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HHS Secretary Azar Statement on Agricultural Biotechnology Executive Order

HHS Gov News - June 12, 2019

HHS Secretary Alex Azar released the following statement upon President Trump’s signing of an executive order regarding the development of agricultural biotechnology:

“Today’s advances in biotechnology make possible the development of many promising, innovative food products, such as those obtained from genome-edited animals and plants. HHS aims to ensure the safety of these agricultural biotechnology products, as part of FDA’s public health mission, while also increasing regulatory transparency, coordination, and predictability for this emerging area. Enhancing public confidence in the regulatory system while also avoiding unnecessary barriers to biotechnology innovations is a priority for HHS and for the whole Trump Administration.

“Today, President Trump is affirming the importance of agricultural biotechnology innovation by signing an Executive Order to modernize the regulatory frameworks for these products to ensure that they are science-based, timely, efficient, and transparent. We look forward to implementing the Executive Order as part of a regulatory approach to agricultural biotechnology that enables safe innovation to benefit American consumers.”

Background

As part of fulfilling the Executive Order signed today, HHS will continue implementing the FDA’s Plant and Animal Biotechnology Innovation Action Plan released in October 2018. Consistent with the Executive Order, the plan is focused on clarifying FDA’s science-and-risk-based approach for product developers; avoiding unnecessary barriers to future innovation in plant and animal biotechnology; and ensuring the safety of these products to fulfill FDA’s public health mission.

Other ongoing efforts by FDA in this emerging space:

  • The FDA has implemented a Veterinary Innovation Program intended to facilitate advancements in development of innovative animal products by providing greater certainty in the regulatory process, which in turn encourages development and research, and supports an efficient and predictable pathway to approval.
  • The FDA’s Plant Biotechnology Consultation Program provides developers the opportunity to engage with the FDA to help navigate the regulatory process and, ultimately, bring safe, innovative plant-based food products to market. The program is part of overall efforts by FDA to enhance engagements with developers in this emerging area of innovation at home and abroad. 

Trump Administration Rule Would Undo Health Care Protections For LGBTQ Patients

A new Trump administration proposal would change the civil rights rules dictating whether providers must care for patients who are transgender or have had an abortion. Supporters of the approach say it protects the freedom of conscience, but opponents say it encourages discrimination.

The sweeping proposal has implications for all Americans, though, because the Department of Health and Human Services seeks to change how far civil rights protections extend and how those protections are enforced.

Roger Severino, the director of the HHS Office for Civil Rights, has been candid about his intentions to overturn an Obama-era rule that prohibited discrimination based on gender identity and termination of a pregnancy. In 2016, while at the conservative Heritage Foundation, he co-authored a paper arguing the restrictions threaten the independence of physicians to follow their religious or moral beliefs.

His office unveiled the proposed rule on May 24, when many people were focused on the start of the long Memorial Day holiday weekend.

The rule is the latest Trump administration proposal to strip protections for transgender Americans, coming the same week another directive was proposed by the Department of Housing and Urban Development that would allow homeless shelters to turn away people based on their gender identity.

The public was given 60 days to comment on the HHS proposal. Here’s a rundown of what you need to know about it.

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What would this proposal do?

Fundamentally, the proposed rule would overturn a previous rule that forbids health care providers who receive federal funding from discriminating against patients on the basis of their gender identity or whether they have terminated a pregnancy.

The Trump administration proposal would eliminate those protections, enabling providers to deny these groups care or insurance coverage without having to pay a fine or suffer other federal consequences.

That may mean refusing a transgender patient mental health care or gender-confirming surgery. But it may also mean denying patients care that has nothing to do with gender identity, such as a regular office visit for a bad cold or ongoing treatment for chronic conditions like diabetes.

“What it does, from a very practical point of view, is that it empowers bad actors to be bad actors,” Mara Keisling, executive director of the National Center for Transgender Equality, told reporters.

The proposal would also eliminate protections based on sexual orientation and gender identity from several other health care regulations, like non-discrimination guidelines for the health care insurance marketplaces.

Does it affect only LGBTQ people?

The proposal goes beyond removing protections for the LGBTQ community and those who have had an abortion.

It appears to weaken other protections, such as those based on race or age, by limiting who must abide by the rules. The Trump proposal would scrap the Obama-era rule’s broad definition of which providers can be punished by federal health officials for discrimination, a complicated change critics have said could ease requirements for insurance companies, for instance, as well as the agency itself.

And the proposal erases many of the enforcement procedures outlined in the earlier rule, including its explicit ban on intimidation or retaliation. It also delegates to Severino, as the office’s director, full enforcement authority when it comes to things like opening investigations into complaints lodged under the non-discrimination rule.

Why did HHS decide to change the rule?

The Obama and Trump administrations have different opinions about whether a health care provider should be able to refuse service to patients because they are transgender or have had an abortion.

It all goes back to a section in the Affordable Care Act barring discrimination on the basis of race, color, national origin, age, disability or sex. President Barack Obama’s health officials said it is discrimination to treat someone differently based on gender identity or stereotypes.

It was the first time Americans who are transgender were protected from discrimination in health care.

But President Donald Trump’s health officials said that definition of sex discrimination misinterprets civil rights laws, particularly a religious freedom law used to shield providers who object to performing certain procedures, such as abortions, or treating certain patients because they conflict with their religious convictions.

“When Congress prohibited sex discrimination, it did so according to the plain meaning of the term, and we are making our regulations conform,” Severino said in a statement. “The American people want vigorous protection of civil rights and faithfulness to the text of the laws passed by their representatives.”

Much of what the Office for Civil Rights has done under Severino’s leadership is to emphasize and strengthen so-called conscience protections for health care providers, many of which existed well before Trump was sworn in. Last year, Severino unveiled a Conscience and Religious Freedom Division, and his office recently finalized another rule detailing those protections and their enforcement.

The office also said the proposed rule would save about $3.6 billion over five years. Most of that would come from eliminating requirements for providers to post notices about discrimination, as well as other measures that cater to those with disabilities and limited English proficiency.

The rule would also save providers money that might instead be spent handling grievances from those no longer protected.

The office “considers this a benefit of the rule,” said Katie Keith, co-founder of Out2Enroll, an organization that helps the LGBTQ community obtain health insurance. “Organizations will have lower labor costs and lower litigation costs because they will no longer have to process grievances or defend against lawsuits brought by transgender people.”

Why does this matter?

Research shows the LGBTQ community faces greater health challenges and higher rates of illness than other groups, making access to equitable treatment in health care all the more important.

Discrimination, from the misuse of pronouns to denials of care, is “commonplace” for transgender patients, according to a 2011 report by advocacy groups. The report found that 28% of the 6,450 transgender and gender non-conforming people interviewed said they had experienced verbal harassment in a health care setting, while 19% said they had been refused care due to their gender identity.

The report said 28% had postponed seeking medical attention when they were sick or injured because of discrimination.

Critics fear the rule would muddy the waters, giving patients less clarity on what is and is not permissible and how to get help when they have been the victims of discrimination.

Jocelyn Samuels, the Obama administration official who oversaw the implementation of the Obama-era rule, said that for now, even though the Trump administration’s HHS will not pursue complaints against those providers, Americans still have the right to challenge this treatment in court. Multiple courts have said the prohibition on sex discrimination includes gender identity.

“The administration should be in the business of expanding access to health care and health coverage,” Samuels told reporters on a conference call after the rule’s release. “And my fear is that this rule does just the opposite.”

FDA Overlooked Red Flags In Drugmaker’s Testing of New Depression Medicine

Ketamine is a darling of combat medics and clubgoers, an anesthetic that can quiet your pain without suppressing breathing and a hallucinogenic that can get you high with little risk of a fatal overdose.

For some patients, it also has dwelled in the shadows of conventional medicine as a depression treatment — prescribed by their doctors, but not approved for that purpose by the federal agency responsible for determining which treatments are “safe and effective.”

That effectively changed in March, when the Food and Drug Administration approved a ketamine cousin called esketamine, taken as a nasal spray, for patients with intractable depression. With that, the esketamine nasal spray, under the brand name Spravato, was introduced as a miracle drug — announced in press releases, celebrated on the evening news and embraced by major health care providers like the Department of Veterans Affairs.

The problem, critics say, is that the drug’s manufacturer, Janssen, provided the FDA at best modest evidence it worked and then only in limited trials. It presented no information about the safety of Spravato for long-term use beyond 60 weeks. And three patients who received the drug died by suicide during clinical trials, compared with none in the control group, raising red flags Janssen and the FDA dismissed.

The FDA, under political pressure to rapidly greenlight drugs that treat life-threatening conditions, approved it anyway. And, though Spravato’s appearance on the market was greeted with public applause, some deep misgivings were expressed at its day-long review meeting and in the agency’s own briefing materials, according to public recordings, documents and interviews with participants, KHN found.

Dr. Jess Fiedorowicz, director of the Mood Disorders Center at the University of Iowa and a member of the FDA advisory committee that reviewed the drug, described its benefit as “almost certainly exaggerated” after hearing the evidence.

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Fiedorowicz said he expected at least a split decision by the committee. “And then it went strongly in favor, which surprised me,” he said in an interview.

Esketamine’s trajectory to approval shows — step by step — how drugmakers can take advantage of shortcuts in the FDA process with the agency’s blessing and maneuver through safety and efficacy reviews to bring a lucrative drug to market.

Step 1: In late 2013, Janssen got the FDA to designate esketamine a “breakthrough therapy” because it showed the potential to reverse depression rapidly — a holy grail for suicidal patients, such as those in an emergency room. That potential was based on a two-day study during which 30 patients were given esketamine intravenously.

“Breakthrough therapy” status puts drugs on a fast track to approval, with more frequent input from the FDA.

Step 2: But discussions between regulators and drug manufacturers can affect the amount and quality of evidence required by the agency. In the case of Spravato, they involved questions like, how many drugs must fail before a patient’s depression is considered intractable or “treatment-resistant”? And how many successful clinical trials are necessary for FDA approval?

Step 3: Any prior agreements can leave the FDA’s expert advisory committees hamstrung in reaching a verdict. Fiedorowicz abstained on Spravato because, though he considered Janssen’s study design flawed, the FDA had approved it.

The expert panel cleared the drug according to the evidence that the agency and Janssen had determined was sufficient. Dr. Matthew Rudorfer, an associate director at the National Institute of Mental Health, concluded that the “benefits outweighed the risks.” Explaining his “yes” vote, he said: “I think we’re all agreeing on the very important, and sometimes life-or-death, risk of inadequately treated depression that factored into my equation.”

But others who also voted “yes” were more explicit in their qualms. “I don’t think that we really understand what happens when you take this week after week for weeks and months and years,” said Steven Meisel, the system director of medication safety for Fairview Health Services based in Minneapolis.

A Nasal Spray Offers A Path To A Patent

Spravato is available only under supervision at a certified facility, like a doctor’s office, where patients must be monitored for at least two hours after taking the drug to watch for side effects like dizziness, detachment from reality and increased blood pressure, as well as to reduce the risk of abuse. Patients must take it with an oral antidepressant.

Despite those requirements, Janssen, part of Johnson & Johnson, defended its new offering. “Until the recent FDA approval of Spravato, health care providers haven’t had any new medication options,” Kristina Chang, a Janssen spokeswoman, wrote in an emailed statement.

Esketamine is the first new type of drug approved to treat severe depression in about three decades.

