Hospitals To End Year With Negative Margins, Kaufman Hall Reports

Hospitals expected to end 2022 with negative margins | Modern Healthcare

Source: Healthcare Dive, by Hailey Mensik

Dive Brief:

  • * Heightened expenses, ongoing staffing shortages and fewer patient discharges have hospitals facing negative margins near the end of the year, according to Kaufman Hall’s monthly national flash report out Wednesday.
  • * Median operating margins have been in the red for 10 consecutive months and were down 2% in October from September. Median operating margins were down 13% year over year in October, according to the report.
  • * Total labor expenses rose 3% from September and total expenses rose 1%, while supply and drug expenses did fall slightly during the month.

Dive Insight:

Ongoing staffing shortages are a key contributor to the heightened expenses facing hospitals today, according to Kaufman Hall’s report. Hospital expenses again rose slightly in October, outpacing revenues.

“With the labor market in the healthcare sector still highly competitive, hospitals are feeling the financial pressure of needing to attract and retain workers with significant increases in salaries,” Erik Swanson, Kaufman Hall’s senior vice president of data and analytics, said in a release.

Persistent staffing shortages are also resulting in challenges discharging patients, leading to longer lengths of stay. Adjusted discharges fell 1% in October and average length of stay increased 3%, according to the report.

“Every aspect of patient care — from being admitted, to treatment, to discharge — is affected by the labor shortage and as we head into the virus season and potential new waves of COVID-19 the pressures on hospitals and their staff could mount,” Swanson said.

Emergency department visits rose 3% in October and operating room minutes rose 2%. That contributed to a 2% increase in gross operating revenue, according to the report.

Higher emergency department volumes could further strain the nation’s healthcare workforce, though, the report said.

The American College of Emergency Physicians and 30 other healthcare associations recently asked President Joe Biden to help find solutions to overcrowded hospital emergency rooms, lamenting in their letter that “boarding has become its own public health emergency,” as many departments lack the necessary staff and beds to tend to influxes of patients.

Remote Workers Hesitant To Return To Office But Incentives May Help

Remote workers hesitant to return to office but incentives may help |  BenefitsPRO

Source: BenefitsPRO, by Alan Goforth

Many employees who began working remotely during the pandemic are in no hurry to return to the office. Nearly 7 in 10 would rather look for a new job than go back, a new survey from Clarify Capital finds

“Before the pandemic forced many Americans to switch from their workplaces to their homes, most office workers were used to getting dressed, commuting and buying lunch every weekday,” the survey report says. “But now that they’ve tasted a better life, they don’t want to go back to the way things were.”

Sixty-eight percent of respondents, including 79% of Gen Z remote workers, say they would look for a new job before returning to the office. Twenty-seven percent say they would rather negotiate a higher salary, and only 5% would be okay with returning without a salary negotiation.


Commuting to work is the biggest annoyance that 45% of remote workers surveyed say they are reluctant to return to. Nearly as many say they would be just as troubled by getting home later and waking up earlier. Business and information technology employees are most likely to name waking up earlier as the biggest annoyance of returning to the office. The commute is what most irritated employees in education, finance, insurance and health services.

The survey asked what incentives might lure workers back to the office. Many named flexible working hours (34%), and nearly as many were interested in a four-day workweek (30%). This change was especially attractive to people working in finance or insurance (34%).

Rather than schedule adjustments, one-third of remote workers prefer the prospect of private office space, and just as many want weekly happy hours. Health-service workers are most likely to choose the happy hour perk, while personal office space was the most common goal among people in education, business and IT.

“Workers are in no rush to get back to the in-person workplace, but there might be ways for managers to incentivize it,” the report concludes. “Many employees wouldn’t turn their noses up at a pay raise, but others might simply want more flexibility built into their schedules. Those who have gotten used to the peace and quiet of working from home might appreciate more personal space at work, while those who have felt isolated from their coworkers could use some scheduled time during work hours to socialize.

“However, these preferences vary, so managers may want to reach out to their employees and find out what they’ll need in order to return to the office.”

Kaiser’s Northern California Nurses Vote To Ratify Four-Year Contract With Big Pay Raises

Kaiser Permanente nurses union deal includes pay raises, new hires | Modern  Healthcare

Source: Sacramento Bee, by Cathie Anderson

Nurses and nurse practitioners at Kaiser Permanente voted overwhelmingly to ratify a four-year labor contract that secured them the biggest wage increases in about 20 years, their union announced Monday.

The California Nurses Association represents more than 21,000 registered nurses and nurse practitioners throughout the company’s Northern California operations.

“With this new contract, we will be able to recruit new nurses, retain experienced RNs, and most importantly, provide our patients with improved care,” said CNA President Cathy Kennedy, a registered nurse in the neonatal intensive care unit at Kaiser Permanente Roseville Medical Center. “We are so happy that this contract adds more than 2,000 positions across our Northern California facilities. That is amazing and will improve staffing greatly.”

Kaiser and the nurse union had been in talks since June. They announced a tentative contract proposal in mid-November, just a few days before the nurses were set to strike. The company endured a bruising 10-week strike by its mental health workers earlier this year.

The nurses’ contract includes a 22.5% increase in wages over the four-year term of the agreement.

However, pay was not an issue that nurses categorized as a key sticking point in bargaining. They said they wanted Kaiser to address nurse burnout and health and safety concerns. They wanted the company to address staffing shortages, improve screening of patients for infectious diseases and take additional steps to prevent workplace violence.

