Americans’ medical debt tops $140B, study finds

What Are The Best Ways to Clear Medical Debt?

Collection agencies held $140 billion in unpaid medical debt in 2020, according to a study published July 20 in JAMA.

Researchers examined a nationally representative panel of consumer credit reports between January 2009 and June 2020. Below are four other notable findings from their report.

  1. An estimated 17.8 percent of Americans owed medical debt in June 2020. The average amount owed was $429.
  2. Over the time period studied, the amount of medical debt became progressively more concentrated in states that don’t participate in the Affordable Care Act’s Medicaid expansion program.
  3. Between 2013 and 2020, states that expanded Medicaid in 2014 experienced a decline in the average flow of medical debt that was 34 percentage points greater than the average medical debt flow in states that didn’t expand Medicaid.
  4. In the states that expanded Medicaid, the gap in the average medical debt flow between the lowest and highest ZIP code income levels decreased by $145, while the gap increased by $218 in states that did not expand Medicaid.

Relying on one nonprofit to relieve the debts owed to another

https://mailchi.mp/bade80e9bbb7/the-weekly-gist-june-18-2021?e=d1e747d2d8

American Hospital Association stays mum on debt collection practices |  BenefitsPRO
Ballad Health, a not-for-profit health system operating in Virginia and Tennessee, announced this week that it had reached an agreement with RIP Medical Debt, a charity that uses donations to relieve debt created by healthcare bills, to pay off $287M of outstanding debt owed by its patients.

According to a report in the Wall Street Journal, the purchase will eliminate the debt of 82,000 low-income patients, many of whom qualified for Ballad’s charity care program but did not take advantage of it. The terms of the purchase were not disclosed, but RIP Medical Debt, which says it has relieved over $4.5B in medical debt nationally, typically pays between one and 1.25 percent of the owed amount for recent debt, and as little as 0.03 percent for older debt. That’s similar to what typical debt-purchasing businesses pay. But unlike those businesses, however, RIP Medical Debt says its debt eradication service has no tax consequences for recipients, effectively wiping away large sums that patients might have owed for years.

Since its creation as the result of a 2018 merger, Ballad has faced a mandate to increase the financial aid it provides to low-income patients, but has still come under criticism for aggressive collection practices, including the use of lawsuits against patients who owe the system. The deal with RIP Medical Debt is intended to reduce the amount of debt outstanding—as Ballad CEO Alan Levine told the Journal, “We’re wiping the slate clean.”

As a recent analysis by Axios and Johns Hopkins University showed, most nonprofit hospital systems have tried to reduce aggressive collections in recent years, with just 10 hospitals accounting for 97 percent of court actions against patients between 2018 and 2020. While it’s shocking to hear of a private charity having to step in to relieve patients of crippling medical debt in our nation’s $3.6T healthcare industry, absent larger structural solutions to the broken reimbursement system, it’s at least heartening to know that such services are available. But it’s a Band-Aid solution—more radical treatment remains undelivered.

1 in 3 Americans skip care due to cost concerns, survey shows

Americans most likely to skip health care due to cost: survey

In the past year, cost was a bigger factor driving Americans to skip recommended healthcare than fear of contracting COVID-19, according to a report released June 1 by Patientco, a revenue cycle management company focusing on patient payment technology.

Patientco surveyed 3,116 patients and 46 healthcare providers, finding 34 percent of female patients and 30 percent of male patients have avoided care in the past year citing concerns about out-of-pocket costs.

Below are three more notable findings from the report:

  1. Healthcare affordability is not an issue that affects only Americans with low incomes, as 85 percent of patients with household incomes greater than $175,000 are less likely to defer care when flexible payment options are offered.
  2. Across all ages, income levels and education levels, most patients said they struggled to understand their medical bills and what they owed. Nearly two-thirds of patients said they did not understand their explanation of benefits, did not know what they should do with the information in their explanation of benefits, or waited too long to obtain their explanation of benefits.
  3. Forty-five percent of patients said they would need financial assistance for medical bills that exceed $500, and 66 percent of patients said the same for medical bills that exceed $1,000.

Average benchmark premiums for ACA exchange plans decline again in 2021: report

Affordable Care Act

Average benchmark premiums for plans on the Affordable Care Act’s exchanges have fallen for the third straight year, according to a new analysis.

