Powerful House Committee is Latest to Take Stab at ‘Surprise’ Billing Fix

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Source: Politico, by Rachel Roubein and Dan Goldberg

The leaders of a powerful House committee are aiming to break through a legislative quagmire as Congress tries to deliver on the stubbornly elusive goal of protecting patients from “surprise” medical bills.

one-page plan from Ways and Means Chairman Richard Neal (D-Mass.) and ranking member Kevin Brady (R-Texas) is at odds with a detailed bipartisan deal struck between key House and Senate committees late last year to settle billing disputes that can leave patients on the hook for thousands of dollars in unexpected expenses.

By calling for outside mediation when private negotiations hit an impasse, the Ways and Means plan moves closer to an approach preferred by powerful hospital and physician groups nervous about any compromise that could favor health plans.

Neal and Energy and Commerce Chairman Frank Pallone (D-N.J.) downplay the differences betweentheir approaches, and House leaders are signaling theywant to bring a compromise bill to the floor. But they’ll still have to find a middle ground on an issue once viewed as the “easy fix” in health policy that’s instead divided health interests intent on avoiding picking up the extra cost of holding patients harmless.

“This institution abounds in skepticism,” Neal said. “I’m not discouraged.”

Any solution will have to come fast since all involved agree the best chance of moving a fix comes in May, when Congress will have to renew funding for community health centers, programs boosting primary care and more. Eliminating surprise billing could provide billions of dollars in projected savings to the government that could help pay for those efforts and boost the prospects for passage in a Congress riven by impeachment and election year politics.

The framework Neal and Brady outlined on committee letterhead is short on specifics but envisions letting providers and insurers work out billing disputes, with the option of turning to “an independent mediated negotiation process.” Doctors and hospitals have pushed for months for an approach that relies on such outside help, believing a deal that emerged from House Energy and Commerce leaders and the Senate health chairman in December could give health plans too much power.

That compromise between Senate HELP Chairman Lamar Alexander (R-Tenn.), Pallone and ranking Republican Greg Walden of Oregon would settle disputes by pegging payments to providers to a federal benchmark payment based on median in-network rates. It would allow outside arbitration in some cases, such as for billing disputes over $750.

“Frank and I are going to try to get together pretty fast with [House Majority Leader] Steny [Hoyer], and we don’t think there are big differences between the Ways and Means bill and the E&C bill,” Neal said, adding it was likely the two plans would get merged.

Neal’s more ready embrace of outside arbitration may be needed to secure the support of Senate Minority Leader Chuck Schumer, who has long guarded the interests of New York hospitals that opposed the bipartisan deal announced in December. Another key player, Senate HELP ranking Democrat Patty Murray of Washington, didn’t sign onto the deal at the time but has since said that she supports it.

Though Schumer hasn’t threatened to hold up any compromise, he’s made it clear he prefers a federal law that mimics New York’s own approach to settling billing disputes — one that uses “baseball-style arbitration” and is credited with saving more than$400 million over three years. Critics say it’s encouraged hospitals to charge more for care, which patients eventually pay for in the form of higher premiums.

“Given that New York State already has a strong, patient-friendly law on the books that seems to be working, Sen. Schumer wanted to make sure that any federal anti-surprise billing legislation did not have an adverse impact on patients in New York,” said Schumer spokesperson Angelo Roefaro.

The New York model is widely disliked by insurers, who say it adds unnecessary delays and costs to the health system, highlighting the industry split that congressional negotiators have to navigate. “We’ll be pretty strong in opposing a bill that includes arbitration as the sole policy principle,” said a spokesperson for the Coalition Against Surprise Medical Billing, which is mainly insurer and employer groups.

As Neal moves toward releasing a fleshed-out legislative proposal, backers of last year’s bicameral plan are touting theirs as the only viable fix that has the backing of the Trump administration.

There’s lingering frustration with Neal and Brady for releasing a framework on surprise billing just days after Senate HELP and House E&C leaders unveiled a detailed section-by-section summary of their bipartisan agreement last year. A Republican Senate aide said that agreement “is the definition of a consensus solution … and it has the support of the White House, to boot.”

“Ways and Means has had a year to present a proposal,” the aide said. “The clock is ticking and innocent patients can’t wait any longer.”

Brady defended the decision to jump into the debate, saying it was “really important not to rush into a year-end deal” on surprise billing and adding he didn’t think the bicameral plan had the votes to pass.

The one-page Ways and Means outline especially frustrated Alexander, who is retiring at the end of the year and wants a surprise billing fix to be part of his legacyandPallone aired grievances over the delay passing ‘surprise’ medical bill legislation during a closed-door House Democratic caucus meeting in December.

A mechanism in the pair’s plan had been targeted for months by a dark money group largely funded by two private-equity backed companies that provide physicians to staff hospitals. It spent nearly $54 million on ads blasting the benchmark payment, according to Advertising Analytics, saying it would lead to doctor shortages and hospital closures, and instead advocating for arbitration.

Meanwhile, the insurer and employer coalition spent about $4 million on ads portraying the federal benchmark payment as the solution that doesn’t inflate health costs, according to a spokesperson.

Neal, Pallone and others are now putting up a united front, even as health care interests promise continued lobbying to shape any compromise.

“The speaker and the leadership have said that they really want to do surprise billing, and we’re going to work on it and get it done,” Pallone said.

The outcome could boil down to the narrow window for deal-cutting.

“It’s troubling that it’s taking this long,” said Rep. Lloyd Doggett, chairman of the Ways and Means Health Subcommittee. Asked about Neal and Brady’s plan, he said, “I have only seen the most general outline, which seems to change from week to week, but this can’t be something that is 100 percent for the provider or 100 percent for the insurer. There has to be some middle ground found here.”

