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UnitedHealth had rules to deny rehab care for certain MA members

Throughout 2023, my colleague Casey Ross and I explored how UnitedHealth Group and its care management subsidiary, NaviHealth, have used an algorithm to cut off rehab care for people enrolled in Medicare Advantage. Turns out, there also were specific rules to deny certain people from getting rehab care in the first place.

Casey and I obtained NaviHealth documents and spoke with a current and former employee, who laid everything out. For example, if someone in an MA plan lived permanently in a nursing home or had cognitive impairment and was referred to get physical and occupational therapy, a frontline clinical reviewer had to automatically send that person’s “prior authorization” request to a physician medical reviewer, who almost always denied it. No algorithm involved — just restrictions that put sick and injured people on a faster track for denials.

These rules, which had little or no basis in clinical evidence, applied to the more than 15 million people enrolled in a UnitedHealthcare Medicare Advantage plan or MA plan that uses NaviHealth. UnitedHealth disagreed that the denials happened all the time under these rules, but the company wouldn’t provide denial rates.

Then suddenly, in November, UnitedHealth befuddled frontline clinical reviewers by tossing out the rules and telling them to apply more of their own discretion, the current and former employees said. That action coincided with increased scrutiny of Medicare Advantage insurers from federal lawmakers and CMS, which will begin auditing their denials of medical services early next year, and came after several of our stories published. Read our latest story to learn more.

So, who has the biggest profits in health care?

Ahead of J.P. Morgan, my colleagues Tara Bannow and Brittany Trang dove into the data of the nation’s health care companies to see which sectors are raking in the most money.

As expected, pharma and medical devices have the highest profit margins in the industry. It helps to have government-granted monopolies. Pharmacy benefit managers have middling profit margins, but those numbers are complicated by the fact that the biggest PBMs are part of larger health insurance and services conglomerates. “When companies are vertically integrated, it’s very hard to disentangle the profitability precisely,” said Michael Chernew, a health care policy professor at Harvard.

Hospitals had lower profit margins, but don’t confuse lower numbers in 2023 from the hospital industry’s very healthy stretch before and during the Covid pandemic. Plus, nonprofit hospital systems often shovel excess cash into land, new construction, and C-suite compensation since they don’t have shareholders to pay out. “Excess profits have to go somewhere,” said Zarek Brot-Goldberg, an economist at the University of Chicago. Read the entire analysis from Tara and Brittany.

3 health policies to watch in states

States continue to be the labs of health care experiments, and Brittany wrote how there are a handful of state-level policies worth watching this year.

So, what are they? Prescription drug affordability boards, antitrust measures, and health care cost caps. Some of these policies are already in motion, while others are gaining steam (for example, at least six states have pondered legislation banning anti-competitive clauses in contracts between insurers and health care providers). Read Brittany’s story, and put a calendar alert on these different policies.

In Texas, a glitzy medical school took priority over the poor

County officials in Austin proposed this deal to taxpayers more than a decade ago: Pony up $35 million every year so the city can get a new medical school and teaching hospital, and in return, indigent patients would get cutting-edge health care services. And hey, a whole bunch of economic development will follow, too.

It turns out the deal was too good to be true.

My colleague Rachel Cohrs traveled to Texas and found a bunch of broken promises. While there is a new, state-of-the-art medical school — Dell Medical School at the University of Texas at Austin — low-income patients say they have no access to physicians at the university’s clinics for cancer and multiple sclerosis, for example. Some patients, like one who had been forced to choose between medications and food, are now suing a county agency to make sure money is only spent on care for the poor. Plots of land that were earmarked for new biotech and health care offices, meanwhile, sit vacant.

“The quandary in Austin underscores how the U.S. safety net has become fragmented, and often arbitrary, for the tens of millions of Americans living below the poverty line, even in liberal cities like Austin,” Rachel writes. Read her entire special report.

Oh, and the entity that owns the medical school’s affiliated hospital? It’s Ascension, the behemoth Catholic hospital system. Read Rachel’s separate dispatch on the nasty legal battle between Ascension and local government (the government alleges Ascension had monthly caps on surgeries for low-income patients), and how the county may try to buy back the hospital.

A new hospital “observation” appeals rule

The federal government is creating a new appeals process for Medicare beneficiaries who have been hospitalized, but have been labeled as outpatients under “observation” — and may have unnecessarily incurred thousands of dollars in out-of-pocket costs.

Some background: People on Medicare who are hospitalized think they are good under their Part A benefit, which covers inpatient services. However, unbeknownst to them, the hospital occasionally may list them as an “outpatient receiving observation services.” That sounds like a minor distinction, but it is a huge problem because a) these people probably have no idea they are an outpatient and are billed for higher amounts under their Part B coverage; and b) under Medicare rules, you have to be an inpatient for at least three nights before you qualify for nursing home care. If you’re technically listed as an outpatient (even though you’re pretty much getting inpatient care), you’re SOL for that nursing home care.

So, Medicare is trying to right that ship (under a judge’s order) with a new proposed rule that outlines standard and expedited appeals. Read the rule to learn more about the nuts and bolts of how it works and who it applies to.

Industry odds and ends

  • Devoted Health, the Medicare Advantage insurer that was founded in 2017, raised another $175 million to fund its operations, the company said last Friday. Devoted’s subsidiaries in Florida and Texas — where a good chunk of Devoted’s MA enrollment is — looked shaky through the first three quarters of 2023. The Texas subsidiary lost $18.9 million through the first nine months of last year (-4.4% margin), while the Florida one essentially broke even (0.5% margin). Devoted’s Ohio subsidiary also was in the red.
  • UnitedHealth is selling its Brazilian hospital and health insurance operations to a “private investor,” according to a securities filing posted Friday. Financial newspaper Valor Econômico recently reported that José Seripieri Filho, the former CEO of a health insurance company in Brazil, was the buyer. UnitedHealth will get a little more than $500 million for the international business, but will have to incur a $7 billion charge after the sale closes next year. Most of that charge is “non-cash and due to the cumulative impact of foreign currency translation losses,” the filing reads.
  • This past Friday, Bright Health Group reached a deal with its bank to shave off $30 million of debt, which prompted CEO Mike Mikan to say this in a press release: “I am really proud of all we have accomplished this year.” Yes, truly a lot to be proud of: burned through billions of investor cash, completely exited the health insurance business that the company was founded on, laid off hundreds of employees, and forced nearly 1 million people to find a new health insurance plan in the individual market — all to fend off bankruptcy.
  • Regeneron Pharmaceuticals sued Samsung Bioepis right before the new year. The lawsuit is about Samsung’s eye disease drug that is a biosimilar version of Regeneron’s Eylea. There is a comical amount of redactions, including an entirely redacted section that would have explained a “patent dance.”
  • We know costs go up for patients, employers, and health insurers when a private equity firm buys a health care provider. A new study shows quality goes down in PE-owned hospitals as well, Tara reports.
  • Bloomberg has a good story that helps you visualize the wild ranges of U.S. health care prices.

The Meme Ward


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