I've Been Mugged Blog

Survey Asked Americans Which They Consider Safer: Self-Driving Ride-Shares Or Solo Ride-Shares With Human Drivers

Many consumers use ride-sharing services, such as Lyft and Uber. We all have heard about self-driving cars. A polling firm asked consumers a very relevant question: "Which ride is trusted more? Would you rather take a rideshare alone or a self-driving car?" The results may surprise you.

The questions are relevant given news reports about sexual assaults and kidnapping ride-sharing drivers and imposters. A pedestrian death involving a self-driving ride-sharing car highlighted the ethical issues about who machines should save when fatal crashes can't be avoided. Developers have admitted that self-driving cars can be hacked by bad actors, just like other computers and mobile devices. And, new car buyers stated clear preferences when considering self-driving (a/k/a autonomous) vehicles versus standard vehicles with self-driving modes.

Using Google Consumer Surveys, The Zebra surveyed 2,000 persons in the United States during August, 2019 and found:

"53 percent of people felt safer taking a self-driving car than driver-operated rideshare alone; Baby Boomers (age 55-plus) were the only age group to prefer a solo Uber ride over a driverless car; Gen Z (ages 18–24) were most open to driverless rideshares: 40 percent said they were willing to hail a ride from one."

Founded 7 years ago, The Zebra describes itself as, "the nation's leading insurance comparison site." The survey also found:

"... Baby Boomers were the only group to trust solo ridesharing more than they would a ride in a self-driving car... despite women being subjected to higher rates of sexual violence, the poll found women were only slightly more likely than men to choose a self-driving car over ridesharing alone (53 percent of women compared to 52 percent of men).

It seems safe to assume: trust it or not, the tech is coming. Quickly. What are your opinions?

The Extortion Economy: How Insurance Companies Are Fueling a Rise in Ransomware Attacks

[Editor's note: today's guest post, by reporters at ProPublica, is part of a series which discusses the intersection of cyberattacks, ransomware, and the insurance industry. It is reprinted with permission.]

By Renee Dudley, ProPublica

On June 24, the mayor and council of Lake City, Florida, gathered in an emergency session to decide how to resolve a ransomware attack that had locked the city’s computer files for the preceding fortnight. Following the Pledge of Allegiance, Mayor Stephen Witt led an invocation. “Our heavenly father,” Witt said, “we ask for your guidance today, that we do what’s best for our city and our community.”

Witt and the council members also sought guidance from City Manager Joseph Helfenberger. He recommended that the city allow its cyber insurer, Beazley, an underwriter at Lloyd’s of London, to pay the ransom of 42 bitcoin, then worth about $460,000. Lake City, which was covered for ransomware under its cyber-insurance policy, would only be responsible for a $10,000 deductible. In exchange for the ransom, the hacker would provide a key to unlock the files.

“If this process works, it would save the city substantially in both time and money,” Helfenberger told them.

Without asking questions or deliberating, the mayor and the council unanimously approved paying the ransom. The six-figure payment, one of several that U.S. cities have handed over to hackers in recent months to retrieve files, made national headlines.

Left unmentioned in Helfenberger’s briefing was that the city’s IT staff, together with an outside vendor, had been pursuing an alternative approach. Since the attack, they had been attempting to recover backup files that were deleted during the incident. On Beazley’s recommendation, the city chose to pay the ransom because the cost of a prolonged recovery from backups would have exceeded its $1 million coverage limit, and because it wanted to resume normal services as quickly as possible.

“Our insurance company made [the decision] for us,” city spokesman Michael Lee, a sergeant in the Lake City Police Department, said. “At the end of the day, it really boils down to a business decision on the insurance side of things: them looking at how much is it going to cost to fix it ourselves and how much is it going to cost to pay the ransom.”

The mayor, Witt, said in an interview that he was aware of the efforts to recover backup files but preferred to have the insurer pay the ransom because it was less expensive for the city. “We pay a $10,000 deductible, and we get back to business, hopefully,” he said. “Or we go, ‘No, we’re not going to do that,’ then we spend money we don’t have to just get back up and running. And so to me, it wasn’t a pleasant decision, but it was the only decision.”

Ransomware is proliferating across America, disabling computer systems of corporations, city governments, schools and police departments. This month, attackers seeking millions of dollars encrypted the files of 22 Texas municipalities. Overlooked in the ransomware spree is the role of an industry that is both fueling and benefiting from it: insurance. In recent years, cyber insurance sold by domestic and foreign companies has grown into an estimated $7 billion to $8 billion-a-year market in the U.S. alone, according to Fred Eslami, an associate director at AM Best, a credit rating agency that focuses on the insurance industry. While insurers do not release information about ransom payments, ProPublica has found that they often accommodate attackers’ demands, even when alternatives such as saved backup files may be available.

The FBI and security researchers say paying ransoms contributes to the profitability and spread of cybercrime and in some cases may ultimately be funding terrorist regimes. But for insurers, it makes financial sense, industry insiders said. It holds down claim costs by avoiding expenses such as covering lost revenue from snarled services and ongoing fees for consultants aiding in data recovery. And, by rewarding hackers, it encourages more ransomware attacks, which in turn frighten more businesses and government agencies into buying policies.

“The onus isn’t on the insurance company to stop the criminal, that’s not their mission. Their objective is to help you get back to business. But it does beg the question, when you pay out to these criminals, what happens in the future?” said Loretta Worters, spokeswoman for the Insurance Information Institute, a nonprofit industry group based in New York. Attackers “see the deep pockets. You’ve got the insurance industry that’s going to pay out, this is great.”

A spokesperson for Lloyd’s, which underwrites about one-third of the global cyber-insurance market, said that coverage is designed to mitigate losses and protect against future attacks, and that victims decide whether to pay ransoms. “Coverage is likely to include, in the event of an attack, access to experts who will help repair the damage caused by any cyberattack and ensure any weaknesses in a company’s cyberprotection are eliminated,” the spokesperson said. “A decision whether to pay a ransom will fall to the company or individual that has been attacked.” Beazley declined comment.

Fabian Wosar, chief technology officer for anti-virus provider Emsisoft, said he recently consulted for one U.S. corporation that was attacked by ransomware. After it was determined that restoring files from backups would take weeks, the company’s insurer pressured it to pay the ransom, he said. The insurer wanted to avoid having to reimburse the victim for revenues lost as a result of service interruptions during recovery of backup files, as its coverage required, Wosar said. The company agreed to have the insurer pay the approximately $100,000 ransom. But the decryptor obtained from the attacker in return didn’t work properly and Wosar was called in to fix it, which he did. He declined to identify the client and the insurer, which also covered his services.

“Paying the ransom was a lot cheaper for the insurer,” he said. “Cyber insurance is what’s keeping ransomware alive today. It’s a perverted relationship. They will pay anything, as long as it is cheaper than the loss of revenue they have to cover otherwise.”

Worters, the industry spokeswoman, said ransom payments aren’t the only example of insurers saving money by enriching criminals. For instance, the companies may pay fraudulent claims — for example, from a policyholder who sets a car on fire to collect auto insurance — when it’s cheaper than pursuing criminal charges. “You don’t want to perpetuate people committing fraud,” she said. “But there are some times, quite honestly, when companies say: ’This fraud is not a ton of money. We are better off paying this.’ ... It’s much like the ransomware, where you’re paying all these experts and lawyers, and it becomes this huge thing.”

Insurers approve or recommend paying a ransom when doing so is likely to minimize costs by restoring operations quickly, regulators said. As in Lake City, recovering files from backups can be arduous and time-consuming, potentially leaving insurers on the hook for costs ranging from employee overtime to crisis management public relations efforts, they said.

“They’re going to look at their overall claim and dollar exposure and try to minimize their losses,” said Eric Nordman, a former director of the regulatory services division of the National Association of Insurance Commissioners, or NAIC, the organization of state insurance regulators. “If it’s more expeditious to pay the ransom and get the key to unlock it, then that’s what they’ll do.”

As insurance companies have approved six- and seven-figure ransom payments over the past year, criminals’ demands have climbed. The average ransom payment among clients of Coveware, a Connecticut firm that specializes in ransomware cases, is about $36,000, according to its quarterly report released in July, up sixfold from last October. Josh Zelonis, a principal analyst for the Massachusetts-based research company Forrester, said the increase in payments by cyber insurers has correlated with a resurgence in ransomware after it had started to fall out of favor in the criminal world about two years ago.

One cybersecurity company executive said his firm has been told by the FBI that hackers are specifically extorting American companies that they know have cyber insurance. After one small insurer highlighted the names of some of its cyber policyholders on its website, three of them were attacked by ransomware, Wosar said. Hackers could also identify insured targets from public filings; the Securities and Exchange Commission suggests that public companies consider reporting “insurance coverage relating to cybersecurity incidents.”

Even when the attackers don’t know that insurers are footing the bill, the repeated capitulations to their demands give them confidence to ask for ever-higher sums, said Thomas Hofmann, vice president of intelligence at Flashpoint, a cyber-risk intelligence firm that works with ransomware victims.

Ransom demands used to be “a lot less,” said Worters, the industry spokeswoman. But if hackers think they can get more, “they’re going to ask for more. So that’s what’s happening. ... That’s certainly a concern.”

In the past year, dozens of public entities in the U.S. have been paralyzed by ransomware. Many have paid the ransoms, either from their own funds or through insurance, but others have refused on the grounds that it’s immoral to reward criminals. Rather than pay a $76,000 ransom in May, the city of Baltimore — which did not have cyber insurance — sacrificed more than $5.3 million to date in recovery expenses, a spokesman for the mayor said this month. Similarly, Atlanta, which did have a cyber policy, spurned a $51,000 ransom demand last year and has spent about $8.5 million responding to the attack and recovering files, a spokesman said this month. Spurred by those and other cities, the U.S. Conference of Mayors adopted a resolution this summer not to pay ransoms.

Still, many public agencies are delighted to have their insurers cover ransoms, especially when the ransomware has also encrypted backup files. Johannesburg-Lewiston Area Schools, a school district in Michigan, faced that predicament after being attacked in October. Beazley, the insurer handling the claim, helped the district conduct a cost-benefit analysis, which found that paying a ransom was preferable to rebuilding the systems from scratch, said Superintendent Kathleen Xenakis-Makowski.

“They sat down with our technology director and said, ‘This is what’s affected, and this is what it would take to re-create,’” said Xenakis-Makowski, who has since spoken at conferences for school officials about the importance of having cyber insurance. She said the district did not discuss the ransom decision publicly at the time in part to avoid a prolonged debate over the ethics of paying. “There’s just certain things you have to do to make things work,” she said.

Ransomware is one of the most common cybercrimes in the world. Although it is often cast as a foreign problem, because hacks tend to originate from countries such as Russia and Iran, ProPublica has found that American industries have fostered its proliferation. We reported in May on two ransomware data recovery firms that purported to use their own technology to disable ransomware but in reality often just paid the attackers. One of the firms, Proven Data, of Elmsford, New York, tells victims on its website that insurance is likely to cover the cost of ransomware recovery.

Lloyd’s of London, the world’s largest specialty insurance market, said it pioneered the first cyber liability policy in 1999. Today, it offers cyber coverage through 74 syndicates — formed by one or more Lloyd’s members such as Beazley joining together — that provide capital and accept and spread risk. Eighty percent of the cyber insurance written at Lloyd’s is for entities based in the U.S. The Lloyd’s market is famous for insuring complex, high-risk and unusual exposures, such as climate-change consequences, Arctic explorers and Bruce Springsteen’s voice.

Many insurers were initially reluctant to cover cyber disasters, in part because of the lack of reliable actuarial data. When they protect customers against traditional risks such as fires, floods and auto accidents, they price policies based on authoritative information from national and industry sources. But, as Lloyd’s noted in a 2017 report, “there are no equivalent sources for cyber-risk,” and the data used to set premiums is collected from the internet. Such publicly available data is likely to underestimate the potential financial impact of ransomware for an insurer. According to a report by global consulting firm PwC, both insurers and victimized companies are reluctant to disclose breaches because of concerns over loss of competitive advantage or reputational damage.

Despite the uncertainty over pricing, dozens of carriers eventually followed Lloyd’s in embracing cyber coverage. Other lines of insurance are expected to shrink in the coming decades, said Nordman, the former regulator. Self-driving cars, for example, are expected to lead to significantly fewer car accidents and a corresponding drop in premiums, according to estimates. Insurers are seeking new areas of opportunity, and “cyber is one of the small number of lines that is actually growing,” Nordman said.

Driven partly by the spread of ransomware, the cyber insurance market has grown rapidly. Between 2015 and 2017, total U.S. cyber premiums written by insurers that reported to the NAIC doubled to an estimated $3.1 billion, according to the most recent data available.

Cyber policies have been more profitable for insurers than other lines of insurance. The loss ratio for U.S. cyber policies was about 35% in 2018, according to a report by Aon, a London-based professional services firm. In other words, for every dollar in premiums collected from policyholders, insurers paid out roughly 35 cents in claims. That compares to a loss ratio of about 62% across all property and casualty insurance, according to data compiled by the NAIC of insurers that report to them. Besides ransomware, cyber insurance frequently covers costs for claims related to data breaches, identity theft and electronic financial scams.

During the underwriting process, insurers typically inquire about a prospective policyholder’s cyber security, such as the strength of its firewall or the viability of its backup files, Nordman said. If they believe the organization’s defenses are inadequate, they might decline to write a policy or charge more for it, he said. North Dakota Insurance Commissioner Jon Godfread, chairman of the NAIC’s innovation and technology task force, said some insurers suggest prospective policyholders hire outside firms to conduct “cyber audits” as a “risk mitigation tool” aimed to prevent attacks — and claims — by strengthening security.

“Ultimately, you’re going to see that prevention of the ransomware attack is likely going to come from the insurance carrier side,” Godfread said. “If they can prevent it, they don’t have to pay out a claim, it’s better for everybody.”

Not all cyber insurance policies cover ransom payments. After a ransomware attack on Jackson County, Georgia, last March, the county billed insurance for credit monitoring services and an attorney but had to pay the ransom of about $400,000, County Manager Kevin Poe said. Other victims have struggled to get insurers to pay cyber-related claims. Food company Mondelez International and pharmaceutical company Merck sued insurers last year in state courts after the carriers refused to reimburse costs associated with damage from NotPetya malware. The insurers cited “hostile or warlike action” or “act of war” exclusions because the malware was linked to the Russian military. The cases are pending.

The proliferation of cyber insurers willing to accommodate ransom demands has fostered an industry of data recovery and incident response firms that insurers hire to investigate attacks and negotiate with and pay hackers. This year, two FBI officials who recently retired from the bureau opened an incident response firm in Connecticut. The firm, The Aggeris Group, says on its website that it offers “an expedient response by providing cyber extortion negotiation services and support recovery from a ransomware attack.”

