Texas Tax-Exempt Hospitals & Charity Care: Surprisingly Progressive

In 1985 -- one year before Congress added EMTALA to Medicare's Conditions of Participation -- Texas became the first state in the country to enact a prohibition against patient-dumping, the practice of for-profit hospitals to transfer unfunded emergency patients to local public hospitals. See Tex. Health & Safety Code § 311.022. When a patient needs emergency medical treatment, the consequences of transfer-related delays could be dire, including death. See this 1985 N.Y. Times story:

(click image to enlarge)

This isn't the only progressive healthcare law in Texas. For decades now, we have also required nonprofit hospitals to provide a certain minimum amount of charity care, both to maintain its nonprofit status (Tex. Health & Safety Code, ch. 311(D)) and to qualify for tax-exempt status (Tex. Tax Code § 11.1801). If a nonprofit hospital meets any one of three measures of required charity care, it gets its exemption:

(A)  charity care and government-sponsored indigent health care (e.g., Medicaid] are provided at a level which is reasonable in relation to the community needs, as determined through the community needs assessment, the available resources of the hospital or hospital system, and the tax-exempt benefits received by the hospital or hospital system; 

(B)  charity care and government-sponsored indigent health care are provided in an amount equal to at least 100 percent of the hospital's or hospital system's tax-exempt benefits, excluding federal income tax;  or 

(C)  charity care and community benefits are provided in a combined amount equal to at least five percent of the hospital's or hospital system's net patient revenue, provided that charity care and government-sponsored indigent health care are provided in an amount equal to at least four percent of net patient revenue. 

The statutes aren't perfect. They are written so that, with enough uncompensated care provided to Medicaid patients, a hospital (in theory) could meet any of the three standards with no charity care whatsoever. In addition,  with careful planning most nonprofit community hospitals can meet one of these standards, and both statutes provide for fairly generous exceptions to the three measures. For example, a recent study concluded that nonprofit hospitals in Texas provide charity care at a level approximately equal to 60% of the value of their tax exemption. Part of the problem is the extremely limited enforcement procedures and budget. And the root of the entire problem is that very few health systems have the level of excess income to do more than put a dent in their community's need for charity care. Medicaid meets some of that need, but most state Medicaid programs are underfunded.

Tax-Exempt Hospitals & Charity Care: A Mixed Bag

Health Affairs just published (and re-published) a few articles on this topic. Their titles pretty much tell the whole story (but here are links so you can read them yourself):

• US Nonprofit Hospitals Have Widely Varying Criteria To Decide Who Qualifies For Free And Discounted Charity Care, Luke Messac et al. (current issue)
• Nonprofit Hospitals: Profits And Cash Reserves Grow, Charity Care Does Not, Derek Jenkins and Vivian Ho (June 2023)
• Analysis Suggests Government And Nonprofit Hospitals’ Charity Care Is Not Aligned With Their Favorable Tax Treatment, Ge Bai et al. (April 2021)
• In California, Not-For-Profit Hospitals Spent More Operating Expenses On Charity Care Than For-Profit Hospitals Spent, Erica Valdovinos et al. (August 2015)

Although some commentators insist that the provision of charity care is a requirement for obtaining and maintaining federal tax-exempt status, I think that's a serious misreading of § 501(r) of the Internal Revenue Code, which was added to the Code by the Affordable Care Act in 2010. Yes, the Code now requires tax-exempt hospitals to formulate, adopt, and widely publicize a financial assistance policy ("FAP"). But the minimum requirements for the FAP merely include the following: "Eligibility criteria for financial assistance, and whether such assistance includes free or discounted care" (emphasis added). 

1. It is at technically correct that an FAP may not provide for free or discounted care. A wise hospital administrator should probably avoid this option, but it is available. Charity care is still an audit item, even if it is not required, and it's an important part of a hospital's connection to the community it serves.
2. The FAP's eligibility criteria my be written in such a manner that little or no financial assistance is actually provided. Failure to meet the community need for health care requires an explanation, but it does not appear to be a basis for the revocation of tax-exempt status.
3. Discounted care alone would also satisfy the requirements of the FAP. So, presumably, would be a low- or no-interest loan program. Again, § 501(r) does not require the provision of any level of charity care; prudence does, but not the IRC. 
4. The IRS's 63-page final rule to implement the ACA's Community Health Needs Assessment mention charity care in exactly one paragraph of the rule's preamble, and it's in the discussion of the administrative burden on hospitals that have to implement the final rule's requirements. 

None of this is to say that the governing legal standard for federal tax-exempt status ("community benefit") doesn't include charity care. It does; it's just not required. The requisite level of "community benefit" can be satisfied without it, as long as other forms of community benefit (education, training, research, etc.) are deemed to be adequate. 

Many if not most communities in this country have some level of need for charity care. Section 501(r) requires that the level of need be documented along with an exempt hospital's efforts to meet that need. Unfortunately, reporting does not mean the same as providing. Maybe someday it will, but not yet.

Washington Physicians Seek Supreme Court Injunction, Claiming 1st Amendment Right to Spread Vax Misinformation

Three physicians licensed in Washington State have disciplinary proceedings pending against them based upon their unfounded public statements about the PCR test for COVID-19 ("inaccurate"), the risk of injury or death from the COVID vaccine, the efficacy of ivermectin and hydroxychloroquine, and the transmissibility of COVID-19 from children.

The physicians have sued the state Attorney General (who represents the Washington Medical Commission) and the chair of the Commission in federal district court, claiming the pending investigations violate their protect speech and due-process rights under the First, Fifth, and Fourteenth Amendments. Their suit is joined by a nonphysician who claims a constitutional right to read and listen to the physicians' misinformation.