Researchers at the Urban Institute, a left-leaning think tank, found that the average benchmark premium on the exchanges fell by 1.7% for 2021. That follows decreases of 1.2% in 2019 and 3.2% in 2020.

By contrast, premiums for employer-sponsored plans increased by 4% in both 2019 and 2020, according to the report. Data for 2021 on the employer market are not yet available, the researchers said.

The national average benchmark premium was $443 per month for a 40-year-old nonsmoker, according to the report, before accounting for any tax credits.

The researchers found much significant variation in premium levels between states, though the difference in growth rates was smaller. Minnesota reported the lowest average benchmark premium at $292 per month, and the highest was in Wisconsin at $782 per month.

Average benchmark premiums topped $500 in 10 states, according to the report.

One of the key trends that’s slowing premium growth is increasing competition in the exchanges, as many insurers are expanding their offerings or returning to the marketplaces to offer plans, according to the report.

“New entrants included national and regional insurers, Medicaid insurers, and small start-up insurers,” the researchers wrote.

Medicaid insurers are those who operated exclusively in the Medicaid managed-care market before 2014; they have increased their participation in the Marketplaces over time. Medicaid insurers are experienced in establishing narrow, low-cost provider networks that allow them to offer lower premiums than other insurers.”

UnitedHealthcare, for example, participated in just four regions included in the study in 2017, but had upped its participation to 11 for 2021. Aetna participated in three regions included in the study in 2017 before fully exiting the exchanges; CVS Health CEO Karen Lynch told investors earlier this year that the insurer plans to return to the marketplaces in 2022.

Several states have also launched programs that aim to lower premiums, according to the report. These include reinsurance programs, which have been rolled out in 12 states as of this year. Some states have also expanded Medicaid in recent years, which leads to some low-income people with costly health needs switching to that program, the researchers said.

Eli Lilly fires back against HHS order to repay providers for violating 340B

UPDATE: May 21, 2021: Late Thursday, drug manufacturing giant Eli Lilly filed a motion in an Indiana district court to halt 340B-related monetary penalties, scant days after the Biden administration set a June 1 deadline for biopharmaceutical companies to comply with new conditions in the drug discount program and allow hospital contract pharmacies access to discounted drugs.

The suit alleges a Monday letter from Diana Espinosa, acting head of the Health Resources and Services Administration, gives “no legal explanation or justification for the arbitrary June 1 deadline.”

Lilly previously filed an almost identical lawsuit January 2020. The Indianapolis-based biopharma said it expected the government to follow the briefing schedule outlined in that suit before mandating compliance with 340B and forcing it to pay “substantial and irretrievable sums of money.”

“If the Court ultimately decides Lilly was required to extend 340B pricing to contract pharmacies, Lilly will comply with that decision. Conversely, if the Court ultimately decides manufacturers are not required to extend 340B pricing to contract pharmacies, then we surely expect the government will comply with that decision. But there is no explanation or justification for the government’s attempt to make Lilly pay now, other than to evade this Court’s review and leave Lilly without recourse for such payments,” the motion reads.

In the petition, Lilly, which brought in $6.2 billion in profit last year, alleges the shifting terms of the program are due to HHS director Xavier Becerra bending to political pressure to “take action” against drug manufacturers, as pharmaceutical prices continue to climb.

Lilly asked the district court to temporarily block HHS from moving against Lilly until the drugmaker’s request for a preliminary injunction is resolved; and for an accelerated legal schedule to settle its claims before the looming June deadline.

An HRSA spokesperson declined to comment on the suit.

Dive Brief:

  • HHS’ Health Resources and Services Administration called out six pharmaceutical companies Tuesday for violating rules under the 340B drug discount program, ordering them to repay affected providers for previous overcharges and warning of more penalties if they don’t comply.
  • In July 2020 some drugmakers stopped giving the 340B ceiling price on their products sold to covered entities and dispensed through contract pharmacies, while others limited sales by requiring specific data or selling products only after a covered entity demonstrated 340B compliance, according to HRSA.
  • In letters from Diana Espinosa, acting administrator of HRSA, the agency requested AstraZeneca, Eli Lilly, United Therapeutics, Sanofi, Novo Nordisk and Novartis give an update on their plans to restart selling covered outpatient drugs at the 340B price to covered entities that dispense medications through contract pharmacies by June 1.