The union said the company had agreed to add more than 2,000 RN and nurse practitioner positions, including 1,200 new graduate positions, 400 in specialty training, 300 float pool nurses, 80 acute re-entry nurses, 50 NPs, and 80 outpatient positions.

Kennedy said she was also delighted that the company agreed to take steps to address systemic racism.

“For the first time, our contract includes equity and inclusion provisions and a commitment to a workplace free from racism and discrimination,” Kennedy said. “Under this new agreement, we will create a regional Equity, Diversity, and Inclusion Committee to address systemic racism within the health care system. This is long past due. I am thrilled that Kaiser is committed to a workplace that is free from racism and discrimination and that Kaiser agrees that health care is a human right and that we must end racial disparities in health care.”

In addition to representing nurses at Kaiser facilities in Northern California, CNA also represents roughly 1,000 registered nurses at KP’s Los Angeles Medical Center. They ratified a five-year contract with similar terms Nov. 22.

Employers Use Patient Assistance Programs to Offset Their Own Costs

Employers Use Patient Assistance Programs to Offset Their Own Costs |  Kaiser Health NewsSource: Kaiser Health News, by Julie Applyby

Anna Sutton was shocked when she received a letter from her husband’s job-based health plan stating that Humira, an expensive drug used to treat her daughter’s juvenile arthritis, was now on a long list of medications considered “nonessential benefits.”

The July 2021 letter said the family could either participate in a new effort overseen by a company called SaveOnSP and get the drug free of charge or be saddled with a monthly copayment that could top $1,000.

“It really gave us no choice,” said Sutton, of Woodinville, Washington. She added that “every single FDA-approved medication for juvenile arthritis” was on the list of nonessential benefits.

Sutton had unwittingly become part of a strategy that employers are using to deal with the high cost of drugs prescribed to treat conditions such as arthritis, psoriasis, cancer, and hemophilia.

Those employers are tapping into dollars provided through programs they have previously criticized: patient financial assistance initiatives set up by drugmakers, which some benefit managers have complained encourage patients to stay on expensive brand-name drugs when less expensive options might be available.

Now, though, employers, or the vendors and insurers they hire specifically to oversee such efforts, are seeking that money to offset their own costs. Drugmakers object, saying the money was intended primarily for patients. But some benefit brokers and companies like SaveOnSP say they can help trim employers’ spending on insurance — which, they say, could be the difference between an employer offering coverage to workers or not.

It’s the latest twist in a long-running dispute between the drug industry and insurers over which group is more to blame for rising costs to patients. And patients are, again, caught in the middle.

Patient advocates say the term “nonessential” stresses patients out even though it doesn’t mean the drugs — often called “specialty” drugs because of their high prices or the way they are made — are unnecessary.

Some advocates fear the new strategies could be “a way to weed out those with costly health care needs,” said Rachel Klein, deputy executive director of the AIDS Institute, a nonprofit advocacy group. Workers who rely on the drugs may feel pressured to change insurers or jobs, Klein said.

Two versions of the new strategy are in play. Both are used mainly by self-insured employers that hire vendors, like SaveOnSP, which then work with the employers’ pharmacy benefit managers, such as Express Scripts/Cigna, to implement the strategy. There are also smaller vendors, like SHARx and Payer Matrix, some of which work directly with employers.

In one approach, insurers or employers continue to cover the drugs but designate them as “nonessential,” which allows the health plans to bypass annual limits set by the Affordable Care Act on how much patients can pay in out-of-pocket costs for drugs. The employer or hired vendor then raises the copay required of the worker, often sharply, but offers to substantially cut or eliminate that copay if the patient participates in the new effort. Workers who agree enroll in drugmaker financial assistance programs meant to cover the drug copays, and the vendor monitoring the effort aims to capture the maximum amount the drugmaker provides annually, according to a lawsuit filed in May by drugmaker Johnson & Johnson against SaveOnSP, which is based in Elma, New York.

The employer must still cover part of the cost of the drug, but the amount is reduced by the amount of copay assistance that is accessed. That assistance can vary widely and be as much as $20,000 a year for some drugs.

In the other approach, employers don’t bother naming drugs nonessential; they simply drop coverage for specific drugs or classes of drugs. Then, the outside vendor helps patients provide the financial and other information needed to apply for free medication from drugmakers through charity programs intended for uninsured patients.

“We’re seeing it in every state at this point,” said Becky Burns, chief operating officer and chief financial officer at the Bleeding and Clotting Disorders Institute in Peoria, Illinois, a federally funded hemophilia treatment center.

The strategies are mostly being used in self-insured employer health plans, which are governed by federal laws that give broad flexibility to employers in designing health benefits.

Still, some patient advocates say these programs can lead to delays for patients in accessing medications while applications are processed — and sometimes unexpected bills for consumers.

“We have patients get billed after they max out their assistance,” said Kollet Koulianos, vice president of payer relations at the National Hemophilia Foundation. Once she gets involved, vendors often claim the bills were sent in error, she said.

Even though only about 2% of the workforce needs the drugs, which can cost thousands of dollars a dose, they can lead to a hefty financial liability for self-insured employers, said Drew Mann, a benefits consultant in Knoxville, Tennessee, whose clientele includes employers that use variations of these programs.

Before employer health plans took advantage of such assistance, patients often signed up for these programs on their own, receiving coupons that covered their share of the drug’s cost. In that circumstance, drugmakers often paid less than they do under the new employer schemes because a patient’s out-of-pocket costs were capped at lower amounts.