District Judge Thomas O. Rice denied the plaintiffs' request for an injunction against the state's enforcement proceedings and granted the state's motion to dismiss the suit for failure to state a claim upon which relief could be granted (Fed. R. Civ. P. 12(b)(6)). See Stockton et al v. Ferguson et al, No. 2:2024cv00071 (E.D. Wash., May 22 2024). The judge ruled that, because the state had not (yet) taken any action against the physician plaintiffs, "Plaintiffs have not shown that they are impeded from otherwise accessing this information, or that Drs. Eggleston and Siler’s speech has been or will likely be chilled by the Commission’s actions." Because the plaintiffs they had not (yet) suffered and were not likely to suffer any harm to a claimed constitutional right, their case was not ripe for judicial consideration. More than that, the judge found  plaintiffs' challenge to the Commission's ability to be completely wrong-headed. The judge ruled that "medical board disciplinary proceedings clearly implicate an important state interest in ensuring adequate healthcare."

On appeal to the Ninth Circuit Court of Appeals, plaintiffs asked for an injunction against the state's enforcement proceedings while their appeal was pending. The Court denied their motion, and on Monday the plaintiffs (represented by, among others, Robert F. Kennedy Jr.) filed an application with the Circuit Justice for the Ninth Circuit, Justice Elena Kagan, against seeking an injunction against the state. Significantly, they asked Justice Kagan not to decide their application but instead to circulate it to the entire court. Stockton et al. v. Ferguson et al., No. 24a440 (filed Oct. 30, 2024), Application at 1.

The plaintiffs' position is clear: "Public speech does not lose its constitutional protection from government action simply because it is uttered by a healthcare professional, even if it is at odds with medical orthodoxy." Id. at 4. The district court's opinion, however, has the better argument:

[T]he Commission may fully regulate professional conduct of physicians licensed to practice in this state.  States may regulate professional conduct, even though that conduct incidentally involves speech.Tingley v. Ferguson, 47 F.4th 1055, 1074 (9th Cir. 2022).  “[C]onduct may indicate unfitness to practice medicine if it raises reasonable concerns that the individual may abuse the status of being a physician in such a way as to harm members of the public, or if it lowers the standing of the medical profession in the public's eyes.”  Haley v. Med. Disciplinary Bd., 117 Wash. 2d 720, 733 (1991).  The Commission’s regulation of medical professionals does not violate the First Amendment.  Accordingly, Plaintiffs’ First Amendment facial challenges or as applied challenges to the Commission’s authority must fail.

COVID-19 misinformation constitutes a clear and present threat to public health and safety. You can read more about it here:

• U.S. Surgeon General: "Health Misinformation" (“Health misinformation is a serious threat to public health. It can cause confusion, sow mistrust, harm people’s health, and undermine public health efforts.”)
• Mayo Clinic, "Debunking COVID-19 myths" (comprehensive collection of myths and why they are wrong)
• Frank Otto, Penn Medicine News, "COVID-19 Misinformation: The Flip Side of ‘Knowledge is Power’" ("An early study estimated that one rumor, which had to do with drinking highly-concentrated alcohol-based cleaning products as a 'cure' for COVID-19, led to more than 5,800 people being hospitalized (with 800 dying) from January through March of 2020 alone")

More later. Meanwhile, Kelsey Reichmann at the Courthouse News Service is doing a good job of following the Stockton case and explaining what's going on.

SCOTUS Oral Argument Today

Just a quick addendum to my Friday listing of healthcare-related cases on the current SCOTUS docket. This morning the Justices heard oral argument in Advocate Christ Medical Center v. Becerra, No. 23-715. The question presented (and accepted by the Court as defining the scope of their review) is a dry-sounding issue of statutory interpretation: "Does the phrase 'entitled . . . to benefits,' used twice in the same sentence of the Medicare Act, mean the same thing for Medicare part A and SSI, such that it includes all who meet basic program-eligibility criteria, whether or not benefits are actually received."

Is this technical issue worth more than a minute of our time? Well, yes, it is. I point you to an excellent article in Axios by Maya Goldman. A few key points from her piece:

• Over 200 hospitals joined this case as petitioners. This is probably not a record number of parites joining together to seek review, but it's still a lot!
• Why does issue mean so much to so many hospitals? Because an answer to the question that favors the hospitals will increase their Disproportionate Share payments -- a reimbursement bump to reflect the higher average cost of treating low-income patients -- by about $1.5 billion.

As Sen. Everett Dirksen (probably never) famously said (though it is often misattributed to him*): "A billion here, a billion there, and pretty soon you're talking about real money." Enough to get the attention of nine Justices of the Supreme Court for an hour on Election Day. Oral argument audio should be posted later today.

_________________________________________________

* https://en.wikiquote.org/wiki/Everett_Dirksen. The New Yale Book of Quotations (2021) cites to a quotation from the Jan. 19, 1938 New York Times "Topics of the Times" column: "Well, now, about this new budget. It's a billion here and a billion there, and by and by it begins to mount up into money."

SCOTUS Watch Update: Oral Arguments for the Coming Week

The Court will hear arguments in two important health-law-related case this week:

• Monday, 12/2: E-cigarettes and the FDA.
  The Court will consider "[w]hether the court of appeals erred in setting aside the Food and Drug Administration’s orders denying respondents’ applications for authorization to market new e-cigarette products as arbitrary and capricious." Food and Drug Administration v. Wages and White Lion Investments, LLC, No. 23-1038, reviewing the en banc decision of the 5th Circuit Court of Appeals, which vacated the FDA's orders as arbitrary and capricious.  
  
  
• Wednesday, 12/4: Gender-affirming care for minors.
  The Court will consider "[w]hether Tennessee Senate Bill 1, which prohibits all medical treatments intended to allow 'a minor to identify with, or live as, a purported identity inconsistent with the minor’s sex' or to treat 'purported discomfort or distress from a discordance between the minor’s sex and asserted identity,' violates the equal protection clause of the 14th Amendment." United States v. Skrmetti, No. 23-477, reviewing the decision of the 6th Circuit Court of Appeals, which reversed the preliminary injunctions issued by the district courts and remanded them for further proceedings.

Reprise: Does EMTALA Pre-Empt Restrictive State Abortion Laws?

