Tagged Health Industry

Covid Testing Has Turned Into a Financial Windfall for Hospitals and Other Providers

Pamela Valfer needed multiple covid tests after repeatedly visiting the hospital last fall to see her mother, who was being treated for cancer. Beds there were filling with covid patients. Valfer heard the tests would be free.

So, she was surprised when the testing company billed her insurer $250 for each swab. She feared she might receive a bill herself. And that amount is toward the low end of what some hospitals and doctors have collected.

Hospitals are charging up to $650 for a simple, molecular covid test that costs $50 or less to run, according to Medicare claims analyzed for KHN by Hospital Pricing Specialists (HPS). Charges by large health systems range from $20 to $1,419 per test, a new national survey by KFF shows. And some free-standing emergency rooms are charging more than $1,000 per test.

Authorities were saying “get tested, no one’s going to be charged, and it turns out that’s not true,” said Valfer, a professor of visual arts who lives in Pasadena, California. “Now on the back end it’s being passed onto the consumer” through high charges to insurers, she said. The insurance company passes on its higher costs to consumers in higher premiums.

As the pandemic enters its second year, no procedure has been more frequent than tests for the virus causing it. Gargantuan volume — 400 million tests and counting, for one type — combined with loose rules on prices have made the service a bonanza for hospitals and clinics, new data shows.

Lab companies have been booking record profits by charging $100 per test. Even in-network prices negotiated and paid by insurance companies often run much more than that and, according to one measure, have been rising on average in recent months.

Insurers and other payers “have no bargaining power in this game” because there is no price cap in some situations, said Ge Bai, an associate professor at Johns Hopkins Bloomberg School of Public Health who has studied test economics. When charges run far beyond the cost of the tests “it’s predatory,” she said. “It’s price gouging.”

The data shows that covid tests continue to generate high charges from hospitals and clinics despite alarms raised by insurers, anecdotal reports of high prices and pushback from state regulators.

The listed charge for a basic PCR covid test at Cedars-Sinai Medical Center in Los Angeles is $480. NewYork-Presbyterian Hospital lists $440 as the gross charge as well as the cash price. Those amounts are far above the $159 national average for the diagnostic test, which predominated during the first year of the pandemic, at more than 3,000 hospitals checked by HPS.

That’s the amount billed to insurance companies, not what patients pay, Cedars spokesperson Cara Martinez said in an email.

“Patients themselves do not face any costs” for the tests, she said. “The amounts we charge [insurers] for medical care are set to cover our operating costs,” capital needs and other items, she said.

Likewise at NewYork-Presbyterian, charges not covered by insurance “are not passed along to patients,” the hospital said.

Many hospitals and labs follow the Medicare reimbursement rate, $100 for results within two days from high-volume tests. But there are outliers. Insurers oftentimes negotiate lower prices within their networks, although not for labs and testing options outside their purview.

Billing by hospitals and clinics from outside insurance company networks can be especially lucrative because the government requires insurers to pay their posted covid-test price with no limit. Regulation for out-of-network vaccine charges, by contrast, is stricter. Charges for vaccines must be “reasonable,” according to federal regulations, with relatively low Medicare prices as a possible guideline.

“There’s a problem with the federal law” on test prices, said Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University. “The CARES Act requires insurers to pay the full billed charge to the provider. Unless they’ve negotiated, their hands are tied.”

But even in-network payments can be highly profitable.

Optim Medical Center in Tattnall, Georgia, part of a chain of orthopedic practices and medical centers, collects $308 per covid test from two insurers, its price list shows. Yale New Haven Hospital collects $182 from one insurer and $173 from another.

Yale New Haven’s prices resulted from existing insurer agreements addressing unspecified new procedures such as the covid test, said Patrick McCabe, senior vice president of finance for Yale New Haven Health.

“We didn’t negotiate” specifically on covid tests, he said. “We’re not trying to take advantage of a crisis here.”

Officials from Optim Medical Center did not respond to queries from KHN.

Castlight Health, which provides benefits and health care guidance to more than 60 Fortune 500 companies, analyzed for KHN the costs of 1.1 million covid tests billed to insurers from March 2020 through this February. The analysis found an average charge of $90, with less than 1% of bills passing any cost along to the patient. Since last March, the average cost has gone up from $63 to as high as $97 per test in December before declining to $89 in February, the most recent results available.