Medi-Cal’s Very Big Decade

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Source: California Healthline, by Harriet Blair Rowan

Medi-Cal had a big decade.

The number of Californians enrolled in the state’s health insurance program for low-income residents swelled by 5.5 million from 2010 to 2019. It now covers 1 in 3 Californians and 40% of children.

The program’s annual budget — a combination of state and federal money — tops $100 billion, more than the entire state budget of Florida.

“Medi-Cal is the largest Medicaid program among all of the states,” said Dr. Andrew Bindman, a professor of medicine at the University of California-San Francisco who helped implement the Affordable Care Act as part of the Obama administration.

It’s most likely going to get bigger. On Friday, California Gov. Gavin Newsom released his 2020-21 state budget blueprint, which would boost Medi-Cal’s annual budget to more than $107 billion and expand coverage to even more people.

Medi-Cal, California’s version of the federal Medicaid program, was transformed in the past decade by federal and state laws — especially the federal Affordable Care Act — and by the ups and downs in California’s economy.

In early 2010, Medi-Cal covered 7.2 million people. Enrollment peaked at 13.7 million in March 2016, and slowly but steadily decreased to 12.8 million people in August 2019, according to the most recent enrollment data from the state Department of Health Care Services. About 4.9 million of them were under age 19.

In 2018, half of enrollees identified as Hispanic, 18% as white, 10% as Asian or Pacific Islander and 8% as black, according to the department. Thirteen percent of enrollees did not report their race/ethnicity.

The federal Affordable Care Act spurred the most significant changes to Medi-Cal since 2010, largely because it allowed states to broaden eligibility for their Medicaid programs to low-income people who had not previously qualified. Thirty-six states plus Washington, D.C., have adopted Medicaid expansions.

In California, Medi-Cal enrollment grew 78% from January 2010 to August 2019, primarily due to the expansion, which began in 2014.

“California went all-in on that,” Bindman said, and reduced its uninsured rate from 18.5% in 2010 to 7.2% in 2018.

Before the change, adults usually didn’t qualify unless they were parents with dependent children, pregnant or had certain conditions or disabilities.

Under the expansion, any adult who met the income guidelines could enroll, which represented a “radical shift” in the way the program operates, said Jen Flory, a policy advocate at the Western Center on Law & Poverty.

It transformed Medi-Cal “to more general low-income coverage,” she said.

The number of adults enrolled through the expansion has hovered around 3.7 million since mid-2016, while the rest of the Medi-Cal population dropped from 10 million to 9 million during the same period. Flory credited a strong economy and low unemployment in part, as more people got jobs that offered employer-based insurance and others surpassed the income limits to qualify.

But Flory and Bindman said other factors might be contributing.

They pointed to fears within immigrant communities over increased immigration enforcement, and policies such as the Trump administration’s “public charge” rule. The rule would allow immigration officials to more easily deny permanent residency status to those who depend on certain public benefits such as Medicaid.

Federal judges temporarily blocked the rule from taking effect in mid-October, but the Trump administration on Monday asked the U.S. Supreme Court to allow it to implement the rule while the legal battles continue.

As a result of such policies and proposals, they said, some immigrants may not be enrolling in Medicaid and other government programs, even if they are eligible.

In the past decade, Medi-Cal has also changed how it delivers care. In January 2010, roughly half of Medi-Cal enrollees participated in the traditional “fee-for-service” model, in which patients can see any doctor who accepts them, and providers are reimbursed for each medical service or visit.

The other half received care from managed-care plans. Under managed care, the state contracts with health plans to deliver benefits to enrollees and pays them a fixed monthly rate to cover the expense of doing so — a payment system known as “capitation.”

The percentage of enrollees served by managed care climbed to 82% by July 2019 as California, like many other states, looked to that model to save money.

The Trump administration and Republicans in Congress have weakened Obamacare and called for limits on federal spending on Medicaid. Such proposals may accelerate if Republicans retain the White House and regain control of the U.S. House of Representatives this year.

While the federal government moves to restrict funding and enrollment, California lawmakers continue to expand eligibility for Medi-Cal.

Starting this year, low-income young adults up to age 26 became eligible for full Medi-Cal benefits regardless of their immigration status, joining unauthorized immigrant children, who became eligible in 2016.

On Friday, Newsom proposed expanding full Medi-Cal benefits to eligible undocumented immigrant adults ages 65 and over as part of his state budget proposal.

California’s policies offer “a striking contrast to the policies of the current federal administration,” Bindman said.

California Bills Would Make Insurers Cover More Mental Health

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Source: San Francisco Chronicle, by Catherine Ho

California legislators on Tuesday introduced two bills aimed at improving access to mental health and addiction treatment by requiring health insurance companies to authorize some forms of treatment more quickly and to cover more comprehensive mental health services.

State Sens. Jim Beall, D-San Jose, and Scott Wiener, D-San Francisco, co-authored Senate Bill 854 and Senate Bill 855 — which both would apply to private health insurance plans only, and not to public insurance programs such as Medi-Cal, the joint federal and state health insurance program for low-income residents. The bills do not address how uninsured residents seek care.

SB854 would prohibit insurance companies from directing patients with substance use disorders to first try other forms of treatment — such as group therapy or step therapy — before covering medication-assisted treatment, or MAT, if MAT is what their doctor recommends. MAT is becoming a more common form of treatment for opioid addiction, in which patients are prescribed opioid medication — at lower doses that don’t induce a high — to wean them off of stronger opioids. It is done under the supervision of a physician and in conjunction with counseling and other behavioral health services.

