As Hospitals Post Price Lists, Consumers Are Asked To Check Up On Them

With much fanfare, federal officials required hospitals nationwide this year to post their “list” prices online. But it’s not yet clear how many are doing it, even as the government has taken the rare step of asking consumers to monitor hospital compliance.

Most hospitals appear to be complying with the rule, according to hospital officials and a small sampling of websites.

However, the feds acknowledge they are not yet enforcing the rule, industry groups are not monitoring compliance, many hospitals are burying the information on their websites, and debate continues about whether the price lists are creating more confusion than clarity among consumers.

The rule took effect Jan. 1, after a year-long controversy about its necessity and usefulness. It requires every hospital in the country — about 6,000 — to post its full price list online.

The lists, known in the industry as “chargemasters,” present prices for the thousands of individual services and products for which a hospital may bill — everything from the price for a bed per day, blood tests and surgical operating room time (billed in 15-minute intervals) to the cost of a single Tylenol tablet.

The problem: Services and products are identified in obscure abbreviations, billing codes and medical terminology that even doctors or nurses often don’t understand.

Additionally, the chargemaster lists only rarely reflect final billed charges because insurers and the government generally negotiate significantly lower prices. In most cases, these posted rates are the highest a hospital would ever charge per service.

Even so, officials at the Centers for Medicare & Medicaid Services (CMS) said full public disclosure was a logical first step in a transparency initiative aimed at eventually encompassing physician and prescription drug prices.

CMS contends the listings will help patients compare facilities, spur competition among hospitals to lower prices and prompt software developers to build tools that consumers can use to comparison shop.

“We think this information will empower patients,” said Seema Verma, the CMS administrator. “And we look forward to seeing consumers continue to drive the demand for hospitals to provide greater price transparency.”

Verma has enlisted the public in an unusual effort to monitor whether hospitals are complying. In appearances, opinion pieces and through social media, she has urged consumers to check their local hospitals’ websites to see if chargemaster lists are posted and let the agency know if they are not.

While putting off enforcing the law, CMS has instead invited hospitals, other health care stakeholders and the public to weigh in on possible enforcement mechanisms, as well as to suggest future price transparency measures. Hundreds of comments have been submitted.

At the agency-initiated Twitter site #WheresthePrice, a dialogue has ensued. In one case, a Texas man, Matt Kleiber, checked 31 hospitals and medical centers in Houston and found one health system, Memorial Hermann, which operates 16 hospitals, not in compliance.

After a reporter’s inquiry, Kathryn Williams, a spokeswoman for Memorial Hermann, said in early February that the hospital system was in compliance. She said they interpreted the government’s rule as allowing a shorter, easier-to-understand price list to be posted.

Subsequently, in late February, the hospital posted its full chargemaster list, as the regulation requires.

“What we posted [initially] was much easier for our patients to understand,” said Williams. “We don’t think the chargemaster list is helpful … and we stand by our position that the information we have had posted on our website since Jan. 1 is consistent with CMS’s guidance.”

Other reports of noncompliance at #WheresthePrice appeared to be the result of incomplete website explorations by consumers. A KHN check of the websites of six cited hospitals showed the price lists were posted. On all but one of the sites, however, the information was not prominently displayed.

About a dozen hospital websites reviewed by KHN included an accompanying — and often prominent — disclaimer saying the information doesn’t reflect typical final charges and is difficult to understand.

Accompanying its chargemaster list, for example, Saline Memorial Hospital in Benton, Ark., states: “The amount listed [for each service] is not necessarily reflective of your actual financial responsibility. … We recommend that all patients contact their insurer or Saline Health System to discuss their individual situations and determine the potential out-of-pocket costs of their care.”

Ariel Levin, senior associate director of state issues at the American Hospital Association (AHA), said hospitals have been reluctant to draw too much attention to their price lists.

“Most hospitals think this information will not help patients,” Levin said. “And many think it only confuses people.”

Levin said the AHA is not monitoring its members’ compliance, and she doesn’t think other hospital trade groups are either.

“But all the hospital websites we have checked so far have been in compliance, and we believe the vast majority are abiding by the rule,” Levin said. Small rural hospitals may take longer to comply, she added.

CMS and the AHA said a few hospitals offer consumer-friendly price transparency that goes significantly beyond the chargemaster price lists.

