Tagged Insurers

Must-Reads Of The Week From Brianna Labuskes

Happy Friday, where we’re 20 days and so-and-so hours (depending on when you read this) into the partial federal shutdown. As of today, it’s tied as the second-longest one in U.S. history, matching the funding gap that stretched from December ’95-January ’96 under President Bill Clinton. (Side note: The history of U.S. shutdowns is a good read for us policy nerds.)

Although health care has been somewhat insulated from the standoff (because funding for the Department of Health and Human Services had already been approved), the battle is really a lesson in the power of a ripple effect. Among the health-related things that have been touched by the impasse in some way: the CVS-Aetna merger, domestic violence victims, food stampswildfire and storm disaster funding, pollution inspections, drug approvals and the Affordable Care Act lawsuit.

But a lot of focus this week was on how the shutdown is curtailing food safety inspections by the Food and Drug Administration, especially following a year that was marked by several high-profile foodborne illness outbreaks.

Politico: FDA Looks to Restart Safety Inspections for Risky Foods Amid Shutdown


This week, my pharma files in Morning Briefing were bursting at the seams, and to be honest, I don’t see that changing anytime soon. This is definitely going to be a year of drug-pricing news, especially because it’s one of the few bipartisan topics that Capitol Hill watchers say might gain traction in a divided Congress.

In recent days, that — along with the fact that drug prices are most certainly a winning election issue — was on stark display. Democratic hopefuls for 2020 are jostling at the starting line to be the one to get THE big, flashy pharma bill out, with Vermont Sen. Bernie Sanders (joined by fellow hopeful New Jersey Sen. Cory Booker and others) as the latest to announce a proposal.

Sanders’ bundle of bills includes allowing the importation of cheaper drugs from Canada, letting Medicare negotiate prices and stripping monopolies from drug companies if their prices exceed the average price in other wealthy countries.

One interesting thing to note (from Stat’s coverage) is that even potential candidates from states that have a heavy biopharma presence (like Massachusetts Sen. Elizabeth Warren and New Jersey’s Booker) are coming out swinging against the industry — a sure sign that being firmly against Big Pharma is seen as crucial to securing the Democratic nomination.

Stat: Democrats Eyeing 2020 Put an Early Spotlight on Drug Prices

The Hill: Sanders, Dems Unveil Sweeping Bills to Lower Drug Prices

The pharma action this week wasn’t limited to the Hill, because the movers and shakers in the industry were all thinking big thoughts at the annual J.P. Morgan Healthcare Conference. There, Johnson & Johnson CEO Alex Gorsky argued that drugmakers were going to have to step up their own self-policing when it comes to pricing or face “onerous” alternatives. Looking at the stories above, I’m thinking he’s not wrong.

The Wall Street Journal: Health-Care CEOs Outline Strategies at J.P. Morgan Conference

Meanwhile, health systems tired of shortages and high prices are flocking by the dozens to the fledgling nonprofit that was created by a group of hospitals to manufacture its own generic drugs.

Stat: Generic Drug Maker Formed by Hospitals Attracts a Dozen More Members

It was hard to pick just a few pharma stories this week, considering the abundance of choices, but one that you should absolutely make time to read is this insulin-rationing piece. Insulin has become the new face of public outrage against outrageous price increases, and this piece presents a good overview of how that came to be, as well as the human toll the hikes have taken. The gut-punch sentence: “Within a month of going off [his mother’s] policy, [Alec Raeshawn Smith] would be dead.”

The Washington Post: Insulin Is a Lifesaving Drug, But It Has Become Intolerably Expensive. and the Consequences Can Be Tragic.


In a largely symbolic move, House Democrats voted to intervene in the health care lawsuit — a strategy geared more toward putting Republicans on record voting against the law (and thus against popular provisions they promised in the midterms to protect) than anything else.

The Hill: Dems Hit GOP on Health Care With Additional ObamaCare Lawsuit Vote

The vote highlighted a problem the GOP faces as it eyes 2020: For the longest time, Republicans have fallen back on “repeal and replace” as their main health care message. Now, the party is going to have to come up with a “positive vision” if they want to regain ground with voters, experts say.

The Hill: GOP Seeks Health Care Reboot After 2018 Losses


States, states, states! Everyone says that’s where the health care movement will be in the next two years, which certainly held true this week.

