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Julie Rovner
KHN

@jrovner

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Julie Rovner is chief Washington correspondent and host of KHN’s weekly health policy news podcast, “What the Health?” A noted expert on health policy issues, Julie is the author of the critically praised reference book “Health Care Politics and Policy A to Z,” now in its third edition.

With Medicare and Social Security apparently off the table for federal budget cuts, the focus has turned to Medicaid, the federal-state health program for those with low incomes. President Joe Biden has made it clear he wants to protect the program, along with the Affordable Care Act, but Republicans will likely propose cuts to both when they present a proposed budget in the next several weeks.

Meanwhile, confusion over abortion restrictions continues, particularly at the FDA. One lawsuit in Texas calls for a federal judge to temporarily halt distribution of the abortion pill mifepristone. A separate suit, though, asks a different federal judge to temporarily make the drug easier to get, by removing some of the FDA’s safety restrictions.

This week’s panelists are Julie Rovner of Kaiser Health News, Alice Miranda Ollstein of Politico, Rachel Cohrs of STAT News, and Lauren Weber of The Washington Post.

Panelists

Rachel Cohrs
Stat News

@rachelcohrs

Read Rachel's stories

Alice Miranda Ollstein
Politico

@AliceOllstein

Read Alice's stories

Lauren Weber
The Washington Post

@LaurenWeberHP

Read Lauren's stories

Among the takeaways from this week’s episode:

• States are working to review Medicaid eligibility for millions of people as pandemic-era coverage rules lapse at the end of March, amid fears that many Americans kicked off Medicaid who are eligible for free or near-free coverage under the ACA won’t know their options and will go uninsured.
• Biden promised this week to stop Republicans from “gutting” Medicaid and the ACA. But not all Republicans are on board with cuts to Medicaid. Between the party’s narrow majority in the House and the fact that Medicaid pays for nursing homes for many seniors, cutting the program is a politically dicey move.
• A national group that pushed the use of ivermectin to treat covid-19 is now hyping the drug as a treatment for flu and RSV — despite a lack of clinical evidence to support their claims that it is effective against any of those illnesses. Nonetheless, there is a movement of people, many of them doctors, who believe ivermectin works.
• In reproductive health news, a federal judge recently ruled that a Texas law cannot be used to prosecute groups that help women travel out of state to obtain abortions. And the abortion issue has highlighted the role of attorneys general around the country — politicizing a formerly nonpartisan state post. –And Eli Lilly announced plans to cut the price of some insulin products and cap out-of-pocket costs, though their reasons may not be completely altruistic: An expert pointed out that a change to Medicaid rebates next year means drugmakers soon will have to pay the government every time a patient fills a prescription for insulin, meaning Eli Lilly’s plan could save the company money.

Plus, for “extra credit,” the panelists suggest health policy stories they read this week that they think you should read, too:

Julie Rovner: The New York Times’ “A Drug Company Exploited a Safety Requirement to Make Money,” by Rebecca Robbins.

Alice Miranda Ollstein: The New York Times’ “Alone and Exploited, Migrant Children Work Brutal Jobs Across the U.S.,” by Hannah Dreier.

Rachel Cohrs: STAT News’ “Nonprofit Hospitals Are Failing Americans. Their Boards May Be a Reason Why,” by Sanjay Kishore and Suhas Gondi.

Lauren Weber: KHN and CBS News’ “This Dental Device Was Sold to Fix Patients’ Jaws. Lawsuits Claim It Wrecked Their Teeth,” by Brett Kelman and Anna Werner.

Also mentioned in this week’s podcast:

• Politico’s “Why One State’s Plan to Unwind a Covid-Era Medicaid Rule Is Raising Red Flags,” by Megan Messerly.
• The Washington Post’s “Doctors Who Touted Ivermectin as Covid Fix Now Pushing It for Flu, RSV,” by Lauren Weber.
• NPR’s “To Safeguard Healthy Twins in Utero, She Had to ‘Escape’ Texas for Abortion Procedure,” by Selena Simmons-Duffin.
• The Daily Beast’s “Tennessee Abortion Ban a ‘Nightmare’ for Woman With Doomed Pregnancy,” by Michael Daly.

click to open the transcript

Transcript: March Medicaid Madness

KHN’s ‘What the Health?’Episode Title: Medicaid March MadnessEpisode Number: 287Published: March 2, 2023

Julie Rovner: Hello and welcome back to KHN’s “What the Health?” I’m Julie Rovner, chief Washington correspondent at Kaiser Health News. And I’m joined by some of the best and smartest health reporters in Washington. We are taping this week on Thursday, March 2, at 10 a.m. As always, news happens fast, and things might have changed by the time you hear this. So, here we go. We are joined today via video conference by Alice Miranda Ollstein of Politico.

Alice Miranda Ollstein: Good morning.

Rovner: Rachel Cohrs of Stat News.

Rachel Cohrs: Hi, everybody.

Rovner: And we officially welcome to the podcast panel this week Lauren Weber, ex of KHN and now at The Washington Post covering a cool new beat on health and science disinformation. Lauren, welcome back to the podcast.

Lauren Weber: Thanks for having me.

Rovner: So we’re going to get right to this week’s news. We’ve talked a lot about the political fight swirling around Medicare the past couple of weeks. So this week, I want to talk more about Medicaid. Our regular listeners will know, or should know, that states are beginning to re-determine eligibility for people who got on Medicaid during the covid pandemic and were allowed to stay on until now. In fact, Arkansas is vowing to re-determine eligibility for half a million people over the next six months. Alice, the last time Arkansas tried to do something bureaucratically complicated with Medicaid, it didn’t turn out so well, did it?

Ollstein: No. It was so much of a cautionary tale that no other state until now has gone down that path, although now at least a couple are attempting to. So Arkansas was the only state to actually move forward under the Trump administration with implementing Medicaid work requirements. And we covered it at the time, and just thousands and thousands of people lost coverage who should have qualified. They were working. They just couldn’t navigate the reporting system. Part of the problem was that you had to report your working hours online and a lot of people who are poor don’t have access to the internet. And, you know, the system was buggy and clunky and it was just a huge mess. But that is not stopping the state from trying again on several fronts. One, they want to do Medicaid work requirements again. The governor, Sarah Huckabee Sanders, has said that they plan to do that and also they plan to do their redeterminations for the end of the public health emergency in half the time the federal government would like states to take to do it. The federal government has incentives for states to go slow and take a full year to make sure people know how to prove whether or not they qualify for Medicaid and to learn what other insurance coverage options might be available to them. For instance, you know, Obamacare plans that are free or almost free.

Rovner: Yeah. Presumably most of the people who are no longer eligible for Medicaid but are still low-income will be eligible for Obamacare with hefty subsidies.

Ollstein: That’s right. So the fear is that history will repeat itself. A lot of people who should be covered will be dropped from coverage and won’t even know it because the state didn’t take the time to contact people and seek them out.

Rovner: This is something that we will certainly follow as it plays out over the next year. More broadly, though, there have been whispers — well, more than whispers, whines — over the past couple of weeks that President [Joe] Biden’s challenge to Republicans not to cut Social Security and Medicare, and Republicans’ apparent acceptance of that challenge, specifically leaves out Medicaid. Now, I never thought that was true, at least for the Democrats. But earlier this week, President Biden extended his promises to Medicaid and the Affordable Care Act. How much of a threat is there really to Medicaid in the coming budget battles? Rachel, you wrote about that today.

Cohrs: There is a lot of anxiety swirling around this on the Hill. I know there’s a former Trump White House official who’s circulated some documents that are making people a little bit nervous about Republicans’ position. But it is useful to look at existing documents out there. It is not reflective necessarily of the consensus Republican position. And it’s a very diverse party right now in the House. They have an incredibly narrow majority and Kevin McCarthy is really going to have to walk a tightrope here. And I think it is important to remember that when Medicaid has come up on steep ballot initiatives in red states, so many times it has passed overwhelmingly. So I think there is an argument to be made that Medicaid enjoys more political support among the GOP voting populace than maybe it does among members of Congress. So I think I am viewing it with caution. You know, obviously, it’s something that we’re going to have to be tracking and watching as these negotiations develop. But Democrats still hold the Senate and they still hold the presidency. So Republicans have more leverage than they did last Congress, but they’re still … Democrats still have a lot of sway here.

Rovner: Although I’ll just point out, as I think I pointed out before, that in 2017, when the Republicans tried to repeal the Affordable Care Act, one of the things they discovered is that Medicaid is actually kind of popular. I think … much to their surprise, they discovered that Medicaid is also kind of popular, maybe not as much as Medicare, but more than I think they thought. So I guess the budget wars really get started next week: We get President Biden’s budget, right?

Ollstein: And House Republicans are allegedly working on something. We don’t know when it will come or how much detail it will have, but it will be some sort of counter to Biden’s budget. But, you know, the real work will come later, in hashing it out in negotiations. And, really, a small number of people will be involved in that. And so just like Rachel said, you know, you’re going to see a lot of proposals thrown out over the next several months. Not all of them should necessarily be taken seriously or taken as determinative. Just one last interesting thing: This has been a really interesting education time, both for lawmakers and the public on just who is covered under these programs. I mean, the idea is that Medicare is so untouchable, is this third rail, because it is primarily seniors, and seniors vote. And seniors are more politically important to conservatives and Republicans. But people forget a lot of seniors are also on Medicaid. They get their nursing home coverage through there. And so I’ve heard a lot of Democratic lawmakers really hammering that argument lately and saying, look, you know, the stereotype for Medicaid is that it’s just poor adults, but …

Rovner: Yeah, moms and kids. That was how it started out.

Ollstein: Exactly.

Rovner: It was poor moms and kids.

Ollstein: Exactly. But it’s a lot more than that now. And it is more politically dicey to go after it than maybe people think.

Rovner: Yeah, I think Nancy Pelosi … in 2017 when, you know, if the threat with Medicare is throwing Granny off the cliff in her wheelchair, the threat of Medicaid is throwing Granny out of her nursing home, both of which have their political perils. All right. Well, we’ll definitely see this one play out for a while. I want to move to the public health beat. Lauren, you had a really cool story on the front page of The Washington Post this week about how the promise of ivermectin to treat infectious diseases in humans. And for those who forget, ivermectin is an anti-wormer drug that I give to my horse and both of my dogs. But the idea of using it for various infectious diseases just won’t die. What is the latest ivermectin craze?

Weber: Yes, and to be clear, there is an ivermectin that is a pill that can be given to humans, which is what these folks are talking about. But there’s this group called the Front Line COVID-19 Critical Care Alliance that really pushed ivermectin in the height of covid. As we all know on this podcast, scientific study after scientific study after clinical trial has disproved that there is any efficacy for that. But this group has continued to push it. And I discovered, looking at their website back this winter, that they’re now pushing it for the flu and RSV. And as I asked the CDC [Centers for Disease Control and Prevention] and medical experts, there’s no clinical data to support pushing that for the flu or RSV. And, you know, as one scientist said to me, they had data that … had antiviral properties in a test tube. But as one scientist said to me, well, if you put Coca-Cola in a test tube, it would show it had antiviral properties as well. So there’s a lot of pushback to these folks. But, that said, they told me that they have had their protocols downloaded over a million times. You know, they’re … absolutely have some prominence and have, you know, converted a share of the American population to the belief that this is a useful medical treatment for them. And one of the doctors that has left their group over their support of ivermectin said to me, “Look, I’m not surprised that they’re continuing to push this for something else. This is what they do now. They push this for other things.” And so it’s quite interesting to see this continue to play out as we continue into covid, to see them kind of expand, as these folks said to me, into other diseases.

Rovner: I know I mean, usually when we see these kinds of things, it’s because the people who are pushing them are also selling them and making money off of them. And I know that’s the case in some of this, but a lot of these are just doctors who are writing prescriptions for ivermectin. Right? I mean, this is an actual belief that they have.

Weber: Yeah, some of them do make money off of telehealth appointments. They can charge up to a couple hundred dollars for telehealth appointments. And one of the couple of co-founders had a lucrative Substack and book deal that talks about ivermectin and do get paid by this alliance. One of them made almost a quarter of a million dollars in salary from the alliance. But yeah, I mean, the average doctor that’s prescribing ivermectin, I mean — there were over 400,000 ivermectin prescriptions in, I think, it was August of 2021. So that’s a lot of prescriptions.

Rovner: They’re not all making money off of it.

Weber: They’re not all making money. And I mean, what’s wild to me is Merck has come out and said, which, in a very rare statement for a pharmaceutical company, you know, don’t prescribe our drug for this. And when I asked them about RSV and the flu, they said, yeah, our statement would still stand on that. So it’s a movement, to some extent. And the folks I talked to about it, they really believe …

Rovner: And I will say, for a while in 2021, you couldn’t get horse wormer, which is a very nasty-tasting paste, even the horses don’t really like it. Because it was hard to get ivermectin at all. So we’ll see where this goes next. Here’s one of those “in case you missed It” stories. The Tulsa World this week has an interview with former Republican Sen. James Inhofe, who said, in his blunt Inhofe way, that he retired last year not only because he’s 88, but because he’s still suffering the effects of long covid. And he’s not the only one — quote, “five or six others have [long covid], but I’m the only one who admits it,” he told the paper, referring to other members of the Senate, presumably other Republican members of the Senate. Now, mind you, the very conservative Inhofe voted against just about every covid funding bill. And my impression from not going to the Hill regularly in 2021 and 2022 is that while covid seemed to be floating around in the air, lots of people were getting it, very few people seemed to be getting very sick. But now we’re thinking that’s not really the case, right?

Ollstein: When I saw this, I immediately went back to a story I wrote about a year ago on Tim Kaine’s long covid diagnosis and his attempts to convince his colleagues to put more research funding or treatment funding, more basic covid prevention funding … you know, fewer people will get long covid if fewer people get covid in the first place. And there was just zero appetite on the Republican side for that. And that’s why a lot of it didn’t end up passing. Inhofe was one of the Republicans I talked to, and I said, you know, do you think you should do more about long covid? What do you think about this? And this is what he told me: “I have other priorities. We’re handling all we can right now.” And then he added that long covid is not that well defined. And he argued there’s no way to determine how many people are affected. Well.

Rovner: OK.

Ollstein: So that … in “Quotes That Aged Poorly Hall of Fame.”

Rovner: You know, obviously Tim Kaine came forward and talked about it. But now I’m wondering if there are people who are slowing down or looking like they’re not well, maybe they have long covid and don’t want to say.

Ollstein: Well, I mean, something that Tim Kaine’s case shows is that there’s no one thing it can look like and somebody can look completely healthy and normal on the outside and be suffering symptoms. And Tim Kaine has also said that members of Congress have quietly disclosed to him and thanked him for speaking up, but said they weren’t willing to do it themselves. And he, Tim Kaine, told me that he felt more comfortable speaking up because the kind of symptoms he had were less stigmatized. They weren’t anything in terms of impeding his mental capacity and function. And there’s just a lot of stigma and fear of people coming forward and admitting they’re having a problem.

Rovner: I find it kind of ironic that last week we talked about how, you know, members of Congress and politicians with mental health, you know, normally stigmatizing problems are more willing to talk about it. And yet here are people with long covid not willing to talk about it. So maybe we’ll see a little bit more after this or maybe not. I want to talk a little bit about artificial intelligence and health care. I’ve been wanting to talk about this for a while, but this week seems to be everyone is talking about AI. There have been a spate of stories about how different types of artificial intelligence are aiding in medical care, but also some cautionary tales, particularly about chat engines. They get all their information from the internet, good or bad. Now, we already have robots that do intricate surgeries and lots and lots of treatment algorithms. On the other hand, the little bit of AI that I already have that’s medical-oriented, my Fitbit, that sometimes accurately tracks my exercise and sometimes doesn’t, and the chat bot from my favorite chain drugstore that honestly cannot keep my medication straight. None of that makes me terribly optimistic about launching into health AI. Is this, like most tech, going to roll out a little before it’s ready and then we’ll work the bugs out? Or maybe are we going to be a little bit more careful with some of this stuff?