Back in June I discussed the applicability of the federal Emergency Medical Treatment and Labor Act to pregnant persons who come to hospital emergency departments with pregnancy-related emergency conditions for whom an abortion is the accepted standard of emergency medical treatment. Common sense should tell us that a federal statute that requires that emergency conditions be stabilized supersede state laws that provide otherwise. A passing familiarity with the Constitution's Supremacy Clause confirms common sense. And -- as stated in an article in the Journal of the American Medical Association ("JAMA") -- "[a contrary] argument [is] particularly absurd in that it turns the rule of law on its head—ignoring more than 200 years of well-settled legal principles that date back to the nation’s founding—namely, that federal law preempts contrary state law.

As this foundational constitutional principle applies to emergency abortion cases, the article observes that "[s]ince the George W. Bush administration, the Department of Health and Human Services (HHS) has interpreted EMTALA to require pregnancy termination if it represents the stabilizing care necessary to save the pregnant patient’s life or prevent grave harm to health."

The federal district court in Idaho followed this precedent, history, and the statutory text and held that EMTALA applies when state law prohibits abortions in response to pregnancy-related emergencies, Moyle v. United States (Idaho), and entered an injunction against enforcement of the restrictive Idaho abortion law. The 9th Circuit Court of Appeals, sitting en banc, refused to stay the district court opinion, which left the district court's injunction in place. The Supreme Court granted review and then decided certiorari was improvidently granted and sent the case back the the 9th Circuit for further development, presumably for a full hearing and decision on the merits. For the time being, the district court's injunction remains effective, providing a small measure of sanity to apply in Idaho.

Not so much in the 5th Circuit, which includes Texas, Mississippi, and Louisiana, where EMTALA and the Supremacy Clause were brushed aside in Texas v, Becerra (5th Cir. 2024). The case involved a challenge to guidance from the U.S, Department of Health & Human Services, which advised in 2022 (within a couple of weeks of the Supreme Court's decision in Dobbs), that EMTALA supersedes state-level abortion bans and restrictions. The 5th Circuit's opinion is limited to its affirmance of the lower court's injunction prohibiting Texas officials from following the HHS guidance, but there is no doubt that a similar challenge to the HHS guidance by Mississippi or Louisiana would be equally successful.

The JAMA article makes a couple of key points that bear repeating here:

• "The idea of a pregnant person being turned away from an emergency department because they are not near enough to death betrays every core principle of medical ethics: beneficence, nonmaleficence, autonomy, and justice."
• "Maternal mortality and morbidity rates in states with abortion bans are so high that they surpass those of every high-income country. High rates of infant mortality and morbidity are now the norm in states with the strictest abortion bans. Indeed, research now confirms the troubling increase in infant deaths after the abortion ban in Texas. If abortion bans are supposed to protect pregnant persons and infants, as proponents of the laws suggest, they are failing miserably" [footnote omitted].

For the time being, the Supreme Court's docket for the Fall 2024 Term doesn't include a pregnancy/EMTALA case. As I noted yesterday, he Court has denied review in a Texas case that raised the issue whether the state's restrictive abortion law violates federal EMTALA law. Xavier Becerra, Secretary of Health and Human Services v. Texas, No. 23-10246. Similar challenges are likely to meet the same fate, so we will have to wait for the 9th Circuit to deliver a decision on the merits of the EMTALA issue. It's entirely likely that there will be four votes to grant certiorari to resolve a split among the circuits. I don't know whether to look forward to or to fear such a decision from the Court.

SCOTUS Update: Health-Related Cases on the Docket for the October 2024 Term

Here are a handful of cases of potential significance (case name links to SCOTUSBlog; case numbers link to Supreme Court's docket):

Firearm Regulation

Garland v. VanDerStok, No. 23-852 [Argued: 10.8.2024]
Issue(s): (1) Whether “a weapon parts kit that is designed to or may readily be completed, assembled, restored, or otherwise converted to expel a projectile by the action of an explosive” under 27 C.F.R. § 478.11 is a “firearm” regulated by the Gun Control Act of 1968; and (2) whether “a partially complete, disassembled, or nonfunctional frame or receiver” that is “designed to or may readily be completed, assembled, restored, or otherwise converted to function as a frame or receiver” under 27 C.F.R. § 478.12(c) is a “frame or receiver” regulated by the act.

Smith & Wesson Brands v. Estados Unidos Mexicanos, No. 23-1141 [No argument date yet]
Issue(s): (1) Whether the production and sale of firearms in the United States is the proximate cause of alleged injuries to the Mexican government stemming from violence committed by drug cartels in Mexico; and (2) whether the production and sale of firearms in the United States amounts to “aiding and abetting” illegal firearms trafficking because firearms companies allegedly know that some of their products are unlawfully trafficked.

Medicare

Advocate Christ Medical Center v. Becerra, No. 23-715 [Argued: 11.5.2024]
Issue(s): Whether the phrase “entitled ... to benefits,” used twice in the same sentence of the Medicare Act, means the same thing for Medicare part A and Supplemental Social Security benefits, such that it includes all who meet basic program eligibility criteria, whether or not benefits are actually received.

Medicare Part D: See Mulready case, below

Medicaid, Affordable Care Act

See Crouch case, below (Transgender Health Care)

FDA: E-cigarettes

Food and Drug Administration v. Wages and White Lion Investments, LLC, No. 23-1038 [Set for argument: 12.2.2024]
Issue(s): Whether the court of appeals erred in setting aside the Food and Drug Administration’s orders denying respondents’ applications for authorization to market new e-cigarette products as arbitrary and capricious.

Transgender Health Care

U.S. v. Skrmetti, No. 23-477 [Set for argument: 12.4.2024]
Issue(s): Whether Tennessee Senate Bill 1, which prohibits all medical treatments intended to allow “a minor to identify with, or live as, a purported identity inconsistent with the minor’s sex” or to treat “purported discomfort or distress from a discordance between the minor’s sex and asserted identity,” violates the equal protection clause of the 14th Amendment.

