Sep 4, 2019

Axios Vitals

By Caitlin Owens
Caitlin Owens

Good morning. Today's word count is 699 words, or <3 minutes.

1 big thing: Hospital lawsuits unearth "cracks in our system"
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Data: Peterson-Kaiser Health System Tracker; Chart: Axios Visuals

Low-income patients often face steeper out-of-pocket costs — and that means they're also more likely to be sued by hospitals when they can't pay their bills.

Driving the news: The New York Times yesterday reported on Carlsbad Medical Center's prolific use of lawsuits to collect its patients' medical debts, which often leads to wage garnishment or property liens.

  • The hospital is the only one in town and has filed nearly 3,000 lawsuits against patients since 2015, NYT found.
  • Its practices were first profiled in an upcoming book by Marty Makary, a doctor at Johns Hopkins, titled "The Price We Pay."
  • "The health insurance deductibles so often discussed in our health policy circles may seem inconsequential to wealthy people and to decision makers in the policy world, but they are crushing many Americans," Makary writes.

Not only are patients facing more out-of-pocket spending than ever before, but hospitals — including Carlsbad Medical Center — often greatly inflate their prices compared to Medicare rates.

  • Some of the hospitals suing patients — like Memphis' Methodist Le Bonheur Healthcare — are nonprofits.
  • "Hospitals want to get all the perks of their nonprofit status…but really rake patients through the coals with their billing practices," Yale's Zack Cooper told me.

The bottom line: "There's a space for folks who are vulnerable to get caught in the cracks of our system ... [such as] higher cost sharing and out-of-pocket costs, skimpier health insurance plans, and more aggressive collection practices by hospitals and providers," Cooper said.

2. Purdue preparing for "free-fall" bankruptcy

Purdue Pharma, the maker of OxyContin, is preparing to file for bankruptcy by the end of the month if it doesn't reach a settlement with the communities suing it over its role in the opioid epidemic, Reuters reports.

Why it matters: If Purdue claims bankruptcy without a payment agreement, the plaintiffs will likely receive less money than they would under the settlement Purdue pitched last month.

  • The company offered a $10–12 billion payout as part of a negotiated bankruptcy case, but some states are unhappy with the offer.

What we're watching: The judge overseeing the massive consolidated case wants 35 state attorneys general to agree to a deal, which hasn't happened yet.

  • Some attorneys general complain that under Purdue's proposal, the Sackler family, which controls the company, would pay too little.
3. The rise of private equity-backed physicians

Private equity's reach into the health care system keeps expanding, Modern Healthcare's Harris Meyer reports.

  • Private equity firms are increasingly investing in orthopedists, gastroenterologists and urologists. Investments in dermatology, ophthalmology and dentistry are even further along.
  • The firms are targeting specialties that can collect large revenues from ambulatory surgery centers, imaging, lab services and other ancillary services.

Between the lines: These deals raise obvious questions about whether they'll encourage higher health costs, along with concerns about increased pressure on doctors to provide unnecessary care.

Yes, but: Doctors see the deals as an alternative to being acquired by hospital systems, and advocates say that the private equity firms can help doctors' practices become more efficient and deliver higher-quality care.

Go deeper:

4. Peering into the hospital-insurer deal process

As Congress looks to reform contracts between hospitals and health insurers, it's worth remembering that most deals get ironed out well in advance, Axios' Bob Herman writes

What they're saying: Analysts with the investment firm Jefferies recently met with executives of HCA Healthcare and heard the hospital chain locked up contractual payment rates from insurers for "75% and 50% of its 2020 and 2021 business, respectively."

  • That's pretty standard, as some insurers and hospitals sign multiyear deals.
  • An HCA spokesperson confirmed the numbers were in the ballpark, and price increases are in line with "normal inflationary trends," per the company's latest earnings call.

The intrigue: HCA told Jefferies there was no major change in insurers' "aggressiveness" during negotiations, which can result in one or both sides going public with attacks if talks go sour.

  • However, patients want their insurers to be aggressive in rate talks so they pay lower premiums — but that's not always the case.
5. The stakes of the ACA insurer tax

Health insurance companies will have to pay $15.5 billion next year if the Affordable Care Act's tax on insurers resumes as planned, the IRS said in a notice on Tuesday.

The big picture: Insurers hate the tax because it eats into profits, and companies pass along the costs to consumers through higher premiums. The industry has a few months left to persuade lawmakers to delay or kill the tax, Bob writes.

Caitlin Owens