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Daily Archives: November 17, 2017

Health Giant Sutter Destroys Evidence In Crucial Antitrust Case Over High Prices

Sutter Health intentionally destroyed 192 boxes of documents that employers and labor unions were seeking in a lawsuit that accuses the giant Northern California health system of abusing its market power and charging inflated prices, according to a state judge.

In a ruling this week, San Francisco County Superior Court Judge Curtis E.A. Karnow said Sutter destroyed documents “knowing that the evidence was relevant to antitrust issues. … There is no good explanation for the specific and unusual destruction here.”

Karnow cited an internal email by a Sutter employee who said she was “running and hiding” after ordering the records destroyed in 2015. “The most generous interpretation to Sutter is that it was grossly reckless,” the judge wrote in his 12-page ruling.

Sutter, which has 24 hospitals and nearly $12 billion in annual revenue, said the destruction was a regrettable €œmistake.”

“It’s stunning what Sutter did to cover up incriminating documents in this case,” said Richard Grossman, the lead plaintiffs’ lawyer representing a class of more than 1,500 employer-funded health plans.

Employers and policymakers across the country are closely watching this legal fight amid growing concern about the financial implications of industry consolidation. Large health systems are gaining market clout and the ability to raise prices by acquiring more hospitals, outpatient surgery centers and physician offices.

In April 2014, a grocery workers’ health plan sued Sutter and allegedit was violating antitrust and unfair competition laws. The plaintiffs began requesting documents related to contracting practices, such as “gag clauses” that prevent patients from seeing negotiated rates and choosing a cheaper provider and “all-or-nothing” terms that require every facility in a health system to be included in insurance networks.

Sutter disputes the broader allegations in the lawsuit over its market conduct and said its charges are in line with its competitors’.

The judge said that in 2015 Melissa Brendt, Sutter’s chief contracting officer in the managed-care department, and an assistant general counsel, Daniela Almeida, authorized Brendt’s executive assistant to destroy 10 years’ worth of managed-care documents going back to 1995. The company earlier had scheduled the documents to be destroyed in 2035 — 20 years later.

The executive assistant, Sina Santagata, testified in a deposition she wasn’t aware of any other time in her 17 years at Sutter when the managed-care department destroyed records held in storage.

In his Nov. 13 ruling against Sutter, the judge singled out an email by Santagata as “particularly noteworthy.”

The executive assistant emailed Brendt, the chief contracting officer, on July 30, 2015, after sending the order to destroy the records. She wrote, “I’ve pushed the button … if someone is in need of a box between 3/15/95 & 11/23/05 … I’m running and hiding. … ‘Fingers crossed’ that I haven’t authorized something the FTC will hunt me down for.”

The Federal Trade Commission (FTC) enforces antitrust laws in health care to prevent hospitals, drugmakers and other industry players from engaging in anti-competitive behavior that could harm consumers.

Santagata testified that she was being “sarcastic” in her email, and Sutter told the judge that the FTC reference was just a “joke.”

Karnow saw no humor in it. “There are infinite topics for jokes, and the choice of this one is strong evidence” in the plaintiffs’ favor, he wrote in his order Monday.

As part of his sanctions against Sutter, the judge ordered the health system to examine email backup tapes covering 2002 through 2005 to search for documents on some of the same topics as the destroyed records. Also, Karnow said he will consider a plaintiffs’ motion for issuing jury instructions that are adverse to Sutter in light of the document destruction. The trial is scheduled for June 2019.

“The record shows that Sutter’s conduct was more than just an inadvertent error,” Karnow wrote.

Sutter spokeswoman Karen Garner said the incident was a “mistake made as part of a routine destruction of old paper records” and the Sacramento-based health system disclosed the error as soon as it was discovered.

€œWe regret that as part of a routine archiving process we failed to preserve some boxes of decades-old hard-copy documents,” Garner said.

The United Food and Commercial Workers and its Employers Benefit Trust initially filed the case against Sutter in 2014. The joint employer-union health plan represents more than 60,000 employees, dependents and retirees. The court certified the case as a class action in August, allowing hundreds of other employers and self-funded health plans to potentially benefit from the litigation.

In addition to its 24 hospitals, Sutter’s nonprofit health system has 35 surgery centers and more than 5,0Ǡ physicians in its network. It reported $11.9 billion in revenue last year and income of $554 million.

