BOSTON, MA – The Lown Institute, a healthcare think tank, has released the seventh edition of its Shkreli Awards, given each year to perpetrators of the most egregious examples of profiteering and dysfunction in healthcare. The “winners” are chosen with the help of a panel of judges made up of health policy experts, clinicians, journalists, and patient advocates. The awards are named for the infamous “pharma bro” Martin Shkreli, known for obtaining the manufacturing rights of the antiparasitic drug Daraprim and marking up its price by over 5,000 percent.

“When you see all these stories in one place, they stop being anecdotes and start to tell a bigger story,” said Vikas Saini, MD, president of the Lown Institute. “The need for more fairness and integrity in U.S. healthcare couldn’t be clearer.”

2023 Lown Institute Shkreli Award Winners

1. Columbia fails to stop OB-GYN from sexually assaulting patients despite years of complaints
2. Commonspirit nonprofit system pays CEO $35.5 million salary
3. Pharma claims Medicare drug price negotiation violates their constitutional rights 
4. Hospitals partner with private equity to offer medical credit cards
5. Vascular doctor allowed to keep practicing despite discipline in a dozen states 
6. GSK markets Zantac for decades despite potential carcinogenic compound 
7. Any narrowed artery seems a fair target for this alleged coronary stent king
8. Hospitals allegedly “dump” sick, homeless patients on the street
9. Physician payments help medical device maker test experimental products on poor, patients of color
10. Hospital threatens to ship expensive, comatose patient out of the country

A complete list of winners with descriptions, sources, and judges’ comments is available at the Lown Institute website.

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Join Lown Institute president Dr. Vikas Saini and guest panelists, award-winning author Harriet Washington and professor and activist Dr. Victor Montori, on Tuesday, January 9 at 1 p.m. ET for a countdown and discussion of this year’s winners.

About the Lown Institute

​​The Lown Institute is an independent think tank advocating bold ideas for a just and caring system for health. We envision a healthcare system focused on what’s best for people, like hospitals caring for those most in need, patients living without fear of financial distress, and health professionals finding joy in their roles. The Lown Hospitals Index, a signature project of the Institute, is the first ranking to assess the social responsibility of U.S. hospitals by applying measures never used before like racial inclusivity, avoidance of overuse, and pay equity.

Contact

Aaron Toleos, Lown Institute, (978) 821-4620, atoleos@lowninstitute.org

The post PRESS RELEASE: Biggest healthcare fails of 2023 named in 7th annual Shkreli Awards appeared first on Lown Institute.

JANUARY 9, 2024 — Welcome to the 7th annual Shkreli Awards, the Lown Institute’s top ten list of the worst examples of profiteering and dysfunction in healthcare, named for the infamous “pharma bro” Martin Shkreli.

Nominees for the Shkreli Awards are compiled by Lown Institute staff with input from readers of Lown Weekly. An esteemed panel of patient activists, clinicians, health policy experts, and journalists help determine the winners. (press release | previous winners)

#10

Hospital threatens to ship expensive, comatose patient out of the country

When a patient at Lehigh Valley Health—Cedar Crest Hospital in Pennsylvania was still in a coma weeks after surgery for a brain aneurysm, her family was distraught but hopeful. What would be the next steps in the care plan for this patient, who also happened to be an undocumented immigrant? According to a story in the Philadelphia Inquirer, the hospital gave the family an ultimatum: pay $500 per day for the equipment they would need to care for her at home, find another facility that would take her, or consent to a “medical deportation” to the Dominican Republic. They had 48 hours to decide.

Thanks to protests from immigration advocates, the patient remains in state and has been transferred to a different hospital. Lehigh Valley Health Network did not comment on the woman’s case citing privacy laws but said that it “works tirelessly with patients and their families to ensure they receive appropriate care.”

SOURCE: Jeff Gammage, The Philadelphia Inquirer

See also: The Philadelphia Inquirer has published an update on this story

JUDGES’ COMMENTS:

Cruelty is like wrong-sided surgery. It has be to be a never event.

Victor Montori

If we could we’d ship all of our sickest somewhere else. Give us elective surgeries or give us death!

Gary Schwitzer

#9

Physician payments help medical device maker test experimental products on poor, patients of color

Surgeons can earn compensation from device maker Medtronic for teaching “courses” where other doctors watch them implant the company’s products. But to get that cash, they need to find patients for which the devices are appropriate…or not. According to the Los Angeles Times, Rodney White, a surgeon at Harbor UCLA Medical Center, a hospital that serves mostly lower income patients and people of color, convinced a patient to have two experimental $15,000 Medtronic devices implanted even though her condition may not have warranted such a procedure.

The patient, Bernetta Higgins, ended up having a stroke and months later was still learning how to talk again. Higgins had worked at a law firm before the stroke, but after the surgery, couldn’t even write her name. According to the LA Times story, County officials said White “acted appropriately” and that they supported his relationship with Medtronic.

SOURCE: Melody Petersen, Los Angeles Times

JUDGES’ COMMENTS:

Another horrific example of how easy it is to get away with taking advantage of the poor and minorities without any punishment whatsoever.

Susan Rogers

This story illustrates the gigantic power of medical device companies in government. They have bought support nationwide and harm patients with impunity.