In California, new Gov. Gavin Newsom revealed his big health care dreams that include reshaping how prescription drugs are paid for, taking steps toward a single-payer system, reinstating the individual mandate, expanding Medi-Cal coverage for immigrants in the country illegally, and creating a surgeon general position for the state.

Reuters: New California Governor Tackles Drug Prices in First Act

Sacramento Bee: Gavin Newsom CA Health Plan Includes Individual Mandate

Meanwhile, up in Washington state, Gov. Jay Inslee proposed a “public option” health care plan for residents, a move that would set the stage for a universal coverage system. (It should be noted that Inslee is a 2020 contender.)

Seattle Times: Inslee Proposes ‘Public Option’ Health-Insurance Plan for Washington

In New York, several big health care developments emerged this week. NYC Mayor Bill de Blasio plans on investing $100 million into making sure that everyone in the city — including residents in the United States illegally — is guaranteed health coverage.

The New York Times: De Blasio Unveils Health Care Plan for Undocumented and Low-Income New Yorkers

And in Albany, Gov. Andrew Cuomo, citing the looming threat to Roe v. Wade, promised to cement a woman’s right to abortion in the state’s constitution.

The Wall Street Journal: Cuomo Vows to Codify Roe V. Wade Decision Into New York Constitution


It seems these days, you can’t swing a cat without hitting someone talking about “Medicare-for-all,” but what about a Medicaid “buy-in”? Some states are considering the option as a politically palatable alternative to help people who are struggling to buy coverage on the exchanges. The plans might not offer the full range of benefits available to traditional beneficiaries, but it could be something.

Stateline: Medicaid ‘Buy-In’ Could Be a New Health Care Option for the Uninsured

Speaking of MFA: A new Politico/Harvard poll shows that 4 in 5 Democrats favor Congress enacting a taxpayer-funded national health plan. Also to note, a fair amount of Republicans (60 percent) supported the idea of letting Americans under 65 buy into Medicare.

Politico: POLITICO/Harvard Poll: Many Democrats Back a Taxpayer-Funded Health Care Plan Like Medicare For All


As of Jan. 1, hospitals have had to post their prices online — which has resulted in much grumbling from industry and experts alike who say the numbers are meaningless to consumers. Centers for Medicare & Medicaid Administrator Seema Verma acknowledged the flaws with the rules this week, but still called them an important first step toward transparency.

Modern Healthcare: Verma: Chargemaster Rule Is ‘First Step’ to Price Transparency


In the miscellaneous file for the week:

• The Chinese scientist who used CRISPR to edit the genes of human embryos had scientists up in arms over the ethical dilemma late last year. But the path of medical breakthroughs is often littered with lapses such as his. Do the ends ever justify the means in these cases? And if so, where should the line be drawn?

CNN: Unethical Experiments’ Painful Contributions to Today’s Medicine

• Juul: Public health crusader? That’s the image the e-cigarette company (under ever-increasing government scrutiny for its marketing practices directed toward youths) is going with these days. But experts are calling its new ad campaign — which touts Juul products as a way to tackle adults’ smoking habits — revisionist history.

The New York Times: Juul’s Convenient Smoke Screen

• A woman who was in a vegetative state for more than 10 years reportedly gave birth last month. The workers at the nursing facility she was in didn’t realize she was even pregnant until she went into labor, raising all kinds of questions about quality of care, abuse and the medical complications of the process.

CNN: How Does Someone in a Vegetative State Have a Baby?

• HIV prevention medication has been shown to be highly effective and, quite literally, a lifesaver to vulnerable populations. But taking it was costing some people their chance at qualifying for life insurance. Now, though, one insurer has settled a lawsuit over the denials, possibly leading the way to changes in the industry.

The New York Times: Facing Legal Action, Insurer Now Will Cover People Taking Truvada, an H.I.V.-Prevention Drug


And good news! The E. coli outbreak is officially over, so you can go back to your romaine (yay?). Have a great weekend!

After Bitter Closure, Rural Texas Hospital Defies The Norm And Reopens

Five months ago, the 6,500 residents of Crockett, Texas, witnessed a bit of a resurrection — at least in rural hospital terms.

A little more than a year after the local hospital shut its doors, the 25-bed facility reopened its emergency department, inpatient beds and some related services, albeit on a smaller scale.