SB855 would require insurance companies to cover all forms of mental health and substance use treatment that a patient’s doctor deems “medically necessary” — not just emergency or urgent services that existing federal and state parity laws require insurers to cover. The bills’ authors and health advocates say existing laws don’t do enough to ensure Californians get timely and comprehensive enough care for mental health conditions.

The California Mental Health Parity Act of 1999 requires insurers to cover services for severe cases of some mental health conditions, but not all types of treatments for all conditions, or substance use disorders.

“We have a huge, huge challenge in California, not just with our homeless population but with everyone, and we need better access (to mental health care),” Wiener said. “These bills will move us in that direction.”

The California Association of Health Plans, which represents public and private health insurers, said that the proposed legislation would create new mandates and that insurers already work with state regulators to comply with current parity laws.

“Mental health care is a high priority for health plans and we are fully committed to ensuring patients are getting the mental health services they need that are on par with medical and surgical care,” the group’s spokeswoman Mary Ellen Grant said in a statement. “Mental health parity is already the law of the land in California and California currently has regulators who are capable of overseeing our compliance with the law. The bills introduced today are less about mental health parity and more about creating new mandates. It is hard to understand how SB855 could be called a mental health parity bill when it sets forth a new system for medical necessity that is at a higher level than other medical services.”

Insurers Deal More Blows To Medicare For All

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Source: Forbes, by Bruce Japsen

Health insurance companies are already reporting unprecedented growth in signing up seniors to their Medicare plans for 2020, which is bad news for certain Democrats pushing single payer versions of “Medicare for All.”

The nation’s largest health insurer, UnitedHealth Group, last week reported its best growth ever for enrollment in individual Medicare Advantage, the private coverage sold by health plans via contracts with the federal government. UnitedHealth’s UnitedHealthcare health insurance unit was the first of the big health insurers to report quarterly earnings and updated 2020 projections for what is expected to be a record year of growth for Medicare Advantage. Other insurers including the Aetna unit of CVS Health, Anthem, Cigna and Humana will be reporting their quarterly earnings in the next two months.

“Within our Medicare Advantage offerings including dual eligible growth, we expect to serve nearly 700,000 more people in 2020,” UnitedHealth Group chief executive David Wichmann told analysts on the company’s fourth quarter earnings call last week.

Wichmann described the most recent open enrollment period, which ended in early December for seniors to choose their Medicare health and drug coverage for 2020, as UnitedHealth’s “strongest ever” for individual Medicare Advantage.

UnitedHealth’s record Medicare Advantage enrollment comes as most Democrats running for their party’s nomination for the Presidency back off a single payer version of Medicare for All that would uproot the private insurance industry. And that would in effect end a Medicare Advantage program that has already signed up more than one in three Medicare eligible seniors and growing.

But more seniors signing up for private Medicare Advantage means it will be politically harder for it to be taken away and replaced with a government-run single-payer version of Medicare for All pushed most notably by Sen. Bernie Sanders of Vermont.

Sanders continues to push single payer Medicare and last week during a debate in Des Moines reiterated that his plan has no copayments or deductibles. Meanwhile, Democrats that include former Vice President Joe Biden and most others still in the race are touting an effort to build on existing coverage under the Affordable Care Act. Sen. Elizabeth Warren, historically a supporter of Sanders plan, has backed off moving all Americans to a government-run healthcare system in favor of first bolstering the ACA and introducing a public option.

As more baby boomers turn 65 and become eligible for Medicare, insurers and the federal government are seeing more of them sign up for private Medicare Advantage than the government-run traditional fee-for-service Medicare.

This year, Medicare Advantage plans are offering more supplement health benefits under new rules established by the Centers for Medicare & Medicaid Services, which has seen  a record number of health plans selling coverage that offers seniors the same benefits as traditional Medicare plus extras like preventative care and outpatient healthcare services.

“We are bullish obviously overall on the outlook for both Medicare Advantage, but also the dual special needs marketplace as well,” UnitedHealth’s Wichmann said. “They are both very larger today and growing in markets. MA is clearly outperforming fee-for-service in terms of overall benefit coverages and the quality of outcomes and the returns that people are getting in terms of their overall satisfaction and so no surprise that it is performing as well and seems to be gaining some momentum.”

The lack of momentum for a single payer version of Medicare for All among Democrats vying to challenge President Donald Trump should Republicans re-nominate him to run for a second term isn’t lost on health plans signing up seniors to Medicare Advantage.

The health insurance industry and its supporters say Medicare Advantage is more about “modernizing” Medicare with the help of the private sector and seniors are increasingly recognizing the difference.

“Despite the lower costs, better outcomes, and high satisfaction that defines Medicare Advantage, some would argue for policies that threaten the success of Medicare Advantage and turn back the clock on innovative care models that enable seniors to live healthier lives,” Allyson Schwartz, a former Democratic Congresswoman and president and CEO of Better Medicare Alliance wrote in an opinion column in the Jan. 7th issue of the journal Health Affairs.

“From my time leading a women’s health center, to my work as Commissioner of Health and Human Services in Philadelphia, to my service in Congress crafting health policy on the Ways and Means Committee, to my role today, I believe health care is a basic human right,” Schwartz wrote. “As we seek to address Americans’ very real concerns, we should fix what is broken in our health care system, while strengthening that which works to ensure coverage and quality at a cost we can all afford.”

Gavin Newsom Wants to Expand Health Care for Undocumented Immigrants, Again

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Source: The Fresno Bee, by Yesenia Amaro

Some 27,000 undocumented California senior citizens would receive Medi-Cal benefits under a funding proposal from Gov. Gavin Newsom.

Advocates and lawmakers who have supported universal health care coverage said they were satisfied that Newsom included $80.5 million to expand Medi-Cal benefits to seniors, age 65 and older, regardless of immigration status. If the proposal makes it in the final budget, benefits would begin Jan. 1, 2021.