Grossman, the plaintiffs’ counsel, said he welcomed the judge’s ruling. But he said much of the evidence is irreplaceable, particularly handwritten notes from negotiating sessions and meetings involving key Sutter executives.

He said those records covered a critical period in the early 2000s when there was a “sea change in Sutter’s contracting strategy” and it implemented provisions that insulated the health system from price competition.

“This was groundbreaking in the industry,” Grossman said. “Until we address the anti-competitive behavior of entities like Sutter, we will not solve the problem of high costs in health care.”

The plaintiffs are seeking to recover hundreds of millions of dollars from Sutter from what it claims are illegally inflated prices. The lawsuit alleges that an overnight hospital stay at Sutter hospitals in San Francisco or Sacramento costs at least 38 percent more than a comparable stay in the more competitive Los Angeles market.

A study published last year found that hospital prices at Sutter and Dignity Health, the two biggest hospital chains in California, were 25 percent higher than at other hospitals around the state. Researchers at the University of Southern California said the giant health systems used their market power to drive up prices — making the average patient admission at both chains nearly $4,000 more expensive.

“Sutter is a pretty extreme case of market power, but health care consolidation has become a really important issue across the country,” said Kathy Hempstead, a health care researcher at the Robert Wood Johnson Foundation. “It’s been on the back burner somewhat because of the debate over the Affordable Care Act, but there is bipartisan interest in tackling this.”

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Podcast: ‘What The Health?’ Tax Bill Or Health Bill?

 

Republican efforts to alter the health law, left for dead in September, came roaring back to life this week as the Senate Finance Committee added a repeal of the “individual mandate” fines for not maintaining health insurance to their tax bill.

In this episode of “What the Health?” Julie Rovner of Kaiser Health News, Sarah Kliff of Vox.com, Joanne Kenen of Politico and Alice Ollstein of Talking Points Memo discuss the other health implications of the tax bill, as well as the current state of the Affordable Care Act.

Among the takeaways from this week’s podcast:

  • The tax bill debate proves that Republicans’ zeal to repeal the Affordable Care Act is never dead. The new congressional efforts to kill the penalties for the health law’s individual mandate could seriously wound the ACA since the mandate helps drive healthy people to buy insurance.
  • One of the most overlooked consequences of the tax debate is that it could trigger a substantial cut in federal spending on Medicare.
  • A $25,000 MRI? That’s what one family paid to go out of their plan’s network to get the hospital they wanted for the procedure for their 3-year-old. Such choices are again drawing complaints about narrow networks of doctors and hospitals available in some health plans.
  • Although they don’t likely say it in front of cameras, many Democrats are relieved at President Donald Trump’s choice to head the Department of Health and Human Services, former HHS official Alex Azar.
  • Federal officials have given 10 states and four territories extra money to keep their Children’s Health Insurance Programs running but it’s not clear what couch they found the money hidden in.
  • And in remembrance of Uwe Reinhardt, a reminder that he always stressed that a health care debate was about more than money – it was about real people.

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

Julie Rovner: Statnews.com’s “This Tennessee insurer doesn’t play by Obamacare’s rules – and the GOP sees it as the future,” by Erin Mershon.

Also: Georgetown University Health Policy Institute™s “What’s Going on in Tennessee? One Possible Reason for Its Affordable Care Act Challenges,” by Kevin Lucia and Sabrina Corlette.

Sarah Kliff: Bloomberg Businessweek’s “How to Make a Fortune on Obamacare,” by Bryan Gruley, Zachary Tracer, and Hannah Recht.

Joanne Kenen: Politico Magazine’s “How Bourbon and Big Data Are Cleaning Up Louisville, by Arthur Allen.

Alice Ollstein: Talking Points Memo’s €œTrump’s Abrupt Policy Shift Fuels Misleading Obamacare Renewal Info,” by Alice Ollstein.

To hear all our podcasts, click here.

And subscribe to What the Health? on iTunes, Stitcher or Google Play.

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Viewpoints: Using Emergency Authority To Fight Opioids; Knowing If Alzheimer’s Is In Your Future…

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Perspectives: A New Front For An Old Obamacare War; How Tax Reform Tees Up Medicare Cuts

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Research Roundup: Noncompliant Plans; Older Americans; Bare Counties; And The Uninsured

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First Edition: November 17, 2017

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Despite ACA Cost Protections, Most Adolescents Skip Regular Checkups

As children move through adolescence, some face health hurdles like obesity, sexually transmitted infections, depression and drug abuse. Regular checkups could help families address such problems, and the Affordable Care Act paved the way by requiring insurers to fully cover well-child visits, at no charge to patients.