St. Luke’s University Health Network, a 10-hospital system with 300 outpatient clinics in Pennsylvania and New Jersey, several years ago launched an online tool with two features, “PriceLock” and “PriceChecker.”

Francine Botek, the hospital’s senior vice president for finance, said PriceLock allows patients to get an all-inclusive price for most — 80 percent — of the hospital’s outpatient services even if a patient doesn’t enter insurance information. PriceChecker permits people to enter insurance information and other data to help calculate their out-of-pocket costs.

The tools are only slowly gaining traction among consumers, said Botek. In 2018, 35,200 people used PriceChecker, averaging about 2,500 a month. Over the past three years, about 3,600 have used PriceLock.

The University of Utah, which owns four hospitals, has a similar online out-of-pocket cost estimator for about 600 common (mostly outpatient) services and procedures — giving a single price that rolls up itemized charges for each. People with or without insurance can use the tool. Those without insurance get an across-the-board 30 percent discount off the list price, and deeper discounts are sometimes available.

Kathy Delis, who oversees billing at University of Utah Health, said the hospital system plans this year to market the tool to the public more aggressively.

“It’s going to take time to engage patients,” Delis said. “We have urged CMS to move beyond the chargemaster rule as soon as possible.”

A few states require hospitals to give consumers price estimates. The laws are limited in scope, however. In 2018, Colorado became the latest state to enact such a law. It mandates that hospitals post “self-pay” prices for the 50 conditions that yield the most revenue from Medicare. Doctors must also post prices for their 15 most popular procedures.

An older California law requires hospitals to disclose prices for the top 26 outpatient services by revenue.

A spokesperson for CMS said the agency plans to issue its next regulation on hospital price transparency this year.

This story was produced by Kaiser Health News, an editorially independent program of the Kaiser Family Foundation.

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Trump Highlights Health Agenda With Vow To Lower ‘Unfair’ Drug Prices

It was not the centerpiece, but health was a persistent theme in President Donald Trump’s State of the Union address at the Capitol on Tuesday night.

Although the administration has focused more on issues of trade, taxes and immigration, the president laid out a series of health-related goals, including some that even Democrats indicated could be areas of bipartisan negotiation or compromise. Trump vowed to take on prescription drug prices, pursue an end to the HIV epidemic and boost funding for childhood cancers.

He also took a victory lap for goals promoted by his administration that had been accomplished. “We eliminated the very unpopular Obamacare individual mandate penalty,” he said, referring to the requirement in the Affordable Care Act that most people must have health insurance or pay a fine. It was eliminated as part of the 2017 GOP tax bill, despite backlash from critics that it could undercut Obamacare, after many failed attempts by Republicans to repeal the law.

And Trump noted congressional passage of a “right to try” bill that was supposed to make it easier for terminally ill patients to gain access to experimental medications, but so far few patients have been able to make the law work for them.

The most likely ground for bipartisanship will be the issue of drug prices, where Democrats are as eager as the president to do something to rein in prices that are spiraling upward.

“It is unacceptable that Americans pay vastly more than people in other countries for the exact same drugs, often made in the exact same place. This is wrong, this is unfair, and together we will stop it. We will stop it fast,” he said. “I am asking the Congress to pass legislation that finally takes on the problem of global freeloading and delivers fairness and price transparency for American patients.”

Democrats are cautiously optimistic on the drug price front. “I really am hopeful about making strides on prescription drug legislation this year on a bipartisan basis,” Wendell Primus, top health aide to House Speaker Nancy Pelosi, said at a conference for health policy researchers hours before the speech.

But not all of Trump’s claims Tuesday about his efforts on drug pricing stand up to close scrutiny. He proclaimed that “in 2018 drug prices experienced their single-largest decline in 46 years.” The drug-price portion of the consumer price index (CPI) declined slightly last year for the first time since 1972, but prices for many individual drugs are still rising sharply.

Factors beyond the administration’s actions appear to have played the biggest role in the overall slowdown. Drug price increases have slowed largely because patents have expired on expensive, blockbuster drugs and several years have passed since the introduction of expensive medicines to treat hepatitis C, according to independent analysts.

But even as consumer drug prices have moderated, drug spending per hospital admission soared 19 percent from 2015 to 2017, a study sponsored by hospital trade groups found last month. That includes anesthesia drugs, chemotherapy infusions and other medicines that are not counted in the CPI.