Although ketamine has been used off-label for years to treat depression and post-traumatic stress disorder, drugmakers saw little profit in doing the studies to prove to the FDA that it worked for that purpose. But a nasal spray of esketamine, which is derived from ketamine and (in some studies) more potent, could be patented as a new drug.

Although Spravato costs more than $4,700 for the first month of treatment (not including the cost of monitoring or the oral antidepressant), insurers are more likely to reimburse for Spravato than for ketamine, since the latter is not approved for depression.

Shortly before the committee began voting, a study participant identifying herself only as “Patient 20015525” said: “I am offering real-world proof of efficacy, and that is I am both alive and here today.”

The drug did not work “for the majority of people who took it,” Meisel, the medication safety expert, said in an interview. “But for a subset of those for whom it did work, it was dramatic.”

Concerns About Testing Precedents

Those considerations apparently helped outweigh several scientific red flags that committee members called out at the hearing.

Although the drug had gotten breakthrough status because of its potential for results within 24 hours, the trials were not persuasive enough for the FDA to label it “rapid-acting.”

The FDA typically requires that applicants provide at least two clinical trials demonstrating the drug’s efficacy, “each convincing on its own.” Janssen provided just one successful short-term, double-blind trial of esketamine. Two other trials it ran to test efficacy fell short.

To reach the two-trial threshold, the FDA broke its precedent for psychiatric drugs and allowed the company to count a trial conducted to study a different topic: relapse and remission trends. But, by definition, every patient in the trial had already taken and seen improvement from esketamine.

What’s more, that single positive efficacy trial showed just a 4-point improvement in depression symptoms compared with the placebo treatment on a 60-point scale some clinicians use to measure depression severity. Some committee members noted the trial wasn’t really blind since participants could recognize they were getting the drug from side effects like a temporary out-of-body sensation.

Finally, the FDA lowered the bar for “treatment-resistant depression.” Initially, for inclusion, trial participants would have had to have failed two classes of oral antidepressants.

Less than two years later, the FDA loosened that definition, saying a patient needed only to have taken two different pills, no matter the class.

Forty-nine of the 227 people who participated in Janssen’s only successful efficacy trial had failed just one class of oral antidepressants. “They weeded out the true treatment-resistant patients,” said Dr. Erick Turner, a former FDA reviewer who serves on the committee but did not attend the meeting.

Six participants died during the studies, three by suicide. Janssen and the FDA dismissed the deaths as unrelated to the drug, noting the low number and lack of a pattern among hundreds of participants. They also pointed out that suicidal behavior is associated with severe depression — even though those who had suicidal ideation with some intent to act in the previous six months, or a history of suicidal behavior in the previous year, were excluded from the studies.

In a recent commentary in the American Journal of Psychiatry, Dr. Alan Schatzberg, a Stanford University researcher who has studied ketamine, suggested there might be a link due to “a protracted withdrawal reaction, as has been reported with opioids,” since ketamine appears to interact with the brain’s opioid receptors.

Kim Witczak, the committee’s consumer representative, found Janssen’s conclusion about the suicides unsatisfying. “I just feel like it was kind of a quick brush-over,” Witczak said in an interview. She voted against the drug.

FAQ: How Does New Trump Fetal Tissue Policy Impact Medical Research?

The announcement this week that the federal government is changing its policy on the use of human fetal tissue in medical research is designed to please anti-abortion groups that have strongly supported President Donald Trump.

But it could jeopardize promising medical research and set back attempts to make inroads in devastating diseases such as HIV, Parkinson’s and diabetes, U.S. scientists said.

Under the new policy, employees at the National Institutes of Health (NIH) will no longer conduct research with human fetal tissue obtained from elective abortions, after using up any material they have on hand. Officials also immediately stopped funding a multiyear contract at the University of California-San Francisco using human fetal tissue in mice to research HIV therapies.

Federally funded projects at other research institutions using fetal tissue can continue until their grants expire. But renewal for these projects and future proposals will have to go through a newly established ethics review process to receive funding. It’s not clear yet what standards that process will entail or whether such experiments will be able to proceed under government sponsorship.

The change was enthusiastically welcomed by abortion opponents, who have long had fetal tissue research in their sights. Many scientists had a very different view.

Here are a few answers to questions about the issue.

Q: What exactly does fetal tissue research refer to?

Fetal tissue is any tissue or organ obtained from a fetus that was fertilized at least eight weeks earlier. (Anything younger than that is called an embryo.)

The statement from the Department of Health and Human Services referred repeatedly to “human fetal tissue from elective abortions.”

Researchers generally use fetal tissue from elective abortions rather than miscarriages because miscarriages often result from chromosomal or other developmental abnormalities that could make the tissue unsuitable for research.

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Q: What is fetal tissue research used for?

These cells are less specialized than adult tissue cells and can be grown readily, making them valuable in research. Fetal tissue has been used in many types of medical research, including the development of vaccines for polio, measles and other diseases, and therapies to treat Parkinson’s, diabetes, rheumatoid arthritis and to prevent the transmission of HIV.

Some researchers graft fetal tissue onto mice, creating “humanized mice” with human blood-forming and immune systems.

Fetal tissue helps researchers learn about birth defects and human tissue development. In recent years, it has been instrumental in understanding how the Zika virus crosses the placenta and affects the development of the human brain, according to a letter to HHS Secretary Alex Azar signed by 70 organizations in December in support of continued fetal tissue research.

Q: Are there rules about using fetal tissue? 

Strict federal rules govern the collection and use of human fetal tissue. It’s against the law for anyone to accept payment for human fetal tissue, except for reasonable amounts associated with acquisition, storage or other costs. There are also provisions that require women who are donating fetal tissue for research to provide informed consent and prohibit physicians from altering the timing or method of an abortion in order to obtain fetal tissue.

Q: Has it always been as controversial as it is today?

Not really. The level of controversy around fetal tissue research waxes and wanes. Human fetal tissue research has been done in the United States since the 1930s, and NIH has been funding this type of research since the 1950s. There was a ban on such funding, however, during part of the terms of Presidents Ronald Reagan and George H.W. Bush. Federal money was restored with bipartisan support in a 1993 bill for the NIH. Among the backers of that effort were some strong abortion opponents, such as Sen. Strom Thurmond (R-S.C.), who argued that the research could help people — like his daughter — with diabetes.

NIH spent $115 million on human fetal tissue research in 2018, a tiny fraction of the nearly $14 billion it spent on clinical research overall. NIH currently funds roughly 200 projects that use fetal tissue, according to HHS.

Fetal tissue once again became a hot-button issue in 2015 with the release of doctored videos, later discredited, purporting to show Planned Parenthood officials discussing tissue donation policies and reimbursement. Last fall, the Trump administration announced it was conducting a review of all research involving fetal tissue to ensure it was consistent with statutes and regulations governing it.

Q: Aren’t there effective alternatives?

It depends on whom you ask. Opponents of fetal tissue research point to a number of other possible options, including monkey or hamster cells for vaccines as well as blood collected after birth from umbilical cords that are rich in blood-forming stem cells. They also suggest the use of adult stem cells and “organoids” — artificially grown cells that somewhat mimic organs.

“Why do we keep focusing on these archaic models when newer, better alternatives are out there?” asked Tara Sander Lee, a senior fellow and director of life sciences at the Charlotte Lozier Institute, which opposes research using fetal tissue from elective abortion.

She suggested that using tissue from a miscarriage could be an acceptable alternative to using tissue from an aborted fetus because it’s from “a natural death, not an intentional killing of the child.”

The letter from researchers to Azar in December called the idea that other cells could replace fetal tissue “patently incorrect.”

“The study of human fetal tissue provides researchers with incomparable insights into how birth defects arise and how they can be prevented as well as an unparalleled window into the complexity of human tissue development,” the letter said.

Sally Temple, scientific director of the Neural Stem Cell Institute who is a past president of the International Society for Stem Cell Research, said that while these other types of cells hold promise, they aren’t ready for prime time.

“There’s a lot of excitement about using stem cells and talk about how we can use three-dimensional organoids,” said Temple. But organoids don’t have the same cellular arrangement or blood vessel network. “Organoids can’t mimic real tissue,” she said.

“If we’re going to understand how tissues are made in humans, you really have to have access to human tissue,” she added. “It makes you so nervous that scientists aren’t being heard.”

Why Some CEOs Figure ‘Medicare For All’ Is Good For Business

EASTON, Pa. — Walk into a big-box retailer such as Walmart or Michaels and you’re likely to see MCS Industries’ picture frames, decorative mirrors or kitschy wall décor.

Adjacent to a dairy farm a few miles west of downtown Easton, MCS is the nation’s largest maker of such household products. But MCS doesn’t actually make anything here anymore. It has moved its manufacturing operations to Mexico and China, with the last manufacturing jobs departing this city along the Delaware River in 2005. MCS now has about 175 U.S. employees and 600 people overseas.

“We were going to lose the business because we were no longer competitive,” CEO Richard Master explained. And one of the biggest impediments to keeping labor costs in line, he said, has been the increasing expense of health coverage in the United States.

Today, he’s at the vanguard of a small but growing group of business executives who are lining up to support a “Medicare for All” national health program. He argues not that health care is a human right, but that covering everyone with a government plan and decoupling health care coverage from the workplace would benefit entrepreneurship.

In February, Master stood with Rep. Pramila Jayapal (D-Wash.) outside the Capitol after she introduced her Medicare for All bill. “This bill removes an albatross from the neck of American business, puts more money in consumer products and will boost our economy,” he said.

As health costs continue to grow, straining employer budgets and slowing wage growth, others in the business community are beginning to take the option more seriously.

While the influential U.S. Chamber of Commerce and other large business lobbying groups strongly oppose increased government involvement in health care, the resolve of many in the business community — especially among smaller firms — may be shifting.

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“There is growing momentum among employers supporting single-payer,” said Dan Geiger, co-director of the Business Alliance for a Healthy California, which has sought to generate business support for a universal health care program in California. About 300 mostly small employers have signed on.

“Businesses are really angry about the system, and there is a lot of frustration with its rising costs and dysfunction,” he said.

Geiger acknowledged the effort still lacks support from any Fortune 500 company CEOs. He said large businesses are hesitant to get involved in this political debate and many don’t want to lose the ability to attract workers with generous health benefits. “There is also a lingering distrust of the government, and they think they can offer coverage better than the government,” he said.

In addition, some in the business community are hesitant to sign on to Medicare for All with many details missing, such as how much it would increase taxes, said Ellen Kelsay, chief strategy officer for the National Business Group on Health, a leading business group focused on health benefits.

Chris Santos uses a forklift to move products around the warehouse at MCS Industries.(William Thomas Cain for The Philadelphia Inquirer)

Democrats Propel the Debate

For decades, a government-run health plan was considered too radical an idea for serious consideration. But Medicare for All has been garnering more political support in recent months, especially after a progressive wave helped Democrats take control of the House this year. Several 2020 Democratic presidential candidates, including Sens. Bernie Sanders and Elizabeth Warren, strongly back it.

The labor unions and consumer groups that have long endorsed a single-payer health system hope that the embrace of it by employers such as Master marks another turning point for the movement.

Supporters of the concept say the health system overall would see savings from a coordinated effort to bring down prices and the elimination of many administrative costs or insurance company profits.

“It’s critical for our success to engage employers, particularly because our current system is hurting employers almost as much as it is patients,” said Melinda St. Louis, campaign director of Medicare for All at Public Citizen, a consumer-rights group based in Washington.

