A waiter wearing a face shield and mask to protect himself and others from the coronavirus serves diners at a restaurant in Santa Monica, California, on June 21, 2020. Photo: David Livingston / Getty Images
In communities across the country, businesses that have been closed for months because of the new coronavirus are reopening their doors. In California’s Napa Valley, you can visit some wineries by appointment. In Idaho, you can sweat it out at a gym while maintaining distance from your workout partner. In New York City, not long ago the epicenter of the nation’s coronavirus crisis, you can once again get a haircut.
The reopening of these businesses means that some workers have returned to work in service jobs even as new cases of COVID-19 continue to surge. Others, deemed “essential” workers because of their industries, never stopped. Is it safe for frontline workers to continue in or return to their place of business? Do their workspaces have the basic health and safety measures in place to protect them from coronavirus transmission?
A recent analysis by KFF examined how many adult workers face an increased likelihood of severe illness if infected with the new coronavirus based on risk factors like being over age 65 or living with a chronic diseases like diabetes, moderate to severe asthma, and others. KFF found that more than 37 million American workers — nearly one in four — are at high risk of serious illness resulting from COVID-19.
It’s a scary thing to go back and know you have low immunity.
—Patti Hanks, Virginia furniture store worker
Twelve million adults who are not working live with those higher risks in households with at least one full-time worker, thereby exposing them indirectly to the infection risks of housemates doing customer-facing or other service jobs during a pandemic.
The ability to earn income from home is a privilege, and the “impossible choice between lives and livelihoods falls mainly to lower-wage workers in service industries,” KFF President and CEO Drew Altman wrote in Axios. Here’s what it’s like to work in four jobs that require face-to-face interaction during the worsening COVID-19 crisis.
Soon after finishing chemotherapy for ovarian cancer, Patti Hanks had to go back to her job processing transactions at a furniture and appliance store in Virginia. She was nervous about returning to work during the pandemic, but she couldn’t afford to lose employer-sponsored health insurance.
“It’s a scary thing to go back and know you have low immunity,” Hanks, 62, told Sarah Kliff in the New York Times. “But when it all boils down to it, I don’t think COVID-19 is going away any time soon. I don’t think you can hide from it.”
Nearly 60% of Americans under 65 have employer health coverage, according to the Peterson-KFF Health System Tracker. For people like Hanks, that makes work and health interdependent. Even without her furniture store job, she likely makes too much income from other sources (rental properties and raising cattle) to qualify for Medicaid.
So Hanks continues reporting to work. She wears a mask in the store, maintains distance from customers, and sanitizes shared objects like chairs and pens frequently. Still, there’s only so much she can control. The store has been busy since Virginia began lifting stay-at-home restrictions in May, and Hanks has assisted at least one customer who appeared to be unwell.
“You can’t crawl into a hole,” she told Kliff. “I think we’ve done everything we can to protect ourselves. . . . So I’ll just keep going.”
In normal times, David Smith, co-owner of the European-style eatery Café Muse in the Detroit suburb of Royal Oak, has one of his younger employees seat customers for dine-in service. But times are certainly not normal — nor are interactions with customers.
“I’ve been trying to do most of the seating, because it’s just really difficult when you have like an 18- or 19-year-old [employee] at the front having to enforce mask wearing,” he told Brenna Houck for her article in Eater Detroit.
The restaurant has been open for dine-in service for a only few weeks, and Smith has already had to call the police on an irate customer who refused to wear a mask when picking up a to-go order. Smith’s business partner, Greg Reyner, stepped in to ask the customer to wait for his food outside, and when the man refused, Reyner asked him to leave. The customer later called the restaurant and allegedly threatened the staff, leading Smith and Reyner to call the police.
The state of Michigan allowed restaurants and bars to reopen for indoor and outdoor dine-in service on June 8. Governor Gretchen Whitmer mandated that each customer must “wear a face covering over his or her nose and mouth . . . when in any enclosed public space, unless the individual is unable medically to tolerate a face covering.” Additionally, businesses are permitted to deny entry or access to anyone who refuses to comply with the mask rule.