Cert. petition pending: Crouch v. Anderson, No. 24-90
Issues: (1) Whether West Virginia violated the equal protection clause of the 14th Amendment by declining to cover surgical treatments for gender dysphoria; and (2) whether West Virginia violated the Medicaid Act and the Affordable Care Act by declining to cover surgical treatments for gender dysphoria.

Disability Discrimination/ADA

Stanley v. City of Sanford, Florida, No. 23-997 [Set for argument: 1.13.2025]
Issue(s): Whether, under the Americans with Disabilities Act, a former employee — who was qualified to perform her job and who earned post-employment benefits while employed — loses her right to sue over discrimination with respect to those benefits solely because she no longer holds her job.

ERISA

Cunningham v. Cornell University, No. 23-1007 [Set for argument: 1.22.2025]
Issue(s): Whether a plaintiff can state a claim by alleging that a plan fiduciary engaged in a transaction constituting a furnishing of goods, services, or facilities between the plan and a party in interest, as proscribed by 29 U.S.C. § 1106(a)(1)(C), or whether a plaintiff must plead and prove additional elements and facts not contained in the provision’s text. Note: This case involves a retirement plan, not a health-insurance plan. I've included it here because the case is based upon an alleged violation of a plan fiduciary's statutory duty and is equally applicable to pension plans and health plans.

Cert. petition pending: Mulready v. Pharmaceutical Care Management Association, No. 23-1213
Issues: (1) Whether the Employee Retirement Income Security Act preempts state laws that regulate pharmacy benefit managers (PBMs) by preventing them from cutting off rural patients’ access, steering patients to PBM-favored pharmacies, excluding pharmacies willing to accept their terms from preferred networks, and overriding state discipline of pharmacists; and (2) whether Medicare Part D preempts state laws that limit the conditions PBMs may place on pharmacies’ participation in their preferred networks. Note: The Court has requested a brief from the Solicitor General.

Abortion/First Amendment

Cert. petition pending: Turco v. City of Englewood, New Jersey, No. 23-1189
Issues: (1) Whether the City of Englewood’s speech-free buffer zones, including zones outside an abortion clinic, violate the First Amendment; and (2) whether the court should overrule Hill v. Colorado. Distributed for the third time for Conference of 11/8/2024.

Note: The Court has denied review in a Texas case that raised the issue whether the state's restrictive abortion law violates federal EMTALA law. Xavier Becerra, Secretary of Health and Human Services v. Texas,, No. 23-10246. Late in the October 2023 Term, the Court declined to review two cases out of Idaho that raised the same issue. Moyle v. United States, No. 23-726; Idaho v. United States, No. 23-727.

From The Commonwealth Fund announcement about its report, "Comparing Deaths from Gun Violence in the U.S. with Other Countries" (Oct. 30, 2024): 

Gun violence kills more people in the United States than in almost any other country. It also costs Americans an estimated $557 billion in 2022, an average of $1,700 per taxpayer. Gun violence — declared a public health crisis by the U.S. surgeon general in June 2024* — is also the leading cause of death for children and a contributor to rising preventable mortality rates.

In a series of charts, Commonwealth Fund researchers illustrate how gun-related deaths in the U.S. compare with other countries and territories around the world. They show that nearly every U.S. state has a higher firearm mortality rate than most other countries.

Explore the charts to learn more, including how the gun violence epidemic impacts children and adolescents, women, and people of color. 

* https://www.hhs.gov/surgeongeneral/priorities/firearm-violence/index.html

And from the CF report itself:

Highlights

Globally, the U.S. ranks at the 93rd percentile for overall firearm mortality, 92nd percentile for children and teens, and 96th percentile for women.

The U.S. has among the highest overall firearm mortality rates, as well as among the highest firearm mortality rates for children, adolescents, and women, both globally and among high-income countries.

Nearly all U.S. states have a higher firearm mortality rate than most other countries. Death rates due to physical violence by firearm in U.S. states are closer to rates seen in countries experiencing active conflict.

Black and American Indian and Alaska Native (AIAN) people have the highest firearm mortality rates of any racial or ethnic group. 

I've blogged on this public-health crisis before (here, here, and here), but I don't see a practical solution in part because we have dug an enormous hole for ourselves:

Based on NICS background data and manufacturing records, it is estimated that there are 500 million civilian-owned firearms in the U.S. Only 6.06 million firearms are registered in America (the U.S. does not require registration for all firearms). Estimates show that 82,880,000 people own at least one firearm in 2023. [source]

And the Supreme Court has mostly boarded up that hole with its hide-bound reading of the Second Amendment. Cf. Congressional Research Service, The Second Amendment at the Supreme Court: Challenges to Federal Gun Laws (updated July 8, 2024). 

And yet . . . something's got to change. As Justice Robert Jackson wrote (in dissent in Terminiello, a free-speech case), "There is danger that, if the Court does not temper its doctrinaire logic with a little practical wisdom, it will convert the constitutional Bill of Rights into a suicide pact."

More on Health Care and the Election

Yesterday I posted Drew Altman's view of the health care issues that are most likely to be affected by the outcome of next Tuesday's presidential (and to a lesser extent congressional) election. Today I am featuring a *small* sampling of the commentary available from reliable sources.

• Larry Levitt is the chief policy guy at the nonpartisan Kaiser Family Foundation, one of the most reliable sources of data and analysis around. In 2013 he wrote in JAMA that "this may be the first presidential election since 2008 when health reform and the ACA—or repeal of the ACA—are not front and center." Just about everything Levitt discussed in this early-campaign essay continues to ring true.
• CBS News (Oct. 30): Where are the candidates on health care isssues
• Harris has backed away from single-payer health care
• Trump says he has "concepts" of a health care plan 
• Harris wants to continue Biden's crackdown on pharmaceutical companies
• Trump says he wants to mandate IVF coverage, but Republicans in Congress aren't so keen
• NPR (Oct. 28): The top three issues in the presidential race
• The future of Medicare’s drug price negotiations
• The Affordable Care Act’s enhanced subsidies
• Continued availability of medication abortion
• NY Times (Oct. 28; paywall): The 2024 Stakes on Health Care
• Insurance: ACA subsidies are due to expire, leaving 3 million without health coverage
• Drug prices: the candidates agree that we pay too much, but not on the role of the president
• Medicare/Medicaid: both agree that benefits shouldn't be cut
• Bottom line: "Kamala Harris has offered policies that would lower out-of-pocket costs for many Americans and preserve or expand health insurance coverage. Donald Trump has been vaguer, and his agenda is a little harder to predict."
• ABC News (Oct. 25): Presidential election puts Affordable Care Act back in the bull's-eye
• Subsidies, risk pools, pre-exisiting condition coverage, Medicaid expansion under the ACA
• And wait, there's more!