Without a hospital, residents of Crockett, located 120 miles north of Houston, were 35 miles away along rural roads from the next closest hospital when a medical crisis struck, said Dr. Bob Grier, board president of the Houston County Hospital District, which is the county’s governmental authority that oversees Crockett, a public hospital. “Someone falls off the roof. A heart attack. A stroke. A diabetic coma. Start naming these rather serious things and health care is known for its golden hour,” he said.

The late-July reopening of the newly named Crockett Medical Center makes it a bit of a unicorn in a state that has led nationally in rural hospital closures. Since January 2010, 17 of the 94 shuttered hospitals have been in Texas, including two that closed in December, according to data from the University of North Carolina’s Cecil G. Sheps Center for Health Services Research.

But Crockett’s story also reflects some of the challenges faced by rural hospitals everywhere. Board members frequently have limited background in health care management and yet are responsible for making financial decisions. Add to that mix a Lone Star State resistance to raising local property taxes. An effort to increase the county’s 15 cents per $100 property valuation for the hospital district has been defeated twice since the hospital closed.

And a small rural hospital like Crockett’s has “no leverage” when negotiating reimbursement rates with insurers, Grier repeatedly points out.

The tough reality is that too many rural hospitals in Texas and elsewhere, when negotiating with insurers and other financial players, “are almost always negotiating from weakness and sometimes from literally leaning out over the edge of the [survival] cliff,” agreed Dr. Nancy Dickey, executive director of the A&M Rural and Community Health Institute at Texas A&M Health Science Center.

Rural communities must think more creatively about how to meet at least some of their health needs without a traditional hospital, whether it’s forming partnerships with nearby towns or expanding telemedicine, Dickey said. “There is little doubt in my mind that many of these communities are going to see their hospitals close,” she said, “and are not going to be able to make an economic case to reopen them.”

The A&M institute, which in December published a report looking at these challenges for three Texas communities, recently landed a $4 million, five-year federal grant to help rural hospitals nationwide keep their doors open or find other ways to maintain local health care.

Demographics And Decisions

The financial headwinds have been particularly fierce in Texas, one of 14 states that has not expanded Medicaid eligibility after the passage of the Affordable Care Act. “That makes a huge difference,” said John Henderson, chief executive officer of the Texas Organization of Rural & Community Hospitals, known in Texas rural circles as TORCH. “But that doesn’t change the reality that we aren’t going to do it.”

Leading up to the state’s biennial legislative session, which begins in January, rural leaders are making the case that state legislators need to take steps to bolster the state’s 161 rural hospitals, starting with rectifying underpayments for Medicaid patients. As the state’s program has transitioned to managed care, over time reimbursements have shrunk to the point that rural hospitals are losing as much as $60 million annually, according to TORCH officials, who cite state data.

They also support a congressional bill, HR 5678, that would make it easier for rural hospitals to close their inpatient beds but retain some services, such as an emergency room and primary care clinic. Under current federal regulations, facilities that make such a move are no longer considered a hospital and can’t be reimbursed by Medicare and Medicaid at hospital rates, which are often higher than payments to clinics or individual doctors. Those lower rates make it harder for stripped-down facilities to keep up their operations, said Don McBeath, TORCH’s director of government relations.

Crockett’s hospital, then called Timberlands Healthcare, abruptly shut down in summer 2017 after just a few weeks’ notice from its management company, Texas-based Little River Healthcare. Little River, which was also the subject of an analysis by Modern Healthcare that showed several of its hospitals engaged in unusually high laboratory billing for out-of-state patients, has since filed for bankruptcy. Two other rural hospitals affiliated with Little River closed their doors in December

As it struggled to stay open, Crockett’s hospital had been treating a population that was increasingly poor and aging, according to Texas A&M’s report. The researchers describe in the report — Crockett is “community 1” among three communities featured — that the hospital was overstaffed with more than 200 employees given its daily average census of three hospitalized patients. Also, they wrote, board members should have more closely questioned the management company. The board said they were given data at each meeting, “but that data did not suggest the imminent demise of the hospital,” the report’s authors wrote.

Fighting The Closure Tide

Leaders in Crockett tried to capture the interest of other hospital systems to reopen and manage the facility, without success, Grier said. Along with staffers losing their jobs, the community knew it would be more difficult to persuade people to relocate or retire to the area without a hospital nearby, he said.

Every weekday at noon for weeks on end, a small group of two to 20 people gathered beneath the hospital’s front portico to pray for some avenue to reopen, Grier said. Then, as the odds looked increasingly long, they got a call out of the blue from two Austin-based doctors. “I feel God was involved,” Grier said. “They have told us that they were looking for some kind of a larger investment.”