Amy Holden Jones

#8

Hospitals allegedly “dump” sick, homeless patients on the street

A frame from a WAVE television report showing an alleged “patient dumping” incident.

Despite a California law meant to prohibit the practice, hospitals are regularly engaging in “patient dumping” of homeless people, according to a story in the San Diego Tribune. One activist told the Tribune that she encountered as many as 500 homeless people who had been “dumped” by hospitals last year. In one case, a patient who was on hospice died “desperately afraid in the park.”

Meanwhile, in Louisville, Kentucky, television station WAVE filmed an elderly woman lying on the sidewalk across from a hospital in 36 degree weather. They were following a tip from a hospital employee saying she saw the patient being dumped from a wheelchair.

Another Louisville man who shattered his hip and pelvis in a car crash was dropped in front of a homeless shelter instead of a rehab facility. He said, “It’s like I’m a worthless man… We’re garbage.” 

According to a statement from one hospital named in the story, “…when individuals without a medical need refuse community support and refuse to leave, there is no option left but to help lead them off property. It is an unfortunate reality, but we must make room for the hundreds of others who do need medical care.”

SOURCES: Gary Warth, San Diego Tribune and John Boel, WAVE

See also: A follow-up report from WAVE

JUDGES’ COMMENTS:

Indifference when a person needs care is the worst cruelty and injustice. When it is done to one patient it betrays the trust and harms where healing should’ve happened.

Victor Montori

No insurance, no money, no problem. We’ve got a dumpster for you behind the hospital.

Gregg Gonsalves

#7

Any narrowed artery seems a fair target for this alleged coronary stent king

An ad featuring Dr. Harlamert from the Witham Health Services website.

According to a WTHR 13 News report, seven patients have filed malpractice complaints against Indiana cardiologist Edward Harlamert for unnecessary cardiac stents, misdiagnosis, unnecessary medications, and more. One patient received 41 stents during 44 heart catheterizations–including some stents placed inside existing stents that had become clogged with scar tissue. And in a video deposition, Harlamert does not deny placing as many as 80-90 stents in a single patient. According to the physician’s attorneys, “Dr. Harlamert has always been committed to providing quality care to patients” and he treats those patients “based on their unique circumstances, his expertise and the tools available.”

SOURCE: Bob Segall, WTHR

JUDGES’ COMMENTS:

People cannot give up on the idea that more is better, and the harm is terrible. This particular story shows how monetary gain can corrupt doctors.

Amy Holden Jones

An unbelievable example of the absence of oversight. At some point someone should have said, “What we’re doing here is not working.”

Gary Schwitzer

#6

Heartburn treatment had dirty secret that company hid for decades

As far back as the 1980s, pharmaceutical company GlaxoSmithKline (GSK) had evidence both from its own research and independent studies that its heartburn medication Zantac could result in the formation of a dangerous carcinogenic compound. According to a Bloomberg article, the company downplayed the issue and even withheld a key study from the U.S. Food & Drug Administration. Zantac went on to become one of the bestselling prescription medications in the world–and, over decades, helped drive the transformation of GSK into a $73 billion company. That is, until 2019 when the FDA finally caught up with them and forced the drug off the market.

Analysts estimate that GSK will settle all the Zantac cases against it for around $5 billion. According to a statement, “GSK does not admit any liability in the settlements and will continue to vigorously defend itself based on the facts and the science in all other Zantac cases.” A reformulated version of Zantac has been offered since 2021, while the key ingredient in the old version has found a new purpose: researchers use it to induce cancer in lab rats.

SOURCE: Anna Edney, Susan Berfield, and Jef Feeley, Bloomberg

JUDGES’ COMMENTS:

Too often we hear cases similar to this where “the company knew for years.” Sadly it would seem that any potential future sanction is chalked up as the cost of doing business.

Adam Elshaug

Drug companies have a code of ethics and concern about customer safety that closely resembles the practice of drug cartels.

Allen Frances

#5

Despite discipline in a dozen states, vascular doc James McGuckin keeps on truckin’

What happens to a doctor’s career once he’s been disciplined by medical boards in a dozen states, lost privileges at multiple hospitals, and settled federal allegations of Medicare fraud for performing unnecessary procedures? If you’re Dr. James McGuckin, you get to keep on practicing. According to a report in ProPublica/Philadelphia Inquirer, McGuckin and his vascular clinics received extensive scrutiny for experimental or unnecessary procedures on patients, including some who lost legs to amputation or nearly lost their lives.

In Washington state, McGuckin was required to write an essay to pass an ethics course. He failed twice with evaluators noting that he wasn’t able to “demonstrate a capacity to think ethically about why he is being held to account.” But no worries, he was able to pass on his third try with the help of a one-on-one tutor. As of August, he was still practicing in Pennsylvania. According to the report, McGuckin’s attorneys said that he has never been found personally liable for fraud and that the government’s most recent allegations are “provably wrong.”

SOURCE: Annie Waldman, ProPublica/The Philadelphia Inquirer

See also: Another story of vascular overuse in the New York Times

JUDGES’ COMMENTS:

Unable to demonstrate a capacity to think ethically? His medical school and training programs should be indicted too.

Susan Rogers

You have to wonder how this guy got into medical school, but the real crime here is the medical boards are not doing their job to protect patients in their state from unethical physicians.