In some cases, hospitals and clinics have supplemented revenue from covid tests with extra charges that go far beyond those for a simple swab.

Warren Goldstein was surprised when Austin Emergency Center, in Texas, charged him and his wife $494 upfront for two covid tests. He was shocked when the center billed insurance $1,978 for his test, which he expected would cost $100. His insurer paid $325 for “emergency services” for him, even though there was no emergency.

“It seemed like highway robbery,” said Goldstein, a New York professor who was visiting his daughter and grandchild in Texas at the time.

Austin Emergency Center has been the subject of previous reports of high covid-test prices.

The center provides “high-quality health care emergency services” and “our charges are set at the price that we believe reflects this quality of care,” said Heather Neale, AEC’s chief operating officer. The law requires the center to examine every patient “to determine whether or not an emergency medical condition exists,” she said.

Curative, the lab company that billed $250 for Valfer’s PCR tests, said through a spokesperson that its operating costs are higher than those of other providers and that consumers will never be billed for charges insurance doesn’t cover. Valfer’s insurer paid $125 for each test, claims documents show.

Even at relatively low prices, testing companies are reaping high profits. Covid PCR tests sold for $100 apiece helped Quest Diagnostics increase revenue by 49% in the first quarter of 2021 and quadruple its profits compared with the same period a year ago.

“We are expecting … to still do quite well in terms of reimbursement in the near term,” Quest CFO Mark Guinan said during a recent earnings call.

Hospitals and clinics do pay tens of thousands of dollars upfront when purchasing analyzer machines, plus costs for chemical reagents, swabs and other collection materials, maintenance, and training and compensating staff members. But the more tests completed, the more cost-effective they are, said Marlene Sautter, director of laboratory services at Premier Inc., a group purchasing organization that works with 4,000 U.S. hospitals and health systems.

A World Health Organization cost assessment of running 5,000 covid tests on Roche and Abbott analyzers — not including that initial equipment price, labor or shipping costs — came to $17 and $21 per test, respectively.

Unlike earlier in the pandemic, lab-based PCR tests no longer dominate the market. Cheaper, rapid options can now be purchased online or in stores. In mid-April, some CVS, Walmart and Walgreens stores began selling a two-pack of Abbott Laboratories’ BinaxNOW antigen test for $23.99.

Regulations require insurers to cover covid testing administered or referred by a health care provider at no cost to the patient. But exceptions are made for public health surveillance and work- or school-related testing.

Claire Lemcke, who works for a Flagstaff, Arizona, nonprofit, was tested at a mall in January and received a statement from an out-of-state lab company saying that the price was $737, that it was performed out-of-network and that she would be responsible for paying. She’s working with her insurer, which has already paid $400, to try to get it settled.

Sticker shock from covid tests has gotten bad enough that Medicare set up a hotline for insurance companies to report bad actors, and states across the country are taking action.

Free-standing emergency centers across Texas, like the one Goldstein visited, have charged particularly exorbitant prices, propelling the Texas Association of Health Plans to write a formal complaint in late January. The 19-page letter details how many of these operations violate state disclosure requirements, charge over $1,000 per covid test and add thousands more in facility fees associated with the visit.

These free-standing ERs are “among the worst offenders when it comes to price gouging, egregious billing, and providing unnecessary care and tests,” the letter says.

In December, the Kansas Insurance Department investigated a lab whose cash price was listed at nearly $1,000. State legislatures in both Minnesota and Connecticut have introduced bills to crack down on price gouging since the pandemic began.

“If these astronomical costs charged by unscrupulous providers are borne by the health plans and insurers without recompense, consumers will ultimately pay more for their health care as health insurance costs will rise,” Justin McFarland, Kansas Insurance Department’s general counsel, wrote in a Dec. 16 letter.

KHN’s ‘What the Health?’: Sharing Vaccines With the World

Can’t see the audio player? Click here to listen on SoundCloud.

The Biden administration — keeping a campaign promise — announced it would back a temporary waiver of patent protections for the covid-19 vaccines, arousing the ire of the drug industry.

The administration is also picking a fight with tobacco companies, as the Food and Drug Administration prepares to ban menthol flavorings in cigarettes and small cigars. Tobacco makers have long promoted menthol products to the African American community, and the action is controversial.

