Obamacare Created Big Medicine
by Matt Stoller - Portside - February 3, 2024
The dominant trend of US social life over the last fifteen years is a stagnating, and then declining, life span. There are many reasons for this trend, such as violence, diet, suicide, drug addiction, and auto accidents. But for many reasons, our monopolistic health care system is a big part of the problem.
Monopolistic drug wholesalers fostered the opioid crisis, and now, for the same reason, they are creating shortages of prescription drugs. Untreated mental illness is a significant factor in elevated suicide rates. Not being able to get care when you need it is associated with higher levels of death and permanent injury. More fundamentally, knowing that there are no systems in place to protect or care for you undermines any sense of hope.
It’s easy to describe what is happening as consistent with an overall pessimistic tale about the U.S., one that is almost uniquely American. The story goes that in the U.S., the richest country in the world, citizens can’t get access to a doctor when they need it. Most of Europe, and most countries globally, have universal health care, and some have had it for more than a century. By contrast, we’ve never had it here.
America almost achieved universal health care multiple times. Teddy Roosevelt proposed it, so did Harry Truman, Richard Nixon, Jimmy Carter, and Bill Clinton. They failed, largely because of the powerful doctor lobby — the American Medical Association — standing against it.
But if you look at the story from the perspective of most Americans instead of the system at large, the story is not so rigid. For much of the 20th century, the American health care system was one of very high quality, with great doctors, hospitals, and an exceptionally innovative, if overpriced, pharmaceutical system.
And access generally did increase, quite dramatically. We organized our health care system by letting people collectively get together, pool their money, and use this pool to pay for medical care when any member needed it. From 1950 to 1965, the percentage of Americans with surgical coverage jumped from 36 percent to 72 percent. In the 1960s, as historian Alan Derickson noted, “health insecurity became the exception rather than the rule.”
These pools are known as insurance companies, and today they represent the classic dilemma of using ‘other people’s money’ that Brandeis noted in the early 20th century. Even so, health insurance is very good to have. And in 2010, the uninsured population in the U.S. was 45 million, or 15 percent of the country. That’s too many.
While there has also been frustration that insurers don’t cover what they should, trying to penny pinch, and costing lives in the process, for most Americans, the assumption was that the care is pretty good. And it often was. So access, not quality, is the fulcrum for political debate, along with some critiques of health insurers who refused to fully cover necessary services.
Yet over the last twenty years, something fundamental in the American health care system has changed. It’s not that people can’t get insurance; indeed, America is more insured than it has ever been. It’s that the underlying quality inside the health system is falling apart. One obvious signpost, of course, is that doctors, distributors, and pharmaceutical companies helped hook Americans on heroin-style substances from the late 1990s onward, leading to the deaths of hundreds of thousands of people. But it’s more than that scandal, as gruesome as it is.
Americans spend more on care, and get less, than any other country. And the reason for the dysfunctional care is that since the passage of Obamacare, the firms who control our health care system have become far bigger, and much more powerful.
The hospital sector, for instance, represents a third of health care spending. Starting in the 1980s and accelerating after Obamacare, hospital systems have merged into giant monopolies, driving huge price hikes and increasingly poor quality. Private equity has come into everything from ambulances to urgent care to nursing homes. Monopolistic Group Purchasing Organizations have created shortages among hundreds of drugs, which reduce the equality of care. These are known problems, and real.
But the one area where we’ve seen the emergence of a different and fundamentally corrupt business model is the insurer space. In 2007, for instance, UnitedHealth Group, one of the country’s biggest insurers, had total revenues of $75 billion. In 2022, the firm, having expanded far beyond insurance, had annual revenue of $325 billion. CVS Health, which bought insurance giant Aetna in 2018, had a similar trajectory, with $76 billion of revenue in 2007, and $322 billion in 2022.
UnitedHealthcare is not just an insurer, it employs around 50,000 physicians, it sells software. CVS is the largest pharmacy chain in the country and has a network of clinics, while Humana is now the biggest provider of home health care services in the country. Insurers control home health agencies, ambulance providers, and data management firms, as well as pharmaceutical middlemen.
Consider a few recent stories about how these firms operate. Last year, ProPublica and The Capitol Forum did two investigations into the health insurance industry. In one story, their reporters profiled a UnitedHealthcare customer named Christopher McNaughton who suffers from a crippling case of ulcerative colitis and requires expensive medicine. UnitedHealthcare didn’t want to pay, so it rejected claims paying for McNaughton’s care, deeming it “not medically necessary” and lying about what his own doctor said. McNaughton’s doctor fought for him, he sued, and he was able to keep paying for medicine and stay alive. But it was horrific.
In another, separate story, reporters found that Cigna, encouraged by private equity, engineered its system so that customers who filed claims for care would be automatically rejected. This practice, of denying care to those who paid for it, is likely industry wide.
One might ask why customers would buy insurance from firms who automatically deny claims. Once again, it’s a monopoly issue. Today, three quarters of markets are highly concentrated, and almost half have one insurer with more than 50 percent of the market. Most people can’t choose their insurer, their employer chooses for them. And it’s compelling to buy from a big insurer, because it’s more likely a local doctor and hospital are in their local network, at better rates. McNaughton, after years of lawsuits, still buys his insurance from UnitedHealthcare.
Other People’s Money
What is weird about the American health care fiasco exposed by ProPublica and The Capitol Forum is that we had supposedly addressed it.
Fourteen years ago, America had a bitter debate over health care access, and President Barack Obama won his fight for what was ostensibly universal care. There were also supposedly rules about denying people coverage. In 2010, the United States Congress passed the Affordable Care Act (ACA), and President Obama signed it into law. This law was largely targeted at the payers in the system — insurers — and not so much providers — the entities who deliver care, such as hospitals, doctors, clinics, pharmaceutical companies, ambulances, etc.
The passage of this law was fraught. Obama didn’t want to let private health insurers sabotage his health care crusade the way they had Bill Clinton’s attempts in the early 1990s, the so-called ‘HillaryCare.’ The strategy Obama chose was to co-opt insurers with sticks and carrots.
The stick was that if they didn’t get on board, they’d be punished with a genuine national system that might push them out of the market. The carrots were more extensive. The law forced millions of people to become customers of these private insurers. It also expanded the health insurance program for the poor, known as Medicaid, which could be profitable for private insurers. Finally, Obama didn’t stop private insurers from privatizing Medicare, which remains enormously profitable for them. So the insurers got on board.
Despite these concessions, health policy wonks generally liked what Obama had done, because it took on the main problem which was, as they saw it, access. Obamacare was designed to expand health insurance coverage to most people who didn’t have it, and in that sense, it delivered. The number of uninsured Americans dropped from 45 million to 27 million within just a few years.
And yet, something was off. Obama had promised on the campaign trail that he would sign a universal health care bill into law, and one that would “cut the cost of a typical family’s premium by up to $2,500 a year.” In 2004, the average insured family of four paid $11,192 in health care costs; by 2022 that amount was $30,260. That increase in cost for a family of four is the price of a small car, every single year.
And that’s because prices have gone up, and not because there are more doctors, beds, or care. While Obamacare did expand access, it didn’t address the key problem in the U.S. health care system: monopoly power. So prices kept rising. And still are.
To understand how it went so wrong, it helps to look at the one key place where policymakers tried to impose real cost controls on insurers, and how that attempt backfired.
The provision of the law most hated by payers during the Obamacare fight was known as the Medical Loss Ratio, a provision authored by then-Senator Al Franken, which required insurers to spend a certain minimum percentage of the premiums they collect on medical care compared to administrative costs (including executive salaries). For some plans, the minimum was 80 percent, for others it was 85 percent. If insurers spent below that amount, they would have to mail the difference out as a rebate to customers.
The Medical Loss ratio was essentially a public utility rate regulation capping profits for private health insurers. And it made a lot of sense, intuitively. Payers could make some money, but they would have to spend on care. If they didn’t spend what they collected, they had to return extra money, which means they had an incentive to lower prices.
At first, this provision seemed to work. The health care nonprofit KFF reported that consumers saved an average of 7.5 percent on their health insurance within the first few years, as payers mailed out hundreds of millions of dollars every year to customers.
