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KHN senior correspondent Angela Hart discussed California’s contract with Civica to make lower-cost insulin on KQED’s “Forum” on March 23. She also discussed California’s potential plan to use Medicaid funding to cover up to six months of rent for low-income enrollees on KCBS’ “State of California” on March 22.
KHN South Carolina correspondent Lauren Sausser discussed prior authorization on WNHN’s “The Attitude With Arnie Arnesen” on March 21.
KHN Montana legislative fellow Keely Larson discussed Montana’s vaccine exemption legislation on the Montana Free Press’ “The Session” on March 20.
KHN Midwest correspondent Bram Sable-Smith discussed insulin costs on NPR’s “Weekend Edition Saturday” on March 18.
Andrew Johnson lets his clients choose what music to play in the car.
As an employee of Family Outreach in Helena, Montana — an organization that assists developmentally disabled people — part of his workday involves driving around, picking up clients, and taking them to work or to run errands.
“What’s up, gangsta?” Johnson said as a client got in the car one day in March.
The pair fist-bumped and Johnson asked what type of music the client liked.
“Gangsta stuff,” came the response. Rap, mainly.
Snoop Dogg played in the background as Johnson and his client drove to McDonald’s, where Johnson helps his client work. The duo washed dishes for two hours in the back of the fast-food restaurant, where it smelled like maple syrup and sulfur.
About two weeks earlier, Johnson testified at a hearing at the Montana Capitol in support of a bill that seeks to raise health providers’ Medicaid reimbursement rates to levels aligned with the average cost of the care they provide. The bill is informed by a 2022 study that recommended benchmark rates after its authors found that Montana Medicaid providers like Family Outreach were being significantly underpaid.
“The provider rates need to be funded so people that work in this field or that work in adjacent fields can have solid ground, a place where you can build a career,” said Johnson, who makes $16.24 per hour in his position as an individual living specialist.
Republican Gov. Greg Gianforte and legislators agree that Medicaid rates need to rise; where they disagree is by how much. The proposals range from the bill Johnson testified for — Democratic Rep. Mary Caferro’s bill to raise rates to the study’s benchmarks — to Gianforte’s plan to fund 91% of that benchmark in 2024 and 86% in 2025.
Meanwhile, the Republicans leading the House Appropriations Committee, a key budget panel, are proposing an average increase of 92% for fiscal year 2024 and 97% in 2025.
Andrew Johnson says his friends think he’s crazy for deciding to work in human services. He knows he made the right career choice for himself, but he still wants to be able to afford a house in Montana someday. (Keely Larson)
Providers and leaders who work in behavioral health, developmental disability, long-term care, and family support services have attended the multiple hearings on rate adjustments, saying thanks for the proposed increases but asking for more. Many providers said the benchmark rates in the study are already outdated.
Providers across the United States say they haven’t seen significant reimbursement increases in more than a decade, according to Shawn Coughlin, president of the National Association for Behavioral Healthcare. Behavioral health can be an afterthought for policymakers, resulting in lower rates than for medical or surgical reimbursement, he said
Michael Barnett, associate professor of health policy and management at the Harvard T.H. Chan School of Public Health, said the supply of staff is inadequate to meet demand for behavioral health care across the U.S.
“And it’s not clear we’re going to meet any of that without paying people more,” Barnett said.
Some health providers have raised wages but still struggled to draw workers and keep the ones they’ve got. Family Outreach raised the wages of some direct care workers from $11 per hour to $12.20 per hour this year, and by more in places where the cost of living is higher, such as Bozeman. But even starting wages of $16 or $18 an hour aren’t attracting enough people to work there, Family Outreach Program Manager Tyler Tobol said.
“It’s a field that not a lot of people want to get into, so those that we can find, I think being able to pay a higher wage, a living wage, I think that would be the best benefit we get out of the rate increase,” Tobol said.
The organization went from 153 employees in 2020 to 128 today. The staffing shortage means employees now focus mainly on making sure clients have the basics — medications and meals — instead of providing additional community integration and activity support services.
At Florence Crittenton in Helena, where moms 18 to 35 with substance use disorders can live with their young kids while undergoing treatment, a mom entered the kitchen where women are taught life skills like learning to cook dinner. The woman told a staff member she was making juice for her child.
“This is where life happens,” said Daniel Champer, Florence Crittenton’s clinical and residential services director.
Executive Director Carrie Krepps said the organization’s two main sources of revenue are Medicaid reimbursements and fundraising. Fundraising, which used to account for 30% of revenue, now makes up between 60% and 70% of the money coming in.
“It’s the reason we’re still open,” Krepps said.
Florence Crittenton’s youth maternity wing has been closed since November 2021 due to staffing difficulties. Previously, teens ages 12-15 stayed in the apartments and received support services from Florence Crittenton. (Keely Larson)
Andrew Johnson says a lot of people with developmental disabilities go to Van’s Thriftway in Helena to get checks cashed. He describes Van’s as an inclusive grocery store. (Keely Larson)
At any given time, an average of 15 to 18 of Florence Crittenton’s 50 staff positions are vacant. If Medicaid rates don’t increase, she said, the organization will have to consider if it can continue operating the recovery home at its current capacity.
“The full rates would just barely cover where we are today,” Krepps said of raising Medicaid reimbursement rates to benchmark levels.
In 2021, Florence Crittenton closed a youth maternity home for pregnant youths and young moms ages 12 to 15, the only home in the state that took teens under 16. Krepps said Florence Crittenton didn’t take Medicaid fees there because the rates were too low.
“It’s heartbreaking,” Champer said. “It’s like clockwork on Monday morning. I come in and see the inquiries and referrals about moms who need treatment and we can’t function at full capacity because we don’t have staff.”
