GAO: rural hospital closures increasing, South hardest hit

https://www.healthcaredive.com/news/gao-rural-hospital-closures-increasing-south-hardest-hit/538604/

Dive Brief:

  • Hospitals across the U.S. are being battered by financial headwinds, and rural hospitals are vulnerable because they don’t have capital or diversified services to fall back on when the going gets rough. Between 2013 and 2017, 64 rural hospitals closed due to financial distress and changing healthcare dynamics, more than twice the number in the previous five years, a new Government Accountability Office analysis shows.  
  • Rural hospital closures disproportionately occurred in the South, among for-profit hospitals and among organizations with a Medicare-dependent hospital payment designation.
  • One potential lifeline was Medicaid expansion. According to GAO, just 17% of rural hospital closures occurred in states that had expanded Medicaid as of April 2018.

Dive Insight:

Declining inpatient admissions and reimbursement cuts have taken a toll on rural hospitals. Since 2010, 86 rural hospitals have closed, and 44% of those remaining are operating at a loss — up from 40% in 2017.

CMS Administrator Seema Verma released a rural health strategy in May aimed at improving access and quality of care in rural communities. Among its objectives are expanding telemedicine, empowering patients in rural areas to take responsibility for their health and leveraging partnerships to advance rural health goals.

The agency also expanded its Rural Community Hospital Demonstration from 17 to 30 hospitals. The program reimburses hospitals for the actual cost of inpatient services rather than standard Medicare rate, which could be as little as 80% of actual cost.

Such initiatives can be helpful, but if a hospital can’t make ends meet on its Medicare and Medicaid businesses and has only a modicum of privately insured patients, “that’s just not a balance that works financially,” Diane Calmus, government affairs and policy manager at the National Rural Health Association, told Healthcare Dive recently.

In all, 49 rural hospitals closed in the South, or 77% of rural hospital closures from 2013 through 2017, according to GAO. Texas had the most closures with 14, followed by Tennessee with eight and Georgia and Mississippi, each with five. By contrast, there were eight rural hospital closures in the Midwest and four each in the West and Northeast.

GAO also looked at closures by Medicare rural hospital payment designation. Critical access hospitals made up 36% of rural hospital closures, 30% were hospitals receiving Medicare standard inpatient payment, 25% had Medicare-dependent hospital designation and 9% were sole community hospitals.

To aid rural hospitals and ensure access for patients, NRHA has urged CMS to adopt a common sense approach to the “exclusive use” standard and lobbied lawmakers to pass legislation eliminating the 96-hour condition of payment requirement, two policies that are particularly hard on rural providers.

Another bill, the Save Rural Hospitals Act, would reverse reimbursement cuts to rural hospitals, provide other regulatory relief and establish the community outpatient hospital, a new provider type offering 24/7 emergency services plus outpatient and primary care.

 

 

 

 

 

CMS Administrator Seema Verma promotes cuts to 340B drug payments

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Senate committee is taking a closer look at the drug discount program.

The Centers for Medicare and Medicaid Services’ focus on lowering drug prices now includes the contentious 340B drug pricing program.

On Wednesday, CMS Administrator Seema Verma told the Pharmacy Quality Alliance that the agency’s change in the 340B payment rate to qualifying hospitals would save Medicare beneficiaries $320 million this year.

Under 340B, hospitals that serve a large number of vulnerable patients are able to buy drugs from manufacturers at discounted prices. However, Verma said Wednesday, “these discounts were not being passed on to our beneficiaries. So, CMS reduced the amount that beneficiaries and the federal government will pay hospitals for drugs that they acquire through this program.”

Medicare beneficiaries will save a total of $320 million in drug spending this year from the change, Verma said.

Last November, several hospital groups including the American Hospital Associationsued CMS for the $1.6 billion in cuts, representing a 28 percent decrease.

On Tuesday, a Senate health committee got involved when members questioned why a rule that would set ceiling prices on drugs in the program has been delayed five times.

The final rule would impose monetary penalties for manufacturers that charge more than the ceiling price for an outpatient drug and imposes other restrictions.

340B hospitals want to see the rule enforced.

The Government Accountability Office will be looking into the issue and the work of the Health Resource and Services Administration, the agency which manages the program and is responsible for the latest delay in implementation of the final rule until July 2019.

The problem is that states and providers do not know the ceiling prices. Confidentiality rules prevent the HRSA from sharing ceiling prices with states or 340B providers.

Because of this, 340B hospitals don’t know what they ought to be paying for discounted drugs, according to Ann Maxwell, assistant inspector general for evaluation and inspections for the Office of the Inspector General, speaking before the Senate Committee on Health, Education, Labor and Pensions.