After the passage of the Affordable Care Act in 2010, health insurance companies pursued a variety of strategies to increase profits. They focused on different kinds of products, especially Medicare Advantage plans targeted at older Americans. And they sought to buy up rivals, hoping to bulk up.
Aetna tried to buy Cigna, and Anthem sought to combine with Humana. These were so-called horizontal mergers, which is to say, firms seeking to combine with rivals who sold the same products they did. Their goal was to simply grow their way out of the problem. If you can only make a 15 or 20 percent margin, well, at least you can still increase your revenue. In both cases, however, the Obama antitrust division sued, and won.
So insurance company executives figured out another strategy. Why not become more than a health insurance business? After all, if you’re both a payer and a provider, you can tap into that other 85 percent by directing insurance money to providers you control.
And so a new kind of merger trend in health care accelerated. Not horizontal acquisitions, but what are called vertical mergers. Health insurance giants stopped trying to buy each other, and started to buy or be bought by entities with whom they negotiate to buy services. It was “payers” buying or being bought by “providers.”
Before the Medical Loss Ratio, “payers,” which is to say insurers whose job was to buy billions of dollars of goods and services for their customers, sort of had an incentive to hold costs down. They usually did this by being jerks to customers, denying them care they needed.
But once the government capped insurer profits at 15 percent of insurance revenue, these firms had a different incentive. They sought higher revenue and higher spending, instead of cost controls. They also wanted to buy providers so they could get access to that other 85 percent of the revenue. What better way to make money than by being both the buyer and the seller?
Richard G. Frank and Conrad Milhaupt from Brookings noted this trend last year. Payers could buy providers, and then send revenue to related businesses. The two firms leading the charge were UnitedHealth Group and CVS. UnitedHealth, one of the big four insurers, formed a subsidiary in 2011 right after the passage of Obamacare called Optum. Optum began rolling up physician’s practices, software and analytics firms, medical clinics, and pharmaceutical middlemen.
In 2018, CVS, which owned large pharmacy chains and the pharmacy benefit manager Caremark, bought the health insurer Aetna. Earlier this year, CVS completed its acquisition of Signify Health and Oak Street. In 2018, Cigna bought Express Scripts, the largest pharmacy benefit manager in the country. Humana bought Kindred, a health care delivery firm. Elevance, formerly Anthem, became a pharmacy benefit manager, and cut deals with a large number of medical providers.
In 2019, UnitedHealth sent 18 percent of its payer revenue to itself, while CVS’s Aetna sent 13 percent to its own clinics and pharmacies. That number has no doubt increased dramatically over the last three years.
The Need For A Glass-Steagall In Health Care
There have been hundreds of acquisitions since the Affordable Care Act was signed, and the American health care system is now a whole different beast. Talking about insurers, or pharmacy benefit managers, or drug store chains, or doctor practices in isolation, simply doesn’t make sense anymore.
We are dominated by health care conglomerates. A few years ago, the Drug Channels Institute showed this dynamic with an infamous chart, purely in the drug middleman space, mapping out immense and confusing consolidation.
The shift in the practice of American medicine has been fundamental. You simply cannot hang a shingle and become an independent doctor or pharmacist, because it is impossible to get reimbursed in any reasonable manner. Becoming a doctor today means you are going to be an employee of a giant conglomerate or hospital chain.
And the prices for consumers, whether through premiums, deductibles, co-insurance, or any of the other sadistic methods dreamed up by health care actuaries, are higher and more confusing. Health care benefits increasingly include consulting services to help navigate health care benefits, which is insane. And that’s if you’re well off.
The heart of the problem is that there is a conflict of interest between being a payer and being a provider. If I’m choosing to spend money on behalf of a customer, and I’m also on the other side of the transaction, I have an incentive to steer that purchase to where I benefit, and not solely for the benefit of the customer.
To address these kinds of conflicts, in previous eras in history, we’ve regulated industries to prohibit certain forms of vertical integration. (30 Rock’s clip on vertical integration explains conceptually what these kinds of mergers do.)
In the 1990s, for instance, when pharmaceutical firms owned pharmaceutical middlemen, the FTC forced them to divest their pharmacy benefit managers to make sure they would have no incentive to promote certain drugs over others. There are also a host of laws, like anti-price steering provisions, anti-kickback laws, and laws like the Robinson-Patman Act, that block conflicts of interest across a variety of industries. The Glass-Steagall regime was one such law in banking that kept investment and commercial banking apart — but there have been many others.
Over time, economists and policymakers came to think of vertical mergers as harmless, or even efficiency-enhancing. So when the Affordable Care Act passed, Congress didn’t do much to prohibit conflicts of interest, as the goal was access to a system that most wonks thought was pretty good. Instead, Congress capped insurer profits through the Medical Loss Ratio.
But without prohibiting the combo of providers and payers, this well-meaning public utility profit cap, combined with new demand for insurance, instead fostered a dramatic roll-up of power. Today, CVS and UnitedHealth Group are health care tyrants, and everyone else must keep pace, either through mergers or other aggressive merger-like contracting practices.
So what are the costs of this vertically integrated hell-space? The underlying quality of care is declining as health care conglomerates focus on exploiting conflicts of interest. Consider three legal actions in recent years.
In March 2022, CVS Health was sued under the False Claims Act for fraud. A whistleblower alleges that CVS was lying to its insurance customers, forcing them to buy more expensive brand name drugs when cheaper generic drugs were available. The reason CVS would lie to customers is that it would get payments on the back-end from pharmaceutical producers whose products it had helped sell. Many customers couldn’t afford those higher prices, even though the government had paid for CVS to give them a Medicare drug plan that covered the costs.
Similarly, last March, Ohio Attorney General David Yost sued Cigna’s Express Scripts subsidiary, as well as Humana Pharmacy Solutions, calling these firms “modern gangsters” for raising prices on people who needed medicine, and cutting revenue to independent pharmacists.
Yost wasn’t the only aggressive regulator. Oklahoma Insurance Commissioner Glen Mulready threatened to strip CVS of its right to operate in the state as a pharmaceutical middleman because the firm forced patients to use its poor quality mail-order and retail pharmacies instead of their preferred pharmacies, and then lied about it.
All three of these actions came about because the entity was a payer, aka it was buying things for a client, as well as a provider, which is to say, it was selling stuff to that client. And it’s getting worse, because the judiciary doesn’t recognize the threat of such vertical mergers.
CVS’ Purchase Of Signify
Another cost is low-level forms of fraud and monopolization, especially where we spend the most on health care: the elderly. Since the early 2000s, the U.S. has been privatizing the Medicare system. Most people above 65 now have their health insurance paid for by the government, but choose from among multiple private plans, in what is known as the Medicare Advantage program.
The Medicare Advantage market has rapidly become one of the largest sources of spending for the federal government, accounting for $361 billion of federal spending in 2021, and is expected to grow to an astounding $943 billion by 2031 as the population ages. Along with this growth is waste. Taxpayers overpaid Medicare Advantage health insurers by as much as $25 billion in 2020 alone, meaning nearly 8 percent of all spending in the program could have been overpayment.
The largest health insurance companies, unsurprisingly, have been capturing the market to monopolize profits. The Top 4 plan providers control around 62 percent of Medicare Advantage plans, with even greater concentration at local levels.
And it’s getting worse, precisely because of the lack of a separation between payers and providers. Last year, CVS Health acquired one of the critical cogs in the Medicare overpayment scheme — the dominant “in-home evaluation” company Signify Health — in an $8 billion deal. This acquisition is a classic payer-provider conflict of interest.
Signify Health is the number-one provider of in-home health evaluations for Medicare Advantage patients. Signify has a network of over 10,000 traveling nurse practitioners and physicians across the country who drive to Medicare Advantage patients’ houses to perform in-home evaluations that generally last around an hour, supposedly trying to help with preventative care.
Signify charges Medicare Advantage plans around $330 per patient visit. Why are the plans willing to pay $330 per visit for a one-hour service that may not actually lead to improved care or lower costs through preventative care? The answer lies in the way Medicare Advantage plans are paid. Since Medicare Advantage pays out a fixed amount per patient, and patients can have vastly different expected costs depending on their preexisting conditions, Medicare developed a system to compensate Medicare Advantage plans for taking on riskier patients.
The health status of a patient is called a risk score, which is calculated using a formula that considers all diagnosis and existing conditions of a patient. For example, if a patient has diabetes, all else equal, that patient will have a higher risk score than a patient without diabetes, and the government will pay the Medicare Advantage plan more per month for insuring that patient.