Dennis Sulser, the CEO of Youth Dynamics, which provides home support, case management, and community-based psychiatric rehabilitation across the state, said his organization is paying its staff more than it can afford. Even with the rate increase, he said, they’d only break even.
In the past three years, Youth Dynamics has lost 56 full-time employees. The covid-19 pandemic made people realize they could find other jobs that paid more and even allowed them to stay home, Sulser said.
Andrew Johnson transports a client from his group home to Family Outreach, where the client does janitorial work for the organization. Johnson described this client as his “soul animal,” referring to their similar taste in music. (Keely Larson)
Two years ago, the entry-level pay for Youth Dynamics was $10.70 per hour, and it now averages $13.70. Still, staffing shortages led to the closure of a group home in Boulder and one in Billings, shrinking the organization’s capacity from 80 to 64 beds statewide.
Ashley Santos, program manager for the organization’s three remaining group homes in Boulder, said she is trying to figure out how to attract enough staff to reopen the closed home there. An increase in pay supported by the provider rate increase could give her flexibility to provide extra incentives, she said.
But it’s hard to attract workers when Hardee’s has a starting wage of $18 per hour compared with Youth Dynamics’ $16, she said. And fast-food jobs don’t come with the emotional toll of working with kids who have a severe emotional disturbance diagnosis like PTSD or depression.
Back in Helena, Johnson made his last stop of the day for Family Outreach. He sat next to a client on the couch at the house where the client lives with his mom. Johnson called the number on the back of his client’s debit card to see how much money was left on it before they went out to run errands.
Johnson and the client then headed to a local supermarket. Trips like these give his client a chance to interact with other people, while his mom gets some time to herself.
“You look nice,” Johnson said to the client as they got into the car, the folksy music of Dougie Poole, the choice of Johnson’s previous client, playing in the background.
Keely Larson is the KHN fellow for the UM Legislative News Service, a partnership of the University of Montana School of Journalism, the Montana Newspaper Association, and Kaiser Health News. Larson is a graduate student in environmental and natural resources journalism at the University of Montana.
Sen. Bernie Sanders, who rose to national prominence criticizing big business in general and the pharmaceutical industry in particular, claimed the spotlight Wednesday on what might at first seem a powerful new stage from which to advance his agenda: chairmanship of the Senate health committee.
But the hearing Sanders used to excoriate a billionaire pharmaceutical executive for raising the price of a covid-19 vaccine showed the challenges the Vermont independent faces.
Though its formal name is the Committee on Health, Education, Labor, and Pensions (HELP), the panel Sanders chairs has little if any authority over drug prices. In the Senate, most of that leverage lies with the Finance Committee, which oversees Medicaid, Medicare, and Obamacare.
As far as drug prices go, the platform Sanders commands is essentially a bully pulpit. So Sanders was left to bully his way toward results. And while some committee Republicans sympathized with his complaints, others bristled at his approach.
By the end of the hearing, seeming to acknowledge the limits of his power, the former presidential candidate was pleading with Moderna chief executive Stéphane Bancel for a relatively modest concession on vaccine pricing.
The CEO made no promises. Then again, pulpit proclamations can lead to corporate action, even if delayed and informal; in the weeks following President Joe Biden’s State of the Union call for cheaper insulin, the companies that make it drastically cut their prices.
Sanders began Wednesday’s hearing with his usual fire and brimstone.
“All over this country people are getting sicker, and in some cases dying, because they can’t afford the outrageous cost of prescription drugs, while companies make huge profits and executives become billionaires,” Sanders thundered.
Bancel had won his place in the witness chair with federal assistance. Moderna, which was founded in 2010 and had not brought a drug to market before the pandemic, received billions in government funds for research, guaranteed purchases, and expert advice to help develop and produce its successful covid vaccine. The payoff has been handsome. As of March 8, Bancel held $3 billion in Moderna stock. He also held options to buy millions of additional shares.
Government research and support are foundational to many of the expensive drugs and vaccines in use today. But Bancel made himself the perfect foil for Sanders when he announced in January that Moderna planned to increase the price of its latest covid shot from about $26 to $110 — or as much as $130.
Denouncing greed, Sanders expounded on his dream of a system in which the government fully funds drug development — and in exchange controls drug prices. “Is there another model out there where, when a lifesaving drug is made, it becomes accessible to all those who need it?” he asked. “What am I missing in thinking that it’s cruel to make a medicine that people can’t afford?’”
Sanders’ overt moralizing and harsh attacks on big business make him an outlier in the Senate, even in his own party. Yet distaste for soaring drug prices extends across the aisle. On the HELP Committee, at least, Republican politicians seem about evenly split between populist and pro-business takes on the problem, showing both the possibilities and the pitfalls that Sanders faces.
Sen. Mike Braun (R-Ind.) expressed disgust with the lack of transparency in the health care system and called Moderna’s planned price hike “preposterous.” Sen. Roger Marshall (R-Kan.) called it “outrageous.”
Sen. Rand Paul (R-Ky.), who often bucks mainstream GOP views and has expressed rancor for the biomedical establishment, claimed Bancel was downplaying vaccine injuries to make money. (Paul vastly exaggerated those risks.)
Ranking member Bill Cassidy (R-La.), who has pledged to work with Sanders, responded to the chairman’s opening remarks with both a hedge and a warning. “I’m not defending salaries or profits,” Cassidy said, but he added that he hoped the hearing’s goal wasn’t to “demonize capitalism.”
Only Sen. Mitt Romney (R-Utah), a former private equity executive, came heartily to Bancel’s defense. “If I’m an investor, I have to expect that if a product I’m backing works, I get to make an awful lot of money,” he said. “I’ve heard people say, ‘That’s corporate greed.’ Yeah, that’s how it works.”