Brokers and the CEOs of firms offering the new programs say that in most cases patients continue to get their drugs, often with little or no out-of-pocket costs.

If workers do not qualify for charity because their income is too high, or for another reason, the employer might make an exception and pay the claim or look for an alternative solution, Mann said. Patient groups noted that some specialty drugs may not have any alternatives.

How this practice will play out in the long run remains uncertain. Drugmakers offer both copay assistance and charity care in part because they know many patients, even those with insurance, cannot afford their products. The programs are also good public relations and a tax write-off. But the new emphasis by some employers on maximizing the amount they or their insurers can collect from the programs could cause some drugmakers to take issue with the new strategies or even reconsider their programs.

“Even though our client, like most manufacturers, provides billions in discounts and rebates to health insurers as part of their negotiations, the insurers also want this additional pool of funds, which is meant to help people who can’t meet the copay,” said Harry Sandick, a lawyer representing J&J.

J&J’s lawsuit, filed in U.S. District Court in New Jersey, alleges that patients are “coerced” into participating in copay assistance programs after their drugs are deemed “nonessential” and therefore are “no longer subject to the ACA’s annual out-of-pocket maximum.”

Once patients enroll, the money from the drugmaker goes to the insurer or employer plan, with SaveOnSP retaining 25%, according to the lawsuit. It claims J&J has lost $100 million to these efforts.

None of that money counts toward patients’ deductibles or out-of-pocket maximums for the year.

In addition to the lawsuit over the copay assistance program efforts, there has been other reaction to the new employer strategies. In an October letter to physicians, the Johnson & Johnson Patient Assistance Foundation, a separate entity, said it will no longer offer free medications to patients with insurance starting in January, citing the rise of such “alternative funding programs.”

Still, J&J spokesperson L.D. Platt said the drugmaker has plans, also in January, to roll out other assistance to patients who may be “underinsured” so they won’t be affected by the foundation’s decision.

In a statement, SaveOnSP said that employers object to drug companies’ “using their employees’ ongoing need for these drugs as an excuse to keep hiking the drugs’ prices” and that the firm simply “advises these employers on how to fight back against rising prices while getting employees the drugs they need at no cost to the employees.”

In a court filing, SaveOnSP said drugmakers have another option if they don’t like efforts by insurers and employers to max out what they can get from the programs: reduce the amount of assistance available. J&J, the filing said, did just that when it recently cut its allotted amount of copay assistance for psoriasis drugs Stelara and Tremfya from $20,000 to $6,000 per participant annually. The filing noted that SaveOnSP participants would still have no copay for those drugs.

For Sutton’s part, her family did participate in the program offered through her husband’s work-based insurance plan, agreeing to have SaveOnSP monitor their enrollment and payments from the drugmaker.

So far, her 15-year-old daughter has continued to get Humira, and she has not been billed a copay.

Even so, “the whole process seems kind of slimy to me,” she said. “The patients are caught in the middle between the drug industry and the insurance industry, each trying to get as much money as possible out of the other.”

California Senior Citizens Are Hit Hard As COVID-19 Surges This Winter

Senior citizens are hit hard as COVID surges across state - Los Angeles  Times

Source: Los Angeles Times, by Rong-Gong Lin II

There has been a troubling spike in coronavirus-positive hospital admissions among seniors in California, rising to levels not seen since the summer Omicron surge.

Hospitalizations have roughly tripled for Californians of most age groups since the autumn low. But the jump in seniors in need of hospital care has been particularly dramatic.

Officials in Los Angeles County have said increases in hospitalizations could lead to an indoor mask order, possibly in early January. Still, there is optimism that any winter surge will not be as bad as those of the last two years.

Rising hospitalization rates are a reason health officials are urging people, especially seniors, to get the updated COVID-19 booster shot and, if they test positive and are eligible, to access therapeutic drugs that likely will reduce the severity of any illness.

Only 35% of California’s vaccinated seniors age 65 and up have received the updated booster since it became available in September.

Among eligible 50- to 64-year-olds, about 21% have received the updated booster. The rate is 12% for younger adults, 9% for adolescents and 8% for 5- to 11-year-olds. The updated booster rate for all vaccinated Californians age 5 and up is 18%.

“We are doing a pathetic job of protecting seniors (and age 50+) from severe COVID in California,” tweeted Dr. Eric Topol, director of the Scripps Research Translational Institute in La Jolla.

Immunity against COVID-19 weakens over time. The booster is especially important for older people, who are at higher risk for severe illness and death.

“The people who are dying today are principally people who are unvaccinated or haven’t gotten an up-to-date vaccine,” Xavier Becerra, the U.S. Health and Human Services secretary, said Thursday in an online forum with the Public Policy Institute of California.

COVID-19 deaths in the state have remained stable at 100 to 200 a week. However, there is concern that increases in cases and hospitalizations could lead to more fatalities.

Of all age groups, 70-plus is the only one that is seeing its hospitalization rate in California exceed that of the summer Omicron peak, according to the U.S. Centers for Disease Control and Prevention.

New coronavirus-positive hospitalizations have doubled in just 2½ weeks to 8.86 for every 100,000 Californians age 70 and up. The summer peak, in July, was 8.36; the autumn low, just before Halloween, was 3.09.

During the seven days to Friday, 2,450 coronavirus-positive Californians age 70 and up were admitted to hospitals — 44% more than in the prior week.