Master, a former Washington lawyer, worked on Democratic Sen. George McGovern’s presidential campaign before returning to Pennsylvania in 1973 to take over his father’s company, which made rigid paper boxes. In 1980, he founded MCS, which pioneered the popular front-loading picture frame and steamless fog-free mirrors for bathrooms. The company has grown into a $250 million corporation.

Master frequently travels to Washington and around the country to talk to business leaders as he seeks to build political support for a single-payer health system.

In the past four years, he has produced several documentary videos on the topic. In 2018, he formed the Business Initiative for Health Policy, a nonprofit group of business leaders, economists and health policy experts trying to explain the financial benefits of a single-payer system.

Dan Wolf, CEO of Cape Air, a Hyannis, Mass.-based regional airline that employs 800 people calls himself “a free market guy.” But he also supports Medicare for All. He said Master helps turn the political argument over single-payer into a practical one.

“It’s about good business sense and about caring for his employees and their well-being,” he said, adding that employers should no longer be straddled with the cost and complexity of health care.

“It makes no more sense for an airline to understand health policy for the bulk of its workers than for a health facility to have to supply all the air transportation for its employees,” he said.

Employers are also an important voice in the debate because 156 million Americans get employer-paid health care, making it by far the single-largest form of coverage.

Master said his company has tried various methods to control costs with little success, including high deductibles, narrow networks of providers and wellness plans that emphasize preventive medicine.

Insurers who are supposed to negotiate lower rates from hospitals and doctors have failed, he added, and too many premium dollars go to covering administrative costs. Only by having the federal government set rates can the United States control costs of drugs, hospitals and other health services, he said.

“Insurance companies are not watching the store and don’t have incentives to hold down costs in the current system,” he said.

Faith Wildrick is a shipper at MCS Industries. She says that even with insurance her family struggles with health costs.(William Thomas Cain for The Philadelphia Inquirer)

Glad The Boss Is Trying To Make A Difference

What’s left of MCS in Pennsylvania is a spacious corporate office building housing administrative staff, designers and a giant distribution center piled high with carton boxes from floor to ceiling.

MCS pays an average of $1,260 per month for each employee’s health care, up from $716 in 2009, the company said. In recent years, the company has reduced out-of-pocket costs for employees by covering most of their deductibles.

Medicare for All would require several new taxes to raise money, but Master said such a plan would mean savings for his company and employees.

MCS employees largely support Master’s attempt to fix the health system even if they are not all on board with a Medicare for All approach, according to interviews with several workers in Easton.

“I think it’s a good idea,” said Faith Wildrick, a shipper at MCS who has worked for the company 26 years. “If the other countries are doing it and it is working for them, why can’t it work for us?”

Wildrick said that even with insurance her family struggles with health costs as her husband, Bill, a former MCS employee, deals with liver disease and needs many diagnostic tests and prescription medications. Their annual deductible has swung from $4,000 several years ago to $500 this year as the company has worked to lower employees’ out-of-pocket costs.

“I’m really glad someone is fighting for this and trying to make a difference,” said Wildrick.

Jessica Ehrhardt, the human resources manager at MCS, said the effort to reduce employees’ out-of-pocket health costs means the company must pay higher health costs. That results in less money for salary increases and other benefits, she added.

Asked about Medicare for All, Ehrhardt said, “It’s a drastic solution, but something needs to happen.”

For too long, Master said, the push for a single-payer health system has been about ideology.

“The movement has been about making health care a human right and that we have a right to universal health care,” he said. “What I am saying is this is prudent for our economy and am trying to make the business and economic case.”

Legal Promise Of Equal Mental Health Treatment Often Falls Short

Amanda Bacon’s eating disorder was growing worse. She had lost 60% of her body weight and was consuming about 100 calories a day.

But that wasn’t sick enough for her Medicaid managed-care company to cover an inpatient treatment program. She was told in 2017 that she would have to weigh 10 pounds less — putting her at 5-foot-7 and 90 pounds — or be admitted to a psychiatric unit.

“I remember thinking, ‘I’m going to die,’” the Las Cruces, N.M., resident recalled recently.

Eventually, Bacon, now 35, switched to a plan that paid for treatment, although she said it was still tedious to get services approved.

Many patients like Bacon struggle to get insurance coverage for their mental health treatment, even though two federal laws were designed to bring parity between mental and physical health care coverage. Recent studies and a legal case suggest serious disparities remain.

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The 2008 Mental Health Parity and Addiction Equity Act required large group health plans that provide benefits for mental health to put that coverage on an equal footing with physical health. Two years later, the Affordable Care Act required small-group and individual health plans sold on the insurance marketplaces to cover mental health services and do that at levels comparable with medical services. (In 2016, parity rules were applied to Medicaid managed-care plans, which cover the majority of people in that federal-state health program for low-income residents.)

The laws have been partially successful. Insurers can no longer write policies that charge higher copays and deductibles for mental health care, nor can they set annual or lifetime limits on how much they will pay for it. But patient advocates say insurance companies still interpret mental health claims more stringently.

“Insurance companies can easily circumvent mental health parity mandates by imposing restrictive standards of medical necessity,” said Meiram Bendat, a lawyer leading a class-action lawsuit against a mental health subsidiary of UnitedHealthcare.

In a closely watched ruling, a federal court in March sided with Bendat and patients alleging the insurer was deliberately shortchanging mental health claims. Chief Magistrate Judge Joseph Spero of the U.S. District Court for the Northern District of California ruled that United Behavioral Health wrote its guidelines for treatment much more narrowly than common medical standards, covering only enough to stabilize patients “while ignoring the effective treatment of members’ underlying conditions.”

UnitedHealthcare works to “ensure our products meet the needs of our members and comply with state and federal law,” said spokeswoman Tracey Lempner.

Several studies, though, have found evidence of disparities in insurers’ decisions.

In February, researchers at the Congressional Budget Office reported that private insurance companies are paying 13% to 14% less for mental health care than Medicare does.

The insurance industry’s own data shows a growing gap between coverage of mental and physical care in hospitals and skilled nursing facilities. For the five years ending in 2017, out-of-pocket spending on inpatient mental health care grew nearly 13 times faster than all inpatient care, according to inpatient data reported in February by the Health Care Cost Institute, a research group funded by the insurance companies Aetna, Humana, UnitedHealthcare and Kaiser Permanente. (Kaiser Health News is not affiliated with Kaiser Permanente.)

And a 2017 report by the actuarial firm Milliman found that an office visit with a therapist is five times as likely to be out-of-network, and thus more expensive, than a primary care appointment.

Despite federal laws that require insurers to treat mental health issues on a par with physical health care, Amanda Bacon hit roadblocks when she was trying to get coverage for inpatient treatment for her eating disorders.(Courtesy of Amanda Bacon)

In this environment, only half of the nearly 8 million children who have been diagnosed with depression, anxiety or attention deficit hyperactivity disorder receive treatment, according to a February research letter in JAMA Pediatrics. Fewer than 1 in 5 people with substance use disorder are treated and, overall, nearly 6 in 10 people with mental illness get no treatment or medication.

Amanda Bacon, who is still receiving care for her eating disorder, remembers fearing that she wouldn’t get treatment. She was at one point rushed to an emergency room for care, but after several days she was sent home, no closer to getting well.

Today, because of her disability, Bacon’s primary insurance is through Medicare, which has paid for treatment that her earlier Medicaid provider, Molina Healthcare, refused. She has been treated in four inpatient programs in the past two years — twice through Presbyterian Centennial Care, a Medicaid plan she switched to after Molina, and twice though her current Medicare plan. Bacon is also enrolled in a state-run Medicaid plan.

Molina said it could not comment on Bacon’s case. “Molina complies with mental health parity laws,” said spokeswoman Danielle Smith, and it “applies industry-recognized medical necessity criteria in any medical determinations affecting mental health.”

The ‘Wrong Criteria’ 

Dr. Eric Plakun, CEO of the Austen Riggs Center, a psychiatric hospital and residential program in Massachusetts, said that often insurers are “using the wrong criteria” for what makes something medically necessary. They pay enough to stabilize a patient’s condition, he said, but not enough to improve their underlying illness. Plakun was one of the experts who testified in the case before Judge Spero in California.

Insurers say they recognize the importance of mental health care coverage and that they are complying with the law.

Cathryn Donaldson, a spokeswoman for the trade group America’s Health Insurance Plans, said that the industry supports parity but that it is also harder to prove when mental health treatment is needed.

Compared with medical and surgical care, the data and standards to measure mental health care “trail far behind.” She cited a 2016 study of Minnesota hospitals, where nearly one-fifth of the time patients spent in psychiatric units occurred after they were stabilized and ready to be discharged.

“Just like doctors use scientific evidence to determine the safest, most effective treatments,” insurers do the same to cover treatment “consistent with guidelines showing when and where it’s effective for patients,” Donaldson said.

Health plans commonly apply several controls for mental health care. The techniques are legal — unless they are applied more strictly for mental health care than medical care.

They often require patients to try cheaper options first, a strategy called “fail first.” Patients referred by their doctors to a residential program for opioid addiction, for example, might be denied by their insurers until they try, and fail, to improve at a less expensive part-time program.

Hiring doctors, nurses and pharmacists to review claims is another technique.

Dr. Frederick Villars, who reviews mental health claims for Aetna, remembers arguing with insurers to approve treatment when he was a practicing psychiatrist. His team decides what to cover based on clinical standards, he said, and providers upset about a coverage decision “are well aware of what these guidelines are.”

“It’s not a pleasant process,” he said, “but it’s the only tool that exists in this setting to try to keep costs under control.”

Payroll Tax Is One State’s Bold Solution To Help Seniors Age At Home

Nearly a decade after federal officials discarded a provision in the Affordable Care Act that would have provided Americans with long-term care insurance benefits, two states — Washington and Hawaii — are experimenting with taxpayer-funded plans to help older residents remain in their homes.

Washington state’s ambitious plan, signed into law in May, will employ a new 0.58% payroll tax (or “premium,” as policymakers prefer to call it) to fund a $36,500 benefit for individuals to pay for home health care, as well as other services — from installing grab bars in the shower to respite care for family caregivers.

Hawaii’s Kupuna Caregivers Program, which was initiated in 2017, is also publicly funded, but state budget allocations limit enrollment and benefits. It provides up to $210 a week for services when family caregivers work outside the home at least 30 hours a week.

Other state policymakers are closely watching both experiments because, as seniors account for a greater proportion of the American population, the need for long-term care will increase. Josephine Kalipeni, director of policy and partnerships for Caring Across Generations, a national group that advocates for long-term care policy improvements, said, “What’s most exciting for us and for the country is to have a working model we can learn from.”

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The need is great. The number of Americans 65 and older will double to 98 million by 2050, and studies show few have the financial resources to pay for care in old age. More than half of adults 65 and up will require long-term assistance at some point with everyday activities, for an average duration of about two years, according to a 2015 study by the Department of Health and Human Services. Finding a way to help people stay in their homes — and not move to nursing homes — can keep them happier and save them and the state money. Medicaid programs help cover the costs of 62% of nursing home residents.

Sixteen percent of Americans have private long-term care insurance, according to the American Association for Long-Term Care Insurance. But that is an expensive option, with premiums averaging as much as $3,000 a year in 2019.