Sanders’ idealized vision of the pharmaceutical industry is, in any case, moot. Even the Biden administration, which successfully browbeat insulin makers into drastically lowering prices in March, revealed this week it would not use “march-in” rights to lower the price of a cancer drug, Xtandi, developed with government-licensed patents.
March-in rights were established in the 1980 Bayh-Dole Act, which enabled companies to license federally funded research and use it to develop drugs. But federal courts and administrations have consistently said the government can seize a product only if the license holder has failed to make it available — not because the price is too high. The administration did, however, announce a review of whether price might be considered in future march-in decisions.
Sanders said before the hearing that he was “extremely disappointed” with the Xtandi decision. But he was ultimately realist enough to aim his bully pulpit at a lower target. Late in Wednesday’s hearing, Sanders pushed for a minimal gimme from Moderna. “Will you reconsider your decision to quadruple the price of your vaccine to the U.S. government and its agents?” he asked politely.
Bancel dodged, saying pricing was more complex now that Moderna faced an uncertain market, had to fill separate syringes with its vaccine, and needed to sell and distribute the vaccine to thousands of pharmacies, where previously the government did all that work. Later, he left open the possibility that negotiations could drive down the price paid by some government agencies or private insurers.
For all the theatrics of such hearings and the mix of opinions among the senators, interrogations of figures like Bancel may help inspire a shift in how the National Institutes of Health “does business in giving away its science to the private sector,” said Tahir Amin, co-executive director of I-MAK, a nonprofit that advocates for equitable access to medicines.
“You have to prosecute it so you at least get these public comments on record,” Amin said. Eventually, he said, this type of hearing could lead to a recognition that, ‘Hey, we need to do this.’”
Despite the HELP Committee’s lack of direct jurisdiction over drug prices, said John McDonough, a Harvard professor who was senior adviser for health reform on the HELP Committee from 2008 to 2010, Sanders “uses his position of authority and influence to draw attention to this in a way that has been helpful.”
KHN correspondent Rachana Pradhan contributed to this report.
A year after private equity-backed Noble Health shuttered two rural Missouri hospitals, patients and former employees grapple with a broken local health system or missing out on millions in unpaid wages and benefits.
The hospitals in Audrain and Callaway counties remain closed as a slew of lawsuits and state and federal investigations grind forward.
In March, Missouri Attorney General Andrew Bailey confirmed a civil investigation. He had previously told local talk radio that there was an “ongoing” investigation into “the hospital issue.”
Bailey’s comment came weeks after the U.S. Department of Labor’s Employee Benefits Security Administration notified executives tied to Noble Health, a startup, that they had violated federal laws and asked them to pay $5.4 million to cover unpaid employee health insurance claims, according to a 13-page letter detailing “interim findings” that was obtained by KHN.
The January letter confirms KHN’s previous reporting, which was informed by employees and patients who described missing paychecks; receiving unexpected, high-dollar medical bills; and going without care, including cancer treatment. According to the letter from federal investigators, the Noble hospitals and their corporate owners collected employee contributions for medical, dental, and vision insurance in 2021 and 2022 but then failed to fund the insurance plans.
The owners and executives were “aware of the harm to participants and, in some cases, were attempting to resolve individual participant complaints,” the letter states, adding that “despite the volume and gravity of complaints and bills received,” they failed to respond.
Ryder Hagedorn was born with spina bifida. His parents have struggled to pay for specialty care since claims were denied by a health plan his mother, Marissa, was offered through her employer. She is one of several former employees of Noble Health who say they were left with substantial medical bills after the company shuttered its two rural Missouri hospitals.(Marissa Hagedorn)
‘Tomfoolery’ and Doing ‘Everybody Dirty’
Marissa Hagedorn, who worked as a hospital laboratory technician, has spent much of the past year starting a new job, caring for her 2-year-old son who was born with spina bifida, and haggling over unpaid medical bills. She told KHN the family owes at least $8,000 for son Ryder’s specialty care in St. Louis, with $6,000 of that in collections. As a Noble employee, Hagedorn said, she was told repeatedly that her employee health insurance would cover Ryder’s care. It didn’t.
Noble has “done everybody dirty,” she said. “We just would like for some responsibility to be taken by this company that didn’t feel the need to get their act together.” Hagedorn’s story of unpaid bills, which was first reported by the local newspaper, the Mexico Ledger, is common among former Noble employees a year after the hospitals closed.
A former employee of the Fulton hospital has filed a class-action lawsuit intended to represent hundreds of employees from both hospitals.
The Jan. 13 letter from federal officials called for responses by Jan. 27 from Noble corporate and hospital executives as well as Platinum Neighbors, which last April bought the hospitals and assumed all liabilities. The letter instructs executives to contact the agency “to discuss how you intend to correct these violations, fund participant claims, and achieve compliance.”
Former employees say their claims have not yet been paid. A Labor Department spokesperson, Grant Vaught, said the agency could not comment on an ongoing investigation.
Separately, the Kansas Department of Labor is reviewing Noble and Platinum’s failure to pay wages and severance to corporate employees. Agency spokesperson Becky Shaffer confirmed that hearings took place in early February on a half-dozen cases totaling more than $1 million in claims for unpaid wages and severance.
Dave Kitchens was among those who filed claims against Noble Health. Kitchens worked briefly as a contract employee and then was hired in October 2021 as a corporate controller, an accounting role in which he was responsible for financial reporting and data analytics. Kitchens provided an audio recording of his hearing to KHN and hopes to eventually get paid more than $90,000 in lost wages, benefits, and severance pay. During the hearing, Kitchens told the administrative judge: “I would just like to be paid what I’m owed.”