Shannon Brownlee

#4

Credit where credit’s due, these hospitals have a medical debt solution for you

Need an expensive, life-changing surgery but scared of the cost of hospital care? You could look into financial assistance policies or payment plans to see if you qualify for help…or you could take the advice of some hospitals and apply for a high interest medical credit card instead. According to KFF Health News, hospitals across the US are embracing relationships with private equity-backed companies to offer medical credit cards. These cards often have attractive “interest free” introductory periods. But when that period ends, interest rates can skyrocket to as high as 26%. 

For example, before UNC Health started contracting with the lender AccessOne, most patients were in no-interest plans. Now 100,000 UNC patients are in AccessOne plans, with almost half of them at the highest interest rate offered. In its defense, UNC Health said they have a “responsibility to remain financially stable to assure we can provide care to all regardless of ability to pay.”

SOURCE: Noam N. Levey and Aneri Pattani, KFF Health News

JUDGES’ COMMENTS:

Hospitals joining the banks in the stampede back to the feudal era where people are pinned down by usury.

Vikas Saini

Disgusting to see the already excessive and harmful commercialization of healthcare reach new lows by financially exploiting people with consumer debt.

Andrew Goldstein

#3

Medicare drug price negotiation tests the constitution of Big Pharma

An AI-generated image of the Founding Fathers featuring three of the medications subject to price negotiations.

As a result of the Inflation Reduction Act, Medicare officials will now be able to negotiate with manufacturers over drug prices for the first time. This will make it easier for older Americans to afford their cancer, heart disease, and diabetes medications and save the federal government an estimated $100 billion over the next decade. That is unless a flurry of big pharma lawsuits puts a stop to it.

At least nine pharmaceutical companies or trade organizations have challenged the new law so far, with all of them claiming some violation of their First, Fifth, or Eighth Amendment rights. For example, some claim that being forced to negotiate is a form of compelled speech since they may have to say that a price they disagree with is actually fair.

While the outcome of most suits is yet to be determined, a federal district judge did reject one attempted injunction noting that a drug company’s participation in Medicare is voluntary and that “As there is no constitutional right (or requirement) to engage in business with the government, the consequences of that participation cannot be considered a constitutional violation.”

SOURCE: Hannah-Alise Rogers, Congressional Research Service

JUDGES’ COMMENTS:

Pharma acting like two-year-olds when they cannot have their way. Shame on them.

Carole Allen

“We make more money that God, but we want more, always. Don’t ever tell us no. Our investors are our biggest priority.”

Gregg Gonsalves

#2

Nonprofit hospital pays CEO stunning salary

An image of Lloyd Dean with hundred dollar bills added as a background.

What would you do with $35.5 million: Produce an independent film, undertake an affordable housing development project, or maybe wipe out the medical debt of 50,000 Americans? Well, if you’re CommonSpirit Health, the largest Catholic health system in the U.S., this is what you paid your CEO Lloyd Dean in 2021, according to a report by StatNews. For comparison, Dean’s total pay was nearly $15 million more than the CEO of the largest FOR-profit health system, HCA Healthcare.

Why so much? According to CommonSpirit’s tax filing, their “executive compensation philosophy” is designed to help the company promote patient and employee satisfaction and improve the quality of life in the communities they serve, among other things. CommonSpirit did not return a request from StatNews for comment on the story.

SOURCE: Tara Bannow, STAT News

JUDGES’ COMMENTS:

Nothing expresses ‘not-for-profit’ like a $35 million salary.

Adam Elshaug

Anybody who is still believes that nonprofit hospitals are more community minded than for profit systems need look no further than the Catholic hospitals.

Shannon Brownlee

#1

Years of complaints fail to stop Columbia OB-GYN from sexually assaulting patients

An image of Columbia protestors posted by New York Assemblywoman Grace Lee.

Despite evidence of an ongoing problem, Columbia University OB-GYN Robert Hadden assaulted patients for years with little intervention by the administration, according to a ProPublica/New York Magazine report. Overall, more than 245 patients have come forward to allege abuse, including one woman whom Hadden had delivered as a baby.

According to the report, Columbia failed to hand over subpoenaed evidence, referred patients sharing new complaints to their general counsel rather than the district attorney, and allowed Hadden to return to work within a week of his arrest as long as he agreed to have a chaperone. Hadden was sentenced to 20 years in prison in July 2023, while Columbia has agreed to pay out more than $235 million to settle two separate lawsuits, admitting no responsibility in the matter.

SOURCE: Bianca Fortis and Laura Beil, ProPublica/New York Magazine

See also: An Op-ed about medicine’s Me-Too movement in The New York Times

JUDGES’ COMMENTS:

“See no evil” is not a principle that should ever exist in a hospital system. Denying and hiding the evil makes it a hundred times worse.

Carole Allen

That Columbia could ignore victims, undermine prosecutors and protect a predator for over 20 years speaks to deep failings that should send shock waves through all healthcare and higher education sectors.