This lack of transparency prevents ensuring that 340B providers are not overpaying pharmaceutical manufacturers and that state Medicaid programs are not overpaying 340B providers, Maxwell said.

The 340B drug pricing program debate pits the hospitals that benefit from the discounted prices of the program against organizations that contend these providers are taking advantage of the financial incentive.

The 340B program, established in 1992, generates savings for certain safety-net providers by allowing them to purchase outpatient drugs at discounted prices.

Opponents of 340B say seniors get none of the benefit and pay full price and that the disproportionate share hospitals that get the discount take advantage of the financial incentive by buying larger quantities of drugs and more expensive drugs.

HRSA reported that total 340B sales in 2016 amounted to approximately $16 billion, or about 3.6 percent of the U.S. drug market.

The Alliance for Integrity and Reform of 340B, or AIR340B released a new report with analytics by the Berkeley Research Group on Medicare Part B hospital outpatient reimbursements that found in 2016, 340B hospitals accounted for nearly two-thirds of Medicare Part B reimbursements – while only representing slightly more than half of all Medicare hospital outpatient revenue.

“Medicare patients treated in 340B hospitals have disproportionately high outpatient drug spend as compared to patients treated at non-340B hospitals,” AIR340B said

PhRMA said it was encouraged to see the Senate HELP Committee continuing to take a closer look at issues within the 340B program.

The New England Journal of Medicine concluded that financial gains for 340B hospitals have not been associated with clear evidence of expanded care or lower mortality among low-income patients, PhRMA said.

340B also drives a shift of treatment to more expensive hospital settings for physician-administered medicines, PhRMA said.

Hospitals and proponents say the 340B drug pricing program is one of the few federal programs to curb drug costs that is working.

“Sadly, the administration’s policy proposals would erode that progress and just put more money into the pockets of pharmaceutical companies,” 340B Heath said. “The administration’s proposals are based on a faulty understanding of the 340B program and the pharmaceutical market. The notion that 340B discounts are raising drug prices is simply false. Drug companies set the prices for their products and they, alone, decide how high those prices go.”

Hospitals participating in the 340B program account for 60 percent of all uncompensated care in the U.S. and serve a high proportion of low-income patients on Medicaid, 340B Health said.

“There is a clear history of manufacturers overcharging 340B providers. Delaying enforcement of this rule will have a tremendous adverse impact on hospitals, clinics and health systems caring for low-income and rural patients,” said Maureen Testoni, interim president and CEO of 340B Health.

America’s Essential Hospitals said federal scrutiny of manufacturer pricing practices has found overcharges in the 340B drug pricing program.

“These overcharges undermine the program’s ability to make drugs affordable for vulnerable patients and increase costs for their hospitals, which already operate with thin margins,” the group said.

 

1115 Medicaid Waivers: From Care Delivery Innovations to Work Requirements

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After months of debate, the Medicaid program emerged from efforts to repeal and replace the Affordable Care Act (ACA) without major legislative changes. Now, however, the Trump administration is encouraging states to apply for waivers that place new conditions on Medicaid eligibility as well as additional costs on beneficiaries in the form of premiums and copayments at the point of service.

To better understand the continuing controversy over Medicaid, let’s take a look at the waiver program’s objectives and how states have used waivers in the past. Are recently proposed state waivers consistent with Medicaid’s underlying mission? And are federal and state authorities appropriately evaluating them for their impact on Medicaid populations?

What is a Medicaid Section 1115 waiver?

Medicaid grants states autonomy in how they run their programs. Under a provision of the Social Security Act, Section 1115, the U.S. Secretary of Health and Human Services (HHS) can waive federal guidelines on Medicaid to allow states to pilot and evaluate innovative approaches to serving beneficiaries. Most waivers are granted for a limited period and can be withdrawn once they expire.

States seek 1115 waivers to test the effects of changes both in coverage and in how care is delivered to patients. The Centers for Medicare and Medicaid Services (CMS), a government agency, reviews each waiver application to ensure not only that it furthers the core objective of Medicaid — to meet the health needs of low-income and vulnerable populations — but also that the proposed demonstration does not require the federal government to spend more on the state’s Medicaid program than it otherwise would.

However, a recent General Accountability Office (GAO) review found that, because of significant limitations, evaluations of 1115 demonstrations often do not provide enough information for policymakers to understand the waivers’ full impact.1 The GAO recommended that CMS establish procedures to ensure that all states submit final evaluation reports at the end of each demonstration cycle, issue criteria for when it will allow limited evaluations of demonstrations, and establish a policy for publicly releasing findings from federal evaluations.