Dive Insight:

Providers and drugmakers have sparred for years over the 340B drug discount program that requires pharmaceutical companies to give discounts on outpatient drugs for providers serving low-income communities.

AHA along with five other provider groups in December filed a federal lawsuit against HHS, alleging the department failed to enforce 340B program requirements and allowed actions from drug companies that undermined the program. That lawsuit was later dismissed.

But with the change in administrations, providers now seem to have an ally in the fight.

Previously, as California’s Attorney General, newly minted HHS chief Xavier Becerra led a group of states pushing the agency to force drugmakers to comply with the law late last year.

Provider groups cheered the move after raising the alarm last year that an increasing number of drug companies were refusing to offer discounts to such eligible hospitals.

“The denial of these discounts has damaged providers and patients and must stop. It is vital that these companies immediately begin to repay the millions of dollars owed to these providers,” 340B Health CEO Maureen Testoni said in a statement.

In separate letters to drugmakers, HRSA outlines complaints against them and their actions, ultimately saying their policies violated the statute and resulted in overcharges that need to be refunded. The companies must work to ensure all impacted entities are contacted and efforts are made to pursue mutually agreed upon refund arrangements, according to the letters.

Any additional violations will be subject to a $5,000 penalty for each instance of overcharging under the program’s Ceiling Price and Civil Monetary Penalties final rule.

The American Hospital Association also praised the agency in a release for “taking the decisive action we’ve called for against drug companies that skirt the law by limiting the distribution of certain 340B drugs through community pharmacies.”

Hospitals in the 340B program provide 60% of all uncompensated care in the U.S. and 75% of all hospital care to Medicaid patients, according to 340B Health.

Missouri backtracks on Medicaid expansion

What You Need to Know About Medicaid Expansion in Missouri - Health Forward  Foundation

Missouri Gov. Mike Parson announced Thursday that his state would not expand Medicaid coverage to 275,000 residents who will become eligible on July 1st, despite a 2020 ballot initiative in which a majority of the state’s voters approved the expansion. Because the Missouri legislature has blocked funding for the expansion, Parson declared that the state’s Medicaid program, MO HealthNet, would run out of money if it moved forward.

The legislature’s decision to block funding was bolstered by an appeals court opinion last year, which challenged the expansion because the ballot initiative did not include a funding mechanism for widening coverage.

Under the Affordable Care Act (ACA), the federal government would have picked up 90 percent of the cost of expanding Medicaid in the state, in addition to boosting funding for existing Medicaid enrollees by 5 percent, thanks to a measure in the recent American Rescue Plan Act. 

The governor’s decision leaves in place one of the strictest Medicaid eligibility standards in the nation: a family of three in Missouri must earn less than 21 percent of the federal poverty level—$5,400 per year—in order to qualify for coverage. The expansion measure would have opened the program to childless adults, and raised the eligibility limit to 138 percent of the federal poverty level.

The Missouri Hospital Association called the decision an “affront” to voters, pointing out that the state is currently running a budget surplus, and could easily allocate funds for the expansion. The status of Medicaid expansion in Missouri, which would become the 38th state to undertake expansion since the ACA’s passage, will ultimately be decided by court ruling, according to observers.

Meanwhile, like other states (mostly in the Southeast) that have resisted Medicaid expansion, Missouri will continue to see tax dollars flow out of the state to fund benefits in states that have expanded eligibility—despite the express will of voters. Given ample evidence that Medicaid expansion boosts access to care, health status, and health system sustainability, it’s nearly unfathomable that the politics of “Obamacare” continue to complicate the extension of this critical safety-net program.

A Texas-sized showdown on Medicaid expansion

https://mailchi.mp/da8db2c9bc41/the-weekly-gist-april-23-2021?e=d1e747d2d8

Medicaid expansion could give insurance to over one million Texans |  Progress Texas

The showdown between the Biden administration and the state of Texas over Medicaid expansion continued to escalate this week. Sen. John Cornyn (R-TX) said he planned to place a hold on the confirmation of Chiquita Brooks-LaSure to become Administrator of the Centers for Medicare & Medicaid Services (CMS), until his concerns over the agency’s move last week to rescind a waiver extension previously granted by the Trump administration were addressed.