That doesn’t mean it’s easy or pleasant to enforce the rule for the safety of staff and customers. “It is very upsetting,” Smith told Houck. “You’re shaking after having these conversations with people, because you just don’t know. What if someone got killed because they told [a customer] to wear a mask? You worry about it all the time.”
Nursing homes and assisted living facilities are hot spots for COVID-19 cases. Amanda (who asked that her last name be withheld) is a receptionist at a nursing home in St. Louis, and the last few months have been extremely stressful as she and her colleagues work to keep the facility free of COVID-19.
“I can’t sleep nowadays because I dream about being the cause of people dying,” she told Vox’s Luke Winkie. “That’s a horrifying thought for me. I’ve written up my resignation several times. But I don’t have the heart to do it because they need me there.”
So far, the nursing home has not had any cases, and Amanda attributes this to the facility’s early adoption of safety precautions. In February, the administrators advised staff to use personal protective equipment at work, regularly disinfect surfaces, and shelter in place at home when they weren’t working. The facility stopped admitting visitors, and when families dropped off presents for Mother’s Day, staff put the presents on hold for 24 to 72 hours before giving them to the residents.
[My family and I] never even hugged one another when I went to the emergency department because I don’t want to infect them.
—Marcial Reyes, emergency room nurse
Amanda and her colleagues take precautions not only at work, but also at home. “I won’t let my kids see their friends,” she told Winkie. “A lot of people are letting their kids see other kids, but I nipped that in the bud right away. My colleagues have done the same.”
As states reopen, Amanda is increasingly worried about the health of senior citizens like the ones she cares for. “I believe that our government hasn’t done anything,” she said. “Why don’t we have rapid testing in our facility right now? They should be in every hospital, every nursing home, and they should continue to produce them until they’re in schools and courthouses.”
Fourteen years ago, Marcial Reyes emigrated from the Philippines to the US on a work visa to become a nurse. He’s been a US citizen for eight years. He was working as an emergency room nurse in Fontana, California, when the COVID-19 crisis struck, Josie Huang reported in LAist.
Reyes knew he was at high risk of contracting the coronavirus. When he started experiencing shortness of breath, he quarantined himself on the first floor of his house, away from his wife Rowena, who is also a nurse, and their five-year-old son. But the symptoms kept getting worse, and eventually he drove himself to the hospital — to the same emergency room where he usually cares for patients.
His health deteriorated so rapidly over the next few days that his doctors put him in a medically induced coma and hooked him up to a ventilator for 10 days. “[My family and I] never even hugged one another when I went to the emergency department because I don’t want to infect them,” he told Huang.
In California, nearly one in five registered nurses is of Filipino descent, according to a 2016 survey (PDF) by the California Board of Registered Nursing. California hospitals have recruited heavily from the Philippines for more than a century. Filipino nurses have stepped up to work in underserved areas and work on the front lines of health crises like the AIDS epidemic and COVID-19.
“It’s not uncommon for many Filipino families to produce multiple health care workers,” Huang wrote. The Reyes family is just one such example. Rowena Reyes and their son both also tested positive for COVID-19, though they recovered without hospitalization.
Marcial Reyes’ recovery will be much slower and more complicated. He needs to regain strength in his legs, and he still struggles with writing, Huang reported. Still, he is looking forward to the day when he can return to the emergency room as a nurse.
The coronavirus has decimated the U.S. economy and benched nearly 40 million American workers. In the past several days, the U.S. has logged its highest number of new Covid-19 cases since the pandemic began. These combined with other factors, which we will discuss, is jeopardizing the future employment of millions of workers and the viability of thousands of businesses. Here’s how unemployment has increased for every state, industry, age group, and race, and why.
Unemployment by State
The coronavirus and subsequent stay at home orders hit the labor force especially hard. As states attempted to reopen, a resurgence in the virus is causing many businesses to close again, some by choice, others by government mandate.