Adam Elshaug

Judges for Shkreli Awards

Carole Allen, MD, MBA, FAAP

Past president of the
Massachusetts Medical Society

Uché Blackstock

Founder and CEO of Advancing Health Equity

Shannon Brownlee

Former senior vice president of the Lown Institute

Adam Elshaug, MPH, PhD

Director of the Centre for Health Policy at University of Melbourne and senior fellow at the Lown Institute

Allen Frances, MD

Professor and chair emeritus at Duke University School of Medicine

Patricia Gabow

Chair of the Lown Institute board of directors, former CEO of Denver Health

Andrew Goldstein, MD

Assistant professor, NYU School of Medicine

Gregg Gonsalves

Associate professor at Yale School of Public Health

Merrill Goozner

Editor and Publisher of GoozNews

Amy Holden Jones

Creator and showrunner,
“The Resident”

Paul Hattis

Physician-Attorney and Senior Fellow at the Lown Institute

Victor Montori

Chair of the board and Founder of The Patient Revolution, Professor of Medicine at the Mayo Clinic

Reshma Ramachandran
MD, MPP, MHS

Assistant Professor, Yale School of Medicine; Co-Director, Yale Collaboration for Regulatory Rigor, Integrity, and Transparency

Susan Rogers, MD

Immediate past president of Physicians for a National Health Program and retired physician at Stroger Hospital

Altaf Saadi, MD, MSc

General Neurologist at Massachusetts General Hospital and 2023 BLASR Winner

Vikas Saini, MD

President of the Lown Institute and co-chair of the Right Care Alliance

Gary Schwitzer

Adjunct associate professor at University of Minnesota School of Public Health and founder of HealthNewsReview.org

Harriet Washington

Lecturer for Columbia University Bioethics M.S. program, author of Medical Apartheid and Deadly Monopolies

Casey Quinlan

In loving memory of Casey Quinlan, also known as Mighty Casey, an outspoken patient activist who also helped with Shkreli judging for many years.

The post 2023 Shkreli Awards appeared first on Lown Institute.

Given that most Americans cannot afford an unexpected $500 bill without going into debt, having financial assistance available and easily accessible is key for reducing the burden of medical debt in the U.S.

Check out our community benefit policy tracker to see the latest on how states are tackling hospital accountability on this issue!

Trends in financial assistance spending

Unfortunately, several recent reports show that spending on financial assistance (also known as “charity care”) appears to be declining among hospitals overall. A Modern Healthcare analysis found that hospitals’ median financial assistance spending as a percentage of operating expenses declined from 1.21% to 0.99% from 2020 to 2022. Although one might have expected financial assistance spending to increase due to the great need for emergency care during Covid-19, hospitals’ expenses also increased greatly from labor and other costs. 

Another 2023 study in Health Affairs found that on average, nonprofit hospital income grew from 2012-2019, but financial assistance declined slightly; in comparison, for-profit hospital spending on financial assistance more than doubled during that time.  

Hospitals also differ widely in the amount of free and discounted care they provide. For example, health systems like NYC Health+Hospitals devoted 6.85% of their expenses to financial assistance in 2022, while Baystate Health in Massachusetts spent only 0.16%, according to Modern Healthcare.

I’d like a refund, please

In Washington state, where there are additional state requirements for nonprofit hospitals, the Attorney General has been investigating certain health systems for inappropriately billing patients who should have qualified for free care. Recently, PeaceHealth System agreed to pay $13.4 million in refunds to thousands of patients who should have were eligible for free or discounted care but were billed anyway. This includes $4.2 million in direct refunds for more than 4,500 patients and up to $9.2 million in refunds for approximately 11,000 additional patients if they validate their income for eligibility. 

Requiring hospitals to refund patients who were billed erroneously is a growing trend. In Oregon, recent legislation requires hospitals to refund patients who paid for care when they were eligible for assistance. And Maryland is refunding patients who were billed for hospitals services from 2017-2021 when they could have qualified for free care.

Hospital sued patients who should have gotten free care

Some hospitals go beyond billing patients, bringing lawsuits to those unable to pay. Louisville Public Media recently reported that Norton Healthcare filed thousands of lawsuits for unpaid medical bills, despite many of those patients qualifying for free or discounted care. In many cases, patients are unaware they may be eligible for free care, or they face administrative barriers to assistance. 

Despite the established regulations around community investment and charity care, the lack of enforcement has resulted in crippling medical debt for thousands of Americans. Let’s hope the recent pressure policymakers and media are putting on hospitals will be encourage them to give more free care, in pursuit of their social mission. 

The post Policymakers and media put pressure on hospitals to give more free care appeared first on Lown Institute.

Fortunately, there have been some encouraging updates in the price transparency space. On the regulation front, CMS recently announced they are updating their price transparency rules to address concerns about data complexity and usability. And on the research front, a fascinating series of interviews with hospital leaders shows what factors drive price transparency compliance. Here’s what you need to know.

Price transparency rule updates

In a final rule Medicare regulation, CMS announced they are adding further requirements for hospital prices, that take effect in 2024:

1. Hospitals will have to use a standard template for their machine-readable file created by CMS. This ideally will make this information more uniform and easier for researchers to compare across hospitals.
2. A link to the machine-readable file must be in the footer of the hospital website, to avoid the maze of clicks that it often takes to reach the price transparency data  
3. Along with their charges and payer-negotiated prices, hospitals will also have to report the “estimated allowed amount” for services, which is the average amount hospitals have historically received from that payer for that service.
4. Hospitals will have to include a statement attesting that the price data they are reporting is “true, accurate, and complete.” This will be a step forward in accountability and give hospitals more incentive to ensure accuracy in the price data they publish.