This intuitively makes sense, but in practice can lead to abuses of the system where plans attempt to make their patient populations appear less healthy than they actually are. As it turns out, Signify’s annual visits are an excellent opportunity to “diagnose” patients, and there have been accusations that Signify pushes their doctors to aggressively diagnose conditions so that plans can be paid for patient conditions that they have no intention of proactively treating.
This is not simply idle speculation. In October 2022, the DOJ sued CIGNA , alleging these practices are fraudulent. The DOJ’s complaint alleges “diagnoses codes were based solely on forms completed by vendors retained and paid by CIGNA to conduct in-home assessments of plan members.”
This brings us to CVS’s acquisition of Signify. Although Signify has already faced allegations of pushing hard to diagnose patients with conditions that would drive up risk scores, it is inevitable that it would have even more incentives to drive up risk scores under the ownership of CVS.
Currently, Signify can be motivated to push higher risk scores to please its customers (insurance companies getting paid by the federal government). However, Signify as an independent company at least has a layer of separation from the profits received by these customers from increasing risk scores.
Once Signify is owned by CVS, a risk score that increases payments from the Center for Medicare and Medicaid Services to CVS’s insurer subsidiary Aetna will directly benefit the corporate entity. CVS management will know this and be incentivized to push Signify’s clinicians to diagnose more aggressively, driving increased revenue and costing the federal government and taxpayers.
Signify is the largest in-home evaluation provider in the country, with its only significant competition coming from its much smaller competitor Matrix Medical Network. Signify’s largest customers besides Aetna (CVS) are Humana and UnitedHealth. These massive vertically integrated health care companies are likely to have the bargaining power to remain important customers of Signify. After all, Signify will need additional volume besides just Aetna customers to profitably maintain its 10,000 clinician network.
The real victims will be smaller Medicare Advantage plans that threaten to bring competition to the Medicare Advantage market. Currently, Signify is incentivized to work with all health plans in order to maximize in-home health evaluation volume and revenue. After the deal, CVS will have the ability to monitor upstart Medicare Advantage plans and either explicitly refuse to service plans that threaten to take market share or provide a degraded or more expensive product to slow their growth.
But the problems don’t stop there. CVS can spy on rivals with the data it is collecting through Signature. The incentives are obvious — CVS will have all of the data collected from Signify’s in-home evaluations, meaning it will know which patients are likely to be the most profitable as Medicare Advantage customers.
Remember, CVS will have data around each patient’s conditions and diagnoses contributing to risk scores, and have its own data around the expected profitability of patients with specific risk scores and profiles. This could lead to Aetna targeting specific patients of its competitors, making it even more difficult for small Medicare Advantage plans to compete.
Aetna could also use Signify data in areas where it does not currently offer Medicare Advantage plans to decide whether to enter that area to offer plans. This would lead to areas with less expected profitability missing out on competition from Aetna that it would otherwise have received.
More broadly, this acquisition adds another stream of highly sensitive data into the health care conglomerate CVS. CVS already controls the largest pharmacy benefit manager in the country, the largest chain of pharmacies in the country, one of the largest health insurance providers in the country, and a growing chain of primary care providers through its Minute Clinic Brand. The pharmacy down the road will now be collecting health data from millions of in-home evaluations across the country.
So What Now?
Why didn’t the Antitrust Division challenge this acquisition? Well in 2022, the Antitrust Division tried to do something about vertical consolidation, suing to block UnitedHealth Group’s purchase of Change Health, which is a dominant payment network within the health care system. But Judge Carl Nichols ruled against the DOJ, partly on the grounds that vertical mergers are usually not harmful. UnitedHealth wouldn’t want to jeopardize its reputation by taking advantage of customers by spying on them, the judge claimed.
So it’s possible that when analyzing the Signify merger or other similar acquisitions, the Antitrust Division is leery of a vertical merger challenge, for fear of losing again and wasting resources.
Or perhaps there is a bigger game afoot. Let’s return to the initial story, the denial of care by UnitedHealth of a customer with ulcerative colitis. Antitrust enforcers have realized that these episodes show a dangerous conflict of interest in the health conglomerate business model.
“What are the chances,” asked The Capitol Forum, “that a doctor who may have disagreed with UnitedHealth in the past would continue to do so if he or she works for UnitedHealth, a large employer of physicians and other health care providers?” Perhaps a broader monopolization claim, a case like that against Google for its conflicts of interest in the adtech ecosystem, is in the works.
But we don’t have to rely on antitrust enforcers. There’s also a broader political backlash brewing. Anger over Obamacare has dissipated, and politicians are beginning to cooperate to learn about and address middlemen in health care.
A contact in the space told me that when he watches hearings, he can see that Senators are much better versed in how pharmacy benefit managers work today than they were even a year before. House Republicans are leading a serious and credible investigation into pharmaceutical middlemen. Oklahoma and Ohio are Republican states, and they are the most aggressive regulators in the country, with Indiana leading on hospital costs. The Federal Trade Commission is investigating pharmacy benefit managers.
So there’s reason for hope.
Still, looking at American health care is an exercise in despair, with health conglomerates engaged in killing people for profit, with endless 10-15 percent increases in annual premiums, and with judges and policymakers not even knowing where to start. But we’ve now moved beyond the progressive frame of thinking the problem is merely access to insurance, and have come to realize that the underlying ability to deliver care is falling apart.
It’s only a matter of time before we start to reimpose some sort of structural prohibitions on the industry. It’s too ugly a system, and there are too many people dying not to try.
Editor’s note: This story was originally printed on Matt Stoller’s newsletter BIG, where he explores the politics of monopoly power.
Matt Stoller is Research Director for the American Economic Liberties Project. His first book Goliath, published by Simon and Schuster, was released in October.
The Lever is a nonpartisan, reader-supported investigative news outlet that holds accountable the people and corporations manipulating the levers of power. The organization was founded in 2020 by David Sirota, an award-winning journalist and Oscar-nominated writer who served as the presidential campaign speechwriter for Bernie Sanders.
Maine lawmakers approve slimmed-down version of hospital facility fee bill
by Joe Lawlor - Portland Press - Herald - April 19, 2024
Maine lawmakers this session approved a bill requiring hospitals and other health care facilities to clearly inform patients that they charge facility fees. It’s a watered-down version of a bill to regulate when and how the often costly fees to defray operational costs are being imposed.
The House and Senate both approved the bill, L.D. 2271, on voice votes with no roll call taken.
The bill now goes to Gov. Janet Mills, who hasn’t yet taken a position on the latest version of the bill.
Ann Woloson, executive director of Consumers for Affordable Health Care, a nonprofit that supports regulation of facility fees, said the bill, while far less strict than earlier proposals, is still a win for patients, who sometimes get charged hundred of dollars in facility fees.
“We see this as a positive first step,” Woloson said. “We hear a lot of confusion from Mainers about facility fees, why and when they are charged, how much they will be charged and how to decipher such fees on hospital bills.”
The bill would require health care facilities to post signs in their buildings and on their websites that facility fees are being charged, but it does not require that hospitals or other health care settings disclose the specific amounts of the fees. The amount a patient pays can vary, depending on their insurance coverage.
Woloson said that requiring any additional information to be provided to patients is a good step toward greater transparency.
Consumers for Affordable Health Care surveyed Mainers about facility fees this year and found that 27% said they had been charged such fees and 62% said they were excessive.
“We are hopeful that policymakers will take additional steps that help minimize the burden such fees have on patients,” Woloson said.
Lawmakers removed from the bill a provision that would have barred patients who receive services through telehealth – without visiting a health care facility – from getting charged a facility fee.
Hospital officials advocated to remove stronger regulations from the bill, arguing that facility fees sometimes are necessary because of the large amount of overhead that it costs to run a hospital.
In 2022, the Press Herald highlighted problems in the often-obscure medical billing system in stories about Mainers’ frustrations with hefty charges that took them by surprise. Facility fees were among their most common complaints, especially since hospitals would sometimes hide the fees in medical bills with no explanation. Insurance companies also sometimes refused to cover them, leaving patients on the hook for hundreds of dollars in unexpected costs simply because they went to a hospital instead of seeking treatment elsewhere.