Cohrs: I think we’ve already seen some examples of things rolling out before they’re exactly ready. And I just thought of my colleague Casey Ross’ reporting on Epic’s algorithm that was supposed to help …

Rovner: Epic, the electronic medical records company.

Cohrs: Yes, yes. They had this algorithm that was supposed to help doctors treat sepsis patients, and it didn’t work. The problem with using AI in health care is that there are life-and-death consequences for some of these things. If you’re misdiagnosing someone, if you’re giving them medicine they don’t need, there are, like, those big consequences. But there are also the smaller ones too. And my colleague Brittany Trang wrote about how with doctor’s notes or transcripts of conversations between a physician and a patient sometimes AI has difficulty differentiating between an “mm-hm” or an “uh-huh” and telling whether that’s a yes or a no. And so I think that there’s just all of these really fascinating issues that we’re going to have to work through. And I think there is enormous potential, certainly, and I think there’s getting more experimentation. But like you said, I think in health care it’s just a very different beast when you’re rolling things out and making sure that they work.

Weber: Yeah, I wanted to add, I mean, one of the things that I found really interesting is that doctors’ offices are using some of it to reduce some of the administrative burden. As we all know, prior authorizations suck up a lot of time for doctors’ offices. And it seems like this has actually been really helpful for them. That said, I mean, that comes with the caveat of — my colleagues and I and much reporting has shown that — sometimes these things just make up references for studies. They just make it up. That level of “Is this just a made-up study that supports what I’m saying?” I think is really jarring. This isn’t quite like using Google. It cannot be trusted to the level … and I think people do have caution with it and they will have to continue to have caution with it. But I think we’re really only at the forefront of figuring out how this all plays out.

Rovner: I was talking before we started taping about how I got a text from my favorite chain drugstore saying that I was out of refills and that they would call my doctor, which is fine. And then they said, “Text ‘Yes’ if you would like us to call” … some other doctor. I’m like, “Who the heck is this other doctor?” And then I realize he’s the doctor I saw at urgent care last September when I burned myself. I’m like, “Why on earth would you even have him in your system?” So, you know, that’s the sort of thing … it’s like, we’re going to be really helpful and do something really stupid. I worry that Congress, in trying to regulate tech, and failing so far — I mean, we’ve seen how much they do and don’t know about, you know, Facebook and Instagram and the hand-wringing over TikTok because it’s owned by the Chinese — I can’t imagine any kind of serious, thoughtful regulation on this. We’re going to have to basically rely on the medical industry to decide how to roll this out, right? Or might somebody step in?

Ollstein: I mean, there could be agency, you know, rulemaking, potentially. But, yes, it’s the classic conundrum of technology evolving way faster than government can act to regulate it. I mean, we see that on so many fronts. I mean, look how long has gone without any kind of update. And, you know, the kinds of ways health information is shared are completely different from when that law was written, so …

Rovner: Indeed.

Weber: And as Rachel said, I mean, this is life-or-death consequences in some places. So the slowness with which the government regulates things could really have a problem here, because this is not something that is just little …

Rovner: Of the things that keep me awake at night, this is one of the things that keeps me awake at night. All right. Well, one of these weeks, we will not have a ton of reproductive health news. But this week isn’t it. As of this taping, we still have not gotten a decision in that Texas case challenging the FDA approval of the abortion pill, mifepristone, back in the year 2000. But there’s plenty of other abortion news happening in the Lone Star State. First, a federal judge in Texas who was not handpicked by the anti-abortion groups ruled that Texas officials cannot enforce the state’s abortion ban against groups who help women get abortion out of state, including abortion funds that help women get the money to go out of state to get an abortion. The judge also questioned whether the state’s pre-Roe ban is even in effect or has actually been repealed, although there are overlapping bans in the state that … so that wouldn’t make abortion legal. But still, this is a win for the abortion rights side, right, Alice?

Ollstein: Yeah, I think the right knows that there are two main ways that people are still getting abortions who live in ban states. They’re traveling out of state or they are ordering pills in the mail. And so they are moving to try to cut off both of those avenues. And, you know, running into some difficulty in doing so, both in the courts and just practically in terms of enforcing. This is part of that bigger battle to try to cut off, you know, people’s remaining avenues to access the procedure.

Rovner: Well, speaking exactly of that, Texas being Texas, this week, we saw a bill introduced in the state legislature that would ban the websites that include information about how to get abortion pills and would punish internet providers that fail to block those sites. It would also overturn the court ruling we just talked about by allowing criminal prosecution of anyone who helps someone get an abortion. Even a year ago, I would have said this is an obvious legislative overreach, but this is Texas. So now maybe not so much.

Ollstein: I mean, I think lots of states are just throwing things at the wall to see what sticks and to see what gets through the courts. You had states test the waters on banning certain kinds of out-of-state travel, and that hasn’t gone anywhere yet. But even things that don’t end up passing and being implemented can have a chilling effect. You have a lot of confusion right now. You have a lot of people not sure what’s legal, what’s not. And if you create this atmosphere of fear where people might be afraid to go out of state, might be afraid to ask for funding to go out of state, afraid to Google around and see what their options are that serves the intended impacts of these proposals, in terms of preventing people from exploring their options and seeing what they can do to terminate a pregnancy.

Rovner: Yeah. Well, meanwhile, a dozen states that are not named Texas are suing the FDA, trying to get it to roll back some of the prescribing requirements around the abortion pill. The states are arguing that not only are the risk-mitigation rules unnecessary, given the proven safety of mifepristone, but that some of the certification requirements could invade the privacy of patients and prescribers and subject them to harassment or worse. They’re asking the judge to halt enforcement of the restrictions while the case is being litigated. That could run right into [U.S. District] Judge [Matthew] Kacsmaryk’s possible injunction in Texas banning mifepristone nationwide. Then what happens? If you’ve got one judge saying, “OK, you can’t sell this nationwide,” and another judge saying … “Of course you can sell it, and you can’t use these safety restrictions that the FDA has put around it.” Then the FDA has two conflicting decisions in front of it.

Weber: Yeah, and I find the battles of the AGs and the abortion wars are really fascinating because, I mean, this is a lawsuit brought by states, which is attorneys general, Democratic attorneys general. And you’re seeing that play out. I mean, you see that in Texas, too, with [Ken] Paxton. You see it in Michigan with [Dana] Nessel. I mean, I would argue one of the things that attorney generals have been the most prominent on in the last several decades of American history and have actually had immediate effects on due to the fall of Roe v. Wade. So we’ll see what happens. But it is fascinating to see in real time this proxy battle, so to speak, between the two sides play out across the states and across the country.

Rovner: No, it’s funny. State AGs did do the tobacco settlement.

Weber: Yes.

Rovner: I mean, that would not have happened. But what was interesting about that is that it was very bipartisan.

Weber: Well, they were on the same side.

Rovner: And this is not.

Weber: Yeah, I mean, yeah, they were on the same side. This is a different deal. And I think to some extent, and I did some reporting on this last year, it speaks to the politicization of that office and what that office has become and how it’s become, frankly, a huge launching pad for people’s political careers. And the rhetoric there often is really notched up to the highest levels on both sides. So, you know, as we continue to see that play out, I think a lot of these folks will end up being folks you see on the national stage for quite some time.

Ollstein: I’ve been really interested in the states where the attorney general has clashed with other parts of their own state government. And so in North Carolina, for example, right now you have the current Democratic attorney general who is planning to run for governor. And he said, I’m not going to defend our state restrictions on abortion pills in court because I agree with the people challenging them. And then you have the Republican state legislatures saying, well, if he’s not going to defend these laws, we will. So that kind of clash has happened in Kentucky and other states where the attorney general is not always on the same side with other state officials.

Rovner: If that’s not confusing enough, we have a story out of Mississippi this week, one of the few states where voters technically have the ability to put a question on the ballot, except that process has been blocked for the moment by a technicality. Now, Republican legislators are proposing to restart the ballot initiative process. They would fix the technicality, but not for abortion questions. Reading from the AP story here, quote, “If the proposed new initiative process is adopted, state legislators would be the only people in Mississippi with the power to change abortion laws.” Really? I mean, it’s hard to conceive that they could say you can have a ballot question, but not on this.

Ollstein: This is, again, part of a national trend. There are several Republican-controlled states that are moving right now to attempt to limit the ability of people to put a measure on the ballot. And this, you know, comes as a direct result of last year. Six states had abortion-related referendums on their ballot. And in all six, the pro-abortion rights side won. Each one was a little different. We don’t need to get into it, but that’s the important thing. And so people voted pretty overwhelmingly, even in really red states like Kentucky and Montana. And so other states that fear that could happen there are now moving to make that process harder in different ways. You have Mississippi trying to do, like, a carve-out where nothing on abortion can make it through. Other states are just trying to raise, like, the signature threshold or the vote threshold people need to get these passed. There are a lot of different ways they’re going about it.

Rovner: I covered the Mississippi “personhood” amendment back in 2011. It was the first statewide vote on, you know, granting personhood to fetuses. And everybody assumed it was going to win, and it didn’t, even in Mississippi. So I think there’s reason for the legislators who are trying to re-stand up this ballot initiative process to worry about what might come up and how the voters might vote on it. Well, because I continue to hear people say that women trying to have babies are not being affected by state abortion bans and restrictions, this week we have not one but two stories of pregnant women who were very much impacted by abortion bans. One from NPR is the story of a Texas woman pregnant with twins — except one twin had genetic defects not only incompatible with life, but that threatened the life of both the other twin and the pregnant woman. She not only had to leave the state for a procedure to preserve her own life and that of the surviving twin, but doctors in Texas couldn’t even tell her explicitly what was going on for fear of being brought up on charges of violating the state’s ban. I think, Alice, you were the one talking about how, you know, women are afraid to Google. Doctors are afraid to say anything.

Ollstein: Yeah, absolutely. I mean, it’s a really chilling and litigious environment right now. And I think, as more and more of these stories start to come forward, I think that is spurring the debates you’re seeing in a lot of states right now about adding or clarifying or expanding the kind of exceptions that exist on these bans. So you have very heated debates going on right now in Utah and Tennessee and in several states around, you know, should we add more exceptions because there are some Republican lawmakers who are looking at these really tragic stories that are trickling out and saying, “This isn’t what we intended when we voted for this ban. Let’s go back and revisit.” Whether exceptions even work when they are on the books is another question that we can discuss. I mean, we have seen them not be effective in other states and people not able to navigate them.

Rovner: We’ve seen a lot of these stories about women whose water broke early and at what point is it threatening her life? How close to death does she have to be before doctors can step in? I mean, we’ve seen four or five of these. It’s not like they’re one-offs. The other story this week is from the Daily Beast. It’s about a 28-year-old Tennessee woman whose fetus had anomalies with its heart, brain, and kidneys. That woman also had to leave the state at her own expense to protect her own health. Is there a point where anti-abortion forces might realize they are actually deterring women who want babies from getting pregnant for fear of complications that they won’t be able to get treated?

Ollstein: Most of the pushback I’ve seen from anti-abortion groups, they claim that the state laws are fine and that doctors are misinterpreting them. And there is a semantic tug of war going on right now where anti-abortion groups are trying to argue that intervening in a medical emergency shouldn’t even count as an abortion. Doctors argue, no, it is an abortion. It’s the same procedure medically, and thus we are afraid to do it under the current law. And the anti-abortion groups are saying, “Oh, no, you’re saying that in bad faith; that doesn’t count as an abortion. An abortion is when it’s intended to kill the fetus.” So you’re having this challenging tug of war, and it’s not really clear what states are going to do. There’s a lot of state bills on this making their way through legislatures right now.

Rovner: And doctors and patients are caught in the middle. Well, finally this week, Eli Lilly announced it would lower, in some cases dramatically, the list prices for some of its insulin products. You may remember that, last year, Democrats in Congress passed a $35-per-month cap for Medicare beneficiaries but couldn’t get those last few votes to apply the cap to the rest of the population. Lilly is getting very good press. Its stock price went up, even though it’s not really capping all the out-of-pocket costs for insulin for everybody. But I’m guessing they’re not doing this out of the goodness of their drugmaking heart, right, Rachel?

Cohrs: Probably not. Even though there’s a quote from their CEO that implied that that was the case. I think there was one drug pricing expert at West Health Policy Center, Sean Dickson, who is very sharp on these issues, knows the programs well. And he pointed out that there’s a new policy going into effect in Medicaid next year, and it’s really, really wonky and complicated. But I’ll do my best to try to explain that, generally, in the Medicare program, rebates are capped, or they have been historically, at the price of the drug. So you can’t charge a drugmaker a rebate that’s higher than the cost. But …

Rovner: That would make sense.

Cohrs: Right. But that math can get kind of wonky when there are really high drug price increases and then that math gets really messed up. But Congress, I want to say it was in 2021, tweaked this policy to discourage those big price increases. And they said, you know what? We’re going to raise the rebate cap in Medicaid, which means that, drugmakers, if you are taking really big price increases, you may have to pay us every time someone on Medicaid fills those prescriptions. And I think people thought about insulin right away as a drug that has these really high rebates already and could be a candidate disproportionately impacted by this policy. So I thought that was an interesting point that Sean made about the timing of this. That change is supposed to go into effect early next year. So this could, in theory, save Lilly a lot of money in the Medicaid program because we don’t know exactly what their net prices were before.

Rovner: But this is very convenient.

Cohrs: It’s convenient. And there’s a chance that they’re not really losing any money right now, depending on how their contracts work with insurers. So I think, yeah, there is definitely a possibility for some ulterior motives here.

Rovner: And plus, the thing that I learned this week that I hadn’t known before is that there are starting to be some generic competition. The three big insulin makers, which are Lilly, Sanofi, and Novo Nordisk, may actually not become the, almost, the only insulin maker. So it’s probably in Lilly’s interest to step forward now. And, you know, they’re reducing the prices on their most popular insulins, but not necessarily their most expensive insulin. So I think there’s still money to be made in this segment. But they sure did get, you know, I watched all the stories come across. It’s, like, it’s all, oh, look at this great thing that Lilly has done and that everything’s going to be cheap. And it’s, like, not quite. But …

Cohrs: But it is different. It’s a big step. And I think …

Rovner: It is. It is.

Cohrs: Somebody has to go first in breaking this cycle. And I think it will be interesting to see how that plays out for them and whether the other two companies do follow suit. Sen. Bernie Sanders asked them to and said, you know, why don’t you just all do the same thing and lower prices on more products? So, yeah, we’ll see how it plays out.

Weber: Day to day, I mean, that’s a huge difference for people. I mean, that is a lot of money. That is a big deal. So, I mean, you know, no matter what the motivation, at the end of the day, I think the American public will be much happier with having to pay a lot less for insulin.

Rovner: Yeah, I’m just saying that not everybody who takes insulin is going to pay a lot less for insulin.

Weber: Right. Which is very fair, very fair.

Rovner: But many more people than before, which is, I think, why it got lauded by everybody. Although I will … I wrote in my notes, please, someone mention Josh Hawley taking credit and calling for legislation. Sen. Hawley from Missouri, who voted against extending the $35 cap, as all Republicans did, to the rest of the population, put out a tweet yesterday that was, like, this is a great thing and now we should have, you know, legislation to follow up. And I’m like: OK.

Cohrs: You’ll have to check on that. I actually think Hawley may have voted for it.

Rovner: Oh, a-ha. All right.

Cohrs: There were a few Republicans.

Rovner: Thank you.

Cohrs: It’s not enough, though.

Rovner: Yeah, I remember that they couldn’t get those last few votes. Yes, I think [Sen. Joe] Manchin voted against. He was the one, the last Democrat they couldn’t get right. That’s why they ended up dropping …

Cohrs: Uh, it had to be a 60-vote threshold, so …

Rovner: Oh, that’s right.

Cohrs: Yeah.

Rovner: All right. Good. Thank you. Good point, Rachel. All right. Well, that is the news for this week. Now it is time for our extra-credit segment. That’s when we each recommend a story we read this week we think you should read, too. As always, don’t worry if you miss it. We will post the links on the podcast page at khn.org and in our show notes on your phone or other mobile device. Alice, why don’t you go first this week?