Medi-Cal is the state’s health care insurance for low-income families.

The proposed funding was part of Newsom’s $222 billion spending plan for 2020-21 released on Friday.

On Monday, Assemblyman Joaquin Arambula applauded Newsom for “continuing to work toward universal coverage in California.” Arambula, D-Fresno, last year said he was going to continue to push to expand health care options for all Californians.

But at least one expert called it a bad idea that would encourage people to enter the country illegally to get medical care.

Andrew Arthur, a fellow in law and policy with the Center for Immigration Studies, said the financial costs associated with this proposal would be significant.

“From an immigration standpoint, … it would encourage individuals to enter the United States to take advantage of this benefit,” he said.

It could also attract fraudulent visa applicants, claiming to be visiting the country as tourists, but they would remain in the country to get medical care, Arthur said.

Arambula said he anticipates the Assembly will support this budget measure as it moves forward. During discussions last year about expanding Medi-Cal benefits to young undocumented adults, Arambula said, many of the advocates “spoke of the need to take care of those who have taken care of us.”

Beginning this year, California began to offer full-scope Medi-Cal benefits to young undocumented adults, age 19 through 25. Young people under 19 were already eligible to receive Medi-Cal benefits under a law passed in 2015.

Preventive care is key to catch diseases before they get worse and more costly to treat, noted Arambula, a doctor.

“I believe that health care is a human right,” Arambula said, echoing past statements. “Our health care system should do better and can do better.”

Sarah Dar, senior policy manager with the California Immigrant Policy Center, said the program ultimately might benefit more immigrants than the administration’s initial estimate of 27,000 people.

If approved, once enrollment gets going, the number could be much higher. Dar said she couldn’t provide a more detailed enrollment estimate.

Estimates from the California Department of Health Care Services show that in Fresno County some 314 seniors are expected to benefit from the Medi-Cal benefits, if the proposal is enacted. The estimated number for Tulare County is 278 seniors, for Kings County the estimate 24, and for Madera County the estimated number is 61. The estimated number for Merced County is 107.

The full implementations costs are projected about $360 million for fiscal year 2022-23, according to the state’s Department of Health Care Services.

“Expanding Medi-Cal to cover all eligible seniors, regardless of their documentation status, reflects our fundamental belief that all Californians deserve quality health care,” Richard Figueroa, acting director for the state’s Department of Health Care Services, said in a statement to The Bee. “This is an important step toward building a Healthy California for All.”

Dar said her organization had been pushing for many years for more medical coverage for undocumented seniors.

“They are the ones who need the care the most,” she said.

This population group has gone their entire life without preventive care and health check-ups, Dar said, and while many of them work and pay taxes, they’re not eligible for Medicare and social security benefits.

“Later in life, health issues become the most exacerbated,” she said.

Rachel Linn Gish, with Health Access California, agreed that this population group has the “highest needs.”

“We are really excited that our seniors will be able to access health care if this is enacted,” she said.

California Health Care Premiums Rose – Are Prescription Drug Costs The Biggest Culprit?

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Source: The Sacramento Bee, by Cathie Anderson

The California Department of Managed Care put out its second report aimed at increasing transparency on prescription drug costs, but perhaps the most startling revelation from the document comes in a footnote showing that health plans greatly expanded their reporting the data.

Insurers build a margin of profit into their annual premiums, and in 2018, they more than doubled the profits they received, driving it up to $2.75 billion from $1.01 billion the prior year. Regulators said in the 14th footnote that three health plans accounted for the increased profit of roughly $1.74 billion.

A DMHC spokesman said that state mandate prevents them from providing the names of the three health plans. The law requires that information be aggregated to ensure that it cannot identify individual plans.

No other factor driving the cost of health plan premiums increased as much as the profit margin. Overall, premium costs rose by $4.14 billion to $71.33 billion in 2018, and roughly 42 percent of increase was because insurers took more profit.

Taxes and fees, however, also had a far greater impact on premiums than the cost of prescription drugs. The cost of taxes and fees jumped 30 percent year over year to $2.46 billion, compared with a 4.7 percent increase in prescription drug charges.

Overall, however, the cost of prescription drugs eats up a much bigger slice of the premiums than do either the profits or the taxes and fees. In 2018, the 26 health plans that filed information with regulators reported spending $9.05 billion on prescription drugs.

Health plans paid out a total of $71.33 billion. The largest expenditure from this pot, roughly $52.99 billion, went toward medical expenses, and that was a 2.7 percent increase from 2017.

“Health plans paid more than $400 million more on prescription drugs in 2018 than they did in 2017,” said DMHC Director Shelley Rouillard. “This rate of increase outpaces the increase in overall medical expenses, impacting the affordability of health care. This report provides greater transparency into prescription drug costs so the public can better understand the impact to health care premiums over time.”

The DMHC’s report contains detailed information on sales of generic, brand name and specialty drugs, showing the most frequently prescribed medications as well as the most costly ones. The lists of most commonly prescribed drugs provide insight into the ailments plaguing many Californians.

The 25 most common prescriptions on the specialty drug list, for example, included nine HIV antiviral drugs, three for diabetes, three to help people living with Crohn’s disease, plaque psoriasis and forms of arthritis.

The most common generics prescribed included eight medications to treat cardiovascular conditions; four to treat depression; and two each for diabetes, chronic respiratory ailments and pain relief. The 25 most commonly prescribed brand-name medications included eight for diabetes, four for chronic respiratory conditions, and four hormonal agents for either contraception or thyroid management.

Although specialty drugs made up a tiny fraction of the volume of drugs prescribed, less than two of every 100 medications, they accounted for 52.6 percent of the total dollars that health plans paid out in 2018, the data revealed.