Kitchens, who is also named as a fiduciary on the federal investigation, said he was not on Noble’s executive team. When asked by Kansas Administrative Law Judge James Ward whether he expected Noble or the secondary buyer Platinum to pay his wages, Kitchens responded he had “no idea who was in charge.”
“I believe there was some tomfoolery,” Kitchens said.
Despite receiving approval for nearly $20 million in federal covid-19 relief money before it closed the hospitals — funds whose use is still not fully accounted for — Noble had stopped paying its bills, according to court records. Contractors, including nursing agencies, a lab that ran covid tests and landscapers, have filed lawsuits seeking millions.
In Audrain County, where community members still hope to reopen the hospital or build a new one, county leaders filed suit for the repayment of a $1.8 million loan they made to Noble. Former Missouri state senator Jay Wasson also filed suit in September, asking for repayment of a $500,000 loan.
Two Noble Health real estate entities filed bankruptcy petitions this year. One Chapter 11 bankruptcy filing names the Fulton hospital property in Callaway County as an asset and lists nearly $4.9 million in liabilities. A third bankruptcy filing by FMC Clinic includes Noble Health as a codebtor.
Federal investigators listed nearly a dozen people or entities connected to Noble Health as fiduciaries who they say are personally responsible for paying back millions in unpaid medical claims. The letter also detailed Noble Health’s ownership for the first time. The owners included William A. Solomon with a 16.82% share, Thomas W. Carter with a 16.82% share, The Peterson Trust with a 19.63%, and NC Holdings Inc. with 46.72%.
NC Holdings is also listed on the stock sale agreement with Platinum along with several signatures including Jeremy Tasset, chief executive of Nueterra Capital.
Tasset did not respond to a request for comment for this article. In an email to KHN in March 2022, the Nueterra Capital CEO wrote, “We are a minority investor in the real estate and have nothing to do with the operations of the hospitals.” In May 2022, Tasset wrote in an email to KHN that “everything was sold (real estate included) to Platinum Neighbors, a subsidiary of Platinum Team Management.”
It is unclear who owns and controls The Peterson Trust, which federal investigators identified. Peterson, who is listed on Noble’s state registration papers as a director and in other roles, didn’t respond to requests for comment for this article. He previously told KHN that his involvement in Noble didn’t violate his exclusion, in his reading of the law.
He said he owned 3% of the company, citing guidance from the Office of Inspector General for the U.S. Department of Health and Human Services. Federal regulators may exclude companies if someone who is banned has ownership of 5% or more.
In March 2022, Peterson created Noble Health Services, which federal investigators note in their letter was “established to restructure the ownership of multiple Noble entities.” Peterson dissolved that company in July 2022, according to a Missouri business filing.
In September, Peterson posted on LinkedIn that he was “sitting in the Emirates Air lounge in Dubai” to finish up due diligence on “launching a new business.”
A 2013 OIG advisory states that “an excluded individual may not serve in an executive or leadership role” and “may not provide other types of administrative and management services … unless wholly unrelated to federal health care programs.”
KHN examined the federal system meant to stop health care business owners and executives from repeatedly bilking government health programs and found that it failed to do so.
The OIG keeps a public list of people and businesses it has banned from all federal health care programs, such as Medicare and Medicaid. KHN’s review found a system devoid of oversight and rife with legal gray areas.
In the wake of KHN’s reporting, Oregon Sen. Ron Wyden, a Democrat who is the chair of the powerful Senate Finance Committee, said “it’s imperative that federal watchdogs can ensure bad actors are kept out of Medicare.” Sen. Chuck Grassley (R-Iowa) said the government needs to do more and “it’s also up to private-sector entities to do a better job checking against the exclusions list.”
“We can’t just depend on one or the other to do everything,” Grassley said.
In recent months, the Missouri hospitals appear to have been sold twice more, according to public records. Oregon-based Saint Pio of Pietrelcina notified state officials of a change of ownership in December and requested an extension of the hospital licenses, which was denied. In January, Audrain County officials, in its lawsuit, revealed another owner named Pasture Medical, which registered as a Wyoming company on Dec. 27, 2022.
“We haven’t come out of the rabbit hole on this one,” said Steve Bollin, director of the division of regulation and licensure for the Missouri Department of Health and Senior Services. Bollin’s agency, which conducts inspections and approves hospital changes in ownership, said he would support his agency doing financial reviews.
“It’s probably not a bad idea that someone takes a little bit deeper dive. We don’t have that many changes of ownership, but we would need appropriate staffing to do that, including some really good CPAs [certified public accountants].”
SACRAMENTO, CA. — El gobernador Gavin Newsom anunció el sábado 18 de marzo que se había seleccionado al fabricante de medicamentos genéricos Civica, con sede en Utah, para producir insulina de bajo costo para el estado, una medida sin precedentes que cumple su promesa de poner al gobierno estatal en competencia directa con las versiones de marca de las farmaceúticas que dominan el mercado.
“La gente no debería verse obligada a endeudarse para obtener recetas que salvan vidas”, dijo Newsom. “Los californianos tendrán acceso a algunas de las insulinas más económicas disponibles, lo que les ayudará a ahorrar miles de dólares cada año”.
El contrato, con un costo inicial de $50 millones que Newsom y los legisladores demócratas aprobaron el año pasado, estipula que Civica produzca insulina de marca estatal y ponga el medicamento a disposición de cualquier californiano que lo necesite, por correo y en las farmacias locales, independientemente de si tenga o no seguro de salud.