Ramarcus Baylor, a principal consultant for The Crypsis Group, a Virginia incident response firm, said he recently worked with two companies hit by ransomware. Although both clients had backup systems, insurers promised to cover the six-figure ransom payments rather than spend several days assessing whether the backups were working. Losing money every day the systems were down, the clients accepted the offer, he said.

Crypsis CEO Bret Padres said his company gets many of its clients from insurance referrals. There’s “really good money in ransomware” for the cyberattacker, recovery experts and insurers, he said. Routine ransom payments have created a “vicious circle,” he said. “It’s a hard cycle to break because everyone involved profits: We do, the insurance carriers do, the attackers do.”

Chris Loehr, executive vice president of Texas-based Solis Security, said there are “a lot of times” when backups are available but clients still pay ransoms. Everyone from the victim to the insurer wants the ransom paid and systems restored as fast as possible, Loehr said.

“They figure out that it’s going to take a month to restore from the cloud, and so even though they have the data backed up,” paying a ransom to obtain a decryption key is faster, he said.

“Let’s get it negotiated very quickly, let’s just get the keys, and get the customer decrypted to minimize business interruption loss,” he continued. “It makes the client happy, it makes the attorneys happy, it makes the insurance happy.”

If clients morally oppose ransom payments, Loehr said, he reminds them where their financial interests lie, and of the high stakes for their businesses and employees. “I’ll ask, ‘The situation you’re in, how long can you go on like this?’” he said. “They’ll say, ‘Well, not for long.’ Insurance is only going to cover you for up to X amount of dollars, which gets burned up fast.”

“I know it sucks having to pay off assholes, but that’s what you gotta do,” he said. “And they’re like, ‘Yeah, OK, let’s get it done.’ You gotta kind of take charge and tell them, ‘This is the way it’s going to be or you’re dead in the water.’”

Lloyd’s-backed CFC, a specialist insurance provider based in London, uses Solis for some of its U.S. clients hit by ransomware. Graeme Newman, chief innovation officer at CFC, said “we work relentlessly” to help victims improve their backup security. “Our primary objective is always to get our clients back up and running as quickly as possible,” he said. “We would never recommend that our clients pay ransoms. This would only ever be a very final course of action, and any decision to do so would be taken by our clients, not us as an insurance company.”

As ransomware has burgeoned, the incident response division of Solis has “taken off like a rocket,” Loehr said. Loehr’s need for a reliable way to pay ransoms, which typically are transacted in digital currencies such as Bitcoin, spawned Sentinel Crypto, a Florida-based money services business managed by his friend, Wesley Spencer. Sentinel’s business is paying ransoms on behalf of clients whose insurers reimburse them, Loehr and Spencer said.

New York-based Flashpoint also pays ransoms for insurance companies. Hofmann, the vice president, said insurers typically give policyholders a toll-free number to dial as soon as they realize they’ve been hit. The number connects to a lawyer who provides a list of incident response firms and other contractors. Insurers tightly control expenses, approving or denying coverage for the recovery efforts advised by the vendors they suggest.

“Carriers are absolutely involved in the decision making,” Hofmann said. On both sides of the attack, “insurance is going to transform this entire market,” he said.

On June 10, Lake City government officials noticed they couldn’t make calls or send emails. IT staff then discovered encrypted files on the city’s servers and disconnected the infected servers from the internet. The city soon learned it was struck by Ryuk ransomware. Over the past year, unknown attackers using the Ryuk strain have besieged small municipalities and technology and logistics companies, demanding ransoms up to $5 million, according to the FBI.

Shortly after realizing it had been attacked, Lake City contacted the Florida League of Cities, which provides insurance for more than 550 public entities in the state. Beazley is the league’s reinsurer for cyber coverage, and they share the risk. The league declined to comment.

Initially, the city had hoped to restore its systems without paying a ransom. IT staff was “plugging along” and had taken server drives to a local vendor who’d had “moderate success at getting the stuff off of it,” Lee said. However, the process was slow and more challenging than anticipated, he said.

As the local technicians worked on the backups, Beazley requested a sample encrypted file and the ransom note so its approved vendor, Coveware, could open negotiations with the hackers, said Steve Roberts, Lake City’s director of risk management. The initial ransom demand was 86 bitcoin, or about $700,000 at the time, Coveware CEO Bill Siegel said. “Beazley was not happy with it — it was way too high,” Roberts said. “So [Coveware] started negotiations with the perps and got it down to the 42 bitcoin. Insurance stood by with the final negotiation amount, waiting for our decision.”

Lee said Lake City may have been able to achieve a “majority recovery” of its files without paying the ransom, but it probably would have cost “three times as much money trying to get there.” The city fired its IT director, Brian Hawkins, in the midst of the recovery efforts. Hawkins, who is suing the city, said in an interview posted online by his new employer that he was made “the scapegoat” for the city’s unpreparedness. The “recovery process on the files was taking a long time” and “the lengthy process was a major factor in paying the ransom,” he said in the interview.

On June 25, the day after the council meeting, the city said in a press release that while its backup recovery efforts “were initially successful, many systems were determined to be unrecoverable.” Lake City fronted the ransom amount to Coveware, which converted the money to bitcoin, paid the attackers and received a fee for its services. The Florida League of Cities reimbursed the city, Roberts said.

Lee acknowledged that paying ransoms spurs more ransomware attacks. But as cyber insurance becomes ubiquitous, he said, he trusts the industry’s judgment.

“The insurer is the one who is going to get hit with most of this if it continues,” he said. “And if they’re the ones deciding it’s still better to pay out, knowing that means they’re more likely to have to do it again — if they still find that it’s the financially correct decision — it’s kind of hard to argue with them because they know the cost-benefit of that. I have a hard time saying it’s the right decision, but maybe it makes sense with a certain perspective.”

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.

 

51 Corporations Tell Congress: A Federal Privacy Law Is Needed. 145 Corporations Tell The U.S. Senate: Inaction On Gun Violence Is 'Simply Unacceptable'

Last week, several of the largest corporations petitioned the United States government for federal legislation in two key topics: consumer privacy and gun reform.

First, the Chief Executive Officers (CEOs) at 51 corporations sent a jointly signed letter to leaders in Congress asking for a federal privacy law to supersede laws emerging in several states. ZD Net reported:

"The open-letter was sent on behalf of Business Roundtable, an association made up of the CEOs of America's largest companies... CEOs blamed a patchwork of differing privacy regulations that are currently being passed in multiple US states, and by several US agencies, as one of the reasons why consumer privacy is a mess in the US. This patchwork of privacy regulations is creating problems for their companies, which have to comply with an ever-increasing number of laws across different states and jurisdictions. Instead, the 51 CEOs would like one law that governs all user privacy and data protection across the US, which would simplify product design, compliance, and data management."

The letter was sent to U.S. Senate Majority Leader Mitch McConnell, U.S. Senate Minority Leader Charles E. Schumer, Senator Roger F. Wicker (Chairman of the Committee on Commerce, Science and Transportation), Nancy Pelosi (Speaker of the U.S. House of Representatives), Kevin McCarthy (Minority Leader of the U.S. House of Representatives), Frank Pallone, Jr. (Chairman of the Committee on Energy and Commerce in the U.S. House of Representatives), and other ranking politicians.

The letter stated, in part:

"Consumers should not and cannot be expected to understand rules that may change depending upon the state in which they reside, the state in which they are accessing the internet, and the state in which the company’s operation is providing those resources or services. Now is the time for Congress to act and ensure that consumers are not faced with confusion about their rights and protections based on a patchwork of inconsistent state laws. Further, as the regulatory landscape becomes increasingly fragmented and more complex, U.S. innovation and global competitiveness in the digital economy are threatened. "

That sounds fair and noble enough. After writing this blog for more than 12 years, I have learned that details matters. Who writes the proposed legislation and the details in that legislation matter. It is too early to tell if the proposed legislation is weaker or stronger than what some states have implemented.

Some of the notable companies which signed the joint letter included AT&T, Amazon, Comcast, Dell Technologies, FedEx, IBM, Qualcomm, Salesforce, SAP, Target, and Walmart. Signers from the financial services sector included American Express, Bank of America, Citigroup, JPMorgan Chase, MasterCard, State Farm Insurance, USAA, and Visa. Several notable companies did not sign the letter: Facebook, Google, Microsoft, and Verizon.

Second, The New York Times reported that executives from 145 companies sent a joint letter to members of the U.S. Senate demanding that they take action on gun violence. The letter stated, in part (emphasis added):

"... we are writing to you because we have a responsibility and obligation to stand up for the safety of our employees ,customers, and all Americans in the communities we serve across the country. Doing nothing about America's gun violence crisis is simply unacceptable and it is time to stand with the American public on gun safety. Gun violence in America is not inevitable; it's preventable. There are steps Congress can, and must take to prevent and reduce gun violence. We need our lawmakers to support common sense gun laws... we urge the Senate to stand with the American public and take action on gun safety by passing a bill to require background checks on all gun sales and a strong Red Flag law that would allow courts to issue life-saving extreme risk protection orders..."

Some of the notable companies which signed the letter included Airbnb, Bain Capital, Bloomberg LP, Conde Nast, DICK'S Sporting Goods, Gap Inc., Levi Strauss & Company, Lyft, Pinterest, Publicis Groupe, Reddit, Royal Caribbean Cruises Ltd., Twitter, Uber, and Yelp.

Earlier this year, the U.S. House of Representatives passed legislation to address gun violence. So far, the U.S. Senate has done nothing. Representative Kathy Castor (14th District in Florida), explained the actions the House took in 2019:

"The Bipartisan Background Checks Act that I championed is a commonsense step to address gun violence and establish measures that protect our community and families. America is suffering from a long-term epidemic of gun violence – each year, 120,000 Americans are injured and 35,000 die by firearms. This bill ensures that all gun sales or transfers are subject to a background check, stopping senseless violence by individuals to themselves and others... Additionally, the Democratic House passed H.R. 1112 – the Enhanced Background Checks Act of 2019 – which addresses the Charleston Loophole that currently allows gun dealers to sell a firearm to dangerous individuals if the FBI background check has not been completed within three business days. H.R. 1112 makes the commonsense and important change to extend the review period to 10 business days..."

Findings from a February, 2018 Quinnipiac national poll:

"American voters support stricter gun laws 66 - 31 percent, the highest level of support ever measured by the independent Quinnipiac University National Poll, with 50 - 44 percent support among gun owners and 62 - 35 percent support from white voters with no college degree and 58 - 38 percent support among white men... Support for universal background checks is itself almost universal, 97 - 2 percent, including 97 - 3 percent among gun owners. Support for gun control on other questions is at its highest level since the Quinnipiac University Poll began focusing on this issue in the wake of the Sandy Hook massacre: i) 67 - 29 percent for a nationwide ban on the sale of assault weapons; ii) 83 - 14 percent for a mandatory waiting period for all gun purchases. It is too easy to buy a gun in the U.S. today..."

What Can Be Done Right Now to Stop a Basic Source of Health Care Fraud

[Editor's note: today's post, by reporters at ProPublica, discusses fixes for the security issues discussed in a prior post. It is reprinted with permission.]

By Marshall Allen, ProPublica

In our story about the convicted health care con man David Williams, we detailed how the Texas personal trainer made off with millions by billing some of the nation’s largest health insurers as if he were a doctor providing medical services.

Williams cannily exploited gaping loopholes in the health insurance system that allowed him almost unfettered entry. Taking commonsense steps to close those loopholes, experts say, could block other fraudsters from entry.

1. No one checks to see whether people getting federal ID numbers that allow them to bill insurers have valid licenses. They could.

Anyone billing an insurance company needs a National Provider Identifier, or NPI number. The number is obtained through Medicare, a federal agency that covers people over 65 as well as those with disabilities. But Medicare doesn’t verify that NPI applicants who claim to be licensed are, indeed, licensed by their state’s regulators. The agency could do a license check in less than a minute online or in milliseconds if the process is automated.

Medicare said federal regulations do not allow it to verify NPI applicants’ credentials, so the Department of Health and Human Services might need to revise the regulations. Congress could also order the reform.

2. Insurance companies don’t always verify that the people they are paying are licensed medical providers. They could.

Williams avoided scrutiny from insurers by billing as an out-of-network provider, so he didn’t have a contract with them and didn’t have his credentials verified before receiving payments. At Williams’ trial on federal fraud charges, representatives from the insurance companies testified that it’s not cost effective to review every claim. Almost all are automatically paid.

At a minimum, insurers could ensure that anyone billing them has the proper licensing before a payment is made. Again, this screening would take seconds or less.

Regulators could also require that insurers verify the licenses of those they pay. Some experts say it may take state and federal legislation to mandate it. Officials from America’s Health Insurance Plans, the trade group for the insurers, declined to comment on this suggestion.

3. Insurance companies aren’t reporting most cases of suspected fraud to state and federal regulators. They could.

Many states have a law in place that requires insurers to report suspected cases of fraud to state regulators. This allows regulators to spot serial fraudsters and trends, and it helps officials build criminal and civil cases. But the states have a mishmash of requirements, and many don’t do audits to make sure cases are being reported.

At least three insurance companies caught Williams committing fraud. But the Texas Department of Insurance only received one referral about the case, according to internal documents. If all three insurers that Williams defrauded had referred him, his case could have been prioritized and stopped sooner.

The existing state laws don’t apply to self-funded plans where employers pay for the health benefits. Those are overseen by the federal government. And no federal law requires insurers who administer self-funded plans to report suspected cases of fraud.

State and federal laws would need to be changed to require the consistent reporting of suspected fraud. Experts say audits, and the potential for fines, may also be needed to spur the insurers to file the reports.

Filed under:

• Health Care

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Health Insurers Make It Easy for Scammers to Steal Millions. Who Pays? You.

[Editor's note: today's guest post, by reporters at ProPublica, discusses security and fraud issues within the health insurance industry. It is reprinted with permission.]

By Marshall Allen, ProPublica

Ever since her 14-year marriage imploded in financial chaos and a protective order, Amy Lankford had kept a wary eye on her ex, David Williams. Williams, then 51, with the beefy body of a former wrestler gone slightly to seed, was always working the angles, looking for shortcuts to success and mostly stumbling. During their marriage, Lankford had been forced to work overtime as a physical therapist when his personal training business couldn’t pay his share of the bills.

So, when Williams gave their three kids iPad Minis for Christmas in 2013, she was immediately suspicious. Where did he get that kind of money? Then one day on her son’s iPad, she noticed numbers next to the green iMessage icon indicating that new text messages were waiting. She clicked.

What she saw next made her heart pound. Somehow the iPad had become linked to her ex-husband’s personal Apple device and the messages were for him.

Most of the texts were from people setting up workouts through his personal training business, Get Fit With Dave, which he ran out of his home in Mansfield, Texas, a suburb of Fort Worth. But, oddly, they were also providing their birth dates and the group number of their health insurance plans. The people had health benefits administered by industry giants, including Aetna, Cigna and UnitedHealthcare. They were pleased to hear their health plans would now pay for their fitness workouts.