The report also showed the value of getting generic prescriptions when possible. Although generics represented 87 percent of the volume of drugs prescribed in 2018, annual spending on them represented just 22.4 percent of the total spent that year. Brand name drugs came in at 11.4 percent of volume but 25 percent of spending.

As the price of drugs increased, the DMHC report showed, plan members shouldered less of the cost. Insurers paid out a little more than $2.5 billion to cover specialty drugs, while members paid out roughly $80 million. Health plans paid out roughly $1.1 billion for brand name drugs and $195 million for generics, and members paid out $168 million and $245 million respectively.

California Gov. Gavin Newsom, as part of his budget proposal last week, introduced a suite of legislation intended to drive down the cost of prescription drugs, including contracting with some manufacturers to produce medications for the state.

Supreme Court Denies Blue States’ Effort to Expedite ObamaCare Challenge

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Source: The Hill, by Harper Neidig

The Supreme Court on Tuesday rejected an effort by Democrats to expedite a challenge to a lower court’s ruling striking down a key tenet of ObamaCare, narrowing the possibility that the court takes up the contentious case this year.

The House of Representatives and a group of blue states had asked the court to fast-track their appeal after the 5th Circuit Court of Appeals ruled that the Affordable Care Act’s individual mandate is unconstitutional.

The panel of judges then sent the case back to a federal judge in Texas — who ruled the entire law unconstitutional in 2018 — to reconsider how much of it could survive without the individual mandate.

The House and coalition of Democratic states, led by California, asked the Supreme Court to take the case in an attempt to bypass what is likely to be a lengthy legal battle that continues into next year.

“Under the current state of affairs, there is considerable doubt over whether millions of individuals will continue to be able to afford vitally important care,” the House wrote in a court filing earlier this month.

“If the Court does not hear the case this Term, that uncertainty will likely persist through next year’s open enrollment period.”

Tuesday’s order makes it unlikely that the high court will rule on ObamaCare before the November presidential election, where health care policy is sure to play a prominent role.

It’s still unclear whether the Supreme Court will decide to hear the challenge. Now that the justices have chosen to adhere to a normal briefing schedule, that decision will likely not come until March at the earliest.

The 5th Circuit’s ruling delivered a victory for the coalition of conservative state attorneys general challenging the Obama administration’s signature achievement.

The Trump administration has declined to defend the Affordable Care Act in court, and the president has cheered on legal efforts to dismantle it.

“This decision will not alter the current healthcare system,” President Trump said in a statement last month.

“My Administration continues to work to provide access to high-quality healthcare at a price you can afford, while strongly protecting those with pre-existing conditions. The radical healthcare changes being proposed by the far left would strip Americans of their current coverage. I will not let this happen.”

For 2020, California Goes Big On Health Care

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Source: California Healthline, by Ana B. Ibarra

California is known for progressive everything, including its health care policies, and, just a few weeks into 2020, state leaders aren’t disappointing.

The politicians’ health care bills and budget initiatives are heavy on ideas and dollars — and on opposition from powerful industries. They put California, once again, at the forefront.

The proposals would lower prescription drug costs, increase access to health coverage, and restrict and tax vaping. But most lawmakers agree that homelessness will dominate the agenda, including proposals to get people into housing while treating some accompanying physical and mental health problems.

“This budget doubles down on the war on unaffordability — from taking on health care costs and having the state produce our own generic drugs to expanding the use of state properties to build housing quickly,” Gov. Gavin Newsom said in a letter to the legislature, which accompanied the $222.2 billion budget proposal he unveiled last Friday. About a third of that money would be allocated to health and human services programs.

But even with a Democratic supermajority in the legislature, these proposals aren’t a slam-dunk. “There are other factors that come into play, like interest groups with strong presence in the Capitol,” including Big Pharma and hospitals, said Shannon McConville, a senior researcher at the nonpartisan Public Policy Institute of California.

Drug Pricing

Newsom’s plan to create a state generic drug label is perhaps his boldest health care proposal in this year’s budget, as it would make California the first state to enter the drug-manufacturing business. It may also be his least concrete.

Newsom wants the state to contract with one or more generics manufacturers to make drugs that would be available to Californians at lower prices. Newsom’s office provided little detail about how this would work or which drugs would be produced. The plan’s cost and potential savings are also unspecified. (Sen. Elizabeth Warren of Massachusetts, who is seeking the Democratic presidential nomination, proposed a similar plan at the federal level.)

Because the generics market is already competitive and generic drugs make up a small portion of overall drug spending, a state generic-drug offering would likely result in only modest savings, said Geoffrey Joyce, director of health policy at USC’s Leonard D. Schaeffer Center for Health Policy & Economics.

However, it could make a difference for specific drugs such as insulin, he said, which nearly doubled in price from 2012 to 2016. “It would reduce that type of price gouging,” he said.

Representatives of Big Pharma said they’re more concerned about a Newsom proposal to establish a single market for drug pricing in the state. Under this system, drug manufacturers would have to bid to sell their medications in California, and would have to offer prices at or below prices offered to any other state or country.

Californians could lose access to existing treatments and groundbreaking drugs, warned Priscilla VanderVeer, vice president for the Pharmaceutical Research and Manufacturers of America, the industry’s lobbying arm.

This proposal could “let the government decide what drugs patients are going to get,” she said. “When the governor sets an artificially low price for drugs, that means there will be less money to invest in innovation.”

Newsom’s drug pricing proposals build on his executive order from last year directing the state to negotiate drug prices for the roughly 13 million enrollees of Medi-Cal, the state’s Medicaid program for low-income residents. He also ordered a study of how state agencies could band together — and, eventually, with private purchasers such as health plans — to buy prescription drugs in bulk.