Y la insulina es solo el comienzo. Newsom dijo que el estado también buscará producir naloxona, el fármaco que revierte las sobredosis de opioides.
Allan Coukell, vicepresidente sénior de políticas públicas de Civica, le dijo a California Healthline que el fabricante de medicamentos sin fines de lucro también está en conversaciones con la administración de Newsom para producir potencialmente otros medicamentos genéricos. Pero se negó a dar más detalles y dijo que la compañía se enfoca primero en hacer que la insulina económica esté ampliamente disponible.
“Estamos muy entusiasmados con esta asociación con el estado de California”, dijo Coukell. “No buscamos tener el 100% del mercado, pero sí queremos que el 100% de las personas tenga acceso a insulina a un precio justo”.
A medida que los costos de la insulina para los consumidores se han disparado, los legisladores y activistas demócratas han pedido a la industria que los controle. Apenas unas semanas después que el presidente Joe Biden atacara a las grandes farmacéuticas por aumentar los precios de la insulina, los tres fabricantes de medicamentos que controlan ese mercado, Eli Lilly and Co., Novo Nordisk y Sanofi, anunciaron que reducirían drásticamente los precios de lista de algunos productos.
Newsom, quien anteriormente acusó a la industria farmacéutica de estafar a los californianos con “precios altísimos”, argumentó que el lanzamiento de la marca de genéricos estatal, CalRx, sumará competencia y ejercerá presión sobre la industria.
Funcionarios de la administración no dijeron cuándo estarían disponibles los productos de insulina de California, pero expertos dicen que podría ser tan pronto como en 2025. Coukell remarcó que el medicamento de marca estatal aún requerirá la aprobación de la Administración de Drogas y Alimentos (FDA), lo que puede demorar unos 10 meses.
La Pharmaceutical Research and Manufacturers of America, que cabildea en nombre de las empresas de marca, criticó la medida de California. Reid Porter, director senior de asuntos públicos estatales de PhRMA, dijo que Newsom solo “quiere sumar puntos políticos”.
“Si el gobernador quiere tener un impacto significativo en lo que los pacientes pagan por las insulinas y otros medicamentos, debería expandir su enfoque a otros en el sistema que a menudo hace que los pacientes paguen más por los medicamentos”, dijo Porter, culpando a las empresas intermediarias, conocidas como administradores de beneficios de farmacia, que negocian con los fabricantes en nombre de las aseguradoras para reembolsos y descuentos.
La Pharmaceutical Care Management Association, que representa a estos administradores, argumentó a su vez que son las compañías farmacéuticas las culpables de los altos precios.
Expertos en precios dicen que los administradores de beneficios farmacéuticos y los fabricantes de medicamentos comparten la culpa.
Funcionarios de la administración Newsom dicen que los costos inflados de la insulina obligan a algunos a pagar hasta $300 por vial o $500 por una caja de plumas inyectables, y que demasiados californianos con diabetes se saltan o racionan sus medicamentos. Esto puede provocar ceguera, amputaciones y afecciones potencialmente mortales, como enfermedades cardíacas e insuficiencia renal. Casi el 10% de los adultos de California tienen diabetes.
Civica está desarrollando tres tipos de insulina genérica, conocida como biosimilar, que estarán disponibles tanto en viales como en plumas inyectables. Se espera que sean intercambiables con productos de marca, incluidos Lantus, Humalog y NovoLog. Coukell dijo que la compañía pondría a disposición el medicamento por no más de $30 por vial, o $55 por cinco plumas inyectables.
Newsom dijo que la insulina estatal le ahorrará a muchos pacientes entre $2,000 y $4,000 al año, aunque siguen sin respuesta preguntas críticas sobre cómo California pondrá los productos en manos de los consumidores, incluida la forma en que persuadiría a las farmacias, las aseguradoras y los minoristas para que distribuyan los medicamentos.
El año pasado, Newsom también obtuvo $50 millones en capital inicial para construir una instalación para fabricar insulina; Coukell dijo que Civica está explorando la construcción de una planta en California.
El movimiento de California, aunque nunca antes lo había intentado un gobierno estatal, podría verse afectado por las recientes decisiones de la industria para reducir los precios de la insulina. En marzo, Lilly, Novo Nordisk y Sanofi se comprometieron a reducir los precios. Con Lilly ofreciendo un vial a $25 por mes, Novo Nordisk prometió importantes reducciones que llevarían el precio de un vial genérico particular a $48, y Sanofi fijó un vial a $64.
La oficina del gobernador dijo que le costará al estado $30 por vial para fabricar y distribuir insulina y se venderá a ese precio. Si lo hace, argumenta la administración, “evitará el atroz cambio de costos que ocurre en los juegos de precios farmacéuticos tradicionales”.
Expertos en precios de medicamentos dijeron que la producción de genéricos en California podría reducir aún más los costos de la insulina y beneficiar a las personas con planes médicos con deducibles altos o sin seguro.
“Este es un movimiento extraordinario en la industria farmacéutica, no solo para la insulina, sino potencialmente para todo tipo de medicamentos”, dijo Robin Feldman, profesor de la Facultad de Derecho de la Universidad de California en San Francisco. “Es una industria muy difícil de quebrantar, pero California está lista para hacer precisamente eso”.
SACRAMENTO, Calif. — Gov. Gavin Newsom on Saturday announced the selection of Utah-based generic drug manufacturer Civica to produce low-cost insulin for California, an unprecedented move that makes good on his promise to put state government in direct competition with the brand-name drug companies that dominate the market.
“People should not be forced to go into debt to get lifesaving prescriptions,” Newsom said. “Californians will have access to some of the most inexpensive insulin available, helping them save thousands of dollars each year.”