After the stories were published, Senate President Troy Jackson, D-Allagash, introduced a bill to regulate the fees. The bill was amended to form a commission to study the topic, and the task force’s recommendations became the basis for L.D. 2271.
HOSPITALS PUSHED BACK
But as the bill went through the legislative process and hospitals lobbied, the regulations became weaker. For instance, one provision recommended by the task force that didn’t make it into the bill would have banned facility fees from being charged at hospital-affiliated facilities that weren’t located on the hospitals’ main campuses.
Jeff Austin, vice president of government affairs for the Maine Hospital Association, said during a hearing this winter that outright banning of facility fees in certain cases would “have a devastating financial impact on hospitals, including the potential closure of some facilities and the loss of patient access to health care services.”
And Lugene Inzana, associate chief financial officer of MaineHealth, in testimony before the Legislature’s Health Coverage, Insurance and Financial Services Committee in March, said that Maine already has a number of regulations on the books that require disclosure of facility fees or bans them in certain cases, such as in office settings for those covered by private insurance.
Katie Harris, chief government affairs officer for MaineHealth, said in a statement on Friday that “we appreciate that the (health coverage) committee ultimately concluded that Maine’s hospitals are not inappropriately charging patients. We understand that hospital billing can be complex, and at times patients can become frustrated with that complexity.”
But Stephanie DuBois, a spokesperson for Anthem Blue Cross Blue Shield, said on Friday that despite certain Maine limits, facility fees sometimes are being incorrectly put on patients’ bills. She said more needs to be done in future legislative sessions to improve protections for patients.
“It was encouraging to see progress,” DuBois said. “But we want to see strengthened protections for Mainers.”
Opinion: Nurse-to-patient ratios are a necessity
by Saddie Tirrell - - Portland Press Herald - March 30, 2024
I love nursing, but last week, I quit my job for the second time in six months. Sadly, my story as a new nurse is not uncommon. I’m less than three years into my career, and I’m considering taking a leave because of the lack of safe work environments. This is is why bedside RNs need a nurse-to-patient ratios law in Maine. We nurses are advocating for what we all want: safe and effective health care.
In 2021, I started as a new graduate bedside nurse at Maine Medical Center in the float pool. In that role, I could be “floated” to work in the medical-surgical units, telemetry units, the emergency department and the geriatric psychiatric unit. I was also a preceptor to several students and new nurses, helping to train the next generation of RNs. I often worked as a charge nurse on one of the med-surg units.
As a new grad RN, I experienced intense moral distress when management told me that sometimes the best we can do is to keep all of the patients alive for a shift. Management said that’s excellent work given the staffing circumstances. Exhaustion and physical illness were regular consequences of the volume of labor and lack of time to eat, drink and use the restroom. I always spoke up about these things tactfully to my managers and asked for help every shift.
I felt bullied and dismissed by the administrators of the hospital, who refused to discuss RN-to-patient ratios at the bargaining table with our Maine State Nurses Association bargaining team. While I worked in an in-patient unit at Maine Medical Center, there were instances of patients shouting from multiple rooms, preventable falls, and the smell of stool we didn’t have time to clean off the floors and walls.
After two years at the bedside, I quit my job doing the work I love. I have since started another nursing position and left again because of unrealistic care provision expectations. Now, I face a lapse in health insurance while I figure out my next move, and I’m still responsible for paying back my nursing student loans. I’m looking for a nannying job because I need a break from carrying the unsafe patient experience on my back.
Maine nurses need meaningful support in the form of legislation, and that’s a real possibility with L.D. 1639 now passing in the Senate. Our dedication to this bill has been the most healing work I’ve ever done.
I testified before the labor committee in favor of the nurse-to-patient ratios bill last year when an administrative RN said in her opposing testimony that nurses who leave the bedside just don’t have what it takes to make it. I left Maine Med with an award for an exemplary code stroke pathway and a 2023 nomination by the float pool manager for a rising star award. I was a bright and willing new grad nurse. It is a shame that my in-patient nursing experience was so scarring.
Nursing is not a profession I can recommend in good conscience without statewide mandated nurse-to-patient ratios. We need Maine to regulate our hospitals, because the quality of our health care is a shared responsibility and it is not fair to ask nurses to sacrifice themselves to create quality health care in an unsafe environment. We are so tired.
Many of us are fighting to make a living in our very expensive hometowns in Maine. We want to use our degrees and follow our calling to be a nurse. Please help nurses make meaningful changes in our health care system that we all agree could use some TLC. This is first and foremost is a patient safety issue, and we all have a say. All nurses want is to give patients the care they deserve.
Opinion The Great Medicaid Purge was even worse than expected
by Catherine Rampell - Washington Post - April 5, 2024
It’s a tale of two countries: In some states, public officials are trying to make government work for their constituents. In others, they aren’t.
This week marks one year since the Great Medicaid Purge (a.k.a. the “unwinding”) began. Early during the pandemic, in exchange for additional funds, Congress temporarily prohibited states from kicking anyone off Medicaid. But as of April 1, 2023, states were allowed to start disenrolling people.
Some did so immediately. So far, at least 19.6 million people have lost Medicaid coverage. That’s higher than the initial forecast, 15 million, even though the process hasn’t yet finished.
Some enrollees were kicked off because they were evaluated and found to be no longer eligible for the public health insurance program — maybe because (happily!) their incomes rose, or because they aged out of a program. But as data from KFF shows, the vast majority, nearly 70 percent, lost coverage because of paperwork issues.
These “procedural” disenrollments happened because the Medicaid recipient (or their parent or guardian) never completed the renewal process. Maybe the state sent the notice letter to an out-of-date address. Or maybe social services lost a file. Whatever the case, without ever being reevaluated for eligibility, they were simply purged from the system.
In any other rich country, government failure at this scale would be scandalous. Or at least a little bit embarrassing. Think about it: Government dysfunction has undermined a critical, half-century-old safety-net program. States knew this “unwinding” process would be a massive challenge that could overwhelm their infrastructure, yet they bungled it anyway.
Equally embarrassing: We don’t know what ultimately happened to those who were purged and how many have any access to care now.
To their credit, some states did try to rise to the occasion. For instance, Tennessee and Minnesota applied for (and received) lots of federal waivers to help them use more of the administrative data they had on file to automatically renew eligible beneficiaries’ coverage without requiring people to fill out yet more paperwork. Some states, such as Kentucky, also delayed eligibility reassessments for some groups.
Some states also learned from their pandemic experience: They realized that not requiring young kids to repeatedly submit the same paperwork reduced the risk of vulnerable children wrongfully losing access to medical care. (Who knew?) Now, a dozen states around the country are working to permanently reduce Medicaid’s administrative barriers and allow low-income kids to stay covered for longer periods.
In Washington state, Oregon and New Mexico, for instance, kids have “continuous eligibility” for public health insurance from birth to age 6. This basically means that if they’re poor enough to qualify for Medicaid or the Children’s Health Insurance Program (CHIP) as infants, they can automatically stay on the program through toddlerhood. Progress!
“We’ve unlocked this flurry of really unprecedented changes to help kids keep coverage,” says Joan Alker, executive director at Georgetown University’s Center for Children and Families. “That’s the good news. The bad news is that some states have moved really aggressively to push people off their [Medicaid] rolls.”
In some parts of the country, public officials are slashing bigger holes in their safety nets. In Arkansas, officials brag about “right-sizing” their state’s Medicaid program. This included purging 25,000 children off of “newborn” coverage over the course of six months. More recently, Gov. Sarah Huckabee Sanders (R) announced that Medicaid will not be available to Arkansas moms for the full year after they give birth, as nearly every other U.S. state allows. (Arkansas, by the way, bans nearly all abortions and has the highest maternal mortality rate in the country.)
Florida has likewise opted not to use any of the tools the feds are offering to help limit or slow coverage losses; about one-third of Floridian beneficiaries up for renewal so far have lost their coverage. But that’s nothing compared with Texas, where half of those up for renewal were purged. At one point, Texas state employees submitted a whistleblower complaint about erroneous Medicaid terminations; the state subsequently acknowledged that at least 90,000 people wrongfully lost their insurance because of unidentified system glitches.