California has the largest homeless population in the nation, estimated at more than 151,000 people in 2019, according to the U.S. Department of Housing and Urban Development. About 72% of the state’s homeless slept outside or in cars rather than in shelters or temporary housing.

Newsom has asked for $1.4 billion in the 2020-21 state budget for homelessness, most of which would go to housing and health care. For instance, $695 million would boost health care and social services for homeless people via Medi-Cal. The money would fund programs such as recuperative care for homeless people who need a place to stay after they’ve been discharged from the hospital, and rental assistance if a person’s homelessness is tied to high medical costs.

A separate infusion of $24.6 million would go to the Department of State Hospitals for a pilot program to keep some people with mental health needs out of state hospitals and in community programs and housing.

Surprise Bills

California has some of the strongest protections against surprise medical bills in the nation, but millions of residents remain vulnerable to exorbitant charges because the laws don’t cover all insurance plans.

Surprise billing occurs when a patient receives care from a hospital or provider outside of their insurance network, and then the doctor or hospital bills the patient for the amount insurance didn’t cover.

Last year, state Assembly member David Chiu (D-San Francisco) introduced legislation that would have limited how much hospitals could charge privately insured patients for out-of-network emergency services. The bill would have required hospitals to work directly with health plans on billing, leaving the patients responsible only for their in-network copayments, coinsurance and deductibles.

But he pulled the measure because of strong opposition from hospitals, which criticized it as a form of rate setting.

Chiu said he plans to resume the fight this year, likely with amendments that have not been finalized. But hospitals remain opposed to the provision that would cap charges, a provision that Chiu says is essential.

“We continue to fully support banning surprise medical bills, but we believe it can be done without resorting to rate setting,” said Jan Emerson-Shea, a spokesperson for the California Hospital Association.

Medi-Cal For Unauthorized Immigrants

California is the first state to offer full Medicaid benefits to income-eligible residents up to age 26, regardless of their immigration status.

Now Democrats are proposing another first: California could become the first to open Medicaid to adults ages 65 and up who are in the country illegally.

Even though Medicaid is a joint state-federal program, California must fund full coverage of unauthorized immigrants on its own.

Newsom set aside $80.5 million in his 2020-21 proposed budget to cover about 27,000 older adults in the first year. His office estimated ongoing costs would be about $350 million a year.

Republicans vocally oppose such proposals. “Expanding such benefits would make it more difficult to provide health care services for current Medi-Cal enrollees,” state Sen. Patricia Bates (R-Laguna Niguel) said in a prepared statement.


Dozens of California cities and counties have restricted the sale of flavored tobacco products in an effort to curb youth vaping.

But last year, state legislators punted on a statewide ban on flavored tobacco sales after facing pressure from the tobacco industry.

Now, state Sen. Jerry Hill (D-San Mateo) is back with his proposed statewide flavor ban, which may have more momentum this year. Since last summer, a mysterious vaping illness has sickened more than 2,600 people nationwide, leading to 60 deaths, according to the Centers for Disease Control and Prevention. In California, at least 199 people have fallen ill and four have died.

Hill’s bill would ban retail sales of flavored products related to electronic cigarettes, e-hookahs and e-pipes, including menthol flavor. It also would prohibit the sale of all flavored smokable and nonsmokable tobacco products, such as cigars, cigarillos, pipe tobacco, chewing tobacco, snuff and tobacco edibles.

Newsom has also called for a new tax on e-cigarette products — $2 for each 40 milligrams of nicotine, on top of already existing tobacco taxes on e-cigarettes. The tax would have to be approved by the legislature as part of the budget process and could face heavy industry opposition.

Tobacco-related bills are usually heard in the Assembly Governmental Organization Committee, “and that is where a lot of tobacco legislation, quite frankly, dies,” said Assembly member Jim Wood (D-Healdsburg), who supports vaping restrictions.

Appeals Court Skeptical of Trump Rule On TV Drug Ads

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Source: The Hill, by Jessie Hellmann

Drugmakers and the administration headed to court Monday in a fight over a Trump rule that would require companies to disclose the list prices of their drugs in television advertising.

Three drug companies — Merck, Eli Lily and Amgen — argue the rule, which was blocked by a federal court in July, is outside the authority of the Department of Health and Human Services (HHS).

The Trump administration urged a federal appeals court Monday to overturn that ruling, arguing it has the authority under the law to run the Medicare and Medicaid programs efficiently. The health care programs for the elderly and the poor paid about $240 billion for prescription drugs in 2016.

But the three-judge panel of the U.S. Court of Appeals for the D.C. Circuit sounded skeptical in its grilling of government lawyers, questioning the agency’s authority to issue the rule and whether the disclosure of list prices, which are often higher than what patients end up paying, would be helpful to consumers.

“The problem is the cost of prescription drugs. I don’t see this as a solution to the problem,” said Judge Karen LeCraft Henderson, an appointee of former President George H.W. Bush.

The list price “is not the price I’ll ever pay. Why is that not adding confusion?”

The other two judges who heard arguments on Monday are Patricia Millett, an Obama appointee, and Harry T. Edwards, a Carter appointee.

The case represents another high-stakes test for President Trump’s drug pricing agenda, which mostly relies on administrative action and rulemaking.

While lowering drug prices has been a top initiative for the president, most of his plans have had trouble getting off the ground.

The administration has conceded in the past that it needs more authority from Congress to act on drug prices, but an agreement between the Democratic House and Republican Senate has proven difficult.

The advertising rule, which would only apply to drugs that cost at least $35 a month and are covered by Medicaid and Medicare, would force drug companies to compete and encourage patients to shop for better deals, potentially driving down prices, said Ethan Davis, a Justice Department attorney representing HHS in its case.

