A Surprise for Paramedic Responses

Leave a comment


After Katie Gurzi woke in the middle of the night with excruciating chest pains, paramedics rushed her to the hospital. That part went smoothly. Katie, 85, was pleased with the care she received and doctors determined she was not having a heart attack, just a spasm in her esophagus. 


But then, in January 2015, the city of La Habra, California sent her a $260 bill for “paramedic response” — after her insurers had already been billed for the November ambulance ride. That made Katie wonder.

It wasn’t just that she believed the city was trying to reach into her purse for money it couldn’t get from health insurers, it was that she was rebuffed nearly every step of the way as she contacted more than a dozen people from city bill collectors to her congressman. Some didn’t return her calls. Others refused to help. A few were just plain rude.

One city employee threatened to send her to collections, warning she wouldn’t ever be able to get a loan.

“I told her, ‘Honey, I’m 85. Do what you need to do… You can blacklist me all you want. I’ll be dead,” Katie said.

When she finally reached the La Habra mayor, Jim Gomez, he was nice enough but told her he didn’t have the authority to dismiss the fee.

“I thought, ‘you’re kind of a toothless mayor,’” she said.

Cases like Katie’s may become commonplace as more cities adopt 911 response fees, said Aileen Harper, executive director of Center for Health Care Rights, a government-funded nonprofit that helps Medicare beneficiaries.

Harper’s organization is helping Katie and three others with similar bills but she believes many more people have simply paid the bill or haven’t come forward.

The city of La Habra says the $260 fees are to help recoup expenses that aren’t sufficiently covered by insurers.

“It is a fee the city charges to offset some of the costs associated with emergency transports,” said Cindy Knapp, bureau manager for the city’s police department. “It is to offset general costs, not for a specific transport.”

Knapp said the money goes into the general fund but that she couldn’t answer exactly how it is spent.

Harper said the cities shouldn’t be billing people like Katie because the cities are already being paid by Medicare or other insurers.

It seems to me their underlying rationale is they don’t seem to be getting paid enough,” she said. “If that is the case, they need to take that up with Medicare and not move those costs to the beneficiaries.”

As in several cities around California, La Habra residents can avoid the fee by subscribing to a voluntary paramedic program, which charges an annual fee to cover emergency response. In La Habra, the fee for its FireMed program, as it is known, is $48 per year, up from $36 in 2009.

If they subscribe, Knapp said, they are protected from any out-of-pocket expenses related to the 911 transportation. The city bills the insurance company but accepts whatever is paid without charging the consumer for any unpaid balance, she said.

If they don’t subscribe, or they aren’t La Habra residents, Knapp said they have to pay $260 each time they are transported by an ambulance, in addition to what insurers cover.

Katie said she lives by some simple rules. Be honest. Treat people with respect. And when something isn’t right, speak up. True to her principles, she started a year-long campaign against the fee, keeping track of every conversation with a handwritten note. She became so frustrated at one point that she accused the city’s billing department of “senior harassment.”

When she contacted her congressman, Rep. Alan Lowenthal (D-Calif.), he responded that the matter was out of his jurisdiction but that he would forward the material to the city manager.

She also reached out to the Centers for Medicare & Medicaid Services, which oversees Medicare, and the Council on Aging in Orange County before she achieved some success with the Center for Health Care Rights. 

A 72-year-old man in Anaheim, California who had a stroke was billed $350 by the city for the 911 response, even though Medicare covered the ambulance ride, according to the center.

In response to an e-mail from the health care rights center, Medicare officials wrote back late last year saying the issue was forwarded to “program integrity” investigators.

Finally, Katie did receive some good news. La Habra officials told her that based on her low income, she could apply for a hardship exemption to get the fee waived. But that, Katie said, wouldn’t be honest. After all, she has enough money to pay the bill.

“This isn’t a hardship,” she said. “It’s inappropriate billing.”

So Katie is continuing to fight her bill, which the collections agency told her is now $271.47. She remains miffed that the city of La Habra lacked both “grace and compassion.”

