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Tuesday, August 8, 2023

Health Care Reform Articles - August 8, 2023

Letter to the editor: Martin’s Point case shows need for Medicare for all

An excellent article by reporter Joe Lawlor was headlined “Martin’s Point fraud settlement highlights shortcomings in Medicare Advantage program” (Aug. 4). It might have said the settlement highlights shortcomings in “private, market-based insurance.” Over and over again, we bemoan the failings of treating health care as a business. Yet we are the only developed country in the world that keeps trying to do so.

There is a better way. The federal Medicare for All Act of 2023 (H.R. 3421) would build upon and expand Medicare to provide comprehensive benefits to every person in the United States. This includes primary care, vision, dental, prescription drugs, mental health, substance abuse, long-term services and supports, reproductive health care, and more.

Rep. Chellie Pingree, D-1st District, is a co-sponsor. We need the rest of Maine’s congressional delegation to get on board and take seriously the possibility that Medicare will be gutted by the private insurance market.

Karen Foster
Portland

 

Editor's Note -

Here's some good news for a change:

- SPC

Suddenly, It Looks Like We’re in a Golden Age for Medicine

We may be on the cusp of an era of astonishing innovation — the limits of which aren’t even clear yet.

by David Wallace-Wells - NYT = August 4, 2023

Hype springs eternal in medicine, but lately the horizon of new possibility seems almost blindingly bright. “I’ve been running my research lab for almost 30 years,” says Jennifer Doudna, a biochemist at the University of California, Berkeley. “And I can say that throughout that period of time, I’ve just never experienced what we’re seeing over just the last five years.”

A Nobel laureate, Doudna is known primarily for Crispr, the gene-editing Swiss Army knife that has been called “a word processor” for the human genome and that she herself describes as “a technology that literally enables the rewriting of the code of life.” The work for which Doudna shared the Nobel Prize was published more than a decade ago, in 2012, opening up what seemed like an almost limitless horizon for Crispr-powered therapies and cures. But surveying the recent landscape of scientific breakthroughs, she says the last half-decade has been more remarkable still: “I think we’re at an extraordinary time of accelerating discoveries.”

The pandemic has exhausted many Americans of medicine, and it has become common to process the last few years as a saga of defeat and failure. And yet these brutal years — which brought more than a million American deaths and probably 20 million deaths worldwide, and seemed to return even the hypermodern citadels of the wealthy West to something like the experience of premodern plague — might also represent an unprecedented watershed of medical innovation. Beyond Crispr and Covid vaccines, there are countless potential applications of mRNA tools for other diseases; a new frontier for immunotherapy and next-generation cancer treatment; a whole new world of weight-loss drugs; new insights and drug-development pathways to chase with the help of machine learning; and vaccines heralded as game-changing for some of the world’s most intractable infectious diseases.

“It’s stunning,” says the immunologist Barney Graham, the former deputy director of the Vaccine Research Center and a central figure in the development of mRNA vaccines, who has lately been writing about a “new era for vaccinology.” “You cannot imagine what you’re going to see over the next 30 years. The pace of advancement is in an exponential phase right now.”

It is sometimes hard to see the silver lining for the cloud, particularly when it’s as dark as the last three years have been. But at the very center of the American Covid experience, amid all the death and suffering and despite the dysfunction that midwifed it into being, sits what would have stood out, in any previous era, as an astonishing biomedical miracle: the coronavirus vaccines. Drug-development timelines in previous history had swallowed whole decades; experts warned not to expect a resolution for years. But the mRNA sequence of the first shot was designed in a weekend, and the finished vaccines arrived within months, an accelerated timeline that saved perhaps several million American lives and tens of millions worldwide — numbers that are probably larger than the cumulative global death toll of the disease.

The miracle of the vaccines wasn’t just about lives saved from Covid. As the first of their kind to be approved by the Food and Drug Administration, they brought with them a very long list of potential future mRNA applications: H.I.V., tuberculosis, Zika, respiratory syncytial virus (R.S.V.), cancers of various and brutal kinds. And the vaccine innovations stretch beyond mRNA: A “world-changing” vaccine for malaria, which kills 600,000 globally each year, is being rolled out in Ghana and Nigeria, and early trials for next-generation dengue vaccines suggest they may reduce symptomatic infection by 80 percent or more.

Not every innovation arriving now or soon to market comes from U.S. research or shares the same saga of development. But many of their back stories do rhyme, often stretching back several decades through the time of the Human Genome Project, which was completed in 2003, and the near-concurrent near-doubling of the National Institutes of Health’s budget, which helped unleash what Donna Shalala, President Bill Clinton’s secretary for health and human services, last year called “a golden age of biomedical research.” 

Ozempic and Wegovy have already changed the landscape for obesity in America — a breakthrough that has been described and debated so much in terms of cosmetic benefits and medical moral hazard that it can be easy to forget that obesity is among the largest risk factors for preventable death in the United States. Next-generation alternatives may prove even more effective, and there are signs of huge off-label implications: At least anecdotally, in some patients the drugs appear to curb compulsive behavior across a range of hard-to-treat addictions.  

https://www.nytimes.com/2023/06/23/magazine/golden-age-medicine-biomedical-innovation.html?campaign_id=190&emc=edit_ufn_20230804&instance_id=99243&nl=from-the-times&regi_id=167206982&segment_id=141122&te=1&user_id=35b90c0614c4155a881b005a5d0313dc

 

A Revolution Is Coming to Medicine. Who Will It Leave Out?

by James Tabery - NYT - August 5, 2023

 

On Aug. 16, 2011, my father woke up and couldn’t get out of bed. Until then, he was an avid outdoorsman, who cast for trout on the Delaware River and trained German wirehaired pointers to track and point pheasant. So after an ambulance ride to the emergency room and then hours of tests, the diagnosis shook our family: Stage 4 non-small cell lung cancer.

Scans revealed tumors all over his body — brain, ribs, pelvis, spine. The tumors on his vertebrae quietly grew until they had cut off nerve signals to his legs.

More people die of lung cancer in the United States every year than from prostate, colon and breast cancers combined. Our family received hope, however, when a biopsy revealed that my dad’s cancerous cells had a molecular marker on their surface making them an ideal candidate for erlotinib, a drug that could disrupt their growth. Just weeks after he received his first dose, my mother phoned with tears of joy in her voice to tell me that the tumors were shrinking.

Erlotinib is a textbook example of what physicians call “personalized medicine,” or sometimes “precision medicine.” In contrast to traditional, one-size-fits-all health care, personalized medicine uses molecular-genetic information about patients to deliver the right treatment, to the right patient, at the right time. Prominent medical geneticists, influential federal scientists, hospital system executives and even elected officials foresee cancer treatments as the leading edge of a genomic revolution, ushering in a new era of miracle cures and biomedical magic bullets, and fundamentally transforming the care of desperate patients.

As health care costs skyrocket, some proponents of personalized medicine envision a more affordable alternative to traditional treatments, one that tailors interventions from the beginning of treatment rather than sending patients off on a trial-and-error odyssey. This approach, they say, could decrease waste while increasing the quality of care. Moreover, the claim is that personalized medicine research that prioritizes the participation of marginalized communities will ensure these breakthroughs extend to everyone, combating racial and sociodemographic health disparities.

It’s hard not to get excited about a future guided by this medical revolution. But a closer look at lung cancer, and at my father’s experience specifically, paints a far gloomier picture than what the personalized medicine champions would have you believe.

There are some diseases for which genetics is truly saving lives; in particular, patients with rare diseases like spinal muscular atrophy and certain cancers such as chronic myelogenous leukemia may now be prescribed personalized medicine treatments that simply didn’t exist a couple of decades ago. For most patients with most diseases, though, the lofty promises have failed to materialize. Even more dangerously, the hype has distracted from alternative approaches to health care that are better suited to improving health for all of us.