KFF's CEO: Final Thoughts on Health Care and the Election

Drew Altman heads the nonpartisan Kaiser Family Foundation, a reliable source of health care data and analysis. His "Quick Take" (Oct. 30) is important reading, and I've reprinted a few key points below (emphasis added):

• This is a fork-in-the-road-election between one side—Vice President Harris—committed to building on existing public programs and protecting consumers, and the other—former President Trump—whose administration will attempt to devolve responsibility to states, and deregulate and dramatically cut federal health funding, both as a policy goal and to pay for tax cuts. 
• Regardless of who is elected, there will be a debate about extending the enhanced ACA premium subsidies. . . . Premium subsidies sound obscure, but the consequences for people and spending are real and substantial:
• The subsidies affect about 20 million people.
• Failure to extend them means a 79% increase in premiums, an average $705 increase.
• It costs $335 billion over 10 years to do it.
• The biggest thing that happens if Vice President Harris is elected is that all of the possible dramatic changes a Trump administration could make for the federal role in health evaporate overnight. . . .
• Agencies like the FTC and CMMI and, above all the FDA, will breathe a sigh of relief, not to mention the Department of Education. 
• There will be no leadership position anywhere in the federal government in health for RFK Jr.
• Mifepristone will continue to be distributed as it is today. 
• Equity will continue to be a priority in federal health programs.
• If former President Trump wins, an alternative history will play out. 
• Medicaid and Mifepristone are likely to be prominent targets; one to pay for tax cuts and the other because it’s the primary way women get abortions now. . . . 
• Some ideas favored by Trump will get through, and others will hit a wall of laws and regulations and bureaucratic resistance. Trump cannot simply decree that RFK Jr. “go wild” on health, food and medicines, and, like Star Trek’s Captain Picard, “make it so.” But a lot will get through. Everyone will need a law degree as legal challenges to Trump regulations, waivers, executive orders and agency reorganizations dot the health policy landscape and command attention. 
• Philosophically, this election is a choice in health between aggressive incrementalism and a sharp right-hand turn in federal policy and spending but take it from this political scientist: no one should doubt the capacity of our system and institutions to thwart dramatic change in any direction.

Toddler's Snake Bite Costs $290K+ to Treat

Two-year-old Brigland Pfeffer was playing with his sibs in their San Diego backyard when he was bitten by a rattlesnake. Ouch! His was one of the 7,000-8,000 venomous snakebites that occur in the U.S. each year. The N.Y. Times reported a surge in the venomous snake population in Southern California 18 years ago, and 20% of all such snakebites occur in that state. So young Brigland's close encounter may have been a surprise, but it was far from a shock.

The shock came when the bills for Brigland's treatment started rolling in. As reported by Kaiser Family Foundation in this morning's on-line Health News, the final bills totaled "$297,461, which included two ambulance rides, an emergency room visit, and a couple of days in pediatric intensive care. Antivenom alone accounts for $213,278.80 of the total bill."

Despite the 2021 passage of the No Surprises Act, there are a few surprises in the final bills:

• The Pfeffer's health insurer paid a large chunk of these bills, but refused payment of a second ambulance ride that took Brigland from Palomar Health's ER Rady Children's Hospital where he was admitted to the pediatric ICU:

Pfeffer said she received a letter this summer indicating they owe an additional $11,300 for Brigland’s care. While the landmark No Surprises Act protects patients from many out-of-network bills in emergencies, the law controversially exempted bills for ground ambulances.

• Experts who reviewed the hospitals' bills described the charges for antivenom "eye-popping." The "Freakonomics" podcast ran a story on the high costs for antivenom in July of this year. KFF's report provides a useful summary of the story behind the charges. The first clue is in the two hospitals' different charges per vial of the serum:

Palomar [Medical Center Escondido], where emergency staffers treated Brigland, charged $9,574.60 per vial, for a total of $95,746 for the starting dose of 10 vials of Anavip.

Rady, the largest children’s hospital on the West Coast, charged $5,876.64 for each vial. For the 20 vials Brigland received there, the total was $117,532.80. [emphasis added]

What explains the difference?

One explanation is that hospitals mark up products to balance overhead costs and generate revenue. . . . 

 For instance, Medicare . . . pays about $2,000 for a vial of [the antivenom] Anavip . On average . . . that is the price hospitals pay for it.

Leslie Boyer, a doctor and toxicology researcher, helped found a group that was instrumental in developing Anavip, as well as the other available snake antivenom, CroFab, which dominated the market for decades. In 2015, she published an editorial in the American Journal of Medicine breaking down the “true” cost of antivenom. 

Boyer's editorial is well worth reading.

Using cost data collected from factory supervisors, animal managers, hospital pharmacists and other sources, Boyer developed a model for a hypothetical antivenom, at a final cost of $14,624 per vial. She found the cost of venom, included in that total, was just 2 cents. Manufacturing accounted for $9 of the $14,624 total. [emphasis added]

More than 70% of the price tag — $10,250 — is attributable to hospital markups, her research showed. 

 And then there's the surcharge for legal expenses:

Anavip entered the market in 2018 as the only competitor to CroFab. But its makers settled a patent infringement lawsuit with CroFab’s maker, requiring the makers of Anavip to pay royalties until 2028.

Anavip debuted at a retail price of $1,220 per vial. Boyer noted that the price later rose to cover the manufacturers’ millions of dollars in legal costs. 