How have 1115 waivers been used in the past?

States have been granted waivers throughout the 53-year history of Medicaid. Most waivers were small in scope until the 1990s, when states started to use them for a wide range of purposes, including to: expand eligibility, simplify the enrollment and renewal process, reform care delivery, implement managed care, provide long-term services and supports, and alter benefits and cost-sharing. Some states have used 1115 waivers to change the way care is delivered to Medicaid patients, like encouraging investments in social interventions. Oregon, for example, used its waiver to establish Coordinated Care Organizations — partnerships between managed care plans and community providers to manage medical, behavioral health, and oral health services for a group of Medicaid beneficiaries.

With the ACA’s enactment, a new category of low-income adults became eligible for Medicaid. After the Supreme Court ruled in 2012 that this eligibility expansion was optional for states, eight states applied for 1115 demonstration waivers from the Obama administration to test different approaches to expanding eligibility, including the introduction of premiums and copayments that exceeded federal guidelines. One of those states, Arkansas, has used Medicaid funds to purchase private health insurance for marketplace enrollees.

How are 1115 waivers changing?

With encouragement from the Trump administration, many states are applying for waivers to make employment, volunteer work, or the performance of some other service a requirement for Medicaid eligibility. The administration has also encouraged waivers to impose premiums and increases in cost-sharing.

States can take different approaches to work or service requirements. Some might require them only for the Medicaid-expansion population (working-age adults with incomes up to 138 percent of the federal poverty level), while other states might also require employment of the traditional Medicaid population.

As of early April 2018, three states — Kentucky, Indiana, and Arkansas — have received approval for work- or service-requirement waivers. Seven others have pending waivers for new applications, amendments to existing waivers, or requests for renewals or extensions.

In Kentucky — the first state to have its work-requirement waiver approved — affected beneficiaries must complete 80 hours per month of community-engagement activities, such as employment, education, job skills training, or community service. Documentation of meeting this requirement is required to remain eligible for coverage. Exemptions are granted to pregnant women, people considered medically frail, older adults, and full-time students. Indiana and Arkansas have received approval for similar waivers.

Shortly after Kentucky’s waiver was approved, attorneys representing 15 Medicaid beneficiaries sued the HHS secretary in federal court (Stewart v. Azar), arguing that the objective of promoting work is not consistent with Medicaid’s core purpose of “providing medical assistance (to people) whose income and resources are insufficient to meet the cost of necessary medical services.”2 The lawsuit’s outcome will affect whether some of the state demonstrations will be able to proceed.

What’s the bottom line?

The 1115 demonstration waiver program is intended to fulfill the primary purpose of Medicaid: to provide health care protection to poor and disabled Americans. The new waivers seeking to impose work or service requirements, as well as others that would impose lifetime coverage limits or premiums, should be fully and carefully evaluated to determine whether they meet this goal. In addition to state and federal evaluations, independent assessments of state demonstrations will be important to informing policymakers and the public about the waivers’ full impact.

 

U.S. Pays Billions for ‘Assisted Living,’ but What Does It Get?

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WASHINGTON — Federal investigators say they have found huge gaps in the regulation of assisted living facilities, a shortfall that they say has potentially jeopardized the care of hundreds of thousands of people served by the booming industry.

The federal government lacks even basic information about the quality of assisted living services provided to low-income people on Medicaid, the Government Accountability Office, a nonpartisan investigative arm of Congress, says in a report to be issued on Sunday.

Billions of dollars in government spending is flowing to the industry even as it operates under a patchwork of vague standards and limited supervision by federal and state authorities. States reported spending more than $10 billion a year in federal and state funds for assisted living services for more than 330,000 Medicaid beneficiaries, an average of more than $30,000 a person, the Government Accountability Office found in a survey of states.

States are supposed to keep track of cases involving the abuse, neglect, exploitation or unexplained death of Medicaid beneficiaries in assisted living facilities. But, the report said, more than half of the states were unable to provide information on the number or nature of such cases.

Just 22 states were able to provide data on “critical incidents — cases of potential or actual harm.” In one year, those states reported a total of more than 22,900 incidents, including the physical, emotional or sexual abuse of residents.

Many of those people are “particularly vulnerable,” the report said, like older adults and people with physical or intellectual disabilities. More than a third of residents are believed to have Alzheimer’s or other forms of dementia.

The report provides the most detailed look to date at the role of assisted living in Medicaid, one of the nation’s largest health care programs. Titled “Improved Federal Oversight of Beneficiary Health and Welfare Is Needed,” it grew out of a two-year study requested by a bipartisan group of four senators.