CMS estimates that these additional requirements will cost hospitals under $3,000 on average to CMS will also publish data on how well hospitals have complied and whether they have been fined for noncompliance.  

What drives hospitals to be transparent? 

Hospitals’ compliance with price transparency has been variable, with some hospitals receiving accolades for their full compliance and many others avoiding the regulation. What made some hospitals decide to publish their prices and others resist? 

A recent Health Services Research article asked representatives from 12 non-profit healthcare organizations what influenced their decision to comply with price transparency regulations in the first year of the law. 

They found that of the 12 organizations, five complied to the regulations in what the researchers called “good faith” efforts without resisting. Three organizations chose a “compromise” strategy– complying with the regulation but at the same time putting pressure on CMS through state or local hospital organizations. Four chose an “avoid” strategy, not posting their prices or just posting enough to not get caught. Some hospitals had plans to fight back against CMS if they were fined, one participant saying, “If CMS got to the point that they actually levied fines, and fined [our organization], we will subjugate the legitimacy of the fine…[and] go to our state hospital association and see if they will help us fight.”

The strategies that health systems decided to take were based on both internal and external factors, including:

• Alignment with organizational mission — Some hospitals viewed the disclosure of price information as central to their core ethos and as something that sets them apart.
• Availability of time and money — Assembling prices for every medical service is a complex task, and almost all organizations hired consultants and external vendors to help. Some hospitals reported it costing millions to do so. And as Covid-19 hit, some hospitals put aside price transparency to focus on the emergency at hand.
• Reputation — Some hospitals wanted to avoid being seen as non-compliant or on CMS’ “naughty list,” because they were afraid of public shaming.
• Competition — Some hospitals wanted to keep their prices secret to maintain a competitive advantage with their insurer negotiations, while other hospitals with lower costs were happy to share the data.

Although financial penalties are CMS’ primary method of enforcing the rule, none of the hospital organizations reported fines as having a big impact on their strategic response and compliance. The amount of fines for noncompliance has increased over time, so they likely have a larger impact now than in the first year of the rule.

As hospitals gain clarity around regulations and their impacts, we should expect to see an increase in compliance rates. Hopefully, this coincides with lower costs to patients and a more cost efficient healthcare system.

The post What makes hospitals comply with price transparency rules (or not)? appeared first on Lown Institute.

We’ve been getting more and more questions about our Fair Share Spending work that assesses whether hospitals are giving back enough in financial assistance and community health investments to justify their generous tax breaks. Two new reports—one from a United States Senate committee and one from the American Hospitals Association—delve into this space and provide very different views. Here’s what you need to know.

Sanders report calls out hospitals

Nonprofit hospitals receive an estimated $28 billion in total tax breaks each year, but give back far less in meaningful community benefits. A Lown Institute report found that nonprofit hospitals received $14 billion more in tax breaks than they spent on financial assistance and community health programs in 2020, what we call a Fair Share Deficit. About three quarters of hospitals failed to give back to their communities in amounts commensurate with their tax exemption.

In August, four US Senators sent letters to the IRS asking for clarification on how hospitals are complying with the community benefit standard. And this week majority staff of the Senate Health, Education, Labor, and Pensions (HELP) Committee, chaired by Senator Bernie Sanders, released a report showing how some large hospital systems spend little on financial assistance, despite paying their CEOs whopping 8-figure salaries.

The Sanders report highlights examples of nonprofit hospitals engaging in aggressive billing activities such as sending patients’ medical debt to collections and denying care to patients with outstanding medical debt. The report also adds a new analysis of how much the 16 largest nonprofit hospital systems spend on financial assistance (free and discounted care for patients who can’t afford to pay). They find that 12 of these systems spent less than $0.02 for each dollar in revenue on financial assistance, and six gave less than $0.01. 

The report also called attention to “massive salaries” for some system CEOs, like Commonspirit which paid their CEO $35 million in 2021. Lown Institute data shows vast inequities at some hospitals, with some CEOs making up to 60 times what other hospital workers make. This underinvestment in financial assistance causes real harm to patients. When hospitals charge patients for care they can’t afford, patients go into debt and often sacrifice basic needs and avoid additional care. An estimated 100 million Americans are in medical debt, and most owe at least some to hospitals. If hospitals paid off their $14 billion fair share deficit, it would be enough to erase the debt of 18 million Americans, which would be a huge step forward for fairness in the country.

AHA provides opposing view

The American Hospitals Association just published their analysis of hospital community benefit spending, finding that hospitals spent $130 billion in 2020, amounting to 15.5% of hospital expenses. That’s far more than other studies estimate. 

How can the AHA estimate be so different? The answer depends on what’s being counted as a “community benefit.” When you imagine programs to improve community health, you might think of free immunizations, health fairs and educational classes, food pantries and other nutritional assistance, investments in affordable housing, healthcare for the homeless, etc. However, spending on those types of programs made up only 1.8% of hospital expenses in 2020, according to the AHA’s report.

Financial assistance, free or discounted care for eligible patients, is another important category of community benefit spending. But the AHA report doesn’t break out this amount on its own; instead, they lump it in together with Medicaid shortfall and other unreimbursed costs of government programs.