The so-called “1115 waiver”—worth more than $11B annually—would have extended by a decade Texas’ ability to use Medicaid funds to cover hospital costs for uninsured residents, rather than expanding Medicaid coverage under the Affordable Care Act (ACA). In rescinding the waiver extension, the Biden administration cited the lack of a public notice process before the waiver was granted, and said that the state’s existing waiver would instead expire next year, as previously scheduled.

Sources inside the administration told the Washington Post last week that the move was intended to force Texas’ hand on Medicaid expansion; the state is one of 12 that have not expanded Medicaid, leaving it with the largest share of uninsured residents of any state, with eligibility currently limited to pregnant women, children, people with disabilities, and families with monthly incomes under $300 per month, or 13.6 percent of the federal poverty level.
 
Enticing the dozen remaining holdout states to expand Medicaid is an important policy priority for the new administration. A key component of the recently passed American Rescue Plan Act is a package of enhanced incentives for those states to expand eligibility, offering an extended 90 percent federal match, in addition to increased funding for existing Medicaid populations.

Although none of the non-expansion states have budged yet, there has been renewed focus among state lawmakers on Medicaid expansion, including in Texas, where the idea had garnered bipartisan support. However, on Thursday, the Texas legislature voted down a proposal aimed at pushing the state toward expanding coverage for the uninsured, by an 80-68 margin. Meanwhile, the rescission of Texas’ waiver has angered the state’s Republican leadership, along with the Texas Hospital Association, whose members have benefited from the waiver’s use of funds to reimburse them for delivering uncompensated care.

While Cornyn’s hold will not ultimately stop the confirmation of the new CMS leader, the escalation on both sides over the past several days surely makes finding a compromise solution less likely. The Biden health policy team is said to be developing a new proposal, as part of an upcoming legislative package, to use the ACA marketplace to offer coverage to people in non-expansion states who might otherwise be eligible for Medicaid—yet another attempt to address one of the longest-standing points of contention stemming from the 2010 health reform law.

The Medicaid showdown is far from over.

Selling Medicaid expansion to the holdout states

https://mailchi.mp/d88637d819ee/the-weekly-gist-march-19-2021?e=d1e747d2d8

The American Rescue Plan stimulus package just sweetened the deal for the twelve holdout states that haven’t yet expanded Medicaid. In exchange for expanding eligibility to the roughly four million adults with incomes up to 133 percent of the federal poverty level, new expansion states will also be eligible for a five percent increase in the federal matching rate for their entire traditional Medicaid population for a two-year period.

The graphic above shows the cumulative fiscal impact for holdout states, should all Medicaid-eligible individuals enroll. Since the traditional Medicaid population is so much larger than the expansion population, the temporary increase more than offsets states’ cost to cover their share of the expansion, resulting in an estimated net fiscal benefit of almost $10B. While the net benefit would vary from state to state, a Kaiser Family Foundation analysis found the two most populous non-expansion states, Texas and Florida, could net up to $1.9B and $1.8B respectively across the two-year period.
 
Medicaid expansion has had a significant positive financial impact on hospitals, reducing uncompensated care and increasing overall operating margin by an average of 1.7 percent.

A recent analysis by the Center on Budget and Policy Priorities found uncompensated care costs as a share of hospital expenses fell an average of 45 percent in Medicaid expansion states between 2013 and 2017. So far, only two states eligible for the enhanced expansion, Alabama and Wyoming, have signaled interest in taking advantage of the new deal. Convincing the remaining ten to follow suit will require intense and coordinated advocacy efforts from the healthcare and business communities. Making the financial case for expansion should prove straightforward, compared to overcoming long-entrenched political opposition. 

Department of Justice tells Supreme Court it supports Affordable Care Act

https://www.healthcarefinancenews.com/news/department-justice-tells-supreme-court-it-supports-affordable-care-act

Image result for Department of Justice

Under the Biden Administration, the DOJ says the ACA can stand even though there is no longer a tax penalty for not having health insurance.

The Department of Justice, under the Biden Administration, has told the Supreme Court that it has changed its stance on the Affordable Care Act

The DOJ previously filed a brief contending that the ACA was unconstitutional because the individual mandate was inseverable from the rest of the law.

Following the change in Administration, the DOJ has reconsidered the government’s position and now takes the position that the ACA can stand, even though there is no longer a mandate for consumers to have health insurance or face a tax penalty, according to a February 10 filing.

WHY THIS MATTERS

Hospitals and health systems support the change in position.