A drug’s list price is not usually public information.

“This lack of transparency threatens Medicare and Medicaid’s sustainability and comes at the expense of American taxpayers,” the government wrote in its brief.

But the judges questioned those claims, noting that Congress has not passed a specific law directing HHS to require drug companies to disclose prices in advertising.

They also worried the ads could cause confusion because the list price, which is set by drug manufacturers, often isn’t what patients actually pay for their drugs after insurance is taken into account.

That was the argument made by drug companies, with the attorney representing them, Richard Bress, telling the court Monday the rule could be “far more dangerous than helpful” if it takes effect.

Patients that view a list price as too high might stay away from it, even if it could help their condition, drug companies argue.

Davis, of the Justice Department, agreed.

“Consumers lose interest in higher-priced drugs,” he said. But he added that should give companies incentive to lower their list prices.

The administration also argued the list price has a relationship to what patients end up paying; drugs with a higher list price could also have a higher copay or coinsurance, Davis said.

“It doesn’t tell you what you’ll actually pay … but gives you a good idea of whether you’ll pay more or less,” Davis said.

Still, HHS and the Justice Department face a high hurdle in getting the appeals court to overturn the ruling issued by U.S. District Judge Amit Mehta, an Obama appointee, in July.

Mehta wrote in his ruling that HHS’s authority to issue rules is not “unbounded.”

“No matter how vexing the problem of spiraling drug costs may be, HHS cannot do more than what Congress has authorized,” Mehta wrote. “The responsibility rests with Congress to act.”

The rule is also opposed by broadcasting and advertising groups. The drug industry spends billions on television ads each year, with prescription drugs accounting for a high percentage of it.

The rule, though, has support on Capitol Hill among lawmakers from both parties. Sens. Dick Durbin (D-Ill.) and Chuck Grassley (R-Iowa) have sponsored a bill that would require price disclosures in drug advertisements, but the path forward for their legislation is uncertain.

Durbin has asked for unanimous consent to pass the bill, meaning it would not require a roll call vote, but it has been objected to by some Republicans.

Lawmakers are also pushing other measures on drug prices.

A bill sponsored by Grassley and Sen. Ron Wyden (D-Ore.) would cap the price increases drug companies typically make every year. That bill is supported by Trump but opposed by Senate Republicans.

Meanwhile, the administration is preparing to finalize a rule that would allow some states to import cheaper prescription drugs from Canada.

The rule is fiercely opposed by the drug industry and is likely to also face legal action.

After Years of Financial Woes, Los Angeles Hospital Running Out of Prayers

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Source: Los Angeles Times, by Alejandra Reyes-Velarde

Many years ago, Gilbert San Juan watched as a wrecking ball demolished the old St. Vincent Medical Center.

An elevator operator and painter there at the time, San Juan wanted to fetch some old furniture from the building, but backed down after seeing the massive, threatening ball hanging from a crane.

Still, he knew he would enter its doors again, when the new hospital near downtown Los Angeles sprung just yards away from the old. For 47 years, San Juan worked in that facility.

So it hasn’t quite hit him that the hospital might actually shutter for good after its owners announced that a sale fell through, he said. Verity Health asked a bankruptcy court for permission to close its doors. A judge gave approval for the closure last week.

“They’re going to have to call the SWAT team to get me out of here,” San Juan joked as he walked through the hospital hallways.

Pointing at a sepia-toned framed photograph of the old building labeled “1927,” San Juan declared: “It was beautiful.”

St. Vincent Medical Center on 3rd and Alvarado streets was founded in 1858 by the Daughters of Charity — six nuns who wanted to offer services to the poor and saw a need for healthcare in a growing L.A.

Now, several hundred patients will need to be transferred to nearby Good Samaritan Hospital and St. Francis Medical Center. Community leaders and experts fear the hospital’s closing will have a ripple effect throughout the community and force the poor and elderly to travel farther away for care.

About 1,000 people, including San Juan, work at the hospital and it is unclear what will happen to those jobs.

Throughout the decades, the mission of the hospital to serve the most needy remained consistent. St Vincent Medical Center’s “disproportionate share percentage” is 70%, which means it serves mostly low-income patients who rely on Medicare and Medicaid, said John Romley, associate professor of pharmaceutical and health economics at USC.

The hospital leans heavily on Medicaid and Medicare, which reimburses the hospital at lower rates than commercial insurance, according to experts. It sits in a working-class, predominantly Latino neighborhood with large Mexican and Central American immigrant populations.

The hospital’s community work had decreased over the years as its financial problems worsened, but it had a history of working with organizations such as the Central American Resource Center, or CARECEN, to offer health screenings and general checkups for free to the area’s immigrant and day laborer communities.

“Having institutions that are anchored in a community such as Westlake and Pico Union are critical to the continued growth and strength of an area,” said CARECEN’s executive director Martha Arevalo. “When we lose those anchors, that has a tremendous ripple effect.”

In its early days, the Daughters of Charity offered care for $1.50 per day to the working class: fishermen, shop owners, stable keepers and watchmakers. Doctors treated pneumonia, typhoid and malaria they said was brought by “newcomers, not wearing sufficiently heavy clothing, particularly in the evening,” according to a Los Angeles Times article in 1887.

According to its website, doctors at St. Vincent Medical Center would later become the first to perform an open heart surgery on the West Coast, the first to offer hemodialysis to kidney failure patients, the first to perform an artificial heart implant and the first to perform a human heart transplantation.

As L.A. prospered, so did the hospital. An 1885 article in The Times boasted of the hospital’s views of the city and far-off orange groves and vineyards from its sparkling new building on Beaudry and Sunset: “The valley can be seen for from thirty to forty miles south and east, and on clear days the ocean plainly appears.