This week’s panelists are Julie Rovner of KHN, Alice Miranda Ollstein of Politico, Tami Luhby of CNN and Kimberly Leonard of Business Insider.

Among the takeaways from this week’s podcast:

  • It is unclear whether the Biden administration’s decision to support a patent waiver for covid vaccines foreshadows Democrats’ willingness to take on the powerful pharmaceutical industry. There is a school of thought that the patent issue is more about trade and intellectual property than it is about health care.
  • President Joe Biden has issued a new goal for vaccinations — getting at least one dose into the arms of 70% of adults by July 4. And the FDA is expected to grant emergency authorization to vaccinate teens age 12 and up in the coming days. But the vaccination effort is slowing down as most of those who want a shot have been vaccinated. Now the challenge is to reach people who are hesitant and those with access problems, either because of where they live or because it is difficult for them to find the time.
  • Even without a plan from the administration, Democrats on Capitol Hill say they plan to press ahead with legislation to reduce prescription drug prices. But the prospects remain cloudy. Democrats have only a slim majority in the House and no votes to spare in the Senate, so finding a compromise will not be easy, despite the popularity of the issue.
  • The FDA’s move to ban menthol flavoring for cigarettes has directly raised the issue of racial disparities in health care. On one hand, African Americans are far more likely to smoke menthol products than white or Hispanic populations, in part because the tobacco industry has strongly promoted menthol within Black communities. If people stopped smoking as a result, that would promote better health. But some people are worried about creating another legal hurdle that would give law enforcement a reason to harass people of color.

Plus, for extra credit, the panelists recommend their favorite health policy stories of the week they think you should read too:

Julie Rovner: KHN’s “The Vulnerable Homebound Are Left Behind on Vaccination,” by Jenny Gold

Tami Luhby: Stat’s “Biden’s Medicaid Pressure Tactics Could Put His Team at Odds With Hospitals,” by Rachel Cohrs

Alice Miranda Ollstein: The Washington Post’s “Many Police Officers Spurn Coronavirus Vaccines as Departments Hold Off on Mandates,” by Isaac Stanley-Becker

Kimberly Leonard: Business Insider’s “Big Insurers Like UnitedHealth, Humana, Cigna, and Anthem Are Moving Beyond Paying for Care. A New Report Reveals Just How Much Their DNA Has Changed,” by Shelby Livingston

To hear all our podcasts, click here.

And subscribe to What the Health? on iTunesStitcherGoogle PlaySpotify, or Pocket Casts.

A Primary Care Physician for Every American, Science Panel Urges

The federal government must aggressively bolster primary care and connect more Americans with a dedicated source of care, the National Academies of Sciences, Engineering and Medicine warn in a major report that sounds the alarm about an endangered foundation of the U.S. health system.

The urgently worded report, which comes as internists, family doctors and pediatricians nationwide struggle with the economic fallout of the coronavirus pandemic, calls for a broad recognition that primary care is a “common good” akin to public education.

The authors recommend that all Americans select a primary care provider or be assigned one, a landmark step that could reorient how care is delivered in the nation’s fragmented medical system.

And the report calls on major government health plans such as Medicare and Medicaid to shift money to primary care and away from the medical specialties that have long commanded the biggest fees in the U.S. system.

“High-quality primary care is the foundation of a robust health care system, and perhaps more importantly, it is the essential element for improving the health of the U.S. population,” the report concludes. “Yet, in large part because of chronic underinvestment, primary care in the United States is slowly dying.”

The report, which is advisory, does not guarantee federal action. But reports from the national academies have helped support major health initiatives over the years, such as curbing tobacco use among children and protecting patients from medical errors.

Strengthening primary care has long been seen as a critical public health need. And research dating back more than half a century shows that robust primary care systems save money, improve people’s health and even save lives.

“We know that better access to primary care leads to more timely identification of problems, better management of chronic disease and better coordination of care,” said Melinda Abrams, executive vice president of the Commonwealth Fund, a New York-based foundation that studies health systems around the world.

Recognizing the value of this kind of care, many nations — from wealthy democracies like the United Kingdom and the Netherlands to middle-income countries such as Costa Rica and Thailand — have deliberately constructed health systems around primary care.