The contract, with an initial cost of $50 million that Newsom and his fellow Democratic lawmakers approved last year, calls for Civica to manufacture state-branded insulin and make the lifesaving drug available to any Californian who needs it, regardless of insurance coverage, by mail order and at local pharmacies. But insulin is just the beginning. Newsom said the state will also look to produce the opioid overdose reversal drug naloxone.
Allan Coukell, Civica’s senior vice president of public policy, told KHN that the nonprofit drugmaker is also in talks with the Newsom administration to potentially produce other generic medications, but he declined to elaborate, saying the company is focused on making cheap insulin widely available first.
“We are very excited about this partnership with the state of California,” Coukell said. “We’re not looking to have 100% of the market, but we do want 100% of people to have access to fair insulin prices.”
As insulin costs for consumers have soared, Democratic lawmakers and activists have called on the industry to rein in prices. Just weeks after President Joe Biden attacked Big Pharma for jacking up insulin prices, the three drugmakers that control the insulin market — Eli Lilly and Co., Novo Nordisk, and Sanofi — announced they would slash the list prices of some products.
Newsom, who has previously accused the pharmaceutical industry of gouging Californians with “sky-high prices,” argued that the launch of the state’s generic drug label, CalRx, will add competition and apply pressure on the industry. Administration officials declined to say when California’s insulin products would be available, but experts say it could be as soon as 2025. Coukell said the state-branded medication will still require approval from the FDA, which can take roughly 10 months.
The Pharmaceutical Research and Manufacturers of America, which lobbies on behalf of brand-name companies, blasted California’s move. Reid Porter, senior director of state public affairs for PhRMA, said Newsom just “wants to score political points.”
“If the governor wants to impact what patients pay for insulins and other medicines meaningfully, he should expand his focus to others in the system that often make patients pay more than they do for medicines,” Porter said, blaming pharmaceutical go-between companies, known as pharmacy benefit managers, that negotiate with manufacturers on behalf of insurers for rebates and discounts on drugs.
The Pharmaceutical Care Management Association, which represents pharmacy benefit managers argued in turn that it’s pharmaceutical companies that are to blame for high prices.
Drug pricing experts, however, say pharmacy benefit managers and drugmakers share the blame.
Newsom administration officials say that inflated insulin costs force some to pay as much as $300 per vial or $500 for a box of injectable pens, and that too many Californians with diabetes skip or ration their medication. Doing so can lead to blindness, amputations, and life-threatening conditions such as heart disease and kidney failure. Nearly 10% of California adults have diabetes.
Civica is developing three types of generic insulin, known as a biosimilar, which will be available both in vials and in injectable pens. They are expected to be interchangeable with brand-name products including Lantus, Humalog, and NovoLog. Coukell said the company would make the drug available for no more than $30 a vial, or $55 for five injectable pens.
Newsom said the state’s insulin will save many patients $2,000 to $4,000 a year, though critical questions about how California would get the products into the hands of consumers remain unanswered, including how it would persuade pharmacies, insurers, and retailers to distribute the drugs.
Last year, Newsom also secured $50 million in seed money to build a facility to manufacture insulin; Coukell said Civica is exploring building a plant in California.
California’s move, though never been tried by a state government, could be blunted by recent industry decisions to lower insulin prices. In March, Lilly, Novo Nordisk, and Sanofi vowed to cut prices, with Lilly offering a vial at $25 per month; Novo Nordisk promising major reductions to bring the price of a particular generic vial to $48; and Sanofi also slashing prices, with one vial pegged at $64.
The governor’s office said it will cost the state $30 per vial to manufacture and distribute insulin and it will be sold at that price. Doing so, the administration argues, “will prevent the egregious cost-shifting that happens in traditional pharmaceutical price games.”
Drug pricing experts said generic production in California could further lower costs for insulin, and benefit people with high-deductible health insurance plans or no insurance.
“This is an extraordinary move in the pharmaceutical industry, not just for insulin but potentially for all kinds of drugs,” said Robin Feldman, a professor at the University of California College of the Law-San Francisco. “It’s a very difficult industry to disrupt, but California is poised to do just that.”
KHN correspondent Rachana Pradhan untangled Medicaid unwinding on PBS’ “PBS News Weekend” on March 11.
KHN senior editor Andy Miller discussed virtual visits on WUGA’s “The Georgia Health Report” on March 10.
KHN rural editor and correspondent Tony Leys discussed how Medicaid clawbacks drain patients’ estates after they die on NPR’s “Weekend Edition Sunday” on March 5.
To crack down on price gouging, proposed legislation in Missouri calls for allowing felony charges against health care staffing agencies that substantially raise their prices during a declared emergency.
A New York bill includes a cap on the amount staffing agencies can charge health care facilities. And a Texas measure would allow civil penalties against such agencies.
These proposed regulations — and others in at least 11 more states, according to the American Staffing Association industry trade group — come after demand for travel nurses, who work temporary assignments at different facilities, surged to unprecedented levels during the worst of the covid-19 pandemic.
Hospitals have long used temporary workers, who are often employed by third-party agencies, to help fill their staffing needs. But by December 2021, the average weekly travel nurse pay in the country had soared to $3,782, up from $1,896 in January 2020, according to a Becker’s Hospital Review analysis of data from hiring platform Vivian Health. That platform alone listed over 645,000 active travel nurse jobs in the final three months of 2022.
Some traveling intensive care unit nurses commanded $10,000 a week during the worst of the pandemic, prompting burned-out nurses across the country to leave their hospital staff jobs for more lucrative temporary assignments. Desperate hospitals that could afford it offered signing bonuses as high as $40,000 for nurses willing to make multiyear commitments to join their staff instead.