Nevada has been hit the hardest as the unemployment rate in the Silver State rose from 4.0% in May 2019 to a whopping 25.3% in May 2020. Nevada’s economy is heavily reliant on leisure and hospitality, which had the brunt of the job losses. Hawaii, the second hardest hit state saw unemployment rise from 2.7% in May 2019 to 22.6% in May 2020. Which is the only other state with unemployment above 20% in May 2020? Michigan, where unemployment rose from 4.2% to 21.2% year over year. What state has fared best? Nebraska, which also has one of the most diverse economies of all states. Deriving nearly 50% of its total GDP from five different industries, unemployment in the Cornhusker State rose from 3.1% to a modest 5.2% from May 2019 to May 2020. Unemployment numbers for all states are shown in the following chart.
Unemployment by Industry
As mentioned in the previous section, the states that have fared best either have a more diverse economy or do not rely heavily on industries that have been hardest hit by the coronavirus. The most negatively affected is the leisure and hospitality industry where unemployment rose 618% from a low of 5.0% in May 2019 to a staggering 35.9% in May 2020. At a distant second, but still reeling, is the wholesale and retail trade industry, which saw unemployment rise from 4.2% to 15.1% during the same period. The rest of the industries are listed in the following chart.
Unemployment by Age Group
Businesses need two things to exist: workers and customers. Without customers, there is no need for workers or the business for that matter. Some businesses require highly skilled workers while others operate well using unskilled labor. It is this unskilled labor group that has been hardest hit.
The greatest rise in unemployment is among workers under age 25. This is likely due to three factors. Younger workers typically have fewer marketable skills, less work experience, and less seniority. Many of these workers are in industries that have felt the greatest pain. Unemployment rates by age group are contained in the following chart.
Unemployment by Race/Ethnicity
Question: Prior to Covid-19, was unemployment among blacks / African Americans at a record low as President Trump has claimed? Using the available data, which extends back to January 1972, the answer is yes. This new record low was achieved in October and November of 2019 when unemployment among black or African American workers fell to 5.1%. The previous record low was 5.2% in December 1973. The current rate is 16.8%, which is less than the highest rate of 20.7% logged in December 1982. The most recent high in unemployment for this group was 19.3% in March 2010. It has been steadily declining since then. Numbers for White, Asian, and Hispanic or Latino and black or African American workers are listed in the following chart.
Businesses need workers, workers need businesses, and both depend on customers. Since the pandemic began, consumer demand has fallen sharply. With the probability that a vaccine will not be available until early 2021 at the soonest, plus a disregard for recommended safety protocols by many individuals, namely wearing masks and social distancing, it is highly unlikely that the economy will return to normal for several years.
Will the president continue to hold rallies? Will he set an example by wearing a mask? Will the protests and violence continue? Will other large gatherings continue? Unless Americans make a collective and conscious choice to mask up and social distance, we will be forced to live in a depressed economy for longer than necessary. The choice is up to us.
While the U.S. wrestles with safely reopening, the European Union confirmed Americans will not be allowed to travel to the bloc of 27 countries when it reopens to some foreign travel Wednesday. The United States is leading the world in both officially confirmed infections and fatalities as it continues to see surges in new cases, hospitalizations and deaths in many states.
Nearly 10.3 million coronavirus cases have been detected worldwide, with roughly 2.6 million infections reported in the United States. At least 124,000 people have died of covid-19 in the United States, and the global death count is hovering near 505,000.
Here are some significant developments:
The investigation looked at 14 companies that sell or market the plans, including eight insurers such as market giants Anthem and UnitedHealth Group, and six brokers.
It found insurers frequently turned down consumers with pre-existing conditions and discriminated against women, turning down applicants who were pregnant or planning to become pregnant and charging women more than men for the same coverage.
The plans had significant coverage limitations. Some excluded routine care like basic preventive visits and pelvic exams. Some plans had hard coverage cutoffs that left consumers with massive medical bills.
In one case, a consumer was billed a whopping $280,000 and lost coverage after being treated for an infection. The insurer said the patient previously had gotten an ultrasound that was “suspicious for deep venous thrombosis.”
AHIP spokesman Allen said it is not surprising given the plans are not intended to replace comprehensive coverage.