But, both before and after the ACA was established, fewer than half of kids ages 10 to 17 were getting routine annual physical exams, according to a recent study.

“Most adolescents are pretty healthy, but a lot of them are headed for trouble with obesity” and mental illness and substance use, said Sally Adams, a research specialist on adolescents and young adults at the University of California-San Francisco, the study’s lead author. “These are things that can be caught early and treated, or at least managed.€

For the study, published online this month in JAMA Pediatrics, researchers analyzed data from the federal Medical Expenditure Panel Survey, which tracks health insurance coverage and health care use and spending. Researchers used data from 25,695 people who were caregivers of adolescents ages 10-17. About half were surveyed from 2007 to 2009 and the rest from 2012 to 2014.

Before the health law passed in 2010, caregivers reported that 41 percent of children had a well-child visit in the previous year. After the ACA’s preventive services protections became effective, typically in 2011, the rate climbed to 48 percent, a œmoderate” increase, Adams said. The increase was greatest for minority and low-income groups.

Still, more than half of children in the survey didn’t go to the doctor for routine care over the course of a year, even though many families gained insurance and wouldn€™t have owed anything for the visits.

That’s cause for concern, Adams said. A primary care provider can screen youngsters for risky behaviors and treat them if necessary. A checkup is also an opportunity to educate patients on health.

“The behaviors they pick up as adolescents have a strong influence on their adult health across their life course,” she said. For example, she noted, “if you can keep them from starting to smoke, then they probably won’t smoke.”

Young children typically have regular pediatrician visits for recommended vaccines, hearing and vision tests as well as school checkups. But those needs may change as children get older, and state requirements that kids get physicals before entering school vary. Some may require a checkup every year, others only at intervals.

“Healthcare professionals have told us that rates of well-child visits tend to be lower after the early childhood years,” Adams said.

The ACA required that most health plans cover preventive services recommended by four medical and scientific expert groups without charging consumers anything out-of-pocket. For children, many of these services are spelled out in the Bright Futures project guidelines, sponsored by the American Academy of Pediatrics and supported by the federal government, and by the U.S. Preventive Services Task Force, an independent group of medical experts that evaluates the evidence for clinical care.

About a fifth of adolescents ages 12 to 19 are obese, and between 13 and 20 percent of children have a mental disorder in any given year, according to the Centers for Disease Control and Prevention.

Some research has shown that parents may believe that adolescents do not need to go to the doctor unless they’re sick and that they can’t afford to pay for checkups, Adams said.

“What we would like is for families to understand that this is a right families have and that these are valuable services that can help their children,” she said.

Please visit khn.org/columnists to send comments or ideas for future topics for the Insuring Your Health column.

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About A Third Of Americans Unaware Of Obamacare Open Enrollment

While the Affordable Care Act’s fifth open enrollment season is off to a surprisingly good start, many uninsured people said they weren’t even aware of it, according to a survey released Friday.

Nearly a third of people overall — including a third of people without health insurance — said they had not heard anything about the sign-up period for individuals who buy health plans on their own, according to the survey by the Kaiser Family Foundation (KFF). (Kaiser Health News is an editorially independent program of the foundation.)

Open enrollment started Nov. 1 and runs through Dec. 15 in most states. Advocates fear enrollment will decline this year because President Donald Trump has been repeatedly saying the health law is “dead,” and his administration severely cut funding for publicity and in-person assistance.

Nonetheless, nearly 1.5 million people have enrolled on the federal health insurance exchange healthcare.gov, which handles coverage in 39 states, federal officials reported Wednesday.

One factor that could be pushing more people to sign up earlier this year is the open enrollment season was cut in half from three months to 45 days for the states relying on the federal exchange. Some state exchanges allow enrollment into January.

Several state health insurance exchanges have also said early sign ups are running higher than last year. The Colorado insurance exchange on Thursday said it has enrolled more than Ƕ,000 people in the first two weeks — a 33 percent jump from last year’s first weeks.

In the previous open-enrollment season, 12.2 million people nationwide selected individual market plans through the marketplaces. The number dropped off during the year because not everyone paid and some found coverage elsewhere.

Forty-five percent of all respondents to the KFF survey and 52 percent who said they were uninsured said they have heard less about open enrollment this year compared to previous years.