The escalating costs led hospitals and their allies around the country to rally against what they saw as price gouging by staffing agencies. In February 2021, the American Hospital Association urged the Federal Trade Commission to investigate “anticompetitive pricing” by agencies, and, a year later, hundreds of lawmakers urged the White House to do the same.
No substantial federal action has occurred, so states are trying to take the next step. But the resulting regulatory patchwork could pose a different challenge to hospitals in states with rate caps or other restrictive measures, according to Hannah Neprash, a University of Minnesota health care economics professor. Such facilities could find it difficult to hire travel nurses or could face a lower-quality hiring pool during a national crisis than those in neighboring states without such measures, she said.
For example, Massachusetts and Minnesota already had rate caps for temporary nurses before the pandemic but raised and even waived their caps for some staffing agencies during the crisis.
And any new restrictions may meet stiff resistance, as proposed rate caps did in Missouri last year.
As the covid omicron variant wave began to subside, Missouri legislators considered a proposal that would have set the maximum rate staffing agencies could charge at 150% of the average wage rate of the prior three years plus necessary taxes.
The Missouri Hospital Association, a trade group that represents 140 hospitals across the state, supported the bill as a crackdown on underhanded staffing firms, not on nurses being able to command higher wages, spokesperson Dave Dillon said.
“During the pandemic there were staffing companies who were making a lot of promises and not necessarily delivering,” Dillon said. “It created an opportunity for both profiteering and for bad actors to be able to play in that space.”
Nurses, though, decried what they called government overreach and argued the bill could make the state’s existing nursing shortage worse.
Theresa Newbanks, a nurse practitioner, asked legislators to imagine the government attempting to dictate how much a lawyer, electrician, or plumber could make in Missouri. “This would never be allowed,” she testified to the committee considering the bill. “Yet, this is exactly what is happening, right now, to nurses.”
Another of the nearly 30 people who testified against the bill was Michelle Hall, a longtime nurse and hospital nursing leader who started her own staffing agency in 2021, in part, she said, because she was tired of seeing her peers leave the industry over concerns about unsafe staffing ratios and low pay.
“I felt like I had to defend my nurses,” Hall later told KHN. Her nurses usually receive about 80% of the amount she charges, she said.
Typically about 75% of the price charged by a staffing agency to a health care facility goes to costs such as salary, payroll taxes, workers’ compensation programs, unemployment insurance, recruiting, training, certification, and credential verification, said Toby Malara, a vice president at the American Staffing Association trade group.
He said hospital executives have, “without understanding how a staffing firm works,” wrongly assumed price gouging has been occurring. In fact, he said many of his trade group’s members reported decreased profits during the pandemic because of the high compensation nurses were able to command.
While Missouri lawmakers did not pass the rate cap, they did make changes to the regulations governing staffing agencies, including requiring them to report the average amounts charged per health care worker for each personnel category and the average amount paid to those workers. Those reports will not be public, although the state will use them to prepare its own aggregate reports that don’t identify individual agencies. The public comment period on the proposed regulations was scheduled to begin March 15.
Hall was not concerned about the reporting requirements but said another of the changes might prompt her to close shop or move her business out of state: Agencies will be barred from collecting compensation when their employees get recruited to work for the facility where they temp.
“It doesn’t matter all the money that I have put out prior, to onboard and train that person,” Hall said.
Dillon called that complaint “pretty rich,” noting that agencies routinely recruit hospital staff members by offering higher pay. “Considering the premium agencies charge for staff, I find it hard to believe that this risk isn’t built into their business model,” he said.
Of course, as the pandemic has waned, the demand for travel nursing has subsided. But pay has yet to drop back to pre-pandemic levels. Average weekly travel nurse pay was $3,077 in January, down 20% year over year but still 62% higher in January 2020, according to reporting on Vivian Health data by Becker’s.
With the acute challenges of the pandemic behind hospitals, Dillon said, health system leaders are eyeing proactive solutions to meet their ongoing workforce challenges, such as raising pay and investing in the nursing workforce pipeline.
A hospital in South Carolina, for example, is offering day care for staffers’ children to help retain them. California lawmakers are considering a $25-per-hour minimum wage for health care workers. And some hospitals have even created their own staffing agencies to reduce their reliance on third-party agencies.
But the momentum to directly address high travel nurse rates hasn’t gone away, as evidenced by the legislative push in Missouri this year.
The latest proposal would apply to certain agencies if a “gross disparity” exists between the prices they charge during an emergency and what they charged prior to it or what other agencies are currently charging for similar services and if their earnings are at least 15% higher than before the emergency.
Malara said he doesn’t have much of a problem with this year’s bill because it gives agencies the ability to defend their practices and pricing.
Kentucky last year applied its existing price gouging rules to health care staffing agencies. The rules, which set criteria for acceptable prices, allow increases driven by higher labor costs. Malara said if the Missouri bill gains momentum he will point its sponsor to that language and ask her to clarify what constitutes a “gross disparity” in prices.
The sponsor of the bill, Missouri state Sen. Karla Eslinger, a Republican, did not respond to requests for comment on the legislation.
Hall said she is opposed to any rate caps but is ambivalent about Missouri’s new proposal. She said she saw agencies raising their prices from $70 an hour to over $300 while she worked as a hospital nursing leader at the height of the pandemic.
“All these agencies that were price gouging,” Hall said, “all they were doing was putting that money in their own pockets. They weren’t doing anything different or special for their nurses.”
The numbers that tell the story of medical debt in the U.S. are staggering: Around 100 million Americans have health care debt, and together they owe at least $140 billion. And research suggests this debt can have striking consequences on people’s financial, physical, and mental health.