Those initial conversations resulted in a five-year lease arrangement between the hospital district and the management company, operating as Crockett Medical Center LLC.

The two physicians, Dr. Kelly Tjelmeland and Dr. Subir Chhikara, are listed on Crockett Medical Center’s website as chairman and president, respectively. They failed to respond to requests for comment about their plans for the hospital. But in a presentation to the board before the lease was signed, they said that one of their goals was to get the facility classified as a critical access hospital, which enables a higher reimbursement for Medicare patients.

Along with operating a primary care clinic and 24/7 emergency room, Crockett Medical Center staffs a handful of hospital beds for patients who need more limited medical treatment, such as heart monitoring or intravenous antibiotics, Grier said. But when the Crockett hospital reopened, it didn’t resume delivering babies. Only 66 of Texas rural hospitals still provide obstetrics services, according to McBeath.

Eliminating baby deliveries was one possibility on the table at another rural hospital if that hospital CEO hadn’t pulled off the sort of Texas miracle that Crockett has yet to achieve — persuading local voters to support a tax increase. Adam Willmann, CEO of 25-bed Goodall-Witcher Hospital Authority, northwest of Waco, said that he and others made the case in dozens of meetings that a hospital property tax was needed to support the financially struggling hospital.

In November, 58 percent of the county’s voters backed the new tax, despite the community’s political leanings. During that same election, 80 percent voted to re-elect Republican Sen. Ted Cruz.

“They want to be 5 minutes, 15 minutes from an ER and not 35 miles down the road,” Willmann said, referring to the nearest hospitals in Waco. “And they’re willing to pay a little more for it.”

Coverage Denied: Medicaid Patients Suffer As Layers Of Private Companies Profit

Marcela Villa isn’t a big name in health care — but she played a crucial role in the lives of thousands of Medicaid patients in California. Her official title: denial nurse.

Each week, dozens of requests for treatment landed on her desk after preliminary rejections. Her job, with the assistance of a part-time medical director, was to conclusively determine whether the care — from doctor visits to cancer treatment — should be covered under the nation’s health insurance program for low-income Americans.

She was drowning in requests, she said, and felt pressed to uphold most of the denials she saw. “If it was a high-dollar case, they tried to deny it,” Villa said. “I told them you can’t deny it just because it’s going to cost $20,000.”

Villa, 32, did not work for the government. She did not even work for an insurer under contract with the government. She worked for a company now called Agilon Health. Owned by a private equity firm, it’s among the legion of private subcontractors looking to profit from Medicaid patients.

California’s Medicaid program, known as Medi-Cal, has determined that the Long Beach company, which was paid to coordinate care for about 400,000 patients, improperly denied or delayed care for at least 1,400 of them, state officials confirmed. The state Department of Managed Health Care is investigating further.

The state findings, along with internal company documents and a whistleblower complaint obtained by Kaiser Health News, shine a light on the potential dangers of outsourcing care for poor people. Government oversight, not rigorous to begin with, fades as taxpayer money filters down through layers of companies eager to seize on Medicaid’s substantial growth under the Affordable Care Act. Medicaid officials say they have authority only over the health plans, not their subcontractors.

In an interview, Agilon chief executive Ron Kuerbitz acknowledged that some patients experienced modest delays in care but disputed that any suffered unjustified denials. He noted that an internal investigation by the company found no evidence of “systemic” denials and that most of the problems existed before Agilon took over another firm, Primary Provider Management Co., in 2016.

“We did the right thing when it was identified,” Kuerbitz said of the problems. “We disclosed it, we investigated it, and we pursued a remedial path.”

Such concerns are not isolated to one company. Last year, KHN reported on similar irregularities at SynerMed, a Medicaid subcontractor that coordinated care for about 650,000 patients in California.

In response to a whistleblower complaint, the state Medicaid program said it found “widespread deficiencies” at SynerMed that put patients “in imminent danger of not receiving medically necessary healthcare services.” The company’s staffers had falsified documents for years to cover up improper denials of care, according to state officials.

Then SynerMed abruptly shut down, and some of its patients moved to Agilon’s medical groups.

Skimping On Services?

Nearly three-quarters of the 73 million low-income Americans on Medicaid are now in managed care, in which states pay health insurers fixed monthly amounts for each enrollee to cover the range of services they need.