“They often do not cover the care and treatments that patients need throughout the year — preventive care, prescription drugs, mental health care or treatments for chronic health conditions — or if they do, they may limit or cap the benefits,” he acknowledged.
On average, short-term plans spend less than half of premium dollars collected from consumers on medical care: only 48%, the investigation found. That’s in stark contrast to plans in the ACA’s individual market, which are required to shell out at least 80% of all premium dollars on claims and benefits.
Short-term insurance represents a significant and growing share of the individual healthcare market. Roughly 3 million consumers bought the plans in 2019, a 27% growth from 2018, the investigation launched in March last year found.
The growth came after the Trump administration, in a controversial move, extended the maximum duration of the plans. The skimpy coverage, which isn’t required to cover the 10 essential benefits under the ACA, was originally designed as cheap safety net coverage for three months.
But in August 2018, HHS expanded the plans to 12 months, with a three year renewal period, and opened them up to all consumers, not just for those who can’t afford other coverage.
ACA supporters and patient advocates blasted the move, which sparked an ongoing legal challenge from safety net providers. Reports of consumers purchasing the coverage, believing it was comprehensive, then being shocked by balance bills prompted the House investigation.
The report also found brokers are paid up to 10 times more compensation for peddling short-term plans than ACA-compliant coverage. The average commission rate for short-term plans compared to ACA plans was 23% versus 2%, respectively.
Currently, 24 states ban or restrict the sale of short-term plans. Some states, including California, Massachusetts, New Jersey and New York, prohibit their sale entirely, while others like Colorado, Connecticut, New Mexico and Rhode Island have such strict regulations that no plans are sold.
Democratic leaders unveiled a bill on Wednesday to bolster the ACA and rescind the administration’s expansion of the plans and expand subsidies, allowing more people to qualify for coverage.
The effort has zero chance of moving this year with Republicans in control of the Senate, but both it and the probe are likely to play into the looming 2020 presidential and congressional elections.
“The heavy-handed tactics uncovered in this investigation demonstrate why Congress must reverse the Trump Administration’s expansion of these junk plans,” E&C Chairman Frank Pallone, D-N.J., Health Subcommittee Chairwoman Anna Eshoo, D-Calif., and Oversight and Investigations Subcommittee Chair Diana DeGette, D-Colo., wrote in a joint statement. “It also shows how dangerous a post-ACA world would be if Republican Attorneys General and the Trump Administration are successful in striking down the law and its protections.”
That lawsuit, led by 18 red states, argues the ACA, which expanded insurance to some 20 million people, is unconstitutional because a tax bill passed in 2017 zeroed out the penalty for its individual mandate. It’s currently pending before the U.S. Supreme Court.
President Donald Trump and his health officials have repeatedly promised people with pre-existing conditions will be protected if the ACA is struck down, but neither the administration nor Republicans in Congress have said specifically how.
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At the same time, some of these same behemoth systems sit on billions in cash, and even greater amounts when taking into account investments that can be liquidated over time. That raises questions about how much money these systems actually need from the federal government given they have hundreds of days worth of cash on hand. Indeed, some big systems, like Kaiser Permanente, are already returning some of the funds.
And it revives concerns that greater examination of hospital finances is needed before divvying up rescue packages.
This is the second story of a Healthcare Dive series examining the bailout funds health systems received amid the COVID-19 pandemic. In this report, we focus on the 20 largest nonprofits by revenue and the amount of Coronavirus Aid, Relief, and Economic Security (CARES) Act funding they have received compared to the amount of cash on hand and recent financial performance. Healthcare Dive used bond filings filed as of June 12 to compile the amount of CARES funding received by health systems. In some instances, we relied on data from Good Jobs First, which also tracks the money. In addition to bond filings, we relied on annual audited financial statements and analyst reports to compile financial performance and days cash on hand.
The cash hospitals have on hand has become an important metric to watch over the past few months as many have seen reserves dwindle to pay everyday expenses as revenue has dried up. At the same time, hospital volumes have plunged due to the economy grinding to a halt.