Meanwhile, the hospitalization rate for 60- to 69-year-olds has doubled since Nov. 11, from 1.28 to 2.59. The summer peak for that age group was 3.03.

Concerned about the rise in cases and hospitalizations, state health officials issued an alert to remind doctors that there are plenty of drugs available for newly infected people.

“There is ample supply of COVID-19 therapeutic agents, but they have been underused — especially among populations disproportionately impacted by COVID-19, including communities of color, low-income communities, and residents of long-term care facilities,” the California Department of Public Health said.

The drugs can reduce the risk of hospitalization and death by 88% among unvaccinated people and by 45% among vaccinated or previously infected people, the agency said.

The drugs “are free and widely available,” said Orange County Health Officer Dr. Regina Chinsio-Kwong in a statement. “Medications such as the Paxlovid pill can stop the virus from multiplying in your body, help you test negative sooner, and may lower the risk of developing long COVID symptoms. Additionally, you do not need to have insurance or U.S. citizenship.”

Other therapies against COVID-19 are becoming effectively useless. On Wednesday, the U.S. Food and Drug Administration said it was no longer authorizing the monoclonal antibody bebtelovimab to treat the disease because it’s not expected to work against the Omicron subvariants BQ.1 and BQ.1.1.


CDC data released Friday estimate that BQ.1 and BQ.1.1 account for 62.8% of coronavirus cases nationwide. The parent strain, BA.5, now accounts for just 13.8% of cases.

The coronavirus outlook has deteriorated rather suddenly since Thanksgiving around swaths of California.

The worsening rate “indicates a higher risk for more individuals to catch COVID-19 this winter,” Chinsio-Kwong said. She urged people to mask up in indoor public settings.

On Nov. 17, all but one of California’s 58 counties — Imperial — was in the low COVID-19 community level as defined by the CDC, which measures case and hospitalization rates. On Thanksgiving, three more counties — Fresno, Madera and Del Norte — joined Imperial in the medium category.

On Thursday, 23 counties entered the medium level: Los Angeles, Orange, Santa Clara, Sacramento, Stanislaus, Sonoma, Monterey, Placer, Merced, Marin, Yolo, Butte, El Dorado, Kings, Nevada, Mendocino, Tehama, San Benito, Tuolumne, Siskiyou, Glenn, Mariposa and Sierra.

About 22 million people, 55% of Californians, live in counties now at the medium level.

In L.A. County, coronavirus cases rose nearly 50% during the last week, from 2,049 to 3,053 a day. The county’s rate has been increasing since late October and is more than triple what it was in the autumn. For the week that ended Friday, L.A. County was recording 212 cases for every 100,000 residents; a rate of 100 or more is considered high. The COVID-19 death rate in L.A. County is stable at around 60 per week.

Besides COVID-19, L.A. County is contending with rising flu cases and a high level of respiratory syncytial virus, which is stressing children’s hospitals. The flu positivity rate in L.A. County is 25%, the highest for this time of year for at least six years.

For L.A. County to reinstate a mask mandate, two hospitalization thresholds need to be met. One has already been reached.

There were 1,285 admissions of coronavirus-positive patients to county hospitals for the week that ended Wednesday — more than triple the rate from the beginning of November. That’s 12.8 for every 100,000 residents, and a rate of 10 or greater is one of the thresholds for a mask mandate.

The other threshold is reached if the percentage of hospital beds used by coronavirus-positive patients is 10% or greater, an indication of strain on the hospital system. This level was reached during the 2020 and 2021 winter surges, the deadliest of the pandemic.


The current figure is 5.9%, up from around 2% at the start of November. The earliest the level could hit 10% would be late December, L.A. County Public Health Director Barbara Ferrer estimated last week.

If that happens, there would likely be a two-week countdown before a mask order would take effect — thus, early January at the soonest.

Elsewhere, Orange County’s coronavirus-positive hospitalization rate has doubled since mid-November to 432 per week, according to the CDC, or 13.6 for every 100,000 residents. Orange County reports that 4.9% of hospital beds are being used by coronavirus-positive patients.

‘Off The Charts’: California Hit With Very High Flu Activity, Among Worst In U.S.

California is now experiencing very high influenza-like illness levels.

Source: Los Angeles Times, by Rong-Gong Lin II

California is now reporting very high flu levels, according to the U.S. Centers for Disease Control and Prevention, as the respiratory illness continues to surge nationwide.

The CDC uses five overall levels, from minimal to very high, to measure influenza-like illnesses across the U.S. and its territories. On Friday, the agency’s color-coded map showed California and 10 other states, along with New York City, shaded purple, the worst of the three shades in the very high flu level.

Since the start of October, CDC officials estimate, there have been 78,000 flu hospitalizations and 4,500 deaths nationally.

The California Department of Public Health classifies all of Southern California as having high flu levels, while Central and Northern California are rated moderate. Flu is the reason for nearly 4% of hospitalizations each week at Kaiser’s Northern California facilities, the highest in any of the prior four flu seasons.

In Los Angeles County, flu and COVID-19 cases are surging, and RSV — or respiratory syncytial virus — also remains at a high level.

“This triple threat … has a lot of potential to cause there to be significant circulating illness and to strain our healthcare system — both in terms of the number of beds that are available and the number of healthcare workers that are impacted by illness, which lowers the hospital’s capacity to take care of patients,” L.A. County Public Health Director Barbara Ferrer said in a recent briefing.