Ollstein: Yeah. So I did the incredible New York Times investigation by Hannah Dreier on child labor. This is about undocumented, unaccompanied migrant children who are coming to the U.S. And the reason I’m bringing it up on our podcast is there is a health angle. So HHS [the Department of Health and Human Services], their Office of Refugee Resettlement has jurisdiction over these kids’ welfare and making sure they are safe. And that is not happening right now. The system is so overwhelmed that they have been cutting corners in how they vet the sponsors that they release the kids to. Of course, we remember that there were tons of problems with these kids being detained and kept for way too long and that being a huge threat to their physical and mental health. But this is sort of the pendulum has swung too far in the opposite direction, and they’re being released to people who in some cases straight up trafficking them and in other cases just forcing them to work and drop out of school, even if it’s not a trafficking situation. And so this reporting has already had an impact. The HHS has announced all these new initiatives to try to stop this. So we’ll see if they are effective. But really moving, incredible reporting.

Rovner: Yeah, it was an incredible story. Lauren.

Weber: I’m going to shout out my former KHN colleague Brett Kelman. I loved his piece on, I guess you can’t call it a medical device because it wasn’t approved by the FDA, which is the point of the story. But this device that was supposed to fix your jaw so you didn’t have to have expensive jaw surgery. Well, what it ended up doing is it messed up all these people’s teeth and totally destroyed their mouths and left them with a bunch more medical and dental bills. And, you know, what I find interesting about the story, what I find interesting about the trend in general is the problem is, they never applied for anything with the FDA. So people were using this device, but they didn’t check, they didn’t know. And I think that speaks to the American public’s perception that devices and medical devices and things like this are safe to use. But a lot of times the FDA regulations are outdated or are not on top of this or the agency is so understaffed and not investigating that things like this slipped through the cracks. And then you have people — and it’s 10,000 patients, I believe, that have used this tool — that did not do what it is supposed to do and, in fact, injured them along the way. And I think that the FDA piece of that is really interesting. It’s something I’ve run into before looking at air cleaners and how they fit the gaps of that. And I think it’s something we’re going to continue to see as we examine how these agencies are really stacking up to the evolution of technology today.

Rovner: Yeah, capitalism is going to push everything. Rachel.

Cohrs: So my extra credit this week is actually an opinion piece, in Stat, and the headline is “Nonprofit Hospitals Are Failing Americans. Their Boards May Be a Reason Why.” It was written by Sanjay Kishore and Suhas Gondi. I think the part that really stood out to me is they analyzed the backgrounds and makeups of hospital boards, especially nonprofit hospitals. I think they analyzed like 20 large facilities. And the statistic that really surprised me was that, I think, 44% of those board members came from the financial sector representing investment funds, real estate, and other entities. Less than 15% were health care workers, 13% were physicians, and less than 1% were nurses. And, you know, I’ve spent a lot of time and we’ve spent a lot of time thinking about just how nonprofit hospitals are operating as businesses. And I think a lot of other publications have done great work as well making that point. But I think this is just a stark statistic that shows these boards that are supposed to be holding these organizations accountable are thinking about the bottom line, because that’s what the financial services sector is all about, and that there’s so much disproportionately less clinical representation. So obviously hospitals need admin sides to run, and they are businesses, and a lot of them don’t have very large margins. But the statistics just really surprised me as to the balance there.

Rovner: Yeah, I felt like this is one, you know, we’ve all been sort of enmeshed in this, you know, what are we going to do about the nonprofit hospitals that are not actually acting as charitable institutions? But I think the boards had been something that I had not seen anybody else look at until now. So it’s a really interesting piece. All right. Well, my story this week is the other big investigation from The New York Times. It’s called “A Drug Company Exploited a Safety Requirement to Make Money,” by Rebecca Robbins. And it’s about those same risk-mitigation rules from the FDA that are at the heart of those abortion drug lawsuits we talked about a few minutes ago. Except in this case, the drug company in question, Jazz Pharmaceuticals, somehow patented its risk-mitigation strategy as the distribution center — it’s actually called the REMS [Risk Evaluation and Mitigation Strategies] — which is managed to fend off generic competition for the company’s narcolepsy drug. It had also had a response already. It has produced a bipartisan bill in the Senate to close the loophole — but [I’ll] never underestimate the creativity of drugmakers when it comes to protecting their profit. It’s quite a story. OK. That’s our show for this week. As always, if you enjoy the podcast, you can subscribe wherever you get your podcasts. We’d appreciate it if you left us a review; that helps other people find us, too. Special thanks, as always, to our ever-patient producer, Francis Ying. Also, as always, you can email us your comments or questions. We’re at whatthehealth — all one word — at kff.org. Or you can tweet me. I’m @jrovner. Alice?

Ollstein: @AliceOllstein

Rovner: Rachel.

Cohrs: @rachelcohrs

Rovner: Lauren.

Weber: @LaurenWeberHP

Rovner: We will be back in your feed next week. In the meantime, be healthy.

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Valley County, with a population of just over 7,500, passed levies to support the nursing home amounting to an estimated $300,000 a year for three years, starting this year. And when the Hi-Line Retirement Center in neighboring Phillips County shut down last year as the covid-19 pandemic brought more stressors to the nursing home industry, Valley View Home took in some of its patients.

Thompson said he foresees more nursing home closures on the horizon as their financial struggles continue. But lawmakers are trying to reduce that risk through measures that would raise and set standards for the Medicaid reimbursement rates that nursing homes depend on for their operations.

A study commissioned by the last legislative session found that Medicaid providers in Montana were being reimbursed at rates much lower than the cost of care. In his two-year state budget proposal before lawmakers, Republican Gov. Greg Gianforte has proposed increases to the provider rates that fall short of the study’s recommendations.

Legislators drafting the state health department budget included rates higher than the governor’s proposal, but still not enough for nursing homes to cover the cost of providing care. Those rates are subject to change as the state budget bill goes through the months-long legislative process, though majority-Republican lawmakers so far have rejected Democratic lawmakers’ attempts for full funding.

In a separate effort to address the long-term care industry’s long-term viability, a bipartisan bill going through Montana’s legislature, Senate Bill 296, aims to revise how nursing homes and assisted living facilities are funded. The bill would direct health officials to consider inflation, cost-of-living adjustments, and the actual costs of services in setting Medicaid reimbursement rates.

SB 296, which received an initial hearing on Feb. 17, has generated conflicting opinions from experts in the long-term care field on whether it does enough to avoid nursing home closures.

Republican Sen. Becky Beard, the bill’s sponsor, said that although the bill comes too late for the nursing homes that have already closed, she sees it as shining a light on a problem that’s not going away.

“We need to stop the attrition,” Beard said.

Sebastian Martinez Hickey, a research assistant at the Economic Policy Institute, a nonprofit think tank, said wages for nursing home employees had been extremely low even before the pandemic. He said the focus needs to be on raising Medicaid reimbursement rates beyond inflationary factors.

“Increasing Medicaid rates for inflation is going to have positive effects, but there’s no way that it’s going to compensate for what we’ve experienced in the last several years,” Martinez Hickey said.

Colorado, Illinois, Massachusetts, and North Carolina are among the states that have adopted laws or regulations to increase nursing home staff wages since the pandemic began. Michigan, North Carolina, and Ohio adopted increases or one-time bonuses.

In Maine, a 2020 study of long-term care workforce issues suggested that Medicaid rates should be high enough to support direct-care worker wages that amount to at least 125% of the minimum wage, which is $13.80 in that state. In combination with other goals outlined in the study, after a year there had been modest increases in residential care homes and beds, improved occupancy rates, and nods toward stabilization of the direct-care workforce.

Rose Hughes, executive director of the Montana Health Care Association, which lobbies on behalf of nursing homes and senior issues, said many of the problems plaguing senior care come down to reimbursement rates. There’s not enough money to hire staff, and, if there were, wages would still be too low to attract staff in a competitive marketplace, Hughes said.

“It’s trying to deal with systemic problems that exist in the system so that longer term the reimbursement system can be more stable,” Hughes said.

The governor’s office said Gianforte has been clear that Montana needs to raise its provider rates. For senior and long-term care, Gianforte’s proposed state budget would raise provider rates to 88% of the benchmark recommended by the state-commissioned study. Gianforte’s budget proposal is a starting point for lawmakers, and legislative budget writers have penciled in funding at about 90% of the benchmark rate.

“The governor continues to work with legislators and welcomes their input on his historic provider rate investment,” Gianforte spokesperson Kaitlin Price said.

Democratic Rep. Mary Caferro is sponsoring a bill to fully fund the Medicaid provider rates in accordance with the study.

“What we really, really need is our bill to pass so that it brings providers current with ongoing funding for predictability and stability so they can do the good work of caring for people,” Caferro said at a Feb. 21 press briefing.

But Thompson said that even the reimbursement rate recommended by the study — $279 per patient, per day, compared with the current $208 rate — isn’t high enough to cover Valley View Home’s expenses. He said he’s going to have to have a “heart to heart” with the facility’s board to see what can be done to keep it open if the local tax levies in combination with the new rate aren’t enough to cover the cost of operations.

David Trost, CEO of St. John’s United, an assisted-living facility for seniors in Billings, said the current reimbursement rate is so low that St. John’s uses savings, grants, fundraising revenue, and other investments to make up the difference. He said that while SB 296 looks at factors to cover operating costs, it doesn’t account for other costs, such as repairs and renovations.

“In addition to paying for existing operating costs as desired by SB 296, we also need to look at funding of capital improvements through some loan mechanism to help nursing facilities make improvements to existing environments,” Trost said.

Another component of SB 296 seeks to boost assisted-living services by generating more federal funding.

Additional money could help reduce or eliminate the waiting list for assisted-living homes, which now stands at about 175 people, Hughes said. That waiting list not only signals that some seniors aren’t getting service, but it also results in more people being sent to nursing homes when they may not need that level of care.

SB 296 would also ensure that money appropriated to nursing homes can be used only for nursing homes, and not be available for other programs within the Department of Public Health and Human Services, like dentists, hospitals, or Medicaid expansion. According to Hughes, in 2021 the nursing home budget had a remainder of $29 million, which was transferred to different programs in the Senior and Long Term Care division.

If the funding safeguard in SB 296 had been in place at that time, Hughes said, there may have been more money to sustain the nursing homes that closed last year.

Keely Larson is the KHN fellow for the UM Legislative News Service, a partnership of the University of Montana School of Journalism, the Montana Newspaper Association, and Kaiser Health News. Larson is a graduate student in environmental and natural resources journalism at the University of Montana.

KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. Together with Policy Analysis and Polling, KHN is one of the three major operating programs at KFF (Kaiser Family Foundation). KFF is an endowed nonprofit organization providing information on health issues to the nation.

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Word spread to Facebook groups, and patients started calling Coram CVS, a major U.S. supplier of the compounded IV nutrients on which they rely for survival. To their dismay, CVS Health confirmed the rumors on June 1: It was closing 36 of the 71 branches of its Coram home infusion business and laying off about 2,000 nurses, dietitians, pharmacists, and other employees.

Many of the patients left in the lurch have life-threatening digestive disorders that render them unable to eat or drink. They depend on parenteral nutrition, or PN — in which amino acids, sugars, fats, vitamins, and electrolytes are pumped, in most cases, through a specialized catheter directly into a large vein near the heart.

The day after CVS’ move, another big supplier, Optum Rx, announced its own consolidation. Suddenly, thousands would be without their highly complex, shortage-plagued, essential drugs and nutrients.

“With this kind of disruption, patients can’t get through on the phones. They panic,” said Cynthia Reddick, a senior nutritionist who was let go in the CVS restructuring.

“It was very difficult. Many emails, many phone calls, acting as a liaison between my doctor and the company,” said Elizabeth Fisher Smith, a 32-year-old public health instructor in New York City, whose Coram branch closed. A rare medical disorder has forced her to rely on PN for survival since 2017. “In the end, I got my supplies, but it added to my mental burden. And I’m someone who has worked in health care nearly my entire adult life.”

CVS had abandoned most of its less lucrative market in home parenteral nutrition, or HPN, and “acute care” drugs like IV antibiotics. Instead, it would focus on high-dollar, specialty intravenous medications like Remicade, which is used for arthritis and other autoimmune conditions.

Home and outpatient infusions are a growing business in the United States, as new drugs for chronic illness enable patients, health care providers, and insurers to bypass in-person treatment. Even the wellness industry is cashing in, with spa storefronts and home hydration services.

But while reimbursement for expensive new drugs has drawn the interest of big corporations and private equity, the industry is strained by a lack of nurses and pharmacists. And the less profitable parts of the business — as well as the vulnerable patients they serve — are at serious risk.

This includes the 30,000-plus Americans who rely for survival on parenteral nutrition, which has 72 ingredients. Among those patients are premature infants and post-surgery patients with digestive problems, and people with short or damaged bowels, often the result of genetic defects.

While some specialty infusion drugs are billed through pharmacy benefit managers that typically pay suppliers in a few weeks, medical plans that cover HPN, IV antibiotics, and some other infusion drugs can take 90 days to pay, said Dan Manchise, president of Mann Medical Consultants, a home care consulting company.

In the 2010s, CVS bought Coram, and Optum bought up smaller home infusion companies, both with the hope that consolidation and scale would offer more negotiating power with insurers and manufacturers, leading to a more stable market. But the level of patient care required was too high for them to make money, industry officials said.

“With the margins seen in the industry,” Manchise said, “if you’ve taken on expensive patients and you don’t get paid, you’re dead.”

In September, CVS announced its purchase of Signify Health, a high-tech company that sends out home health workers to evaluate billing rates for “high-priority” Medicare Advantage patients, according to an analyst’s report. In other words, as CVS shed one group of patients whose care yields low margins, it was spending $8 billion to seek more profitable ones.

CVS “pivots when necessary,” spokesperson Mike DeAngelis told KHN. “We decided to focus more resources on patients who receive infusion services for specialty medications” that “continue to see sustained growth.” Optum declined to discuss its move, but a spokesperson said the company was “steadfastly committed to serving the needs” of more than 2,000 HPN patients.

DeAngelis said CVS worked with its HPN patients to “seamlessly transition their care” to new companies.

However, several Coram patients interviewed about the transition indicated it was hardly smooth. Other HPN businesses were strained by the new demand for services, and frightening disruptions occurred.

Smith had to convince her new supplier that she still needed two IV pumps — one for HPN, the other for hydration. Without two, she’d rely partly on “gravity” infusion, in which the IV bag hangs from a pole that must move with the patient, making it impossible for her to keep her job.

“They just blatantly told her they weren’t giving her a pump because it was more expensive, she didn’t need it, and that’s why Coram went out of business,” Smith said.

Many patients who were hospitalized at the time of the switch — several inpatient stays a year are not unusual for HPN patients — had to remain in the hospital until they could find new suppliers. Such hospitalizations typically cost at least $3,000 a day.

“The biggest problem was getting people out of the hospital until other companies had ramped up,” said Dr. David Seres, a professor of medicine at the Institute of Human Nutrition at Columbia University Medical Center. Even over a few days, he said, “there was a lot of emotional hardship and fear over losing long-term relationships.”

To address HPN patients’ nutritional needs, a team of physicians, nurses, and dietitians must work with their supplier, Seres said. The companies conduct weekly bloodwork and adjust the contents of the HPN bags, all under sterile conditions because these patients are at risk of blood infections, which can be grave.

As for Coram, “it’s pretty obvious they had to trim down business that was not making money,” Reddick said, adding that it was noteworthy both Coram and Optum Rx “pivoted the same way to focus on higher-dollar, higher-reimbursement, high-margin populations.”

“I get it, from the business perspective,” Smith said. “At the same time, they left a lot of patients in a not great situation.”

***

Smith shares a postage-stamp Queens apartment with her husband, Matt; his enormous flight simulator (he’s an amateur pilot); cabinets and fridges full of medical supplies; and two large, friendly dogs, Caspian and Gretl. On a recent morning, she went about her routine: detaching the bag of milky IV fluid that had pumped all night through a central line implanted in her chest, flushing the line with saline, injecting medications into another saline bag, and then hooking it through a paperback-sized pump into her central line.