Affordability and sustainability are the two main challenges to public long-term care insurance programs. The federal ACA originally included the long-term care provision — sponsored by Sen. Ted Kennedy (D-Mass.), who did not live to see it enacted — called the Community Living Assistance Services and Supports (CLASS) Plan. The voluntary program would have provided benefits of up to $50 a day for home assistance or to help with nursing home care for people who paid into the system. But critics said the program was unlikely to draw healthy people to help pay premiums, and the Obama administration in 2011 said it could not find a way to make it solvent. Congress later repealed the provision.

Initially, Washington state officials considered an alternative plan — shoring up the private long-term care insurance market — but determined that option was neither affordable nor likely to succeed.

Instead, they created a benefit system with a broad definition of covered services, from paying someone to build a wheelchair ramp to helping a caregiver learn how to deal with aggressive or violent patients. They could have shrunk this list to make the program less expensive, but Washington policymakers believed offering a wide menu of services would help keep people out of nursing homes.

The state will begin collecting the payroll tax in 2022, and starting in 2025 residents can collect benefits if they have paid into the system for at least three of the previous six years or five consecutive years within a decade. The details will be set over the next few years, but to qualify for a benefit of up to $100 a day, which will be adjusted for inflation, a person must show they need help with at least three activities of daily living.

The Long-Term Care Trust Act is expected to save $3.9 billion in state Medicaid costs by 2052.

Setting up a new state-run tax and benefit system is complicated. And figuring out how to determine who qualifies and how the money can be spent could take Washington state officials the next five years.

“The challenge is just the enormity of the insurance product itself,” said Bea Rector, director of the home and community services division of the Washington Department of Social and Health Services, one of four agencies involved in implementing the new program. State feasibility studies estimate the Long-Term Care Trust Act provisions will eclipse long-term care benefits paid through the state Medicaid program, which helps about 66,000 people at any time. The number expected to seek the new benefit is estimated at 15,000 in the first year of operation in 2025, growing to 97,000 by 2050.

Jason McGill, Gov. Jay Inslee’s senior health policy adviser, is not concerned about implementation. “We’ve been working on this for five years now,” he said, adding that the Trust Act is a modest benefit that will cover what most people need without breaking the state budget. “It’s not like we just cooked this up. This has been thoroughly thought through.”

Rector said the new state program for paid family leave, which also involves a payroll tax, has laid the groundwork for administering the new long-term care fee.

“We’ve got a long way to go before we start paying benefits,” said McGill, who believes the biggest challenge will be communicating with the public why they’re paying this new tax. Self-employed people can voluntarily join the new program and workers with private long-term care insurance can opt out; otherwise, all public and private employees will be assessed the new tax.

Other states are also grappling with long-term care.

Minnesota is considering allowing people to convert life insurance plans to long-term care insurance.

Last November, Maine voters rejected a ballot proposal to provide free long-term care to residents, funded by a 3.8% income tax on residents making more than $128,400 a year. Instead, the state government is educating people about the need to buy long-term care insurance, including an awareness campaign in high schools.

The California Aging and Disability Alliance, an advocacy group, is considering a ballot initiative for a state program to provide long-term services and support, but it is still researching how to pay for and run this program. Michigan and Illinois are also studying proposals.

New York lawmakers have debated a graduated income tax to pay for comprehensive long-term care for its citizens. The Assembly has passed such a bill repeatedly, but the state’s Senate has refused to approve it.

Social Security Error Jeopardizes Medicare Coverage For 250,000 Seniors

At least a quarter of a million Medicare beneficiaries may receive bills for as many as five months of premiums they thought they already paid.

But they shouldn’t toss the letter in the garbage. It’s not a scam or a mistake.

Because of what the Social Security Administration calls “a processing error” that occurred in January, it did not deduct premiums from some seniors’ Social Security checks and it didn’t pay the insurance plans, according to the agency’s “frequently asked questions” page on its website. The problem applies to private drug policies and Medicare Advantage plans that provide both medical and drug coverage and substitute for traditional government-run Medicare.

Some people will discover they must find the money to pay the plans. Others could get cancellation notices. Medicare officials say approximately 250,000 people are affected.

Medicare and Social Security said they expect proper deductions and payments to insurers will resume this month or next. Insurers are required to send bills directly to their members for the unpaid premiums, according to Medicare.

But neither agency would explain how the error occurred or provide a more exact number or the names of the plans that were shortchanged. The amount the plans are owed also wasn’t disclosed. A notice to beneficiaries on Medicare’s website lacks key details.

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Rep. Richard Neal (D-Mass.), who chairs the House Ways and Means Committee, and two colleagues wrote to both agencies about the problem on May 22 but have not received a response from Medicare. Social Security’s response referred most questions to Medicare officials.

Organizations that help seniors say they are getting some questions from Medicare beneficiaries. Two seniors in Louisiana lost drug coverage after their policies were canceled because of the SSA error, said the state’s Senior Health Insurance Information Program (SHIIP) director, Vicki Dufrene. One woman had had the same drug plan since 2013, and it dropped her at the end of April. She was without coverage for the entire month of May until earlier this week, when Dufrene was able to get her retroactively re-enrolled.

Dufrene said some people might not notice that their checks did not include a deduction for their Medicare Advantage or drug plan premiums. If their check was a little more than expected, they could have assumed that extra amount was the expected cost-of-living increase, among other things.

In Ohio, a Medicare Advantage plan reinstated a member due to unpaid premiums less than 48 hours after the state’s SHIIP got involved, said director Christina Reeg.

Medicare beneficiaries have had the option of paying their premiums through a deduction from their Social Security checks for more than a decade, she said. However, they can also charge payments directly to a credit card or checking account instead of relying on Social Security.

Humana spokesman Mark Mathis said about 33,000 members were affected — or fewer than 1% of its total Medicare membership. None of those members lost coverage. The company blamed Medicare’s nearly 15-year-old IT systems for the failure and urged the agency to invest in new equipment.

A UnitedHealthcare representative said none of its 32,000 Medicare Advantage or Part D members affected by the SSA problem lost coverage. The company has the highest Medicare enrollment in the U.S.

Aetna has not received payments for Medicare Advantage and drug plans for the months of February through May for 43,000 affected members, said spokesman Ethan Slavin. Customers will receive bills for the unpaid premiums and can set up payment plans if they can’t pay the entire amount.

These and other affected insurers must allow their members at least two months from the billing date to pay. And they must offer a payment plan for those who can’t pay several months of premiums at once, Medicare said. With both steps, “plans can avoid invoking their policy of disenrollment for failure to pay premiums while the member is adhering to the payment plan,” Jennifer Shapiro, the acting director for the Medicare Plan Payment Group, warned the companies in a May 22 memo.

Lindsey Copeland, federal policy director for the Medicare Rights Center, an advocacy group, said she is concerned that older adults will view the bill with suspicion.

“If you think your premiums are being paid automatically and then your plan tells you six months later that wasn’t the case,  you may be confused,” she said.

KHN’s ‘What The Health?’: Fetal Tissue Research Is Latest Flashpoint In Abortion Debate

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Julie Rovner

Kaiser Health News

@jrovner

Read Julie's Stories Joanne Kenen

Politico

@JoanneKenen

Read Joanne's Stories Margot Sanger-Katz

The New York Times

@sangerkatz

Read Margot's Stories Paige Winfield Cunningham

The Washington Post

@pw_cunningham

Read Paige's Stories

The Trump administration this week announced efforts to restrict research using fetal tissue from elective abortions. The new policy bars such research by government scientists and creates hurdles for outside scientists that get funding from the National Institutes of Health. The move displaces a policy passed with bipartisan support in Congress more than 25 years ago.

Meanwhile, on the campaign trail, former Vice President Joe Biden endured backlash from other Democratic candidates and women’s groups after he said he supports the continuation of the “Hyde Amendment,” which bans federal government funding of most abortions.

And the Trump administration’s policies on both trade and immigration could have a major impact on health issues, including the makeup of the nation’s health care workforce.

This week’s panelists are Julie Rovner from Kaiser Health News, Margot Sanger-Katz of The New York Times, Paige Winfield Cunningham of The Washington Post and Joanne Kenen of Politico.

Rovner also interviews Dan Weissmann, host of the podcast “An Arm and a Leg,” about why health care costs so much and what patients can do about it. KHN is co-producing the podcast’s new season.

Among the takeaways from this week’s podcast:

  • The Trump administration’s announcement Wednesday about federal cutbacks in fetal tissue research is short of a total ban, but scientists in the field say it is concerning because it could affect work on treatments or preventions for key diseases, such as HIV and Parkinson’s.
  • Biden’s announcement that he supports the Hyde Amendment may not be as problematic to his presidential candidacy as some people think. Although the left wing of the party is strongly opposed to abortion restrictions, many Democrats and independents have a more nuanced view.
  • Health issues often play a key role in international trade negotiations because many countries do not give drugmakers as generous patent protections as the U.S. does.
  • President Donald Trump’s effort to restrict immigration could have serious ripple effects on U.S. health care since foreign-born residents provide a large amount of home health care and services in rural areas.

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

Julie Rovner: Kaiser Health News’ “Your Wake-Up Call On Data-Collecting Smart Beds And Sleep Apps,” by Julie Appleby

Margot Sanger-Katz: The Washington Post’s “Pfizer Had Clues Its Blockbuster Drug Could Prevent Alzheimer’s. Why Didn’t It tell the World?” by Christopher Rowland

Joanne Kenen: The New York Times’ “Doctors Were Alarmed: ‘Would I Have My Children Have Surgery Here?” by Ellen Gabler

Paige Winfield Cunningham: The New York Times’ “Fighting the Gender Stereotypes That Warp Biomedical Research,” by JoAnna Klein

To hear all our podcasts, click here.

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

As Measles Cases Surpass 1,000, Secretary Azar Reinforces Commitment to Vaccination

HHS Gov News - June 06, 2019

On June 5, 2019, the Centers for Disease Control and Prevention (CDC) reported that the number of measles cases nationwide so far in 2019 was 1,001. Health and Human Services Secretary Alex Azar released the following statement:

“The Department of Health and Human Services has been deeply engaged in promoting the safety and effectiveness of vaccines, amid concerning signs that there are pockets of undervaccination around the country. The 1,000th case of a preventable disease like measles is a troubling reminder of how important that work is to the public health of the nation. The Centers for Disease Control and Prevention, alongside others across HHS, will continue our efforts to support local health departments and healthcare providers in responding to this situation, with the ultimate goal of stopping the outbreak and the spread of misinformation about vaccines, and increasing the public’s confidence in vaccines to help all Americans live healthier lives, safe from vaccine-preventable diseases.

“We cannot say this enough: Vaccines are a safe and highly effective public health tool that can prevent this disease and end the current outbreak. The measles vaccine is among the most-studied medical products we have and is given safely to millions of children and adults each year. Measles is an incredibly contagious and dangerous disease. I encourage all Americans to talk to your doctor about what vaccines are recommended to protect you, your family, and your community from measles and other vaccine-preventable diseases.”

In response to the current situation, CDC has:

  • Implemented an Incident Management Structure (IMS) within the National Center for Immunization and Respiratory Diseases to respond to the measles outbreaks.
  • Reinforced to healthcare providers the guidelines for recognition and prevention of measles.
  • Developed a toolkit with resources for physicians about measles and vaccines and has begun implementing a strategy to address vaccine hesitancy, including creating new resources and updating existing ones to counter misinformation.
  • Undertaken outreach to rabbinical, camp, and medical associations to help spread clear, consistent, and credible vaccine information through trusted sources.
  • Deployed a field team to Rockland County, NY, to provide technical assistance with case identification and contact tracing.
  • Continued to work with local communities to figure out how to develop culturally appropriate communications resources for affected areas in New York.
  • Since January 1, 2019, conducted 73 air contact investigations for measles and identified over 1,500 individuals who were exposed to the measles virus during travel.
  • Deployed an immunization program project officer to Albany.