“Without the ACA, millions of Americans will lose protections for pre-existing conditions and the health insurance coverage they have gained through the exchange marketplaces and Medicaid. We should be working to achieve universal coverage and preserve the progress we have made, not take coverage and consumer protections away,” said American Hospital Association CEO and president Rick Pollack. 

The Supreme Court is expected to return a decision before the end of the term in June.

THE LARGER TREND

The Supreme Court heard oral arguments on November 10, 2020 regarding whether the elimination of the tax penalty made the remainder of the ACA invalid under the law.

The DOJ sided with the Trump Administration and Republican states that brought the legal challenge, while 20 Democratic attorneys general supported the ACA and asked the court for quick resolution.

They were led by California Attorney General Xavier Becerra, who is Biden’s pick to head the Department of Health and Human Services.

Hospital Uncompensated Care Costs Grew to $41.61B in 2019

Uncompensated Care Costs Fell in Nearly Every State as ACA's Major Coverage  Provisions Took Effect | Center on Budget and Policy Priorities

Hospital uncompensated care costs were up from $41.3B in 2018 and $38.4B in 2017, revealing an upward trend, according to AHA data.

Hospital uncompensated care costs increased right before the COVID-19 pandemic hit, according to new data from the American Hospital Association (AHA).

AHA data showed that hospitals incurred a new high of $41.61 billing in uncompensated care costs in 2019, the most recent year for which the group had complete data.

Uncompensated care costs in 2019 were up from $41.3 billion in 2018 and $38.4 billion in 2017 and were the second-highest per AHA records. Hospitals reported the most uncompensated care costs in 2013 when they incurred $46.8 billion.

Hospital uncompensated care costs decreased after the all-time high in 2013, but have recently started to tick back up after holding steady at $38.4 in 2016 and 2017.

In just the last 20 years, hospitals of all types have provided more than $660 billion in uncompensated care to patients, AHA reported. And that figure does not fully account for other ways in which provides provide financial assistance to patients of limited means, the group stated.

Each year, AHA aggregates data on uncompensated care, or care provided for which no reimbursement is received by hospitals from patients or payers. The data comes from the group’s Annual Survey of Hospitals, a comprehensive report of hospital financial data.

Uncompensated care is the sum of a hospital’s bad debt and financial assistance it provides, AHA explained.

Bad debt occurs when a hospital does not expect to obtain reimbursement for care provided, such as when patients are unable to pay their financial responsibility and do not qualify for financial assistance or are unwilling to pay their bills.

Hospitals also provide varying levels of financial assistance, AHA added. Financial assistance supports patients who cannot afford to pay and qualify for support from the hospital based on policies it has established based on the facility’s mission, financial condition, and geographic location, among other factors.

Combined, bad debt and financial assistance charges total a hospital’s uncompensated care charges, which is then multiplied by a hospital’s cost-to-charge ratio to determine total uncompensated care costs.

AHA noted that it expressed uncompensated care in costs versus charges because of significant variations in hospital payer mixes. Publishing the information as costs rather than charges enables better comparison across hospitals, the group said.

Nearly half of hospitals (48 percent) have seen bad debt and uncompensated care increase recently as a result of the ongoing COVID-19 pandemic, an analysis from consulting firm Kaufman Hall revealed.

More than 40 percent of hospitals also reported increases in percentage of uninsured or self-pay patients (44 percent) and the percentage of Medicaid patients (41 percent), which both contribute to unfunded or underfunded care at hospitals.

“The challenges brought on by the COVID-19 pandemic have affected nearly every aspect of hospital financial and clinical operations,” Lance Robinson, a managing director at Kaufman Hall, said at the time. “Organizations have responded to the challenge by adjusting their operations and strengthening important community relationships.”

Hospital uncompensated care costs – and bad debt as a result – are likely to increase in 2020 as hospitals come to terms with the impact COVID-19 has had on their financial health.

Already, hospitals have lost an estimated $323 billion in 2020 as a result of the COVID-19 pandemic, according to earlier projections from AHA.

About half of US hospitals also started the year in the red, AHA and Kaufman Hall stated in a recent report. The organizations predicted that hospital margins would sink to -7 percent in the second half of 2020 without comprehensive financial support from the government, but could decrease to a low of -11 percent if COVID-19 continued to periodically surge as it has.