And many have reaped significant rewards. Europeans with chronic illnesses such as diabetes, high blood pressure, cancer and depression reported significantly better health if they lived in a country with a robust primary care system, a group of researchers found.

For decades, experts here have called for this country to make a similar commitment.

But only about 5% of U.S. health care spending goes to primary care, versus an average of 14% in other wealthy nations, according to data collected by the Organization for Economic Co-operation and Development.

Other research shows that primary spending has declined in many U.S. states in recent years.

The situation grew even more dire as the pandemic forced thousands of primary care physicians — who didn’t receive the government largesse showered on major medical systems — to lay off staff members or even close their doors.

Reversing this slide will require new investment, the authors of the new report conclude. But, they argue, that should yield big dividends.

“If we increase the supply of primary care, more people and more communities will be healthier, and no other part of health care can make this claim,” said Dr. Robert Phillips, a family physician who co-chaired the committee that produced the report. Phillips also directs the Center for Professionalism and Value in Health Care at the American Board of Family Medicine.

The report urges new initiatives to build more health centers, especially in underserved areas that are frequently home to minority communities, and to expand primary care teams, including nurse practitioners, pharmacists and mental health specialists.

And it advocates new efforts to shift away from paying physicians for every patient visit, a system that critics have long argued doesn’t incentivize doctors to keep patients healthy.

Potentially most controversial, however, is the report’s recommendation that Medicare and Medicaid, as well as commercial insurers and employers that provide their workers with health benefits, ask their members to declare a primary care provider. Anyone who does not, the report notes, should be assigned a provider.

“Successfully implementing high-quality primary care means everyone should have access to the ‘sustained relationships’ primary care offers,” the report notes.

This idea of formally linking patients with a primary care office — often called empanelment — isn’t new. Kaiser Permanente, consistently among the nation’s best-performing health systems, has long made primary care central. (KHN is not affiliated with Kaiser Permanente.)

But the model, which was at the heart of managed-care health plans, suffered in the backlash against HMOs in the 1990s, when some health plans forced primary care providers to act as “gatekeepers” to keep patients away from costlier specialty care.

More recently, however, a growing number of experts and primary care advocates have shown that linking patients with a primary care provider need not limit access to care.

Indeed, a new generation of medical systems that rely on primary care to look after elderly Americans on Medicare with chronic medical conditions has demonstrated great success in keeping patients healthier and costs down. These “advanced primary care” systems include ChenMed, Iora Health and Oak Street Health.

“If you don’t have empanelment, you don’t really have continuity of care,” said Dr. Tom Bodenheimer, an internist who founded the Center for Excellence in Primary Care at the University of California-San Francisco and has called for stronger primary care systems for decades.

Bodenheimer added: “We know that continuity of care is linked to everything good: better preventive care, higher patient satisfaction, better chronic care and lower costs. It is really fundamental.”

Mental Health Services Wane as Insurers Appear to Skirt Parity Rules During Pandemic

Therapists and other behavioral health care providers cut hours, reduced staffs and turned away patients during the pandemic as more Americans experienced depression symptoms and drug overdoses, according to a new report from the Government Accountability Office.

The report on patient access to behavioral health care during the covid-19 crisis also casts doubt on whether insurers are abiding by federal law requiring parity in insurance coverage, which forbids health plans from passing along more of the bill for mental health care to patients than they would for medical or surgical care.

The GAO’s findings are “the tip of the iceberg” in how Americans with mental, emotional and substance use disorders are treated differently than those with physical conditions, said JoAnn Volk, a research professor at Georgetown University’s Center on Health Insurance Reforms who studies mental health coverage.

The GAO report, shared before publication exclusively with KHN, paints a picture of an already strained behavioral health system struggling after the pandemic struck to meet the treatment needs of millions of Americans with conditions like alcohol use disorder and post-traumatic stress disorder.

Up to 4 in 10 adults on average reported anxiety or depression symptoms during the pandemic, the report showed, compared with about 1 in 10 adults in early 2019.

During the first seven months of the pandemic, there were 36% more emergency room visits for drug overdoses, and 26% more visits for suicide attempts, compared with the same period in 2019.

As the need grew, already spotty access to treatment dwindled, the GAO found: A survey of members of the National Council for Behavioral Health, an organization that represents treatment providers, showed 27% reported they laid off employees during the pandemic; 35% reduced hours; and 45% said they closed programs.