“I think seniors deserve a little better,” she said.

Drug Makers Sidestep Price Barriers

Leave a comment

Couple Medicare Surprises

The pain reliever Duexis is a combination of two older drugs, the generic equivalents of Motrin and Pepcid. If prescribed separately, the two drugs purchased together would cost no more than $20-$40 per month. By contrast, Duexis which contains both older drugs in a single pill, costs about $1500 per month.

Needless to say, many insurers do not want to pay for Duexis. Yet sales of the drug are growing rapidly, in large part because its manufacturer, Horizon Pharma, who has figured out a way to circumvent efforts of insurers and pharmacists to switch patients to the generic components, or even to the over-the-counter versions.

It is called “Prescriptions Made Easy.” Instead of sending their patients to the drugstore with a prescription, doctors are urged by Horizon to submit prescriptions directly to a mail-order specialty pharmacy affiliated with the drug company. The pharmacy mails the drug to the patient and deals with the insurance companies, relieving the doctor of the reimbursement hassle that might otherwise discourage them from prescribing such an expensive drug.

Horizon is not alone. Use of specialty pharmacies seems to have become a new way of trying to keep the health system paying for high-priced drugs. Valeant Pharmaceuticals International, which has attracted government and media scrutiny for its huge price increases, does much the same thing for its dermatology products with a specialty pharmacy called Philidor Rx Services.

“They are all trying to get rid of the sticker shock of using their drugs,” said Dr. Kenneth Beer, a dermatologist in West Palm Beach, Fla. “They become the drugstore now,” he said.

He said Valeant’s program, which he had used, buffered physicians from insurers and complaints from their patients about high prices.

“It lowers one barrier to using their products,” he said.

Valeant revealed in October 2015 that it had received subpoenas from federal prosecutors in Manhattan and Massachusetts seeking information about its financial assistance programs for patients, pricing decisions and the distribution of its products. It is not clear if the probes are related in any way to Valeant’s relationship with Philidor.

Philidor, based in Hatboro, Pa., reveals little about itself on its website. It was denied a license in California in 2014 because, the state said, its application had not truthfully identified its owners and financial officers. Phone calls asking to speak to Philidor executives were not returned.

Valeant had said little about Philidor until J. Michael Pearson, Valeant’s chief executive, revealed the company’s quarterly earnings that Valeant had purchased an option to acquire Philidor in late 2015. He said that Valeant consolidated Philidor’s results in its own financial reports.

Mr. Pearson also said that the pricing environment had changed, and that the industry was “being aggressively sort of attacked for past pricing actions.” He said that Valeant was considering divesting the division selling neurological drugs where, he said, the biggest price increases had occurred.

He also said that in the future, price increases would be “more modest,” probably not more than 10 percent a year. Last year, he said, increases in list prices averaged 36 percent for the branded drugs sold by Valeant in the United States.

Specialty pharmacies are most known for providing patient assistance with complex drugs, many of them requiring refrigeration and injections for serious diseases and rare genetic disorders. But the drugs dispensed through the specialty pharmacies used by Horizon and Valeant are for common ailments like arthritis pain, acne and toenail fungus.

The programs do offer advantages to patients. The drugs are delivered quickly and co-pays are subsidized. Horizon said 98 percent of patients getting Duexis have co-payments of no more than $10, less than the co-pays would be for generics in many cases.

Moreover, if the insurer refuses to pay, the patient already has the drug and the manufacturer absorbs the cost. A spokesman for Horizon said that happened for a large number of Duexis prescriptions. Still, Horizon and Valeant apparently come out ahead because enough insurers do pay.

The practice is legal,  providing that co-pay assistance is not used for patients covered by Medicare or other federal programs. For federal programs, co-pay assistance is considered an illegal inducement to get someone to use a drug. Both Horizon and Valeant say they confine their programs to commercially insured patients.

In August 2015, one analyst asked the company to discuss the positive points of the Prescriptions Made Easy program.