Lankford’s mind raced as she scrolled through the messages. It appeared her ex-husband was getting insurance companies to pay for his personal training services. But how could that be possible? Insurance companies pay for care that’s medically necessary, not sessions of dumbbell curls and lunges.

Insurance companies also only pay for care provided by licensed medical providers, like doctors or nurses. Williams called himself “Dr. Dave” because he had a Ph.D. in kinesiology. But he didn’t have a medical license. He wasn’t qualified to bill insurance companies. But, Lankford could see, he was doing it anyway.

As Lankford would learn, “Dr. Dave” had wrongfully obtained, with breathtaking ease, federal identification numbers that allowed him to fraudulently bill insurers as a physician for services to about 1,000 people. Then he battered the system with the bluntest of ploys: submit a deluge of out-of-network claims, confident that insurers would blindly approve a healthy percentage of them. Then, if the insurers did object, he gambled that they had scant appetite for a fight.

By the time the authorities stopped Williams, three years had passed since Lankford had discovered the text messages. In total, records show, he ran the scheme for more than four years, fraudulently billing several of the nation’s top insurance companies — United, Aetna and Cigna — for $25 million and reaping about $4 million in cash.

In response to inquiries, Williams sent a brief handwritten letter. He didn’t deny billing the insurers and defended his work, calling it an “unprecedented and beneficial opportunity to help many people.”

“My objective was to create a system of preventative medicine,” he wrote. Because of his work, “hundreds of patients” got off their prescription medication and avoided surgery.

There are a host of reasons health care costs are out-of-control and routinely top American’s list of financial worries, from unnecessary treatment and high prices to waste and fraud. Most people assume their insurance companies are tightly controlling their health care dollars. Insurers themselves boast of this on their websites.

In 2017, private insurance spending hit $1.2 trillion, according to the federal government, yet no one tracks how much is lost to fraud. Some investigators and health care experts estimate that fraud eats up 10% of all health care spending, and they know schemes abound.

Williams’ case highlights an unsettling reality about the nation’s health insurance system: It is surprisingly easy for fraudsters to gain entry, and it is shockingly difficult to convince insurance companies to stop them.

Williams’ spree also lays bare the financial incentives that drive the system: Rising health care costs boost insurers’ profits. Policing criminals eats away at them. Ultimately, losses are passed on to their clients through higher premiums and out-of-pocket fees or reduced coverage.

Insurance companies “are more focused on their bottom line than ferreting out bad actors,” said Michael Elliott, former lead attorney for the Medicare Fraud Strike Force in North Texas.

As Lankford looked at the iPad that day, she knew something else that made Williams’ romp through the health care system all the more surprising. The personal trainer had already done jail time for a similar crime, and Lankford’s father had uncovered the scheme.

Scanning her ex-husband’s texts, Lankford, then 47, knew just who to call. During the rocky end of her marriage, her dad had become the family watchdog. Jim Pratte has an MBA in finance and retired after a career selling computer hardware, but even the mention of Williams flushed his face red and ratcheted up his Texas twang. His former-son-in law is the reason he underwent firearms training.

Lankford lived a few minutes away from her parents in Mansfield. She brought her dad the iPad and they pored over message after message in which Williams assured clients that their insurance would cover their workouts at no cost to them.

Lankford and Pratte, then 68, were stunned at Williams’ audacity. They were sure the companies would quickly crackdown on what appeared to be a fraudulent scheme.

Especially because Williams had a criminal record.

In early 2006, while Williams and Lankford were going through their divorce, the family computer started freezing up. Lankford asked her dad to help her recover a document. Scrolling through the hard drive, Pratte came upon a folder named “Invoices,” and he suspected it had something to do with Williams.

His soon to be ex-son-in-law had had a promising start. He’d wrestled and earned bachelor’s and master’s degrees at Boise State University, and a Ph.D. at Texas A&M University, before landing a well-paying job as a community college professor in Arlington. But the glow faded when the school suddenly fired him for reasons hidden by a confidential settlement and by Williams himself, who refused to reveal them even to his wife.

Out of a job, Williams had hustled investments from their friends to convert an old Winn-Dixie grocery store into a health club called “Doc’s Gym.” The deal fell apart and everyone lost their money. The failure was written up in the local newspaper under the headline: “What’s up with Doc’s?”

Inside the “Invoices” folder, Pratte found about a dozen bills that appeared to be from a Fort Worth nonprofit organization where his daughter and Williams took their son Jake for autism treatment. As Pratte suspected, the invoices turned out to be fake. Williams had pretended to take Jake for therapy, then created the false bills so he could pocket a cash “reimbursement” from a county agency.

In November 2008, Williams pleaded guilty in Tarrant County District Court to felony theft. He was sentenced to 18 months in jail and was released on bail while he appealed.

Things took an even darker turn about two years later when Williams and Lankford’s 11-year-old son showed up to school with bruising on his face. Investigators determined that Williams had hit the boy in the face about 20 times. Williams pleaded guilty to causing bodily injury to a child, a felony, which, coupled with the bail violation, landed him in jail for about two years.

The time behind bars didn’t go to waste. Williams revised the business plan for Get Fit With Dave, concluding he needed to get access to health insurance.

Williams detailed his plans in letters to Steve Cosio, a tech-savvy friend who ran the Get Fit With Dave website in exchange for personal training sessions. Cosio, whose name later popped up on Lankford’s son’s iPad, kept the letters in their original envelopes and shared them with ProPublica. He said he never suspected Williams was doing anything illegal.

In his letters, Williams said that when he got out, instead of training clients himself, he would recruit clients and other trainers to run the sessions. “It has the potential for increased revenue.”

He asked Cosio to remove the term “personal training” from his website in another letter, adding “95 percent of my clients are paid for by insurance, which does not cover ‘personal training,’ I have to bill it as ‘therapeutic exercise.’ It is the same thing, but I have to play the insurance game … Insurance pays twice as much as cash pay so I have to go after that market.”

Williams downplayed his child abuse conviction — “I can honestly say that I am the only one in here for spanking their child” — and included a dig at his ex-father-in-law, Pratte: “an evil, evil man. He is the reason for my new accommodations.”

Williams told Cosio he needed to raise a quick $30,000 to pay an attorney to get him access to his children. “I will need to get a bunch of clients in a hurry.”

To set his plan in motion, Williams needed what is essentially the key that unlocks access to health care dollars: a National Provider Identifier, or NPI number. The ID number is little known outside the medical community but getting one through the federal government’s Medicare program is a rite of passage for medical professionals and organizations. Without it, they can’t bill insurers for their services.

One would think obtaining an NPI, with its stamp of legitimacy, would entail at least some basic vetting. But Williams discovered and exploited an astonishing loophole: Medicare doesn’t check NPI applications for accuracy — a process that should take mere minutes or, if automated, a millisecond. Instead, as one federal prosecutor later noted in court, Medicare “relies on the honesty of applicants.”

Records show Williams first applied for an NPI under his own name as far back as 2008. But it wasn’t until 2014 that Williams began to ramp up his scheme, even though now he wasn’t just unlicensed, he was a two-time felon. He got a second NPI under the company name, Kinesiology Specialists. The following year, he picked up another under Mansfield Therapy Associates. In 2016, he obtained at least 11 more, often for entities he created in the areas where he found fitness clients: Dallas, Nevada, North Texas and more. By 2017, he had 20 NPIs, each allowing him a new stream of billings.

For every NPI application, Williams also obtained a new employer identification number, which is used for tax purposes. But he never hid who he was, using his real name, address, phone number and email address on the applications. He added the title “Dr.” and listed his credentials as “PhD.” Under medical specialty he often indicated he was a “sports medicine” doctor and provided a license number, even though he wasn’t a physician and didn’t have a medical license.

Medicare officials declined to be interviewed about Williams. But in a statement, they acknowledged that the agency doesn’t verify whether an NPI applicant is a medical provider or has a criminal history. The agency claims it would need “explicit authority” from the Department of Health and Human Services to do so — and currently doesn’t have it. Regulations, and potentially the law, would need to be revised to allow the agency to vet the applications, the statement said.

Medicare does verify the credentials of physicians and other medical providers who want to bill the agency for their Medicare patients.

To those charged with rooting out fraudsters, the current regulations seem like an invitation to plunder. “Medicare has to make sure that the individuals who apply for NPIs are licensed physicians — it’s that simple,” said Elliott, the former prosecutor who ran about 100 health care fraud investigations.

Elliott, who now does white-collar criminal defense, said he knows of two other cases currently under federal investigation in which non-licensed clinic administrators lied to obtain NPI numbers, then used patients’ information to file false claims worth millions.

Medicare warns NPI applicants that submitting false information could lead to a $250,000 fine and five years in prison. But since Medicare started issuing NPIs in 2006, officials said they could not identify anyone who had been sanctioned.

So, for those bent on fraud, the first step is easy; the online approval for an NPI takes just minutes.

Williams got out of jail in November 2012 and launched an aggressive expansion with an irresistible pitch: Time to get those private personal training sessions you thought you couldn’t afford!

“Now accepting most health insurance plans,” his Get Fit With Dave website announced. He added a drop-down menu to his site, allowing potential clients to select their health insurance provider: Aetna. Blue Cross Blue Shield. United.

He began building a team, soliciting trainers from the strength and conditioning department at Texas Christian University. He met with new recruits at local fast food joints or coffee shops to set them up. To the trainers, the business appeared legit: They even signed tax forms. Before long, Williams’ network stretched throughout Texas and into Colorado, Idaho and Nevada.

One Fort Worth trainer recalled meeting Williams through one of his clients, a Southwest Airlines flight attendant. Williams, he said, seemed like a real doctor, and it wasn’t hard to imagine an insurer’s wellness program covering fitness. Plus, it was good money — about $50 an hour and Williams paid him for multiple clients at once if he did boot camps, said the trainer, who asked that his name not be used so he wouldn’t be tarnished by his association with Williams. Williams, he said, even gave him an iPad, with “Kinesiology Specialists” etched on the back, to submit bills and paid him via direct deposit.

Clients came to Williams through his business cards, his website and word-of-mouth. Williams, records show, quickly verified if their insurance companies would cover his fees — although he didn’t tell clients that those fees would be billed as medical services, not personal training. To ensure the clients paid nothing, he waived their annual deductibles — the portion patients pay each year before insurance kicks in. Authorities said Williams banked on being able to file enough claims to quickly blow through their deductibles so he could get paid.

Meredith Glavin, a flight attendant with Southwest, told the authorities she got in touch with Williams after her co-workers said insurance was covering their workouts. After providing her name, address and insurance information on the Get Fit With Dave website, Williams emailed back with the good news: “Everything checks out with your insurance. My services will be covered at no cost to you.”

During a follow-up phone call, Glavin said, they discussed her fitness and weight loss goals and then Williams connected her with a trainer. The workouts were typical fitness exercises, she said, not treatment for a medical condition. But insurance claims show Williams billed the sessions as highly complex $300 examinations to treat “lumbago and sciatica,” a condition in which nerve pain radiates from the lower back into the legs.

He used his favorite billing code — 99215 — to bill Glavin’s insurer, United, the claims show. The code is supposed to be used less often because it requires a comprehensive examination and sophisticated medical decision-making, warranting higher reimbursement. In all, Williams used the code to bill United for more than $20.5 million — without apparently triggering any red flags at the insurer. For that code alone, the insurance giant rewarded him with $2.5 million in payments.

Eventually, Get Fit With Dave expanded to about a dozen trainers and around 1,000 patients, said a source familiar with the case. And, court records show, the checks from insurance companies, some over $100,000, kept rolling in.

Williams bought a couple of pick-up trucks, a new Harley Davidson motorcycle and a fancy house. But greed didn’t seem his only motivation. “I made $50K last week,” he wrote in a December 2014 text to a friend. “Seriously it means nothing. It is not about the money. I have had a lot taken away from me, and maybe I am trying to prove something ... Maybe it is my way of giving the finger to everyone???”

A few miles away, his former father-in-law watched Williams’ illegal business blossom with growing outrage. Pratte kept his grandson’s iPad on his desk, near his computer, and checked it every day. The texts appeared boring, even routine, but Pratte knew they were evidence of ongoing fraud.

“I have another flight attendant friend who is interested in signing up as well,” a new client texted to Williams.

“Tell him to show up with his insurance card,” Williams replied.

To Pratte, the text messages were a “gold mine.” This is the stuff that will really nail his rear end, he recalled thinking as he read the messages. He couldn’t wait to share his findings with the insurers. How often do they get cases wrapped up in a bow?

But when he and Lankford began contacting insurers, they were soon bewildered. When Pratte told Aetna that he wanted to report a case of fraud, he said the customer service representative asked for his member number, then told him non-members couldn’t report criminal activity. Lankford, who happened to be covered by Aetna, made the complaint, but they say they never heard back.

An Aetna spokesman told ProPublica that the insurer could find no record of Pratte’s call but said the company’s fraud hotline takes tips from anyone, even anonymous callers.

Lankford sent an email to Cigna’s special investigations unit in January 2015 “regarding one of your providers that concerns me.” She provided Williams’ company name, address, cellphone number, Social Security number and more, and she described his scheme. “He has no medical license or credentials,” she wrote. “He was in prison for felony theft.”

A supervisory investigator called to ask for the names of personal trainers, which Lankford provided. But, again, there was silence.

Pratte could see many of the clients worked for Southwest and had their benefits administered by United. He jotted down the name, address, phone number, birth date and member identification number of the potential clients on a yellow legal pad — all the information the insurer and Southwest would need to investigate the fraud. This is so easy, Pratte recalled thinking as he wrote down the details, all they have to do is cross-reference this.

Because Southwest self-funds its benefits, the company was on the hook for the bills, which would eventually total about $2.1 million according to a source familiar with the case. It paid United to administer the company’s plan and ensure the claims it covered were legitimate. Pratte said he called the airline in the fall of 2015 and spoke to someone in the human resources department who said they would pass the information to the right people. “That was the last I heard,” he said. Southwest declined to comment for this story. It still pays United to administer its benefits.

Pratte started calling United in the fall of 2014 and spoke to a fraud investigator who took the information with interest, he said. But within a couple of weeks he was told she moved to a different position. Pratte continued calling United over the following two years, making about a dozen calls in total, he said. “He is not a doctor,” Pratte told whoever picked up the phone. “So, I don’t see how he can be filing claims.”

In early 2015, Lankford emailed additional information to the investigator. The investigator wrote back, thanking Lankford and saying she forwarded the details to the people who research licenses. “They will investigate further,” she said in the email.

Meanwhile, the text messages showed Williams continuing to sign up — and bill for — United members.

Frustrated, Pratte made one final call to United in 2016, but he was told the case was closed. United said he’d have to call the Texas Department of Insurance for any additional details. Pratte had already filed a complaint with the regulator but reached out again. The department told him that because he hadn’t personally been defrauded, it would not be able to act on his complaint.