The Biden administration has tried to limit the damage. At one point, it forced some states to pause procedural terminations when numbers looked suspiciously high, reinstating coverage for about 500,000 people. Last week, the administration also extended the open enrollment period for individual marketplace plans to give people more coverage options.
As bad as the numbers are, it’s worth considering how much worse this catastrophe might have been with different federal leadership. Recall that the Trump administration, for instance, did all it could to limit outreach and open enrollment for marketplace plans. It also tried to cut Medicaid coverage more directly.
About 1 in 5 Americans is on Medicaid. Yet, for some reason, the partial dismantling of this critical program has barely pierced the election news cycle so far. Presumably, some politicians would prefer to keep it that way.
https://www.washingtonpost.com/opinions/2024/04/05/medicaid-unwinding-purge-disenrollment/
Insurance Companies Reap Hidden Fees as Patients Get Unexpected Bills
Insurers Reap Hidden Fees by Slashing Payments. You May Get the Bill.
A little-known data firm helps health insurers make more when less of an out-of-network claim gets paid. Patients can be on the hook for the difference.
Chris Hamby reviewed more than 50,000 pages of documents and interviewed more than 100 people for this article. The New York Times also petitioned two federal courts for materials under seal.
Weeks after undergoing heart surgery, Gail Lawson found herself back in an operating room. Her incision wasn’t healing, and an infection was spreading.
At a hospital in Ridgewood, N.J., Dr. Sidney Rabinowitz performed a complex, hourslong procedure to repair tissue and close the wound. While recuperating, Ms. Lawson phoned the doctor’s office in a panic. He returned the call himself and squeezed her in for an appointment the next day.
“He was just so good with me, so patient, so kind,” she said.
But the doctor was not in her insurance plan’s network of providers, leaving his bill open to negotiation by her insurer. Once back on her feet, Ms. Lawson received a letter from the insurer, UnitedHealthcare, advising that Dr. Rabinowitz would be paid $5,449.27 — a small fraction of what he had billed the insurance company. That left Ms. Lawson with a bill of more than $100,000.
“I’m thinking to myself, ‘But this is why I had insurance,’” said Ms. Lawson, who is fighting UnitedHealthcare over the balance. “They take out, what, $300 or $400 a month? Well, why aren’t you people paying these bills?”
The answer is a little-known data analytics firm called MultiPlan. It works with UnitedHealthcare, Cigna, Aetna and other big insurers to decide how much so-called out-of-network medical providers should be paid. It promises to help contain medical costs using fair and independent analysis.
But a New York Times investigation, based on interviews and confidential documents, shows that MultiPlan and the insurance companies have a large and mostly hidden financial incentive to cut those reimbursements as much as possible, even if it means saddling patients with large bills. The formula for MultiPlan and the insurance companies is simple: The smaller the reimbursement, the larger their fee.
Here’s how it works: The most common way Americans get health coverage is through employers that “self-fund,” meaning they pay for their workers’ medical care with their own money. The employers contract with insurance companies to administer the plans and process claims. Most medical visits are with providers in a plan’s network, with rates set in advance.
But when employees see a provider outside the network, as Ms. Lawson did, many insurance companies consult with MultiPlan, which typically recommends that the employer pay less than the provider billed. The difference between the bill and the sum actually paid amounts to a savings for the employer. But, The Times found, it means big money for MultiPlan and the insurer, since both companies often charge the employer a percentage of the savings as a processing fee.
How MultiPlan and Insurers Make Money on Fees
MultiPlan and health insurers typically receive a percentage of the “savings” on each claim, creating an incentive to recommend lower payments.
Fee percentages vary based on negotiated contracts.
By The New York Times
Insurance Companies Reap Hidden Fees as Patients Get Unexpected Bills - The New York Times
In recent years, the nation’s largest insurer by revenue, UnitedHealthcare, has reaped an annual windfall of about $1 billion in fees from out-of-network savings programs, including its work with MultiPlan, according to testimony by two of its executives. Last year alone, MultiPlan told investors, it identified nearly $23 billion in bills from various insurers that it recommended not be paid.
MultiPlan and the insurers say they are combating rampant overbilling by some doctors and hospitals, a chronic problem that research has linked to rising health care costs and regulators are examining. Yet the little-understood financial incentive for insurers and MultiPlan has left patients across the country with unexpectedly large bills, as they are sometimes asked to pick up what their plans didn’t pay, The Times found. In addition, providers have seen their pay slashed, and employers have been hit with high fees, records and interviews show.
In some instances, the fees paid to an insurance company and MultiPlan for processing a claim far exceeded the amount paid to providers who treated the patient. Court records show, for example, that Cigna took in nearly $4.47 million from employers for processing claims from eight addiction treatment centers in California, while the centers received $2.56 million. MultiPlan pocketed $1.22 million.
Confidential Pricing and Fee Data
Itemized payments and fees for thousands of claims were made public in a lawsuit against Cigna after The Times petitioned the court. The insurer and MultiPlan opposed the release, calling the data “highly confidential.”
Insurance Companies Reap Hidden Fees as Patients Get Unexpected Bills - The New York Times
MultiPlan, which makes nearly all its revenue from such fees, markets its calculations as “defensible, repeatable and completely transparent” and independent of insurance company influence. The firm estimates that its reach extends to more than 100,000 health plans covering more than 60 million people. Patients have encountered its pricing recommendations after a variety of treatments, including spine surgeries, physical therapy appointments and ambulance rides.
The company did not respond to detailed questions from The Times. In a statement, it said it uses “well-recognized and widely accepted solutions” to promote “affordability, efficiency and fairness,” by recommending a “reimbursement that is fair and that providers are willing to accept in lieu of billing plan members for the balance.”
In examining MultiPlan’s dominant role in this secretive world, The Times reviewed more than 50,000 pages of confidential corporate records, legal filings, claims information and other documents. The Times also interviewed more than 100 patients, doctors, billing specialists, advisers to employer health plans and former MultiPlan employees.
The Times found:
Patients hit with unexpectedly large bills sometimes forgo care or cease long-term treatment, and complain that appeals are fruitless. “They basically took away the mental health care I was getting,” said Olivia Henderson, who stopped her therapy sessions in New York when the cost spiked.
MultiPlan’s recommended payments not only push back against known overbillers, but can also squeeze smaller practices. Kelsey Toney, who provides behavioral therapy for children with autism from a clinic in rural Virginia, saw her pay cut in half for two patients. “I don’t want to say, ‘I’m sorry I can no longer accept you,’ especially when I’m the only provider within an hour,” she said.
Insurers pitch MultiPlan to employers as a way to control costs, but the fees can be onerous and unpredictable. New England Motor Freight, a New Jersey trucking company, was charged $50,650 by UnitedHealthcare for processing a single hospital bill.
Insurers can influence MultiPlan’s purportedly independent payment recommendations, according to MultiPlan documents made public by a federal judge after a petition from The Times. That generally means paying even less to doctors and making more in fees.
Former employees at MultiPlan, which has annual revenues of about a billion dollars, described a numbers-driven culture that encouraged locking in unreasonably low payments and tied their bonuses to the reductions. “I knew they were not fair,” said one former MultiPlan negotiator, Kajuana Young.
Regulators rarely intervene. The administration of employer-funded health plans is mostly exempt from state regulations. Enforcement primarily falls to an agency within the federal Department of Labor, which says it has one investigator for every 8,800 health plans.
In separate statements, UnitedHealthcare, Cigna and Aetna said MultiPlan helps them control costs for employers. A UnitedHealthcare spokesman said employers negotiate and accept contract terms, including the fee, and described the arrangement as “an industry-standard approach.” A Cigna spokeswoman also said the fee “aligns with industry standards,” adding that “it is fully transparent to our client” and has no influence on payouts to medical providers.
As to the issue of patients being billed for unpaid balances, Aetna said it offered employers “various options and strategies” to minimize the risk of unexpected charges. Cigna said that payment decisions could be appealed, and that it collected no fee if the patient was ultimately billed the balance. UnitedHealthcare blamed “egregious” charges by out-of-network providers and suggested that criticism of its work with MultiPlan had been stoked by a private-equity-backed medical staffing firm that is suing the insurer.
Determining what to pay when a patient goes out of network has long been a contentious issue. While such claims represent a small portion of all medical visits, they can be expensive, little understood by patients and difficult to avoid. Legislation that took effect in 2022 now protects patients from certain kinds of surprise bills but does not cover a vast majority of the claims directed to MultiPlan.
