Why a bill meant to stop surprise medical bills hasn’t worked

You’re reading the web version of Health Care Inc., STAT’s weekly newsletter following the flow of money in medicine. Sign up to get it in your inbox every Monday. 

Optum scooping up more docs during Change outage

Just when you thought things couldn’t get weirder, UnitedHealth Group plans to buy Steward Health Care’s physician practice. The experts I spoke with said this deal is different from UnitedHealth’s usual fare because these doctors are affiliated with a hospital chain. UnitedHealth usually goes for independent groups.

Leerink Partners analyst Whit Mayo disagreed with the notion that UnitedHealth is scraping the bottom of the barrel, but he did offer this beauty: “They’ll buy anything not nailed down.” Recall that UnitedHealth already employs or contracts with about 10% of the country’s doctors.

Steward has been in the news lately, and not for good reasons. Its Massachusetts hospitals are on the brink of financial disaster, and the company is in the midst of a turnaround plan. The turmoil started long before the great Change Healthcare cyberattack of 2024, and it’s unclear how Steward was affected. Read more about the strategy behind UnitedHealth’s plan to buy Steward’s doctors.

Will Change Healthcare change healthcare?

Federal lawmakers and regulators are asking what Washington can do to ensure that a healthcare system outage like Change Healthcare doesn’t happen again, our health tech colleague Mohana Ravindranath tells us.

However, many of the proposed initiatives focus on either helping hospitals meet cybersecurity standards or penalizing them if they suffer a cyberattack. But as evidenced by the Change attack, even if providers themselves are up to snuff, they can still be sidelined if their vendors have a ransomware attack.

“Even if we spent every dollar of our budgets on cybersecurity, that still does not eliminate the majority of cyber risk that comes to us from third parties,” John Riggi of the American Hospital Association told Mohana.

Other Change updates:

• Amid congressional calls to hold UnitedHealth responsible for the Change outage, House Oversight and Accountability member Jamie Raskin has asked UnitedHealth CEO Andrew Witty to answer questions about how the Change outage happened, including whether United beefed up security after a December federal warning about the very hackers that executed the attack. Answers are due by April 8.
• On a call with stakeholders March 27, UnitedHealth president Dirk McMahon said that United is finally figuring out what was in the stolen data and would take on the work of notifying patients of the breach, if permitted.
• UnitedHealth Group announced that its current CFO John Rex will be taking over as president April 1. Current president and COO McMahon’s retirement was already announced in early February, before the cyberattack.

The corporatization of cancer care

Remember when I told you we’d soon have not just one, but two publicly-traded oncology providers? Well, shares of American Oncology Network hit Nasdaq last year, and since then, they’ve, well, plummeted.

AON’s stock was priced below $6 per share this week, down more than 70% from their price on its first day of trading in September 2023. The company lost $49 million on operations in 2023 on $1.3 billion in revenue. It had made money, albeit not much, in prior years. AON’s rival, The Oncology Institute, is faring similarly on the stock market. Its shares are down more than 80% since its IPO.

Despite that, AON has been growing aggressively. It has 220 doctors and advanced practice providers in 20 states. And just last week, it opened three new clinics north of Houston that are part of its new practice, Woodlands Cancer Institute. Woodlands, AON’s second practice in Texas, has medical oncologists and a radiation oncologist. An AON spokesperson said the doctors came from Millennium Physicians, a local multispecialty group.

It’s not just these companies. Financial investors are getting all up in your cancer care. The consulting group VMG Health just came out with this handy list of corporate and private equity-backed oncology providers, and it is long! Don’t miss the dissection of the KKR-backed GenesisCare sell-off.

Bold move, Ralph

I don’t know about you, but if I was urged to testify before a Congressional committee, I’d probably, at the very least, respond. But according to U.S. Senators Ed Markey and Elizabeth Warren, Steward Health Care CEO Ralph de la Torre has not so much as acknowledged their request that he testify before their subcommittee hearing on Wednesday.

As mentioned above, Steward is in rough financial shape, in large part because its previous private equity owner saddled the company with hundreds of millions in debt. You can probably understand why de la Torre wouldn’t be thrilled about speaking at a hearing entitled, “When Health Care Becomes Wealth Care: How Corporate Greed Puts Patient Care and Health Workers at Risk.” But it’s still kind of shocking to learn that the man in charge of more than 30 hospitals refused to answer a congressional request.

It might be worth pointing out that Steward has high-profile beef with the state Markey and Warren represent. Not only are Steward’s hospitals in Massachusetts in particularly dire straits, but Steward has sued state agencies in an effort to keep its finances under lock and key.

Awe, you thought the No Surprises Act would end surprise billing? That’s sweet 

Making laws must feel like a constant game of whack-a-mole. Close off one loophole to corporate profiteering at patients’ expense, and someone will find a workaround. Case in point: the No Surprises Act. Since the law took effect in the beginning of 2022, we’ve heard that patients will be protected against surprise bills if the hospital they got care at was in-network. (The exception is ground ambulances, but Bob & I wrote about fixes in the works on that.)

If you, too, thought the NSA seemed too good to be true, here’s your chance to say ‘told ya so.’ The law only applies to medically necessary services, so insurers can deny care by simply saying that it wasn’t medically necessary. Poof! Claim gone. A spokesperson for the National Patient Advocate Foundation told KFF Health News that medical necessity “seems like it’s becoming a catch-all for turning down patients.”

KFF profiled a California mom who faces an almost $100,000 (!) bill for an air-ambulance ride that Cigna is refusing to cover, deeming it not medically necessary. Even though Sara England’s 3-month-old son, who had just undergone open-heart surgery, was on a ventilator because he couldn’t breathe, Cigna maintained he should have taken a ground ambulance the almost 100 miles to the San Francisco hospital, where he was treated. Read the infuriating story here.

Industry odds and ends

• The Lown Institute last week came out with its latest report that puts hospitals on blast for having lower charity care spending relative to the value of their tax exemptions. According to Lown, a whopping 80% of the 2,425 nonprofit hospitals studied spent less on charity care and community investment than they got in tax breaks. Read Brittany’s story.
• Fifteen states have taken action to protect patients against the real surprise bills: facility fees, a report last week from the U.S Public Interest Research Group found. Connecticut’s law is the most comprehensive. There, the fees can’t exceed Medicare rates, and patients must get written notice about facility fees when they schedule appointments.
• Speaking of facility fees, the Wall Street Journal had a good piece last week on them, noting that hospitals add billions of dollars to medical bills for routine care in outpatient centers they own. And as hospitals grow their reach, so do facility fees.
• A new Brookings analysis on the No Surprises Act’s arbitration process finds that it results in very high prices, in stark contrast with the CBO’s projection that it would lower prices. But if you’re a regular STAT reader, you already know that’s the case.
• Walgreens Boots Alliance on Thursday posted an operating loss in the quarter that ended Feb. 29 (TIL quarters can end Feb. 29!) because of a nearly $6 billion after-tax impairment charge related to the closures of its VillageMD clinics. Walgreens says it will close 160 VillageMD clinics in total, far more than the 60 it had originally announced.