To Pratte, it appeared he had struck out with Aetna, United, Southwest and the Texas Department of Insurance. “I was trying to get as many people as possible to look into it as I could,” Pratte said recently. “I don’t know if that tells me they are incompetent. Or they don’t care. Or they’re too busy.”

A case summary, prepared by the Texas Department of Insurance, shows it first learned of the Williams case in January 2015 but lacked staff to investigate. A spokesman said the regulator later received Pratte’s complaint but didn’t pursue it after learning that United had already investigated and closed its case.

Meanwhile, some Get Fit With Dave clients had begun noticing odd claims on their insurance statements.

Nanette Bishop had heard about Williams when a fellow Southwest flight attendant handed her the trainer’s business card and said, “You’ve got to meet Dr. Dave.” (Bishop said the Southwest legal department advised her not to speak with ProPublica. Details about her interaction with Williams come from court records.)

Bishop said she started strong with the workouts but “fizzled” quickly. Her daughter, who was also on her plan and signed up for workouts, only did a couple sessions. Bishop said she had a hard time staying consistent because she was traveling a lot — for much of October 2014 she was in Germany. Later, she noticed in her insurance records that Williams had been paid for dozens of sessions over many months, even during the time she’d been abroad.

Bishop texted Williams in January 2015 to tell him he needed to refund all the money. “I never worked out four [times] a week and [my daughter] quit the first week of September,” she wrote. Bishop also called United and Southwest Airlines to report the overbilling.

About a month later, Williams received a letter from a subsidiary of United ordering a review Bishop’s medical records.

Another client texted Williams with concerns that her United insurance plan had been billed for 18 workouts in December 2015. That couldn’t be accurate, the woman wrote. “I had to take December off due to my work schedule and family in town,” she wrote. “I understand that people need to be paid but this seems excessive.”

While Pratte, Lankford and some of Williams’ clients repeatedly flagged bogus bills, the mammoth health insurers reacted with sloth-like urgency to the warnings. Their correspondence shows an almost palpable disinterest in taking decisive action — even while acknowledging Williams was fraudulently billing them.

Cigna appears to have been the quickest to intervene. In January 2015, Cigna sent Williams a letter, noting that he wasn’t a licensed medical provider and had misrepresented the services he provided. The insurer said he needed to pay back $175,528 and would not be allowed to continue billing.

“I just got a $175K bill in the mail,” Williams texted to a friend. “Cigna insurance has been overpaying me for the past 18 months and they want it back. I knew that they were reimbursing at too high of a rate so I can’t really complain.”

By then Williams had more than one National Provider Identifier, so he just switched numbers and kept billing Cigna. More than a year later, in May 2016, Cigna sent another letter, saying he now owed $310,309 for inappropriate payments. In total, the company paid him more than $323,000. Williams never gave any of it back. Cigna declined to comment about the Williams case.

Aetna wrote Williams in January 2015 to say it had reviewed his claims and found he wasn’t licensed, resulting in an overpayment of $337,933. The letter said there appeared to be “abusive billing” that gave “rise to a reasonable suspicion of fraud.” But the insurer also gave him a month to provide documentation to dispute the assessment. When Williams hadn’t responded in three months, an Aetna investigator wrote to Williams’ attorney, saying, “We are willing to discuss an amicable resolution of this matter,” and gave him two more weeks to respond.

That August, an Aetna attorney sent Williams’ attorney another letter, noting that Williams had submitted “fraudulent claims” and had continued to submit bills “even after his billing misconduct was identified.”

In January 2016 — a year after Aetna first contacted him — Williams agreed to a settlement that required him to refund the company $240,000 “without admission of fault or liability by either party.”

But that didn’t stop, or even appear to slow, Williams. Not only did he renege on that promise, he picked one of his other NPI numbers and continued to file claims resulting in another $300,000 in payments from Aetna. In total, Aetna paid Williams more than $608,000.

In emails, Ethan Slavin, a company spokesman, didn’t explain why Aetna settled with Williams instead of pursuing criminal prosecution. He blamed the insurer’s slow response on the lengthy settlement process and Williams’ tactic of billing under different organizations and tax identification numbers. Williams did repay some of the money before defaulting, Slavin said.

United, one of the largest companies in the country, paid out the most to Williams. The insurer brought in $226 billion last year and has a subsidiary, Optum, devoted to digging out fraud, even for other insurers. But that prowess is not reflected in its dealings with Williams.

In September 2015, United wrote to Williams, noting his lack of a license and the resulting wrongful payments, totaling $636,637. But then the insurer added a baffling condition: If Williams didn’t respond, United would pay itself back out of his “future payments.” So while demanding repayment because Williams was not a doctor, the company warned it would dock future claims he would be making as a doctor.

Williams responded a month later, noting that he had a Ph.D. in kinesiology and did rehab, so he met the qualifications of a sports medicine doctor.

United responded in November 2015 with the same argument: he wasn’t licensed and thus needed to repay the money, again warning that if he didn’t, United would “initiate repayment by offsetting future payments.”

Williams took United up on its offer. “Please offset future payments until the requested refund amount is met,” he responded.

Then Williams turned to another NPI number, records show, and continued submitting claims to United.

In January 2016, Williams agreed to settle with United and repay $630,000 in monthly installments of $10,000. Inexplicably, the agreement refers to Williams as “a provider of medical services or products licensed as appropriate under the laws of the state of TX” and notes that the settlement doesn’t terminate his continued participation in United’s programs.

In 2016, Williams obtained a new batch of NPI numbers from Medicare. As usual, he used his real name, address and credentials on the applications. The additional numbers allowed him to continue to make claims to United.

In November 2016, United investigators caught Williams again — twice. They sent two letters accusing him of filing 820 claims between May 2016 and August 2016 and demanded repayment. Again, almost inconceivably, the company threatened to cover his debt with “future payments.”

In December 2016, United notified Williams he had only repaid $90,000 of the initial $630,000 he owed and was in default. The following month, United told him he had to pay the remaining $540,000 within 20 days or he could face legal action. Williams replied, saying he wanted to renegotiate the settlement, but the insurer declined. Late that month, United said its inappropriate payments to Williams had ballooned to more than $2.3 million.

A United spokeswoman said it was difficult to stop Williams because he used variations on his name and different organizations to perpetrate the fraud. “He did everything he could not to get caught,” Maria Gordon-Shydlo said.

She acknowledged getting the complaints from Lankford and Pratte, as well as United members, but defended the response of the company, saying it had eventually referred Williams to law enforcement.

The insurer is continuing “to improve our processes and enhance our systems so we can catch these schemes on the front-end,” she said, “before a claim is paid and to recoup dollars that were paid as a result of provider misconduct.”

In all, United paid Williams more than $3.2 million — most of it after the insurer had caught him in the act.

But in reality, the losses weren’t all United’s. Most of the fraud was funded by its client, Southwest.

Many health care experts and fraud investigators said they weren’t surprised to hear that insurers were slow to stop even such an outlandish case of fraud.

“It’s just not worth it to them,” said Dr. Eric Bricker, an internist who spent years running a company that advised employers who self-funded their insurance.

For insurance behemoths pulling in billions, or hundreds of billions, in revenue, fraud that sucks away mere millions is not even a rounding error, he said.

And perhaps counter-intuitively, insurance companies are loath to offend physicians and hospitals in their all-important networks — even those accused of wrongdoing, many experts have said. They attract new clients by providing access to their networks.

This ambivalence toward fraud, Bricker and others said, is no secret. Scammers like Williams are “emblematic of gazillions of people doing variants of the same thing,” Bricker said. Insurers embolden them by using a catch-and-release approach to fraud, in which the insurers identify criminals, then let them go.

Joe Christensen has pursued fraud for both government and commercial insurers, serving as a director in Aetna’s Special Investigations Unit, a team of more than 100 people ferreting out fraud, from 2013 to 2018 and as the director of Utah’s insurance fraud division for 13 years. Fraud in government programs, like Medicare and Medicaid, gets more publicity, he said, and has dedicated arms of agencies pursuing fraudsters. But the losses may be even greater in the commercial market because the dollar levels are higher, he said.

Some commercial insurers take a passive approach, Christensen said, in part because it’s expensive to press a fraud case. At Aetna, he said, investigators would identify cases of apparent fraud, but it was up to the executives and legal team to decide how to handle them. Taking fraudsters to civil or criminal court requires resources, so the company often settled for trying to get repaid through settlements or blocking a suspect provider from billing, he said.

Christensen said while he was at Aetna, investigators almost never sought to partner with law enforcement agencies to pursue criminal cases. Last spring, he became the SIU director for a Southern California-based Medicaid plan called L.A. Care Health Plan, where he was allowed to take a proactive approach. In just about a year, he said, his much smaller team began 37 criminal investigations with law enforcement agencies. The cases are in different stages, but so far there have been seven arrests, four search warrants and one conviction. Christensen recently took a job with an insurer in Utah, where his family lives, so he could be closer to them.

ProPublica asked Aetna how many criminal cases it had pursued in 2017 and 2018. A company official said the question could not be answered because it does not track such cases.

In the spring of 2017, more than four years after Williams first began billing insurers, one of them, United, finally brought him to the attention of the FBI’s heath care fraud squad.

One May day, agents from the FBI and the newly engaged Texas Department of Insurance knocked on the door of Williams’ sprawling six-bedroom home — a spread he’d boasted to one trainer that he’d purchased with cash. Williams didn’t invite them in. He refused to answer questions, claiming his attorney had dealt with the questionable billings.

Undaunted, just days later, Williams used a freshly minted NPI number to send another bill to United. The last known claim he submitted was on June 3, 2017, according to a source familiar with the investigation.

That October, Williams’ long run came to an end when he was arrested by the FBI.

The following May, Williams’ trial began in the United States District Court for the Northern District of Texas. The prosecution didn’t have to make a complex argument. Williams had billed for non-medically necessary services and wasn’t a medical provider — a “slam dunk case” said the agent on the case.

But the testimony served as a cheat sheet for how to defraud the health insurance industry and mostly get away with it.

Without irony, the prosecutor, P.J. Meitl, argued that Williams had preyed on a health insurance system that relies “on trust, relies on honesty” when it pays claims.

He called fraud investigators from Aetna, Cigna and United, who testified that their companies auto-pay millions of claims a year. It’s not cost effective to check them, they said. “Aetna relies on the honesty of the person submitting the claim verifying that it’s true,” testified Kathy Richer, a supervisor in Aetna’s Special Investigations Unit.

In a similar manner, Medicare trusts that people who apply for NPI numbers are actually medical providers, Meitl told the jury. Medicare “does not investigate or verify whether an individual is actually a health care provider before issuing an NPI number.”

Williams’ attorney, Wes Ball, argued that the case was the sign of a “broken” health care system and blamed insurers for making a financial decision not to review Williams’ claims before paying them. United failed to protect Southwest’s money, Ball said, and “might be a vendor you might not want to hire.”

As for the NPI numbers, anyone could have checked Williams’ credentials, he said.

The jury wasn’t convinced, convicting Williams of four counts of health care fraud.

The judge sentenced him to a little more than nine years in federal prison and ordered him to pay $3.9 million in restitution to United, Aetna and Cigna.

Insurers promote themselves as guardians of health care dollars. United says on its website it wants to “help employers manage” medical expenses, resulting in “lower costs.” Aetna promises employers “affordability.” Cigna promises “increased savings.”

But private health insurers allow so much fraud that prosecutors use an idiom to describe the rare person who gets caught: “Pigs get fat, hogs get slaughtered.”

“Pigs” can steal millions, if they bill just enough to avoid notice. But if they get greedy and bill too many millions, they “become a data outlier,” said Elliott, the former fraud task force prosecutor. “You get slaughtered.”

Williams took years to reach hog status.

Part of the problem, experts say, is that health care fraud is often misunderstood as shafting greedy insurers — not the folks paying for health insurance. Ultimately, insurers don’t bear the cost. For their self-funded clients, like Southwest, they merely process the claims. For their traditionally insured clients, they can recover any losses by increasing deductibles and premiums and decreasing coverage.

Williams appears to have duped more than insurers. His twin brother, Dan Williams, recently retired as the assistant special agent in charge of the Dallas field office for criminal investigation for the Internal Revenue Service. He spent 27 years ferreting out fraud, and he gets the irony. “You’re not the first person to point that out,” he said.

Dan Williams said his brother’s sudden riches from the training business piqued his investigative instincts, but he “trusted” his brother when “he told me he was authorized to bill insurance companies.”

In his letter to ProPublica, Williams did not address the issues in the case or even acknowledge that any of his activities were wrong. Instead, he blamed his former wife. “It grieves me that the consequences of a bitter and hurtful divorce have resulted in the ending of this unprecedented and beneficial opportunity to help many people,” he wrote.

Lankford and Pratte are proud of their part in ending his scheme, if still baffled that they had to play such a central role in uncovering it.

If it hadn’t been for the iPad messages, “I have to believe he would still be billing insurance companies from a Caribbean island,” Pratte said.

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.

Behind the Scenes, Health Insurers Use Cash and Gifts to Sway Which Benefits Employers Choose

[Editor's note: today's guest post, by reporters at ProPublica, explores business practices within the health insurance industry. It is reprinted with permission.]

By Marshall Allen, ProPublica

The pitches to the health insurance brokers are tantalizing.

“Set sail for Bermuda,” says insurance giant Cigna, offering top-selling brokers five days at one of the island’s luxury resorts.

Health Net of California’s pitch is not subtle: A smiling woman in a business suit rides a giant $100 bill like it’s a surfboard. “Sell more, enroll more, get paid more!” In some cases, its ad says, a broker can “power up” the bonus to $150,000 per employer group.

Not to be outdone, New York’s EmblemHealth promises top-selling brokers “the chance of a lifetime”: going to bat against the retired legendary New York Yankees pitcher Mariano Rivera. In another offer, the company, which bills itself as the state’s largest nonprofit plan, focuses on cash: “The more subscribers you enroll … the bigger the payout.” Bonuses, it says, top out at $100,000 per group, and “there’s no limit to the number of bonuses you can earn.

Such incentives sound like typical business tactics, until you understand who ends up paying for them: the employers who sign up with the insurers — and, of course, their employees.

Human resource directors often rely on independent health insurance brokers to guide them through the thicket of costly and confusing benefit options offered by insurance companies. But what many don’t fully realize is how the health insurance industry steers the process through lucrative financial incentives and commissions. Those enticements, critics say, don’t reward brokers for finding their clients the most cost-effective options.

Here’s how it typically works: Insurers pay brokers a commission for the employers they sign up. That fee is usually a healthy 3 to 6 percent of the total premium. That could be about $50,000 a year on the premiums of a company with 100 people, payable for as long as the plan is in place. That’s $50,000 a year for a single client. And as the client pays more in premiums, the broker’s commission increases.

Commissions can be even higher, up to 40 or 50 percent of the premium, on supplemental plans that employers can buy to cover employees’ dental costs, cancer care or long-term hospitalization.

Those commissions come from the insurers. But the cost is built into the premiums the employer and employees pay for the benefit plan.