Insurers say that the traditional approach — paying a portion of what providers typically charge — no longer works because of dramatic price hikes. Cigna, in its statement, said some out-of-network providers last year tried to charge “up to 1,904 percent of what they charge Medicare.” Providers, meanwhile, argue that insurers and MultiPlan can’t be trusted to set fair rates.
The situation echoes a past scandal. Fifteen years ago, the New York attorney general broke up a pricing system that his office’s investigation concluded was “rigged.” The central player, UnitedHealth, agreed to pay $350 million to patients and medical professionals who said they had been shortchanged, and along with other major insurers, it agreed to reforms meant to ensure this wouldn’t happen again.
But the settlement left an opening.
An Industrywide Investigation
In 2009, a woman from Yonkers, N.Y., became a symbol of patients’ outrage and the promise of change.
Mary Reinbold Jerome had been diagnosed with ovarian cancer at age 62 and received treatment at Memorial Sloan Kettering. Because the hospital was outside her plan’s network, she was billed tens of thousands of dollars.
A tenacious woman who taught English to nonnative speakers at Columbia University, Dr. Jerome lodged a complaint with the state attorney general’s office, helping to prompt an industrywide investigation.
She stood beside Andrew M. Cuomo, then the attorney general, as he announced his office’s blistering conclusions: A payment system riddled with conflicts of interest had been shortchanging patients, and at its core was a data company called Ingenix. Insurers used the company, a UnitedHealth subsidiary, to unfairly lower their payments and shift costs to patients, the probe found.
UnitedHealthcare, Cigna, Aetna and other major insurers agreed to replace Ingenix with a nonprofit that would provide independent pricing data. Dr. Jerome was featured on news programs and hailed as an agent of change, while senators held hearings and blasted insurers for cheating patients.
In 2010, Dr. Jerome died.
“She was thinking beyond her own situation,” her daughter, Eva Jerome, said in an interview. “She was hoping it would have a broader impact.”
But amid the triumph, a key detail in the attorney general’s agreements with insurers largely escaped notice: The companies were required to use the nonprofit database for only five years.
When that term expired in 2014, MultiPlan was well positioned to capitalize.
‘All for Naught’
For decades, the company, founded in 1980, offered a traditional approach to managing out-of-network claims by negotiating rates with doctors. Insurers got discounts and assurances that patients would not have to make up the difference.
But after MultiPlan’s founder sold it to private equity investors in 2006, the company pursued a more aggressive approach. It embraced pricing tools that used algorithms to recommend lower payments, and no longer protected patients from having to pay the difference, documents show.
Meanwhile, private equity ramped up investments in physician groups and hospitals and, in some instances, began billing for extraordinary sums. Once insurers were no longer obligated to use the nonprofit database, FAIR Health, they began looking for ways to combat that billing and other charges they considered egregious. Because FAIR Health’s data was based on what doctors typically charged, insurers contended that overbilling would skew payments too high.
Cigna was particularly concerned with what it considered overbilling and fraud by substance abuse treatment centers. It halted some payments, opened investigations and met with a public relations firm “to precondition public support for any next steps we may need to take,” internal documents show.
In a 2015 email, unsealed after The Times’s request and over Cigna’s objection, a Cigna executive reminded colleagues of a key consideration.
“We cannot develop these charges internally (think of when Ingenix was sued for creating out-of-network reimbursements),” wrote Eva Borden, a chief risk officer at Cigna. “We need someone (external to Cigna) to develop acceptable” rates, she wrote.
UnitedHealthcare developed talking points to “position UnitedHealthcare as an advocate that is helping consumers push back on excessively high physician and facility bills,” a 2016 internal memo said.
Both insurers increasingly turned to MultiPlan. Internal documents show that UnitedHealthcare began a campaign to persuade employers to switch from FAIR Health. In a 2019 email, a UnitedHealthcare senior vice president emphasized creating a “sense of urgency” and helping companies still using FAIR Health “understand they don’t want to be on that program anymore.”
UnitedHealthcare had a big incentive to encourage this change. When it processed claims from employer plans using FAIR Health, the insurer collected no additional fee, according to legal testimony. But when it used MultiPlan, documents show, it typically charged employers 30 to 35 percent of the difference between the billed amount and the portion paid.
MultiPlan, too, charged a percentage of the savings, meaning it could make more by recommending lower payments. (FAIR Health charged a flat fee.)
While UnitedHealthcare was MultiPlan’s largest customer, Cigna and Aetna also embraced its tools and fee model, records show. Other insurers that work with MultiPlan include Kaiser Permanente, Humana and some Blue Cross Blue Shield plans.
Employers with self-funded plans administered by insurers include large companies like Coca-Cola and AstraZeneca and smaller organizations like school districts and union locals. (New York Times Company plans also operate this way.)
FAIR Health has expanded the types of data it offers and made it available online. Numerous states use the nonprofit when setting payments for government programs. Big commercial insurers still license its data, but they have largely shifted to other approaches, according to interviews, documents and statements from UnitedHealthcare and Cigna.
“If they’re able to go back to their old ways,” Eva Jerome said, “then it was all for naught.”
‘I’m Being Ripped Off’
When claims go through MultiPlan, some patients receive statements highlighting what their insurer calls discounts or savings — even as doctors or hospitals bill them for those amounts.
Cari Campbell, who received fertility treatment in Minnesota, was charged thousands of dollars that her insurer had labeled “you saved.” In Kansas City, Kan., Paul Haddix paid the amounts labeled “your discount” for his daughter’s occupational and speech therapy. In New Jersey, Jonathan Menjivar paid upfront for therapy appointments and saw his reimbursements plunge.
“I took a closer look at the explanation of benefits,” Mr. Menjivar said, “and noticed for the first time this column labeled ‘your discount,’ which is an interesting way of putting it.”
The supposed savings and discounts were the portions MultiPlan had recommended the employers not pay. Patients could still be on the hook.
Fact Check: An Explanation of Benefits
Insurance statements often identify savings or discounts. But sometimes patients can still be billed for that amount, as in this case involving the UnitedHealth subsidiary UMR.
The burden can fall hardest on people with chronic or complex conditions who see out-of-network specialists. Justin Dynlacht, who has Crohn’s disease, paid extra for a plan that covered such visits. After seeing two in-network doctors about persistent abdominal pain, he went to an outside specialist who discovered a hernia containing abdominal tissue.
Aetna sent the specialist’s claims to MultiPlan, and Mr. Dynlacht was left with thousands of dollars in bills.
“I’m being ripped off,” he said. “It’s not right.”
Staying in-network can be especially difficult for mental health or substance abuse treatment.
A California woman whose teenage son was battling opioid addiction found only one treatment center that would accept him, and it was out of network. “When your kid has hit rock bottom, they’re dying, you get them in wherever you can,” she said, speaking on the condition that she not be named to protect her son’s privacy.
They had the most expensive health plan her employer offered, but her insurer, citing MultiPlan, left the family with tens of thousands of dollars in bills.
“I expected there would be some payment that wasn’t covered,” she said. “What I didn’t expect was the deceit that caused an even higher payment, an amount I never dreamed.”
You saved $370.62. CIGNA negotiates discounts with health care professionals and facilities to help save you money.
Some providers said they had begun requiring payment upfront or stopped accepting patients with certain insurance plans because appealing for higher payments can be time-consuming, infuriating and futile. Others have tried to sue insurers or MultiPlan. Dr. Rabinowitz, who repaired Ms. Lawson’s incision, hopes to collect the remaining balance from UnitedHealthcare in an ongoing case.
Surprise bills for some types of care are no longer an issue, insurers said, thanks to the law that went into effect in 2022. Brittany Perritt didn’t realize the anesthesiologists at her 3-year-old’s brain tumor treatments in 2020 were out-of-network until the claims went to MultiPlan. If that care occurred today, she likely would be spared the calls from debt collectors, because she didn’t go out of network by choice.
But MultiPlan assured investors shortly before the law’s passage that it was likely to have “limited impact” on the company. In fact, MultiPlan said, 90 percent of its revenue involved out-of-network claims that wouldn’t be affected.
‘Lining Their Pockets’
Debra Margraf, a trustee for a union health plan covering about 1,500 Phoenix-area electricians, was stunned when she and her colleagues asked Cigna what they had paid for “cost-containment” services.