Smith has a connective tissue disorder called Ehlers-Danlos syndrome, which can cause many health problems. As a child, Smith had frequent issues such as a torn Achilles tendon and shoulder dislocations. In her 20s, while working as an EMT, she developed severe gut blockages and became progressively less able to digest food. In 2017, she went on HPN and takes nothing by mouth except for an occasional sip of liquid or bite of soft food, in hopes of preventing the total atrophy of her intestines. HPN enabled her to commute to George Washington University in Washington, D.C., where in 2020 she completed a master’s in public health.

On days when she teaches at LaGuardia Community College — she had 35 students this semester — Smith is up at 6 a.m. to tend to her medical care, leaves the house at 9:15 for class, comes home in the afternoon for a bag of IV hydration, then returns for a late afternoon or evening class. In the evening she gets more hydration, then hooks up the HPN bag for the night. On rare occasions she skips the HPN, “but then I regret it,” she said. The next day she’ll have headaches and feel dizzy, sometimes losing her train of thought in class.

Smith describes a “love-hate relationship” with HPN. She hates being dependent on it, the sour smell of the stuff when it spills, and the mountains of unrecyclable garbage from the 120 pounds of supplies couriered to her apartment weekly. She worries about blood clots and infections. She finds the smell of food disconcerting; Matt tries not to cook when she’s home. Other HPN patients speak of sudden cravings for pasta or Frosted Mini-Wheats.

Yet HPN “has given me my life back,” Smith said.

She is a zealous self-caretaker, but some dangers are beyond her control. IV feeding over time is associated with liver damage. The assemblage of HPN bags by compounding pharmacists is risky. If the ingredients aren’t mixed in the right order, they can crystallize and kill a patient, said Seres, Smith’s doctor.

He and other doctors would like to transition patients to food, but this isn’t always possible. Some eventually seek drastic treatments such as bowel lengthening or even transplants of the entire digestive tract.

“When they run out of options, they could die,” said Dr. Ryan Hurt, a Mayo Clinic physician and president of the American Society for Parenteral and Enteral Nutrition.

***

And then there are the shortages.

In 2017, Hurricane Maria crippled dozens of labs and factories making IV components in Puerto Rico; next came the covid-19 emergency, which shifted vital supplies to gravely ill hospital patients.

Prices for vital HPN ingredients can fluctuate unpredictably as companies making them come and go. For example, in recent years the cost of the sodium acetate used as an electrolyte in a bag of HPN ballooned from $2 to $25, then briefly to $300, said Michael Rigas, a co-founder of the home infusion pharmacy KabaFusion.

“There may be 50 different companies involved in producing everything in an HPN bag,” Rigas said. “They’re all doing their own thing — expanding, contracting, looking for ways to make money.” This leaves patients struggling to deal with various shortages from saline and IV bags to special tubing and vitamins.

“In the last five years I’ve seen more things out of stock or on shortage than the previous 35 years combined,” said Rigas.

The sudden retrenchment of CVS and Optum Rx made things worse. Another, infuriating source of worry: the steady rise of IV spas and concierge services, staffed by moonlighting or burned-out hospital nurses, offering IV vitamins and hydration to well-off people who enjoy the rush of infusions to relieve symptoms of a cold, morning sickness, a hangover, or just a case of the blahs.

In January, infusion professionals urged FDA Commissioner Robert Califf to examine spa and concierge services’ use of IV products as an “emerging contributing factor” to shortages.

The FDA, however, has little authority over IV spas. The Federal Trade Commission has cracked down on some spa operations — for unsubstantiated health claims rather than resource misuse.

Bracha Banayan’s concierge service, called IVDRIPS, started in 2017 in New York City and now employs 90 people, including 60 registered nurses, in four states, she said. They visit about 5,000 patrons each year, providing IV hydration and vitamins in sessions of an hour or two for up to $600 a visit. The goal is “to hydrate and be healthy” with a “boost that makes us feel better,” Banayan said.

Although experts don’t recommend IV hydration outside of medical settings, the market has exploded, Banayan said: “Every med spa is like, ‘We want to bring in IV services.’ Every single paramedic I know is opening an IV center.”

Matt Smith, Elizabeth’s husband, isn’t surprised. Educated as a lawyer, he is a paramedic who trains others at Columbia University Irving Medical Center. “You give someone a choice of go up to some rich person’s apartment and start an IV on them, or carry a 500-pound person living in squalor down from their apartment,” he said. “There’s one that’s going to be very hard on your body and one very easy on your body.”

The very existence of IV spa companies can feel like an insult.

“These people are using resources that are literally a matter of life or death to us,” Elizabeth Smith said.

Shortages in HPN supplies have caused serious health problems including organ failure, severe blisters, rashes, and brain damage.

For five months last year, Rylee Cornwell, 18 and living in Spokane, Washington, could rarely procure lipids for her HPN treatment. She grew dizzy or fainted when she tried to stand, so she mostly slept. Eventually she moved to Phoenix, where the Mayo Clinic has many Ehlers-Danlos patients and supplies are easier to access.

Mike Sherels was a University of Minnesota Gophers football coach when an allergic reaction caused him to lose most of his intestines. At times he’s had to rely on an ethanol solution that damages the ports on his central line, a potentially deadly problem “since you can only have so many central access sites put into your body during your life,” he said.

When Faith Johnson, a 22-year-old Las Vegas student, was unable to get IV multivitamins, she tried crushing vitamin pills and swallowing the powder, but couldn’t keep the substance down and became malnourished. She has been hospitalized five times this past year.

Dread stalks Matt Smith, who daily fears that Elizabeth will call to say she has a headache, which could mean a minor allergic or viral issue — or a bloodstream infection that will land her in the hospital.

Even more worrying, he said: “What happens if all these companies stop doing it? What is the alternative? I don’t know what the economics of HPN are. All I know is the stuff either comes or it doesn’t.”

KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. Together with Policy Analysis and Polling, KHN is one of the three major operating programs at KFF (Kaiser Family Foundation). KFF is an endowed nonprofit organization providing information on health issues to the nation.

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Julie Rovner is chief Washington correspondent and host of KHN’s weekly health policy news podcast, “What the Health?” A noted expert on health policy issues, Julie is the author of the critically praised reference book “Health Care Politics and Policy A to Z,” now in its third edition.

While repealing the Affordable Care Act seems to have fallen off congressional Republicans’ to-do list for 2023, plans to cut Medicare and Medicaid are back. The GOP wants Democrats to agree to cut spending on both programs in exchange for a vote to prevent the government from defaulting on its debts.

Meanwhile, the nation’s health care workers — from nurses to doctors to pharmacists — are feeling the strain of caring not just for the rising number of insured patients seeking care, but also more seriously ill patients who are difficult and sometimes even violent.

This week’s panelists are Julie Rovner of KHN, Joanne Kenen of the Johns Hopkins Bloomberg School of Public Health and Politico, Tami Luhby of CNN, and Victoria Knight of Axios.

Panelists

Joanne Kenen
Johns Hopkins Bloomberg School of Public Health and Politico

@JoanneKenen

Read Joanne's stories

Tami Luhby
CNN

@luhby

Read Tami's stories

Victoria Knight
Axios

@victoriaregisk

Read Victoria's stories

Among the takeaways from this week’s episode:

• Conservative House Republicans are hoping to capitalize on their new legislative clout to slash government spending, as the fight over raising the debt ceiling offers a preview of possible debates this year over costly federal entitlement programs like Medicare.
• House Speaker Kevin McCarthy said Republicans will protect Medicare and Social Security, but the elevation of conservative firebrands — like the new chair of the powerful House Ways and Means Committee — raises questions about what “protecting” those programs means to Republicans.
• Record numbers of Americans enrolled for insurance coverage this year under the Affordable Care Act. Years after congressional Republicans last attempted to repeal it, the once highly controversial program also known as Obamacare appears to be following the trajectory of other established federal entitlement programs: evolving, growing, and becoming less controversial over time.
• Recent reports show that while Americans had less trouble paying for health care last year, many still delayed care due to costs. The findings highlight that being insured is not enough to keep care affordable for many Americans.
• Health care workers are growing louder in their calls for better staffing, with a nursing strike in New York City and recent reports about pharmacist burnout providing some of the latest arguments for how widespread staffing issues may be harming patient care. There is bipartisan agreement in Congress for addressing the nursing shortage, but what they would do is another question.

Plus, for extra credit, the panelists recommend their favorite health policy stories of the week that they think you should read, too:

Julie Rovner: Roll Call’s “NIH Missing Top Leadership at Start of a Divided Congress,” by Ariel Cohen

Tami Luhby: CNN’s “ER on the Field: An Inside Look at How NFL Medical Teams Prepare for a Game Day Emergency,” by Nadia Kounang and Amanda Sealy

Joanne Kenen: The Atlantic’s “Don’t Fear the Handshake,” by Katherine J. Wu

Victoria Knight: The Washington Post’s “‘The Last of Us’ Zombie Fungus Is Real, and It’s Found in Health Supplements,” by Mike Hume

Also mentioned in this week’s podcast:

The New York Times’ “As France Moves to Delay Retirement, Older Workers Are in a Quandary,” by Liz Alderman

Stat’s “Congressional Medicare Advisers Warn of Higher Drug Prices, Despite New Price Negotiation,” by John Wilkerson

Click to Expand

Episode 280 Transcript

KHN’s ‘What the Health?’Episode Title: As US Bumps Against Debt Ceiling, Medicare Becomes a Bargaining ChipEpisode Number: 280Published: Dec. 19, 2023

Tamar Haspel: A lot of us want to eat better for the planet, but we’re not always sure how to do it. I’m Tamar Haspel.

Michael Grunwald: And I’m Michael Grunwald. And this is “Climavores,” a show about eating on a changing planet.

Haspel: We’re here to answer all kinds of questions. Questions like: Is fake meat really a good alternative to beef? Does local food actually matter?

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Julie Rovner: Hello! Welcome back to KHN’s “What the Health?” I’m Julie Rovner, chief Washington correspondent at Kaiser Health News. And I’m joined by some of the best and smartest health reporters in Washington. We’re taping this week on Thursday, Jan. 19, at 10 a.m. As always, news happens fast, and things might have changed by the time you hear this. So here we go. Today we are joined via video conference by Joanne Kenen of the Johns Hopkins Bloomberg School of Public Health and Politico.

Joanne Kenen: Good morning, everybody.

Rovner: Tami Luhby of CNN.

Tami Luhby: Good morning.

Rovner: And Victoria Knight of Axios.

Victoria Knight: Good morning.

Rovner: So Congress is in recess this week, but there is still plenty of news, so we’ll get right to it. The new Congress is taking a breather for the MLK holiday, having worked very hard the first two weeks of the session. But there’s still plenty going on on Capitol Hill. Late last week, House Republicans leaked to The Washington Post a plan to pay only some of the nation’s bills if the standoff over raising the debt ceiling later this year results in the U.S. actually defaulting. Republicans say they won’t agree to raise the debt ceiling, something that’s been done every couple of years for decades, unless Democrats agree to deep spending cuts, including for entitlement programs like Social Security, Medicare, and Medicaid — why we are talking about this. Democrats say that a default, even a partial one, could trigger not just a crisis in U.S. financial markets, but possibly a worldwide recession. It’s worth remembering that the last time the U.S. neared a default but didn’t actually get there, in 2011, the U.S. still got its credit rating downgraded. So who blinks in this standoff? And, Tami, what happens if nobody does?

Luhby: That’s going to be a major problem for a lot of people. I mean, the U.S. economy, potentially the global economy, global financial markets, but also practical things like Social Security recipients getting their payments and federal employees in the military getting paid, and Treasury bond holders getting their interest payments. So it would be a giant mess. [Treasury Secretary Janet] Yellen last week in her letter to [House Speaker Kevin] McCarthy, signaling that we were going to hit the debt ceiling, likely today, urged Congress to act quickly. But instead, of course, what just happened was they dug their heels in on either side. So, you know, we have the Republicans saying that we can’t keep spending like we are. We don’t have just an unlimited credit card. We have to change our behavior to save the country in the future. And the White House and Senate Democrats saying this is not a negotiable subject. You know, we’ve been here before. We haven’t actually crossed the line before. So we’ll see what happens. But one of the differences is, this year, that McCarthy has a very narrow margin in the House. Any one of his members — this is among the negotiations that he did not want to agree to but had to after 15 rounds of voting for his job — any member can make a motion to vacate the speaker’s chair. And if that happens, then we don’t have to worry about the debt ceiling because we have to worry more about who’s going to be leading the House, because we can’t deal with the debt ceiling until we actually have someone leading the House. So this is going to be even more complicated than in the past.

Rovner: Just to be clear, even if we hit the debt ceiling today, that doesn’t mean we’re going to default, right? I mean, that’s not coming for several months.

Luhby: Right. So Social Security, seniors and people with disabilities, and the military and federal employees don’t have to yet worry about their payments. They’re going to be paid. The Treasury secretary and Treasury Department will take what’s called “extraordinary measures.” They’re mainly just behind-the-scenes accounting maneuvers. They won’t actually hurt anybody. Yellen had said that she expects these extraordinary measures in cash to last at least until early June, although she did warn that the forecast has considerable uncertainty, as does everything around the debt ceiling.

Rovner: So, Victoria, obviously, the sides are shaping up. Is this going to be the big major health fight this year?

Knight: I think it’s going to be one of the big topics that we’re definitely talking about this year in Congress. I think it’s going to be a dramatic year, as we’ve already seen in these first two weeks. My colleagues at Axios, we talked to some Republicans last week, asking them about: Do you actually think they will make cuts to entitlement programs, to Medicare, Medicaid? Is that realistic? It’s kind of a mixed bag. Some are like, yeah, we should look at this, and some are like, we don’t really want to touch it. I think they know it’s really a touchy subject. There are a lot of Medicare beneficiaries that don’t want the age increase. You know, there’s some talk of increasing the age to 67 rather than 65. They know that is a touchy subject. Last week in a press conference, McCarthy said, “We’re Republicans; we’ll protect Medicare and Social Security,” so they know people are talking about this. They know people are looking at it. So I think in a divided government, obviously, the Senate is in Democratic control. I think it seems pretty unlikely, but I think they’re going to talk about it. And we have a new Ways and Means chairman, Jason Smith from Missouri. He’s kind of a firebrand. He’s talked about wanting to do reform on the U.S. spending. So I think it’s something they’re going to be talking about. But I don’t know if that much will actually happen. So we’ll see. I have been talking to Republicans on what else they want to work on this year in Congress. I think a big thing will be PBM [pharmacy benefit managers] reform. It’s a big topic that’s actually bipartisan. So I think that’s something that we’ll see. These are the middlemen in regards to between pharmacies and insurers. And they’re negotiating drug prices. And we know there are going to be hearings on that. I think health care costs. There’s some talk about fentanyl, scheduling. But I think in regards to big health care reform, there probably isn’t going to be a lot, because we are in a divided government now.

Kenen: Just one thing about how people talk about protecting Medicare and Social Security, it doesn’t mean they don’t want to make changes to it. We’ve been through this before. Entitlement reform was the driving force for Republicans for quite a few years under … when Paul Ryan was both, I guess it was budget chair before he was speaker. I mean, that was the thing, right? And he wanted to make very dramatic changes to Medicare, but he called it protecting Medicare. So there’s no one like Ryan with a policy really driving what it should look like. I mean, he had a plan, yet the plan never got through anywhere. It died, but it was an animating force for many years. It went away for a minute in the face of the last 10 years that were about the Affordable Care Act. So I don’t think they’re clear on what they want to do. But we do know some conservative Republicans want to make some kind of changes to Medicare. TBD.

Rovner: And Tami, we know the debt ceiling isn’t the only place where House Republicans are setting themselves up for deep cuts that they might not be able to make while still giving themselves the ability to cut taxes. They finessed some of this in their rules package, didn’t they?