One problem with personalized medicine is the cost. As the bills for his biopsies, surgeries and radiation piled up, we started to call my father the “million-dollar man.” The real eyepopper was the erlotinib, priced at over $5,000 for a one-month supply of the tiny pills. A number of other drugs for lung cancer have emerged in the years since — osimertinib, crizotinib and sotorasib, to name a few — in the $10,000-to-$20,000-per-month range. These, in fact, are on the affordable end of the spectrum; $50,000-per-month list prices aren’t uncommon for personalized medicines.

There’s a straightforward biological explanation for this. Personalized medicine works by carving patient populations into subgroups based on their molecular-genetic profiles. For lung cancer, there are a number of biological distinctions made, and those distinctions result in smaller pools of potential users for any given drug, which incline the pharmaceutical companies to drastically increase prices.

There is thus an inherent tension at the heart of personalized medicine. It purports to both tailor health care and drive down costs, but the more it succeeds at individualization, the higher go the prices. Patients, as a result, can now face an agonizing decision: forgo treatment or suffer financial ruin.

Our family was fortunate. My parents were financially stable, and they had good health insurance that covered the expensive drug. They lived only an hour’s drive to a major hospital network. My father had another thing going for him: the color of his skin. White patients with lung cancer are far more likely than Black patients to receive a diagnostic test indicating whether or not a drug like erlotinib is a good match, and patients from richer neighborhoods are more likely to get access compared with those from poorer neighborhoods.

My dad was ultimately able to leave the hospital and go home, where he continued receiving care, undergoing physical therapy and tying flies in the hopes that he’d one day again wade into the chilly spring waters of the Delaware. The following summer, however, a round of tests revealed that his tumors were growing again. He never regained the ability to stand, let alone cast a fly. On Sept. 23, 2012, a little over a year after he woke up paralyzed, my father died.

Media reports surrounding personalized medicine often forecast a future of health care revolutionized by the arrival of medical magic bullets and biomedical breakthroughs. Erlotinib, though, generally doesn’t cure cancer; it puts it on pause, and when it comes back, it often comes back with a vengeance. Oncologists today can respond by prescribing one of the newer, more expensive drugs. Still, for patients with advanced lung cancer like my dad, the chances of being alive five years after initial diagnosis are terrifyingly small.

Genetic information about patients can result in clinical treatments for certain diseases that are known to be caused by a fairly straightforward genetic mechanism; that’s what made conditions like spinal muscular atrophy and chronic myelogenous leukemia such good candidates for intervention. But those cases are the exception in medicine, not the norm. When we move to common and complex diseases like hypertension, Parkinson’s, diabetes or asthma, where, for a vast majority of patients, there’s no single gene causing the disease, the opportunity for a personalized medicine revolution that can benefit most patients is severely limited.

Taking steps to prevent the development of illness is both more effective and more cost-efficient than trying to eliminate disease after it arrives. Lung cancer is a prime example. Even though there is still no cure for metastatic lung cancer, age-adjusted death rates from lung cancer in the United States have been dropping steadily because of public health research and programs aimed at making our environments more lung-friendly, with asbestos abatement programs, antismoking campaigns and other efforts to control harmful chemicals.

People of color and those living in poverty are particularly susceptible to the harms of unhealthy environments. They tend to be the ones who are living closest to factories and highways and farthest from green spaces and fresh produce. It is abundantly clear that health disparities along racial and economic lines are largely caused by differences in our environments, not differences in our genes. That’s why the health and economic impact of addressing unsafe drinking water, food insecurity, exposure to heavy metals and countless other things is so important: Everyone benefits, not just the people with the right genes, the right skin color or the right bank account balance.

It’s impossible to specify how much time erlotinib added to the end of my father’s life, but there’s every reason to believe that he lived longer because of the drug. I’ll always cherish that period, just as I’m certain that the family members of lung cancer patients battling the disease today soak up every moment with their loved ones. Erlotinib, however, didn’t save him. For a very high price, the drug slowed his terminal disease down for a short time, and even that limited benefit is not available to everyone.

Improving health for us all, driving down the costs of health care and making the world a more equitable place are all noble goals. The most direct route, though, isn’t by way of orienting health care around the genetic differences between us. It’s by focusing it on the environments we share.

https://www.nytimes.com/2023/08/05/opinion/personalized-medicine-genes.html 

How former CMS head, Tom Scully, privatized and destroyed Medicare

by Diane Archer - Just Care - August 1, 2023

David Dayen reports on former Center for Medicare and Medicaid Services (CMS) head, Tom Scully, privatized and destroyed Medicare for The American Prospect.

Back in 2002, Scully, the administrator at CMS under President George W. Bush, attacked the incentives in the Medicare program. At the time, he was focused on hospital incentives to inflate patient costs, saying “People follow the money, and they’ll find the little niches in the program and they’ll game it, and that’s what happened here.”

Scully, himself, has taken advantage of these “niches” since leaving government in 2003 for private equity. Scully’s view about health care is Darwinian. People should pay out of pocket for their health care, as they do for their vegetables–survival of the fittest–with help only for the poor.

Scully doesn’t recognize the value of Medicare negotiating prices for physicians and hospitals. Of course, that’s what has kept Medicare spending down for older Americans and people with disabilities. It’s also one key way other countries get value from their health care systems. In Scully’s view, if you get sick, you should pay for it.

It’s thinking like Scully’s that has pretty much destroyed our health care system. Physicians and patients have suffered as private equity and big corporations have seen their profits soar. “Scully’s fear of big-government price-fixers has led to the triumph of big private profit-takers, at the cost of doctors, nurses, and patient care.”

The corporate takeover of health care has also made navigating the system challenging. It’s now so complex. Choice and competition are meaningless. They have not improved quality and they have only increased costs. Unlike with airline travel, restaurants, housing or automobiles, you have virtually no idea if the health plan you choose will deny and delay your care and endanger your health. All you know is that there’s a decent chance that your insurer will not cover your care.

Health care corporations are in business to help their investors first and foremost. And, in the health care space, they can do so pretty easily, with little accountability, by simply extracting money from the system. Scully knows this full well and helped conceive, design and implement the algorithms that now power NaviHealth–a software AI system that helps insurers to keep more of their government payments by denying or limiting home health, nursing and rehab coverage.

Scully sold NaviHealth before it was bought by Optum, a division of UnitedHealth. He then went on to push Congress to allow for-profit PACE programs and to invest in InnovAge, which was buying up PACE programs. Soon after, CMS addressed allegations that InnovAge was denying thousands of PACE patients medically necessary services and suspended enrollment in many of InnovAge PACE programs for a time.

As former head of the Center for Medicare and Medicaid Innovation at the Centers for Medicare and Medicaid Services, Rick Gilfillan, explains: “When you privatize social goods like health care, you end up getting the worst of both worlds. Because it’s seen as a public good, you can’t let the marketplace operate as it normally would … you get captured regulatory processes that end up facilitating the extraction of wealth by the private sector.”

https://justcareusa.org/how-former-cms-head-tom-scully-privatized-and-destroyed-medicare/?link_id=9&can_id=044f92a3c83fd93141b3d1d7e582acde&source=email-when-corporate-insurers-routinely-deny-care-where-are-the-feds&email_referrer=email_2008250&email_subject=if-you-value-medicare-beware-ted-cruz-and-rick-scott 

How much money do doctors really make and why is it such a lot?

by Andrew Van Dam - Washington Post - August 4, 2023

The average U.S. physician earns $350,000 a year. Top doctors pull in 10 times that.

When those simple data points were first presented in 2020, a small subset of physicians came unglued on the microblogging site formerly known as Twitter, slinging personal insults and at least one deeply unflattering photo illustration of an economist.

We couldn’t understand why. The figures are nigh-on unimpeachable. They come from a working paper, newly updated, that analyzes more than 10 million tax records from 965,000 physicians over 13 years. The talented economist-authors also went to extreme lengths to protect filers’ privacy, as is standard for this type of research.

