Tuesday, September 17, 2019

Healthcare regulation by exposé

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It's been said that shaming by journalists doth not a regulatory regime make. But in 2019, national healthcare reporters are giving it a go.

Back in January, Sarah Kliff, then at Vox (now at the NYT), reported that Zuckerberg San Francisco General Hospital, a go-to destination for trauma victims, did not accept any private insurance plans. Every private who enters the hospital gets balance billed (or did at the time of writing) -- often for tens of thousands of dollars. The stories were vivid and egregious.

The next shoe dropped in April:
Zuckerberg San Francisco General Hospital announced Tuesday it has overhauled its billing policies, a move that comes three months after a Vox story drew national attention to the hospital’s abnormal and aggressive billing tactics.
The hospital has for years made the rare decision to be out of network with all private health insurance plans. This created an acute problem for patients like like Nina Dang, 24, who made an unexpected trip to the hospital’s emergency room, the largest in San Francisco. An ambulance took Dang to the trauma center after a bike accident last April. She is insured by a Blue Cross plan, but she didn’t know that the ER does not accept insurance. She received a bill for $20,243.

After the Vox story ran, the hospital reduced Dang’s bill to $200, the copay listed on her insurance card.

Now, Zuckerberg San Francisco General Hospital (ZSFG) is essentially making the same change for all future patients: Its new billing policies will no longer charge those with private coverage “any more than they would have paid out of pocket for the same care at in-network facilities, based on their insurance coverage.”
More recently, on Sept. 9, the Washington Post ran an exposé by Jay Hancock about billing practices at the University of Virginia Health System. UVA has sued 36,000 patients over the past six years -- " seizing wages and bank accounts, putting liens on property and homes and forcing families into bankruptcy."
Every year, the health system sued about 100 of its own employees who also happened to be patients. It garnished thousands of paychecks, largely from workers at lower-pay employers such as Walmart, where UVA took wages more than 800 times
The hospital system has more restrictive charity care requirement than peers, bills patients at far higher rate than it bills insurers, and pursues patients in courts with all but unique ferocity. Here too the personal tales were plentiful, egregious and gory.

In this case, the mea culpa came within a week:
The University of Virginia Medical Center announced Friday that it will adjust its financial aid guidelines in order to offer free and low-cost care to more patients.

The announcement came after pressure from a report that revealed how frequently the hospital had sued patients in recent years. Beginning in January, the university will write off more bills of low-income patients, and it will offer uninsured patients a larger discount if they meet new asset requirement....

“The reality is our practices were too aggressive,” President Jim Ryan said. “We do accept all patients, but there’s a balance there in how you do it. It’s not an easy balance to get right, but I think we’re moving toward a better place.”

In a statement, the university said it recognized that “lawsuits, property liens and garnishing wages can be not only disruptive but devastating.” It said that, moving forward, the university will typically refrain from filing suit unless patients have outstanding balances over $1,000 and are part of households earning more than 400% of the federal poverty level, which is $103,000 for a family of four.

Doug Lischke, the hospital’s chief financial officer, said the hospital has considered adjusting its guidelines before, but first seriously started investigating the possibility after receiving inquiries from reporters.
That is, we're sorry we got caught.

Also this week in high impact journalism: a mystery solved. This summer, after a strong start, federal legislation to protect patients from balance billing seems to have stalled as a dark money group that dubbed itself Doctor Patient Unity poured $28 million into attack ads aimed at bill sponsors. The strong Senate HELP committee bill would essentially ban balance billing and pay out-of-network providers working at in-network hospitals at the average rate paid by commercial insurers in the region. That would seriously dent the pricing power of physician specialties -- ER, anesthesiology, radiology -- that routinely bill 4-6 times Medicare rates.  Those specialties are dominated by private equity-owned megapractices that have escalated balance billing in recent years.

No one following the issue, therefore, was particularly surprised when the New York Times' Margot Sanger-Katz shone a light on the dark pool:
The two largest financial backers of Doctor Patient Unity are TeamHealth and Envision Healthcare, private-equity-backed companies that own physician practices and staff emergency rooms around the country, according to Greg Blair, a spokesman for the group.
No mea culpas this time.  Instead, regulatory consequences:
Energy and Commerce Committee Chairman Frank Pallone, Jr. (D-NJ) and Ranking Member Greg Walden (R-OR) today launched a bipartisan investigation into practices of private equity firms surrounding surprise billing.  In letters to KKR & Co. Inc., Blackstone Group, and Welsh, Carson, Anderson, & Stowe, Pallone and Walden request information and documents pertaining to the firms’ ownership of private physician staffing and emergency transportation companies, which recent research shows are a leading source of surprise medical billing.

"We write to request information regarding [name of private equity firm] ownership, policies, and practices as it relates to third-party medical providers.  We are particularly interested in your firm’s relationship with any physician staffing companies and emergency transportation companies," write Pallone and Walden.  "In recent years, the Committee has heard countless heart-wrenching stories from insured individuals who have received thousands of dollars in medical bills after inadvertently receiving care from out-of-network providers."
Bipartisanship! Balance billing is an abuse too egregious even for (some) Republicans, though its proponents are influential and well-heeled enough to undermine support for strong reform among (some) Democrats. If any legislation does pass, it will likely include arbitration of out-of-network bills on terms favored by physician groups. On the other hand, the PE firms relying on balance billing as a cash cow may have jumped the shark in this case. The letters to the PE firms from Pallone and Walden ask interesting questions about the extent to which their portfolio practices rely on balance billing and the extent to which the PE firms shape contract negotiations with insurers and billing practices.

Great journalism is happening in a target-rich environment. American healthcare is so corrupted by profit and revenue maximization in every industry sector -- hospital systems, physician practices, insurers, pharma, device makers -- that exposure of not-unusual if not always typical practices can bring swift turnarounds in individual instances. The abuses may be beyond the capacity of our political system to fix. To the extent we make any progress at all, however -- e.g., in curbing balance billing -- good reporting will have proved instrumental.

One thing too that these stories have in common: They all concern abuses by healthcare providers. When excoriating the high prices, impaired access and bureaucratic abuse to which American patients are subject, Democratic presidential candidates (and elected officials and candidates generally) still won't say a word against providers: all the invective is directed against insurers and pharma. That's as true for single payer proponents Sanders and Warren as for anyone. If anyone wants to break ranks, reporters are offering plenty of cover. KKR is not Dr. Welby.


  1. Great article, thanks!

    Two quick notes:

    Rep Frank Pallone has been a real stalwart on health care. His name is attached to a lot of progressive legislation since the ACA.

    The University of Virginia was not profit driven in its cruelty, nor was Zuckerberg Hospital. No group of investors was being enriched.

    Rather they were arrogant and were assuming that a hospital debt should be harshly collected.

    My interest in this issue was sparked about 15 years ago, when the Yale University hospital was exposed for financial attacks on vulnerable patients.

    In the same vein, the federal Department of Education is ruthless in some of its student loan collection practices. Whenever there is debt, someone will step forward to enforce it.....and in the case of education and health care, society needs to protect the vulnerable.

  2. Thanks for a great article!

    American hospitals have always had to live with a certain amount of bad debt. Part of this is due to the EMTALA law in the 1980's, which is a wholly unfunded mandate to treat anyone in a health crisis.

    Hospitals are left to form their own guidelines on charity care. Some states do have regulations on billing the uninsured, but these rules have wide gaps.
    Thus we rely on lawsuits and bankruptcy courts and media embarassment to alleviate the pain of aggressive collections.