Luhby: Yes, they did. And they made it very clear that they, in the rules, they made it harder to raise taxes. They increased it to a supermajority, 3/5 of the House. They made it easier to cut spending in the debt ceiling and elsewhere. And, you know, the debt ceiling isn’t our only issue that we have coming up. It’s going to be right around the same time, generally, maybe, as the fiscal 2024 budget, which will necessitate discussion on spending cuts and may result in spending cuts and changes possibly to some of our favorite health programs. So we will see. But also just getting back to what we were talking about with Medicare. Remember, the trustees estimate that the trust fund is going to run out of money by 2028. So we’ll see in a couple of months what the latest forecast is. But, you know, something needs to be done relatively soon. I mean … the years keep inching out slowly. So we keep being able to put this off. But at some point …

Rovner: Yeah, we keep getting to this sort of brinksmanship, but nobody, as Joanne points out, ever really has a plan because it would be unpopular. Speaking of which, while cutting entitlement programs here is still just a talking point, we have kind of a real-life cautionary tale out of France, where the retirement age may be raised from 62 to 64, which is still younger than the 67, the U.S. retirement age is marching toward. It seems that an unintended consequence of what’s going on in France is that employers don’t want to hire older workers. So now they can’t get retirement and they can’t find a job. And currently, only half of the French population is still employed by age 62, which is way lower than other members of the European Union. France is looking at protests and strikes over this. Could the same thing happen here, if we might get to that point? It’s been a while since we’ve seen the silver-haired set out on the street with picket signs.

Knight: I think it would be pretty contentious, I think, if they decide to actually raise the age. It’ll be interesting to see [if] there are actual protests, but I think people will be very upset, for sure, especially people reaching retirement age having counted on this. So …

Kenen: They probably wouldn’t do it like … if you’re 62, you wouldn’t [go] to 67. When they’ve talked about these kinds of changes in the past, they’ve talked about phasing it in over a number of years or starting it in the …

Rovner: Right, affecting people in the future.

Kenen: Right.

Rovner: But I’m thinking not just raising the retirement age. I’m thinking of making actual big changes to Medicare or even Medicaid.

Kenen: Well, there’s two things since the last debate about this. Well, first of all, Social Security was raised and it didn’t cause … it was raised slowly, a couple of months at a time over, what, a 20-year period. Is that right? Am I remembering that right, Julie?

Rovner: Yeah, my retirement age is 66 and eight months.

Kenen: Right. So … it used to be 65. And they’ve been going, like, 65 and one month, 65 and two months. It’s crept up. And that was done on a bipartisan basis, which, of course, not a whole lot is looking very bipartisan right now. But I mean, that’s the other pathway we could get. We could get a commission. We could move toward some kind of changes after … last time there was a commission that failed, but the Social Security commission did work. The last Medicare commission did not. The two sides are so intractable and so far apart on debt right now that there’s probably going to have to be some kind of saving grace down the road for somebody. So it could be yet another commission. And also in 2011, 2012, which was the last time there was the big debate over Medicare age, was pre-ACA [Affordable Care Act] implementation. And, you know, if you’re 65 and you’re not working, if they do change the Medicare in the out years, it’s complicated what it would do to the risk pools and premiums and all that. But you do have an option. I mean, the Affordable Care Act would … right now you only get it to Medicare. That would have to be changed. So it’s not totally the same … I’m not advocating for this. I’m just saying it is a slightly different world of options and the chessboard’s a little different.

Rovner: Well, clearly, we are not there yet, although we may be there in the next couple of months. Finally, on the new Congress front. Last week, we talked about some of the new committee chairs in the House and Senate. This week, House Republicans are filling out some of those critical subcommittee chairs. Rep. Andy Harris, a Republican from Maryland who’s also an anesthesiologist who bragged about prescribing ivermectin for covid, will chair the Appropriations subcommittee responsible for the FDA’s budget [the Agriculture, Rural Development, Food and Drug Administration subcommittee]. Things could get kind of interesting there, right?

Knight: Yeah. And there is talk that he wanted to chair the Labor [Health and Human Services, Education] subcommittee, which would have been really interesting. He’s not.

Rovner: Which would’ve been the rest of HHS. We should point out that in the world of appropriations, FDA is with Agriculture for reasons I once tried to figure out, but they go back to the late 1940s. But the rest of HHS is the Labor HHS Appropriations subcommittee, which he won’t chair.

Knight: Right, he is not. Rep. Robert Aderholt is chairing Labor HHS. But this is, as we were talking about, they’re going to have to fund the government. Republicans are talking about wanting to pass 12 appropriations bills. If they actually want to try to do that, they’re going to have to do a lot of negotiations on what goes into the Labor HHS bill, what goes into the AG bill with FDA, with these chairs over the subcommittees, they’re going to want certain things in there. They’re going to maybe want oversight of these agencies, especially in regards to what’s happening with covid, what’s going on with the abortion pills. So I think it’ll be really interesting to see what happens. It seems unlikely they’re actually going to be able to pass 12 appropriations bills, but it’s just another thing to watch.

Rovner: I would point out that every single Congress, Republican and Democrat, comes in saying, we’re going to go back to regular order. We’re going to pass the appropriations bills separately, which is what we were supposed to do. I believe the last time that they passed separately, and that wasn’t even all of them, was the year 2000; it was the last year of President [Bill], it might have been. It was definitely right around then. When I started covering Congress, they always did it all separately, but no more.

Luhby: And they want to pass the debt ceiling vote separately.

Rovner: Right, exactly. Not that much going on this year. All right. Well, last week we talked about health insurance coverage. Now it is official. Obamacare enrollment has never been higher and there are still several weeks to go to sign up in some states, even though enrollment through the federal marketplace ended for the year on Sunday. Tami, have we finally gotten to the point that this program is too big to fail or is it always going to hang by a political thread?

Luhby: Well, I think the fact that we’re all not reporting on the weekly or biweekly enrollment numbers, saying “It’s popular, people are still signing up!” or under the Trump years, “Fewer people are signing up and it’s lost interest.” I think that in and of itself is very indicative of the fact that it is becoming part of our health care system. And I mean, I guess one day I’m not going to write the story that says enrollment opens on Nov. 1, then another one that says it’s ending on Jan. 15.

Rovner: I think we’ll always do that because we’re still doing it with Medicare.

Luhby: Well, but I’m not. So … it’s possible, although now with Medicare Advantage, I think it is actually worth a story. So that’s a separate issue.

Rovner: Yes, that is a separate issue.

Luhby: But yeah, no, I mean, you know, I think it’s here to stay. We’ll see what [District Judge Reed] O’Connor does in Texas with the preventive treatment, but …

Rovner: Yes, there will always be another lawsuit.

Luhby: There will be chips around the edges.

Kenen: I mean, this court has done … we all thought that litigation was over, like we thought, OK, it’s done. They’ve … upheld it, you know, however many times, move on. But this Supreme Court has done some pretty dramatic rulings and not just Roe [v. Wade], on many public health measures, about gun control and the environment and vaccine mandates. And, of course, you know, obviously, Roe. Do I think that there’s going to be another huge existential threat to the ACA arising out of this preventive care thing? No, but we didn’t think a lot of the things that the Supreme Court would do. There’s a real ideological shift in how they approach these issues. So politically, no, we’re not going to see more repeal votes. In the wings could there be more legal issues to bite us? I don’t think it’s likely, but I wouldn’t say never.

Rovner: In other words, just because congressional Republicans aren’t still harping on this, it doesn’t mean that nobody is.

Kenen: Right. But it’s also, I mean, I agree with Tami … I wrote a similar story a year ago on the 10th anniversary: It’s here. They spent a lot of political capital trying to repeal it and they could not. People do rely on it and more … Biden has made improvements to it. It’s like every other American entitlement: It evolves over time. It gets bigger over time. And it gets less controversial over time.

Rovner: Well, we still have problems with health care costs. And this week we have two sort of contradictory studies about health care costs. One from the Centers for Disease Control and Prevention found a three-percentage-point decline in the number of Americans who had trouble paying medical bills in 2021 compared to the pre-pandemic year of 2019. That’s likely a result of extra pandemic payments and more people with health insurance. But in 2022, according to a survey by Gallup, the 38% of patients reported they delayed care because of cost. That was the biggest increase ever since Gallup has been keeping track over the past two decades, up 12 percentage points from 2020 and 2021. This has me scratching my head a little bit. Is it maybe because even though more people have insurance, which we saw from the previous year. Also more have high-deductible health plans. So perhaps they don’t want to go out and spend money or they don’t have the money to spend initially on their health care. Anybody got another theory? Victoria, I see you sort of nodding.

Knight: I mean, that’s kind of my theory is, like, I think they just have high-deductible plans, so they’re still having to pay a lot out-of-pocket. And I know my brother had to get an ACA plan because he is interning for an electrician and — so he doesn’t have insurance on his own, and I know that, like, it’s still pretty high and he just has to pay a lot out-of-pocket. He’s had medical debt before. So even though more people have health insurance, it’s still a huge issue, it doesn’t make that go away.

Rovner: And speaking of high medical prices, we are going to talk about prescription drugs because you can’t really talk about high prices without talking about drugs. Stat News reports this week that some of the members of the Medicare Payment Advisory Committee, or MedPAC, are warning that even with the changes to Medicare that are designed to save money on drugs for both the government and patients — those are ones taking effect this year — we should still expect very high prices on new drugs. Partly that’s due to the new Medicare cap on drug costs for patients. If insurers have to cover even the most expensive drugs, aside from those few whose price will be negotiated, then patients will be more likely to use them and they can set the price higher. Are we ever going to be able to get a handle on what the public says consistently is its biggest health spending headache? Victoria, you kind of previewed this with the talk about doing something about the middlemen, the PBMs.

Knight: Yeah, I think it’s really difficult. I mean, the drug pricing provisions, they only target 20 of the highest-cost drugs. I can’t remember exactly how they determine it, but it’s only 20 drugs and it’s implemented over years. So it’s still leaving out a lot of drugs. We still have years to go before it’s actually going into effect. And I think drugmakers are going to try to find ways around it, raising the prices of other drugs, you’re talking about. And even though they’re hurt by the IRA [Inflation Reduction Act], they’re not completely down and out. So I don’t know what the answer is to rein in drug prices. I think maybe PBM reform, as I said, definitely a bipartisan issue. This Congress … I think will actually have maybe some movement and we’ll see if actually legislation can be passed. But I know they want to talk about it. So, I mean, that could help a little bit. But I think drugmakers are still a huge reason for a lot of these costs. And so it won’t completely go away even if PBMs have some reforms.

Rovner: And certainly the American public sees drug costs as one of the biggest issues just because so many Americans use prescription drugs. So they see every dollar.

Knight: Yes.

Rovner: So the good news is that more people are getting access to medical care. The bad news is that the workforce to take care of them is burned out, angry, and simply not large enough for the task at hand. The people who’ve been most outspoken about that are the nation’s nurses, who’ve given the majority of the care during the pandemic and taken the majority of patient anger and frustration and sometimes even violence. We’re seeing quite a few nurses’ strikes lately, and they’re mostly not striking for higher wages, but for more help. Tami, you talked to some nurses on the picket line in New York last week. What did they tell you?

Luhby: Yeah, I had a fun assignment last week. Since I live in the Bronx, I spent two days with the striking nurses at the Montefiore Medical Center, and there were 7,000 nurses at Mount Sinai Hospital in Manhattan and Montefiore in the Bronx that went on strike for three days. It was a party atmosphere there much of the time, but they did have serious concerns that they wanted to relay and get their word out. There was a lot of media coverage as well. Their main issue was staffing shortages. I mean, the nurses told me about terrible working conditions, particularly in the ER. Some of them had to put babies on towels on the floor of the pediatric ER or tell sick adults that they have to stand because there aren’t even chairs available in the adult ER, much less beds or cots. And every day, they feared for their licenses. One said that she would go to sleep right when she got home because she didn’t want to think about the day because she was concerned she might not want to go back the next day. And she said, heartbreakingly, that she was tired of apologizing to families and patients, that she was stretched too thin to deliver better care, that she was giving patients their medicines late because she had seven other patients she had to give medicine to and probably handle an emergency. So the nurses at Montefiore, interestingly, they’re demanding staffing. But one thing they kept repeating to me, you know, the leaders, was that they wanted enforcement ability of the staffing. They didn’t just want paper staffing ratios, and they wanted to be more involved in recruitment. While the hospitals — interestingly, this is not necessarily over in New York as it probably won’t be elsewhere. These hospitals reached a tentative agreement with the unions, but there’s another battle brewing. The nurses’ contract for the public hospital system expires on March 2, and the union is already warning that will demand better pay and staffing.

Rovner: Yeah. Well, it’s not just the nurses, though. Doctors are burnt out by angry and sometimes ungrateful patients. Doctors in training, too. And I saw one story this week about how pharmacists, who are being asked to do more and more with no more help — a similar story — are getting fried from dealing with short-tempered and sometimes abusive patients. Is there any solution to this, other than people trying to behave better? Is Congress looking at ways to buttress the health care workforce? This is a big problem. You know, they talked about, when they were passing the Affordable Care Act, that if you’re going to give all these people more insurance, you’re going to need more health care professionals to take care of them.

Knight: Yeah.

Rovner: Yet we haven’t seemed to do that.

Knight: Yeah, I know. It’s something that is being talked about. My colleague Peter [Sullivan] at Axios talked to both Sen. [Bernie] Sanders and Sen. [Bill] Cassidy about things they might want to work on on the HELP [Health, Education, Labor & Pensions] Committee. And I know that the nursing workforce shortage is one thing they do actually agree on. So it’s definitely possible. I do think the medical provider workforce shortage is maybe a bipartisan area in this Congress that they could work on. But I mean, they’ve been talking about it forever. And will they actually do something? I’m not sure. So we’ll see. But I know nursing …

Rovner: Yeah, the spirit of bipartisanship does not seem to be alive and well, at least yet, in this Congress.

Knight: Yeah, well, between the House and the Senate. Yeah, well, we’ll see.

Kenen: But the nursing shortage is, I mean, been documented and talked about for many, many years now and hasn’t changed. The doctor shortage is more controversial because there’s some debate about whether it’s numbers of doctors or what specialties they go into. I mean, and, also, do they go to rich neighborhoods or poor neighborhoods? I mean, if you’re in a wealthy suburb, there’s plenty of dermatologists. Right? But in rural areas, certain urban areas … So it’s not just in quantity. It’s also an allocation both by geography and specialty. Some of that Congress could theoretically deal with. I mean, the graduate medical education residency payment … they’ve been talking about reforming that since before half of the people listening to this were born. There’s been no resolution on a path forward. So some of these are things that Congress can nudge or fix with funding. Some of it is just things that have to happen within the medical community, some cultural shift. Also student debt. I mean, one reason people start out saying they’re going to go into primary care and end up being orthopedic surgeons is their debt. So it’s complicated. Some of it is Congress. Not all of it is Congress. But Congress has been talking about this for a very, very, very, very, very long time.

Rovner: I will point out — and Joanne was with me when this happened — when Congress passed the Balanced Budget Act in 1997, they cut the number of residencies that Medicare would pay for with the promise — and I believe this is in the report, if not in the legislation — that they would create an all-payer program to help pay for graduate medical education by the next year, 1998. Well, now it’s 2023, and they never did that.

Kenen: They meant the next century.

Rovner: We’re a fifth — almost a quarter of the way — through the next century, and they still haven’t done it.

Kenen: And if you were on the front lines of covid, the doctors and the nurses, I mean, at the beginning they had no tools. So many people died. They didn’t know how to treat it. There were so many patients, you know, in New York and other places early on. I mean, it was these nurses that were holding iPads so that people could say goodbye to their loved ones. I don’t think any of us can really understand what it was like to be in that situation, not for 10 minutes, but for weeks and over and over …

Rovner: And months and years, in some cases.

Kenen: Right. But I mean, the really bad … it’s years. But these crunches, the really traumatic experiences, I mean, we’ve also talked in the past about the suicide rate among health care providers. It’s been not just physically exhausting, it’s become emotionally unimaginable for those of us who haven’t been in those ICU or ERs.