“As a public institution, it is without an equal south of San Francisco,” the article read.

But financial woes soon trailed the hospital.

The Daughters of Charity racked up debt to construct new facilities. When the hospital moved to its current location on Third and Alvarado in the 1920s, one Times article noted the nuns were “unable to accumulate the capital to defray the cost of the institution” due to the thousands of patients who received care “without the payment of even a moderate fee.”

In recent years, the hospital had changed ownership several times, though that’s not unusual in today’s market-driven healthcare landscape, according to experts.

Among the creditors in the bankruptcy is the hospital system’s former management company, Integrity Healthcare, controlled by entrepreneur-physician Patrick Soon-Shiong’s company NantWorks. Soon-Shiong also owns The Times.

Verity, the nonprofit operator of six California hospitals, filed for bankruptcy protection in 2018. At the time, officials said the company had more than $1 billion of debt from bonds and unfunded pension liabilities and needed cash to make seismic repairs to its aging facilities. They said they’d purchased the hospitals in 2017 hoping to get back to financial health but could not.

The bankruptcy sparked concerns in communities about the fate of the hospitals. Santa Clara County has taken over operations of two of the hospitals — O’Connor Hospital in San Jose and St. Louise Regional Hospital in Gilroy. The move came after the California attorney general demanded oversight of the transfer.

St. Francis Medical Center in Lynwood has also been the subject of debate, because of its importance to the southeast Los Angeles County region. Lynwood officials last year even discussed purchasing the medical center.

Verity said last week it would continue operating St. Francis as well as Seton Medical Center and Seton Coastside in San Mateo County.

St. Vincent Medical Center (which is not related to the New York health system of the same name) is home to the Asian Pacific Liver Center, which focuses on Hepatitis B awareness, screenings and care for the Asian American population, which is disproportionately affected by the disease.

The hospital’s volunteer department has for years supported operations and deployed people to participate in organizations such as Meals on Wheels.

Through a spokeswoman, Verity Health declined to allow longtime staff members and heads of these organizations to speak to a Times reporter.

St. Vincent’s isn’t the only hospital to face financial challenges. There has been much variability in the healthcare industry in terms of ownership changes and mergers, Romley said. Between 25% and 30% of all California hospitals are operating at a loss. St. Vincent Medical Center, lost $67 million in 2018, he said.

“This organization has been in some turmoil for some time,” Romley said. “It’s been heading in this direction for a while.”

It’s the neediest populations that are often more at risk of losing their hospitals. According to a study on trauma centers by UC San Francisco researchers, emergency rooms in hospitals located in low-income neighborhoods are 1.5 times more likely to close and those patients are affected more severely than other areas.

When the Martin Luther King Jr. Hospital closed in 2007, the number of uninsured patients that one local hospital treated tripled from 12.9% in 1999 to 44.6% in 2009, according to a 2016 study co-authored by Renee Hsia, a professor in the Department of Emergency Medicine at UC San Francisco.

When a hospital closes its emergency room and its patients are diverted to the next closest hospital, both the patients being transported and the patients who were already receiving care in the hospital experience higher mortality rates, Hsia said.

She cited a mix of factors, including longer distances patients need to travel to receive care and overcrowded hospitals.

“Peoples’ emergencies don’t go away when an ER closes,” Hsia said. “There is a very real and documented domino effect, especially in areas where there is need.”

“It’s important people realize the supply of hospitals is not regulated,” she added. “Hospitals can decide whether to open and close where and when they want.”

Verity Health has said patients in need of emergency care will be directed to eight hospitals within a three-mile radius of St. Vincent Medical Center, although it didn’t name which hospitals.

Good Samaritan, a 408-bed hospital also in the Westlake neighborhood, has a 70% disproportionate share percentage and lost $8 million in 2018. St. Francis Medical Center, which has 384 beds, did not suffer losses in 2018, but 100% of its patients are low-income.

Teresa Henrique, 75, who has gone to St. Vincent Medical Center for years, said she didn’t know the hospital would be closing.

“I’ll have to find a new hospital,” she said. “I’ll have to see if they’ll take my insurance. They treated me really well at [St. Vincent Medical Center]. I like it.”

Kay Kim, 65, said she has relied on the hospital for emergency care, for herself, her parents and other family members. It was where both her parents, Korean immigrants, died.

“It’s close to where I live,” she said. “Whenever I have an emergency, I come here. I hope someone else buys it. That’s very sad.”

At the hospital’s “Cafe on 3rd” last week, employees whispered about the closure. A maintenance supervisor tapping on his phone announced he was being ordered to redo the coverings for the emergency room signage.

“We leave the 24th,” said one woman in the hospital’s cafe. “Well be the last ones out.”

Que tristeza,” a cafe employee told colleagues in Spanish. What a shame.

One employee fretted about being without work for an extended time.

Carlos Bueno, the maintenance supervisor, said his company will stay behind after the hospital’s closure, but some co-workers are already tweaking their resumes.

As he covered signs around the hospital, he saw staff members congregate in groups taking photos. For the memories, he guessed.

Elpidio Villaneda, who in March would have reached his 30-year work anniversary at the hospital, said it has been his second home.

“I thought the city or something would jump in,” Villaneda said. “It’s a landmark, you know? We could use another hospital. There’s enough people here to support it.”

“Everybody is sad, everybody is down right now,” Bueno said.

Huddled around a cafe table, San Juan took out his phone to play a song, “Todo Tiene Su Final.”

“Like Willie Colon and Hector Lavoe say, everything comes to its end,” San Juan said.

Last Updated 01/22/2020

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