“I think simply, the positive is we drove over $100 million in net revenue in the second quarter and rapidly increased prescriptions,” Timothy P. Walbert, the chief executive, replied. He then said the program was “doing the right thing for patients.”

Duexis is a combination of ibuprofen, an anti-inflammatory drug, and famotidine, the ingredient in Pepcid, which is supposed to prevent the serious and even lethal gastrointestinal problems that can result from chronic use of ibuprofen or similar drugs. Both drugs are available as generics, and over-the-counter. Horizon says that by combining the two drugs into one pill, taken three times a day, makes it more likely that patients will get the benefit of the stomach protection.

Horizon has increased the price of Duexis about tenfold since the drug was introduced in late 2011. In 2013, it acquired the main competitor to Duexis, a drug called Vimovo, which is a combination of the pain reliever naproxen and the stomach protector Nexium. Horizon immediately raised the price of Vimovo about 600 percent, and has roughly doubled it again since then, so both drugs now cost about the same amount per month.

It has become common in the last several years for pharmaceutical companies to offer co-payment assistance to make sure patients are not deterred from using a drug by out-of-pocket costs. Once the patient uses the drug, the pharmaceutical company is paid by the insurance company. Insurers say co-pay assistance circumvents their efforts to encourage the use of cheaper drugs by setting lower co-pays for them, thereby driving up overall medical spending.

Starting this year, the nation’s two largest pharmacy benefit managers, Express Scripts and CVS Health, said they would not pay for Duexis and Vimovo.

Despite that, Horizon said in its regulatory filing for the second quarter, “with the successful adoption of our Prescriptions Made Easy program by physicians,” sales volumes for Duexis increased by 72 percent in the first half of this year compared to the first half of 2014. In dollars, sales of Duexis rose 131 percent in the first half to $73.1 million. In the second quarter, 71 percent of Duexis prescriptions and 61 percent of those for Vimovo went through the Prescriptions Made Easy program.

Horizon targeted physicians whose patients had strong commercial coverage. “Patients whose insurance covers Horizon’s medications serve to support co-pay buy-downs for patients with less generous coverage.

Horizon said in its regulatory filing that prescriptions filled through the program “are less likely to be subject to the efforts of traditional pharmacies to switch a physician’s intended prescription of our products to a generic or over-the-counter brand.” It said that if it were unable to get physicians to direct prescriptions to Prescriptions Made Easy, “We may experience a significant decline in Duexis and Vimovo prescriptions as a result of formulary exclusions.”

This article is for informational purposes only; no personal advice or recommendation is intended.


Medicare Advantage Plan Audits

Leave a comment

Billing and Patient

Negligent, lax auditing has given overcharging encouragement to Medicare Part C advantage health insurance plans.

With the mounting evidence that federal officials have been overpaying some Medicare Part C advantage health insurance plans by tens of millions of dollars a year, the government revisited efforts to reclaim as much money as possible.

Records of the Centers for Medicare and Medicaid Services reveals that officials there as early as 2008 identified a group of privately run Medicare Part C Advantage health insurance plans they suspected of ripping off the government.

CMS officials chose to do only 30 in-depth financial audits to recover overpayments each year, even though the records make clear they could complete many more.

In February 2012, CMS announced it would do just that — which meant about 5 percent of the roughly 600 Medicare Advantage contracts in force would be audited in a year.

The agency expected to complete the first batch of the Medicare Advantage audits, which covered 2011 spending, and to “recoup overpayments” in early 2014, according to another document. But it has yet to do so. A spokesman said the Medicare agency “anticipates completing” the audits in 2016.

The CMS records were recently released to the Center for Public Integrity through a court order in a Freedom of Information Act lawsuit.

Since 2004, the government has paid the health plans using a risk score it calculates for each patient based on diseases reported by the health plans. Medicare expects to pay higher rates for sicker people and less for those in good health. But overspending tied to fast-rising risk scores has cost taxpayers billions of dollars in recent years, as the Center for Public Integrity reported in a series of articles published in 2014, leading to widespread suspicions that some risk scores are being purposefully inflated.