Assisted living communities are intended to be a bridge between living at home and living in a nursing home. Residents can live in apartments or houses, with a high degree of independence, but can still receive help managing their medications and performing daily activities like bathing, dressing and eating.

Nothing in the report disputes the fact that some assisted living facilities provide high-quality, compassionate care.

The National Center for Assisted Living, a trade group for providers, said states already had “a robust oversight system” to ensure proper care for residents. In the last two years, it said, several states, including California, Oregon, Rhode Island and Virginia, have adopted laws to enhance licensing requirements and penalties for poor performance.

But the new report casts a harsh light on federal oversight, concluding that the Centers for Medicare and Medicaid Services has provided “unclear guidance” to states and done little to monitor their use of federal money for assisted living.

As a result, it said, the federal health care agency “cannot ensure states are meeting their commitments to protect the health and welfare of Medicaid beneficiaries receiving assisted living services, potentially jeopardizing their care.”

Congress has not established standards for assisted living facilities comparable to those for nursing homes. In 1987, Congress adopted a law that strengthened the protection of nursing home residents’ rights, imposed dozens of new requirements on homes and specified the services they must provide.

But assisted living facilities have largely escaped such scrutiny even though the Government Accountability Office says the demand for their services is likely to increase because of the aging of the population and increased life expectancy.

That potential has attracted investors. “Don’t miss out on the largest market growth in a generation!” says the website of an Arizona company, which adds that “residential assisted living is the explosive investment opportunity for the next 25 years.”

Carolyn Matthews, a spokeswoman for the company, the Residential Assisted Living Academy, said: “Unfortunately, there has been elderly abuse in this business. We are trying to change the industry so the elderly have better quality care and we are not warehousing them.”

The government report was requested by Senator Susan Collins of Maine, a Republican who is the chairwoman of the Special Committee on Aging; Senator Orrin G. Hatch of Utah, a Republican who is the chairman of the Finance Committee; and two Democratic senators, Claire McCaskill of Missouri and Elizabeth Warren of Massachusetts.

The Trump administration agreed with the auditors’ recommendation that federal officials should clarify the requirement for states to report on the abuse or neglect of people in assisted living facilities. The administration said it was studying whether additional reporting requirements might be needed.

“Although the federal government has comprehensive information on nursing homes providing Medicaid services, not much is known about Medicaid beneficiaries in assisted living facilities,” the report said.

Assisted living was not part of the original Medicaid program, but many states now cover it under waivers intended to encourage “home and community-based services” as an alternative to nursing homes and other institutions.

The report said that assisted living could potentially save money for Medicaid because it generally cost less than nursing home care. Under the most common type of waiver, Medicaid covers assisted living only for people who would be eligible for “an institutional level of care,” in a nursing home or hospital.

 

 

Patients With Rare Diseases And Congress Square Off Over Orphan Drug Tax Credits

Patients With Rare Diseases And Congress Square Off Over Orphan Drug Tax Credits

As President Donald Trump talked tax reform on Capitol Hill Tuesday, Arkansas patient advocate Andrea Taylor was also meeting with lawmakers and asking them to save a corporate tax credit for rare-disease drug companies.

Taking the credit away, Taylor said, “eliminates the possibility for my child to have a bright and happy future.”

Taylor, whose 9-year-old son, Aiden, has a rare connective tissue disorder, spoke as part of a small rally thrown together this week by the National Organization for Rare Disorders (NORD) — the nation’s largest advocacy group for patients with rare diseases.

NORD advocate Andrea Taylor holds a picture of her sons, Aiden, 9, and Aaron, 11. Aiden has the rare connective-tissue disorder arterial tortuosity syndrome, which causes symptoms such as aneurysms and congestive heart failure. The syndrome has no treatment. Taylor says Congress is sending a message “that my child’s life does not matter” if the orphan drug tax credit is eliminated or reduced. (Sarah Jane Tribble/KHN)

Earlier this month, House Republicans proposed eliminating the orphan drug tax credits, which Congress passed as part of a basket of financial incentives for drugmakers in the 1983 Orphan Drug Act. The law, intended to spur development of medicines for rare diseases, also gives seven years of market exclusivity for drugs that treat a specific condition that affects fewer than 200,000 people.

The Senate Finance Committee, led by Sen. Orrin Hatch (R-Utah), put the tax credit back into the tax legislation. After some negotiations, the committee settled on reducing the credit to 27.5 percent of the costs of preapproved clinical research, compared with the current 50 percent. The committee also restored a provision that would have eliminated any credits for drugmakers who repurpose a mass-market drug as an orphan.