The flu positivity rate in L.A. County has reached 25%, a level not seen at this time of year in the last four years. “Clearly, we’re … off the charts,” Ferrer said.

“We already are seeing many individuals hospitalized for flu-related illness and complications. So please, we urge people to not just think of this as ‘just the flu.’ It’s not too late to get your seasonal flu shot,” she added.


California has recorded at least 36 flu-related deaths since the start of October, based on death certificate data. That figure is probably an undercount.

The positivity rate for RSV also remains elevated — around 15%, higher than in any of the four prior cold-and-flu years, which run October through September.

There are some indications that RSV activity may have peaked in L.A. County in early November and is starting to decline. In late October, the positivity rate exceeded 20%, according to county data. But it’s possible the 15% rate is simply a result of more people being tested for the virus, Ferrer said.


“The current percent positivity, even while it’s dropped, still surpasses the highest percent positivity values seen for our last five seasons,” Ferrer said. “So, still an alarming number of people who are testing positive for RSV.”

At Children’s Hospital Los Angeles, the RSV positivity rate is 23%. That’s dropped considerably from Nov. 1, when the rate was 38%. But the latest figure is still quite high and is about the same as during the peak for all of last winter, which was 24%. The emergency room at CHLA is so busy that it cannot always accommodate patient transfers from other hospitals.


The positivity rate for flu at CHLA is 19%; before Thanksgiving, it was 12%.

Orange County’s RSV situation remains the same as it was the prior week, according to its Health Care Agency, where officials declared a public health emergency over RSV and other viral illnesses stressing children’s hospitals.

Increasing coronavirus-positive hospitalizations are exacerbating the RSV situation, as a rise in COVID-19 hospital patients means there’s fewer hospital beds available, the agency said.


At Kaiser’s Northern California hospitals, about 2.2% of hospital admissions are related to RSV, down from 2.3% last week, according to the most recent available data. Those rates are higher than in the five preceding cold-and-flu seasons.

There have been at least 14 RSV-related deaths, according to California death certificate data, since the start of October. The figure is probably an undercount.

“Given the high levels of RSV activity, caution is warranted,” Ferrer said. “RSV often impacts young children most severely and causes bronchiolitis [inflammation of the airways] and pneumonia. It’s important to take precautions to prevent respiratory illnesses. This includes washing your hands often, and for RSV in particular, wiping down frequently touched surfaces.”

In addition to wearing a mask, health experts say one of the easiest ways to reduce your risk of catching the flu or other viral illnesses is to avoid touching your face.

The CDC notes that people can be infected with flu and RSV by touching contaminated surfaces, where some viruses can survive for days, and then their face.

“The one point I want to reemphasize is … avoiding touching your eyes, nose and mouth,” Dr. Ralph Gonzales, a UC San Francisco associate dean, said at a recent campus town hall. “Very good studies have shown that if we can double down our efforts to be vigilant about this, that will increase our chances of staying flu-free.”

Still, this simple-sounding advice may be easier said than done. Touching your face can be a spontaneous or even subconscious act that some research indicates can help us deal with anxiety and discomfort, or be related to negative or dissatisfactory feelings.


And it’s something that happens a lot. A study from 2015 caught medical students in class touching their faces 23 times per hour on average.

Here are some tips on how to train yourself to avoid touching your face.

  • * Be mindful when you do touch your face, and catch yourself when — and, preferably, before — you do it.
  • * If you catch yourself before touching your face, consider folding your hands or doing something else with them.
  • * Got an itch? Try to ignore it. If that’s bothersome, wash your hands, then scratch it, then wash your hands again. Or buy sterile wooden tongue depressors to use as a tool to scratch itches.

Regular hand-washing is also an important step to help thwart viral spread, officials say. When soap and water aren’t available, hand sanitizer can be used as a substitute.

4 Ways Medicaid Could Manage High-Price Drugs

How State Medicaid Programs are Managing Prescription Drug Costs: Results  from a State Medicaid Pharmacy Survey for State Fiscal Years 2019 and 2020  | KFF

Source: Fierce Healthcare, by Frank Diamond

Private payers can just say “no.” So can Medicare. Medicaid, however, must say “yes.”

Medicaid must provide coverage for any medication approved by the Food and Drug Administration (FDA), even those medications approved under the FDA’s accelerated approval program (AAP), which are often very expensive medications that lack complete clinical data, according to a special commentary in JAMA Health Forum.

For the most part, the authors said, suggestions for addressing the problem focus on the FDA approval process. Policymakers might also want to consider better reimbursement systems for payers when it comes to medications that secure accelerated approval, the article said.

The accelerated approval program was created in 1992 to speed up the approval process for medications to fight HIV/AIDS. However, over the past decade, the AAP has shifted more into oncological medications and other niche areas. States worry that their Medicaid programs might be crushed by the high prices of some drugs.

Take Alzheimer’s disease drug aducanumab. Approved under the AAP, aducanumab came to market with a $56,000 annual price tag and serious questions about its efficacy.

Private insurers can exclude drugs from their formularies, and many did just that for aducanumab.

“Medicare has the authority to limit coverage for drugs that are not reasonable and necessary, a rarely used power it applied regarding aducanumab due to the lack of reported clinical benefits when weighed against the potential for harm,” the article said. “But state Medicaid programs lack these authorities and are generally legally required to cover essentially all FDA-approved drugs, including accelerated approval products, despite their lack of supporting clinical evidence.”