Some well-placed Republicans praised the drug price effort. “I expect deep-pocketed interests to oppose anything and everything to protect the status quo,” said Sen. Chuck Grassley (R-Iowa), chairman of the powerful Senate Finance Committee. “But the moment is ripe for action and Americans expect us to work together to get the job done.”

News organizations including Kaiser Health News have reported on dozens of cases of surprise hospital bills, unaffordable costs for life-sustaining drugs and other health-expense shocks for patients. Shereese Hickson, whose experience with a $123,000 bill for multiple sclerosis drugs was covered by KHN and National Public Radio, was watching the speech.

“I’m glad he mentioned it,” she said of Trump’s promise to bring transparency and competition to pharmaceutical prices. “But I would like to see if it really will come true. If you do that — that’s going against the drug companies. They’ll be losing money and they’re not going to let that happen.”

Elizabeth Moreno was billed $17,850 for a urine test. After Moreno’s insurer declined to pay any of the bill because the lab was out-of-network, her father, Dr. Paul Davis, paid the lab $5,000 to settle the bill.(Julia Robinson for KHN)

Paul Davis — a retired doctor from Findlay, Ohio, whose family’s experience with a $17,850 bill for a simple urine test was detailed in a KHN-NPR “Bill of the Month” feature last year and who met with Trump about surprise billing last month — said he was disappointed Trump did not go into further detail about his health care proposals.

“He didn’t say anything,” he said.

Davis said he would have liked to have heard more about the administration’s recently announced plan to eliminate drug rebates negotiated by middlemen in the Medicare drug program, as well as the recently implemented policy requiring hospitals to list their prices online.

“If he wanted to use the podium to talk about the wonderful things that he’s done, that’s one of the things he’s gotten accomplished,” Davis said.

In their official responses to the speech, Democrats were more combative. “In this great nation, Americans are skipping blood pressure pills, forced to choose between buying medicine or paying rent,” said Stacey Abrams, former Georgia House minority leader and a rising star in the national Democratic Party. “Maternal mortality rates show that mothers, especially black mothers, risk death to give birth. And in 14 states, including my home state where a majority want it, our leaders refuse to expand Medicaid, which could save rural hospitals, economies and lives.”

California Attorney General Xavier Becerra, who gave the Spanish-language Democratic response, reminded viewers that while the Trump administration is seeking to have the Affordable Care Act overturned in court, Democrats would provide “medical care for your family that no politician can take away from you.”

The son of Mexican immigrants, Becerra attacked Trump’s proposal for a border wall as not only immoral, but also illegal.

“Tonight was about convincing us that the deceit and dysfunction would stop and that cooperation would begin. What we heard was the same tired refrain of building walls,” Becerra said. But that’s not the only wall the administration is trying to build, he said.

“They are putting a wall between you and your doctor,” he said. “They are putting a wall between you and the voting booth.”

“They are also putting a wall between our veterans and their medical services,” he added. “They are ready to waste millions of dollars on a border wall instead of helping our veterans who wait long hours to get into a hospital.”

Becerra has sued the Trump administration 45 times in the past two years, and leads a coalition of 20 states and the District of Columbia in defending the Affordable Care Act against a Texas lawsuit that could determine the fate of the law.

“In the courts or in Congress or at the polls, we have to fight for our agenda. That is why I have fought in court as attorney general, against the administration, and we are winning.”

In another outreach to Democrats, Trump vowed that his budget “will ask Democrats and Republicans to make the needed commitment to eliminate the HIV epidemic in the United States within 10 years. Together, we will defeat AIDS in America,” he said.

Groups that have been fighting HIV praised the promise.

“While we might have policy differences with the president and his administration, this initiative, if properly implemented and resourced, can go down in history as one of the most significant achievements of his presidency,” said Michael Ruppal, executive director of The AIDS Institute.

Trump also promised that his budget, which has been delayed by the recent government shutdown, will seek new funding to expand research into cures and treatments for childhood cancer.

He said he will seek “$500 million over the next 10 years to fund this critical lifesaving research.” The National Institutes of Health has long been a bipartisan favorite in Congress, although Trump in his first budget did seek cuts in NIH funding.

The one area in which bipartisanship will clearly not prevail is that of abortion. Trump reiterated a promise he made to anti-abortion groups as a candidate in 2016 and pushed for a federal bill to ban abortions after 20 weeks of pregnancy.