“As with any major reform, tough choices have to be made,” a Hatch spokesperson wrote in an emailed statement, adding that the senator will continue to work “to make the appropriate policy decisions” to deliver a comprehensive tax overhaul.

Hatch, a member of a rare-disease congressional caucus, received $102,600 in campaign contributions from pharmaceutical and related trade group political action committees in the first half of 2017, making him the top recipient of pharmaceutical cash in the Senate.

If the Senate provision remains untouched, reducing the tax credit would save the federal government nearly $30 billion over a decade, according to a markup of the bill released late last week.

Orphan drug development has become big business in recent years and advocates as well as critics of the industry say tax credits have been an important motivation for companies. Orphan drugs accounted for 7.9 percent of total U.S. drug sales last year, according to a report released by QuintilesIMS and NORD.

Because patient populations for rare-disease drugs are relatively small, companies often charge premium prices for the medicines. EvaluatePharma, a company that analyzes the drug industry, estimates that among the top 100 drugs in the U.S. the average annual cost per patient for an orphan drug last year was $140,443. Giant pharmaceutical companies such as Celgene, Roche, Novartis, AbbVie and Johnson & Johnson have led worldwide sales in the orphan market, according to EvaluatePharma’s 2017 Orphan Drug Report.

Jonathan Gardner, the U.S. news editor for EvaluatePharma, said the orphan drug tax credit is “probably the most important incentive for developing an orphan drug.” Cutting the credit will force even the large companies to question development of drugs for rare diseases, Gardner said.

Dr. Aaron Kesselheim, an associate professor of medicine at Harvard Medical School, has been critical of the Orphan Drug Act’s incentives and of companies taking advantage of the law’s financial incentives for profit. But he warned against rushing to eliminate the tax credit.

“We need to think about ways we can improve the Orphan Drug Act and stop people from gaming the system and exploiting it,” Kesselheim said. But there “are a lot of rare diseases that don’t have treatments. So, we need to be careful in making changes.”

The battle over the tax credit is the latest controversy for the Food and Drug Administration’s orphan drug program. FDA Commissioner Scott Gottlieb announced a “modernization” plan for the agency this summer, closing a pediatric testing loophole and eliminating a backlog of corporate applications for orphan drug status. And, this week, the agency confirmed that Dr. Gayatri Rao, director for the Office of Orphan Products Development, is leaving.

Meanwhile, the Government Accountability Office confirmed this month that it recently launched an investigation of the orphan drug program. The GAO’s review was sparked by a letter from top Republican Sens. Hatch, Chuck Grassley (R-Iowa) and Tom Cotton (R-Ark.), asking the agency to investigate whether drugmakers “might be taking advantage” of the drug approval process.

When the 1983 Orphan Drug Act was passed, the law described an orphan drug as one that affects so few people that drugmakers might lose money after covering the cost of developing a drug. Congress added the 200,000-patient limit in 1984.

Today, many orphan medicines treat more than one condition and often come with astronomical prices. Many of the medicines aren’t entirely new, either. A Kaiser Health News investigation, which was also aired and published by NPR, found that more than 70 of the roughly 450 individual drugs given orphan status were first approved for mass-market use, including cholesterol blockbuster Crestor, Abilify for psychiatric conditions, cancer drug Herceptin and rheumatoid arthritis drug Humira, which for years was the best-selling medicine in the world.

More than 80 other orphans won FDA approval for more than one rare disease and, in some cases, multiple rare diseases, the KHN investigation showed.

The pharmaceutical industry has had a muted response to the tax bill, which includes a corporate tax cut. The powerful industry lobbying group PhRMA said it is pleased Congress is looking at overhauling the tax code but “encourages policymakers to maintain incentives” for rare diseases. BIO, the Biotechnology Innovation Organization that represents biomedical companies, said it was “gratified” the Senate committee chose to partially retain the credit but would prefer to keep the existing incentive.

The group that rallied Tuesday — wearing bright-orange shirts that read “Save the Orphan Drug Tax Credit” — planned to meet with a couple of dozen lawmakers, including Grassley, who is a member of the Senate Finance Committee.

NORD, like many patient advocacy groups, receives funding from pharmaceutical companies, but the organization’s leaders say the industry does not have members on the board and does not dictate how general donations are spent.

On Tuesday, NORD leaders said they are open to discussions about the tax credit and whether the overall law is working as intended.

“We’re here to have that conversation, we’re ready to have that conversation,” said Paul Melmeyer, director of federal policy for NORD. “Sadly, that’s not the conversation we are having today.”