Under this system, keeping patients as healthy as possible is one way to make money. Another is to deny or skimp on services.

Increasingly, Medicaid plans outsource the work of managing patients’ health and medical treatment to subcontractors like Agilon — passing along a share of the government money coupled with the financial risk posed by a fixed budget.

These firms can be powerful gatekeepers. They run physician groups, bear responsibility for forming doctor networks and judge whether a request for care is necessary.

Agilon is a big player in California — doing business with insurers such as Molina Healthcare and Blue Shield of California — and it’s now expanding in other states like Texas and Ohio.

Primary Provider Management Co. ran several medical groups, including Vantage Medical Group with more than 5,000 physicians across Southern California. By building off PPMC’s base of Medicaid enrollees in California, the New York private equity firm that owns a majority stake in Agilon — Clayton, Dubilier & Rice — sought to coordinate care in Medicaid and Medicare Advantage plans across the country. (CD&R did not respond to interview requests.)

For several years, the problems at PPMC, and then Agilon, went undetected. Then, in early 2018, Agilon disclosed to the California Department of Managed Health Care its discovery that employees had been altering records prepared for auditors, which it said was not known to top management.

According to an internal report, completed in May and obtained by KHN, staffers had been falsifying documents since at least 2014 to pass audits by health plans. Employees were changing dates, for example, to cover up delays or withholding certain files so they couldn’t be reviewed.

That same month, an anonymous whistleblower sent a letter to health plans and government officials, urging them to investigate “illegal, unethical” conduct at the firm. “Senior management delays treatments for cancer patients without any regard of patient’s well-being, to save their dollars,” the whistleblower wrote in a two-page letter reviewed by KHN. “They brag about how profitable we are.”

In response to the allegations raised by the whistleblower and state, Agilon opened another internal investigation. That second report, finished in June, found inadequate staffing to handle the volume of work, various shortcuts and practices outside industry “norms” and improperly denied claims. Both internal reports were released to the state.

A top official Inland Empire Health Plan, one of the largest Medicaid insurers in the country, said the plan also looked into Agilon’s conduct and found instances in which its patients were harmed.

In an interview, Inland Empire CEO Bradley Gilbert said Agilon denied a patient’s transfusions for anemia, causing the person to be hospitalized. It also improperly denied cardiac rehabilitation to a patient recovering from a heart attack, he said. Inland Empire canceled its contract with Agilon’s Vantage Medical Group in August, he said.

A ‘Manager Told Me To Do It’

Agilon’s June report depicts an operation that was often stretched thin: Nurses were handling 120 to 200 requests for care per day, on average, with no full-time medical director to review the findings.

From 2014 until May, the company relied on a family physician who was working 10 to 12 hours a day running his own medical practice, according to the report.

Dr. Reuel Gaskins was busy seeing his own patients at the Hampton Medical Clinic in Riverside, Calif., where a red neon sign flashes “Open” in the front window. In an interview, Gaskins said he reviewed cases during breaks throughout the day and after normal work hours. He said he left Agilon in April.

Ultimately, Agilon’s internal investigation found that patient care may have been denied 439 times since 2014 without a physician’s review of the medical records — a potential violation of state law. Under California law, only a licensed physician or health care professional who is “competent to evaluate the specific clinical issues involved” can determine medical necessity.

Gaskins said he was not aware of allegations that medical decisions were made without his review until he was interviewed by Agilon’s lawyers.

“That’s inappropriate and unacceptable,” he said. “It really bothered me when I heard about it.”

The June report also found that Villa helped alter 20 files at the request of a supervisor in 2014 so her employer could pass an upcoming audit by an insurer.

A “manager told me to do it,” Villa said in an interview. “They were so adamant that everything look perfect for the auditors.”

A few days after the company’s lawyers made that discovery, Agilon sent Villa home on paid leave, the nurse said. She said that when she returned to work in August, she found she had been replaced as denial nurse, and shortly after that, she was fired.

Meanwhile, in recent months, Agilon has mended its relationships with some insurers and won new Medicaid contracts.

Consumer advocates worry that the concerns surrounding Agilon and SynerMed signal a much larger problem in the burgeoning Medicaid managed-care industry.

“These private entities get very little oversight,” said Linda Nguy, a policy advocate at the Western Center on Law & Poverty in Sacramento, “and there’s real harm being done to patients.”


This story was produced by Kaiser Health News, which publishes California Healthline, a service of the California Health Care Foundation.