Now, layer on top of that the additional bonuses that brokers can earn from some insurers. The offers, some marked “confidential,” are easy to find on the websites of insurance companies and broker agencies. But many brokers say the bonuses are not disclosed to employers unless they ask. These bonuses, too, are indirectly included in the overall cost of health plans.

These industry payments can’t help but influence which plans brokers highlight for employers, said Eric Campbell, director of research at the University of Colorado Center for Bioethics and Humanities.

“It’s a classic conflict of interest,” Campbell said.

There’s “a large body of virtually irrefutable evidence,” Campbell said, that shows drug company payments to doctors influence the way they prescribe. “Denying this effect is like denying that gravity exists.” And there’s no reason, he said, to think brokers are any different.

Critics say the setup is akin to a single real estate agent representing both the buyer and seller in a home sale. A buyer would not expect the seller’s agent to negotiate the lowest price or highlight all the clauses and fine print that add unnecessary costs.

“If you want to draw a straight conclusion: It has been in the best interest of a broker, from a financial point of view, to keep that premium moving up,” said Jeffrey Hogan, a regional manager in Connecticut for a national insurance brokerage and one of a band of outliers in the industry pushing for changes in the way brokers are paid.

As the average cost of employer-sponsored health insurance premiums has tripled in the past two decades, to almost $20,000 for a family of four, a small, but growing, contingent of brokers are questioning their role in the rise in costs. They’ve started negotiating flat fees paid directly by the employers. The fee may be a similar amount to the commission they could have earned, but since it doesn’t come from the insurer, Hogan said, it “eliminates the conflict of interest” and frees brokers to consider unorthodox plans tailored to individual employers’ needs. Any bonuses could also be paid directly by the employer.

Brokers provide a variety of services to employers. They present them with benefits options, enroll them in plans and help them with claims and payment issues. Insurance industry payments to brokers are not illegal and have been accepted as a cost of doing business for generations. When brokers are paid directly by employers, the results can be mutually beneficial.

In 2017, David Contorno, the broker for Palmer Johnson Power Systems, a heavy-equipment distribution company in Madison, Wisconsin, saved the firm so much money while also improving coverage that Palmer Johnson took all 120 employees on an all-expenses paid trip to Vail, Colorado, where they rode four-wheelers and went whitewater rafting. In 2018, the company saved money again and rewarded each employee with a health care “dividend” of about $700.

Contorno is not being altruistic. He earned a flat fee, plus a bonus based on how much the plan saved, with the total equal to roughly what would have made otherwise.

Craig Parsons, who owns Palmer Johnson, said the new payment arrangement puts pressure on the broker to prevent overspending. His previous broker, he said, didn’t have any real incentive to help him reduce costs. “We didn’t have an advocate,” he said. “We didn’t have someone truly watching out for our best interests.” (The former broker acknowledged there were some issues, but said it had provided a valuable service.)

Working for Employers, Not Insurers

Contorno is part of a group called the Health Rosetta, which certifies brokers who agree to follow certain best practices related to health benefits, including eliminating any hidden agreements that raise the cost of employee benefits. To be certified, brokers (who refer to themselves as “benefits advisers”) must disclose all their direct and indirect sources of income — bonuses, commissions, consulting fees, for example — and who pays them to the employers they advise.

Dave Chase, a Washington businessman, created Rosetta in 2016 after working with tech health startups and launching Microsoft’s services to the health industry. He said he saw an opportunity to transform the health care industry by changing the way employers buy benefits. He said brokers have the most underestimated role in the health care system. “The good ones are worth their weight in gold,” Chase said. “But most of the benefit brokers are pitching themselves as buyer’s agents, but they are paid like a seller’s agent.”

There are only 110 Rosetta certified brokers in an industry of more than 100,000, although others who follow a similar philosophy consider themselves part of the movement.

From the employer’s point of view, one big advantage of working with brokers like those certified by Rosetta, is transparency. Currently, there’s no industry standard for how brokers must disclose their payments from insurance companies, so many employers may have no idea how much brokers are making from their business, said Marcy Buckner, vice president of government affairs for the National Association of Health Underwriters, the trade group for health benefits brokers. And thus, she said, employers have no clear sense of the conflicts of interest that may color their broker’s advice to them.

Buckner’s group encourages brokers to bill employers for their commissions directly to eliminate any conflict of interest, but, she said, it’s challenging to shift the culture. Nevertheless, Buckner said she doesn’t think payments from insurers undermine the work done by brokers, who must act in their clients’ best interests or risk losing them. “They want to have these clients for a really long term,” Buckner said.

Industrywide, transparency is not the standard. ProPublica sent a list of questions to 10 of the largest broker agencies, some worth $1 billion or more, including Marsh & McLennan, Aon and Willis Towers Watson, asking if they took bonuses and commissions from insurance companies, and whether they disclosed them to their clients. Four firms declined to answer; the others never responded despite repeated requests.

Insurers also don’t seem to have a problem with the payments. In 2017, Health Care Service Corporation, which oversees Blue Cross Blue Shield plans serving 15 million members in five states, disclosed in its corporate filings that it spent $816 million on broker bonuses and commissions, about 3 percent of its revenue that year. A company spokeswoman acknowledged in an email that employers are actually the ones who pay those fees; the money is just passed through the insurer. “We do not believe there is a conflict of interest,” she said.

In one email to a broker reviewed by ProPublica, Blue Cross Blue Shield of North Carolina called the bonuses it offered — up to $110,000 for bringing in a group of more than 1,000 — the “cherry on top.” The company told ProPublica that such bonuses are standard and that it always encourages brokers to “match their clients with the best product for them.”

Cathryn Donaldson, spokeswoman for the trade group America’s Health Insurance Plans, said in an email that brokers are incentivized “above all else” to serve their clients. “Guiding employees to a plan that offers quality, affordable care will help establish their business and reputation in the industry,” she said.

Some insurer’s pitches, however, clearly reward brokers’ devotion to them, not necessarily their clients. “To thank you for your loyalty to Humana, we want to extend our thanks with a bonus,” says one brochure pitched to brokers online. Horizon Blue Cross Blue Shield of New Jersey offered brokers a bonus as “a way to express our appreciation for your support.” Empire Blue Cross told brokers it would deliver new bonuses “for bringing in large group business ... and for keeping it with us.”

Delta Dental of California’s pitches appears to go one step further, rewarding brokers as “key members of our Small Business Program team.”

ProPublica reached out to all the insurers named in this story, and many didn’t respond. Cigna said in a statement that it offers affordable, high-quality benefit plans and doesn’t see a problem with providing incentives to brokers. Delta Dental emphasized in an email it follows applicable laws and regulations. And Horizon Blue Cross said its gives employers the option of how to pay brokers and discloses all compensation.

The effect of such financial incentives is troubling, said Michael Thompson, president of the National Alliance of Healthcare Purchaser Coalitions, which represents groups of employers who provide benefits. He said brokers don’t typically undermine their clients in a blatant way, but their own financial interests can create a “cozy relationship” that may make them wary of “stirring the pot.”

Employers should know how their brokers are paid, but health care is complex, so they are often not even aware of what they should ask, Thompson said. Employers rely on brokers to be a “trusted adviser,” he added. “Sometimes that trust is warranted and sometimes it’s not.”

Bad Faith Tactics

When officials in Morris County, New Jersey, sought a new broker to manage the county’s benefits, they specified that applicants could not take insurance company payouts related to their business. Instead, the county would pay the broker directly to ensure an unbiased search for the best benefits. The county hired Frenkel Benefits, a New York City broker, in February 2015.

Now, the county is suing the firm in Superior Court of New Jersey, accusing it of double-dipping. In addition to the fees from the county, the broker is accused of collecting a $235,000 commission in 2016 from the insurance giant Cigna. The broker got an additional $19,206 the next year, the lawsuit claims. To get the commission, one of the agency’s brokers allegedly certified, falsely, that the county would be told about the payment, the suit said. The county claims it was never notified and never approved the commission.

The suit also alleges the broker “purposefully concealed” the costs of switching the county’s health coverage to Cigna, which included administrative fees of $800,000.

In an interview, John Bowens, the county’s attorney, said the county had tried to guard against the broker being swayed by a large commission from an insurer. The brokers at Frenkel did not respond to requests for comment. The firm has not filed a response to the claims in the lawsuit. Steven Weisman, one of attorneys representing Frenkel, declined to comment.

Sometimes employers don’t find out their broker didn’t get them the best deal until they switch to another broker.

Josh Butler, a broker in Amarillo, Texas, who is also certified by Rosetta, recently took on a company of about 200 employees that had been signed up for a plan that had high out-of-pocket costs. The previous broker had enrolled the company in a supplemental plan that paid workers $1,000 if they were admitted to the hospital to help pay for uncovered costs. But Butler said the premiums for this coverage cost about $100,000 a year, and only nine employees had used it. That would make it much cheaper to pay for the benefit without insurance.

Butler suspects the previous broker encouraged the hospital benefits because they came with a sizable commission. He sells the same type of policies for the same insurer, so he knows the plan came with a 40 percent commission in the first year. That means about $40,000 of the employer’s premium went into the broker’s pocket.

Butler and other brokers said the insurance companies offer huge commissions to promote lucrative supplemental plans like dental, vision and disability. The total commissions on a supplemental cancer plan one insurer offered come to 57 percent, Butler said.

These massive year-one commissions lead some unscrupulous brokers to “churn” their supplemental benefits, Butler said, convincing employers to jump between insurers every year for the same type of benefits. The insurers don’t mind, Butler said, because the employers end up paying the tab. Brokers may also “product dump,” Butler said, which means pushing employers to sign employees up for multiple types of voluntary supplemental coverage, which brings them a hefty commission on each product.

Carl Schuessler, a broker in Atlanta who is certified by the Rosetta group, said he likes to help employers find out how much profit insurers are making on their premiums. Some states require insurers to provide the information, so when he took over the account for The Gasparilla Inn, an island resort on the Gulf Coast of Florida, he obtained the report for the company’s recent three years of coverage with UnitedHealthcare. He learned that the insurer had only paid out in claims about 65 percent of what the Inn had paid in premiums.

But in those same years the insurer had increased the Inn’s premiums, said Glenn Price, its chief financial officer. “It’s tough to swallow” increases to our premium when the insurer is making healthy profits, Price said. UnitedHealthcare declined to comment.

Schuessler, who is paid by the Inn, helped it transition to a self-funded plan, meaning the company bears the cost of the health care bills. Price said the Inn went from spending about $1 million a year to about $700,000, with lower costs and better benefits for employees, and no increases in three years.

A Need for Regulation

Despite the important function of brokers as middlemen, there’s been scant examination of their role in the marketplace.

Don Reiman, head of a Boise, Idaho, broker agency and a financial planner, said the federal government should require health benefit brokers to adhere to the same regulation he sees in the finance arena. The Employee Retirement Income Security Act, better known as ERISA, requires retirement plan advisers to disclose to employers all compensation that’s related to their plans, exposing potential conflicts.

The Department of Labor requires certain employers that provide health benefits to file documents every year about their plans, including payments to brokers. The department posts the information on its website.

But the data is notoriously messy. After a 2012 report found 23 percent of the forms contained errors, there was a proposal to revamp the data collection in 2016. It is unclear if that work was done, but ProPublica tried to analyze the data and found it incomplete or inaccurate. The data shortcomings mean employers have no real ability to compare payments to brokers.

About five years ago, Contorno, one of the leaders in the Rosetta movement, was blithely happy with the status quo: He had his favored insurers and could usually find traditional plans that appeared to fit his clients’ needs.

Today, he regrets his role in driving up employers’ health costs. One of his LinkedIn posts compares the industry’s acceptance of control by insurance companies to Stockholm Syndrome, the feelings of trust a hostage would have toward a captor.

Contorno began advising Palmer Johnson in 2016. When he took over, the company had a self-funded plan and its claims were reviewed by an administrator owned by its broker, Iowa-based Cottingham & Butler. Contorno brought in an independent claims administrator who closely scrutinized the claims and provided detailed cost information. The switch led to significant savings, said Parsons, the company owner. “It opened our eyes to what a good claims review process can mean to us,” he said.

Brad Plummer, senior vice president for employee benefits for Cottingham & Butler, acknowledged “things didn’t go swimmingly” with the claims company. But overall his company provided valuable service to Palmer Johnson, he said.

Contorno also provided resources to help Palmer Johnson employees find high-quality, low-cost providers, and the company waived any out-of-pocket expense as an incentive to get employees to see those medical providers. If a patient needed an out-of-network procedure, the price was negotiated up front to avoid massive surprise bills to the plan or the patient. The company also contracted with a vendor for drug coverage that does not use the secret rebates and hidden pricing schemes that are common in the industry. Palmer Johnson’s yearly health care costs per employee dropped by more than 25 percent, from about $11,252 in 2015 to $8,288 in 2018. That’s lower than they’d been in 2011, Contorno said.

“Now that my compensation is fully tied to meeting the clients’ goals, that is my sole objective,” he said. “Your broker works for whoever is cutting them the check.”

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.

You Snooze, You Lose: Insurers Make The Old Adage Literally True

[Editor's note: today's guest post, by reporters at ProPublica, is part of a series which explores data collection, data sharing, and privacy issues within the healthcare industry. It is reprinted with permission.]

By Marshall Allen, ProPublica

Last March, Tony Schmidt discovered something unsettling about the machine that helps him breathe at night. Without his knowledge, it was spying on him.

From his bedside, the device was tracking when he was using it and sending the information not just to his doctor, but to the maker of the machine, to the medical supply company that provided it and to his health insurer.

Schmidt, an information technology specialist from Carrollton, Texas, was shocked. “I had no idea they were sending my information across the wire.”

Schmidt, 59, has sleep apnea, a disorder that causes worrisome breaks in his breathing at night. Like millions of people, he relies on a continuous positive airway pressure, or CPAP, machine that streams warm air into his nose while he sleeps, keeping his airway open. Without it, Schmidt would wake up hundreds of times a night; then, during the day, he’d nod off at work, sometimes while driving and even as he sat on the toilet.

“I couldn’t keep a job,” he said. “I couldn’t stay awake.” The CPAP, he said, saved his career, maybe even his life.

As many CPAP users discover, the life-altering device comes with caveats: Health insurance companies are often tracking whether patients use them. If they aren’t, the insurers might not cover the machines or the supplies that go with them.

In fact, faced with the popularity of CPAPs, which can cost $400 to $800, and their need for replacement filters, face masks and hoses, health insurers have deployed a host of tactics that can make the therapy more expensive or even price it out of reach.

Patients have been required to rent CPAPs at rates that total much more than the retail price of the devices, or they’ve discovered that the supplies would be substantially cheaper if they didn’t have insurance at all.

Experts who study health care costs say insurers’ CPAP strategies are part of the industry’s playbook of shifting the costs of widely used therapies, devices and tests to unsuspecting patients.