Abbey Meyers, a founder of NORD and the leading advocate behind passing the initial 1983 law, said she fears the high cost of the drugs will make it impossible to sustain the orphan drug program. Now retired, Meyers said she has followed the law’s success over the years and believes the tax credit should not be changed.

“There are other things that have happened since the law was passed where there wasn’t any logic to what they did,” Meyers said, adding “because somebody went to a senator and they put into the law.”

 

Ambulance trips can leave you with surprising — and very expensive — bills

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One patient got a $3,660 bill for a four-mile ride. Another was charged $8,460 for a trip from a hospital that could not handle his case to another that could. Still another found herself marooned at an out-of-network hospital, where she’d been taken by ambulance without her consent.

These patients all took ambulances in emergencies and got slammed with unexpected bills. Public outrage has erupted over surprise medical bills — generally out-of-network charges that a patient did not expect or could not control — prompting 21 states to pass laws over the years protecting consumers in some situations. But these laws largely ignore ground ambulance rides, which can leave patients stuck with hundreds or even thousands of dollars in bills and with few options for recourse, finds a Kaiser Health News review of 350 consumer complaints in 32 states.

Patients usually choose to go to the doctor, but they are vulnerable when they call 911 or get into an ambulance. The dispatcher picks the ambulance crew, which may be the local fire department or a private company hired by the municipality. The crew, in turn, often picks the hospital. Moreover, many ambulances are not summoned by patients, but by police or a bystander.

Betsy Imholz, special projects director at the Consumers Union, which has collected more than 700 patient stories about surprise medical bills, said at least a quarter concern ambulances.

“It’s a huge problem,” she said.

Forty years ago, most ambulances were free for patients, provided by volunteers or town fire departments using taxpayer money, said Jay Fitch, president of Fitch & Associates, an emergency services consulting firm. Today, ambulances are increasingly run by private companies and venture capital firms. Ambulance operators now often charge by the mile and sometimes for each “service,” such as providing oxygen. If the ambulance is staffed by paramedics rather than emergency medical technicians, that will result in a higher charge — even if the patient didn’t need paramedic-level services. Charges range from zero to thousands of dollars.

The core of the problem is that ambulance companies and private insurers often can’t agree on a fair price, so the ambulance service doesn’t join the insurer’s network. That leaves patients stuck with out-of-network charges that are not negotiated, Imholz said.

This happens to patients frequently, according to a recent study of more than half a million ambulance trips taken by patients with private insurance in 2014. The study, by two staffers at the Federal Trade Commission, found that 26 percent of these trips were billed on an out-of-network basis.

That figure is “quite jarring,” said Loren Adler, co-author of a recent report on surprise billing.

The KHN review of complaints revealed two common scenarios leaving patients in debt: First, patients get into an ambulance after a 911 call. Second, an ambulance transfers them between hospitals. In both scenarios, patients later learn the fee is much higher because the ambulance was out-of-network, and after the insurer pays what it deems fair, they get a surprise bill for the balance, also known as a “balance bill.”

The Better Business Bureau has received nearly 1,200 consumer complaints about ambulances in the past three years; half were related to billing, and 46 mentioned out-of-network charges, spokeswoman Katherine Hutt said.

While the federal government sets reimbursement rates for patients on Medicare, it does not regulate ambulance fees for patients with private insurance. Those patients are left with a highly fragmented system in which the cost of a similar ambulance trip can vary widely from town to town. There are about 14,000 ambulance services across the country, run by governments, volunteers, hospitals and private companies, according to the American Ambulance Association. (The Washington area reflects that mix.)

For a glimpse into the unpredictable system, consider the case of Roman Barshay. The 46-year-old software engineer, who lives in Brooklyn, was visiting friends in the Boston suburb of Chestnut Hill last November when he took a nasty fall.

Barshay felt a sharp pain in his chest and back, and he had trouble walking. An ambulance crew responded to a 911 call at his friends’ house and drove him four miles to Brigham and Women’s Hospital, taking his blood pressure as he lay down in the back. Doctors there determined he had sprained tendons and ligaments and a bruised foot, and released him after about four hours, he said.

After Barshay returned to Brooklyn, he got a bill for $3,660, or $915 for each mile of the ambulance ride. His insurance had covered nearly half, leaving him to pay the remaining $1,890.50.

“I thought it was a mistake,” Barshay said.

But Fallon Ambulance Service, the private company that brought him to the hospital, was out-of-network for his UnitedHealthcare insurance plan.