By accounting for all streams of income, they revealed that doctors make more than anyone thought — and more than any other occupation we’ve measured. In the prime earning years of 40 to 55, the average physician made $405,000 in 2017 — almost all of it (94 percent) from wages. Doctors in the top 10 percent averaged $1.3 million. And those in the top 1 percent averaged an astounding $4 million, though most of that (85 percent) came from business income or capital gains.

In certain specialties, doctors see substantially more in their peak earning years: Neurosurgeons (about $920,000), orthopedic surgeons ($789,000) and radiation oncologists ($709,000) all did especially well for themselves. Specialty incomes cover 2005 to 2017 and are expressed in 2017 dollars.

Not all doctors breathe that rarefied air. Even in these peak years, family-practice physicians made around $230,000 a year. General practice ($225,000) and preventive-medicine ($224,000) doctors earned even less — though that’s still enough to put them at the top of the heap among all U.S. earners.

So why did those figures ruffle so many physician feathers?

“A lot of students go into medicine because they want to help patients,” Stanford economist Maria Polyakova told us. Polyakova and economist Joshua Gottlieb of the University of Chicago spent the past five years working on this data in collaboration with Census Bureau economists Kevin Rinz and Victoria Udalova and the University of New Brunswick’s Hugh Shiplett.

She continued: “There is this sense of, well, if you show that physician incomes put them at the top of the income distribution, then you’re somehow implying that they’re instead going into medicine because they want to make money. And that narrative is uncomfortable to people.”

Added Gottlieb: “You can want to help people and you can simultaneously want to earn money and have a nicer lifestyle and demand compensation for long hours and long training. That’s totally normal behavior in the labor market.”

Yale University economist Jason Abaluck notes that when he asks the doctors and future doctors in his health economics classes why they earn so much, answers revolve around the brutal training required to enter the profession. “Until they finish their residency, they’re working an enormous number of hours and their lifestyle is not the lifestyle of a rich person,” Abaluck told us.

That is true. Our analysis of Census Bureau data shows that residents are in an exclusive class with oil field roughnecks when it comes to hours worked in their late 20s and early 30s; firefighting managers such as captains and lieutenants also come close. And those blue-collar jobs pay about as well as medical residencies — often a bit better. At least until the residents become physicians and settle into working fewer hours and earning, um, more.

Residency also extends your education into your late 20s and beyond, cutting into your lifetime earning potential. And, as Abaluck’s students often point out, that long medical education also leads to astonishingly high student debt — an average of $246,000 as of 2017. But that debt almost vanishes against a physician’s still more-than-robust expected $10 million in lifetime income.

So, why do physicians make that much?

One unfair, inflammatory and accurate answer would be that they like money.

On average, doctors — much like anyone else — behave in ways that just happen to drive up their income. For example, the economists found that graduates from the top medical schools, who can presumably write their own ticket to any field they want, tend to choose those that pay the most.

“Our analysis shows that certainly physicians respond to earnings when choosing specialties,” Polyakova told us. “And there’s nothing wrong with that, in my opinion.”

They also found that each 10 percent increase in the Medicare payment rate for a procedure causes a 4.4 percent increase in billing for the procedure — mostly because the doctor will work to find additional patients who could benefit from the now-more-profitable intervention.

“We can’t just sit back and say, ‘Oh doctors, they’re good people. They wouldn’t possibly do this,’” Gottlieb said. “They may be very good people, but that doesn’t mean that they don’t care about economics.”

And American physicians seem to be quite talented at caring about economics.

“In general, U.S. physicians are making about 50 percent more than German physicians and about more than twice as much as U.K. physicians,” internal medicine physician Atul Grover told us. Grover leads the Association of American Medical Colleges’ Research and Action Institute, teaches medicine at George Washington University and speaks with the easy authority and charisma of someone who probably deserves to be earning several times what we do.

Grover said the widest gaps were “really driven by surgeons and a handful of procedural specialties,” doctors who perform procedures with clear outcomes, rather than preventing disease or treating chronic conditions. In the United States, “we’re not about prevention, you know?” he said, noting that his own PhD is in public health. “I wish it was different, but it ain’t!”

Doctors do tend to be at the top of the earnings scale in every country, research shows. But their especially high incomes in the United States are undoubtedly related to America’s doctor shortage.

The United States has fewer doctors per person than 27 out of 31 member countries tracked by the Organization for Economic Cooperation and Development, a club of mostly economically advanced nations that supplies a surfeit of stats you can’t find almost anywhere else.

In 1970, based on a slightly different measure that’s been tracked for longer, America had more licensed physicians per person than all but two of the 10 countries for which we have data. What caused the collapse?

Casting about for an answer, we recalled a fascinating submission from reader Sonia Bisaccia in West Chester, Pa. She noted that the United States has far fewer residency slots than qualified med school graduates, which means thousands of qualified future physicians are annually shut out of the residency pipeline, denied their chosen career and stuck with no way to pay back those quarter-million-dollar loans.

“I’d like to see an in-depth analysis of the effect of the government capping the number of residency spots and how it’s created an artificial ‘physician shortage’ even though we have thousands of talented and graduated doctors that can’t practice due to not enough residency spots,” Bisaccia wrote.

What a tremendous suggestion! Such an analysis would begin with a deeply influential 1980 report, according to Robert Orr, who has untangled this history over at the Niskanen Center, a center-right but far-from-orthodox D.C. think tank. (Orr recently became a health-care-focused aide for freshman Republican Sen. J.D. Vance of Ohio.)

That report, by a federal advisory committee tasked with ensuring the nation had neither too few nor too many doctors, concluded that America was barreling toward a massive physician surplus. It came out just before President Ronald Reagan took office, and the new administration seemed only too eager to cut back on federal spending on doctor-training systems.

In response to the report and the end of some federal grant programs, the mighty Association of American Medical Colleges (AAMC), a coalition of MD-granting medical schools and affiliated teaching hospitals, slammed the brakes on a long expansion. From 1980 to around 2004, the number of medical grads flatlined, even as the American population rose 29 percent.

Federal support for residencies was also ratcheted down, making it expensive or impossible for hospitals to provide enough slots for all the medical school graduates hitting the market each year. That effort peaked with the 1997 Balanced Budget Act which, among other things, froze funding for residencies — partially under the flawed assumption that HMOs would forever reduce the need for medical care in America, Orr writes. That freeze has yet to fully unwind.

The idea that there could be too many doctors might sound ridiculous — especially these days, when a global pandemic, burnout and changing markets have reshaped the medical profession. In 2021, a large survey found that about 1 in 5 doctors intended to leave their current practice within two years, and the share of physicians in private practice fell from 56 percent in 2016 to 47 percent in 2022, according to the American Medical Association.

But for decades, many policymakers believed more doctors caused higher medical spending. Orr says that’s partly true, but “the early studies failed to differentiate between increased availability of valuable medical services and unnecessary treatment and services.”

“In reality, the greater utilization in places with more doctors represented greater availability, both in terms of expanded access to primary care and an ever-growing array of new and more advanced medical services,” he writes. “The impact of physician supply on levels of excessive treatment appears to be either small or nonexistent.”

If health costs keep you up at night, research suggests there are better ways to rein them in than what Orr would call rationing the supply of doctors. Polyakova and her collaborators find doctor pay consumes only 8.6 percent of overall health spending. It grew a bit faster than inflation over the time period studied, but much slower than overall health-care costs.

“People have a narrative that physician earnings is one of the main drivers of high health-care costs in the U.S.,” Polyakova told us. “It is kind of hard to support this narrative if ultimately physicians earn less than 10 percent of national health-care expenditures.”

Regardless, the dramatic limits on medical school enrollment and residencies enjoyed strong support from the AAMC and the AMA. We were surprised to hear both organizations now sound the alarm about a doctor shortage. MD-granting medical schools started expanding again in 2005.

Someone like Orr might say it’s because states have responded to the shortage by empowering nurse practitioners and physician assistants to perform tasks that once were the sole province of physicians. Over the past 20 years, the number of registered nurses grew almost twice as quickly as the number of doctors, and the number of physician assistants grew almost three times as rapidly, our analysis showed.