Worker shortages have long been an obstacle to accessing behavioral health services, which experts attribute in large part to problems with how providers are paid. Last fall the federal government estimated that more than one-third of Americans live in an area without enough providers available.

Provider groups interviewed by GAO investigators acknowledged staff shortages and some delays in getting patients into treatment. They noted that the pandemic forced them to cut outpatient services and limit inpatient options. They also told the researchers that payment issues are a significant problem that predated the pandemic. In particular, the GAO said, most groups cited problems getting reimbursed by Medicaid more often than any other payer.

Sen. Ron Wyden (D-Ore.), who chairs the Senate Finance Committee, requested the report from GAO after hearing complaints that constituents’ insurance claims for behavioral health care were being denied.

In an interview, Wyden said he plans to embark on a “long-running project” as chairman to make care “easier to find, more affordable, with fewer people falling between the cracks.”

Spurred by how the pandemic has intensified the system’s existing problems, Wyden identified four “essential” targets for lawmakers: denied claims and other billing issues; the workforce shortage; racial inequality; and the effectiveness of existing federal law requiring coverage parity.

For Wyden, the issue is personal: The senator’s late brother had schizophrenia. “Part of this is making sure that vulnerable Americans know that somebody is on their side,” he said.

State and federal officials rely heavily on people’s complaints about delayed or denied insurance claims to alert them to potential violations of federal law. The report cited state officials who said they “routinely” uncover violations, yet they lack the data to understand how widespread the problems may be.

Congress passed legislation in December that requires that health plans provide government officials with internal analyses of their coverage for mental and physical health services upon request.

Part of the problem is that people often do not complain when their insurer refuses to pay for treatment, said Volk, who has been working with state officials on the issue. She advised that anyone who is denied a claim for behavioral care should appeal it to their insurer and report it to their state’s insurance or labor department.

Another obstacle: Shame and fear are often associated with being treated for a mental health disorder, as well as a belief among some patients that inequitable treatment is just the way the system works. “Something goes wrong, and they just expect that’s the way it’s supposed to be,” Volk said.

The GAO report noted other ways the pandemic limited access to care, including how public health guidelines encouraging physical distancing had forced some treatment facilities to cut the number of beds available.

On a positive note, the GAO also reported widespread approval for telehealth among stakeholders like state officials, providers and insurers, who told government investigators that the increased payments and use of virtual appointments had made it easier for patients to access care.

Two Unmatched-Doctor Advocacy Groups Are Tied to Anti-Immigrant Organizations

In their last year of medical school, fourth-year students get matched to a hospital where they will serve their residency.

The annual rite of passage is called the National Resident Matching Program. To the students, it’s simply the Match.

Except not every medical student is successful. While tens of thousands do land a residency slot every year, thousands others don’t.

Those “unmatched” students are usually left scrambling to figure out their next steps, since newly graduated doctors who don’t complete a residency program cannot receive their license to practice medicine.

At first glance, two new advocacy groups, Doctors Without Jobs and Unmatched and Unemployed Doctors of America, seem to be championing their cause, helping them find residency slots and lobbying Congress to create more medical residency positions. The groups also recently organized a protest in Washington, D.C., to draw attention to the scarcity of residencies.

But the organizations aren’t merely support groups. They are tied to Progressives for Immigration Reform, an organization that the Southern Poverty Law Center has designated as an anti-immigrant group. PFIR is financed by an anti-immigrant foundation and its executive director has been affiliated with a network of anti-immigrant groups.

The two doctor groups want U.S.-trained and U.S. citizen doctors to get top priority in the Match over foreign-educated doctors. While both Doctors Without Jobs and Unmatched and Unemployed Doctors of America do not say they are anti-immigrant, their websites include messaging that implies foreign doctors are taking residency spots away from U.S. doctors.

However, newly unmatched medical students searching for a source of support aren’t necessarily aware of the groups’ anti-immigrant affiliations.

Haley Canoles, a fourth-year medical student who didn’t match this year, was caught off guard when she learned of the organizations’ deeper agenda.

“I had no idea. I just recently joined Twitter and started following groups that I thought could help me network to find a residency position,” Canoles wrote in a private message on Twitter. “I absolutely do not stand for any anti-immigration agenda.”