Insurers are trying to pick up some of the challenges of publicizing enrollment, and some of those ads are getting noticed.

The percentage of survey respondents who said they saw ads attempting to sell health insurance increased from 34 percent to 41 percent between the October and November KFF tracking polls. The share who say they saw ads that provided information about how to get health insurance under the ACA increased from 20 percent to 32 percent.

The poll found that nearly 8 in 10 Americans were aware the Affordable Care Act was still in effect.

The survey of 1,201 adults, which was conducted Nov. 8-13, has a margin of error +/-3 percent.

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Medicaid Expansion Takes A Bite Out Of Medical Debt

As the Trump administration and Republicans in Congress look to scale back Medicaid, many voters and state lawmakers across the country are moving to make it bigger.

This story is part of a partnership that includes KCUR, NPR and Kaiser Health News. It can be republished for free. (details)logo npr

On Nov. 7, Maine voters approved a ballot measure to expand Medicaid under the Affordable Care Act. Advocates are looking to follow suit with ballot measures in Utah, Missouri and Idaho in 2018.

Virginia may also have another go at expansion after the Legislature thwarted Gov. Terry McAuliffe’s attempt to expand Medicaid. Virginia voters elected Democrat Ralph Northam to succeed McAuliffe as governor in January, and Democrats made inroads in the state Legislature, too.

An exit poll of Virginia voters on Election Day found that 39 percent of them ranked health careÂas their No. 1 issue. More than three-quarters of the Virginians in this group voted for Democrats.

A study from the Urban Institute may shed light on why Medicaid eligibility remains a pressing problem: medical debt. While personal debts related to health care are on the decline overall, they remain far higher in states that didn’t expand Medicaid.

In some cases, struggles with medical debt can be all-consuming.

Geneva Wilson is in her mid-40s and lives outside of Lowry City, Mo. She has a long history of health problems, including a blood disorder, depression and a painful misalignment of the hip joint called hip dysplasia.

She’s managed to find some peace living in a small cabin in the woods. She keeps chickens, raises rabbits and has a garden. Her long-term goal is to live off her land by selling what she raises at farmers markets.

Her health has made it hard to keep a job and obtain the insurance that typically comes with it. And Missouri’s stringent Medicaid requirements — which exclude nondisabled adults without children €”Âhave kept her from getting public assistance.

Since graduating from college more than 20 years ago, Wilson has mostly had to pay out-of-pocket for medical care, and that’s left her with a seemingly endless pile of medical debt.

“As soon as I get it down a little bit, something happens, and I have to start all over again,” Wilson said.

Right now her medical debt stands at about $3,000, which she pays down by $50 a month. She desperately needs a hip replacement, but she canceled the surgery because, even with a deeply discounted rate from a nearby hospital, she couldn’t afford it.

“Approximately $11,000 is what would come out of my pocket to pay for the hip. That’s my entire pretax wage from last year,” Wilson said. “So it’s kind of on hold, but I don’t know if I can survive the year without going ahead and trying to get it done.”

For many people like Wilson, medical debt can be nearly as problematic as an illness. In 2015, 30.6 percent of Missouri adults ages 18 to 64 had past-due medical debt, the seventh-highest rate in the country. Kansas, at 27 percent, had the 15th-highest rate. In Maine, which voted to expand Medicaid this week, it was 27.7 percent.

Researchers Aaron Sojourner and Ezra Golberstein of the University of Minnesota studied financial data from 2012 to 2015 for people who would be eligible for Medicaid where it was expanded.

They found that in states that didn’t expand, the percentage of low-income, nonelderly adults with unpaid medical bills dropped from 47 to 40 percent within three years.

“The economy improved and maybe other components of the ACA contributed to a 7-percentage-point reduction, Sojourner says. “Where they did expand Medicaid, it fell by almost twice as much.”

Those states saw an average drop of 13 percentage points, from 43 to 30 percent.

In Kansas, the rate of medical debt for nonelderly adults fell by 4 percentage points to 27 percent. In Missouri, the rate dropped 4 points to 31 percent, according to the Urban Institute. In Maine, it dropped only 1.4 percentage points from 2012 to 2015.

Medicaid, as opposed to private insurance, is the key, said the Urban Instituteâ€s Kyle Caswell, because it requires little out-of-pocket costs.

Even if Medicaid patients need lots of care, they aren’t on the hook for big out-of-pocket costs in the same way someone with private insurance might be.