Osteopathic schools, which grant DO degrees, were also fast to respond to the physician shortage, doubling in number since the turn of the millennium, according to the American Association of Colleges of Osteopathic Medicine. DO is a legally equivalent medical degree that features additional training in hands-on, chiropractic-like treatment, and those who earn it are more likely to go into primary care.

While there still aren’t enough residency positions, we’re getting more thanks in part to recent federal spending bills that will fund 1,200 more slots over the next few years.

But that’s still well short of the 4,000 per year that Grover estimates will be needed to stem the shortage.

https://www.washingtonpost.com/business/2023/08/04/doctor-pay-shortage/ 

 

 

Friday, August 4, 2023

Health Care Reform Articles - August 4, 2023

Private Equity Wreckers Come For Your Health Insurance

As hundreds of thousands lose coverage and face major additional out-of-pocket expenses, private equity enters the spotlight.

by Matthew Cunningham-Cook - Lever - July 28, 2023

The private-equity backed health insurer Friday Health Plans collapsed under order by Colorado state regulators on July 18, stranding 30,000 policyholders without health insurance as of August 31 — forcing them to pursue new plans in the middle of the year and rendering the money they’ve already spent towards annual deductibles and out-of-pocket maximums moot.

The implosion of Friday Health Plans, which offered plans on seven state health insurance exchanges, comes as other private equity-backed insurers have faced similar issues. Bright Health, which was backed by private equity titan The Blackstone Group among others, had to end its insurance business on the exchanges last year, leaving hundreds of thousands of people to find new insurance policies for 2023.

In total, more than a million people have lost their health insurance thanks to the failures of the two private equity-backed insurers.

Their collapses illustrate the major risks of private equity moving into the already unstable health insurance market. Due to decades of failing anti-monopoly policy, the health care industry is designed for big players that are getting bigger. Lax regulations mean unscrupulous entrants can offer insurance to potentially millions of people with minimal oversight, while facing massive headwinds to profitability and long-term stability for patients.

Private Equity Moving In

The failure of private equity-backed insurers — and their impact on customers desperate for affordable care — comes as private equity has massively expanded its footprint in the health care space.

Hospitals, medical practices, nursing homes, psychiatric care, disability care, and health care information technology have all been subject to extensive private equity speculation.

Private equity’s business model is centered on extracting profits, rather than providing high-quality, consistent, and affordable care. Studies show private equity involvement often spells worse patient outcomes.

Private equity-owned nursing homes have 10 percent higher resident deaths than in nursing facilities overall. Private equity-backed hospitals have cut staffing and services to meet the colossal dividend payments to the private equity firms that bought them. Private equity-backed emergency room staffing firms helped effectively create the “surprise billing” phenomenon, in which patients receive far higher medical bills for out-of-network care despite going to hospitals that are included in their insurance networks. And private equity roll-ups of dermatology practices have resulted in higher prices with poorer quality care.

Laura Katz Olson, a professor at Lehigh University who has studied private equity’s role in health care, said that private equity results in “instability for patients and far lower quality of care. They sell off their companies after several years, so patients don’t have any stability in terms of their providers.”

“They’re extracting value from the health care system, they load them up with debt and then they pay it back by lowering the quality of care,” said Katz Olson. “Health insurance is just another niche that private equity is destroying. They keep buying up these places, extract the value, and then spit them out.”

Friday had been operating plans in Colorado for six years, and for less than three years in the six other states where it operated. Bright Health was founded in 2016 by a coterie of former executives at UnitedHealth Group, the country’s largest insurer.

Friday, which is based in Denver, received backing from Vestar Capital Partners, a private equity firm with strong Colorado connections. Vestar Managing Director Jim Kelley is based in Denver and also heads the Colorado Impact Fund, where former Denver mayor and U.S. Transportation and Energy Secretary Federico Peña is a senior adviser.

From 2006 until 2018, Vestar owned The Mentor Network, a for-profit foster care company for children with intellectual and physical disabilities. A bipartisan report from the Senate Finance Committee found that 94 children died in the company’s care during that period.

Bright Health, which is based in Minneapolis, has recorded a 99 percent erosion in its share price since going public in June 2021. Modern Healthcare reported that when Bright Health exited the exchange market in October, the company would be able to reap $250 million from winding down its businesses. Instead, it owes $200 million to health care providers.

Blackstone backed Bright Health as part of a funding round in September 2020. Other backers include venture capital firm Bessemer Venture Partners, and the hedge fund Tiger Global Management.

While Bright Health, an insurer, would appear to have a vested interest in lowering the cost of providing care, Blackstone’s other investments in the health care space have substantially increased care costs.

Blackstone-backed TeamHealth, an emergency room physician staffing firm, helped pioneer the practice of surprise medical billing. According to a 2017 working paper from Yale researchers,  out-of-network billing costs increased by 33 percent when TeamHealth entered a given market.

TeamHealth is currently restructuring its debt and could face bankruptcy in the coming months.

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“A Good Governance Problem”

Ari Gottlieb, a health care analyst who has studied private equity-backed insurers, says of the Bright Health and Friday collapses, “There’s a good-governance problem and a systemic-solvency problem.”

For starters, said Gottlieb, regulators failed to ascertain whether these plans had sufficient capital, despite a long history of excessive risk-taking by private equity firms.

“Insurance companies are authorized by state regulators to operate for a full year,” he said. “But they don’t have to sign anything certifying that they actually have the capital to operate.”

Gottlieb pointed out that the Centers for Medicare and Medicaid Services (CMS) — which is tasked with regulating the state health insurance exchanges created under Democrats’ 2010 Affordable Care Act (ACA) — doesn’t guarantee or investigate insurer solvency, meaning that insurers can be approved to operate on the exchanges even if they don’t have sufficient capital.

“If you want to sell insurance products for a year, you should certify that you have money to operate for a year,” he remarked.

Another core issue is that the rapid consolidation of health care is driving up costs for insurers and making it harder for narrowly focused insurance startups to survive.

As hospitals are consolidated, only large insurers with diverse regional footprints will have the market power to negotiate lower prices from hospitals and medical practices — the latter of which have been getting scooped up by private equity firms as well as by giant health insurers.

If an insurer is only focusing on the ACA exchange market and the Medicare Advantage markets, as private equity-backed insurers have typically done, that doesn’t provide the company with enough market power to negotiate the same prices that much larger insurers like Blue Cross and UnitedHealth can demand.

“The individual market isn’t big,” said Gottlieb. “In any given market, you’re never going to be big enough to bargain with providers.”

Likely in part because of these issues, Friday collapsed midyear — a catastrophic development for many policyholders in Colorado, who will now face significant additional out-of-pocket expenses if they need care this year .

That’s because the vast majority of other insurers have refused regulators’ request that they voluntarily honor the payments these policyholders had already made to Friday towards their deductibles and out-of-pocket maximums.

“Friday is being shut down involuntarily, they’re going through the liquidation process in the middle of the year,” said Gottlieb. “As a result of failing midyear, individuals are having to pick new plans. Their deductibles don’t carry over. There’s no provision in the law protecting them.”

Health insurers are currently allowed to impose out-of-pocket maximums of up to $9,100 for individuals and $18,200 for families on ACA exchange plans. Friday’s “gold,” or most robust, insurance offering in Colorado, had out-of-pocket limits of $8,250 per individual and $16,500 per family.

For example, if a family already paid $16,500 or more for out-of-pocket costs this year on their Friday health plan, they could now face an extra $18,200 in out-of-pocket costs on their new health plan before the end of 2023, if anyone on their plan needs expensive care or services.

Despite their collapsing business, Bright Health’s executives have still enjoyed major rewards. (Bright Health is publicly traded, so this information is public. Friday Health is privately held, so there is no public information about executive compensation.)