“You can’t write a payroll check off of accounts receivables, you have to write it off your cash and cash equivalents.” Rick Gundling, senior vice president of healthcare financial practices for Healthcare Financial Management Association, told Healthcare Dive.
In the early days of the outbreak in the U.S., some hospital executives sounded the alarm over dire financial straits, particularly small, rural hospitals whose executives warned they were weeks away from not making payroll. These pleas helped push Congress to pass massive rescue packages, with providers earmarked for $175 billion thus far.
Nonprofit health systems tend to keep more cash on hand than publicly-traded hospital chains. That’s because investor-owned facilities can raise capital more quickly, mainly through the stock market, while nonprofits have to rely on the bond market and their own operations, Gundling said.
Another important avenue that can boost cash is investments. It’s common for large nonprofits to rake in more in net income than they do from their core operations of running hospitals and caring for patients, in large part due to their investments in the stock market.
For example, Chicago-based CommonSpirit posted an operating loss of $602 million during its fiscal year 2019 but net income far exceeded that, totaling $9 billion. It was buoyed by investments and its recent merger, bringing together Catholic Health Initiatives and Dignity Health, according to its audited financial statement for the year ended June 30, 2019.
Ascension, the second-largest nonprofit system, received about $492 million in CARES funding, according to Good Jobs First. Ascension reported having 231 days cash on hand. Its unrestricted cash and investments totaled a sum of $15.5 billion as of March 31.
Kaiser, the nation’s largest nonprofit system, has about 200 days of cash on hand as of its fiscal year end, Dec. 31, according to a recent report from Fitch Ratings.
Providence, the third-largest nonprofit and first U.S. health system to treat a COVID-19 patient, reported 182 days of cash on hand as of March 31, according to a May bond filing.
However, Cleveland Clinic has the most cash on hand when measured in days among the top 20 nonprofits.
Cleveland Clinic had 337 days of cash on hand at the end of March, according to an unaudited financial statement from May. That’s nearly an entire year’s worth of operating expenses. The system has received $199 million in CARES funding, according to that same filing.
Rochester, Minnesota-based Mayo Clinic had the second most days of cash on hand with 252. Mayo Clinic has received $220 million in grant money, according to a May financial filing.
“You would never see that much cash on an investor-owned hospital,” Gundling said. “Generally, they want to pour that cash back into the services,” he said.
NYC Health + Hospitals, also the nation’s largest municipal health system, had the fewest days of cash on hand and it received $745 million in CARES funding, the second-most compared to other systems.
Sitting on a pile of money and accepting the bailout funds is already raising eyebrows.
“There is significant headline risk,” Michael Abrams, co-founder and partner at Numerof & Associates, told Healthcare Dive.
Worried about the optics, other institutions with considerable reserves or endowments have returned federal bailout funds, including Harvard University and major health insurers.
Providers are returning relief funds, too. Kaiser Permanente, the nation’s largest nonprofit by revenue, told the San Francisco Business Times it has returned more than $500 million in CARES funding. CEO Greg Adams the system “will do fine” despite the setback from the pandemic.
Mara McDermott, vice president of McDermott+Consulting, agrees there is a risk in accepting the grant money if systems possess such large reserves. Yet, she also cautioned that the healthcare ecosystem is so much more complicated.
“Regardless of the structure, it requires a deeper dive into need and that’s not what HHS did. They just wrote checks,” McDermott told Healthcare Dive.
Just because a parent company has a large cash reserve, it doesn’t mean that the money is readily available on a daily basis to a smaller practice it may own down the chain and one that hasn’t had any patients since March, she said.
“It’s easy to point the finger… but it’s much more complex than that,” she said.
The first tranche of money HHS sent to hospitals was based on Medicare fee-for-service business, and later on net patient service revenue. These formulas were criticized for putting some hospitals at an advantage compared to others, particularly those with larger shares of Medicaid patients. HHS has since released more targeted funding for providers in hot spots such as New York and plans to funnel funding to those serving a large share of Medicaid members in an attempt to address earlier concerns.