In addition to regular, ongoing efforts supporting vaccination across the department, HHS leadership undertook a significant push during National Infant Immunization Week earlier in May, reaching tens of millions of Americans with messages about the safety and efficacy of vaccines, which will continue in the coming months.

For more information about who should get the measles vaccine, go here: https://www.vaccines.gov/diseases/measles

Statement from the Department of Health and Human Services

HHS Gov News - June 06, 2019

In September 2018, the Department of Health and Human Services (HHS) terminated a contract between Advanced Bioscience Resources, Inc. and the Food and Drug Administration that provided human fetal tissue from elective abortions to develop testing protocols. The Department was not sufficiently assured that contract included the appropriate protections applicable to fetal tissue research or met all other procurement requirements. As a result, HHS also initiated a comprehensive review of all HHS research involving human fetal tissue from elective abortions to ensure consistency with statutes and regulations governing such research, and to ensure the adequacy of procedures and oversight of this research in light of the serious regulatory, moral, and ethical considerations involved.

When the audit and review began, HHS had an existing contract with the University of California, San Francisco (UCSF) regarding research involving human fetal tissue from elective abortions. HHS has been extending the UCSF contract by means of 90-day extensions while conducting its audit and review. The current extension expires on June 5, 2019, and there will be no further extensions.

Promoting the dignity of human life from conception to natural death is one of the very top priorities of President Trump’s administration. The audit and review helped inform the policy process that led to the administration’s decision to let the contract with UCSF expire and to discontinue intramural research – research conducted within the National Institutes of Health (NIH) – involving the use of human fetal tissue from elective abortion. Intramural research that requires new acquisition of fetal tissue from elective abortions will not be conducted.

No current extramural research projects (research conducted outside NIH, e.g., at universities, that are funded by NIH grants) will be affected during their currently approved project period. For new extramural research grant applications or current research projects in the competitive renewal process (generally every five years) that propose to use fetal tissue from elective abortions and that are recommended for potential funding through NIH’s two-level external scientific review process, an ethics advisory board will be convened to review the research proposal and recommend whether, in light of the ethical considerations, NIH should fund the research project—pursuant to a law passed by Congress.

HHS will also undertake changes to its regulations and NIH grants policy to adopt or strengthen safeguards and program integrity requirements applicable to extramural research involving human fetal tissue.

Finally, HHS is continuing to review whether adequate alternatives exist to the use of human fetal tissue from elective abortions in HHS-funded research and will ensure that efforts to develop such alternatives are funded and accelerated. In December 2018, NIH announced a $20 million funding opportunity for research to develop, demonstrate, and validate experimental models that do not rely on human fetal tissue from elective abortions. HHS is committed to providing additional funding to support the development and validation of alternative models.

Illinois Clamps Down On Nursing Homes In Wake Of KHN-Chicago Tribune Investigation

In reaction to an investigation by Kaiser Health News and the Chicago Tribune, the Illinois legislature has passed a new law to impose fines on nursing homes that fail to meet minimum staffing requirements. Click here to read the story by the Chicago Tribune.

Read the original investigation:

Fatal Shock

Dropped From Health Insurance Without Warning: Was It Legal?

Special Reports

An Arm and a Leg

May 23

Health care — and how much it costs — is scary. But you’re not alone with this stuff, and knowledge is power. “An Arm and a Leg” is a podcast about these issues, and its second season is co-produced by KHN.

Caitlin and Corey Gaffer know they made a mistake.

Anyone could have done the same thing, the Minneapolis couple says. Still, they can’t believe it cost them their health insurance coverage just as Caitlin was in the middle of pregnancy with their first child.

“I was like ‘What?’ There’s no way that’s possible,” said Caitlin, 31, of her reaction to the letter she opened in early October telling them the coverage they had for nearly two years had been canceled. It cited nonpayment of their premium as the reason.

Except they had paid the bill, they thought.

The Gaffers’ snafu — and their marathon battle to correct the error with insurer HealthPartners — is featured in the podcast “An Arm and a Leg,” which launches its second season this week and is co-produced by Kaiser Health News.

Like the Gaffers, tens of thousands of Americans each year — exact counts aren’t available — are dropped by their insurers over payment issues, sometimes with little or no prior warning from their insurers.

The question is: Can insurers cancel people with little or no notice? The answer is yes … and no. Like so many issues in American health care, it is surprisingly complicated.

This is one problem the Affordable Care Act was designed to fix. Certainly, safeguards were put in place. Insurers can’t cancel people when they fall ill, for example. But the protections for being dropped for a missed payment are uneven. Consumers who get an ACA subsidy have more protection than those who don’t.

The Gaffers didn’t qualify for a subsidy. So they were subject to state law. Minnesota’s law requires insurers to provide at least 30 days’ notice before canceling, said Scott Smith, spokesman for the state Department of Health, which regulates HMOs. However, an administrative rule seems to undercut that requirement.

The Gaffers didn’t get a notice, they say. Their efforts to correct their error were stymied until Dan Weissmann, creator and host of “An Arm and A Leg,” started making inquiries about their case.

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Misfired Payments

The problem for the Gaffers started in early September. They changed checking accounts and had to set up all new online payments. When they made their monthly $730 health insurance premium payment, they mistakenly sent it to a hospital owned by HealthPartners rather than the health plan itself. The hospital didn’t let the health plan know it had a payment from the Gaffers. Compounding the problem, the couple sent their October payment a couple of weeks later to the correct place but had insufficient funds to cover the amount.

The Gaffers got a letter from HealthPartners dated Oct. 8 canceling coverage back to mid-September. Caitlin was six months pregnant.

“It was a busy time in our life,” said Corey, 32, who runs an architectural photography studio. “We made these two little mistakes, but were never given any notice that we were making mistakes until after the fact.”

Why didn’t the hospital and health plan communicate about the misdirected payment? After all, they are part of the same system and that could have avoided the problem altogether.

HealthPartners spokeswoman Rebecca Johnson said its hospitals are supposed to notify the health plan if they receive premium payments in error, but said that “even though we have this process, we are not always notified of this or not notified in a timely fashion.”

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As far as a past-due notice to the Gaffers, Johnson said HealthPartners’ policy at the time was to include information on monthly statements about outstanding balances.

That, however, is different from getting a warning that “you will be canceled as of this date,” said JoAnn Volk, a research professor at the Georgetown University Center on Health Insurance Reforms.

Still, the Gaffers’ story does have a happy ending — including an apology and some new notification practices by HealthPartners — but not before they racked up lots of stress and nearly $30,000 in medical bills incurred while Caitlin was uninsured briefly during her complicated pregnancy.

Same Insurance, Different Rules

The ACA bars insurers from retroactively canceling policies if consumers fall ill or discover they are pregnant —things that could have occurred in most states before the federal law passed.

But it does allow allows cancellations for two reasons: false information on an application or failure to pay premiums.

Those who qualify for a tax credit — because they earn less than 400% of the federal poverty level, or roughly $50,000 for an individual — get a 90-day grace period after missing a payment. Also, the law requires insurers to notify those policyholders that they have fallen behind and face cancellation. If payment is made in full before the end of the 90-day grace period, they are reinstated. If not, they’re canceled and medical costs incurred in the second and third months of the grace period fall on the consumer.

This policy keeps federal subsidy dollars flowing to insurers during the grace period, even if a consumer has a financial wobble.

It’s different for people like the Gaffers, however, who make too much for a subsidy. They are subject to state laws and can be dropped much more abruptly.

Most states have a 30-day grace period to make a payment after the premium is due, said Tara Straw, a senior policy analyst at the Center on Budget and Policy Priorities. But how much prior notice insurers must give before canceling — if any — varies by state.

“In most states, plans would balk at also having to send a notice of delinquent premium,” said Straw. “But notice is important for consumers so they can correct the situation and make the payment, especially in a case like this where they made an honest mistake.”

It’s a policy that harks back to a time before the ACA when individual consumers could be dropped for almost any reason. It isn’t clear why the Gaffers received no notice.

Spokeswoman Johnson, when asked about the state requirement, wrote: “Members are notified of any outstanding balance on their monthly premium statements. They have a 30-day grace period.”

HealthPartners told the state’s insurance exchange as part of an inquiry into the Gaffer’s case, that “as far as past-due notices go, we do not send letters for members that do not have [a subsidy],” an appeals document shows.

Following the attention on the Gaffer’s plight, HealthPartners has a new policy, rolled out in March and April for customers who don’t get subsidies: Those who fall behind will get a late notice around the 15th of the month, said spokeswoman Johnson.

That might have helped the Gaffers, but it is still far less time than the 90-day window the insurer must give by law to anyone who bought the same insurance plan but got a subsidy.

An Apology

As for the Gaffers, who scrambled for months trying to get coverage and went uninsured for a while, there’s good news.

First, they got new coverage from a different insurer before they welcomed baby Maggie, born without a hitch and healthy in late January.

Months later, after fielding questions from “An Arm and a Leg,” HealthPartners called the Gaffers: It wanted to reinstate them — and cover the outstanding medical bills racked up during their time uninsured.

“We’ve apologized to the family, reinstated their coverage and view this situation as an opportunity where we can do better,” spokeswoman Johnson said in an email.

The Gaffers have learned a lot in the process.

“Being an advocate for yourself is such a huge thing,” said Corey.

He’s glad HealthPartners has now said it will send warnings to consumers who fall behind on payments.

Oh, and just to be sure, the couple’s premiums are now on “auto pay” and “we have like eight calendar reminders set up,” Caitlin said. “Today it popped up three times: ‘Make sure insurance is paid.’”

California Gov. Newsom Proposes Penalty To Fund Health Insurance Subsidies

Claire Haas and her husband are at a health insurance crossroads.

If they were single, each would qualify for a federal tax credit to help reduce the cost of their health insurance premiums. As a married couple, they get zip.

“We talk about getting divorced every time we get our health care bills,” said Haas, 34, of Oakland, Calif. She has been married to her husband, Andrew Snyder, 33, for two years.

“We kind of feel like we messed up. We shouldn’t have gotten married.”

The couple pays about $900 in monthly premiums — which adds up to about 14% of their annual income, said Haas, a self-employed leadership coach and consultant. Snyder is an adjunct professor of ethnomusicology.

Under a proposal by Gov. Gavin Newsom, an estimated 850,000 Californians could get help paying their premiums, including people like Haas and Snyder, who together make too much to qualify for federal financial aid but still have trouble affording coverage.

To pay for the health insurance tax credits, the Democratic governor is proposing a tax penalty on Californians who don’t have health insurance — similar to the unpopular federal penalty the Republican-controlled Congress eliminated, effective this year.

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If Newsom’s $295 million plan is enacted, California would be the first state to offer financial aid to middle-class families who have shouldered the full cost of premiums themselves, often well over $1,000 a month.

“This is a gap in the Affordable Care Act, but there’s been no action at the federal level,” said Matthew Fiedler, a fellow with the USC-Brookings Schaeffer Initiative for Health Policy.

Democrats in Congress introduced legislation this year to expand the federal subsidy to more people, but those efforts have stalled in the past in the face of Republican opposition.