“The doctors and providers are not in control of medicine anymore,” said Harry Lawrence, owner of Advanced Oxy-Med Services, a New York company that provides CPAP supplies. “It’s strictly the insurance companies. They call the shots.”

Insurers say their concerns are legitimate. The masks and hoses can be cumbersome and noisy, and studies show that about third of patients don’t use their CPAPs as directed.

But the companies’ practices have spawned lawsuits and concerns by some doctors who say that policies that restrict access to the machines could have serious, or even deadly, consequences for patients with severe conditions. And privacy experts worry that data collected by insurers could be used to discriminate against patients or raise their costs.

Schmidt’s privacy concerns began the day after he registered his new CPAP unit with ResMed, its manufacturer. He opted out of receiving any further information. But he had barely wiped the sleep out of his eyes the next morning when a peppy email arrived in his inbox. It was ResMed, praising him for completing his first night of therapy. “Congratulations! You’ve earned yourself a badge!” the email said.

Then came this exchange with his supply company, Medigy: Schmidt had emailed the company to praise the “professional, kind, efficient and competent” technician who set up the device. A Medigy representative wrote back, thanking him, then adding that Schmidt’s machine “is doing a great job keeping your airway open.” A report detailing Schmidt’s usage was attached.

Alarmed, Schmidt complained to Medigy and learned his data was also being shared with his insurer, Blue Cross Blue Shield. He’d known his old machine had tracked his sleep because he’d taken its removable data card to his doctor. But this new invasion of privacy felt different. Was the data encrypted to protect his privacy as it was transmitted? What else were they doing with his personal information?

He filed complaints with the Better Business Bureau and the federal government to no avail. “My doctor is the ONLY one that has permission to have my data,” he wrote in one complaint.

In an email, a Blue Cross Blue Shield spokesperson said that it’s standard practice for insurers to monitor sleep apnea patients and deny payment if they aren’t using the machine. And privacy experts said that sharing the data with insurance companies is allowed under federal privacy laws. A ResMed representative said once patients have given consent, it may share the data it gathers, which is encrypted, with the patients’ doctors, insurers and supply companies.

Schmidt returned the new CPAP machine and went back to a model that allowed him to use a removable data card. His doctor can verify his compliance, he said.

Luke Petty, the operations manager for Medigy, said a lot of CPAP users direct their ire at companies like his. The complaints online number in the thousands. But insurance companies set the prices and make the rules, he said, and suppliers follow them, so they can get paid.

“Every year it’s a new hurdle, a new trick, a new game for the patients,” Petty said.

A Sleep Saving Machine Gets Popular

The American Sleep Apnea Association estimates about 22 million Americans have sleep apnea, although it’s often not diagnosed. The number of people seeking treatment has grown along with awareness of the disorder. It’s a potentially serious disorder that left untreated can lead to risks for heart disease, diabetes, cancer and cognitive disorders. CPAP is one of the only treatments that works for many patients.

Exact numbers are hard to come by, but ResMed, the leading device maker, said it’s monitoring the CPAP use of millions of patients.

Sleep apnea specialists and health care cost experts say insurers have countered the deluge by forcing patients to prove they’re using the treatment.

Medicare, the government insurance program for seniors and the disabled, began requiring CPAP “compliance” after a boom in demand. Because of the discomfort of wearing a mask, hooked up to a noisy machine, many patients struggle to adapt to nightly use. Between 2001 and 2009, Medicare payments for individual sleep studies almost quadrupled to $235 million. Many of those studies led to a CPAP prescription. Under Medicare rules, patients must use the CPAP for four hours a night for at least 70 percent of the nights in any 30-day period within three months of getting the device. Medicare requires doctors to document the adherence and effectiveness of the therapy.

Sleep apnea experts deemed Medicare’s requirements arbitrary. But private insurers soon adopted similar rules, verifying usage with data from patients’ machines — with or without their knowledge.

Kristine Grow, spokeswoman for the trade association America’s Health Insurance Plans, said monitoring CPAP use is important because if patients aren’t using the machines, a less expensive therapy might be a smarter option. Monitoring patients also helps insurance companies advise doctors about the best treatment for patients, she said. When asked why insurers don’t just rely on doctors to verify compliance, Grow said she didn’t know.

Many insurers also require patients to rack up monthly rental fees rather than simply pay for a CPAP.

Dr. Ofer Jacobowitz, a sleep apnea expert at ENT and Allergy Associates and assistant professor at The Mount Sinai Hospital in New York, said his patients often pay rental fees for a year or longer before meeting the prices insurers set for their CPAPs. But since patients’ deductibles — the amount they must pay before insurance kicks in — reset at the beginning of each year, they may end up covering the entire cost of the rental for much of that time, he said.

The rental fees can surpass the retail cost of the machine, patients and doctors say. Alan Levy, an attorney who lives in Rahway, New Jersey, bought an individual insurance plan through the now-defunct Health Republic Insurance of New Jersey in 2015. When his doctor prescribed a CPAP, the company that supplied his device, At Home Medical, told him he needed to rent the device for $104 a month for 15 months. The company told him the cost of the CPAP was $2,400.

Levy said he wouldn’t have worried about the cost if his insurance had paid it. But Levy’s plan required him to reach a $5,000 deductible before his insurance plan paid a dime. So Levy looked online and discovered the machine actually cost about $500.

Levy said he called At Home Medical to ask if he could avoid the rental fee and pay $500 up front for the machine, and a company representative said no. “I’m being overcharged simply because I have insurance,” Levy recalled protesting.

Levy refused to pay the rental fees. “At no point did I ever agree to enter into a monthly rental subscription,” he wrote in a letter disputing the charges. He asked for documentation supporting the cost. The company responded that he was being billed under the provisions of his insurance carrier.

Levy’s law practice focuses, ironically, on defending insurance companies in personal injury cases. So he sued At Home Medical, accusing the company of violating the New Jersey Consumer Fraud Act. Levy didn’t expect the case to go to trial. “I knew they were going to have to spend thousands of dollars on attorney’s fees to defend a claim worth hundreds of dollars,” he said.

Sure enough, At Home Medical, agreed to allow Levy to pay $600 — still more than the retail cost — for the machine.

The company declined to comment on the case. Suppliers said that Levy’s case is extreme, but acknowledged that patients’ rental fees often add up to more than the device is worth.

Levy said that he was happy to abide by the terms of his plan, but that didn’t mean the insurance company could charge him an unfair price. “If the machine’s worth $500, no matter what the plan says, or the medical device company says, they shouldn’t be charging many times that price,” he said.

Dr. Douglas Kirsch, president of the American Academy of Sleep Medicine, said high rental fees aren’t the only problem. Patients can also get better deals on CPAP filters, hoses, masks and other supplies when they don’t use insurance, he said.

Cigna, one of the largest health insurers in the country, currently faces a class-action suit in U.S. District Court in Connecticut over its billing practices, including for CPAP supplies. One of the plaintiffs, Jeffrey Neufeld, who lives in Connecticut, contends that Cigna directed him to order his supplies through a middleman who jacked up the prices.

Neufeld declined to comment for this story. But his attorney, Robert Izard, said Cigna contracted with a company called CareCentrix, which coordinates a network of suppliers for the insurer. Neufeld decided to contact his supplier directly to find out what it had been paid for his supplies and compare that to what he was being charged. He discovered that he was paying substantially more than the supplier said the products were worth. For instance, Neufeld owed $25.68 for a disposable filter under his Cigna plan, while the supplier was paid $7.50. He owed $147.78 for a face mask through his Cigna plan while the supplier was paid $95.

ProPublica found all the CPAP supplies billed to Neufeld online at even lower prices than those the supplier had been paid. Longtime CPAP users say it’s well known that supplies are cheaper when they are purchased without insurance.

Neufeld’s cost “should have been based on the lower amount charged by the actual provider, not the marked-up bill from the middleman,” Izard said. Patients covered by other insurance companies may have fallen victim to similar markups, he said.

Cigna would not comment on the case. But in documents filed in the suit, it denied misrepresenting costs or overcharging Neufeld. The supply company did not return calls for comment.

In a statement, Stephen Wogen, CareCentrix’s chief growth officer, said insurers may agree to pay higher prices for some services, while negotiating lower prices for others, to achieve better overall value. For this reason, he said, isolating select prices doesn’t reflect the overall value of the company’s services. CareCentrix declined to comment on Neufeld’s allegations.

Izard said Cigna and CareCentrix benefit from such behind-the-scenes deals by shifting the extra costs to patients, who often end up covering the marked-up prices out of their deductibles. And even once their insurance kicks in, the amount the patients must pay will be much higher.

The ubiquity of CPAP insurance concerns struck home during the reporting of this story, when a ProPublica colleague discovered how his insurer was using his data against him.

Sleep Aid or Surveillance Device?

Without his CPAP, Eric Umansky, a deputy managing editor at ProPublica, wakes up repeatedly through the night and snores so insufferably that he is banished to the living room couch. “My marriage depends on it.”

In September, his doctor prescribed a new mask and airflow setting for his machine. Advanced Oxy-Med Services, the medical supply company approved by his insurer, sent him a modem that he plugged into his machine, giving the company the ability to change the settings remotely if needed.

But when the mask hadn’t arrived a few days later, Umansky called Advanced Oxy-Med. That’s when he got a surprise: His insurance company might not pay for the mask, a customer service representative told him, because he hadn’t been using his machine enough. “On Tuesday night, you only used the mask for three-and-a-half hours,” the representative said. “And on Monday night, you only used it for three hours.”

“Wait — you guys are using this thing to track my sleep?” Umansky recalled saying. “And you are using it to deny me something my doctor says I need?”

Umansky’s new modem had been beaming his personal data from his Brooklyn bedroom to the Newburgh, New York-based supply company, which, in turn, forwarded the information to his insurance company, UnitedHealthcare.

Umansky was bewildered. He hadn’t been using the machine all night because he needed a new mask. But his insurance company wouldn’t pay for the new mask until he proved he was using the machine all night — even though, in his case, he, not the insurance company, is the owner of the device.

“You view it as a device that is yours and is serving you,” Umansky said. “And suddenly you realize it is a surveillance device being used by your health insurance company to limit your access to health care.”

Privacy experts said such concerns are likely to grow as a host of devices now gather data about patients, including insertable heart monitors and blood glucose meters, as well as Fitbits, Apple Watches and other lifestyle applications. Privacy laws have lagged behind this new technology, and patients may be surprised to learn how little control they have over how the data is used or with whom it is shared, said Pam Dixon, executive director of the World Privacy Forum.

“What if they find you only sleep a fitful five hours a night?” Dixon said. “That’s a big deal over time. Does that affect your health care prices?”

UnitedHealthcare said in a statement that it only uses the data from CPAPs to verify patients are using the machines.

Lawrence, the owner of Advanced Oxy-Med Services, conceded that his company should have told Umansky his CPAP use would be monitored for compliance, but it had to follow the insurers’ rules to get paid.

As for Umansky, it’s now been two months since his doctor prescribed him a new airflow setting for his CPAP machine. The supply company has been paying close attention to his usage, Umansky said, but it still hasn’t updated the setting.

The irony is not lost on Umansky: “I wish they would spend as much time providing me actual care as they do monitoring whether I’m ‘compliant.’”

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Health Insurers Are Vacuuming Up Details About You — And It Could Raise Your Rates

[Editor's note: today's guest post, by reporters at ProPublica, explores privacy and data collection issues within the healthcare industry. It is reprinted with permission.]

By Marshall Allen, ProPublica

To an outsider, the fancy booths at last month’s health insurance industry gathering in San Diego aren’t very compelling. A handful of companies pitching “lifestyle” data and salespeople touting jargony phrases like “social determinants of health.”

But dig deeper and the implications of what they’re selling might give many patients pause: A future in which everything you do — the things you buy, the food you eat, the time you spend watching TV — may help determine how much you pay for health insurance.

With little public scrutiny, the health insurance industry has joined forces with data brokers to vacuum up personal details about hundreds of millions of Americans, including, odds are, many readers of this story. The companies are tracking your race, education level, TV habits, marital status, net worth. They’re collecting what you post on social media, whether you’re behind on your bills, what you order online. Then they feed this information into complicated computer algorithms that spit out predictions about how much your health care could cost them.

Are you a woman who recently changed your name? You could be newly married and have a pricey pregnancy pending. Or maybe you’re stressed and anxious from a recent divorce. That, too, the computer models predict, may run up your medical bills.

Are you a woman who’s purchased plus-size clothing? You’re considered at risk of depression. Mental health care can be expensive.

Low-income and a minority? That means, the data brokers say, you are more likely to live in a dilapidated and dangerous neighborhood, increasing your health risks.

“We sit on oceans of data,” said Eric McCulley, director of strategic solutions for LexisNexis Risk Solutions, during a conversation at the data firm’s booth. And he isn’t apologetic about using it. “The fact is, our data is in the public domain,” he said. “We didn’t put it out there.”

Insurers contend they use the information to spot health issues in their clients — and flag them so they get services they need. And companies like LexisNexis say the data shouldn’t be used to set prices. But as a research scientist from one company told me: “I can’t say it hasn’t happened.”

At a time when every week brings a new privacy scandal and worries abound about the misuse of personal information, patient advocates and privacy scholars say the insurance industry’s data gathering runs counter to its touted, and federally required, allegiance to patients’ medical privacy. The Health Insurance Portability and Accountability Act, or HIPAA, only protects medical information.

“We have a health privacy machine that’s in crisis,” said Frank Pasquale, a professor at the University of Maryland Carey School of Law who specializes in issues related to machine learning and algorithms. “We have a law that only covers one source of health information. They are rapidly developing another source.”

Patient advocates warn that using unverified, error-prone “lifestyle” data to make medical assumptions could lead insurers to improperly price plans — for instance raising rates based on false information — or discriminate against anyone tagged as high cost. And, they say, the use of the data raises thorny questions that should be debated publicly, such as: Should a person’s rates be raised because algorithms say they are more likely to run up medical bills? Such questions would be moot in Europe, where a strict law took effect in May that bans trading in personal data.

This year, ProPublica and NPR are investigating the various tactics the health insurance industry uses to maximize its profits. Understanding these strategies is important because patients — through taxes, cash payments and insurance premiums — are the ones funding the entire health care system. Yet the industry’s bewildering web of strategies and inside deals often have little to do with patients’ needs. As the series’ first story showed, contrary to popular belief, lower bills aren’t health insurers’ top priority.

Inside the San Diego Convention Center last month, there were few qualms about the way insurance companies were mining Americans’ lives for information — or what they planned to do with the data.

The sprawling convention center was a balmy draw for one of America’s Health Insurance Plans’ marquee gatherings. Insurance executives and managers wandered through the exhibit hall, sampling chocolate-covered strawberries, champagne and other delectables designed to encourage deal-making.

Up front, the prime real estate belonged to the big guns in health data: The booths of Optum, IBM Watson Health and LexisNexis stretched toward the ceiling, with flat screen monitors and some comfy seating. (NPR collaborates with IBM Watson Health on national polls about consumer health topics.)