Rovner: Well, it’s clear that the pandemic experiences have created a mental health crisis for a lot of people. Clearly, people on the front lines of health care, but also lots of other people. This week, finally, a little bit of good news for at least one population. Starting this week, any U.S. military veteran in a mental health crisis can get free emergency care, not just at any VA [Department of Veterans Affairs] facility, but at any private facility as well. They don’t even have to be in the VA health system because many former members of the military are not actually eligible for VA health care. This is for all veterans. It’s actually the result of a law passed in 2020 and signed by then-President [Donald] Trump. How much of difference could this change, at least, make? I mean, veterans in suicidal crises are also, unfortunately, fairly common, aren’t they?

Kenen: Yeah, but I mean, we have a provider shortage, so giving them greater access to a system that doesn’t have enough providers, I mean, will it help? I would assume so. Is it going to fix everything? I would assume not. You know, we don’t have enough providers, period. And there are complicated reasons for that. And that’s also … they’re not all doctors. They’re, you know, psychologists and social workers, etc. But that’s a huge problem for veterans and every human being on Earth right now. I mean, everybody was traumatized. There’s degrees of how much trauma people had, but nobody was untraumatized by the last three years. And the ongoing stresses. You can be well-adjusted traumatized. You could be in-crisis traumatized. But we’re all on that spectrum of having been traumatized.

Knight: Yeah.

Rovner: Well, lots more work to do. OK. That’s the news for this week. Now it is time for our extra-credit segment, where we each recommend a story we read this week we think you should read, too. Don’t worry if you miss it; we will post the links on the podcast page at khn.org and in our show notes on your phone or other mobile device. Victoria, why don’t you go first this week?

Knight: The story that I’m recommending is called “‘The Last of Us’ Zombie Fungus Is Real, and It’s Found in Health Supplements.” It’s in The Washington Post by Mike Hume. “The Last of Us” is a new HBO show everyone’s kind of talking about. And, basically, people become zombies from this fungus. Turns out that fungus is real in real life. It’s spread by insects that basically infect people and then kind of take over their minds and then shoot little spores out. And in the show, they do that as well, except they don’t spread by spores. They spread by bites. But it’s used in health supplements for different things like strength, stamina, immune boost. So it’s kind of just a fun little dive into a real-life fungus.

Rovner: To be clear, it doesn’t turn people into zombies.

Knight: Yes. To be clear, it does not turn people into zombies. If you eat it, that will not happen to you. But it is based on a real-life fungus that does infect insects and make them zombies.

Rovner: Yes. [laughter] It’s definitely creepy. Tami.

Luhby: My story is by my fantastic CNN colleagues this week. It’s called “ER on the Field: An Inside Look at How NFL Medical Teams Prepare for a Game Day Emergency.” It’s by my colleagues Nadia Kounang, Amanda Sealy, and Sanjay Gupta. Listen, I don’t know anything about football, but I happened to be watching TV with my husband when we flipped to the channel with the Bills-Bengals game earlier this month, and we saw the ambulance on the field. So like so many others, I was closely following the story of Damar Hamlin’s progress. What we heard on the news was that the team and the medical experts repeatedly said that it was the care on the field that saved Hamlin’s life. So Nadia, Amanda, and Sanjay provide a rare behind-the-scenes look at how hospital-quality treatment can be given on the field when needed. I learned that — from the story and the video — that there are about 30 medical personnel at every game. All teams have emergency action plans. They run drills an hour before kickoff. The medical staff from both teams review the plan and confirm the details. They station certified athletic trainers to serve as spotters who are positioned around the stadium to catch any injuries. And then they communicate with the medical team on the sidelines. But then — and this is what even my husband, who is a major football fan, didn’t know this — there’s the all-important red hat, which signifies the person who is the emergency physician or the airway physician, who stands along the 30-yard line and takes over if he or she has to come out onto the field. And that doctor said, apparently, they have all the resources available in an emergency room and can essentially do surgery on the field to intubate a player. So I thought it was a fascinating story and video even for non-football fans like me, and I highly recommend them.

Rovner: I thought it was very cool. I read it when Tami recommended it. Although my only question is what happens when there’s a team, one whose color is red and there are lots of people wearing red hats on the sidelines?

Luhby: That’s a good point.

Rovner: I assume they still can find the doctor. OK, Joanne.

Kenen: There was a piece in The Atlantic by Katherine J. Wu called “Covid Couldn’t Kill the Handshake.” It had a separate headline, depending on how you Googled it, saying “Don’t Fear the Handshake.” So, basically, we stopped shaking hands. We had fist bumps and, you know, bows and all sorts of other stuff. And the handshake is pretty much back. And yes, your hands are dirty, unless you’re constantly washing them, your hands are dirty. But they are not quite as dirty as we might think. We’re not quite as dangerous as we may think. So, you know, if you can’t get out of shaking someone’s hand, you probably won’t die.

Rovner: Good. Good to know. All right. My extra credit this week is a story I wish I had written. It’s from Roll Call, and it’s called “NIH Missing Top Leadership at Start of a Divided Congress,” by Ariel Cohen. And it’s not just about not having a replacement for Dr. Tony Fauci, who just retired as the longtime head of the National Institute for Allergy and Infectious Diseases last month, but about having no nominated replacement for Frances Collins, who stepped down as NIH [National Institutes of Health] director more than a year ago. In a year when pressure on domestic spending is likely to be severe, as we’ve been discussing, and when science in general and NIH in particular are going to be under a microscope in the Republican-led House, it doesn’t help to have no one ready to catch the incoming spears. On the other hand, Collins’ replacement at NIH will have to be vetted by the Senate HELP Committee with a new chairman, Bernie Sanders, and a new ranking member, Bill Cassidy. I am old enough to remember when appointing a new NIH director and getting it through the Senate was a really controversial thing. I imagine we are back to exactly that today.

OK. That’s our show for this week. As always, if you enjoyed the podcast, you could subscribe wherever you get your podcasts. We’d appreciate it if you left us a review; that helps other people find us, too. Special thanks, as always, to our ever-patient producer, Francis Ying, and to our KHN webteam, who have given the podcast a spiffy new page. As always, you can email us your comments or questions. We’re at whatthehealth — all one word — @kff.org. Or you can tweet me. I’m still at Twitter, for now, where I’m @jrovner. Tami?

Luhby: I’m @Luhby — L-U-H-B-Y

Rovner: Victoria.

Knight: @victoriaregisk

Rovner: Joanne.

Kenen: @JoanneKenen

Rovner: We will be back in your feed next week. Until then, be healthy.

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KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. Together with Policy Analysis and Polling, KHN is one of the three major operating programs at KFF (Kaiser Family Foundation). KFF is an endowed nonprofit organization providing information on health issues to the nation.

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The federal system meant to stop health care business owners and executives from repeatedly bilking government health programs fails to do so, a KHN investigation has found.

That means people are once again tapping into Medicaid, Medicare, and other taxpayer-funded federal health programs after being legally banned because of fraudulent or illegal behavior.

In large part that’s because the government relies on those who are banned to self-report their infractions or criminal histories on federal and state applications when they move into new jobs or launch companies that access federal health care dollars.

The Office of Inspector General for the U.S. Department of Health and Human Services keeps a public list of those it has barred from receiving any payment from its programs — it reported excluding more than 14,000 individuals and entities since January 2017 — but it does little to track or police the future endeavors of those it has excluded.

The government explains that such bans apply to “the excluded person” or “anyone who employs or contracts with” them. Further, “the exclusion applies regardless of who submits the claims and applies to all administrative and management services furnished by the excluded person,” according to the OIG.

Federal overseers largely count on employers to check their hires and identify those excluded. Big hospital systems and clinics typically employ compliance staff or hire contractors who routinely vet their workers against the federal list to avoid fines.

However, those who own or operate health care businesses are typically not subject to such oversight, KHN found. And people can sidestep detection by leaving their names off key documents or using aliases.

“If you intend to violate your exclusion, the exclusion list is not an effective deterrent,” said David Blank, a partner at Arnall Golden Gregory who previously was senior counsel at the OIG. “There are too many workarounds.”

KHN examined a sample of 300 health care business owners and executives who are among more than 1,600 on OIG’s exclusion list since January 2017. Journalists reviewed court and property records, social media, and other publicly available documents. Those excluded had owned or operated home health care agencies, medical equipment companies, mental health facilities, and more. They’d submitted false claims, received kickbacks for referrals, billed for care that was not provided, and harmed patients who were poor and old, in some cases by stealing their medication or by selling unneeded devices to unsuspecting Medicare enrollees. One owner of an elder care home was excluded after he pleaded guilty to sexual assault.

Among those sampled, KHN found:

• Eight people appeared to be serving or served in roles that could violate their bans;
• Six transferred control of a business to family or household members;
• Nine had previous, unrelated felony or fraud convictions, and went on to defraud the health care system;
• And seven were repeat violators, some of whom raked in tens of millions of federal health care dollars before getting caught by officials after a prior exclusion.

The exclusions list, according to Blank and other experts, is meant to make a person radioactive — easily identified as someone who cannot be trusted to handle public health care dollars.

But for business owners and executives, the system is devoid of oversight and rife with legal gray areas.

One man, Kenneth Greenlinger, pleaded guilty in 2016 to submitting “false and fraudulent” claims for medical equipment his California company, Valley Home Medical Supply, never sent to customers that totaled more than $1.4 million to Medicare and other government health care programs, according to his plea agreement. He was sentenced to eight months in federal prison and ordered to pay restitution of more than $1 million, according to court records. His company paid more than $565,000 to resolve allegations of false claims, according to the Justice Department website.

Greenlinger was handed a 15-year exclusion from Medicare, Medicaid, and any other federal health care program, starting in 2018, according to the OIG.

But this October, Greenlinger announced a health care business with government contracts for sale. Twice on LinkedIn, Greenlinger announced: “I have a DME [durable medical equipment] company in Southern California. We are contracted with most Medicare and Medi-Cal advantage plans as well as Aging in Place payers. I would like to sell,” adding a Gmail address.

Reached by phone, Greenlinger declined to comment on his case. About the LinkedIn post, he said: “I am not affiliated directly with the company. I do consulting for medical equipment companies — that was what that was, written representing my consulting business.”

His wife, Helene, who previously worked for Valley Home Medical Supply, is now its CEO, according to LinkedIn and documentation from the California Secretary of State office. Although Helene has a LinkedIn account, she told KHN in a telephone interview that her husband had posted on her behalf. But Kenneth posted on and commented from his LinkedIn page — not his wife’s.

At Valley Home Medical Supply, a person who answered the phone last month said he’d see whether Kenneth Greenlinger was available. Another company representative got on the line, saying “he’s not usually in the office.”

Helene Greenlinger said her husband may come by “once in a while” but “doesn’t work here.”

She said her husband doesn’t do any medical work: “He’s banned from it. We don’t fool around with the government.”

“I’m running this company now,” she said. “We have a Medicare and Medi-Cal number and knew everything was fine here, so let us continue.”

No Active Enforcement

Federal regulators do not proactively search for repeat violators based on the exclusion list, said Gabriel Imperato, a managing partner with Nelson Mullins in Florida and former deputy general counsel with HHS’ Office of the General Counsel in Dallas.

He said that for decades he has seen a “steady phenomenon” of people violating their exclusions. “They go right back to the well,” Imperato said.

That oversight gap played out during the past two years in two small Missouri towns.

Donald R. Peterson co-founded Noble Health Corp., a private equity-backed company that bought two rural Missouri hospitals, just months after he’d agreed in August 2019 to a five-year exclusion that “precludes him from making any claim to funds allocated by federal health care programs for services — including administrative and management services — ordered, prescribed, or furnished by Mr. Peterson,” said Jeff Morris, an attorney representing Peterson, in a March letter to KHN. The prohibition, Morris said, also “applies to entities or individuals who contract with Mr. Peterson.”

That case involved a company Peterson created called IVXpress, now operating as IVX Health with infusion centers in multiple states. Peterson left the company in 2018, according to his LinkedIn, after the settlement with the government showed a whistleblower accused him of altering claims, submitting false receipts for drugs, and paying a doctor kickbacks. He settled the resulting federal charges without admitting wrongdoing. His settlement agreement provides that if he violates the exclusion, he could face “criminal prosecution” and “civil monetary penalties.”

In January 2020, Peterson was listed in a state registration document as one of two Noble Health directors. He was also listed as the company’s secretary, vice president, and assistant treasurer. Four months later, in April 2020, Peterson’s name appears on a purchasing receipt obtained under the Freedom of Information Act. In addition to Medicare and Medicaid funds, Noble’s hospitals had received nearly $20 million in federal covid relief money.

A social media account with a photo that appears to show Peterson announced the launch of Noble Health in February 2020. Peterson identified himself on Twitter as executive chairman of the company.

It appears federal regulators who oversee exclusions did not review or approve his role, even though information about it was publicly available.

Peterson, whose name does not appear on the hospitals’ Medicare applications, said by email that his involvement in Noble didn’t violate his exclusion in his reading of the law.

He said he owned only 3% of the company, citing OIG guidance — federal regulators may exclude companies if someone who is banned has ownership of 5% or more of them — and he did not have a hand in operations. Peterson said he worked for the corporation, and the hospitals “did not employ me, did not pay me, did not report to me, did not receive instructions or advice from me,” he wrote in a November email.

A 2013 OIG advisory states that “an excluded individual may not serve in an executive or leadership role” and “may not provide other types of administrative and management services … unless wholly unrelated to federal health care programs.”

Peterson said his activities were apart from the business of the hospitals.

“My job was to advise Noble’s management on the acquisition and due diligence matters on hospitals and other entities it might consider acquiring. … That is all,” Peterson wrote. “I have expert legal guidance on my role at Noble and am comfortable that nothing in my settlement agreement has been violated on any level.”

For the two hospitals, Noble’s ownership ended badly: The Department of Labor opened one of two investigations into Noble this March in response to complaints from employees. Both Noble-owned hospitals suspended services. Most employees were furloughed and then lost their jobs.

Peterson said he left the company in August 2021. That’s the same month state regulators cited one hospital for deficiencies that put patients “at risk for their health and safety.”

If federal officials determine Peterson’s involvement with Noble violated his exclusion, they could seek to claw back Medicaid and Medicare payments the company benefited from during his tenure, according to OIG records.

Enforcement in a Gray Zone

Dennis Pangindian, an attorney with the firm Paul Hastings who had prosecuted Peterson while working for the OIG, said the agency has limited resources. “There are so many people on the exclusions list that to proactively monitor them is fairly difficult.”

He said whistleblowers or journalists’ reports often alert regulators to possible violations. KHN found eight people who appeared to be serving or served in roles that could violate their bans.

OIG spokesperson Melissa Rumley explained that “exclusion is not a punitive sanction but rather a remedial action intended to protect the programs and beneficiaries from bad actors.”

But the government relies on people to self-report that they are banned when applying for permission to file claims that access federal health care dollars through the Centers for Medicare & Medicaid Services.

While federal officials are aware of the problems, they so far have not fixed them. Late last year, the Government Accountability Office reported that 27 health care providers working in the federal Veterans Affairs system were on the OIG’s exclusion list.

If someone “intentionally omits” from applications they are an “excluded owner or an owner with a felony conviction,” then “there’s no means of immediately identifying the false reporting,” said Dara Corrigan, director of the center for program integrity at CMS. She also said there is “no centralized data source of accurate and comprehensive ownership” to check for violators.

The OIG exclusion list website, which health care companies are encouraged to check for offenders, notes that the list does not include altered names and encourages those checking it to vet other forms of identification.

Gaps in reporting also mean many who are barred may not know they could be violating their ban because exclusion letters can go out months after convictions or settlements and may never reach a person who is in jail or has moved, experts said. The exclusion applies to federal programs, so a person could work in health care by accepting only patients who pay cash or have private insurance. In its review, KHN found some on the exclusion list who were working in health care businesses that don’t appear to take taxpayer money.