While it’s important that hospitals care for patients with Medicaid, the “shortfall” they report does not go towards tangible community programs or into the pockets of patients. Instead, this is an accounting item related to the discounted prices in Medicaid. Hospitals offer discounts on care to insurers all the time, but these aren’t considered community benefits–why should Medicaid discounts be any different? Most hospitals already make up this shortfall from public insurers by charging private insurers more than their costs of care. The same goes for Medicare shortfall, which the AHA report also includes in their total, despite this not even being considered a “community benefit” by the IRS.

The AHA report also includes bad debt, which is money the hospital expected to get from patients but never received. The AHA argues this spending is a benefit to the community because many patients who don’t pay would have qualified for financial assistance. However, in the real world, policies on financial assistance vary widely and getting access to it can be easy or hard. If a hospital goes to great lengths to make their financial assistance application simple and accessible, and give more in assistance as a result, that should be rewarded. On the other hand, if hospitals make getting assistance hard and hound low-income patients to pay their bills or send their debt to collection agencies, that hardly seems like a “community benefit.”

What can policymakers do?

The Sanders report adds to existing evidence that nonprofit hospitals could do much more to improve community health and earn their tax-exempt status. How can federal policymakers improve transparency and incentives around the community benefit standard? See some of our key recommendations for Congress on this issue.

The post The rising debate about hospital community benefits: Sanders vs AHA appeared first on Lown Institute.

A recent report from the majority staff of the Senate Health, Education, Labor, and Pensions (HELP) Committee, chaired by Senator Bernie Sanders, called out some large nonprofit hospital systems for underspending on financial assistance and engaging in predatory billing activities. What can policymakers do about this issue to protect patients from medical debt and ensure hospitals are giving back their fair share to communities? 

Here are some proposals that could move the needle. 

1. CLEARLY DEFINE COMMUNITY BENEFIT: Currently, hospitals get a lot of leeway in determining what counts as a “community benefit.” Any program that purports to improve community health can count, even if it has nothing to do with what community members have said matters most to their health. Congress should create a clearer definition of community benefit that ties spending directly to the priority health needs identified in the community health needs assessment that hospitals are required to conduct, as states like Massachusetts do already.
2. BETTER REPORTING: The IRS requires hospitals to report their spending on several community benefit categories on their Form 990 Schedule H, but current reporting requirements have holes. For example, hospitals are allowed to report their spending aggregated at the system level, which reduces transparency by masking differences in spending by individual hospitals. Congress could direct the IRS to make facility-level reporting of Schedule H a requirement, as several states already do. They could also enable communities to more easily see if hospitals are spending their fair share by requiring hospitals to report the value of their local property and sales tax breaks.
3. FINANCIAL ASSISTANCE STANDARDS: Currently, hospitals in most states do not have a set standard on who they must make eligible for financial assistance or how much they must spend. Congress could do what California and other states have done, and set specific standards for nonprofit hospitals to ensure that patients under a certain poverty level (depending on the state or local economic conditions) receive care that’s free or discounted. Congress could also create a standard financial assistance application all hospitals must make available and disallow barriers to assistance like asset tests for patients that qualify.
4. CB SPENDING MINIMUMS: Nonprofit hospitals are not required to spend a certain amount on community benefits to maintain their tax-exempt status, giving them little incentive to increase their spending. Congress could encourage hospitals to spend more by providing tax benefits on a sliding scale based on how fully hospitals comply with the community benefit standard compared to their peers, so that hospitals meeting the bare minimum would get a smaller tax break. Or they could follow Oregon’s example and set a community benefit spending floor for all hospitals, based on hospitals’ financial positions and local need, to ensure hospitals give back at least a certain amount.
5. PREDATORY BILLING RESTRICTIONS: Nonprofit hospitals are allowed to take “extraordinary collection actions”–send patients’ medical debt to collections, sue patients for medical debt, garnish their wages, or refuse patients with debt nonemergency care–if they have “made reasonable efforts” to determine whether someone is eligible for financial assistance before doing so. However, there are many cases in which hospitals take these actions against low-income patients who should have received assistance. Congress should disallow these actions entirely for nonprofit hospitals or issue fines to hospitals who are found to have taken these actions against patients who should have qualified for financial assistance. At the very least, they could require hospitals to report on their IRS 990 the number of patients they’ve taken extraordinary collection actions against in the past year.
6. CEO PAY LIMITATIONS: Some nonprofit hospital CEOs make tens of millions each year, despite spending little on community benefits. While capping CEO pay outright—as some have proposed—would be most simple, the political feasibility is low. However, policymakers could place additional requirements on hospitals that pay their CEOs an “excessive” amount, such as halting all extraordinary debt collection actions or requiring a living wage for all employees.

This is just a sample of the many ideas that health policy experts and community health advocates have proposed to make the community benefit standard more meaningful, reduce medical debt, and attend to community health needs. For policymakers worried about small hospitals being able to comply, critical access hospitals could be excluded, or policies could be targeted specifically at large nonprofit hospitals or systems.

Whichever route policymakers decide to take—through transparency, regulation, or all of the above—urgent action on this issue is needed for the physical and financial health of our communities.

The post Six ways Congress could improve the hospital community benefit standard appeared first on Lown Institute.

How often are these procedures happening, and where? How much are we wasting on these low-value services? And what can we do to prevent unnecessary care?