“We would certainly expect their risk to out-of-pocket expenses to be much lower, and ultimately the risk of unpaid bills to ultimately be also lower,” Caswell said.

But Medicaid’s debt-reducing advantages over private insurance could disappear under the leadership of the Trump administration.

Shortly after Seema Verma was confirmed as the administrator for the Centers for Medicare & Medicaid Services, she and Tom Price, then head of the Department of Health and Human Services, sent a letter to the governors outlining their plans for Medicaid.

The letter encouraged states to consider measures that would make their Medicaid programs operate more like commercial health insurance, including introducing premiums and copayments for emergency room visits.

Verma said that by giving recipients more “skin in the game,” they will take more responsibility for the cost of care and save the program money.

Republican proposals in Congress to repeal and replace the Affordable Care Act would have eliminated or limited Medicaid expansion. And that would have affected the last few years’ downward trend in medical debt.

“Anything that reduces access to Medicaid most likely would have the reverse effect of what we’re seeing in our paper,” Caswell said. €œReduced access to Medicaid would likely increase exposure to medical out-of-pocket spending and ultimately unpaid medical bills.”

As Geneva Wilson tends to her chickens, she said, she tries not to think too much about her medical debt or how shell pay for that hip replacement.

“It’s going to the point where, if I were to go shopping at Walmart, I would have to get one of the carts you drive because I can’t manage,” she said.

Wilson has already sold her jewelry, some furniture and a wood stove to pay down her debts. Now there’s not much left to sell except her cabin and her land.

“Probably the homestead and garden that I want, that I’ve been wanting and trying to work for, I don’t think they are a viable dream either,” Wilson said. “It’s hard losing your dreams.”

This story is part of a partnership that includes KCUR, NPR and Kaiser Health News.

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Medicare Seeks Comment On Ways To Cut Costs Of Part D Drugs

Noting that the true price of a drug is often hidden from consumers, Medicare officials requested comments late Thursday on how to use discounts and rebates to help decrease what enrollees pay for prescriptions.

The proposal request, buried in hundreds of pages released late Thursday afternoon, asked for public comment on how to share the rebates and discounts that are negotiated by manufacturers, pharmacists and insurers. Insurers and pharmacy benefit managers, or PBMs, administer Medicare’s Part D drug program and negotiate behind-the-scenes fees and discounts that are often hidden from public view.

Officials at Medicare “are asking: ‘Tell us what you want,’” said Jack Hoadley, a commissioner with the Medicare Payment Advisory Commission and a health policy analyst at Georgetown University. â€They are open to ideas both around manufacturer rebates and the pharmacy price concessions.”

Requests for comments are open until Jan. 16 and, Hoadley said, it may be a challenge to institute any changes before 2020. But other parts of the proposed rule are more likely to take effect sooner. Those include:

  • Allowing enrollees to buy drugs at the pharmacy they prefer, by revising participation rules to motivate more local pharmacies to participate in the program.
  • Lowering drug costs by allowing for midyear changes to prescription drug formularies when a generic becomes available.
  • Treating lower-cost drugs called biosimilars, such as cancer drug Zarxio, the same as generics when determining how much they cost out-of-pocket.

While the request for information on the fees and discounts is not yet a proposal, pressure has been building for the administration to take action.

Earlier this year, the Centers for Medicare & Medicaid Services (CMS) released a fact sheet that set the stage for change, describing how the fees kept Medicare Part D and monthly premiums lower but translated to higher out-of-pocket spending by enrollees and increased costs to the program overall.

Supporters of a rule change say they want the fees disclosed and for them to be applied to what enrollees pay for their drugs. However, there are questions about how the rule would work and whether it would drive up premium prices for Medicare Part D plans.

“There’s a potential to bring about the price reductions at the point of sale,” Hoadley said. That might come at the expense of higher premiums. Money is going to move from one pot to another.”

In the proposal out Thursday, CMS writes that when manufacturer rebates and pharmacy price concessions are not reflected at the point of sale, Medicare enrollees might get a break with lower premiums but “end up paying a larger share of the actual cost of a drug.”

Congress has also raised concerns, sending letters to CMS officials asking about transparency, sharing the discounts with enrollees and introducing related legislation.

When Sen. Chuck Grassley (R-Iowa) and 10 other senators sent a letter in July to the agency asking for more transparency in the fees, CMS Administrator Seema Verma responded last month that they were analyzing the issue.

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