As Bright Health was pulling back from providing insurance altogether, choosing to focus on a small group of primary care clinics it had purchased, its board of directors — which includes former General Electric CEO Jeff Immelt and Biden COVID-19 adviser Andy Slavitt — approved $4 million in bonuses for Bright Health executives. These payments came despite the company’s stock price falling precipitously.

Under the terms of Bright Health’s supervisory agreement with the state of Florida, where it offered coverage, the company could not pay bonuses to executives, Gottlieb pointed out. But because the parent company is separate from the legal entity that offered insurance in Florida, the bonuses were still legal.

“It’s just sort of staggering that they have negative capital, and are paying cash bonuses,” he concluded. “Where’s the accountability there?”

https://www.levernews.com/private-equity-wreckers-come-for-your-health-insurance/?utm_source=newsletter-email&utm_medium=link&utm_campaign=newsletter-article 

 

 

Letter to the editor: The problem with upcoding under Medicare Advantage

On July 30, 1965, President Johnson signed Medicare into law, allowing millions of seniors to access health care. On the occasion of Medicare’s 58th birthday, Medicare is under threat. Efforts to privatize Medicare are eroding this landmark program, allowing the greed of a few to threaten the well-being of us all.

The Medicare Advantage program is diverting billions of dollars a year to corporate profiteering. Through the process of “upcoding” (making patients look sicker than they actually are), insurance corporations have been overpaid by taxpayers to the tune of tens of billions of dollars.

Here’s how “upcoding” happens: I am 66 years old, in good health. I am enrolled in a Medicare Advantage plan. I am getting several calls each month from the insurance company, urging me to take advantage of a “free” health screening. The purpose of this home health visit is not to provide health care. Rather, its purpose is to “upcode”: to add irrelevant diagnoses to my medical history just to increase the insurance company’s payout.

President Biden has taken some steps to try to rein in the practice of upcoding, but he can do more. Therefore, on the occasion of Medicare’s 58th birthday, I am encouraging President Biden to take executive action to prohibit upcoding, and to stop overpayments to Medicare Advantage. The tax dollars saved can be used to improve traditional Medicare – eliminating deductibles and expanding coverage to include dental, vision and hearing – so that we have the freedom to just choose Medicare, not a privatized plan.

Julie Pease
Topsham

 https://www.pressherald.com/2023/08/01/letter-to-the-editor-the-problem-with-upcoding-under-medicare-advantage/

 

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Updated July 31
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Martin’s Point Health Care to pay $22 million to settle Medicare fraud claims

An agreement announced Monday, the largest Medicare fraud settlement in state history, includes a $3.8 million payment to a whistleblower who sued Martin's Point in 2018 alleging that it was miscoding the health conditions of Medicare Advantage patients. 

by Emily Allen and Joe Lawlor- Portland Press Herald - July 31, 2023

 

Martin’s Point Health Care in Portland has agreed to pay more than $22 million to the U.S. government for alleged Medicare fraud that was brought to light by a whistleblower within the company.

Of that total, $3.8 million will be paid to Alicia Wilbur, a former manager at Martin’s Point from mid-2016 through late 2017 who filed the complaint against the company in June 2018. Her complaint was unsealed in federal court Monday, where the terms of the settlement also were filed. It was the largest Medicare fraud settlement in state history, the U.S. Attorney’s Office in Maine told The Associated Press.

Wilbur informed her superiors numerous times about inflated payments for Medicare services, but she was rebuffed, according to court documents that detail problems with the billing that date to 2013. Attempts to reach Wilbur through her attorney were unsuccessful Monday.

Martin’s Point would routinely code patients’ historical health conditions – such as for cancers, strokes and heart conditions – as active conditions, according to court records. That generated additional revenue for the nonprofit that it was not entitled to receive from the Medicare Advantage program.

Medicare Advantage is supplemental insurance for patients who have Medicare coverage – typically those 65 and older – that covers costs Medicare doesn’t pay for, such as vision, hearing and dental, drug costs not covered by Medicare, and other health services not covered.

“Martin’s Point repeatedly pressured and directed employees and contractors to ignore unsupported codes – such as coding historical conditions as active – because deleting those codes would hurt profitability,” the complaint alleges.

Martin’s Point provides primary care to patients at six locations: Portland, Biddeford, Brunswick, Scarborough, Gorham and Portsmouth, New Hampshire. It also offers a Medicare Advantage plan that covers about 60,000 members.

From 2016 to 2019, Martin’s Point assigned additional diagnoses to patients in order to get higher reimbursements using information that was not supported by medical records, Wilbur alleged in her complaint.

“Medicare Advantage programs rely on accurate health information to provide the best health care and proper payment from the federal government,” said Amy L. Easton, an attorney who represented Wilbur. “Inaccurate diagnosis codes distort both the delivery of health care and government payment for that health care.”

Martin’s Point billed Medicare for medical conditions such as diabetes, obesity, congestive heart failure, heart arrhythmias, vascular disease, rheumatoid arthritis and other conditions “of which a significant percentage were unsupported based on the underlying medical records,” according to court records. Martin’s Point “submitted these erroneous codes knowingly” and received payments “to which it was not entitled,” the settlement agreement said.

“Stunningly, in 2017, when Martin’s Point retroactively reviewed a sample of three years of medical charts, it found that the patients did not have (or the charts did not support) 60% of the illnesses reported to, and paid by (the Center for Medicare and Medicaid Services),” the complaint reads. “In response, Martin’s Point did nothing: it did not investigate further, broaden its sample size nor look for these errors in prior time periods. On information and belief, it did not even notify CMS and kept the resulting overpayments.”

‘NO IMPACT TO OUR PATIENTS OR MEMBERS,’ MARTIN’S POINT SAYS

Steve Amendo, chief marketing officer for Martin’s Point Health Care, released a statement on behalf of the organization that said  “claims resolved by the settlement are allegations only, and there has been no determination of liability.”

“The settlement is not related to member care or the payment of member claims. Martin’s Point worked collaboratively with the (Department of Justice) during the course of the investigation,” the statement says. “Despite denying liability for the litigation claims at issue, Martin’s Point ultimately determined that settlement of this matter was appropriate rather than engaging in the cost and uncertainty of protracted litigation.

“This settlement is not an admission of liability, it instead allows us to avoid the disruption, expense and uncertainty of litigation,” Amendo continued. “This resolution allows us to put the past behind us, and we remain committed to our patients and members across our service regions and to the regulatory agencies that oversee our work.”

The statement by the health care nonprofit also said that “Martin’s Point Health Care is committed to the integrity of our work, mission, and service to our patients and members. Since 2019, Martin’s Point has taken steps to strengthen and develop new risk adjustment processes. Additionally, under the direction of new executive and senior leadership, the organization has established a team of experienced personnel specifically tasked with oversight of all risk adjustment practices.

Amendo, in an email response to questions about the allegations, said that “Martin’s Point will continue to operate with no impact to our patients or members.”

According to the most recent publicly available Internal Revenue Service 990 form – from 2021 – Martin’s Point reported $551 million in revenue and $479 million in expenses, ending the year with a $71 million surplus.

Amendo’s email also said that “Martin’s Point adheres to responsible financial stewardship practices, and we are well-prepared for circumstances such as this. Our overall organizational financial position remains strong and this has no implications for our day-to-day operations.”

Dr. David Howes, former president and CEO of Martin’s Point, earned $937,418 in 2021, three years after Wilbur’s initial court filing. His income was $643,509 in 2014 before ballooning to about $860,000 in 2015. Howes’ salary fluctuated after that, but was generally about $900,000 per year.

It was unclear according to the 2018 court filing how much Howes knew about the alleged overpayments, but in one passage it said Howes, along with another executive, either “knew or recklessly disregarded or were deliberately ignorant” of “high error rates uncovered by audits.”

Attempts to reach Howes were unsuccessful Monday.

Dr. Paul Kasuba replaced Howes as president and CEO in 2022, according to a Martin’s Point news release. Kasuba was not mentioned in any court documents as being involved in the Medicare Advantage reimbursement system.