To understand the scope of what they were offering, consider Optum. The company, owned by the massive UnitedHealth Group, has collected the medical diagnoses, tests, prescriptions, costs and socioeconomic data of 150 million Americans going back to 1993, according to its marketing materials. (UnitedHealth Group provides financial support to NPR.) The company says it uses the information to link patients’ medical outcomes and costs to details like their level of education, net worth, family structure and race. An Optum spokesman said the socioeconomic data is de-identified and is not used for pricing health plans.

Optum’s marketing materials also boast that it now has access to even more. In 2016, the company filed a patent application to gather what people share on platforms like Facebook and Twitter, and link this material to the person’s clinical and payment information. A company spokesman said in an email that the patent application never went anywhere. But the company’s current marketing materials say it combines claims and clinical information with social media interactions.

I had a lot of questions about this and first reached out to Optum in May, but the company didn’t connect me with any of its experts as promised. At the conference, Optum salespeople said they weren’t allowed to talk to me about how the company uses this information.

It isn’t hard to understand the appeal of all this data to insurers. Merging information from data brokers with people’s clinical and payment records is a no-brainer if you overlook potential patient concerns. Electronic medical records now make it easy for insurers to analyze massive amounts of information and combine it with the personal details scooped up by data brokers.

It also makes sense given the shifts in how providers are getting paid. Doctors and hospitals have typically been paid based on the quantity of care they provide. But the industry is moving toward paying them in lump sums for caring for a patient, or for an event, like a knee surgery. In those cases, the medical providers can profit more when patients stay healthy. More money at stake means more interest in the social factors that might affect a patient’s health.

Some insurance companies are already using socioeconomic data to help patients get appropriate care, such as programs to help patients with chronic diseases stay healthy. Studies show social and economic aspects of people’s lives play an important role in their health. Knowing these personal details can help them identify those who may need help paying for medication or help getting to the doctor.

But patient advocates are skeptical health insurers have altruistic designs on people’s personal information.

The industry has a history of boosting profits by signing up healthy people and finding ways to avoid sick people — called “cherry-picking” and “lemon-dropping,” experts say. Among the classic examples: A company was accused of putting its enrollment office on the third floor of a building without an elevator, so only healthy patients could make the trek to sign up. Another tried to appeal to spry seniors by holding square dances.

The Affordable Care Act prohibits insurers from denying people coverage based on pre-existing health conditions or charging sick people more for individual or small group plans. But experts said patients’ personal information could still be used for marketing, and to assess risks and determine the prices of certain plans. And the Trump administration is promoting short-term health plans, which do allow insurers to deny coverage to sick patients.

Robert Greenwald, faculty director of Harvard Law School’s Center for Health Law and Policy Innovation, said insurance companies still cherry-pick, but now they’re subtler. The center analyzes health insurance plans to see if they discriminate. He said insurers will do things like failing to include enough information about which drugs a plan covers — which pushes sick people who need specific medications elsewhere. Or they may change the things a plan covers, or how much a patient has to pay for a type of care, after a patient has enrolled. Or, Greenwald added, they might exclude or limit certain types of providers from their networks — like those who have skill caring for patients with HIV or hepatitis C.

If there were concerns that personal data might be used to cherry-pick or lemon-drop, they weren’t raised at the conference.

At the IBM Watson Health booth, Kevin Ruane, a senior consulting scientist, told me that the company surveys 80,000 Americans a year to assess lifestyle, attitudes and behaviors that could relate to health care. Participants are asked whether they trust their doctor, have financial problems, go online, or own a Fitbit and similar questions. The responses of hundreds of adjacent households are analyzed together to identify social and economic factors for an area.

Ruane said he has used IBM Watson Health’s socioeconomic analysis to help insurance companies assess a potential market. The ACA increased the value of such assessments, experts say, because companies often don’t know the medical history of people seeking coverage. A region with too many sick people, or with patients who don’t take care of themselves, might not be worth the risk.

Ruane acknowledged that the information his company gathers may not be accurate for every person. “We talk to our clients and tell them to be careful about this,” he said. “Use it as a data insight. But it’s not necessarily a fact.”

In a separate conversation, a salesman from a different company joked about the potential for error. “God forbid you live on the wrong street these days,” he said. “You’re going to get lumped in with a lot of bad things.”

The LexisNexis booth was emblazoned with the slogan “Data. Insight. Action.” The company said it uses 442 non-medical personal attributes to predict a person’s medical costs. Its cache includes more than 78 billion records from more than 10,000 public and proprietary sources, including people’s cellphone numbers, criminal records, bankruptcies, property records, neighborhood safety and more. The information is used to predict patients’ health risks and costs in eight areas, including how often they are likely to visit emergency rooms, their total cost, their pharmacy costs, their motivation to stay healthy and their stress levels.

People who downsize their homes tend to have higher health care costs, the company says. As do those whose parents didn’t finish high school. Patients who own more valuable homes are less likely to land back in the hospital within 30 days of their discharge. The company says it has validated its scores against insurance claims and clinical data. But it won’t share its methods and hasn’t published the work in peer-reviewed journals.

McCulley, LexisNexis’ director of strategic solutions, said predictions made by the algorithms about patients are based on the combination of the personal attributes. He gave a hypothetical example: A high school dropout who had a recent income loss and doesn’t have a relative nearby might have higher than expected health costs.

But couldn’t that same type of person be healthy? I asked.

“Sure,” McCulley said, with no apparent dismay at the possibility that the predictions could be wrong.

McCulley and others at LexisNexis insist the scores are only used to help patients get the care they need and not to determine how much someone would pay for their health insurance. The company cited three different federal laws that restricted them and their clients from using the scores in that way. But privacy experts said none of the laws cited by the company bar the practice. The company backed off the assertions when I pointed that the laws did not seem to apply.

LexisNexis officials also said the company’s contracts expressly prohibit using the analysis to help price insurance plans. They would not provide a contract. But I knew that in at least one instance a company was already testing whether the scores could be used as a pricing tool.

Before the conference, I’d seen a press release announcing that the largest health actuarial firm in the world, Milliman, was now using the LexisNexis scores. I tracked down Marcos Dachary, who works in business development for Milliman. Actuaries calculate health care risks and help set the price of premiums for insurers. I asked Dachary if Milliman was using the LexisNexis scores to price health plans and he said: “There could be an opportunity.”

The scores could allow an insurance company to assess the risks posed by individual patients and make adjustments to protect themselves from losses, he said. For example, he said, the company could raise premiums, or revise contracts with providers.

It’s too early to tell whether the LexisNexis scores will actually be useful for pricing, he said. But he was excited about the possibilities. “One thing about social determinants data — it piques your mind,” he said.

Dachary acknowledged the scores could also be used to discriminate. Others, he said, have raised that concern. As much as there could be positive potential, he said, “there could also be negative potential.”

It’s that negative potential that still bothers data analyst Erin Kaufman, who left the health insurance industry in January. The 35-year-old from Atlanta had earned her doctorate in public health because she wanted to help people, but one day at Aetna, her boss told her to work with a new data set.

To her surprise, the company had obtained personal information from a data broker on millions of Americans. The data contained each person’s habits and hobbies, like whether they owned a gun, and if so, what type, she said. It included whether they had magazine subscriptions, liked to ride bikes or run marathons. It had hundreds of personal details about each person.

The Aetna data team merged the data with the information it had on patients it insured. The goal was to see how people’s personal interests and hobbies might relate to their health care costs. But Kaufman said it felt wrong: The information about the people who knitted or crocheted made her think of her grandmother. And the details about individuals who liked camping made her think of herself. What business did the insurance company have looking at this information? “It was a dataset that really dug into our clients’ lives,” she said. “No one gave anyone permission to do this.”

In a statement, Aetna said it uses consumer marketing information to supplement its claims and clinical information. The combined data helps predict the risk of repeat emergency room visits or hospital admissions. The information is used to reach out to members and help them and plays no role in pricing plans or underwriting, the statement said.

Kaufman said she had concerns about the accuracy of drawing inferences about an individual’s health from an analysis of a group of people with similar traits. Health scores generated from arrest records, home ownership and similar material may be wrong, she said.

Pam Dixon, executive director of the World Privacy Forum, a nonprofit that advocates for privacy in the digital age, shares Kaufman’s concerns. She points to a study by the analytics company SAS, which worked in 2012 with an unnamed major health insurance company to predict a person’s health care costs using 1,500 data elements, including the investments and types of cars people owned.

The SAS study said higher health care costs could be predicted by looking at things like ethnicity, watching TV and mail order purchases.

“I find that enormously offensive as a list,” Dixon said. “This is not health data. This is inferred data.”

Data scientist Cathy O’Neil said drawing conclusions about health risks on such data could lead to a bias against some poor people. It would be easy to infer they are prone to costly illnesses based on their backgrounds and living conditions, said O’Neil, author of the book “Weapons of Math Destruction,” which looked at how algorithms can increase inequality. That could lead to poor people being charged more, making it harder for them to get the care they need, she said. Employers, she said, could even decide not to hire people with data points that could indicate high medical costs in the future.

O’Neil said the companies should also measure how the scores might discriminate against the poor, sick or minorities.

American policymakers could do more to protect people’s information, experts said. In the United States, companies can harvest personal data unless a specific law bans it, although California just passed legislation that could create restrictions, said William McGeveran, a professor at the University of Minnesota Law School. Europe, in contrast, passed a strict law called the General Data Protection Regulation, which went into effect in May.

“In Europe, data protection is a constitutional right,” McGeveran said.

Pasquale, the University of Maryland law professor, said health scores should be treated like credit scores. Federal law gives people the right to know their credit scores and how they’re calculated. If people are going to be rated by whether they listen to sad songs on Spotify or look up information about AIDS online, they should know, Pasquale said. “The risk of improper use is extremely high. And data scores are not properly vetted and validated and available for scrutiny.”

As I reported this story I wondered how the data vendors might be using my personal information to score my potential health costs. So, I filled out a request on the LexisNexis website for the company to send me some of the personal information it has on me. A week later a somewhat creepy, 182-page walk down memory lane arrived in the mail. Federal law only requires the company to provide a subset of the information it collected about me. So that’s all I got.

LexisNexis had captured details about my life going back 25 years, many that I’d forgotten. It had my phone numbers going back decades and my home addresses going back to my childhood in Golden, Colorado. Each location had a field to show whether the address was “high risk.” Mine were all blank. The company also collects records of any liens and criminal activity, which, thankfully, I didn’t have.

My report was boring, which isn’t a surprise. I’ve lived a middle-class life and grown up in good neighborhoods. But it made me wonder: What if I had lived in “high risk” neighborhoods? Could that ever be used by insurers to jack up my rates — or to avoid me altogether?

I wanted to see more. If LexisNexis had health risk scores on me, I wanted to see how they were calculated and, more importantly, whether they were accurate. But the company told me that if it had calculated my scores it would have done so on behalf of their client, my insurance company. So, I couldn’t have them.

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Why Your Health Insurer Doesn’t Care About Your Big Bills

[Editor's note: today's guest post, by the reporters at ProPublica, discusses pricing and insurance problems within the healthcare industry, and a resource most consumers probably are unaware of. It is reprinted with permission.]

By Marshall Allen, ProPublica

Michael Frank ran his finger down his medical bill, studying the charges and pausing in disbelief. The numbers didn’t make sense.

His recovery from a partial hip replacement had been difficult. He’d iced and elevated his leg for weeks. He’d pushed his 49-year-old body, limping and wincing, through more than a dozen physical therapy sessions.

The last thing he needed was a botched bill.

His December 2015 surgery to replace the ball in his left hip joint at NYU Langone Medical Center in New York City had been routine. One night in the hospital and no complications.

He was even supposed to get a deal on the cost. His insurance company, Aetna, had negotiated an in-network “member rate” for him. That’s the discounted price insured patients get in return for paying their premiums every month.

But Frank was startled to see that Aetna had agreed to pay NYU Langone $70,000. That’s more than three times the Medicare rate for the surgery and more than double the estimate of what other insurance companies would pay for such a procedure, according to a nonprofit that tracks prices.

Fuming, Frank reached for the phone. He couldn’t see how NYU Langone could justify these fees. And what was Aetna doing? As his insurer, wasn’t its duty to represent him, its “member”? So why had it agreed to pay a grossly inflated rate, one that stuck him with a $7,088 bill for his portion?

Frank wouldn’t be the first to wonder. The United States spends more per person on health care than any other country. A lot more. As a country, by many measures, we are not getting our money’s worth. Tens of millions remain uninsured. And millions are in financial peril: About 1 in 5 is currently being pursued by a collection agency over medical debt. Health care costs repeatedly top the list of consumers’ financial concerns.

Experts frequently blame this on the high prices charged by doctors and hospitals. But less scrutinized is the role insurance companies — the middlemen between patients and those providers — play in boosting our health care tab. Widely perceived as fierce guardians of health care dollars, insurers, in many cases, aren’t. In fact, they often agree to pay high prices, then, one way or another, pass those high prices on to patients — all while raking in healthy profits.

ProPublica and NPR are examining the bewildering, sometimes enraging ways the health insurance industry works, by taking an inside look at the games, deals and incentives that often result in higher costs, delays in care or denials of treatment. The misunderstood relationship between insurers and hospitals is a good place to start.

Today, about half of Americans get their health care benefits through their employers, who rely on insurance companies to manage the plans, restrain costs and get them fair deals.

But as Frank eventually discovered, once he’d signed on for surgery, a secretive system of pre-cut deals came into play that had little to do with charging him a reasonable fee.

After Aetna approved the in-network payment of $70,882 (not including the fees of the surgeon and anesthesiologist), Frank’s coinsurance required him to pay the hospital 10 percent of the total.

When Frank called NYU Langone to question the charges, the hospital punted him to Aetna, which told him it paid the bill according to its negotiated rates. Neither Aetna nor the hospital would answer his questions about the charges.

Frank found himself in a standoff familiar to many patients. The hospital and insurance company had agreed on a price and he was required to help pay it. It’s a three-party transaction in which only two of the parties know how the totals are tallied.

Frank could have paid the bill and gotten on with his life. But he was outraged by what his insurance company agreed to pay. “As bad as NYU is,” Frank said, “Aetna is equally culpable because Aetna’s job was to be the checks and balances and to be my advocate.”

And he also knew that Aetna and NYU Langone hadn’t double-teamed an ordinary patient. In fact, if you imagined the perfect person to take on insurance companies and hospitals, it might be Frank.

For three decades, Frank has worked for insurance companies like Aetna, helping to assess how much people should pay in monthly premiums. He is a former president of the Actuarial Society of Greater New York and has taught actuarial science at Columbia University. He teaches courses for insurance regulators and has even served as an expert witness for insurance companies.

The hospital and insurance company may have expected him to shut up and pay. But Frank wasn’t going away.