The reporting on snake antivenom -- from manufacture to treatment to the inevitable legal costs -- gives us a snapshot of the best and the worst features of our healthcare system. 

1. Best. Brigland's hand, arm, and possibly life were saved because a relatively rare medication was available at two local hospitals, including a pediatric facility, via a healthcare infrastructure (including 9-1-1, emergency transportation with a treatment team on-board). We have a healthcare delivery system (for those who can acess it) that is among the best in the world [cite].
2. Not the best. Many if not most rattlesnake bites occur in rural settings far from the world-class doctors and hospitals in a city like San Diego. In a word, the excellence we are so proud of (and pay so much to maintain) is, in geographical terms, spotty.
3. Worst. The cost of Brigland's treatment exceeded the median price of a home in 16 states and was close to the median home price in 5 or 6 more. Most of that was for the antivenom medication and most of the charge for that was due to hospital mark-ups. As one commenter told KFF, hospital charges -- thousands of which reside in their chargemasters -- are largely fictitious and are neither regulated nor controlled by any public or private body. As the National Academy for State Healthcare Policy blogged in 2020:

[T]he chargemaster rates hospitals use are nearly meaningless*. . . . 

Hospital chargemaster rates are the equivalent of Manufacturers Suggested Retail Price or MSRP in car buying markets. They are little more than the price a seller would ideally like to charge a consumer. Hospitals set their own chargemaster rates – there is no legal requirement or set formula a hospital must follow when establishing the basis between chargemaster rates and costs. As a result, chargemaster rates are unlikely to be accurate reflections of actual hospital expenses.

Recently, The Montana Office of the Commissioner of Securities and Insurance examined the ratio between 10 acute hospitals’ expenses and chargemaster rates.

The state concluded that what the hospitals listed as chargemaster rates for all payers would cover between 192 to 384 percent of the hospitals’ actual costs.

A hospital may also change chargemaster rates at any time – prior notification is not always required – and mark-ups on hospital-purchased services and supplies like durable medical equipment are not disclosed. All of these features make it difficult for public and private payers to use chargemaster rates as a way to establish relevant prices to pay to hospitals. Hospitals instead negotiate discounts off their chargemaster rates with individual and group plans.

In fact, almost no one actually pays the publicized chargemaster rates. The vast majority of health care consumers are represented by a payer of some kind, such as a commercial health insurance company, Medicaid, or Medicare. Commercial insurers negotiate the actual prices they pay during the process of contracting with providers. Medicare and Medicaid establish their own payment levels independent of hospitals’ chargemaster lists – Medicare through the federal government and Medicaid through state governments.

* But chargemaster prices aren't entirely meaningless: 

The cruel irony of the chargemaster is that the uninsured are the most likely to be billed chargemaster rates because they are not represented by a payer. 

Our healthcare "system," which daily provides the kind of excellent care Brigland received, seems to thrive on financial chaos. Despite the No Surprises Act, the costs of care are higher than any other industrialized country, often unpredictable, subject to substantial variations from institution to institution even within a single city, and frequently unfair. 

For Brigland's parents, this episode of care cost them $7,200 (their out-of-pocket maximum) plus $11,300 for that second ambulance ride that their insurer refused to pay. One not-so-minor irony: At the end of the transcript of the Freakonomics podcast about the high cost of antivenom, there was one comment. It ended with this sentence: "Oh, and if you get bitten in Australia, anti-venom is free because we have universal health care! :-)" Ouch, indeed.

"Climate change is the most significant threat to human health in the 21st century"

That's the bottom line from Admiral Rachel L. Levine, M.D., the U.S. Assistant Secretary for Health. She's the guest on a podcast hosted by the Commonwealth Fund. Here are a few examples of what she is talking about:

Levine, who oversees the federal Office of Climate Change and Health Equity, talks about how weather-related events are already having a serious impact on our fragile health system supply chain, even though those effects can go unnoticed by the broader public. [1] In communities repeatedly ravaged by storms or heat waves, a lack of blood donations is leading to delays in surgeries and treatment for diseases like sickle cell. [2] In rural Alaska, where the melting permafrost is wreaking havoc on wildlife populations, native tribal communities are forced to rely on shipments of food items that are typically high in sugar and salt — a diet contributing to rising rates of hypertension, diabetes, and heart disease.

Adding injury to more injury, "[w]hen the ground thaws, microbes begin feasting on organic matter in soils that have been frozen for millennia.

These microbes release carbon dioxide and methane, potent greenhouse gases. As those gases escape into the atmosphere, they further warm the climate, creating a feedback loop: Warmer temperatures thaw more soil, releasing more organic material for microbes to feast on and produce more greenhouse gases. [source]

We usually think of weather-related catastrophes in terms of storm surges, killing winds, floods, and similar threats to life, limb, and property. Admiral Levine provides a valuable and often-overlooked  perspective on the effects of climate change on human health.

Texas AG Sues Pediatrician for Providing Gender-Affirming Treatment

Last week Texas Attorney General Ken Paxton sued Dr. May Lau, a Dallas pediatrician and assistant professor at UT-Southwestern Medical School, for violating Texas's statutory ban on gender-affirming care for persons under the age of 18. Here are some helpful links, ending with links to a relevant U.S. Supreme Court case that will be argued in December:

1. A few newspapers have picked up this story (WaPo, NY Times, Dallas Morning News), all behind a paywall except for this one: The Texas Tribune (Oct. 17, 2024). There is also free coverage from NBC News, CNN, and KERA News (NPR affiliate in Dallas).

2. The AG's complaint is on his official website here. The essence of the complaint is:

a. Dr. Lau provided gender-affirming care to a minor, and

b. She misrepresented the nature of her treatment, allegedly (1) to cover up the medical rationale for testosterone therapy and (2) to secure insurance coverage for the treatments.

