,” said Jessica Akopyan, a spokeswoman for Amgen, whose biosimilar product comes to market on Tuesday. She added that the company would “employ flexible pricing approaches to ensure patient access.”
Even now, as AbbVie prepares for competitors to erode its Humira sales in the United States, the company will have a new way to make more money from the drug. Under the terms of the legal settlements it reached with rival manufacturers from 2017 to 2022, AbbVie will earn royalties from the knockoff products that it delayed.
The exact sizes of the royalties are confidential, but analysts have estimated that they could be 10 percent of net sales. That could translate to tens of millions of dollars annually for AbbVie.
In the longer run, though, AbbVie’s success with Humira may boomerang on the drug industry.
Last year, the company’s tactics became a rallying cry for federal lawmakers as they successfully pushed for Medicare to have greater control over the price of widely used drugs that, like Humira, have been on the market for many years but still lack competition.
How a Drug Company Made $114 Billion by Gaming the U.S. Patent System
As ACA enrollment reaches record highs nationwide, Maine sees decline for 2023
The Affordable Care Act marketplace saw a record number of signups nationwide for 2023, but Maine saw a decrease in enrollment.
Roughly 63,000 Mainers signed up for health insurance on the marketplace, compared with 66,000 last year. Ann Woloson, executive director of Consumers for Affordable Health Care, says one likely reason for the decline is the improved economy.
"People are getting jobs that are providing them with health insurance so they haven't had to rely on the marketplace," she says.
Another reason, Woloson says, is that people on MaineCare have received continuous eligibility throughout the pandemic. But that will end in April, and she says some people may transition to the marketplace under a special enrollment period.
According to Maine's Department of Health and Human Services, 83% of consumers who enrolled in 2023 marketplace plans received financial assistance, and more than 10,000 are paying monthly premiums that are under $10.
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