Ed McKersie, chair of the Martin’s Point board of directors, refused to comment on the settlement when contacted Monday, referring questions to Amendo.

Problems with Medicare Advantage overbilling have become widespread, according to an October, 2022 article in The New York Times, with eight of 10 of the largest Medicare Advantage insurers having submitted inflated bills, a recent analysis by federal audits shows. A separate analysis estimated $12 billion in overpayments in the Medicare Advantage program in 2020, The New York Times reported.

Justin Ward, executive vice president of Gray-based Patient Advocates, which assists people with medical billing issues, said the complex coding system, if used improperly, can lead to “millions in overpayments.” Ward said their group does not work with clients who have Medicare Advantage plans.

“One reform that could help would be giving patients unfettered access to their complete medical records, at any time,” Ward said.

‘REVENUE MAXIMIZATION’

According to the 2018 court filing “Martin’s Point knew that physician-supplied diagnosis codes were often inaccurate, and dedicated numerous resources to reviewing the charts and physician-supplied diagnosis codes in order to capture missing codes. Conversely, little to no resources were dedicated to correcting unsupported codes that resulted in overpayments.”

Martin’s Point “dedicated an entire internal unit and hired third-party vendors to capture codes that physicians may have missed” doing so “under the guise of promoting accuracy.” However, “the aim of these activities was purely revenue maximization, not accuracy,” the 2018 court filing states.

Although the terms of the settlement allow Martin’s Point to avoid liability, it does not release the company from the possibility of criminal charges.

The Office of Public Affairs for the Justice Department did not respond to questions Monday on how the settlement will be used, and if Martin’s Point is responsible for reimbursing Medicare Advantage patients if they were overbilled. The department also did not respond to inquiries on how the settlement compares to others related to the False Claims Act, or whether prosecutors are considering criminal charges.

The U.S. Attorney’s Office for the District of Maine helped coordinate the settlement along with other agencies, according to the DOJ, but they referred all questions to the Justice Department.

“The government expects those who participate in Medicare Advantage to provide accurate information to ensure that proper payments are made for the care received by enrolled beneficiaries,” Deputy Assistant Attorney General Michael D. Granston said in a statement Monday. “Today’s result sends a clear message to the Medicare Advantage community that the United States will take appropriate action against those who knowingly submit inflated claims for reimbursement.”

https://www.pressherald.com/2023/07/31/martins-point-health-care-to-pay-22-million-to-settle-medicare-fraud-claims/

 

Martin’s Point fraud settlement highlights shortcomings in Medicare Advantage program

 by Joe Lawlor - Portland Press Herald - August 4, 2023

The Medicare Advantage insurance program that is at the heart of this week’s $22.5 million settlement between Martin’s Point Health Care and the U.S. Department of Justice has siphoned off billions of dollars from Medicare, the government health insurance program for people ages 65 and older.

Practices brought to light in Maine by a whistleblower, as well as similar methods of overbilling, have become widespread in Medicare Advantage plans across the country, according to research and analysis by experts in Medicare policy. And although the practices don’t affect patients directly, this overcharging – which includes adding unnecessary codes to patients’ medical conditions to extract extra money from Medicare – threatens services provided by traditional Medicare and the financial solvency of Medicare itself.

“These Medicare Advantage plans are getting grossly overpaid,” said David Lipschutz, an attorney who works for a national nonprofit that advocates for Medicare.

Dr. Donald Berwick, who headed up the Centers for Medicare and Medicaid Services during the Obama administration and is currently a health policy lecturer at Harvard University, agreed that the status quo with how Medicare Advantage operates is “highly destabilizing” to Medicare.

Medicare Advantage is a replacement plan for Medicare that typically offers an array of benefits not included under traditional Medicare – such as vision, dental, and hearing, and may have lower out-of-pocket costs – which makes the plans attractive for those who can afford them.

Martin’s Point is a primary care provider with six locations in Maine, including Portland, and has 60,000 members enrolled in a Medicare Advantage plan.

The settlement, filed in court on Monday, detailed allegations of how Martin’s Point’s Medicare Advantage plan would code patients’ historical conditions – such as for cancer, stroke, and heart disease – as current health conditions to obtain money from Medicare that it was not entitled to receive. It’s the largest Medicare fraud settlement in state history.

As part of the settlement, Martin’s Point was not required to admit to any wrongdoing. Its officials have declined interview requests.

“Martin’s Point repeatedly pressured and directed employees and contractors to ignore unsupported codes – such as coding historical conditions as active – because deleting those codes would hurt profitability,” court records state.

Lipschutz, associate director for The Center for Medicare Advocacy, a Connecticut-based nonprofit law firm that advocates for improved Medicare services and to protect access to the program, said the current system of Medicare Advantage overbilling is extremely lucrative for the firms selling those plans.

The financial rewards are so great, that the penalties for getting caught gaming the system are not stiff enough to stop plans from continuing to overcharge, he said.

“The incentives are in place for Medicare Advantage plans to maximize profits, regardless of whether this is causing inappropriate additional costs borne by federal taxpayers,” Lipschutz said. “These settlements appear to now be part of the cost of doing business.”

Berwick said the practice – called “upcoding” – has become so ingrained in the system that Medicare Advantage plans that properly followed all the rules would be “driven out of business.”

But the current system is creating a vicious cycle – estimates of the overbilling range from $12 billion to $75 billion per year – where Medicare Advantage enrollees receive more generous benefits at the expense of traditional Medicare, Lipschutz said. Medicare Advantage plan enrollees tend to be wealthier and healthier than traditional Medicare patients, skewing the risk pool and making it more costly for the federal government to care for Medicare patients. If in response to rising costs, Medicare slashes reimbursement rates paid to doctors, while Medicare Advantage continues to reap record profits, that could incentivize healthcare providers to limit the number of traditional Medicare patients, he said.

The irony is that gaming the system means that Medicare Advantage is pretending its patients are much sicker than they are, Lipschutz said.

TRADITIONAL MEDICARE COULD SUFFER

Also, with Medicare Advantage plans flush with cash they shouldn’t have, they can offer increasingly generous benefits, attracting even more enrollees, Lipschutz said. The larger Medicare Advantage becomes – it currently has nearly half of all Medicare-eligible enrollees – the bigger the threat to Medicare’s financial solvency.

“You could see this spiral of growing enrollment in private Medicare Advantage plans, to the detriment of traditional Medicare,” Lipschutz said.

Although the scheme destabilizes the Medicare program, it doesn’t cause overbilling of the patients themselves.

Berwick said if current trends continue, Medicare Advantage overcharging could further threaten the Medicare hospital insurance trust fund, which according to the Kaiser Family Foundation is currently at about $170 billion but is slated to be depleted by 2029. If the trust fund runs out, Congress could slash Medicare benefits, raise taxes or come up with other fixes to make it solvent again.

In recent years, the Justice Department has gone after numerous providers of Medicare Advantage plans across the country and reached settlements in the millions, including with major insurers like Anthem, United Health Group, and Independent Health Group in Buffalo. An October 2022 article in the New York Times showed eight of the 10 largest Medicare Advantage insurers having submitted inflated bills to Medicare, according to a recent analysis by federal audits.

Lipschutz said the current penalties do not appear to be enough to stop the practice. Suspending operating licenses for insurance companies would be a substantial penalty, but he said he’s not seeing that happen.

“If these companies are defrauding the federal government, why are they allowed to continue to operate?” Lipschutz said.

Criminal penalties for executives also could help deter “upcoding.”

“You very rarely see health executives being led away in handcuffs,” Lipschutz said. The settlement agreement with Martin’s Point did not rule out future criminal charges, but there have not been any criminal charges filed in connection with the case.

Berwick said depending on how it’s done, “upcoding” in many cases is legal, even though it’s harmful to the system. But he said the more aggressive insurance companies are at “upcoding,” the closer they “skate to the edge” of legality, and those responsible could face criminal charges.