The answer: The fees had risen from just over $550,000 in 2016 to $2.6 million in 2019, according to a lawsuit the trustees filed.
“It’s very frustrating to go out and have someone pitch us that they’re going to save us money and then end up lining their pockets,” Ms. Margraf said.
Cigna did not respond to questions from The Times about specific employer plans.
Other employers have also questioned increased fees and complained about being kept in the dark. A UnitedHealthcare account executive emailed colleagues for help explaining the $50,650 fee charged to New England Motor Freight. The fee grew out of a $152,594 bill, of which just $7,879 was covered.
The trucking company “thinks these are a money tree for us in fees and we are milking them,” the account executive wrote.
One UnitedHealthcare executive suggested a partial refund and an annual cap on fees, but a colleague countered, “We have to be concerned about setting precedent.”
As a company we have been unwilling to enter into one-off agreements that cap our revenue, so we have to be very careful.
Source: Read the PDF.
The way the fees were calculated was particularly galling: How could MultiPlan and insurers tie their own fees to bills they deemed unreasonable? It made no sense, one consultant for the trucking company wrote, to charge a 35 percent fee “if a hospital were to bill $20,000 for a flu shot.”
UnitedHealthcare did not respond to questions from The Times about the trucking company. In a statement, the insurer said it also offers fee arrangements not tied to billed amounts.
Cigna’s statement defended its fee, saying that “it enables us to administer the program, negotiate with providers and absorb the long-term risk associated with any challenging negotiation.”
Even verifying the accuracy of fees was difficult when UnitedHealthcare initially refused to provide the trucking company with the full underlying data. Cigna refused a similar request from auditors for Arlington County, Va., which it had charged $261,000 in one year. “There is no process for verifying the accuracy of any of these amounts,” the auditors wrote.
Large employers also have trouble getting data from insurers, said James Gelfand, head of the ERISA Industry Committee, which represents big companies with employee benefit plans.
Cost-containment programs can be a “revenue center” for insurers, Mr. Gelfand said, but are “extremely difficult for employers to police.”
‘In a Lot of Pain’
Patients have limited recourse. If they want to sue, they usually must first complete an administrative appeals process; even then, they stand to collect relatively modest amounts.
Regulators are unlikely to step in. Self-funded employer plans are largely exempt from state oversight. And federal regulators have limited resources and legal authority to police them.
Even when patients figured out where to direct complaints — the Employee Benefits Security Administration — they described the process as draining and mostly fruitless.
Patti Sietz-Honig, a video editor at Fox 5 in New York, filed a complaint in 2022. The cost of seeing a specialist for chronic back pain had spiked, and she faced roughly $60,000 in bills.
Ms. Sietz-Honig pressed for updates about her complaint and sent articles critical of MultiPlan from Capitol Forum, a site focused on antitrust and regulatory news. Last March, the agency emailed her that her employer and her insurer, Aetna, had agreed to a “temporary exception” and made additional payments.
“Unfortunately,” the agency wrote, the law “does not prohibit the use of third-party vendors” to calculate payments.
Meanwhile, her longtime pain specialist started requiring payment upfront. To save money, Ms. Sietz-Honig spaced out her appointments.
“I’ve been in a lot of pain lately,” she said, “so I’ve been going — and paying.”
‘Not a Real Negotiation’
As MultiPlan became deeply embedded with major insurers, it pitched new tools and techniques that yielded even higher fees, and in some instances told insurers what unnamed competitors were doing, documents and interviews show.
After meeting in 2019 with a MultiPlan executive, a UnitedHealthcare senior vice president wrote in an internal email that other insurers were using MultiPlan’s aggressive pricing options more broadly, and that UnitedHealthcare could catch up.
“Dale did not specifically name competitors but from what he did say we were able to glean who was who,” the executive, Lisa McDonnel, wrote, referring to Dale White, then an executive vice president at MultiPlan. She described how Cigna, Aetna and some Blue Cross Blue Shield plans were apparently using MultiPlan.
In recent years, MultiPlan’s top revenue generator has been an algorithm-based tool called Data iSight that consistently produces the lowest payment recommendations. Some insurers have used it as part of strategy MultiPlan calls “target pricing” or “meet-or-beat”: Insurers set a maximum price they will pay, and MultiPlan collects a fee only if its recommendation is lower.
In theory, many of MultiPlan’s recommendations are negotiable. But documents and interviews revealed tactics meant to pressure medical practices to accept low payments. Some offers came with all-caps admonitions and deadlines just hours away. Accept and receive prompt payment; refuse and risk an even lower payout. Practices and billing specialists said this often wasn’t an empty threat.
“It’s not a real negotiation,” said Tammie Farkas, who handles billing for her husband’s small New York-area practice focused on repairing blood vessels in the brain.
Insurers can set negotiation parameters for MultiPlan, including not negotiating at all, records and interviews show. Multiple providers and billing specialists said that in recent years they had increasingly been told their claims weren’t eligible for negotiation.
“It wasn’t this bad before,” said Tiffany Letosky, who oversees a small practice specializing in surgeries for endometriosis and gynecologic cancers.
Former MultiPlan negotiators said their bonuses had been linked to their success at reducing payments, incentivizing a hard-line approach.
Ms. Young, the former negotiator critical of the process, said she had occasionally called a provider from a cellphone — knowing that her work line was recorded — and advised against accepting her own offer.
Another former negotiator said the pressure to get bigger discounts had made her physically ill. “It was just a game,” she said. “It’s sad.”
Jennifer Pittinger, also a former negotiator, said she saw nothing wrong with the hard-driving approach because she believed she was combating overbilling.
“I was a bit of a viper,” she said. “Sometimes I just wanted to go in as hard as I could because my bonus is affected. If I can get a provider to accept 50 percent off, that’s great for me.”
But tools rolled out to combat price-gouging hospitals and private-equity profiteers, The Times found, have also been directed at people like Ms. Toney, the therapist in rural Virginia who treats children with autism.
She charges the rates that Virginia pays for people on Medicaid. But last year, she said, Meritain Health, an Aetna subsidiary, informed her that fair payment for her services was less than half what Medicaid paid, based on calculations by MultiPlan.
Ms. Toney has not billed the parents of her two patients covered by Meritain, but going forward she will not accept patients with similar insurance.
“It puts me in a tough position,” she said. “Do I want to pay myself a salary or be able to help people?”
Many Patients Don’t Survive End-Stage Poverty
by Lindsay Ryan - NYT - APRIL 11, 2024
Dr. Ryan is an associate physician at the University of California, San Francisco, department of medicine.
He has an easy smile, blue eyes and a life-threatening bone infection in one arm. Grateful for treatment, he jokes with the medical intern each morning. A friend, a fellow doctor, is supervising the man’s care. We both work as internists at a public hospital in the medical safety net, a loose term for institutions that disproportionately serve patients on Medicaid or without insurance. You could describe the safety net in another way, too, as a place that holds up a mirror to our nation.
What is reflected can be difficult to face. It’s this: After learning that antibiotics aren’t eradicating his infection and amputation is the only chance for cure, the man withdraws, says barely a word to the intern. When she asks what he’s thinking, his reply is so tentative that she has to prompt him to repeat himself. Now with a clear voice, he tells her that if his arm must be amputated, he doesn’t want to live. She doesn’t understand what it’s like to survive on the streets, he continues. With a disability, he’ll be a target — robbed, assaulted. He’d rather die, unless, he says later, someone can find him a permanent apartment. In that case, he’ll proceed with the amputation.
The psychiatrists evaluate him. He’s not suicidal. His reasoning is logical. The social workers search for rooms, but in San Francisco far more people need long-term rehousing than the available units can accommodate. That the medical care the patient is receiving exceeds the cost of a year’s rent makes no practical difference. Eventually, the palliative care doctors see him. He transitions to hospice and dies.
A death certificate would say he died of sepsis from a bone infection, but my friend and I have a term for the illness that killed him: end-stage poverty. We needed to coin a phrase because so many of our patients die of the same thing.
Safety-net hospitals and clinics care for a population heavily skewed toward the poor, recent immigrants and people of color. The budgets of these places are forever tight. And anyone who works in them could tell you that illness in our patients isn’t just a biological phenomenon. It’s the manifestation of social inequality in people’s bodies.