As the percentage of unmatched U.S. medical students increases each year and the number of residency positions remains mostly static, more could be drawn to a support group such as Doctors Without Jobs.

According to 2021 data from the National Resident Matching Program, the percentage of medical school graduates who don’t match has increased. In 2021, 7.2% of students didn’t match into residency programs, up from 5.7% in 2017.

Meanwhile, the percentage of non-U.S. citizens who attended foreign medical schools who didn’t match has declined over the past five years to 45.2% in 2021, from 47.6% in 2017.

That makes advocates for international medical students worry that, if this trend continues, there could be increased resentment toward doctors educated abroad and xenophobic attitudes in the medical community.

“I obviously disagree with the idea that foreign medical graduates are taking spots from U.S. medical graduates,” said Dr. William Pinsky, president and chief executive officer of the Educational Commission for Foreign Medical Graduates, which certifies international medical graduates before they enter the U.S. graduate medical education system. “What residency directors primarily look for is who is the best qualified, and sometimes foreign medical graduates fit that bill.”

Kevin Lynn, executive director of PFIR, founded Doctors Without Jobs as an offshoot of the organization in 2018, after meeting an unmatched doctor outside a protest at the White House.

“I didn’t even know this was a problem, and then we started looking at the data and realizing that thousands of medical students weren’t getting into residency programs,” said Lynn. “At the same time, the number of foreign doctors who graduate from foreign medical schools and get taxpayer-funded residencies is increasing.”

PFIR endorses restricting immigration into the U.S., it says, to protect the American labor force and the environment. Its website also says it researches the “unintended consequences of mass migration.”

In a 2020 report, the SPLC found that Lynn had been closely involved with members of prominent Washington anti-immigration hate groups, including the Federation for American Immigration Reform (FAIR) and the Center for Immigration Studies (CIS). Both organizations push for reducing the number of immigrants in the U.S., are designated as hate groups by the SPLC and were founded by Dr. John Tanton, whom the SPLC has tied to white nationalists, racists and eugenicists.

And in July 2020, at the height of the covid pandemic, Lynn sent a letter to then-Senate Majority Leader Mitch McConnell asking him not to allow a bipartisan bill that would allocate unused green cards to foreign health care workers into the next covid stimulus bill, and instead prioritize unmatched U.S. doctors. That effort was publicized in Breitbart News, a right-wing publication that shares the anti-immigrant view. The bill died in the Senate.

The SPLC also reported that Joe Guzzardi, a writer for Doctors Without Jobs, has previously written more than 700 blog posts for a white nationalist hate website.

According to recent nonprofit filings, from 2015 to 2019 PFIR received almost $2 million in funding from the anti-immigrant Colcom Foundation, which also provides significant funds to FAIR and CIS. Neither Doctors Without Jobs nor Unmatched and Unemployed Doctors of America have made any public financial disclosures, though Doctors Without Jobs accepts donations.

The modus operandi of these types of nativist groups is to take any policy problem area and say the solution is to restrict or eliminate immigration into the U.S., said Eddie Bejarano, a research analyst at SPLC who wrote the 2020 report. Doctors not receiving residency spots is just the latest issue that the anti-immigration movement has seized on.

“They’re taking issues like this and saying that the solution is grounded in nativism, it’s not about reform,” said Bejarano. “It’s out of the textbook for nativists, if they can prey on the fears for normal Americans, such as here, where doctors are just wanting a fair shot at a job and blaming it on immigrants.”

Lynn’s rhetoric doesn’t contradict Bejarano’s observation. “I believe we should be prioritizing Americans,” Lynn said in an interview with KHN. “People say that is xenophobic, that is racist. These are attempts to quiet dissent. What I’m saying are uncomfortable truths.”

Unmatched and Unemployed Doctors of America has a less direct connection to the anti-immigrant groups. It claims it is solely volunteer-run, independent of Doctors Without Jobs and doesn’t receive any funding from the organization. But it does say on its website that it is affiliated with Doctors Without Jobs. The groups have worked together to organize a recent protest and feature each other on their respective websites and in promotional materials.

Leaders of Unmatched and Unemployed Doctors of America declined an interview but provided KHN with an emailed statement claiming nearly half its members are immigrants or are second-generation immigrants.