The authors of the JAMA Open Forum article suggest four possible ways to fix this problem: formulary exclusions, Medicaid rebate reform, value-based pricing and consolidated purchasing.

Formulary exclusions

Give Medicaid the power to exclude AAP drugs from its formulary on the grounds that they have not been proven to have medical efficacy, the authors said. That could be done through waivers, something that Massachusetts and Oregon have already applied for.

The Centers for Medicare & Medicaid Services (CMS) already rejected Massachusetts’ request, although legal scholars argue against CMS’ reasoning.

The government could create a national process to determine whether Medicaid must cover certain drugs or allow Medicaid to simply mirror Medicare’s determinations, the authors wrote. But Medicare and Medicaid aren’t interchangeable, and the authors note that “although enabling state Medicaid programs to adopt Medicare’s coverage determinations would be useful for a product like aducanumab, it would be less useful for products with high Medicaid market share but little Medicare exposure, such as eteplirsen or hydroxyprogesterone caproate.”

Medicaid rebate reform

The Medicaid and CHIP Payment and Access Commission (MACPAC) proposes that drugs approved under the AAP be sold at an increased rebate that would decrease only with greater evidence of efficacy. MACPAC also proposes that the prices account for inflation.

“The MACPAC proposal would likely require legislation, and its effectiveness depends on the size of the increase in the rebates; however, this proposal is likely less administratively complex than other strategies because it builds on an existing rebate structure,” the article said. “The proposal targets products that have not yet converted to traditional approval and could encourage the timely completion of confirmatory trials.”

Also, as Fierce Healthcare reported recently, expect pushback from drug companies.

Value-based pricing

This involves a review of the clinical data on medications and tying the price to what it seems to be worth at certain points along that review. It would involve comparing the AAP medication with other drugs used to treat the same conditions to help determine whether the newer drug is worth the price.

“These approaches are used by many other countries to ascertain appropriate pricing for new drugs, and they permit payers to balance the prices that are paid while clinical evidence develops,” the study said.

Consolidated purchasing or carve-outs

The authors suggested examining the possibility of creating a federal insurance program for cell and gene therapies for rare diseases.

“The goal would be to shift the financing of these medications to the federal government by increasing the federal share of Medicaid spending to 100% either for all accelerated approval products or rare disease products alone,” the article said. “Under some of these proposals, access could be managed through a rare disease fund for all patients regardless of payer type.”

Each of these four suggestions comes with challenges and drawbacks, but all could possibly be a solution for states trying to deal with ever more expensive medications that they now must currently cover, the authors said.

“The types of proposals that we have described could provide a range of options for policymakers to evaluate trade-offs of access and pricing associated with the accelerated approval program,” the article said.

Senate Bill Seeks To Improve Medicare Handbook Amid Spike In Marketing Complaints

Bill seeks to improve Medicare handbook after marketing concerns

Source: Fierce Healthcare, by Robert King

New legislation seeks to improve the Medicare & You handbook in the latest attempt by Congress to scrutinize how Medicare Advantage plans are marketed to seniors.

The legislation introduced Tuesday by Sens. Maggie Hassan, D-N.H., and Roger Marshall, R-Kan., would add new information to the handbook on health plan choices and supplemental insurance. It is the latest bid by lawmakers to address a spike in complaints among seniors over aggressive marketing practices for MA plans.

“I’ve grown increasingly concerned about mass marketing ad campaigns during open enrollment, and want to be sure that seniors are selecting plans that best meet their health and financial needs,” said Marshall in a statement.

The handbook guides new and current Medicare beneficiaries on the program, which is in the middle of open enrollment through Dec. 7.

It includes a summary of Medicare benefits, available health and drug plans as well as frequently asked questions. While the handbook does compare Medicare and MA, it doesn’t discuss how MA plans can control costs.

The legislation would include information in the handbook on how MA plans rely on drug cost controls like step therapy and prior authorization. It also discusses network sizes in MA, a key difference compared with traditional Medicare.

The legislation would also add an explainer on what happens if a senior switches to MA and go back to traditional Medicare.

“They may be prohibited from purchasing supplemental coverage or else have to pay significantly higher premiums,” a release on the bill said.

The legislation is the latest effort by the Senate to scrutinize MA marketing.

Senate Finance Committee Chairman Ron Wyden, D-Ore., released a report earlier this month showing that nine states have experienced a higher rate of complaints over MA marketing practices. A common complaint was that mailers were sometimes tailored to be official government documents.

The report found that some plans were marketing to beneficiaries that had dementia or enrolled in a plan without their consent.

Wyden has called for the Centers for Medicare and Medicaid Services to adopt several recommendations that include holding brokers and agents accountable for their actions and closing a loophole that enables cold calling to seniors.

CMS has said it is looking at the recommendations. The agency issued a guidance document last month that reminded plans they are responsible for the actions of brokers and agents hired on behalf of the plans.

Starting next year, CMS will also preapprove any MA television spots. Currently, such spots can air before getting agency approval.

Audits—Hidden Until Now—Reveal Millions In Medicare Advantage Overcharges

Audits — Hidden Until Now — Reveal Millions in Medicare Advantage  Overcharges | Kaiser Health NewsSource: Fierce Healthcare, by Fred Schulte & Holly Hacker

Newly released federal audits reveal widespread overcharges and other errors in payments to Medicare Advantage health plans for seniors, with some plans overbilling the government more than $1,000 per patient a year on average.