“Let us reaffirm a fundamental truth: All children — born and unborn — are made in the holy image of God,” he said.

Senate Republicans voted on such a bill in 2018; it failed to advance by a large margin. The bill still lacks the votes in the Senate, and the House now has a majority that supports abortion rights.

Abortion opponents praised the president’s comments. “Once again, President Trump has proved he is our nation’s most pro-life president ever and he is keeping his promise to the voters who fueled his victory,” said Marjorie Dannenfelser of the Susan B. Anthony List.

Abortion-rights supporters, meanwhile, chastised Trump’s comments.

“Shame on the president for using the State of the Union to vilify people who have abortions and the providers who care for them,” said Megan Donovan of the Guttmacher Institute. “Make no mistake: This is part of a larger agenda to eliminate access to abortion altogether.”

Staff writers Jay Hancock and Emmarie Huetteman contributed to this report.

This story was produced by Kaiser Health News, an editorially independent program of the Kaiser Family Foundation.

Pain From The Government Shutdown Spreads. This Time It’s Food Stamps.

Antoinette Martinez was relieved when she heard she would receive her food stamps for February about two weeks early. Her cabinet was nearly empty after the holidays, and now she could stock up on groceries to feed her family.

But Martinez also feared she wouldn’t be able to make the funds last. “I know I’m gonna spend them and I’m gonna be struggling next month,” 31-year-old Martinez said late Wednesday as she loaded her car with bags from a Food 4 Less market in Los Angeles.

The pain from the federal government’s partial shutdown is spreading in sometimes unexpected ways to millions of people who don’t work for the federal government.

The roughly 40 million people who depend on federal food assistance will get their February benefits early, because the government shutdown means the money will be unavailable later, state and federal officials said. All 50 states and the District of Columbia issued the benefits this week, or plan to do so by Sunday, according to the U.S. Department of Agriculture. Normally, they would be distributed on or after Feb. 1.

It is unclear whether funding for the program will be available in March if the shutdown continues. The benefits for February cost the federal government approximately $4.8 billion.

The Supplemental Nutrition Assistance Program, commonly known as food stamps, is administered through states and counties. In California, which operates the nation’s largest program, about 3.8 million people receive benefits. Nationwide, the average participant receives $125 per month.

The shutdown, caused by a disagreement between congressional Democrats and the Trump administration over the president’s demand for a wall at the Mexican border, is in its 28th day — the longest federal government shutdown in history.

The USDA informed states last week that if they wanted the nutrition dollars for February, they had to issue the benefits to participants by Jan. 20. The government told the states to make sure beneficiaries knew these were early, not extra, benefits — and that they would have to make them last.

A USDA spokesperson said Thursday in an emailed statement that food stamp recipients should “plan their purchases carefully to meet their food needs through the month of February.”

However, benefit administrators and advocates worry that there’s not enough time to get that message out widely. And even in normal times, food assistance often doesn’t carry families through an entire month, which could make it difficult for many families to stretch the money until March.

“I don’t think it will be a surprise that people will exhaust those benefits before the end of February, because they need them to eat,” said Cathy Senderling-McDonald, deputy executive director of the County Welfare Directors Association of California, which represents human service directors in all 58 counties.

Despite these concerns, Senderling-McDonald and social service administrators throughout the nation have said they are pleased that the federal government released the funds early so recipients would not have to go without food assistance next month.

USDA officials told states they should continue accepting new applications and recertifying eligibility on existing cases because there is a contingency fund, though limited, to provide February benefits to that population.

States, counties and community organizations are getting out the message about the change — and the need to make the benefits last six weeks — through text messages, social media, posters, websites and call centers.

The message hadn’t made it to Howard Naylor, a retired veteran who lives in Los Angeles. He said the February funds appeared on his card Wednesday but he didn’t know why. Upon hearing the reason, Naylor said he would try to hold back some of the money so he didn’t run out before March. “You got to make do with what you got,” he said.

Naylor, 56, said he didn’t understand why the debate in Washington over funding for a border wall was affecting him. “It’s unfair,” said Naylor, who receives about $190 in food assistance each month. “What did I do?”

For low-income families, budgeting and planning are sometimes easier said than done, said Jeremy Everett, executive director of Baylor University’s Texas Hunger Initiative, which provides research and resources to organizations addressing food insecurity.

“Most families are running out of money by the end of the month even under normal circumstances,” Everett said. “I’m worried that by February, families are going to be really hurting.”