Doctors Without Jobs and Unmatched and Unemployed Doctors of America have increased their activity in the past couple of months. In January, members of the two groups traveled to Washington to protest outside the headquarters of the Association of American Medical Colleges, to bring attention to the issue of unmatched doctors. The AAMC runs the electronic system for submitting residency program applications.

The groups said they met with members of Congress to discuss reintroducing the Resident Physician Shortage Reduction Act, which would increase federally supported medical residency positions by 2,000 annually for seven years. The bill was introduced again in the House and Senate in March.

Doctors Without Jobs also recently released a video targeting the AAMC and saying that the organization is promoting a policy that “allows foreign medical students to take American students’ residencies.”

In an emailed statement, Karen Fisher, the AAMC’s chief public policy officer, said that any unnecessary restrictions on immigration would only accelerate and worsen the existing physician shortage and that foreign-trained doctors often fill critical gaps in the health care workforce.

“The nation’s teaching hospitals seek to recruit the most qualified candidates into their residency training programs,” said Fisher. “A blanket preference for U.S. applicants runs counter to this goal and would severely restrict the pool of highly qualified individuals and prevent U.S. patients from receiving the best possible care from a diverse and dedicated group of aspiring physicians.”

What a Difference a Year Makes in Colorado’s Case for a Public Option Plan

DENVER — Before the pandemic, Colorado looked set to become the second state to pass what’s known as a “public option” health insurance plan, which would have forced hospitals that lawmakers said were raking in obscene profits to accept lower payments. But when covid-19 struck, legislators hit pause.

Now, after a year of much public lionizing of doctors and other health professionals on the front lines of the covid fight, it’s a lot harder to make the case hospitals are fleecing patients.

“It is much more difficult now that we have this narrative of the health care heroes,” said Sarah McAfee, director of communications for the Center for Health Progress, a Denver-based health advocacy organization that pushed for the public option. “Part of this is separating the two: The people who are providing the health care are not the same as the corporations who are focused on the bottom line.”

Colorado legislators had tried to walk a tightrope, targeting their criticism toward the business side of the industry while continuing to praise front-line health workers and trying to get buy-in from all sides. But on Monday, Democratic legislators said they’d made a deal with the health industry to scrap the public option and instead mandate lower premiums for those buying coverage on the individual or small-group markets. The bill still must be approved.

Colorado’s compromise highlights the political tap dance likely to play out across the country as the pandemic changes the political discussion on health care costs. With states including Connecticut, Nevada and Oregon also considering public option plans this year, Colorado’s example may be a sign that major health care upheavals will be delayed for at least another year as hospitals, providers and insurers unite and push back together.

“Nationally, there’s little appetite to pursue policies that would potentially cut revenues for hospitals and other providers,” said Sabrina Corlette, research professor and co-director of the Center on Health Insurance Reforms at Georgetown University. “It’s very hard to do when the public sees these providers as true heroes.”

At the start of this year’s legislative session, Colorado Democrats had proposed giving the health industry four years to reduce health insurance premiums by 20%. Failure to meet that target would have triggered a state-designed public option plan in 2025 that would likely undercut the cost of private insurance plans. Proponents argued that as a nonprofit-run plan without the need for hefty spending for administration, marketing and profit, it could pass on significant savings to consumers. To lower premiums, insurers would have to pressure providers into taking lower payments for their services.

Instead, under the deal reached with the health industry this week, insurance plans would commit to reducing premiums by 18% over three years. If they fail to do so, insurers would have to justify their premiums and state officials would get some say over provider payment rates. Those rates would not dip below 165% of Medicare rates for hospitals, or 135% for other health providers. Hospitals had been pushing for a floor of 200% of Medicare, and physician groups are still negotiating with the bill sponsors to increase their minimum rates.

The state would design a standardized benefit plan that would limit the insurance companies’ ability to skimp on benefits or increase cost sharing to make up for the drop in premiums.

Democratic Rep. Dylan Roberts, the legislation’s lead sponsor, said the compromise would offer significant cost reductions for Coloradans, a benefit that was ultimately more important to him than how those savings were achieved.

“Health care access is the No. 1 thing I hear from my constituents,” Roberts said. “Do they care whether their health insurance product is coming from a public entity or a private insurance company? I don’t think they care as much about that as whether it’s affordable.”