Join us Tuesday, October 31 as we discuss the impact of unnecessary stents with leading health experts and policymakers.

Meet the panelists

David L. Brown, MD

David L. Brown, MD is a general cardiologist and Clinical Professor of Medicine in the Division of Cardiovascular Medicine at Keck Medicine of USC. Dr. Brown received his undergraduate degree from the University of Texas and his medical degree at Baylor College of Medicine where he also trained in internal medicine and served as a chief medical resident. He trained in cardiology and hematology at University of California, San Francisco and interventional cardiology at the Cleveland Clinic. During his career he has practiced and taught interventional cardiology, critical care cardiology, consultative cardiology, and outpatient cardiology. He has published more than 300 abstracts, manuscripts and book chapters. His work has been cited more than 8500 times resulting in an h-index of 37. His primary research focus has been on outcomes research in cardiovascular disease with most of his research projects attempting to fill gaps in the knowledge base that come to light during direct patient care. He currently serves on the editorial board of JAMA Internal Medicine. 

Thomas Power, MD, MBA, FACC, MRCPI

Thomas Power is the Senior Medical Director of Cardiology and Sleep Programs at Carelon Medical Benefits Management and is responsible for the clinical components of those programs. Before coming to Carelon MBM, Dr. Power had three years of experience in cardiac imaging utilization management. He attended medical school at the University of Dublin (Trinity College) and completed residency and fellowship in cardiovascular diseases at Allegheny General Hospital in Pittsburgh, Pennsylvania. 

Dr. Power is board certified in cardiovascular diseases and is a Fellow of the American College of Cardiology (FACC). In addition, he holds a certificate from the Certification Council for Nuclear Cardiology, and he is a Professional of the Academy of Healthcare Management. He has been the recipient of several awards for excellence in clinical teaching and a research grant from the American Heart Association (AHA).

Betty Rambur, PhD, RN, FAAN

Betty Rambur, PhD, RN, FAAN is the Routhier Endowed Chair for Practice, Professor of Nursing, and Interim Dean of the College of Nursing at the University of Rhode Island.  She serves on the state’s Cost Trends Steering Committee, the Technical Advisory Panel for Reimagining Nursing Initiative “Reducing Barriers to Value-based Care Payments in NP-led Primary Care,” and as a member of the Medicare Payment Advisory Commission (MEDPAC).

Vikas Saini, MD

Vikas Saini, MD, president of the Lown Institute, is a clinical cardiologist trained by Dr. Bernard Lown at Harvard. He also serves as co-chair of the Right Care Alliance, a grassroots network of clinicians, patient activists, and community leaders organizing to put patients, not profits, at the heart of health care. Dr. Saini is an expert on the optimal medical management of cardiologic conditions, medical overuse, hospital performance and evaluation, and health equity. He has spoken and presented research at professional meetings around the world, and has been quoted in numerous print media, radio, and television.

The post REGISTER: How unnecessary stents harm patients and waste billions of dollars appeared first on Lown Institute.

Fee-for-service vs value-based care

In most states, the dominant payment model for healthcare is fee-for-service, in which providers get paid for each service they do. Hospitals and doctors therefore have an incentive to do more tests and procedures, even when they don’t make patients healthier. At the same time, there is little incentive to take on health-related social needs and preventive care that can keep patients out of the hospital in the first place.

The goal of the AHEAD model is to turn these incentives on their head (sorry!). Hospitals in participating states will receive a “global budget” — essentially an annual salary — that takes into account their previous Medicare and Medicaid payments, the populations they serve, and other factors. So when hospitals avoid unnecessary care and reduce preventable hospitalizations by addressing social needs, they get to keep those savings.

AHEAD builds on the success of previous global budget models. In Maryland, they have had global budgeting for hospital inpatient care since 2014, which has led to significant Medicare cost savings and reductions in avoidable readmissions. In Vermont, most hospitals participate in a voluntary accountable care organization model to reduce overuse and better coordinate care. And many rural hospitals in Pennsylvania received fixed global budgets through a CMS pilot program, which gave them financial stability during COVID-19.

The AHEAD model takes these existing models much further, which could result in transformative change for participating states. For one, AHEAD is a ten-year program, so states and hospitals will have the time to invest in primary care and social needs and actually see savings during the program. AHEAD is also comprehensive, including Medicare, Medicaid, and private payers (states are responsible for incentivizing or requiring participation from private insurers); including a voluntary fixed payment model for primary care providers as well as hospitals; and including outpatient as well as inpatient payments in the global budgets. Lastly, AHEAD holds providers accountable for achieving not only quality goals but equity goals as well. Participating states must develop a “health equity plan” for improving population health and reducing disparities.

Challenges ahead

The AHEAD program is promising, but this ambitious plan is going to face many challenges throughout planning and implementation. In a recent piece in Health Affairs, Troyen Brennan, adjunct professor of public health at the Harvard T.H. Chan School of Public Health, identifies potential roadblocks and unanswered questions for CMS.

For example, AHEAD goes further than Maryland’s global budget model by including outpatient care as well as inpatient care. Will hospitals join in the model without this “lifeline of fee-for-service support”? In Maryland’s model, Medicare pays hospitals much higher rates to make up for lower rates from private insurers. Is CMS prepared to offer these much higher rates to hospitals in more states?