In California, state Department of Social Services officials worked closely with counties to get the benefits issued by Wednesday.

Mike Edmundson, a deputy division director of the social services agency in Orange County, said his county had issued February benefits to 85,000 participants. The other 20,000 are awaiting recertification.

It’s now clear that the shutdown is impacting some of the “most vulnerable members of our community,” Edmundson said. “They need these benefits to make sure there is food on the table.”

The USDA has said it is closely monitoring the situation and looking at all options for the next round of benefits, due for distribution in March.

That’s not comforting to Baylor University’s Everett. “My worry for March is that the government won’t be reopened … and it will be pretty dire,” he said.

Dawn Torres, 48, who was buying milk, bread and eggs on Wednesday at Food 4 Less, has the same fear. She depends on the roughly $200 she receives each month and says she already stretches those funds. “It does not go far,” she said. Torres said she hoped the shutdown would end before March. “We depend on the money we get,” she said.

Families running out of food assistance money could increase pressure on food banks, said Korey Patty, executive director of Feeding Louisiana, the state association of food banks. They are already expecting an increase in visitors next month and are worried about meeting the demand.

“The need doesn’t go away,” Patty said. “It just gets pushed to us.”

This story was produced by Kaiser Health News, an editorially independent program of the Kaiser Family Foundation.

California’s Top Lawyer Cements His Role As Health Care Defender-In-Chief

SACRAMENTO, Calif. — Xavier Becerra, the political savvy Democratic attorney general of California, has sued the Trump administration 45 times in the past two years, often with much fanfare.

In winning a legal challenge Sunday against new government rules limiting birth control, he once against cemented himself as a national figure leading a fight against the administration across a range of issues — especially health care.

The 12 other states and the District of Columbia that had joined Becerra’s lawsuit also gained a last-minute reprieve from the federal regulations that would have taken effect Monday. They would have allowed most employers to refuse to provide insurance coverage for workers’ birth control by raising a religious or moral objection.

Those rules were also halted for the rest of the country on Monday when a Pennsylvania judge granted a nationwide injunction in a similar lawsuit.

The contraception case is one of several fronts where Becerra has led state coalitions to defend the Affordable Care Act in lawsuits in Texas, California and Washington, D.C.

“The Trump administration is trying to chip away at those protections,” said Andrew Kelly, an assistant professor at the Department of Health Sciences at California State University-East Bay. “It’s left to states like California and Attorney General Becerra in taking a lead in confronting these efforts.”

Becerra is perhaps best known for leading the opposition to the Texas v. U.S. lawsuit. In that suit, the Texas attorney general argued that the Affordable Care Act should be rendered unconstitutional because Congress eliminated the tax penalty on the uninsured. A federal judge last month sided with Texas, ruling that the federal health care law is unconstitutional.

Becerra, who said he helped write the health care law, said he felt compelled to step in when the Trump administration decided not to defend the law. Sixteen states and the District of Columbia joined that lawsuit, which is now on appeal.

The multistate strategy is one that attorneys general have used often in the past few decades when they don’t agree with policies coming out of Washington, legal and political experts say. And it’s not unique to one political party.

Republican attorneys general, for example, sued the Obama administration to block the expansion of Medicaid in their states. When George W. Bush was president, the state of Massachusetts led Democratic states in an effort to force the Environmental Protection Agency to regulate greenhouse gas emissions from cars.

The legal tit for tat is what Nicholas Bagley, a professor at the University of Michigan Law School, described as a disconcerting “militarization” of the state attorneys general offices to press an agenda in the courts.

“At a time of polarized politics, there’s every incentive to pull whatever levers are available to you to try to advance your goals,” Bagley said. “Over time, the state attorneys general have come to the view that the courts are an important forum to have these fights over important questions.”

The behavior of the attorneys general also comes in response to an administration that is using its executive authority to push initiatives that it can’t get Congress to approve.

President Donald Trump is left “to try to use either the regulatory process or executive order to accomplish his goals,” said Gerald Kominski, a professor of health policy at UCLA. “Anyone who opposes those goals has to proceed through the legal process to challenge them.”

Becerra, the first Latino to serve as California attorney general, has sued the Trump administration on a wide range of issues: health care, immigration, the Muslim travel ban, citizenship questions on the census, the border wall, climate change and clean-water rules.