In California, legislators are debating Newsom’s penalty and tax credit proposals as part of budget negotiations, which must be wrapped up by June 15. Democrats control the legislature, but Republicans and taxpayer groups are opposed to the proposed penalty, saying people should have a choice about whether to buy insurance.

“It’s a very costly and regressive tax on young people who can’t afford it,” said David Wolfe, legislative director of the Howard Jarvis Taxpayers Association. “They likely aren’t going to get sick, and they want to take that chance.”

Three other states — Massachusetts, New Jersey and Vermont — and the District of Columbia already have adopted state health insurance requirements. Health experts say these mandates encourage young, healthy people to buy coverage alongside older, sicker — and more expensive — enrollees.

If lawmakers approve a state tax penalty, modeled after the now-defunct ACA mandate, some Californians could owe thousands of dollars if they fail to buy insurance.

“Without the mandate, everybody’s premiums go up,” Newsom said at an event in Sacramento in early May. “Every single person in this state will experience an increase in their costs if we don’t have a diversified risk pool.”

Massachusetts and Vermont provide state financial aid to low-income people who qualify for federal aid under the ACA, according to the USC-Brookings Schaeffer Initiative for Health Policy. Newsom wants to go a step further and give financial help to middle-income earners — which could include families of four earning up to about $154,500.

Under his proposal, 75% of the financial aid would go to about 190,000 of these middle-income people who make between 400% and 600% of the federal poverty level. That’s between about $50,000 and $75,000 a year for an individual and between about $103,000 and $154,500 for a family of four.

Claire Haas and Andrew Snyder of Oakland would qualify for federal financial aid to help pay for their health insurance premiums if they were single, but as a married couple, they don’t receive any assistance. “We talk about getting divorced every time we get our health care bills,” Haas said. (Courtesy of Claire Haas)

The average household tax credit in this category would be $144 per month, according to Covered California.

The remaining money would go toward tax credits for about 660,000 people who earn between 200% and 400% of the federal poverty level, or roughly between $25,000 and $50,000 for an individual and $51,500 and $103,000 for a family of four. The average household tax credit in this category would be $13 a month, Covered California estimated.

Exactly how much Californians could receive would vary depending on where they live, their ages, incomes and family size, said Peter Lee, Covered California’s executive director.

For example, a couple, both 62, living in the San Francisco Bay Area making $72,000 a year doesn’t qualify for federal tax credits. They now pay a $2,414 monthly premium — or about 40% of their income.

That couple could qualify for a $1,613 state tax credit under Newsom’s proposal, lowering the cost of health insurance to about 13% of their income, according to a Covered California analysis.

By comparison, the ACA defines an affordable employer-sponsored health plan as one that costs about 9.5% or less of an employee’s household income.

California’s high premium costs are among the biggest concerns middle-income customers raise with Kevin Knauss, an insurance agent in the Sacramento region.

“I have clients, especially those who are self-employed, who have literally discussed the possibility of not working for two or three months or stepping back from projects” so they can earn less and qualify for federal tax credits, Knauss said.

Other insurance agents said they’ve met middle-income families who are willing to forgo insurance for one family member — often the breadwinner — to bring down costs.

Alma Beltran, a small-business owner in Chula Vista, Calif., doesn’t have health insurance, and neither do her husband and 17-year-old daughter.

Beltran knows it’s a risk but said the premiums this year were simply unaffordable: $1,260 a month for a plan with a whopping $13,000 deductible.

“I decided to let my business grow at the expense of my health insurance,” said Beltran, 53, who manufactures labels for the beer and wine industry. “This is the first year ever that I haven’t had health insurance.”

Such stories are why some lawmakers think Newsom’s proposal doesn’t go far enough. For instance, some households wouldn’t qualify for a state tax credit until they spent a quarter of their income on premiums.

“We’re still talking about a substantial portion of someone’s income,” said state Sen. Richard Pan (D-Sacramento). “I appreciate the governor’s leadership, but I think that we do need to more.”

The state Senate wants the governor to double the funding to about $600 million, not only by relying on the penalty revenue but by dipping into the state general fund. California is projected to have a $21.5 billion budget surplus for budget year 2019-20.

While Newsom said he supports giving consumers larger subsidies, he said his plan is fiscally responsible because it has a dedicated revenue source from the proposed health insurance penalty.

“Perfect’s not on the menu, but better than any other state in America is,” Newsom said.

This KHN story first published on California Healthline, a service of the California Health Care Foundation.

HHS Secretary Azar Statement on Personnel Promotion and Departure

HHS Gov News - June 03, 2019

The Department of Health and Human Services announced today that HHS Secretary Azar’s Chief of Staff, Peter Urbanowicz, will be leaving the department in June, with Deputy Chief of Staff Brian Harrison promoted to the Chief of Staff position.

Secretary Alex Azar released the following statement regarding Mr. Urbanowicz’s service and Mr. Harrison’s promotion:

“Earlier this year, Peter advised me of his intention to return to his home in Texas this summer. Peter has been a key leader in HHS’s success over the past year and a half, and has played a vital role in our work to lower prescription drug prices, advance value-based care, and improve rural healthcare access. As Chief of Staff, he built a highly engaged team, governed by a disciplined management culture, which laid out an ambitious strategic vision and executed on its goals. He has inculcated a strategic mindset and a culture of professional development among the agency’s leaders, and emphasized high standards of integrity for all employees. Peter’s service to the department and the American people is deeply appreciated, and he will be greatly missed.

“I have known Peter and Brian for a combined time of more than 30 years, and we could not have accomplished what we have without the strong team they formed. In his role as Deputy Chief of Staff, Brian has demonstrated remarkable leadership and managerial talents, and I am proud to promote him to a new role where he will continue to lead.”

Mr. Urbanowicz issued the following statement:

“It has been a great honor to work for Secretary Azar and President Trump and serve the American people. The entire HHS team has made important progress on our shared goals, including improving the quality and affordability of healthcare and tackling pressing public health challenges. I am lucky to have had two wonderful tours at HHS and I am proud to have had the privilege to work alongside the thousands of HHS employees who demonstrate daily their devotion to the health and well-being of all Americans. I will always cherish the time I have spent here.”

Mr. Harrison issued the following statement:

“It is a privilege to continue the important work that has begun, and build upon the successes that have been achieved, at HHS over the past year and a half. The entire team will miss Peter’s leadership, and I personally will miss his friendship. I am humbled by Secretary Azar’s confidence in me and look forward to diligently serving the President, Secretary, and department in this new role. It has been and will be an honor to help lead the men and women of our department in advancing the mission of HHS and delivering results for the American people.” 

Watch: A Status Update On Efforts To Address Surprise Medical Bills

KHN correspondent Rachel Bluth appeared on PBS Newshour Weekend to talk with host Megan Thompson about the continuing problem of surprise medical bills and how the issue is currently playing on Capitol Hill. Rachel’s interview begins around the 10 min. 55 second mark.

For more information about medical bills, check out KHN’s Bill of the Month series.

Robin Hood To Rescue Of Rural Hospitals? New Math Promised On Medicare Payments

As rural hospital closures roil the country, some states are banking on a Trump administration proposal to change the way hospital payments are calculated to rescue them.

The goal of the proposal, unveiled by Centers for Medicare & Medicaid Services Administrator Seema Verma last month, is to bump up Medicare’s reimbursements to rural hospitals, some of which receive the lowest rates in the nation.

For example, Alabama’s hospitals — most of which are rural — stand to gain an additional $43 million from Medicare next year if the federal agency makes this adjustment.

“We’re hopeful,” said Danne Howard, executive vice president and chief policy officer of the Alabama Hospital Association. “It’s as much about the rural hospitals as rural communities being able to survive.”

The proposed tweak, as wonky as it is, comes with considerable controversy.

By law, any proposed changes in the calculation of Medicare payments must be budget-neutral; in other words, the federal government can’t spend more money than previously allocated. That would mean any change would have a Robin Hood-like effect: increasing payments to some hospitals and decreasing them to others.

“There is a real political tension,” said Mark Holmes, director of the University of North Carolina’s Cecil G. Sheps Center for Health Services Research. Changing the factors in Medicare’s calculations that help hospitals in rural communities generally would mean that urban hospitals get less money.

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The federal proposal targets a long-standing and contentious regulation known in Washington simply as the “wage index.” The index, created in the 1980s as a way to ensure federal Medicare reimbursements were equitable for hospitals nationwide, attempts to adjust for local market prices, said Allen Dobson, president of the consulting firm Dobson, DaVanzo & Associates.

That means under the current index a rural community hospital could receive a Medicare payment of about $4,000 to treat someone with pneumonia compared with an urban hospital receiving nearly $6,000 for the same case, according to CMS.

“The idea was to give urban a bit more and rural areas a bit less because their labor costs are a bit less,” said Dobson, who was the research director for Medicare in the 1980s when the index was created. “There’s probably no exact true way to do it. I think everybody agrees if you are in a high-wage area you ought to get paid more for your higher wages.”

For decades, hospitals have questioned the fairness of that adjustment.

Rural hospitals nationwide have a median wage index that is consistently lower than that of urban hospitals, according to a recent brief by the Sheps Center. The gap is most acute in the South, where 14 of the 20 states account for the lowest median wage indices.

Last year, the Department of Health and Human Services Office of Inspector General found that the index may not accurately reflect local labor prices and, therefore, Medicare payments to some hospitals “may not be appropriately” adjusted for local labor prices. More plainly, in some cases, the payments are too low.

In an emailed statement to KHN, Verma said the current wage index system “has partly contributed to disparities in reimbursement across the country.”

CMS’ current proposal would increase Medicare payments to the mostly rural hospitals in the lowest 25th percentile and decrease the payments to those in the highest 75th percentile. The agency is also proposing a 5% cap on any hospital’s decrease in the final wage index in 2020 compared with 2019. This would effectively limit the loss in payments some would experience.

Dobson, a former Medicare research director, said he expects “enormous resistance.” (The CMS proposal is open for public comment until June 24.)

HHS Secretary Alex Azar, foreshadowing how difficult a change could be, said during a May 10 Senate budget hearing that the wage index is “one of the more vexing issues in Medicare.” It’s problematic, agreed Tom Nickels, an AHA executive vice president, noting in an emailed statement that there are other ways “to provide needed relief to low-wage areas without penalizing high-wage areas.”

It’s this split that appears to be dictating the range of reactions.

The Massachusetts Health & Hospital Association’s Michael Sroczynski, who oversees its government lobbying, questioned in an emailed statement whether the wage index is the correct mechanism for providing relief to struggling hospitals. The state’s hospitals have historically been at the higher end of the wage index.

In contrast, Tennessee Hospital Association CEO Craig Becker applauded the proposed change and said the Trump administration is recognizing the “longstanding unfairness” of the index. Tennessee has been among the hardest hit with hospital closures, counting 10 since 2012.

In Alabama, where four rural hospitals have closed since 2012, Howard said that without the change she “could see a dozen or more of our hospitals not being able to survive the next year.” Indeed, Howard said, hospitals in more than 20 states could gain Medicare dollars if the proposal passes and “only a small number actually get hurt.”

Kaiser Health News asked the Missouri Hospital Association, in a state where most hospitals do not stand to gain or lose significantly from the rule change, to calculate the exact differences in hospital payments under the current wage index formula. Under the complex formula, a hospital in Santa Cruz, Calif., an area at the top end of the range, received a Medicare payment rate of $10,951.30 — or 70% more — for treating a concussion with major complications in 2010, compared with a rural Alabama hospital, at the bottom end, which received $6,441.76 to provide the same care.