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Neglecting this fact can make otherwise meticulous care fail. That’s why, on one busy night, a medical student on my team is scouring websites and LinkedIn. She’s not shirking her duties. In fact, she’s one of the best students I’ve ever taught.
This week she’s caring for a retired low-wage worker with strokes and likely early dementia who was found sleeping in the street. He abandoned his rent-controlled apartment when electrolyte and kidney problems triggered a period of severe confusion that has since been resolved. Now, with little savings, he has nowhere to go. A respite center can receive patients like him when it has vacancies. The alternative is a shelter bed. He’s nearly 90 years old.
Medical textbooks usually don’t discuss fixing your patient’s housing. They seldom include making sure your patient has enough food and some way to get to a clinic. But textbooks miss what my med students don’t: that people die for lack of these basics.
People struggle to keep wounds clean. Their medications get stolen. They sicken from poor diet, undervaccination and repeated psychological trauma. Forced to focus on short-term survival and often lacking cellphones, they miss appointments for everything from Pap smears to chemotherapy. They fall ill in myriad ways — and fall through the cracks in just as many.
Early in his hospitalization, our retired patient mentions a daughter, from whom he’s been estranged for years. He doesn’t know any contact details, just her name. It’s a long shot, but we wonder if she can take him in.
The med student has one mission: find her.
I love reading about medical advances. I’m blown away that with a brain implant, a person who’s paralyzed can move a robotic arm and that surgeons recently transplanted a genetically modified pig kidney into a man on dialysis. This is the best of American innovation and cause for celebration. But breakthroughs like these won’t fix the fact that despite spending the highest percentage of its G.D.P. on health care among O.E.C.D. nations, the United States has a life expectancy years lower than comparable nations—the U.K. and Canada— and a rate of preventable death far higher.
The solution to that problem is messy, incremental, protean and inglorious. It requires massive investment in housing, addiction treatment, free and low-barrier health care and social services. It calls for just as much innovation in the social realm as in the biomedical, for acknowledgment that inequities — based on race, class, primary language and other categories — mediate how disease becomes embodied. If health care is interpreted in the truest sense of caring for people’s health, it must be a practice that extends well beyond the boundaries of hospitals and clinics.
Meanwhile, on the ground, we make do. Though the social workers are excellent and try valiantly, there are too few of them, both in my hospital and throughout a country that devalues and underfunds their profession. And so the medical student spends hours helping the family of a newly arrived Filipino immigrant navigate the health insurance system. Without her efforts, he wouldn’t get treatment for acute hepatitis C. Another patient, who is in her 20s, can’t afford rent after losing her job because of repeated hospitalizations for pancreatitis — but she can’t get the pancreatic operation she needs without a home in which to recuperate. I phone an eviction defense lawyer friend; the young woman eventually gets surgery.
Sorting out housing and insurance isn’t the best use of my skill set or that of the medical students and residents, but our efforts can be rewarding. The internet turned up the work email of the daughter of the retired man. Her house was a little cramped with his grandchildren, she said, but she would make room. The medical student came in beaming.
In these cases we succeeded; in many others we don’t. Safety-net hospitals can feel like the rapids foreshadowing a waterfall, the final common destination to which people facing inequities are swept by forces beyond their control. We try our hardest to fish them out, but sometimes we can’t do much more than toss them a life jacket or maybe a barrel and hope for the best.
I used to teach residents about the principles of internal medicine — sodium disturbances, delirium management, antibiotics. I still do, but these days I also teach about other topics — tapping community resources, thinking creatively about barriers and troubleshooting how our patients can continue to get better after leaving the supports of the hospital.
When we debrief, residents tell me how much they struggle with the moral dissonance of working in a system in which the best medicine they can provide often falls short. They’re right about how much it hurts, so I don’t know exactly what to say to them. Perhaps I never will.
Lindsay Ryan is an associate physician at the University of California, San Francisco, department of medicine.
Forgiving medical debt after it is sent to collections has fewer benefits – study
by Jessica Glenza - The Guardian - April 14, 2024
Medical debt is the most common form of debt in collections in the US. But forgiving that debt once it has gone to collections may provide fewer health and financial benefits than once hoped.
A new study by researchers who partnered with RIP Medical Debt, a non-profit that buys and forgives medical debt, found “disappointing” results when people’s bills were purchased and forgiven, with little impact on people’s credit scores and willingness to go to the doctor.
“Our hope was that this would be a cost effective intervention,” said Raymond Kluender, lead author on the National Bureau of Economic Research (NBER) report which partnered with RIP Medical Debt, and an assistant professor of business administration at Harvard Business School.
“We find no real benefits on people’s household finances or their mental health or utilization of healthcare in our study,” Kluender said.
However, he added, he doesn’t “think any of the authors on the project would not say medical debt is not a huge issue”. Instead, Kluender said, “Our interpretation is you have to intervene upstream,” which essentially means it might be more effective to provide people with financial assistance or universal, affordable healthcare – the sort that might prevent bills from accumulating – rather than forgive one bill at a time.
“What we do doesn’t solve the problem, but it removes some of the burden,” said Allison Sesso, president and CEO of RIP Medical Debt. Government policy change – one that provides universal healthcare – is “a better answer” but “we’re not holding our breath for that to happen”.
The findings are likely to disappoint legislative leaders. At least 15 states and local jurisdictions have worked with RIP Medical Debt to relieve debts for their constituents. Many, such as Arizona and Connecticut, used millions in federal pandemic relief aid to forgive debt.
“If you’re intervening only after the debt has been sent to collections or after the hospital has been collecting on it for a year, there’s very little benefit,” said Kluender.
The results contrast with surveys done by RIP Medical Debt, which found medical debt dramatically impacted people’s mental wellbeing and self-worth, and with the positive effects of “upstream” relief from hospital financial assistance programs.
Although more than 90% of US adults have health insurance, individual medical debt has become an important way US healthcare is financed, particularly in the last decade.
Most Americans make monthly payments toward insurance (premiums) and large upfront payments (deductibles) before insurance kicks in. For the average worker with only one person on a plan, the average annual deductible in 2023 was more than $1,700.
Unexpected medical bills can accumulate quickly when insurance denies claims, when small upfront payments (co-pays) are required regularly, or when people use doctors or services not covered by their health insurance (out-of-network).
All of those cash payments are collected by providers. When people can’t pay those bills, they become debt, and those providers send bills to collectors. That’s how medical debt became the most common form of debt in collections in 2021 – representing 58% of all debt on credit reports.
Those bills are important health indicators for several reasons. First, people will avoid the doctor if they have large upfront payments. There is also evidence to show people cut back on food, medicine, clothes and other household expenses when they have medical debt. Out-of-pocket expenses can push some Americans to delay having kids. On the population level, places where people have more medical debt also tend to have worse overall health outcomes.
Seeking to study the effects of debt forgiveness, researchers conducted a study with RIP Medical Debt that sorted more than 83,000 people with $169m in medical debt into three camps.
One group had debt purchased directly from a for-profit hospital with operations across eight states in the mountain west and south and forgiven. That debt was younger and more expensive, at 5.5 cents for every $1.00 of face value. Another group had debt purchased directly from a debt collection company. This debt was generally older and was less expensive – RIP was able to buy this debt for less than one penny for every $1.00 of face value. A third group was allowed to go through collections. Researchers then surveyed those people about a year later for impacts on mental, physical and financial health changes.
Researchers found that medical debt forgiveness did not dramatically affect people’s overall financial health, but that it did increase credit availability for a small subset of people who otherwise had clean credit reports. They also found debt relief slightly reduces payment of other medical bills (by $14 or about 7.2% on average), researchers believe because people may have then expected relief. They also found debt relief did not positively impact mental health.
However, the research did appear to show a widespread positive effect from a change in the credit landscape. In the middle of the experiment, the nation’s three large reporting agencies voluntarily stopped reporting most medical debt.
“I think the research is well done there,” said Breno Braga, an economist at the Urban Institute. “The results are at first counterintuitive, but after you read the results they make sense.”
Debt forgiveness is, “a very specific program that has been done to deal with medical debt”, and one that authors show “is not as positive as one would imagine”. But, Braga added, “I don’t think you can conclude from there that medical debt is not important.”
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