But some disconnect may be occurring between what people say they want and the political will at the Statehouse to take on the unified health care industry. According to a November poll by Healthier Colorado, 66% of Coloradans supported the public option plan, including 78% of Blacks and 76% of Hispanics. That’s virtually unchanged from polling done before the pandemic and after a hefty advertising campaign against the legislation.

Kyle Piccola, spokesperson for the advocacy group, said polling in some of the more rural, conservative districts showed 57% to 66% support. About 40% of those identifying themselves as Republicans supported the bill as it was.

“This data point,” he said, “is really showing that everybody, regardless of who you are, is really feeling the high cost of care.”

Democrats have the votes to push just about any bill through the House and Senate on their own, and Democratic Gov. Jared Polis had supported a public option after campaigning on the issue. But Joe Hanel, spokesperson for the nonpartisan Colorado Health Institute that analyzes health policy, said the sponsors likely courted industry and Republican support to avoid having opponents undermine the effort for years to come, as happened on the federal level with the Affordable Care Act.

“It just really seems like they just want buy-in to make this be more durable, and not be a lightning rod, not have millions of dollars of ads out there against them for years, like they are right now,” Hanel said.

Industry groups had opposed last year’s bill and the initial proposal this session. National groups ran a campaign with TV ads and mailers warning consumers a public option would put hospitals out of business. With the compromise, Colorado hospital, insurance and other provider associations have withdrawn their opposition.

[embedded content]

Still, the new proposal passed its first test along a strict party-line vote in a House committee on Tuesday, as the pandemic loomed heavily over the debate. Republicans argued health care is dramatically different now than when a 2019 actuarial analysis suggested hospitals could easily absorb lower payment rates.

“And nothing has changed in the medical world since 2019?” Republican Rep. Hugh McKean asked the sponsors, tongue in cheek. “There hasn’t been any big stuff that we’re still in the middle of?”

Hospitals have also taken every opportunity to remind legislators of their role in battling the challenges of the past year.

“These are the very same hospitals who supported Colorado at every turn during the covid-19 pandemic. They were and continue to be there for their communities,” said Chris Tholen, president and CEO of the Colorado Hospital Association. “It is critical that we carefully implement this legislation and monitor it to be sure that hospitals can continue to be vital resources for their communities.”

An analysis done on behalf of the Colorado Business Group on Health found that Colorado hospitals averaged a 15.6% profit margin in 2018, beating out Utah and California for the highest margins in the country. While financial data for 2020 has not yet been released, Roberts said, many of the larger hospital systems did well amid the pandemic. They also benefited from millions in federal relief money. The bill would provide additional support for many of the smaller or rural hospitals that have struggled.

Those provisions were not enough to assuage Republicans.

“If we want to have good health care providers in Colorado, we can’t cut their funds while they are recovering from covid,” said Colorado GOP chairperson Kristi Burton Brown. “This bill completely disregards our health care workers and our health care facilities. At a time when we should be ensuring they can operate in Colorado, the Democrats are working to shut them down.”

Colorado has been aggressive on health care policy in recent years, pushing through measures aimed at reducing health care costs for its residents. Proponents of the public option bill have played up the example of the Peak Health Alliance, in which communities in seven counties in western Colorado negotiated price concessions from hospitals, lowering premiums by 20% to 40%.

Tamara Pogue, a Summit County commissioner and former CEO of the alliance, said she saw similarities between the bill’s approach and the Peak Health model. “It’s creating incentives for the industry and the communities to work together,” she said.

The Peak Health example helps to fend off criticisms that cutting costs would close hospitals and reduce access.

“We don’t even have to entertain hypotheticals,” Roberts said. “We have a real-world example there.”

Watch: What Happens When Car and Health Insurance Collide

“CBS This Morning,” in collaboration with KHN and NPR, tells the story of Mark Gottlieb, a marketing consultant in Little Ferry, New Jersey, who faced more than $700,000 in medical bills after surgery on his spine. Gottlieb was injured in a car accident, and, despite having the maximum amount of personal injury protection in his car insurance policy, his medical bills exceeded it. His health insurance could not help much, because his surgeon was out-of-network. In an interview with Anthony Mason of CBS, KHN Editor-in-Chief Dr. Elisabeth Rosenthal describes some of the pitfalls accident victims can try to avoid as they seek care.