Even more, MHA’s data analysis showed that the lower payments to Alabama hospitals have compounded over time. In 2019, Medicare increased its pay to the hospitals in the Santa Cruz-Watsonville area for the same concussion care. It now stands at $13,503.37 — a nearly 23% increase above the 2010 payment. In contrast, rural Alabama hospitals recorded a 3% payment increase,  to $6,646.80, for the same care.

For Alabama, addressing the calculation disparity could be “the lifeline that we’ve been praying for,” Howard said.

Churches Wipe Out Millions In Medical Debt For Others

The leaders of Pathway Church on the outskirts of Wichita, Kan., had no clue that the $22,000 they already had on hand for Easter would have such impact.

The nondenominational suburban congregation of about 3,800 had set out only to help people nearby pay off some medical debt, recalled Larry Wren, Pathway’s executive pastor. After all, the core membership at Pathway’s three sites consists of middle-income families with school-age kids, not high-dollar philanthropists.

But then they learned that, like a modern-day loaves-and-fishes story, that smaller amount could wipe out $2.2 million in debt not only for the Wichita area but all available debt for every Kansan facing imminent insolvency because of medical expenses they couldn’t afford to pay — 1,600 people in all.

As Wren thought about the message of Easter, things clicked. “Being able to do this provides an opportunity to illustrate what it means to have a debt paid that they could never pay themselves,” he said. “It just was a great fit.”

Churches in Maryland, Illinois, Virginia, Texas and elsewhere have been reaching the same conclusion. RIP Medical Debt, a nonprofit organization based in Rye, N.Y., that arranges such debt payoffs, reports a recent surge in participation from primarily Christian places of worship. Eighteen have worked with RIP in the past year and a half, said Scott Patton, the nonprofit’s director of development. More churches are joining in as word spreads.

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The mountain of bills they are trying to clear is high. Medical debt contributes to two-thirds of bankruptcies, according to the American Journal of Public Health. And a 2018 Kaiser Family Foundation/New York Times poll showed that of the 26% of people who reported problems paying medical bills, 59% reported a major life impact, such as taking an extra job, cutting other household spending or using up savings. (Kaiser Health News is an editorially independent program of the foundation.)

The federal Consumer Financial Protection Bureau proposed a rule this month to curb debt collectors’ ability to bug those with outstanding bills, and some states have tried various measures, such as limiting the interest rates collectors may charge. But until a comprehensive solution emerges, churches and others are trying to ease some of the load by jumping into the debt market.

A big part of RIP’s appeal comes from the impact even a small donation can have, say participating church leaders. When a person can’t pay a bill, that debt is often packaged with other people’s debt and sold to bill collectors for some fraction of the total amount of the bill. Those debts usually come from low-income people and are more difficult to collect.

RIP Medical Debt buys debt portfolios on this secondary market for pennies on the dollar with money from its donors. But instead of collecting the debt, RIP forgives it.

To be eligible for repayment from RIP, the debtor must be earning less than twice the federal poverty level (about $25,000 a year for an individual), have debts that are 5% or more of their annual income and have more debt than assets.

Because hospitals and doctors are eager to get those hard-to-collect debts off their books, they sell them cheap. That’s how, Patton said, those 18 churches have been able to abolish $34.4 million of debt since the start of 2018.

Working this way puts a high-dollar project within reach of even small churches. Revolution Annapolis, a nondenominational Maryland church with Sunday attendance of around 200 and without a permanent building, wiped out $1.9 million in debt for 900 families in March. Total amount raised: $15,000.

Revolution leaders heard about RIP Medical Debt on a segment of John Oliver’s “Last Week Tonight” in 2016, said Kenny Camacho, lead pastor. But at the time, they didn’t think they had the resources to make much of a splash.

After hearing about another church that paid off millions last year, Revolution leaders decided to try it. At most, they hoped to have an impact in their area, Camacho said. But the money went much further, eventually covering 14 counties in eastern and central Maryland.

Emmanuel Memorial Episcopal Church, a congregation of about 175 families in Champaign, Ill., had a similar experience. The original idea was to try to have an impact just in Champaign County, said the Rev. Christine Hopkins. But their $15,000 abolished $4 million of debt for the entire diocese, which stretches across the southern half of the state.

“We were bowled over, actually,” Hopkins said. “It was to the point of tears.”

In many cases, churches have not had to do a fundraising campaign because their contribution came from money already on hand. Emmanuel Episcopal, for instance, had leftovers from a campaign set up a year ago to celebrate the centennial of its church building.

The Fincastle Baptist Church, with 1,600 members in the Roanoke, Va., area used money it had budgeted for an annual “Freedom Fest” event to honor first responders, and then partnered with local television station WSLS in a telethon to raise more. That effort abolished over $2.7 million in medical debt targeted at veterans.

The RIP nonprofit allows donors to choose geographic areas they want to reach and can pinpoint veterans as recipients. But beyond that, no restrictions are allowed, Patton said. A church can’t specify which types of medical procedures could be paid for or anything about the background of the recipients.

That didn’t bother church leaders contacted for this story. But it is a subject that’s been broached by donors of all types in the past, Patton said.

For instance, some potential donors have asked to exclude people from different faiths or certain political parties, he said. “It’s just absurd. This is not a revenge tactic,” Patton said. “People who are requesting those things really don’t understand philanthropy.”

Churches don’t necessarily experience a direct return in the way of new members. All the processing goes through RIP Medical Debt, which sends letters notifying the beneficiaries their debts have been forgiven. Donors can have their names listed on those letters, but not everyone opts to do so.

New membership wasn’t the point for Pathway Church in Kansas, Wren said. “Sometimes the more powerful spiritual message is when you’re able to do something for somebody that you’ll never meet.”

The Revolution Church decided against putting its name on the notification letters, Camacho said, because it didn’t want beneficiaries to feel obligated. “When a person has their debt forgiven, we want them to experience that as a kind of no-strings-attached gift,” he said. “We don’t want there to be any sense that because we did this now they should visit our church or something.”

Besides, he said, the gift covered an area large enough that some beneficiaries live a couple of hours away. “I would much rather them think more positively about the church down the street from where they live.”

Donors sometimes hear back from the people whose debts they’ve paid, but not often. Many don’t expect it. “I guess that’s a biblical story, too. Jesus forgave 10, and only one said thank you,” Hopkins said.

Churches have a lot of choices when it comes to charity, but medical debt and affordability issues often resonate with parishioners. Some churches are worried enough about medical costs for their members that they subscribe to cost-sharing nonprofits, in which members pay each other’s medical bills.

Medical mission work has long been an important form of outreach for Fincastle Baptist Church in Virginia, said associate pastor Warren King. The church runs a free clinic, and mission trips to other countries usually include a medical component.

Paying off medical debt is an extension of that line of thinking. “We need to do not just this thing but many things that practically show the love of God,” King said. “It’s hard to tell somebody God loves you if they’re starving and you don’t try to deal with the problem.”

Hopkins said the debt outreach was a satisfying project for her Illinois congregation because it could resolve a problem for the beneficiaries. “We do a lot of outreach that’s food-related and housing-related. This was something different,” Hopkins said. “You help feed somebody, and you’re feeding them again the next day. This was something that could make an impact.”

Mired In Medical Debt? Federal Plan Would Update Overdue-Bill Collection Methods

Elham Mirshafiei was at the library cramming for final exams during her senior year at California State University-Long Beach when she grew nauseated and started vomiting. After the 10th episode in an hour, a friend took her to the nearest emergency room. Diagnosis: an intestinal bug and severe dehydration. In a few hours, she was home again, with instructions to eat a bland diet and drink plenty of fluids.

That was in 2010. But the $4,000 bill for the brief emergency department visit at an out-of-network hospital has trailed her ever since. Mirshafiei, 31, has a good job now as a licensed insurance adviser in Palo Alto, Calif. But money is still tight and her priority is paying off her $67,000 student loan debt rather than that old hospital bill.

Once or twice a year she gets a letter from a collection agency. She ignores them, and, so far, the consequences have been manageable. “It’s not like electricity that gets cut off if you don’t pay it,” she said.

Mirshafiei has plenty of company. At least 43 million other Americans have overdue medical bills on their credit reports, a federal Consumer Financial Protection Bureau report on medical debt found in 2014. And 59% of people contacted by a debt collector say the exchange was over medical bills, the most common type of contact stemming from an overdue bill, according to the CFPB.

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This month, the CFPB proposed a rule to frame what debt collectors are allowed to do when pursuing many types of overdue bills, including medical debt.

Federal law already prohibits debt collectors from harassing consumers or contacting them before 8 a.m. or after 9 p.m., among other things. But the law, which was passed in 1977, didn’t anticipate emails and text messages. The CFPB’s proposal clarifies how debt collectors can use these communication tools. And it would allow consumers to opt out of being contacted this way.

The rule also specifies that debt collectors can make no more than seven telephone calls weekly over a specific debt.

But some consumer advocates panned the effort. “This really doesn’t go far enough to protect consumers and make sure that consumers are not abused or harassed or subject to unfair collection practices in debt collection,” said April Kuehnhoff, an attorney at the National Consumer Law Center who specializes in debt collection.

For instance, the center wants a limit of just three telephone attempts each week on a debt. The seven-call limit could be particularly tough on people with medical debt, Kuehnhoff said. They may accumulate bills from several providers for a single medical event — hospital, doctors, a lab and a nursing home, for example — and all could be in collections separately, potentially resulting in dozens of calls each week.

Debt collectors aren’t necessarily in favor of the seven-call cap either, but for different reasons. They say that limiting the number of calls could lead to more litigation or adverse credit reporting rather than working out a payment plan. Overall, the proposed rule seemed to strike a good balance between collection industry and consumer concerns, said Leah Dempsey, vice president and senior counsel for federal affairs at ACA International, a trade group representing 2,500 debt collectors, asset buyers and related professions.

The general consensus is that people should pay their debts. But taking responsibility for medical debt isn’t always as straightforward as paying off a large-screen TV that someone put on a credit card. Did health insurance pay the correct amount? Was the person screened for eligibility for Medicaid, charity care or financial assistance?

“The actual debt collector problem is often about the lack of accountability that providers have for the people that they pass their debt along to,” said Leonardo Cuello, director of health policy at the National Health Law Program.

When a debt collector calls, consumers who are confused about the bill should ask, in writing and generally within 30 days, that the debt be validated. Debts are often bundled and sold multiple times to different collectors, which means errors may be introduced along the way. “There are no magic words; you don’t need to cite the statute,” said Justin J. Lowe, legal director at Health Law Advocates, a nonprofit law firm in Boston that helps people with low incomes who are having trouble accessing or paying for medical care.

At that point, the collection agency has to stop activities until it proves what the consumer owes. The proposed CFPB rule would spell out verification information that must be provided along with instructions for consumers about how to dispute the debt.

The proposal would also address other practices, including the collection of so-called zombie debt. That refers to a bill that has passed a time limit — or statute of limitations — for bringing legal action, often between three and six years, depending on the state. In many states, if a collector sues someone for such a time-barred debt, consumers can raise the issue in court in their defense. If a judge agrees, the case could be dismissed.

Consumer advocates have long wanted debt collectors to be prohibited from trying to collect zombie debt. After several years, it can be difficult for patients to remember whether a bill has been paid or to locate records, they argue.

The proposed CFPB rule would prohibit debt collectors from suing or threatening to sue consumers for zombie debt, but only if the collectors knew or should have known that the statute of limitations had expired. That puts the onus on the consumer to prove what was in the debt collector’s mind rather than merely showing that too much time had passed to collect.