OIG said its exclusions are “based largely on referrals” from the Justice Department, state Medicaid fraud-control units, and state licensing boards. A lack of coordination among state and federal agencies was evident in exclusions KHN reviewed, including cases where years elapsed between the convictions for health care fraud, elder abuse, or other health-related felonies in state courts and the offenders’ names appearing on the federal list.

ProviderTrust, a health care compliance group, found that the lag time between state Medicaid fraud findings and when exclusions appeared on the federal list averaged more than 360 days and that some cases were never sent to federal officials at all.

The NPI, or National Provider Identifier record, is another potential enforcement tool. Doctors, nurses, other practitioners, and health businesses register for NPI numbers to file claims to insurers and others. KHN found that NPI numbers are not revoked after a person or business appears on the list.

The NPI should be “essentially wiped clean” when the person is excluded, precluding them from submitting a bill, said John Kelly, a former assistant chief for health care fraud at the Department of Justice who is now a partner for the law firm Barnes & Thornburg.

Corrigan said the agency didn’t have the authority to deactivate or deny NPIs if someone were excluded.

The Family ‘Fronts’

Repeat violators are all too common, according to state and federal officials. KHN’s review of cases identified seven of them, noted by officials in press releases or in court records. KHN also found six who transferred control of a business to a family or household member.

One common maneuver to avoid detection is to use the names of “family members or close associates as ‘fronts’ to create new sham” businesses, said Lori Swanson, who served as Minnesota attorney general from 2007 to 2019.

Blank said the OIG can exclude business entities, which would prevent transfers to a person’s spouse or family members, but it rarely does so.

Thurlee Belfrey stayed in the home care business in Minnesota after his 2004 exclusion for state Medicaid fraud. His wife, Lanore, a former winner of the Miss Minnesota USA title, created a home care company named Model Health Care and “did not disclose” Thurlee’s involvement, according to his 2017 plea agreement.

“For more than a decade” Belfrey, his wife, and his twin brother, Roylee, made “millions in illicit profits by cheating government health care programs that were funded by honest taxpayers and intended for the needy,” according to the Justice Department. The brothers spent the money on a Caribbean cruise, high-end housing, and attempts to develop a reality TV show based on their lives, the DOJ said.

Federal investigators deemed more than $18 million in claims Model Health Care had received were fraudulent because of Thurlee’s involvement. Meanwhile, Roylee operated several other health care businesses. Between 2007 and 2013, the brothers deducted and collected millions from their employees’ wages that they were supposed to pay in taxes to the IRS, the Justice Department said.

Thurlee, Lanore, and Roylee Belfrey all were convicted and served prison time. When reached for comment, the brothers said the government’s facts were inaccurate and they looked forward to telling their own story in a book. Roylee said he “did not steal people’s tax money to live a lavish lifestyle; it just didn’t happen.” Thurlee said he “never would have done anything deliberately to violate the exclusion and jeopardize my wife.” Lanore Belfrey could not be reached for comment.

Melchor Martinez settled with the government after he was accused by the Department of Justice of violating his exclusion and for a second time committing health care fraud by enlisting his wife, Melissa Chlebowski, in their Pennsylvania and North Carolina community mental health centers.

Previously, Martinez was convicted of Medicaid fraud in 2000 and was excluded from all federally funded health programs, according to DOJ.

Later, Chlebowski failed to disclose on Medicaid and Medicare enrollment applications that her husband was managing the clinics, according to allegations by the Justice Department.

Their Pennsylvania clinics were the largest providers of mental health services to Medicaid patients in their respective regions. They also had generated $75 million in combined Medicaid and Medicare payments from 2009 through 2012, according to the Justice Department. Officials accused the couple of employing people without credentials to be mental health therapists and the clinics of billing for shortened appointments for children, according to the DOJ.

They agreed, without admitting liability, to pay $3 million and to be excluded — a second time, for Martinez — according to court filings in the settlement with the government. They did not respond to KHN’s attempts to obtain comment.

‘Didn’t Check Anything’

In its review of cases, KHN found nine felons or people with fraud convictions who then had access to federal health care money before being excluded for alleged or confirmed wrongdoing.

But because of the way the law is written, Blank said, only certain types of felonies disqualify people from accessing federal health care money — and the system relies on felons to self-report.

According to the DOJ court filing, Frank Bianco concealed his ownership in Anointed Medical Supplies, which submitted about $1.4 million in fraudulent claims between September 2019 and October 2020.

Bianco, who opened the durable medical equipment company in South Florida, said in an interview with KHN that he did not put his name on a Medicare application for claims reimbursement because of his multiple prior felonies related to narcotics.

And as far as he knows, Bianco told KHN, the federal regulators “didn’t check anything.” Bianco’s ownership was discovered because one of his company’s contractors was under federal investigation, he said.

Kenneth Nash had been convicted of fraud before he operated his Michigan home health agency and submitted fraudulent claims for services totaling more than $750,000, according to the Justice Department. He was sentenced to more than five years in prison last year, according to the DOJ.

Attempts to reach Nash were unsuccessful.

“When investigators executed search warrants in June 2018, they shut down the operation and seized two Mercedes, one Land Rover, one Jaguar, one Aston Martin, and a $60,000 motor home — all purchased with fraud proceeds,” according to a court filing in his sentencing.

“What is readily apparent from this evidence is that Nash, a fraudster with ten prior state fraud convictions and one prior federal felony bank fraud conviction, got into health care to cheat the government, steal from the Medicare system, and lavishly spend on himself,” the filing said.

As Kelly, the former assistant chief for health care fraud at the Justice Department, put it: “Someone who’s interested in cheating the system is not going to do the right thing.”

KHN Colorado correspondent Rae Ellen Bichell contributed to this report.

KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. Together with Policy Analysis and Polling, KHN is one of the three major operating programs at KFF (Kaiser Family Foundation). KFF is an endowed nonprofit organization providing information on health issues to the nation.

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To bring a new drug to market, the FDA requires pharmaceutical firms to perform extensive studies to demonstrate safety and efficacy, which are often expensive and time-consuming to conduct to the agency’s specifications. Getting a drug to market a few months sooner and for less expense than usual can translate into millions in profit for the manufacturer.

That is why a private equity-backed startup like Headlands Research saw an opportunity in creating a network of clinical sites and wringing greater efficiency out of businesses, to perform this critical scientific work faster. And why Moderna, Pfizer, Biogen, and other drug industry bigwigs have been willing to hire it — even though it’s a relatively new player in the field, formed in 2018 by investment giant KKR.

In July 2020, Headlands announced it won coveted contracts to run clinical trials of covid-19 vaccines, which would include shots for AstraZeneca, Johnson & Johnson, Moderna, and Pfizer.

In marketing its services, Headlands described its mission to “profoundly impact” clinical trials — including boosting participation among racial and ethnic minorities who have long been underrepresented in such research.

“We are excited,” CEO Mark Blumling said in a statement, to bring “COVID-19 studies to the ethnically diverse populations represented at our sites.” Blumling, a drug industry veteran with venture capital and private equity experience, told KHN that KKR backed him to start the company, which has grown by buying established trial sites and opening new ones.

Finding and enrolling patients is often the limiting and most costly part of trials, said Dr. Marcella Alsan, a public policy professor at Harvard Kennedy School and an expert on diverse representation in clinical trials, which have a median cost of $19 million for new drugs, according to Johns Hopkins University researchers.

Before covid hit, Headlands acquired research centers in McAllen, Texas; Houston; metro Atlanta; and Lake Charles, Louisiana, saying those locations would help it boost recruitment of diverse patients — an urgent priority during the pandemic in studying vaccines to ward off a disease disproportionately killing Black, Hispanic, and Native Americans.

Headlands’ sites also ran, among other things, clinical studies on treatments to combat Type 2 diabetes, postpartum depression, asthma, liver disease, migraines, and endometriosis, according to a review of website archives and the federal website ClinicalTrials.gov. But within two years, some of Headlands’ alluring promises would fall flat.

In September, Headlands shuttered locations in Houston — one of the nation’s largest metro areas and home to major medical centers and research universities — and Lake Charles, a move Blumling attributed to problems finding “experienced, highly qualified staff” to carry out the complex and highly specialized work of clinical research. The McAllen site is not taking on new research as Headlands shifts operations to another South Texas location it launched with Pfizer.

What impact did those sites have? Blumling declined to provide specifics on whether enrollment targets for covid vaccine trials, including by race and ethnicity, were met for those locations, citing confidentiality. He noted that for any given trial, data is aggregated across all sites and the drug company sponsoring it is the only entity that has seen the data for each site once the trial is completed.

A fragmented clinical trials industry has made it a prime target for private equity, which often consolidates markets by merging companies. But Headlands’ trajectory shows the potential risks of trying to combine independent sites and squeeze efficiency out of studies that will affect the health of millions.

Yashaswini Singh, a health economist at Johns Hopkins who has studied private equity acquisitions of physician practices, said consolidation has potential downsides. Singh and her colleagues published research in September analyzing acquisitions in dermatology, gastroenterology, and ophthalmology that found physician practices — a business with parallels to clinical trial companies — charged higher prices after acquisition.

“We’ve seen reduced market competition in a variety of settings to be associated with increases in prices, reduction in access and choice for patients, and so on,” Singh said. “So it’s a delicate balance.”

Dr. Aaron Kesselheim, a professor of medicine at Harvard Medical School, called private equity involvement in trials “concerning.”

“We need to make sure that patients” know enough to provide “adequate, informed consent,” he said, and ensure “protections about the privacy of the data.”

“We don’t want those kinds of things to be lost in the shuffle in the goals of making money,” he said.

Blumling said trial sites Headlands acquired are not charging higher prices than before. He said privacy “is one of our highest concerns. Headlands holds itself to the highest standard.”

Good or bad, clinical trials have become a big, profitable business in the private equity sphere, data shows.

Eleven of the 25 private equity firms identified by industry tracker PitchBook as the top investors in health care have bought stakes in clinical research companies, a KHN analysis found. Those companies have been involved in studies ranging from covid vaccines to treatments for ovarian cancer, Parkinson’s disease, and Alzheimer’s.

Contracted firms also analyze patient data and prepare materials to secure approval from regulatory agencies, in hopes of getting more drugs to market faster. And a big draw for investors: Clinical research companies make money whether or not a drug succeeds, making it less risky than investing in a drug company.

The number of clinical trials has exploded to more than 434,000 registered studies this year as of late November, more than triple the number a decade ago.

Still, most trial sites are physician practices that don’t consistently perform studies, according to a presentation by Boston-based investment firm Provident Healthcare Partners.

“Independent sites are being purchased by private equity, and they’re moving into larger site groups of 30, 40, and then their game plan is to roll that up into a business and then sell it again,” said Linda Moore Schipani, CEO of Clinical Research Associates, a Nashville-based company that worked on covid vaccine trials for AstraZeneca, Novavax, and Pfizer. “That’s kind of the endgame.”

Headlands is a prime example. It announced in November 2019 that it would acquire six centers in the U.S. and Canada, including three sites in Texas and Louisiana owned by Centex Studies that would help improve participation among Hispanics and African Americans.

It has made other acquisitions since then and opened new sites in areas with “extremely limited trial options,” something Blumling says distinguishes his company.

“I’m not an evangelist for private equity,” Blumling said. “The ability of KKR to be willing to invest in something that is a three- to five-year return versus a one- to two-year return is something that you won’t see out there.”

A research center in Brownsville, Texas — a stone’s throw from the U.S.-Mexico border and where 95% of the population is Hispanic or Latino — is one of several where it is partnering with Pfizer to boost patient diversity.

To recruit patients, Headlands “is really going beyond what a lot of sites do, which is social media,” Blumling said in an interview. “It’s going within churches, community fairs, really getting out into as much as possible the broader community.”

Headlands closed the Houston and Lake Charles sites because of staffing issues, Blumling said, and finished or moved their studies elsewhere. Blumling said the decision to close those locations “did not have anything to do with the speed of trials.”

Similarly, he said, Headlands is moving the McAllen site’s operations to Brownsville “because it had a larger population of trained personnel.”

“We want to continue to grow sites and do great work,” Blumling said. “If we can’t find the people in order to do that at the quality that we demand, which is at the highest level, then it doesn’t make sense to keep those sites.”

‘The Writing to Me Was on the Wall’

In 2006, Devora Torrence co-founded Centex Studies, which she described as “my little mom and pop business” in a 2021 podcast about female entrepreneurs in science. She said a flurry of interest from private equity came at the end of 2018. The appeal was evident: Drug companies were relying on bigger clinical trial networks.

“The thing is speed, getting it to market. With a bigger network, you get that speed,” Torrence said on the podcast. “The writing to me was on the wall that either I get some outside investment and scale up myself, or kind of listen to these guys and see if maybe now would be the right time to exit.”

Joining Headlands had its benefits during the pandemic because she could “lean on” its other sites with experience running vaccine trials. “Had we not gotten those … we may not still be here,” Torrence said.

Torrence, whose LinkedIn profile said she left the company in 2021, didn’t respond to messages from KHN.

Lyndon Fullen, a health care consultant and former Centex employee, said private equity provides funding that allows companies to add study sites.

“I completely support it,” he said. “If it’s about reaching that large patient population, it’s of course better to have larger groups with that funding.”

Opportunity in Long Covid

Contract research organization Parexel saw opportunity in the covid pandemic — millions of people were developing long covid after infection and there were few, if any, meaningful treatment options.

The company, which employs more than 19,000 people, was acquired in 2021 by EQT Private Equity and Goldman Sachs’ private equity arm for $8.5 billion, billions more than the $4.5 billion that private equity firm Pamplona Capital Management paid when it took Parexel private in 2017.

A growing body of research shows the debilitating effects of long covid, including a recent study of tens of thousands of patients in Scotland where nearly half had not fully recovered months later. But treatments addressing its root causes could be years away. “It’s a huge number of people,” said Dr. Nathalie Sohier, who leads Parexel’s infectious diseases and vaccines franchise. “There’s a lot of need.”

Long covid represents the promise and peril of the work to develop new drugs: Millions of patients create a potentially lucrative market for drug companies, and yet researchers and industry experts say they are reluctant to jump in. In part, that’s because “it’s not a well-defined disease, and that really makes it highly risky for companies to invest in research,” said Cecil Nick, a vice president for Parexel.

“How are we going to be able to tell the FDA that our drug works? We can’t count the number of people who died; we can’t count the number of people in the hospital,” said Dr. Steven Deeks, a University of California-San Francisco professor who is running an observational study on long covid patients.

As of August, among more than 4,400 covid studies, only 304 focused on long covid. A third of those were related to drug development, Sohier said.

Sohier said “there are few” companies in its long covid program. That hasn’t stopped Parexel from pitching itself as the ideal partner to shepherd new products, including by doing regulatory work and using remote technology to retain patients in trials. Parexel has worked on nearly 300 covid-related studies in more than 50 countries, spokesperson Danaka Williams said.

Michael Fenne, research and campaign coordinator with the Private Equity Stakeholder Project, which studies private equity investments, said Parexel and other contract research organizations are beefing up their data capacity. The aim? To have better information on patients.

“It kind of ties into access and control of patients,” Fenne said. “Technology makes accessing patients, and then also having more reliable information on them, easier.”

KHN senior correspondent Fred Schulte and Megan Kalata contributed to this report.

KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. Together with Policy Analysis and Polling, KHN is one of the three major operating programs at KFF (Kaiser Family Foundation). KFF is an endowed nonprofit organization providing information on health issues to the nation.

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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 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 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 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 health care 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, 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 the Freedom of Information Act 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 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 the 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 health care 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.

KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. Together with Policy Analysis and Polling, KHN is one of the three major operating programs at KFF (Kaiser Family Foundation). KFF is an endowed nonprofit organization providing information on health issues to the nation.

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His parents sued the Kool Smiles dental clinic in Yuma, Arizona, and its private equity investor, FFL Partners. They argued the procedures were done needlessly, in keeping with a corporate strategy to maximize profits by overtreating kids from lower-income families enrolled in Medicaid. Zion died after being diagnosed with “brain damage caused by a lack of oxygen,” according to the lawsuit.