Brennan also questions whether hospitals that are financially successful in the current fee-for-service system will take a gamble on global budgets when they might lose money. He writes:

“As a hospital executive, your key strategy, perhaps your only strategy, has been to increase in size, gain leverage with insurers, bargain for better fee-for-service rates, and do more procedures.  Working under a prospective budget blocks that strategy.  So one might ask about Pennsylvania, would centers like UPMC in the west, and Jefferson or University of Pennsylvania in the East, be ready to abandon the fee-for-service revenue generation program for one based solely on value-based care that improves population management. I wish that were true, but it seems doubtful.”

Ever since Maryland launched their global budgeting model, health policy experts have been hoping that other states will follow their lead. The AHEAD program presents an opportunity for more states to dive into the deep end of value-based care, with CMS holding their hand for support. Let’s hope states will take the plunge.

The post Looking AHEAD: CMS’ new global budget model for states appeared first on Lown Institute.

For these drugs, Medicare will set a “maximum fair price” based on several factors, including manufacturer costs of research, development, and distribution; comparative drug effectiveness and therapeutic alternatives; and how much the government supported research and development related to the drug.

The first ten drugs for potential negotiation were selected last month (see below). In total, these drugs cost Medicare about $50 billion last year, and accounted for $3.4 billion in out of pocket costs for Medicare recipients.

If some of these names look familiar, it’s because these brand name drugs have been in the news over the past few years. Here’s a rundown of our previous blogs related to these drugs…

Blood thinner boondoggle

Eliquis and Xarelto are blood thinners that cost Medicare a combined $22.5 billion last year, according to CMS. This high cost to Medicare may be related to the companies’ pricing strategy. The Lown Institute gave the manufacturers of these drugs a “dishonorable mention” in the 2022 Shkreli Awards for allegedly raising their prices in concert. From the blog:

Anticoagulant drugs Eliquis and Xarelto were revolutionary when they hit the market in 2011 because they were safer than the previous standard of care. But as their popularity has grown over the past decade, so has their price, reported advocacy group Patients for Affordable Drugs. PAD’s 2022 report alleges that drug companies Pfizer and Johnson & Johnson have increased the prices of their drugs in lockstep, a practice known as “shadow pricing.” The prices for both of these drugs have more than doubled since 2011, and Eliquis and Xarelto are now the #1 and #3 most costly Medicare drugs, respectively.

25x price increases

A 2021 report from the Congressional Committee on Oversight and Reform called out Enbrel (a drug for rheumatoid arthritis) for increasing their price more than 25 times since its initial market launch.

The report, which utilized 1.5 million pages of internal documents and took three years to compile, found that pharma companies target the US for price increases because Medicare can’t negotiate, even as they keep prices flat or lowering them in the rest of the world. The report examined 12 drug prices and found that ten had increased in price 20 times of more since they came to market. Amgen in particular increased the price of Enbrel more than 25 times, for a total price increase of 486% since market launch. Amgen made more than $5 billion in revenue from this drug in 2019.

Another drug on the Medicare price negotiation list was also investigated in the congressional report. Imbruvica, a drug for blood cancers, was one of the few drugs that didn’t have 20 or more price increases– but they did increase the price more than five times for an 82% overall price increase. The drug made AbbVie $3.83 billion in revenue in 2019.

Drug ads that scare

Here’s a throwback from the Lown Institute blog archives. We included Entresto, a heart failure drug, and Eliquis in our Halloween series on scary pharma advertisements. Here’s an excerpt from our 2017 blog about the ominous “Keep it Pumping” ad campaign from Entresto manufacturer Novartis:

Novartis’ 2016 ad campaign called “Keep it Pumping” featured a TV advertisement warning that “with heart failure, danger is always on the rise.” As a man ignores the water rising around him, a voice-over says, “About 50% of people die within five years of being diagnosed [with heart failure].” Although the Novartis drug Entresto wasn’t explicitly mentioned, viewers were told to “talk to their doctor about heart failure treatment options.” Many doctors and researchers, including the head researcher on an Entresto study, criticized the ad for fear-mongering.

How are stakeholders responding?

Several pharmaceutical manufacturers, including Merck, J&J, and AstraZeneca have filed lawsuits to try and block the price negotiation (Astellas recently dropped their suit). Trade groups like the pharmaceutical lobbying group PhRMA and the National Infusion Center Association are also suing.

Given that pharma companies stand to lose billions each year from price reductions to their blockbuster drugs, it’s not surprising that they’re pushing back. What’s more interesting is the lack of response from hospitals on the negotiations. Large hospital and medical organizations like the American Hospitals Association have not publicly commented, noted Bob Herman in Stat News. Why not? One would think that hospitals would want lower drugs prices, but hospitals can make a hefty profit by passing along drug price markups to insurers (particularly if they are getting a discount on the drugs). Herman also points out that hospitals might not want to endorse price negotiations for drugs if they could later be subject to price negotiations on reimbursements for medical services.

The fact that Medicare may be negotiating drug prices soon is a historic win for patients. A successful first round of negotiations could put America closer to where other countries stand on drug price affordability, so we’ll be following this issue as we get closer to implementation.

The post Medicare drug price negotiations: The first drug list is here! appeared first on Lown Institute.