In this episode of the “Tradeoffs” podcast, Dan Gorenstein talks about the pain and possible solutions to medical debt with KHN senior correspondent Noam N. Levey and UCLA researcher Wes Yin.
“About a third of people who have medical debt owe less than $1,000,” Levey said. “But a quarter of people owe, I think, more than $5,000. More than half say they’ve had to make a difficult sacrifice, like using up all their savings, moving in with friends and family, or losing their homes. So I don’t think it’s hyperbole to say that there’s a shocking amount of misery out there.”
SACRAMENTO, Calif. — Sacramento and Solano counties are in a standoff with the state over mental health coverage for a portion of Medicaid patients in those counties — a dispute that threatens to disrupt care for nearly 50,000 low-income residents receiving treatment for severe mental illness.
The Department of Health Care Services, which administers Medi-Cal, the state’s Medicaid program, says Sacramento and Solano counties must take over managing and providing specialty mental health care for thousands of Medi-Cal patients enrolled in Kaiser Permanente plans. It insists on shifting the responsibility because California’s remaining 56 counties already operate this way. State officials argue the switch would simplify the state’s disjointed mental health system and is needed to implement a larger transformation of Medi-Cal, an initiative known as CalAIM.
State health officials gave counties until March 15 to accept Kaiser Permanente patients, so California can properly transfer their specialty mental health care to counties by July 1. But the two counties are rebuffing the transfer, arguing that without more funding they can’t adequately care for a major influx of Medi-Cal patients with severe mental health conditions, such as schizophrenia or bipolar disorder. Medi-Cal officials, meanwhile, are threatening steep penalties or potentially terminating mental health contracts with those counties.
Local officials warn that if the state follows through with its plan, about 39,000 patients in Sacramento County and about 8,000 in Solano County could see their care disrupted and, for instance, may be forced to find a new psychiatrist.
“For someone who has schizophrenia or another serious mental health disorder, it has taken a long time to build a trusted relationship with their provider, and now they are going to see that care disrupted or have to find a different provider,” said Debbie Vaughn, assistant county administrator for Solano County. “There will be risks of people going into crisis.”
Ryan Quist, director of behavioral health services for Sacramento County, said the counties need not only more funding, but also more time to transfer the patients’ care. “The state is playing chicken with their lives,” he said.
Under state law, counties are responsible for administering and delivering specialty care to Medi-Cal patients with severe mental illness. Medi-Cal managed-care insurers are responsible for providing treatment for mild or moderate mental health conditions, such as anxiety or low-level depression.
But under a decades-old arrangement between the state and the counties of Sacramento and Solano, California has been paying Kaiser Permanente to provide all mental health care for the health care giant’s Medi-Cal enrollees. Now the state is dissolving that arrangement, forcing roughly 7,000 specialty mental health patients in those two counties to move out of Kaiser Permanente and into county-run mental health plans.
State officials argue that the two counties are legally obligated to provide care for Medi-Cal patients with severe mental illness and that county behavioral health agencies would be the ones putting patients in danger if the counties continue refusing the shift. Medi-Cal patients enrolled in health plans other than Kaiser Permanente get their specialized mental health care directly from counties.
“Sacramento and Solano counties’ failure to engage in this process places Medi-Cal members at risk of losing access to critical Medi-Cal entitlement services,” said Tony Cava, a spokesperson for the Department of Health Care Services. “DHCS will have no choice but to take action if the counties continue to refuse to fulfill their obligations.”
The state is considering sanctions or terminating the counties’ contracts, but Cava said that “contract termination is not DHCS’ preferred approach.” He declined to elaborate, adding only that the agency would “identify solutions to continue coverage” for Kaiser Permanente patients.
He said transferring patients to the counties will provide “a more consistent and seamless health system by reducing complexity and increasing flexibility.”
Counties currently receive a portion of state sales tax revenue and vehicle license fees to fund specialty mental health care, but under the agreement in Sacramento and Solano, the state has been paying Kaiser Permanente from its general fund to serve a portion of the insurer’s overall Medi-Cal enrollees’ mental health needs.
Under the shift, California would stop distributing general-fund money to the counties. Instead, counties would receive a greater share of existing sales tax and vehicle license fee revenues set aside by a 2011 arrangement. But Kaiser Permanente’s specialty mental health patients, the counties argue, were not under their purview at the time that agreement was reached, underscoring their legal argument that the state should cover the costs of their care.
The state is offering an additional $11.6 million a year to Sacramento and $7.7 million a year to Solano, which would draw down additional federal funding. That money would be siphoned from revenue other counties rely on for behavioral health treatment.
“The insult to injury is this takes money from other counties,” said Michelle Doty Cabrera, executive director of the County Behavioral Health Directors Association, “and across California we’re seeing a greater demand for services, especially after the pandemic.”
Sacramento County wants $36 million more each year to cover a 16% increase in patients, or 4,836 people. Solano County seeks nearly $17 million more each year for increasing its load by 50%, or 2,091 patients.
Behavioral health officials say counties are also struggling to recruit and retain mental health professionals willing to serve Medi-Cal patients.
“Our system is already bursting at the seams,” said Le Ondra Clark Harvey, CEO of the California Council of Community Behavioral Health Agencies, which represents local mental health providers.
State officials believe that both counties have an adequate number of mental health providers, with the small exception of Sacramento County’s need for two to three additional psychiatrists to serve kids.
Kaiser Permanente told KHN that it did not ask to move patients out of its network of care and that it told the state it wanted to continue serving them. Yet it ultimately agreed to transfer care to the counties.
“While we had expressed our preference to continue to provide specialty care to this vulnerable population,” said spokesperson Gerri Ginsburg, “we respect the state’s long-term objectives.”