When the former congressman was sworn in to his second term last week, he declared that he had “been a little busy keeping the dysfunction and insanity in Washington, D.C., from affecting California,” and defending the state from the “overreach of the federal government.” And he doesn’t have any plans to let up.

“Whether it’s the criminals on our streets or the con man in the boardrooms or the highest office of the land,” Becerra said, “we’ve got your back.”

But Becerra’s record has been mixed.

The victory in court Sunday was limited. Oakland-based U.S. District Judge Haywood Gilliam Jr. blocked the rules from taking effect in the District of Columbia and the 13 states that challenged them, but he refused to stop them from taking effect in the rest of the country. That national reprieve came a day later in a Pennsylvania court, with U.S. District Judge Wendy Beetlestone describing the harm to women as “actual and imminent.”

If the administration appeals, as expected, Pennsylvania, along with California and its legal coalition would move ahead with their cases to permanently throw out the rules, arguing that the Affordable Care Act guaranteed women no-cost contraception as part of their preventive health care, a provision that they say has benefited more than 62 million women since 2012, when the regulations went into effect.

The Trump rules, California argued in legal filings, would “transform contraceptive coverage from a legal entitlement to an essentially gratuitous benefit wholly subject to an employer’s discretion.” In its proposed regulations, the U.S. Department of Health and Human Services described the exemption as narrow and one that would affect a fraction of women — no more than 127,000.

That’s a number Becerra disputes.

In claiming victory on the birth control lawsuit, Becerra said Sunday that his coalition will continue to advocate for women’s access to reproductive health care.

How much more will Becerra fight during the next four years? Addressing the crowd who gathered this month to see him sworn in to a second term, he conveyed a simple response:

“The sky is the limit.”

Coverage Denied: Medicaid Patients Suffer As Layers Of Private Companies Profit

Marcela Villa isn’t a big name in health care — but she played a crucial role in the lives of thousands of Medicaid patients in California. Her official title: denial nurse.

Each week, dozens of requests for treatment landed on her desk after preliminary rejections. Her job, with the assistance of a part-time medical director, was to conclusively determine whether the care — from doctor visits to cancer treatment — should be covered under the nation’s health insurance program for low-income Americans.

She was drowning in requests, she said, and felt pressed to uphold most of the denials she saw. “If it was a high-dollar case, they tried to deny it,” Villa said. “I told them you can’t deny it just because it’s going to cost $20,000.”

Villa, 32, did not work for the government. She did not even work for an insurer under contract with the government. She worked for a company now called Agilon Health. Owned by a private equity firm, it’s among the legion of private subcontractors looking to profit from Medicaid patients.

California’s Medicaid program, known as Medi-Cal, has determined that the Long Beach company, which was paid to coordinate care for about 400,000 patients, improperly denied or delayed care for at least 1,400 of them, state officials confirmed. The state Department of Managed Health Care is investigating further.

The state findings, along with internal company documents and a whistleblower complaint obtained by Kaiser Health News, shine a light on the potential dangers of outsourcing care for poor people. Government oversight, not rigorous to begin with, fades as taxpayer money filters down through layers of companies eager to seize on Medicaid’s substantial growth under the Affordable Care Act. Medicaid officials say they have authority only over the health plans, not their subcontractors.

In an interview, Agilon chief executive Ron Kuerbitz acknowledged that some patients experienced modest delays in care but disputed that any suffered unjustified denials. He noted that an internal investigation by the company found no evidence of “systemic” denials and that most of the problems existed before Agilon took over another firm, Primary Provider Management Co., in 2016.

“We did the right thing when it was identified,” Kuerbitz said of the problems. “We disclosed it, we investigated it, and we pursued a remedial path.”

Such concerns are not isolated to one company. Last year, KHN reported on similar irregularities at SynerMed, a Medicaid subcontractor that coordinated care for about 650,000 patients in California.

In response to a whistleblower complaint, the state Medicaid program said it found “widespread deficiencies” at SynerMed that put patients “in imminent danger of not receiving medically necessary healthcare services.” The company’s staffers had falsified documents for years to cover up improper denials of care, according to state officials.

Then SynerMed abruptly shut down, and some of its patients moved to Agilon’s medical groups.

Skimping On Services?

Nearly three-quarters of the 73 million low-income Americans on Medicaid are now in managed care, in which states pay health insurers fixed monthly amounts for each enrollee to cover the range of services they need.