Still, without certainty of how long this public health crisis will last, no one knows how much cash on hand will ultimately be enough.
“A year’s cash on hand sounds like a lot of money but when you expend hundreds of millions of dollars a month, it won’t take you long to burn through that,” Scott Graham, CEO of Three Rivers Hospital, a 25-bed facility in rural Washington state, told Healthcare Dive.
Graham had feared in March that without quick intervention from the government, his hospital was near closure with just a few weeks cash on hand. The federal grant money has bought his hospital some time, about six months if volumes stay where they are, longer if they tick back up.
“I think what HHS did was right at the moment because we needed to ensure that the healthcare system survived this. It’s one thing for a small rural hospital to close, it’s another thing for the entire health system to collapse,” he said.
Medical practices across the United States have been hit hard by the COVID-19 outbreak.
The new study by researchers from Harvard Medical School and the American Board of Family Medicine attempts to put a price tag on that hit by running a microsimulation for projected 2020 revenues based on volume data for general practices, general internal medicine practices, general pediatric practices and family medicine practices.
As a result, they concluded that the average revenue loss per practice per physician will be $67,774, even taking into account revenue generated by telemedicine visits, which did not make up for the massive loss of patient volume during the spring.
That loss could be cut to as little as $28,265 per full-time physician if other staff is furloughed and salaries are cut to the 25th percentile of such cuts that took place during the peak of the stay-at-home orders.
Some practices are also projected to have steeper losses. Rural primary care practices are projected to lose $75,274 per physician. Other studies have suggested that pediatric practices have been hit harder than other primary care fields. Some organizations, such as the American Medical Group Association, say revenue won’t rebound fully even next year.
The study also conducted various alternate scenarios for the remainder of 2020, including a second wave of COVID-19 in the fall. The researchers estimated that would cut patient volumes by about half as much as what occurred during the spring. However, the financial hit would deepen even further, reaching $85,666 per physician.
Altogether, the study projects primary care practices will lose $15.1 billion in fee-for-service revenue this year, not even accounting for a second wave of the coronavirus. The study’s authors note that “this loss would balloon substantially if telemedicine payment rates revert back to pre-COVID-19 levels towards the end of the year.”
The study concluded that while primary care physicians as a whole have not been as hard hit as the hospital sector, the services they provide in managing chronic diseases such as diabetes and as the port of entry for many into the healthcare system makes them too valuable to suffer sustained levels of financial damage.
The pandemic has battered the economy, causing historic levels of unemployment. For many Americans, healthcare coverage is tethered to their jobs. As such, the pandemic is not only a threat to Americans’ health but their ability to pay for the care they need, sick with COVID-19 or not.
As many as 27 million Americans may have lost job-based coverage between March and May of this year, according to a recent analysis from the Kaiser Family Foundation.
Of the newly uninsured, about half (12.7 million) would be eligible for Medicaid coverage, according to Kaiser’s estimates. There are a few options for workers out of a job and insurance. They can opt to extend their coverage through COBRA, enroll in coverage through the exchanges, or check to see if they qualify for Medicaid.
This week, CMS attempted to quantify just how many out-of-work Americans were turning to the exchanges.
About 500,000 out-of-work consumers enrolled in coverage so far this year. However, there are other life events that qualify a consumer to shop for coverage during a special enrollment period. Overall, special enrollment period sign-ups garnered more than 890,000 enrollees, dwarfing other periods.
If the trend continues, it may fuel a significant shift in health insurance. For years, a majority have received commercial coverage through work. Even health insurers recognize disruption is on the horizon.
Many of the nation’s largest insurers are bracing for a shift from their commercial book of business to covering more Medicaid enrollees through their contracts with states. Earlier this year, Molina, Centene and Anthem all said they expect upticks in their Medicaid membership and exchange products.
Molina executives said in April they already saw 30,000 more Medicaid members from the prior-year period.
U.S. commercial labs had made “significant strides” during the coronavirus pandemic by expanding testing capacity from about 100,000 tests per day in early April to more than 300,000 currently, according to ACLA.