 3. The Texas law that provides the basis for the AG's lawsuit is HB 14 (eff. September 1, 2023). It is codified in various places in the Texas Code, e.g.:

a. § 62.151, Health and Safety Code: (g)  The child health plan may not provide coverage for services prohibited by Section 161.702 that are intended to transition a child's biological sex as determined by the child's sex organs, chromosomes, and endogenous profiles. 

b. § 161.702, Health and Safety Code: PROHIBITED PROVISION OF GENDER TRANSITIONING OR GENDER REASSIGNMENT PROCEDURES AND TREATMENTS TO CERTAIN CHILDREN. For the purpose of transitioning a child's biological sex as determined by the sex organs, chromosomes, and endogenous profiles of the child or affirming the child's perception of the child's sex if that perception is inconsistent with the child's biological sex, a physician or health care provider may not knowingly:

               (1)  perform a surgery that sterilizes the child,

  including:

                     (A)  castration;

                     (B)  vasectomy;

                     (C)  hysterectomy;

                     (D)  oophorectomy;

                     (E)  metoidioplasty;

                     (F)  orchiectomy;

                     (G)  penectomy;

                     (H)  phalloplasty; and

                     (I)  vaginoplasty;

               (2)  perform a mastectomy;

               (3)  provide, prescribe, administer, or dispense any of the following prescription drugs that induce transient or permanent infertility:

                     (A)  puberty suppression or blocking prescription drugs to stop or delay normal puberty;

                     (B)  supraphysiologic doses of testosterone to females; or

                     (C)  supraphysiologic doses of estrogen to males; or

               (4)  remove any otherwise healthy or non-diseased body part or tissue. 

c. Sec. 161.704.  PROHIBITED USE OF PUBLIC MONEY.***

d. Sec. 161.705.  PROHIBITED STATE HEALTH PLAN REIMBURSEMENT.***

e.   Sec. 161.706.  ATTORNEY GENERAL ENFORCEMENT. (a) If the attorney general has reason to believe that a person is committing, has committed, or is about to commit a violation of Section 161.702, the attorney general may bring an action to enforce this subchapter to restrain or enjoin the person from committing, continuing to commit, or repeating the violation.***

4. In Texas v. Loe (No. 23-0697, June 28, 2024) the Texas Supreme Court reversed the trial court's preliminary injunction against enforcement of HB 14, concluding:

The trial court concluded that the law likely violates the Texas Constitution, and it temporarily enjoined the law’s enforcement. On direct appeal of the temporary injunction, we do not attempt to identify the most appropriate treatment for a child suffering from gender dysphoria.  That is a complicated question hotly debated by medical experts and policy makers throughout this country and the world.  And, to be sure, neither this Court nor any party to this proceeding suggests that children suffering from gender dysphoria are undeserving of treatment and support.  The reverse is obviously true: they, like all children, deserve the most appropriate treatment together with support, love, and empathy.  We emphasize, though, that the only question we are called upon to answer is a distinctly legal one: whether plaintiffs in this case have established a probable right to relief on their claims that the Legislature’s prohibition of certain treatments for children suffering from gender dysphoria violates the Texas Constitution. 

We conclude that plaintiffs failed to meet that burden.  We have said—and we reaffirm today—that fit parents have a fundamental interest in directing the care, custody, and control of their children free from government interference.  But we have never defined the source or precise scope of this interest, and our precedents make clear that this interest is not absolute.  Indeed, we have never held that a fit parent’s interest in caring for her child free from government interference, though weighty, triggers heightened scrutiny of every statute that restricts any asserted right connected to that interest.  When developments in our society raise new and previously unconsidered questions about the appropriate line between parental autonomy on the one hand and the Legislature’s authority to regulate the practice of medicine on the other, our Constitution does not render the Legislature powerless to provide answers. 

For the reasons explained below, we conclude the Legislature made a permissible, rational policy choice to limit the types of available medical procedures for children, particularly in light of the relative nascency of both gender dysphoria and its various modes of treatment and the Legislature’s express constitutional authority to regulate the practice of medicine.  We therefore conclude the statute does not unconstitutionally deprive parents of their rights or physicians or health care providers of an alleged property right in their medical licenses or claimed right to occupational freedom.  We also conclude the law does not unconstitutionally deny or abridge equality under the law because of sex or any other characteristic asserted by plaintiffs.  We therefore reverse and vacate the trial court’s order (footnote deleted and emphasis added).

  5. In the United States Supreme Court, a very similar Tennessee law will be debated in December. Tenn. SB 1 (eff. July 1, 2023) codified as Tenn. Code § 68-33-103) broadly prohibits medical or surgical treatments for minors with gender dysphoria. A similar law was enacted in Kentucky. Two district courts granted preliminary injunctions to block enforcement of the laws while challenges were being considered in their courts. On appeal from those decisions, the Sixth Circuit -- in a wide-ranging opinion -- reversed the two district courts, concluding that all the usual factors related to injunctions -- including the likelihood of prevailing on the merits of the challenge -- favored denial of the challengers' motions. See L.W. v. Skrmetti (6th Cir., Nos. 23-5600 and 23-5609, Sept. 28, 2023). The challenge in the Supreme Court is limited to the issue presented by the petition for certiorari: "Whether Tennessee Senate Bill 1 (SB1), which prohibits all medical treatments intended to allow 'a minor to identify with, or live as, a purported identity inconsistent with the minor’s sex' or to treat 'purported discomfort or distress from a discordance between the  minor’s sex and asserted identity,' Tenn. Code Ann.  § 68-33-103(a)(1), violates the Equal Protection Clause of the Fourteenth Amendment" (emphasis added). 

6. According to the 6th Circuit, 35 states have legislated on this subject, with 21 states prohibiting medical or surgical treatments (or both) and 14 states passing laws protecting patients who seeks such treatment. 

7. My old firm, Covington & Burling, filed an amicus brief in support of the challengers and urging reversal of the 6th Circuit on behalf of the American Academy of Pediatrics, the American Medical Association, and 23 additional medical and health care associations and societies. Additional amicus briefs in support of the challengers were filed by the American Psychological Association and the American Bar Association and literally scores of other amici including many in support of the Commonwealth of Kentucky.