Under this system, keeping patients as healthy as possible is one way to make money. Another is to deny or skimp on services.

Increasingly, Medicaid plans outsource the work of managing patients’ health and medical treatment to subcontractors like Agilon — passing along a share of the government money coupled with the financial risk posed by a fixed budget.

These firms can be powerful gatekeepers. They run physician groups, bear responsibility for forming doctor networks and judge whether a request for care is necessary.

Agilon is a big player in California — doing business with insurers such as Molina Healthcare and Blue Shield of California — and it’s now expanding in other states like Texas and Ohio.

Primary Provider Management Co. ran several medical groups, including Vantage Medical Group with more than 5,000 physicians across Southern California. By building off PPMC’s base of Medicaid enrollees in California, the New York private equity firm that owns a majority stake in Agilon — Clayton, Dubilier & Rice — sought to coordinate care in Medicaid and Medicare Advantage plans across the country. (CD&R did not respond to interview requests.)

For several years, the problems at PPMC, and then Agilon, went undetected. Then, in early 2018, Agilon disclosed to the California Department of Managed Health Care its discovery that employees had been altering records prepared for auditors, which it said was not known to top management.

According to an internal report, completed in May and obtained by KHN, staffers had been falsifying documents since at least 2014 to pass audits by health plans. Employees were changing dates, for example, to cover up delays or withholding certain files so they couldn’t be reviewed.

That same month, an anonymous whistleblower sent a letter to health plans and government officials, urging them to investigate “illegal, unethical” conduct at the firm. “Senior management delays treatments for cancer patients without any regard of patient’s well-being, to save their dollars,” the whistleblower wrote in a two-page letter reviewed by KHN. “They brag about how profitable we are.”

In response to the allegations raised by the whistleblower and state, Agilon opened another internal investigation. That second report, finished in June, found inadequate staffing to handle the volume of work, various shortcuts and practices outside industry “norms” and improperly denied claims. Both internal reports were released to the state.

A top official Inland Empire Health Plan, one of the largest Medicaid insurers in the country, said the plan also looked into Agilon’s conduct and found instances in which its patients were harmed.

In an interview, Inland Empire CEO Bradley Gilbert said Agilon denied a patient’s transfusions for anemia, causing the person to be hospitalized. It also improperly denied cardiac rehabilitation to a patient recovering from a heart attack, he said. Inland Empire canceled its contract with Agilon’s Vantage Medical Group in August, he said.

A ‘Manager Told Me To Do It’

Agilon’s June report depicts an operation that was often stretched thin: Nurses were handling 120 to 200 requests for care per day, on average, with no full-time medical director to review the findings.

From 2014 until May, the company relied on a family physician who was working 10 to 12 hours a day running his own medical practice, according to the report.

Dr. Reuel Gaskins was busy seeing his own patients at the Hampton Medical Clinic in Riverside, Calif., where a red neon sign flashes “Open” in the front window. In an interview, Gaskins said he reviewed cases during breaks throughout the day and after normal work hours. He said he left Agilon in April.

Ultimately, Agilon’s internal investigation found that patient care may have been denied 439 times since 2014 without a physician’s review of the medical records — a potential violation of state law. Under California law, only a licensed physician or health care professional who is “competent to evaluate the specific clinical issues involved” can determine medical necessity.

Gaskins said he was not aware of allegations that medical decisions were made without his review until he was interviewed by Agilon’s lawyers.

“That’s inappropriate and unacceptable,” he said. “It really bothered me when I heard about it.”

The June report also found that Villa helped alter 20 files at the request of a supervisor in 2014 so her employer could pass an upcoming audit by an insurer.

A “manager told me to do it,” Villa said in an interview. “They were so adamant that everything look perfect for the auditors.”

A few days after the company’s lawyers made that discovery, Agilon sent Villa home on paid leave, the nurse said. She said that when she returned to work in August, she found she had been replaced as denial nurse, and shortly after that, she was fired.

Meanwhile, in recent months, Agilon has mended its relationships with some insurers and won new Medicaid contracts.

Consumer advocates worry that the concerns surrounding Agilon and SynerMed signal a much larger problem in the burgeoning Medicaid managed-care industry.

“These private entities get very little oversight,” said Linda Nguy, a policy advocate at the Western Center on Law & Poverty in Sacramento, “and there’s real harm being done to patients.”

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