LOOKING FOR SOLUTIONS

Lipschutz said Congress or Medicare officials also could devise other solutions, such as limiting or eliminating “risk adjustment” payments for patients. Under “risk adjustment,” Medicare Advantage is paid more if the patient is sicker, giving financial incentives to insurers to code patients with conditions they don’t have or had years ago. Congress could simply eliminate “risk adjustment” or use other formulas to balance out potential overpayments, he said.

The issue is starting to attract the attention of members of Congress.

Matthew Felling, a spokesman for Sen. Angus King, I-Maine, said in response to questions from the Press Herald that “Senator King is engaged in efforts to improve Medicare Advantage and to protect the long-term solvency of the program.”

Steve Amendo, spokesman for Martin’s Point, released a statement on Monday that said, “the settlement is not related to member care or the payment of member claims.”

“Despite denying liability for the litigation claims at issue, Martin’s Point ultimately determined that settlement of this matter was appropriate rather than engaging in the cost and uncertainty of protracted litigation,” he said.

According to court filings, the claims of erroneous coding that were brought to light by whistleblower Alicia Wilbur, a former Martin’s Point employee who received $3.8 million in the settlement, were not enough to stop Martin’s Point from continuing its practices.

“Stunningly, in 2017, when Martin’s Point retroactively reviewed a sample of three years of medical charts, it found that the patients did not have (or the charts did not support) 60% of the illnesses reported to, and paid by (the Center for Medicare and Medicaid Services),” the complaint reads. “In response, Martin’s Point did nothing: it did not investigate further, broaden its sample size nor look for these errors in prior periods. On information and belief, it did not even notify CMS and kept the resulting overpayments.”

Wilbur has not responded to a request through her attorney to be interviewed.

Lipschutz said until reforms are enacted, there are enough loopholes for the problems to continue.

“There’s a lot of wiggle room right now for plans to exploit, to try to defend an indefensible practice,” he said.

https://www.pressherald.com/2023/08/04/martins-point-fraud-settlement-highlights-shortcomings-in-medicare-advantage-program/ 

 

Nearly 4 million in U.S. cut from Medicaid, most for paperwork reasons

by Amy Goldstein - Washington Post - July 28, 2023

The notice arrived in an envelope stamped “important information,” telling Kristin Fortner she needed to prove that she and her husband still deserved Medicaid. She filled out the form within a week of receiving it this past winter and mailed it back. So she was perplexed by a phone call almost three months later from the Arkansas Department of Human Services alerting her that she had neglected to renew the couple’s Medicaid and, unless she sent the paperwork, their health insurance would end.

Fortner quickly resubmitted the same form, this time in person. Except Arkansas already had cut them off. She discovered in May that her insurance had vanished as she tried to pick up a prescription for Suboxone, the medicine that helps her stay off opioids, from a Walgreens near her Fayetteville, Ark., home. Suddenly, she owed $380. Her Medicaid coverage, the pharmacy’s records showed, had expired April 30.

A 33-year-old waitress earning $3 an hour plus tips, Fortner walked out of the drugstore without the pills. She is among nearly 4 million Americans who have been lopped off Medicaid since the end of a pandemic-era promise that people with the safety-net health coverage could keep it, requiring every state to begin a herculean undertaking of sorting out who still belonged on the rolls. The 3.8 million — the most thorough tally — is an undercount, reflecting only people who have lost coverage so far in 38 states that have voluntarily made public their data from this sorting process, known as the Medicaid unwinding.

Most of those people have been dropped from Medicaid for reasons unrelated to whether they actually are eligible for the coverage, according to KFF, a health-policy organization, which has been compiling this data. Three-fourths have been removed because of bureaucratic factors. Such “procedural” cutoffs — prompted by renewal notices not arriving at the right addresses, beneficiaries not understanding the notices, or an assortment of state agencies’ mistakes and logjams — were a peril against which federal health officials had cautioned for many months as they coached states in advance on how best to carry out the unwinding.

Fortner’s experience attests to the bureaucratic maze ensnaring some people — and the damage being done to their well-being. The Arkansas Medicaid agency, one of the nation’s first to launch the unwinding, has repeatedly insisted that Fortner needs to provide different documents. Her husband, Ryan, has stopped making physical therapy appointments for a herniated disk. As for her Suboxone, Fortner felt like she was going through withdrawal when she skipped it for two weeks, and now, after paying for a partial order with a drug discount card, stretches the supply by cutting the pills in half.

Medicaid, the country’s largest public insurance program, is a legacy of the 1960s’ War on Poverty. The federal government provides most of the money, lays down basic rules and supervises states, which set eligibility standards and handle applications and renewals.

Beneficiaries typically must renew Medicaid every year, but that stopped in 2020 when the coronavirus arrived. With no one leaving the program, the number of Americans on Medicaid swelled to 85 million by this April, when the unwinding began in phases, with five states starting to terminate people. By July, every state except one had started removing some people from the program. Oregon will begin removing people in the fall. The government wants states to spread the undertaking over a year, although a few have chosen to do it faster — none more rapidly than Arkansas.

Health and Human Services Secretary Xavier Becerra has made clear his displeasure with the high rates at which low-income people are being severed from Medicaid without knowing whether they still qualify.

“[I]t is critically important to ensure that individuals do not lose coverage due solely to administrative processes,” Becerra admonished in a June letter to the nation’s governors in which he urged states to improve their renewal methods.

Some health-policy advocates and Democrats on Capitol Hill contend that HHS is partly to blame, saying federal health officials should exert a heavier hand with states that have been performing poorly.

“They have to be more assertive,” said Rep. Frank Pallone Jr. (N.J.), the top Democrat on the House Energy and Commerce Committee, which oversees Medicaid. Pallone said in an interview that the Centers for Medicare and Medicaid Services should explore whether some Republican-led states are deliberately winnowing their Medicaid rolls so they will have fewer low-income people to insure. Last year, Congress gave CMS the power to order states to draft plans to correct the problem and pause removing beneficiaries for procedural reasons — and to fine states that persist in mishandling cases.

During the unwinding’s first few months, CMS refused to disclose how many states were violating federal guidelines and how often federal officials were intervening.

In recent days, the agency has pivoted, portraying itself as stepping in when it discovers that a state is performing badly. According to Daniel Tsai, CMS’s Medicaid director, the agency has ordered a half-dozen states he did not identify to pause the removal of people for paperwork reasons and to reinstate some whose coverage had been denied — up to tens of thousands of people, depending on the state. The agency is conferring with about a dozen other states regarding potential violations.

Tsai said some states are failing to follow a federal requirement that they rely when possible on electronic data — such as wage records from food stamps or other benefits programs — to check people’s eligibility automatically and avoid the burden of renewal notices.

“Make no mistake, where we have found problems or violations of federal requirements, we are taking action to ensure that states correct the issue immediately,” CMS Administrator Chiquita Brooks-LaSure said during a recent news briefing.

CMS has been collecting states’ unwinding data monthly but said it could not release its first state-by-state snapshot before the end of July because federal officials needed time to check the accuracy of that data. Many health-care advocates say CMS should have been providing this unwinding picture sooner.

On Friday, the agency issued the first official unwinding data based on 18 states that began the process relatively early. The report evaluated what happened with 2.2 million beneficiaries whose status was scheduled to be reviewed. It found that 46 percent remained on Medicaid or the Children’s Health Insurance Program, 32 percent were removed from the program, and 22 percent of the reviews had not been completed. Of those removed, 79 percent were for procedural reasons.

Spanning just two months, the federal snapshot is less complete than the data compiled by KFF and separate tracking of 20 states by Georgetown University’s Center for Children and Families. Still, all three sources show considerable variation in how many people have been cut off — and the rate at which people lose coverage for paperwork reasons. Michigan and Pennsylvania are doing comparatively well, with most beneficiaries who have come up for renewal remaining on Medicaid. The KFF and Georgetown tallies show that, in both states, 3 in 5 cases removed from the rolls were dropped because of ineligibility.