Kool Smiles “overtreats, underperforms and overbills,” the family alleged in the suit, which was settled last year under confidential terms. FFL Partners and Kool Smiles had no comment but denied liability in court filings.

Private equity is rapidly moving to reshape health care in America, coming off a banner year in 2021, when the deep-pocketed firms plowed $206 billion into more than 1,400 health care acquisitions, according to industry tracker PitchBook.

Seeking quick returns, these investors are buying into eye care clinics, dental management chains, physician practices, hospices, pet care providers, and thousands of other companies that render medical care nearly from cradle to grave. Private equity-backed groups have even set up special “obstetric emergency departments” at some hospitals, which can charge expectant mothers hundreds of dollars extra for routine perinatal care.

As private equity extends its reach into health care, evidence is mounting that the penetration has led to higher prices and diminished quality of care, a KHN investigation has found. KHN found that companies owned or managed by private equity firms have agreed to pay fines of more than $500 million since 2014 to settle at least 34 lawsuits filed under the False Claims Act, a federal law that punishes false billing submissions to the federal government with fines. Most of the time, the private equity owners have avoided liability.

New research by the University of California-Berkeley has identified “hot spots” where private equity firms have quietly moved from having a small foothold to controlling more than two-thirds of the market for physician services such as anesthesiology and gastroenterology in 2021. And KHN found that in San Antonio, more than two dozen gastroenterology offices are controlled by a private equity-backed group that billed a patient $1,100 for her share of a colonoscopy charge — about three times what she paid in another state.

It’s not just prices that are drawing scrutiny.

Whistleblowers and injured patients are turning to the courts to press allegations of misconduct or other improper business dealings. The lawsuits allege that some private equity firms, or companies they invested in, have boosted the bottom line by violating federal false claims and anti-kickback laws or through other profit-boosting strategies that could harm patients.

“Their model is to deliver short-term financial goals and in order to do that you have to cut corners,” said Mary Inman, an attorney who represents whistleblowers.

Federal regulators, meanwhile, are almost blind to the incursion, since private equity typically acquires practices and hospitals below the regulatory radar. KHN found that more than 90% of private equity takeovers or investments fall below the $101 million threshold that triggers an antitrust review by the Federal Trade Commission and the U.S. Justice Department.

Spurring Growth

Private equity firms pool money from investors, ranging from wealthy people to college endowments and pension funds. They use that money to buy into businesses they hope to flip at a sizable profit, usually within three to seven years, by making them more efficient and lucrative.

Private equity has poured nearly $1 trillion into nearly 8,000 health care transactions during the past decade, according to PitchBook.

Fund managers who back the deals often say they have the expertise to reduce waste and turn around inefficient, or moribund, businesses, and they tout their role in helping to finance new drugs and technologies expected to benefit patients in years to come.

Critics see a far less rosy picture. They argue that private equity’s playbook, while it may work in some industries, is ill suited for health care, when people’s lives are on the line.

In the health care sphere, private equity has tended to find legal ways to bill more for medical services: trimming services that don’t turn a profit, cutting staff, or employing personnel with less training to perform skilled jobs — actions that may put patients at risk, critics say.

KHN, in a series of articles published this year, has examined a range of private equity forays into health care, from its marketing of America’s top-selling emergency contraception pill to buying up whole chains of ophthalmology and gastroenterology practices and investing in the booming hospice care industry and even funeral homes.

These deals happened on top of well-publicized takeovers of hospital emergency room staffing firms that led to outrageous “surprise” medical bills for some patients, as well as the buying up of entire rural hospital systems.

“Their only goal is to make outsize profits,” said Laura Olson, a political science professor at Lehigh University and a critic of the industry.

Hot Spots

When it comes to acquisitions, private equity firms have similar appetites, according to a KHN analysis of 600 deals by the 25 firms that PitchBook says have most frequently invested in health care.

Eighteen of the firms have dental companies listed in their portfolios, and 16 list centers that offer treatment of cataracts, eye surgery, or other vision care, KHN found.

Fourteen have bought stakes in animal hospitals or pet care clinics, a market in which rapid consolidation led to a recent antitrust action by the FTC. The agency reportedly also is investigating whether U.S. Anesthesia Partners, which operates anesthesia practices in nine states, has grown too dominant in some areas.

Private equity has flocked to companies that treat autism, drug addiction, and other behavioral health conditions. The firms have made inroads into ancillary services such as diagnostic and urine-testing and software for managing billing and other aspects of medical practice.

Private equity has done so much buying that it now dominates several specialized medical services, such as anesthesiology and gastroenterology, in a few metropolitan areas, according to new research made available to KHN by the Nicholas C. Petris Center at UC-Berkeley.

Although private equity plays a role in just 14% of gastroenterology practices nationwide, it controls nearly three-quarters of the market in at least five metropolitan areas across five states, including Texas and North Carolina, according to the Petris Center research.

Similarly, anesthesiology practices tied to private equity hold 12% of the market nationwide but have swallowed up more than two-thirds of it in parts of five states, including the Orlando, Florida, area, according to the data.

These expansions can lead to higher prices for patients, said Yashaswini Singh, a researcher at the Bloomberg School of Public Health at Johns Hopkins University.

In a study of 578 physician practices in dermatology, ophthalmology, and gastroenterology published in JAMA Health Forum in September, Singh and her team tied private equity takeovers to an average increase of $71 per medical claim filed and a 9% increase in lengthy, more costly, patient visits.

Singh said in an interview that private equity may develop protocols that bring patients back to see physicians more often than in the past, which can drive up costs, or order more lucrative medical services, whether needed or not, that boost profits.

“There are more questions than answers,” Singh said. “It really is a black hole.”

Jean Hemphill, a Philadelphia health care attorney, said that in some cases private equity has merely taken advantage of the realities of operating a modern medical practice amid growing administrative costs.

Physicians sometimes sell practices to private equity firms because they promise to take over things like billing, regulatory compliance, and scheduling — allowing doctors to focus on practicing medicine. (The physicians also might reap a big payout.)

“You can’t do it on a scale like Marcus Welby used to do it,” Hemphill said, referring to an early 1970s television drama about a kindly family doctor who made house calls. “That’s what leads to larger groups,” she said. “It is a more efficient way to do it.”

But Laura Alexander, a former vice president of policy at the nonprofit American Antitrust Institute, which collaborated on the Petris Center research, said she is concerned about private equity’s growing dominance in some markets.

“We’re still at the stage of understanding the scope of the problem,” Alexander said. “One thing is clear: Much more transparency and scrutiny of these deals is needed.”

‘Revenue Maximization’

Private equity firms often bring a “hands-on” approach to management, taking steps such as placing their representatives on a company’s board of directors and influencing the hiring and firing of key staffers.

“Private equity exercises immense control over the operations of health care companies it buys an interest in,” said Jeanne Markey, a Philadelphia whistleblower attorney.

Markey represented physician assistant Michelle O’Connor in a 2015 whistleblower lawsuit filed against National Spine and Pain Centers and its private equity owner, Sentinel Capital Partners.

In just a year under private equity guidance, National Spine’s patient load quadrupled as it grew into one of the nation’s largest pain management chains, treating more than 160,000 people in about 40 offices across five East Coast states, according to the suit.

O’Connor, who worked at two National Spine clinics in Virginia, said the mega-growth strategy sprang from a “corporate culture in which money trumps the provision of appropriate patient care,” according to the suit.

She cited a “revenue maximization” policy that mandated medical staffers see at least 25 patients a day, up from 16 to 18 before the takeover.

The pain clinics also overcharged Medicare by billing up to $1,100 for “unnecessary and often worthless” back braces and charging up to $1,800 each for urine drug tests that were “medically unnecessary and often worthless,” according to the suit.

In April 2019, National Spine paid the Justice Department $3.3 million to settle the whistleblower’s civil case without admitting wrongdoing.

Sentinel Capital Partners, which by that time had sold the pain management chain to another private equity firm, paid no part of National Spine’s settlement, court records show. Sentinel Capital Partners had no comment.

In another whistleblower case, a South Florida pharmacy owned by RLH Equity Partners raked in what the lawsuit called an “extraordinarily high” profit on more than $68 million in painkilling and scar creams billed to the military health insurance plan Tricare.

The suit alleges that the pharmacy paid illegal kickbacks to telemarketers who drove the business. One doctor admitted prescribing the creams to scores of patients he had never seen, examined, or even spoken to, according to the suit.

RLH, based in Los Angeles, disputed the Justice Department’s claims. In 2019, RLH and the pharmacy paid a total of $21 million to settle the case. Neither admitted liability. RLH managing director Michel Glouchevitch told KHN that his company cooperated with the investigation and that “the individuals responsible for any problems have been terminated.”

In many fraud cases, however, private equity investors walk away scot-free because the companies they own pay the fines. Eileen O’Grady, a researcher at the nonprofit Private Equity Stakeholder Project, said government should require “added scrutiny” of private equity companies whose holdings run afoul of the law.

“Nothing like that exists,” she said.

Questions About Quality

Whether private equity influences the quality of medical care is tough to discern.

Robert Homchick, a Seattle health care regulatory attorney, said private equity firms “vary tremendously” in how conscientiously they manage health care holdings, which makes generalizing about their performance difficult.

“Private equity has some bad actors, but so does the rest of the [health care] industry,” he said. “I think it’s wrong to paint them all with the same brush.”

But incipient research paints a disturbing picture, which took center stage earlier this year.

On the eve of President Joe Biden’s State of the Union speech in March, the White House released a statement that accused private equity of "buying up struggling nursing homes” and putting “profits before people.”

The covid-19 pandemic had highlighted the “tragic impact” of staffing cuts and other moneysaving tactics in nursing homes, the statement said.

More than 200,000 nursing home residents and staffers had died from covid in the previous two years, according to the White House, and research had linked private equity to inflated nursing costs and elevated patient death rates.

Some injured patients are turning to the courts in hopes of holding the firms accountable for what the patients view as lapses in care or policies that favor profits over patients.

Dozens of lawsuits link patient harm to the sale of Florida medical device maker Exactech to TPG Capital, a Texas private equity firm. TPG acquired the device company in February 2018 for about $737 million.

In August 2021, Exactech recalled its Optetrak knee replacement system, warning that a defect in packaging might cause the implant to loosen or fracture and cause “pain, bone loss or recurrent swelling.” In the lawsuits, more than three dozen patients accuse Exactech of covering up the defects for years, including, some suits say, when “full disclosure of the magnitude of the problem … might have negatively impacted” Exactech’s sale to TPG.

Linda White is suing Exactech and TPG, which she asserts is “directly involved” in the device company’s affairs.

White had Optetrak implants inserted into both her knees at a Galesburg, Illinois, hospital in June 2012. The right one failed and was replaced with a second Optetrak implant in July 2015, according to her lawsuit. That one also failed, and she had it removed and replaced with a different company’s device in January 2019.

The Exactech implant in White’s left knee had to be removed in May 2019, according to the suit, which is pending in Cook County Circuit Court in Illinois.

In a statement to KHN, Exactech said it conducted an “extensive investigation” when it received reports of “unexpected wear of our implants.”

Exactech said the problem dated to 2005 but was discovered only in July of last year. “Exactech disputes the allegations in these lawsuits and intends to vigorously defend itself,” the statement said. TPG declined to comment but has denied the allegations in court filings.

‘Invasive Procedures’

In the past, private equity business tactics have been linked to scandalously bad care at some dental clinics that treated children from low-income families.

In early 2008, a Washington, D.C., television station aired a shocking report about a local branch of the dental chain Small Smiles that included video of screaming children strapped to straightjacket-like “papoose boards” before being anesthetized to undergo needless operations like baby root canals.

Five years later, a U.S. Senate report cited the TV exposé in voicing alarm at the "corporate practice of dentistry in the Medicaid program.” The Senate report stressed that most dentists turned away kids enrolled in Medicaid because of low payments and posed the question: How could private equity make money providing that care when others could not?

“The answer is ‘volume,’” according to the report.

Small Smiles settled several whistleblower cases in 2010 by paying the government $24 million. At the time, it was providing “business management and administrative services” to 69 clinics nationwide, according to the Justice Department. It later declared bankruptcy.

But complaints that volume-driven dentistry mills have harmed disadvantaged children didn’t stop.

According to the 2018 lawsuit filed by his parents, Zion Gastelum was hooked up to an oxygen tank after questionable root canals and crowns “that was empty or not operating properly” and put under the watch of poorly trained staffers who didn’t recognize the blunder until it was too late.

Zion never regained consciousness and died four days later at Phoenix Children’s Hospital, the suit states. The cause of death was “undetermined,” according to the Maricopa County medical examiner’s office. An Arizona state dental board investigation later concluded that the toddler’s care fell below standards, according to the suit.

Less than a month after Zion’s death in December 2017, the dental management company Benevis LLC and its affiliated Kool Smiles clinics agreed to pay the Justice Department $24 million to settle False Claims Act lawsuits. The government alleged that the chain performed “medically unnecessary” dental services, including baby root canals, from January 2009 through December 2011.

In their lawsuit, Zion’s parents blamed his death on corporate billing policies that enforced “production quotas for invasive procedures such as root canals and crowns” and threatened to fire or discipline dental staff “for generating less than a set dollar amount per patient.”

Kool Smiles billed Medicaid $2,604 for Zion’s care, according to the suit. FFL Partners did not respond to requests for comment. In court filings, it denied liability, arguing it did not provide “any medical services that harmed the patient.”

Covering Tracks

Under a 1976 federal law called the Hart-Scott-Rodino Antitrust Improvements Act, deal-makers must report proposed mergers to the FTC and the Justice Department antitrust division for review. The intent is to block deals that stifle competition, which can lead to higher prices and lower-quality services.

But there’s a huge blind spot, which stymies government oversight of more than 90% of private equity investments in health care companies: The current threshold for reporting deals is $101 million.

KHN’s analysis of PitchBook data found that just 423 out of 7,839 private equity health care deals from 2012 through 2021 were known to have exceeded the current threshold.

In some deals, private equity takes a controlling interest in medical practices, and doctors work for the company. In other cases, notably in states whose laws prohibit corporate ownership of physician practices, the private equity firm handles a range of management duties.

Thomas Wollmann, a University of Chicago researcher, said antitrust authorities may not learn of consequential transactions “until long after they have been completed” and “it's very hard to break them up after the fact.”

In August, the FTC took aim at what it called “a growing trend toward consolidation” by veterinary medicine chains.

The FTC ordered JAB Consumer Partners, a private equity firm based in Luxembourg, to divest from some clinics in the San Francisco Bay and Austin, Texas, areas as part of a proposed $1.1 billion takeover of a rival.

The FTC said the deal would eliminate “head-to-head” competition, “increasing the likelihood that customers are forced to pay higher prices or experience a degradation in quality of the relevant services.”

Under the order, JAB must obtain FTC approval before buying veterinary clinics within 25 miles of the sites it owns in Texas and California.

The FTC would not say how much market consolidation is too much or whether it plans to step up scrutiny of health care mergers and acquisitions.

“Every case is fact-specific,” Betsy Lordan, an FTC spokesperson, told KHN.

Lordan, who has since left the agency, said regulators are considering updates to regulations governing mergers and are reviewing about 1,900 responses to the January 2022 request for public comment. At least 300 of the comments were from doctors or other health care workers.

Few industry observers expect the concerns to abate; they might even increase.

Investors are flush with “dry powder,” industry parlance for money waiting to stoke a deal.

The Healthcare Private Equity Association, which boasts about 100 investment companies as members, says the firms have $3 trillion in assets and are pursuing a vision for "building the future of healthcare.”

That kind of talk alarms Cornell University professor Rosemary Batt, a longtime critic of private equity. She predicts that investors chasing outsize profits will achieve their goals by “sucking the wealth” out of more and more health care providers.

“They are constantly looking for new financial tricks and strategies,” Batt said.

KHN’s Megan Kalata contributed to this article.

KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. Together with Policy Analysis and Polling, KHN is one of the three major operating programs at KFF (Kaiser Family Foundation). KFF is an endowed nonprofit organization providing information on health issues to the nation.

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