“The cost is outrageous,” said Barshay, who reluctantly paid the bill after Fallon sent it to a collection agency. If he had known what the ride would cost, he said, he would at least have been able to refuse the ride and “crawl to the hospital myself.”

In a statement, UnitedHealthcare said: “Out-of-network ambulance companies should not be using emergencies as an opportunity to bill patients excessive amounts when they are at their most vulnerable.”

“You feel horribly to send a patient a bill like that,” said Peter Racicot, senior vice president of Fallon, a family-owned company based outside Boston.

But ambulance firms are “severely underfunded” by Medicare and Medicaid, Racicot said, so Fallon must balance the books by charging higher rates for patients with private insurance.

Racicot said his company has not contracted with Barshay’s insurer because they couldn’t agree on a fair rate. When insurers and ambulance companies can’t agree, he said, “unfortunately, the subscribers wind up in the middle.”

It’s also unrealistic to expect EMTs and paramedics at the scene of an emergency to determine whether their company takes a patient’s insurance, Racicot added.

Ambulance services must charge enough to subsidize the cost of keeping their crews ready around the clock, said Fitch, the ambulance consultant. In a third of the cases where an ambulance crew answers a call, he added, they end up not transporting anyone and the company typically isn’t reimbursed for the trip.

In part, Barshay had bad luck. If his injury had happened just a mile away — inside Boston’s city limits — he could have ridden a city ambulance, which would have charged $1,490, according to Boston EMS, a sum that his insurer probably would have covered in full.

Very few states have laws limiting ambulance charges, and most state laws that protect patients from surprise billing do not apply to ground ambulance rides, according to Brian Werfel, a consultant to the American Ambulance Association. And none of the surprise-billing protections apply to people with self-funded employer-sponsored health insurance plans, which are regulated only by federal law. That’s a huge exception: 61 percent of privately insured employees are covered by self-funded employer-sponsored plans.

Some towns that hire private companies to respond to 911 calls may regulate fees or prohibit balance billing, Werfel said, but each locality is different.

Insurers try to protect patients from balance billing by negotiating rates with ambulance companies, said Cathryn Donaldson, a spokeswoman for America’s Health Insurance Plans. But “some ambulance companies have been resistant to join plan networks” that offer Medicare-based rates, she said.

Medicare rates vary widely by geographic area. On average, ambulance services make a small profit on Medicare payments, according to a report by the Government Accountability Office. If a patient uses a basic life support ambulance in an emergency in an urban area, for instance, Medicare payments range from $324 to $453, plus $7.29 per mile. Medicaid rates tend to be significantly lower.

There’s evidence of waste and fraud in the ambulance industry, Donaldson added, citing a study from the Office of Inspector General at the Department of Health and Human Services. The report concluded that in 2012 Medicare paid more than $50 million in improper ambulance bills, including for supposedly emergency-level transport that ended at a nursing home, not a hospital. One in 5 ambulance services had “questionable billing” practices, said the report, which noted that Medicare spent $5.8 billion on ambulance transport that year.

Most complaints reviewed by Kaiser Health News did not appear to involve fraudulent charges. Instead, patients got caught in a system in which ambulance services can legally charge thousands of dollars for a single trip — even when the trip starts at an in-network hospital.

That’s what happened to Devin Hall, a 67-year-old retired postal inspector in Northern California. While he faces Stage 3 prostate cancer, Hall is also fighting a $7,109.70 bill from American Medical Response, the nation’s largest ambulance provider.

On Dec. 27, 2016, Hall went to a local hospital with rectal bleeding. Because the hospital didn’t have the right specialist to treat his symptoms, it arranged for an ambulance ride to another hospital about 20 miles away. Even though the hospital was in his network, the ambulance was not.

Hall was stunned to see that AMR billed $8,460 for the trip. His federal health plan, the Special Agents Mutual Benefit Association, paid $1,350.30 and held Hall responsible for $727.08, records show. (According to his plan’s explanation of benefits, it paid that amount because AMR’s charges exceeded the plan’s Medicare-based fee schedule, which is based on Medicare rates.) But AMR turned his case over to a debt collector, Credence Resource Management, which sent an Aug. 25 notice seeking the full balance of $7,109.70.

“These charges are exorbitant — I just don’t think what AMR is doing is right,” said Hall, noting that he had intentionally sought treatment at an in-network hospital.

He has spent months on the phone calling the hospital, his insurer and AMR trying to resolve the matter. Given his prognosis, he worries about leaving his wife with a legal fight and a lien on their Brentwood, Calif., house for a debt they shouldn’t owe.