Summaries of the 90 audits, which examined billings from 2011 through 2013 and are the most recent reviews completed, were obtained exclusively by KHN through a three-year Freedom of Information Act (FOIA) lawsuit, which was settled in late September.


The government’s audits uncovered about $12 million in net overpayments for the care of 18,090 patients sampled, though the actual losses to taxpayers are likely much higher. Medicare Advantage, a fast-growing alternative to original Medicare, is run primarily by major insurance companies.

Officials at the Centers for Medicare & Medicaid Services (CMS) have said they intend to extrapolate the payment error rates from those samples across the total membership of each plan—and recoup an estimated $650 million as a result.

But after nearly a decade, that has yet to happen. CMS was set to unveil a final extrapolation rule Nov. 1 but put that decision off (PDF) until February.


Ted Doolittle, a former deputy director of CMS’ Center for Program Integrity, which oversees Medicare’s efforts to fight fraud and billing abuse, said the agency has failed to hold Medicare Advantage plans accountable. “I think CMS fell down on the job on this,” said Doolittle, now the healthcare advocate for the state of Connecticut.

Doolittle said CMS appears to be “carrying water” for the insurance industry, which is “making money hand over fist” off Medicare Advantage. “From the outside, it seems pretty smelly,” he said.

In an email response to written questions posed by KHN, Dara Corrigan, a CMS deputy administrator, said the agency hasn’t told health plans how much they owe because the calculations “have not been finalized.”

Corrigan declined to say when the agency would finish its work. “We have a fiduciary and statutory duty to address improper payments in all of our programs,” she said.


The 90 audits are the only ones CMS has completed over the past decade, a time when Medicare Advantage has grown explosively. Enrollment in the plans more than doubled during that period, passing 28 million in 2022, at a cost to the government of $427 billion.

Seventy-one of the 90 audits uncovered net overpayments, which topped $1,000 per patient on average in 23 audits, according to the government’s records. Humana, one of the largest Medicare Advantage sponsors, had overpayments exceeding that $1,000 average in 10 of 11 audits, according to the records.

CMS paid the remaining plans too little on average, anywhere from $8 to $773 per patient.

Auditors flag overpayments when a patient’s records fail to document that the person had the medical condition the government paid the health plan to treat, or if medical reviewers judge the illness is less severe than claimed.

That happened on average for just over 20% of medical conditions examined over the three-year period; rates of unconfirmed diseases were higher in some plans.

As Medicare Advantage’s popularity among seniors has grown, CMS has fought to keep its audit procedures, and the mounting losses to the government, largely under wraps.

That approach has frustrated both the industry, which has blasted the audit process as “fatally flawed” and hopes to torpedo it (PDF), and Medicare advocates, who worry some insurers are getting away with ripping off the government.

“At the end of the day, it’s taxpayer dollars that were spent,” said David Lipschutz, a senior policy attorney with the Center for Medicare Advocacy. “The public deserves more information about that.”

At least three parties, including KHN, have sued CMS under FOIA t to shake loose details about the overpayment audits, which CMS calls Risk Adjustment Data Validation, or RADV.

In one case, CMS charged a law firm an advance search fee of $120,000 and then provided next to nothing in return, according to court filings. The law firm filed suit last year, and the case is pending in federal court in Washington, D.C.

KHN sued CMS in September 2019 after the agency failed to respond to a FOIA request for the audits. Under the settlement, CMS agreed to hand over the audit summaries and other documents and pay $63,000 in legal fees to Davis Wright Tremaine, the law firm that represented KHN. CMS did not admit to wrongfully withholding the records.

High coders

Most of the audited plans fell into what CMS calls a “high coding intensity group.” That means they were among the most aggressive in seeking extra payments for patients they claimed were sicker than average. The government pays the health plans using a formula called a “risk score” that is supposed to render higher rates for sicker patients and lower ones for healthier ones.

But often medical records supplied by the health plans failed to support those claims. Unsupported conditions ranged from diabetes to congestive heart failure.

Overall, average overpayments to health plans ranged from a low of $10 to a high of $5,888 per patient collected by Touchstone Health HMO, a New York health plan whose contract was terminated “by mutual consent” in 2015, according to CMS records.

Most of the audited health plans had 10,000 members or more, which sharply boosts the overpayment amount when the rates are extrapolated.

In all, the plans received $22.5 million in overpayments, though these were offset by underpayments of $10.5 million.

Auditors scrutinize 30 contracts a year, a small sample of about 1,000 Medicare Advantage contracts nationwide.

UnitedHealthcare and Humana, the two biggest Medicare Advantage insurers, accounted for 26 of the 90 contract audits over the three years.

Eight audits of UnitedHealthcare plans found overpayments, while seven others found the government had underpaid.

UnitedHealthcare spokesperson Heather Soule said the company welcomes “the program oversight that RADV audits provide.” But she said the audit process needs to compare Medicare Advantage to original Medicare to provide a “complete picture” of overpayments. “Three years ago we made a recommendation to CMS suggesting that they conduct RADV audits on every plan, every year,” Soule said.

Humana’s 11 audits with overpayments included plans in Florida and Puerto Rico that CMS had audited twice in three years.

The Florida Humana plan also was the target of an unrelated audit in April 2021 by the Department of Health and Human Services inspector general. That audit, which covered billings in 2015, concluded Humana improperly collected nearly $200 million that year by overstating how sick some patients were. Officials have yet to recoup any of that money, either.