Florida has severed the second-most people, after Texas — slightly more than 300,000, two-thirds for procedural reasons. And CMS says Florida has been the only state unwilling to discuss with the agency how to minimize removing people for the wrong reasons.

“We are alarmed by the data,” a coalition of more than 50 health-care and other advocacy groups wrote this spring to Florida Gov. Ron DeSantis (R), calling on the governor to pause the unwinding until the state improved its methods.

Rep. Kathy Castor (D-Fla.) and the seven other Democrats in the state’s congressional delegation also wrote to DeSantis, saying the disenrollment rate “is incredibly concerning” and echoing the call for a pause. “I’m very concerned too many Floridians are going to be lost in the shuffle,” Castor said in an interview.

According to Castor’s staff, DeSantis, a candidate for the 2024 GOP presidential nomination, did not reply to the lawmakers’ letter. The governor’s office referred questions from The Washington Post to the Florida Department of Children and Families. Mallory McManus, the department’s deputy chief of staff, said the agency had developed “a thoughtful, common-sense plan … to return to normal Medicaid processes” and already uses some procedures urged by federal health officials. “Florida’s top priority is ensuring that those who are eligible for Medicaid remain enrolled,” McManus said by email.

Already, the large proportion of beneficiaries in some states tumbling into the ranks of the uninsured is starting to hurt clinics and hospitals that focus on low-income patients — especially in the poorest states, such as West Virginia, where about 1 in 3 residents have relied on Medicaid.

“It’s a total failure, this unwinding,” said Craig Robinson, the executive director of Cabin Creek Health Systems, a network of a half-dozen clinics in West Virginia. Every day, he said, people arrive for appointments or for medicine at each clinic, unaware that their Medicaid coverage has stopped.

Cabin Creek is not alone. At West Virginia Health Right, a Charleston clinic with 43,000 patients at three sites, the number covered by Medicaid fell by about 1,600 in May and June, the first two months of that state’s unwinding, according to Angie Settle, the clinics’ chief executive. The number of uninsured patients, usually fairly stable, rose by about the same number during those two months.

Settle said the unwinding is putting a strain on the staff as new people show up for medical services they can no longer afford — and a strain on finances as more people show up for medications for which no one else is paying the costs.

One of Health Right’s new patients is Heather Elkins, who lives nearby with her daughter in Dunbar, at a bend in the Kanawha River. Living on $1,100-a-month Social Security checks, Elkins, 63, had no health insurance starting in 2012, when she quit the construction work that was hurting her body, partly because of breathing lime dust on river barges. Five years later, her health deteriorating, she applied for Medicaid, which has paid for medications for her high blood pressure, high cholesterol, depression and diseased lungs.

When she went to pick up prescriptions the first week in May, Elkins said, the pharmacist told her, “Honey, you’re declined. You don’t have coverage.”

She paid out of pocket for the prescriptions, except for the Symbicort to treat her chronic obstructive pulmonary disease, because a month’s supply would have cost about $400. Instead, she headed to Health Right for it.

Elkins said she isn’t certain whether her renewal notice from the West Virginia Department of Health and Human Resources never came or was stuck in the middle of other pieces of mail. She stopped at a state office to try to find out what she needed to do. Over the next two months, she was told to bring a Social Security card, assured that would suffice, then was told she would need to start a new application. When Elkins finally brought in the completed paperwork, an employee looked in the computer, ripped up the form without examining it and said she was back on Medicaid. Stunned, Elkins asked about what she’d been told by the first worker who triggered the whole runaround — and was told he had been a new employee and did not work there any more.

According to Sarah Young, the health department’s deputy commissioner, each beneficiary receives three phone calls and written notices before a case is closed. She did not address how situations such as Elkins’ could happen but said by email, “the challenge remains how to increase the number of individuals who submit their renewal forms in a timely manner to prevent a loss of coverage.”

Some states face special obstacles. In Alaska, renewal notices do not always reach intended recipients in rural communities that lack roads or broadband internet, according to Anne Zink, the state’s chief medical officer. Some towns and villages at times lack a working postmaster, so mailbags containing the notices sometimes pile up outside shuttered post offices, Zink said.

Alaska is among 34 states, plus D.C., that have been out of compliance with at least one federal requirement for how to conduct the unwinding, a CMS tally shows. But even some states that meet all the federal rules have high rates of people being dropped from the program for paperwork reasons, mystifying state officials and patient advocates alike.

One of those states is Indiana, where 86 percent of removals were done on procedural grounds, according to the KFF and Georgetown data. In addition to sending beneficiaries a postcard, letter, renewal packet, text messages and phone calls, the state’s Medicaid agency is launching a multilingual ad campaign and has collaborated with food banks, pharmacists, clinics, school systems and child-welfare workers to spread the word, according to Michele Holtkamp, the agency’s spokeswoman.

In Arkansas, a 2021 law requires the state to sort through renewals within six months, half the time the Biden administration recommends. Gov. Sarah Huckabee Sanders (R) published an op-ed in the Wall Street Journal in May saying, “I’m proud Arkansas is leading the nation in getting back to normal.” Most Arkansans who lost jobs during the pandemic are working again, she wrote, saying, “It’s time to get them off the path of dependency.” The governor did not say how many of the reemployed have health benefits through their jobs.

Trevor Hawkins, an attorney at Legal Aid of Arkansas, said some people have been told their Medicaid cases were closed at their own request — when that was not true. As in a number of states, he said, children are being removed from coverage if their parents become ineligible, even though the children still qualify. And some people are simply being denied and told to reapply, Hawkins said, so they are uninsured while “they are just patiently waiting to be reapproved …[with] no idea how long the line is.”

Arkansas Community Organizations, a grass-roots antipoverty group, held a protest last month outside one of the Department of Human Services’ Little Rock offices. Demonstrators carried hand-lettered placards saying, “Fix the glitch!” and “This update is life or death,” and one protester staged a skit simulating depositing information into a cardboard computer and receiving a slip of paper saying, “Denied.”

Gavin Lesnick, spokesman for the state’s human services department, said Arkansas is following “a detailed plan … that is both fair and helps protect Medicaid resources for those who truly need it.” He said that just because a case is closed for a procedural reason does not necessarily mean someone failed to receive a renewal packet or did not know about the unwinding. Some people, Lesnick said, have chosen not to return renewal forms, aware that they are no longer eligible.

In Fayetteville, Fortner does not know when — or if — her Medicaid coverage will be restored. She does not understand why her 15-year-old daughter has been allowed to stay on the children’s version of Medicaid, while she and her husband, the manager of a vape shop, were cut off — without receiving a denial letter.

She takes Suboxone to stay clean from the opioid addiction she said she has struggled with since she was 14 and prescribed painkillers for whiplash from a car crash. The day this spring she could not afford the Suboxone, she said, “I felt hopeless … and pretty irritated.”

After discovering in May that her Medicaid coverage had been cut off, she went to a local branch of the human services department to find out what was going on. “I was told I would need to reapply completely,” Fortner said. By the end of that week, she took in all the requested information, including proof of her husband’s previous jobs and his current one.

“They said I was good to go,” she said, and was told the paperwork would take 30 to 45 days to process. After calling repeatedly, she returned in person in mid-June. She was told she needed to furnish evidence that she no longer worked at another waitress job she had left nearly a year before. She also was told her husband’s doctor needed to provide proof of why he was on Social Security disability. Her husband has never been on disability. She asked for a copy of the form with the disability question, but the employee said she couldn’t print it out because it had just been mailed to their home and, once it arrived, she could mail it back saying he did not have disability benefits.

“It’s very, very frustrating,” Fortner said. “I keep thinking I’ve done everything I’m supposed to do and it’s fine, but then, when I check, it’s not fine.”

https://www.washingtonpost.com/health/2023/07/28/medicaid-unwinding-pandemic/