After being contacted by Kaiser Health News, AMR said it pulled Hall’s case from collections while it reviews the billing. After further review, company spokesman Jason Sorrick said the charges were warranted because it was a “critical care transport, which requires a specialized nurse and equipment on board.”

Sorrick faulted Hall’s health plan for underpaying, and said Hall could receive a discount if he qualifies for AMR’s “compassionate care program” based on his financial and medical situation.

“In this case, it appears the patient’s insurance company simply made up a price they wanted to pay,” Sorrick said.

In July, a California law went into effect that protects consumers from surprise medical bills from out-of-network providers, including some ambulance transport between hospitals. But Hall’s case occurred before that, and the state law doesn’t apply to him because of his federal insurance plan.

The consumer complaints reviewed by Kaiser Health News reveal a wide variety of ways that patients are left fighting big bills:

• An older patient in California said debt collectors called incessantly, including on Sunday mornings and at night, demanding an extra $500 on top of the $1,000 that his insurance had paid for an ambulance trip.

• Two ambulance services responded to a New Jersey man’s 911 call when he felt burning in his chest. One of them charged him $2,100 for treating him on the scene for less than 30 minutes — even though he never rode in that company’s ambulance.

• A woman who rolled over in her Jeep in Texas was charged a $26,400 “trauma activation fee” — a fee triggered when the ambulance service called ahead to the emergency department to assemble a trauma team. The woman, who did not require trauma care, fought the hospital to get the fee waived.

In other cases, patients face financial hardship when ambulances take them to out-of-network hospitals. Patients don’t always have a choice in where to seek care; that’s up to the ambulance crew and depends on the protocols written by the medical director of each ambulance service, said Werfel, the ambulance association consultant.

Sarah Wilson, a 36-year-old microbiologist, had a seizure at her grandmother’s house in rural Ohio on March 18, 2016, the day after having hip surgery at Akron City Hospital. When her husband called 911, the private ambulance crew that responded refused to take her back to Akron City Hospital, instead driving her to an out-of-network hospital that was 22 miles closer. Wilson refused care because the hospital was out-of-network, she said.

Wilson wanted to leave. But “I was literally trapped in my stretcher,” without the crutches she needed to walk, she said. Her husband, who had followed by car, wasn’t allowed to see her right away. She ended up leaving against medical advice at 4 a.m. She landed in collections for a $202 hospital bill for a medical examination, a debt that damaged her credit score, she said.

Ken Joseph, chief paramedic of Emergency Medical Transport, the private ambulance company that transported Wilson, said company protocol is to take patients to the “closest appropriate facility.” Serving a large area with just two ambulances, the company has to get each ambulance back to its station quickly so it can be ready for the next call, he said.

Patients such as Wilson are often left to battle these bills alone, because there are no federal protections for patients with private insurance.

Rep. Lloyd Doggett (D-Texas), who has been pushing for federal legislation protecting patients from surprise hospital bills, said in a statement that he supports doing the same for ambulance bills.

Meanwhile, patients do have the right to refuse an ambulance ride, as long as they are older than 18 and mentally capable.

“You could just take an Uber,” said Adler, co-author of the surprise-billing report. But if you need an ambulance, there’s little recourse to avoid unexpected bills, he said, “other than yelling at the insurance company after the fact, or yelling at the ambulance company.”

UnitedHealth, Anthem file protests over Tricare contracts

http://www.fiercehealthcare.com/payer/unitedhealth-anthem-file-protests-over-tricare-contracts?utm_medium=nl&utm_source=internal&mrkid=959610&mkt_tok=eyJpIjoiTldOak1UUmtaR0l5Tm1VeiIsInQiOiIxXC96OG5JYmtUUGs2dmZFZ3czQk9VOFRZVlNXNjJxRkJ3VnNwR0drb1RMZllmXC9tcGpaZG5JYkZ6MUdBcVgrVjc0Q2lHSkpsUDJPT3FcL21GYVR1ekRDNmxxd0Q2TVhqRlRwS0NGWVlhRjJ3RT0ifQ%3D%3D

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Two of the nation’s largest health insurers have filed protests with the Government Accountability Office (GAO) contesting the defense department’s decision to award new Tricare contracts to competing companies.

UnitedHealth officially filed its protest with the GAO on Aug. 1, and WellPoint Military Care, a subsidiary of Anthem, filed its own protest a day later.

The protests dispute the contracts awarded to Tricare’s East and West regions announced in July by the Defense Health Agency at the Department of Defense. The defense department appointed Humana to manage the East region, a consolidation of the North and South regions worth $40.5 billion over the five-year contract. Health Net, which was acquired by Centene in March, was selected to run the West region, with a contract valued at $17.7 billion.