Many of the records released by CMS are heavily redacted, with dates and the names of their authors sometimes missing. More than 1,400 pages have been “withheld in their entirety” by CMS, including names of the health plans and how much they were overpaid.

 The government’s relaxed pace in chasing down overpayments — and the secrecy surrounding the audit results — brought a sharp rebuke from Senate Judiciary Committee Chairman Charles Grassley.

“The agencies are responsible for getting the payments right in the first place and pursuing full refunds of all over-payments for the taxpayers,” the Iowa Republican said in a statement.

“The agencies also have an obligation to be as transparent as possible in the public interest about a taxpayer-funded program,” Grassley added.

The CMS records make clear that Medicare Advantage overpayments have piled up mainly because the complex formula relying on risk scores that is used to pay the plans has few safeguards to discourage abuse. One memo describes it as an “honor system.”

A CMS spokesman didn’t directly address written questions posed by the Center for Public Integrity about the history of the audits. But the agency offered a statement that read in part: “CMS takes seriously program integrity and payment accuracy in Medicare Advantage, and is taking steps to protect taxpayers, Medicare beneficiaries, and the Medicare program.”

The CMS records include an earlier confidential audit of 2005 payments to 22 Medicare Advantage health plans; it showed that auditors couldn’t confirm that 31 percent of the patients had the diseases Medicare was paying plans to treat.

Some plans were much worse than others. The average error rate for 17 of the 22 plans was more than 10 percent above the norm, with some even higher. The confidential 2005 audit, conducted by consulting firm BearingPoint, projected 2005 losses at $4.2 billion from what it termed a “substantial overpayment” to Medicare Advantage plans.

The audits are called RADV, for Risk Adjustment Data Validation. Auditors review medical records of a sample of 201 patients to verify they have the diseases their health plan is being paid to treat.

CMS officials also appeared to have doubts about the legality of RADV because it lacked a formal appeals process. The health plans were not penalized until February 2012 — even though officials knew payment errors were wasting billions of tax dollars.

Audits for 2007, for instance, dragged on for more than five years before ending with a whimper. CMS had anticipated collecting from $500 million to $800 million from 37 health plans audited that year.

That never happened. Instead, CMS collected less than $14 million, and some health plans, including UnitedHealth Care, have spent years appealing to get at least some of that money recovered.

The Centers for Medicare and Medicaid Services, which is part of the Department of Health and Human Services, spends about $17 million a year conducting RADV audits and estimating payment errors. So far, these efforts have returned about $15 million to the agency.

By contrast, other medical fraud and abuse efforts are said to more than pay for themselves. HHS announced in March 2015 that fraud recovery efforts by the department returned $7.70 for every dollar spent.

CMS officials have said the threat of being audited, and a provision of the Affordable Care Act requiring prompt return of any excess payments, have led Medicare Advantage insurance plans to voluntarily send back more than $1 billion to the Treasury**, mostly since 2010.

The CMS spokesman said audits of 30 Medicare Advantage insurance company contracts and their spending from 2012 have begun and that plans were chosen based on how aggressively they report diagnosis codes to CMS for payment.

But Steve Ellis, vice president of the budget watchdog group Taxpayers for Common Sense, said it was troubling that the audits have not delivered better results. “You really have to enforce audits and act on them and not let the bad actors off the hook,” he said.

**Please note:  When millions of dollars are paid to settle a Medicare or Medicaid false claim allegation, where is the reclaimed money allocated? Some of the fines, mostly paid by health care companies, are rewarded to whistleblowers…close to $2.5 billion from 2009 to 2014. Another portion goes to the Crime Victims Fund and other funding goes to the Healthcare Fraud and Abuse Control Program.  So, what happens to the remaining Medicare fraud reclaimed tax dollars? Well, the remainder of recaptured fraud dollars is placed in the Department of Justice “slush fund” with a present balance of $9 billion. And, is used for what the department considers important matters such as terrorism. To reiterate, a large portion of the money is not returned to Medicare or Medicaid for replacement of illegal payments to fraudsters.