In an email, Humana spokesperson Jahna Lindsay-Jones called the CMS audit findings “preliminary” and noted they were based on a sampling of years-old claims.

“While we continue to have substantive concerns with how CMS audits are conducted, Humana remains committed to working closely with regulators to improve the Medicare Advantage program in ways that increase seniors’ access to high-quality, lower-cost care,” she wrote.

Billing showdown

Results of the 90 audits, though years old, mirror more recent findings of a slew of other government reports and whistleblower lawsuits alleging that Medicare Advantage plans routinely have inflated patient risk scores to overcharge the government by billions of dollars.

Brian Murphy, an expert in medical record documentation, said collectively the reviews show that the problem is “absolutely endemic” in the industry.

Auditors are finding the same inflated charges “over and over again,” he said, adding: “I don’t think there is enough oversight.”

When it comes to getting money back from health plans, extrapolation is the big sticking point.

Although extrapolation is routinely used as a tool in most Medicare audits, CMS officials have never applied it to Medicare Advantage audits because of fierce opposition from the insurance industry.

“While this data is more than a decade old, more recent research demonstrates Medicare Advantage’s affordability and responsible stewardship of Medicare dollars,” said Mary Beth Donahue, president of the Better Medicare Alliance, a group that advocates for Medicare Advantage. She said the industry “delivers better care and better outcomes” for patients.

But critics argue that CMS audits only a tiny percentage of Medicare Advantage contracts nationwide and should do more to protect tax dollars.

Doolittle, the former CMS official, said the agency needs to “start keeping up with the times and doing these audits on an annual basis and extrapolating the results.”

But Kathy Poppitt, a Texas healthcare attorney, questioned the fairness of demanding huge refunds from insurers so many years later. “The health plans are going to fight tooth and nail and not make this easy for CMS,” she said.

Here’s How Those Looking To ‘Age In Place’ Can Fund Home Health-Care Services

Home Health Care and Aging in Place | Retirement Living

Source: CNBC, by Deborah Nason

Some 70% of people want to age at home, yet only 10% have long-term care insurance, a recent HCG Secure/Arctos Foundation study found. Furthermore, about half of respondents had no idea how much in-home care would cost.

With the median annual cost of a home health aide nationally estimated at $61,776, how are folks going to fund this?


“The need for help at home is much more common than you think, but people don’t plan for it,” said certified financial planner Chris Chenwealth strategist with Insight Financial Strategies in Newton, Massachusetts.

Scoping out the insurance option landscape

People with long-term care insurance will usually have home health care covered under the same eligibility conditions as for long-term care facilities — the inability to perform two of six so-called activities of daily living, Chen said. According to the Administration for Community Living, this situation typically lasts an average of two years.

“Basically, I try to segment the risk into a short-term need and a long-term need, and to fund them separately,” he said. “Where possible, I encourage people to buy LTC insurance for a short period of coverage, maybe a year.”

“Then I encourage them to buy a hybrid life insurance to cover for longer periods,” Chen added. “And I like to plan for some assets to be used to cover the differences.”

Tom Beauregard, founder of insurance company HCG Secure, said there’s “a need for innovation in this space to cover middle-income families to age at home.”


“For most people, it’s a blind spot — they [mistakenly] think home care will be covered by their [employee] insurance or Medicare,” he said. “And most of them can’t afford long-term care insurance.”

Beauregard’s firm recently launched Home Care Secure, an indemnity plan that pays cash on a weekly basis, along with access to planning and coordination services such as well-being assessments, an aging-at-home plan, help with finding and scheduling in-home health aides, telehealth visits, etc.

While indemnity plans pay cash benefits, the policies themselves do not retain cash value like plans such as hybrid life insurance.

Creative ways for clients to fund aging in place

With a previous background in the home health-care industry, Taylor Kovar, CFP and CEO of Kovar Wealth Management in Lufkin, Texas, suggests several creative ways for clients to fund aging in place, including:

  • * Offering room and board in exchange for in-home assistance, especially in college towns.
  • * Cost-sharing and splitting hours of caregivers and other helpers with a neighbor or relative. “If neighbors share, then effectively, you’re so close, it’s like you have the [helper] available all day,” Kovar said.
  • * Digging into any corporate retiree benefits beyond just a pension, as there’s often additional services for in-home care, he said.
  • * Researching local nonprofits that can help pay for in-home health care, going through state aging and disability resource centers, and sites such as the U.S. Administration on Aging’s Eldercare Locator.
  • * Looking into benefits that may be available from previous law enforcement or other public service employment.

Scott Vance, CFP, owner of Trisuli Financial Advising in Holly Springs, North Carolina, focuses his practice on military members and veterans. He said the Department of Veterans Affairs offers eligible veterans many means-tested home care services, such as light housekeeping, laundering, meal prep, grocery shopping, transportation appointments and — in severe cases — bathing, toileting, eating, dressing, etc.

In addition, so-called Aid and Attendance benefits provide monthly payments for qualified veterans and survivors.

Vance said he helped secure such benefits for his elderly uncle and found it easy.

“The VA really stepped up,” he said. “It was almost painless to enroll him in services.”

Thinking about these things ahead of time can help you have a calmer and safer life as you age at home, said HCG Secure’s Beauregard.

If you can get a little bit of home health support, your chances of a dramatic catastrophe are lower — like a bad fall [or while trying to keep] meds straight, getting meals together, showering,” he said. “There are all sorts of crisis opportunities.”

Last Updated 12/07/2022

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