While a college student in 2010, Elham Mirshafiei went to a hospital that wasn’t in her insurance network for treatment of an intestinal bug and severe dehydration. She still carries the $4,000 debt from that visit.(Courtesy of Elham Mirshafiei)

It’s unclear how the proposed changes announced by the CFPB might affect Mirshafiei’s situation. The statute of limitations in California on written contracts is four years.

One thing someone in Mirshafiei’s situation should be aware of is that making a payment could reset the statute of limitations, Lowe said. The debt collector could argue that by making a payment the person is affirming that he or she owes the debt.

Because of her damaged credit, Mirshafiei needed a relative to co-sign for student loans for graduate school. She worries that if she tries to buy a house, she’ll have trouble getting approved.

“I just hope that in the next chapter of my life I don’t have to be denied things because of this stain on my record,” she said.

As the federal government moves ahead with the rule to address various types of debt collection activities, legislators in a few states have introduced bills that specifically target medical debt. Their efforts often focus on improving access to financial assistance for medical care and limiting predatory debt collection tactics.

Last month, Washington Gov. Jay Inslee signed a law that reduces the maximum interest rate on medical debt prior to a court judgment from 12% to 9%. It also prohibits sending a medical debt to collections until 120 days after the patient is sent the initial bill and requires collection agencies to provide itemized statements to patients for medical and hospital debts and to notify them of their possible eligibility for charity care.

In Oregon, a bill sponsored by Rep. Andrea Salinas would require nonprofit hospitals and affiliated clinics to provide care free of charge to families with incomes up to 200% of the federal poverty level (about $43,000 for a family of three) and charge a sliding scale for families earning up to 400% of the poverty level (about $85,000 for a three-person family).

Like the Washington law, the Oregon bill places limits on the interest charged for medical debt. It also requires health care facilities to screen patients for eligibility for financial assistance and insurance.

The bill passed the House earlier this month.

Some hospitals already have strong financial assistance policies, but the playing field needs leveling, said Salinas. “We really need hospitals to be a part of the solution to prevent consumers from going into bankruptcy over medical debt.”

Hospitals Accused Of Paying Doctors Large Kickbacks In Quest For Patients

For a hospital that had once labored to break even, Wheeling Hospital displayed abnormally deep pockets when recruiting doctors.

To lure Dr. Adam Tune, an anesthesiologist from nearby Pittsburgh who specialized in pain management, the Catholic hospital built a clinic for him to run on its campus in Wheeling, W.Va. It paid Tune as much as $1.2 million a year — well above the salaries of 90% of pain management physicians across the nation, the federal government charged in a lawsuit filed this spring.

In addition, Wheeling paid an obstetrician-gynecologist a salary as high as $1.3 million a year, so much that her department bled money, according to a related lawsuit by a whistleblowing executive. The hospital paid a cardiothoracic surgeon $770,000 and let him take 12 weeks off each year even though his cardiac team also routinely ran in the red, that lawsuit said.

Despite the losses from these stratospheric salaries and perks, the recruitment efforts had a golden lining for Wheeling, the government asserts. Specialists in fields like labor and delivery, pain management and cardiology reliably referred patients for tests, procedures and other services Wheeling offered, earning the hospital millions of dollars, the lawsuit said.

The problem, according to the government, is that the efforts run counter to federal self-referral bans and anti-kickback laws that are designed to prevent financial considerations from warping physicians’ clinical decisions. The Stark law prohibits a physician from referring patients for services in which the doctor has a financial interest. The federal anti-kickback statute bars hospitals from paying doctors for referrals. Together, these rules are intended to remove financial incentives that can lead doctors to order up extraneous tests and treatments that increase costs to Medicare and other insurers and expose patients to unnecessary risks.

Wheeling Hospital is contesting the lawsuits. It said in a countersuit against the whistleblower that its generous salaries were not kickbacks but the only way it could provide specialized care to local residents who otherwise would have to travel to other cities for services such as labor and delivery that are best provided near home.

The hospital and its specialists declined requests for interviews. In a statement, Gregg Warren, a hospital spokesman, wrote, “We are confident that, if this case goes to a trial, there will be no evidence of wrongdoing — only proof that Wheeling Hospital offers the Northern Panhandle Community access to superior care, world class physicians and services.”

Elsewhere, whistleblowers and investigators have alleged that other hospitals, in their quests to fill beds and expand, disguise these arrangements by overpaying doctors or offering other financial incentives such as free office space. More brazenly, others set doctor salaries based on the business they generate, federal lawsuits have asserted.

“If we’re going to solve the health care pricing problem, these kinds of practices are going to have to go away,” said Dr. Vikas Saini, president of the Lown Institute, a Massachusetts nonprofit that advocates for affordable care.

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‘It’s Almost A Game’

Hospitals live and die by physician referrals. Doctors generate business each time they order a hospital procedure or test, decide that a patient needs to be admitted overnight or send patients to see a specialist at the hospital. An internal medicine doctor generates $2.7 million in average revenues — 10 times his salary — for the hospital with which he is affiliated, while an average cardiovascular surgeon generates $3.7 million in hospital revenues, nearly nine times her salary, according to a survey released this year by Merritt Hawkins, a physician recruiting firm.

Last August, William Beaumont Hospital, part of Michigan’s largest health system and located outside Detroit, paid $85 million to settle government allegations that it gave physicians free or discounted offices and subsidized the cost of assistants in exchange for patient referrals.

A month later in Montana, Kalispell Regional Healthcare System paid $24 million to resolve a lawsuit alleging that it overcompensated 63 specialists in exchange for referrals, paying some as full-time employees when they worked far less. Both nonprofit hospital systems did not admit wrongdoing in their settlements but signed corporate integrity agreements with the federal government requiring strict oversight.

“It’s almost a game of ‘We’re going to stretch the limits and see if we get caught, and if we get caught we won’t be prosecuted and we’ll pay a settlement,’” said Tom Ealey, a professor of business administration at Alma College in Michigan who studies health care fraud.

Dubious payment arrangements are a byproduct of a major shift in the hospital industry. Hospitals have gone on buying sprees of physician practices and added doctors directly to their payrolls. As of January 2018, hospitals employed 44% of physicians and owned 31% of practices, according to a report the consulting group Avalere prepared for the Physician Advocacy Institute, a group led by state medical association executives. Many of those acquisitions occurred this decade: In July 2012, hospitals employed 26% of doctors and owned 14% of physician practices.

“If you acquire some key physician practices, it really shifts their referrals to the mother ship,” said Martin Gaynor, a health policy professor at Carnegie Mellon University in Pittsburgh. Nonprofit hospitals are just as assertive as profit-oriented companies in seeking to expand their reach. “Any firm — it doesn’t matter what the firm is — once they get dominant market power, they don’t want to give it up,” he said.

But these hires and acquisitions have increased opportunities for hospitals to collide with federal laws mandating that hospitals pay doctors fair market value for their services without regard to how much additional business they bring through referrals.

“The law is very broad, and the exceptions are very narrow,” said Kate Stern, an Atlanta lawyer who represents hospitals.

‘A Man We Need to Keep Happy’

Lavish salaries for physicians with high potentials for referrals was the key to the business plan to turn Wheeling Hospital, a 247-bed facility near the Ohio River, into a profit machine, according to a lawsuit brought by Louis Longo, a former executive vice president at the hospital, and a companion suit from the U.S. Department of Justice.

Between 1998 and 2005, Wheeling Hospital lost $55 million, prompting the local Catholic diocese to hire a private management company from Pittsburgh, according to the suits. In 2007, the company’s managing director, Ronald Violi, a former children’s hospital executive, took over as Wheeling’s chief executive officer.

The hospital remained church-owned, but Violi adopted an aggressively market-oriented approach. He began hiring physicians — both as employees and independent contractors — “to capture for the hospital those physicians’ referrals and the resulting revenues, thereby increasing Wheeling Hospital’s market share,” the government alleged. Along with greater market share came the ability to bargain for higher payments from insurers, according to Longo’s suit.

The government complaint said at least 36 physicians had employment contracts tied to the business they brought to the hospital. Hospital executives closely tracked how much each doctor earned for the hospital, and executives catered to those whose referrals were most lucrative.

In 2008, the hospital’s chief financial officer wrote in an internal memorandum that cardiovascular surgeon Dr. Ahmad Rahbar “is a man we need to keep happy” because the previous year “he generated over $11 million in revenues for us,” according to the government’s lawsuit.

Dr. Chandra Swamy, an obstetrician-gynecologist the hospital hired in 2009, was another physician whose referrals Wheeling coveted. By 2012, Wheeling was paying her $1.2 million, four times the national median for her peers, according to Longo’s suit.

An internal memorandum by the hospitals’ chief operating officer quoted in Longo’s lawsuit said that the labor and delivery practice where Swamy worked was the biggest money loser among the specialty divisions and that her salary made it “almost impossible for this practice to show a bottom line profit.” But the memo went on to conclude that Wheeling should “continue to absorb the practice loss” because it “would not want to endanger the significant downstream revenue that she produces” for the hospital: nearly $4.6 million a year, according to the lawsuit.

In some cases it was the specialists who demanded lopsided pay packages. When Wheeling, eager to get a piece of the booming field of pain management, decided to recruit Tune, the anesthesiologist responded that he wanted an “alternative/undefined model” of compensation that could earn him $1 million a year, according to Longo’s lawsuit.

Instead of making Tune an employee, Longo alleges, Wheeling leased clinic space to a company created by Tune and paid him $3,000 a day — more than $700,000 a year. In its initial contract, Wheeling also let Tune keep 70% of his practice’s net income, according to the government’s complaint.

Two years later, when the hospital’s chief lawyer raised legal concerns, Wheeling revised the contract, dropping the profit-sharing provision but boosting Tune’s daily stipend to $6,100. The government complaint said this was designed to make up for the lost incentives and thus remained illegally based on how much business Tune generated for Wheeling. Indeed, Tune and his clinic earned roughly the same amount of money as they had received before the new compensation package, the complaint indicated.

Longo said his resistance to such deals rankled both Violi and physicians. He was fired in 2015 because, he alleged, of his objections to various contracts the hospital struck with physicians. The hospital countersued in March, saying Longo had breached his fiduciary duties because he never reported any financial irregularities when he worked there. Wheeling said that after Longo was fired, he threatened to file his lawsuit unless he received a settlement. Longo has asked that the case be dismissed and said in court papers he told Violi about his concerns on “multiple occasions.”

As a whistleblower, Longo is entitled to receive a portion of any money the government collects in its complaint. Longo’s lawyer said he would not comment for this story.

In financial terms, Wheeling’s tactics succeeded. According to the government’s suit, over the first five years under Violi, Wheeling earned profits of nearly $90 million. Violi’s management firm, R&V Associates, also prospered: Wheeling more than doubled the firm’s annual compensation from $1.5 million in 2007 to $3.5 million in 2018. Violi and his lawyer did not respond to requests for comment.

“The hospital has benefited tremendously from Ron’s keen business acumen,” Monsignor Kevin Quirk, the hospital board chairman, said last week in announcing Violi’s retirement.

Wheeling’s quality of care has not excelled commensurately, however, according to Hospital Compare, Medicare’s consumer website. Patients with heart failure or pneumonia are more likely to die than at most hospitals. In April, Medicare awarded Wheeling Hospital its lowest rating, one star, for overall quality.

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