Health Care Fraud: Texas Style

On Oct. 15 a federal jury in Houston convicted the owner of a firm that operated 14 pharmacies, on fifteen counts including conspiracy to commit mail fraud, conspiracy to violate the anti-kickback statute, bribery concerning programs receiving federal funds, conspiracy to commit bribery, five counts of healthcare fraud, and six counts of money laundering, resulting in $160 million in fraudulent claims that were paid by Medicare. 

As described by the Office of the U.S. Attorney for the Southern District of Texas:

From 2014 through 2021, Mohamad Mokbel led a company called 4M Pharmaceuticals which operated 14 pharmacies with straw owners. The jury heard evidence that Mokbel illegally purchased thousands of Medicare beneficiaries, including their identification number, personal health and physician information. Mokbel targeted elderly diabetic patients who are dependent on diabetic testing supplies to manage their blood sugar levels. Mokbel paid $16 to $40 per Medicare beneficiary.  

To maximize reimbursements and without regard for medical necessity, Mokbel then directed 4M employees to use the Medicare beneficiaries’ patient data to run insurance claims to determine if Medicare or other insurance plans would cover and reimburse at a high rate for the topical creams, Omega-3 pills and other medications that Mokbel intended to sell through 4M pharmacies.

At Mokbel’s direction, 4M employees would then fax pre-filled prescription requests to the patients’ doctors appearing to be for diabetic testing supplies with topical creams added at the bottom. They also included false representations that the patient was requesting a 4M Pharmacy fill their medications. In reality, Mokbel had previously purchased the patient’s personal information, the patient had not selected a 4M Pharmacy and the patient was often unaware the request was being made on their behalf. 

Many doctors apparently took the representations in the fax at face value and did sign and send back the prefilled prescription requests to 4M. Mokbel’s call center in Houston and later in Egypt then contacted the patients and made false and misleading statements about the topical cream and their doctor’s order. Mokbel’s pharmacies then shipped out numerous topical creams, often on auto-refill, and excessively billed Medicare, Medicaid and private insurance plans. 

Mokbel made over $200 million as a result of the scheme. 

The money value of the fraud is considerably less than the record for Medicare fraud, but what caught my eye was the complexity of the scheme and the lineup of law-enforcement agencies involved in the case: Homeland Security Investigations (HSI) Houston, the FBI, IRS Criminal Investigation, the U.S. Department of Health and Human Services, the U.S. Food and Drug Administration, and the Texas Attorney General’s Medicaid Fraud Control Unit. This was a big, big deal for these investigators.

New England Journal of Medicine: "The Failing U.S. Health System"

It should come as a shock to no one that our health care "system" is only a "system" in the loosest sense of the word. "System" implies a set of common goals, a comprehensive design, and coordination of effort toward achieving the system's purposes. The result is about what you would expect with a largely profit-based set of arrangements among participants who are often working at cross-purposes.

The recent report from the Commonwealth Fund ("Mirror, Mirror 2024: A Portrait of the Failing U.S. Health System") paints a dismal picture. The website has the report and useful chartpacks in PowerPoint and PDF. Here's the executive summary:

• Goal: Compare health system performance in 10 countries, including the United States, to glean insights for U.S. improvement.
• Methods: Analysis of 70 health system performance measures in five areas: access to care, care process, administrative efficiency, equity, and health outcomes.
• Key Findings: The top three countries are Australia, the Netherlands, and the United Kingdom, although differences in overall performance between most countries are relatively small. The only clear outlier is the U.S., where health system performance is dramatically lower.
• Conclusion: The U.S. continues to be in a class by itself in the underperformance of its health care sector. While the other nine countries differ in the details of their systems and in their performance on domains, unlike the U.S., they all have found a way to meet their residents’ most basic health care needs, including universal coverage.

Three of the authors provide an expanded version of this abstract in this week's edition of the New England Journal of Medicine (apparently for free). Here are some of the main points:

• We can be proud of our process for delivering care. Compared to nine peer countries, we are ranked #2, quite close behind New Zealand.
• But the cost of this care is astronomically high and the results place our health outcomes dead last among this peer group:
  
  
  
  
  
  
• "Many of the U.S. health system’s shortfalls result from persistent economic barriers to obtaining essential care. The Affordable Care Act and related policies reduced the proportion of uninsured people to its current level of 7 to 8%. But 26 million Americans still lack insurance. . . . Substantial progress toward this goal could be made by building on existing programs, such as the Affordable Care Act, Medicare, and Medicaid." Note to self: This strategy requires political will and adequate financing at the state and federal levels. I'm not optimistic.
• "The U.S. health care delivery system has profound problems that result in huge inefficiencies and excessive costs that would limit the benefits of expanded coverage. One such problem is the country’s worsening shortage of primary care clinicians . . . . Improved compensation and reductions in administrative burdens for primary care clinicians would help the health system recruit and retain such clinicians and build desperately needed capacity." See Note to self above.
• "A second delivery-system failure is the high prices charged by U.S. health care facilities and professionals, which far exceed prices in other health systems. These high prices largely account for the extraordinary costs of care in the United States, which would make expanded coverage less affordable and which drive employers, who purchase insurance for more than half of Americans younger than 65 years of age, to impose high deductibles and copayments." The authors suggest scrutiny of the extensive consolidation of providers -- institutional and individual -- underway. But: The the premium-price train left the station far earlier than the consolidation boom. Consolidation may be exacerbating the problem, but the problem goes back decades, is cultural,  and it runs deep.
• "Improvements in coverage and the delivery system will need to be complemented by policies targeting critical influences on health outside the health sector. The United States lags behind comparator countries when it comes to addressing the social determinants of health, such as poverty, homelessness, inequality, and hunger. . . . The toll of gun violence in the United States also demands policy attention." See Note to self above.

This report gives us a good differential diagnosis and then prescribes the policy equivalent of "lose weight, exercise more, cut back on meat and dairy, reduce stress in your life, and start getting enough sleep." We all know this is the Path to Enlightenment (or at least to health maintenance), but how many patients take this advice?