But newly emerging hotspots like Arizona, California and Texas are putting a strain on labs and an already limited supply of testing materials, the group said.
While labs nationwide are trying to increase capacity by purchasing more testing machines and attempting to secure additional test materials from suppliers, ACLA President Julie Khani cautioned, “the reality of this ongoing global pandemic is that testing supplies are limited” and “every country across the globe is in need of essential testing supplies, like pipettes and reagents, and that demand is likely to increase in the coming months.”
Khani said ACLA has been in talks with the Trump administration and supply chain partners about the challenges labs face as they try to increase their level of respective COVID-19 testing abilities to meet the anticipated increase in U.S. demand for tests over the coming weeks.
In the absence of a solution, Khani warned that significant demand “will likely exceed” labs’ testing capacities and “could extend turnaround times for test results.”
For its part, Quest’s statement on Thursday described the U.S. coronavirus outbreak as an “evolving” situation that is putting a “strain” on the company’s COVID-19 testing resources.
“Today, we have the capacity to perform approximately 110,000 of these tests a day (770,000 a week). Despite the rapid expansion of our testing capacity, demand for testing has been growing faster,” according to Quest.
Currently, Quest’s average turnaround time for test results are one day for hospital patients, pre-operative patients in acute care settings, and symptomatic healthcare workers, and two to three days for all other patient populations. However, the company warned that “given increased demand, we expect average turnaround times near term to extend in excess of 3 days.”
Nonetheless, Quest said it is taking actions to try to increase COVID-19 testing scale, with the goal of being able to perform 150,000 tests per day. Toward that end, the company is installing additional testing platforms in its network of U.S. labs and said it is collaborating with independent labs who currently have underused capacity.
Quest’s rival LabCorp was not immediately available for comment on its testing capacity amid reports of demand increasing across the country.
The indictment, filed in the Middle District of Florida and unsealed Monday, alleges the 10 defendants, using management companies they owned, would take over rural hospitals often struggling financially. They would then bill commercial payers for millions of dollars for pricey urine analysis drug tests and blood tests through the rural hospitals, though the tests were normally conducted at outside labs, and launder the money to hide their trail and distribute proceeds.
The rural hospitals had negotiated rates with commercial insurers for higher reimbursement for tests than if they’d been run at an outside labs, so the facilities were used as a shell for fraudulent billing for often medically unnecessary tests, the indictment alleges.
The defendants, aged 34 to 60, would get urine and other samples by paying kickbacks to recruiters and healthcare providers, like sober homes and substance abuse treatment centers.
Screening urine tests, to determine the presence or absence of a substance in a patient’s system, is generally inexpensive and simple — it can be done at a substance abuse facility, a doctor’s office or a lab. But confirmatory tests, to identify concentration of a drug, are more precise and sensitive and have to be done at a sophisticated lab.
As such they’re more expensive and are typically reimbursed at higher rates than screening urine tests. None of the rural hospitals had the capacity to conduct confirmatory tests, or blood tests, on a large scale, but frequently billed in-network insurers, including CVS Health-owned Aetna, Florida Blue and Blue Cross Blue Shield of Georgia, for the service from 2015 to 2018, the indictment says.
Rural hospitals are facing unprecedented financial stress amid the pandemic, but have been fighting to keep their doors open for years against shrinking reimbursement and lowering patient volume. That can give bad actors an opportunity to come in and assume control.
One of the defendants, Jorge Perez, 60, owns a Miami-based hospital operator called Empower, which has seen many of its facilities fail after insurers refused to pay for suspect billing. Half of rural hospital bankruptcies last year were affiliated with Empower, which controlled 18 hospitals across eight states at the height of the operation. Over the past two years, 12 of the hospitals have declared bankruptcy. Eight have closed, leaving their rural communities without healthcare and a source of jobs.
“Schemes that exploit rural hospitals are particularly egregious as they can undermine access to care in underserved communities,” Thomas South, a deputy assistant inspector general in the Office of Personnel Management Office of Inspector General, said in a statement.
HENRY KOTULA 