Patients fund the entire health care industry through taxes, insurance premiums and cash payments. Even the portion paid by employers comes out of an employee’s compensation. Yet when the health care industry refers to “payers,” it means insurance companies or government programs like Medicare.

Patients who want to know what they’ll be paying — let alone shop around for the best deal — usually don’t have a chance. Before Frank’s hip operation he asked NYU Langone for an estimate. It told him to call Aetna, which referred him back to the hospital. He never did get a price.

Imagine if other industries treated customers this way. The price of a flight from New York to Los Angeles would be a mystery until after the trip. Or, while digesting a burger, you’d learn it cost 50 bucks.

A decade ago, the opacity of prices was perhaps less pressing because medical expenses were more manageable. But now patients pay more and more for monthly premiums, and then, when they use services, they pay higher co-pays, deductibles and coinsurance rates.

Employers are equally captive to the rising prices. They fund benefits for more than 150 million Americans and see health care expenses eating up more and more of their budgets.

Richard Master, the founder and CEO of MCS Industries Inc. in Easton, Pennsylvania, offered to share his numbers. By most measures MCS is doing well. Its picture frames and decorative mirrors are sold at Walmart, Target and other stores and, Master said, the company brings in more than $200 million a year.

But the cost of health care is a growing burden for MCS and its 170 employees. A decade ago, Master said, an MCS family policy cost $1,000 a month with no deductible. Now it’s more than $2,000 a month with a $6,000 deductible. MCS covers 75 percent of the premium and the entire deductible. Those rising costs eat into every employee’s take-home pay.

Economist Priyanka Anand of George Mason University said employers nationwide are passing rising health care costs on to their workers by asking them to absorb a larger share of higher premiums. Anand studied Bureau of Labor Statistics data and found that every time health care costs rose by a dollar, an employee’s overall compensation got cut by 52 cents.

Master said his company hops between insurance providers every few years to find the best benefits at the lowest cost. But he still can’t get a breakdown to understand what he’s actually paying for.

“You pay for everything, but you can’t see what you pay for,” he said.

Master is a CEO. If he can’t get answers from the insurance industry, what chance did Frank have?

Frank’s hospital bill and Aetna’s “explanation of benefits” arrived at his home in Port Chester, New York, about a month after his operation. Loaded with an off-putting array of jargon and numbers, the documents were a natural playing field for an actuary like Frank.

Under the words, “DETAIL BILL,” Frank saw that NYU Langone’s total charges were more than $117,000, but that was the sticker price, and those are notoriously inflated. Insurance companies negotiate an in-network rate for their members. But in Frank’s case at least, the “deal” still cost $70,882.

With a practiced eye, Frank scanned the billing codes hospitals use to get paid and immediately saw red flags: There were charges for physical therapy sessions that never took place, and drugs he never received. One line stood out — the cost of the implant and related supplies. Aetna said NYU Langone paid a “member rate” of $26,068 for “supply/implants.” But Frank didn’t see how that could be accurate. He called and emailed Smith & Nephew, the maker of his implant, until a representative told him the hospital would have paid about $1,500. His NYU Langone surgeon confirmed the amount, Frank said. The device company and surgeon did not respond to ProPublica’s requests for comment.

Frank then called and wrote Aetna multiple times, sure it would want to know about the problems. “I believe that I am a victim of excessive billing,” he wrote. He asked Aetna for copies of what NYU Langone submitted so he could review it for accuracy, stressing he wanted “to understand all costs.”

Aetna reviewed the charges and payments twice — both times standing by its decision to pay the bills. The payment was appropriate based on the details of the insurance plan, Aetna wrote.

Frank also repeatedly called and wrote NYU Langone to contest the bill. In its written reply, the hospital didn’t explain the charges. It simply noted that they “are consistent with the hospital’s pricing methodology.”

Increasingly frustrated, Frank drew on his decades of experience to essentially serve as an expert witness on his own case. He gathered every piece of relevant information to understand what happened, documenting what Medicare, the government’s insurance program for the disabled and people over age 65, would have paid for a partial hip replacement at NYU Langone — about $20,491 — and what FAIR Health, a New York nonprofit that publishes pricing benchmarks, estimated as the in-network price of the entire surgery, including the surgeon fees — $29,162.

He guesses he spent about 300 hours meticulously detailing his battle plan in two inches-thick binders with bills, medical records and correspondence.

ProPublica sent the Medicare and FAIR Health estimates to Aetna and asked why they had paid so much more. The insurance company declined an interview and said in an emailed statement that it works with hospitals, including NYU Langone, to negotiate the “best rates” for members. The charges for Frank's procedure were correct given his coverage, the billed services and the Aetna contract with NYU Langone, the insurer wrote.

NYU Langone also declined ProPublica’s interview request. The hospital said in an emailed statement it billed Frank according to the contract Aetna had negotiated on his behalf. Aetna, it wrote, confirmed the bills were correct.

After seven months, NYU Langone turned Frank’s $7,088 bill over to a debt collector, putting his credit rating at risk. “They upped the ante,” he said.

Frank sent a new flurry of letters to Aetna and to the debt collector and complained to the New York State Department of Financial Services, the insurance regulator, and to the New York State Office of the Attorney General. He even posted his story on LinkedIn.

But no one came to the rescue. A year after he got the first bills, NYU Langone sued him for the unpaid sum. He would have to argue his case before a judge.

You’d think that health insurers would make money, in part, by reducing how much they spend.

Turns out, insurers don’t have to decrease spending to make money. They just have to accurately predict how much the people they insure will cost. That way they can set premiums to cover those costs — adding about 20 percent to for their administration and profit. If they’re right, they make money. If they’re wrong, they lose money. But, they aren’t too worried if they guess wrong. They can usually cover losses by raising rates the following year.

Frank suspects he got dinged for costing Aetna too much with his surgery. The company raised the rates on his small group policy — the plan just includes him and his partner — by 18.75 percent the following year.

The Affordable Care Act kept profit margins in check by requiring companies to use at least 80 percent of the premiums for medical care. That’s good in theory but it actually contributes to rising health care costs. If the insurance company has accurately built high costs into the premium, it can make more money. Here’s how: Let’s say administrative expenses eat up about 17 percent of each premium dollar and around 3 percent is profit. Making a 3 percent profit is better if the company spends more.

It’s like if a mom told her son he could have 3 percent of a bowl of ice cream. A clever child would say, “Make it a bigger bowl.”

Wonks call this a “perverse incentive.”

“These insurers and providers have a symbiotic relationship,” said Wendell Potter, who left a career as a public relations executive in the insurance industry to become an author and patient advocate. “There’s not a great deal of incentive on the part of any players to bring the costs down.”

Insurance companies may also accept high prices because often they aren’t always the ones footing the bill. Nowadays about 60 percent of the employer benefits are “self-funded.” That means the employer pays the bills. The insurers simply manage the benefits, processing claims and giving employers access to their provider networks. These management deals are often a large, and lucrative, part of a company’s business. Aetna, for example, insured 8 million people in 2017, but provided administrative services only to considerably more — 14 million.

To woo the self-funded plans, insurers need a strong network of medical providers. A brand-name system like NYU Langone can demand — and get — the highest payments, said Manuel Jimenez, a longtime negotiator for insurers including Aetna. “They tend to be very aggressive in their negotiations.”

On the flip side, insurers can dictate the terms to the smaller hospitals, Jimenez said. The little guys, “get the short end of the stick,” he said. That’s why they often merge with the bigger hospital chains, he said, so they can also increase their rates.

Other types of horse-trading can also come into play, experts say. Insurance companies may agree to pay higher prices for some services in exchange for lower rates on others.

Patients, of course, don’t know how the behind-the-scenes haggling affects what they pay. By keeping costs and deals secret, hospitals and insurers dodge questions about their profits, said Dr. John Freedman, a Massachusetts health care consultant. Cases like Frank’s “happen every day in every town across America. Only a few of them come up for scrutiny.”

In response, a Tennessee company is trying to expose the prices and steer patients to the best deals. Healthcare Bluebook aims to save money for both employers who self-pay, and their workers. Bluebook used payment information from self-funded employers to build a searchable online pricing database that shows the low-, medium- and high-priced facilities for certain common procedures, like MRIs. The company, which launched in 2008, now has more than 4,500 companies paying for its services. Patients can get a $50 bonus for choosing the best deal.

Bluebook doesn’t have price information for Frank’s operation — a partial hip replacement. But its price range in the New York City area for a full hip replacement is from $28,000 to $77,000, including doctor fees. Its “fair price” for these services tops out at about two-thirds of what Aetna agreed to pay on Frank’s behalf.

Frank, who worked with mainstream insurers, didn’t know about Bluebook. If he had used its data, he would have seen that there were facilities that were both high quality and offered a fair price near his home, including Holy Name Medical Center in Teaneck, New Jersey, and Greenwich Hospital in Connecticut. NYU Langone is one of Bluebook’s highest-priced, high-quality hospitals in the area for hip replacements. Others on Bluebook’s pricey list include Montefiore New Rochelle Hospital in New Rochelle, New York, and Hospital for Special Surgery in Manhattan.

ProPublica contacted Hospital for Special Surgery to see if it would provide a price for a partial hip replacement for a patient with an Aetna small-group plan like Frank’s. The hospital declined, citing its confidentiality agreements with insurance companies.

Frank arrived at the Manhattan courthouse on April 2 wearing a suit and fidgeted in his seat while he waited for his hearing to begin. He had never been sued for anything, he said. He and his attorney, Gabriel Nugent, made quiet conversation while they waited for the judge.

In the back of the courtroom, NYU Langone’s attorney, Anton Mikofsky, agreed to talk about the lawsuit. The case is simple, he said. “The guy doesn’t understand how to read a bill.”

The high price of the operation made sense because NYU Langone has to pay its staff, Mikofsky said. It also must battle with insurance companies who are trying to keep costs down, he said. “Hospitals all over the country are struggling,” he said.

“Aetna reviewed it twice,” Mikofsky added. “Didn’t the operation go well? He should feel blessed.”

When the hearing started, the judge gave each side about a minute to make its case, then pushed them to settle.

Mikofsky told the judge Aetna found nothing wrong with the billing and had already taken care of most of the charges. The hospital’s position was clear. Frank owed $7,088.

Nugent argued that the charges had not been justified and Frank felt he owed about $1,500.

The lawyers eventually agreed that Frank would pay $4,000 to settle the case.

Frank said later that he felt compelled to settle because going to trial and losing carried too many risks. He could have been hit with legal fees and interest. It would have also hurt his credit at a time he needs to take out college loans for his kids.

After the hearing, Nugent said a technicality might have doomed their case. New York defendants routinely lose in court if they have not contested a bill in writing within 30 days, he said. Frank had contested the bill over the phone with NYU Langone, and in writing within 30 days with Aetna. But he did not dispute it in writing to the hospital within 30 days.

Frank paid the $4,000, but held on to his outrage. “The system,” he said, “is stacked against the consumer.”

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Federal Regulators Assess $1 Billion Fine Against Wells Fargo Bank

On Friday, several federal regulators announced the assessment of a $1 billion fine against Wells Fargo Bank for violations of the, "Consumer Financial Protection Act (CFPA) in the way it administered a mandatory insurance program related to its auto loans..."

The Consumer Financial Protection Bureau (CFPB) announced the fine and settlement with Wells Fargo Bank, N.A., and its coordinated action with the Office of the Comptroller of the Currency (OCC). The announcement stated that the CFPB:

"... also found that Wells Fargo violated the CFPA in how it charged certain borrowers for mortgage interest rate-lock extensions. Under the terms of the consent orders, Wells Fargo will remediate harmed consumers and undertake certain activities related to its risk management and compliance management. The CFPB assessed a $1 billion penalty against the bank and credited the $500 million penalty collected by the OCC toward the satisfaction of its fine."

This not the first fine against Wells Fargo. The bank paid a $185 million fine in 2016 to settle charges about for alleged unlawful sales practices during the past five years. To game an internal sales system, employees allegedly created about 1.5 million bogus email accounts, and both issued and activated debit cards associated with the secret accounts. Then, employees also created PIN numbers for the accounts, all without customers' knowledge nor consent. An investigation in 2017 found millions more bogus accounts created than originally found in 2016. Also in 2017, irregularities were reported about how the bank handled mortgages.

The OCC explained that it took action:

"... given the severity of the deficiencies and violations of law, the financial harm to consumers, and the bank’s failure to correct the deficiencies and violations in a timely manner. The OCC found deficiencies in the bank’s enterprise-wide compliance risk management program that constituted reckless, unsafe, or unsound practices and resulted in violations of the unfair practices prong of Section 5 of the Federal Trade Commission (FTC) Act. In addition, the agency found the bank violated the FTC Act and engaged in unsafe and unsound practices relating to improper placement and maintenance of collateral protection insurance policies on auto loan accounts and improper fees associated with interest rate lock extensions. These practices resulted in consumer harm which the OCC has directed the bank to remediate.

The $500 million civil money penalty reflects a number of factors, including the bank’s failure to develop and implement an effective enterprise risk management program to detect and prevent the unsafe or unsound practices, and the scope and duration of the practices..."

MarketWatch explained the bank's unfair and unsound practices:

"When consumers buy a vehicle through a lender, the lender often requires the consumer to also purchase “collateral protection insurance.” That means the vehicle itself is collateral — or essentially, could be repossessed — if the loan is not paid... Sometimes, the fine print of the contracts say that if borrowers do not buy their own insurance (enough to satisfy the terms of the loan), the lender will go out and purchase that insurance on their behalf, and charge them for it... That is a legal practice. But in the case of Wells Fargo, borrowers said they actually did buy that insurance, and Wells Fargo still bought more insurance on their behalf and charged them for it."

So, the bank forced consumers to buy unwanted and unnecessary auto insurance. The lesson for consumers: don't accept the first auto loan offered, and closely read the fine print of contracts from lenders. Wells Fargo said in a news release that it:

"... will adjust its first quarter 2018 preliminary financial results by an additional accrual of $800 million, which is not tax deductible. The accrual reduces reported first quarter 2018 net income by $800 million, or $0.16 cents per diluted common share, to $4.7 billion, or 96 cents per diluted common share. Under the consent orders, Wells Fargo will also be required to submit, for review by its board, plans detailing its ongoing efforts to strengthen its compliance and risk management, and its approach to customer remediation efforts."

Kudos to the OCC and CFPB for taking this action against a bank with a spotty history. Will executives at Wells Fargo learn their lessons from the massive fine? The Washington Post reported that the bank will:

"... benefit from a massive corporate tax cut passed by Congress last year. he bank’s effective tax rate this year will fall from about 33 percent to 22 percent, according to a Goldman Sachs analysis released in December. The change could boost its profits by 18 percent, according to the analysis. Just in the first quarter, Wells Fargo’s effective tax rate fell from about 28 percent to 18 percent, saving it more than $600 million. For the entire year, the tax cut is expected to boost the company’s profits by $3.7 billion..."

So, don't worry about the bank. It's tax savings will easily offset the fine. This makes one doubt the fine was a sufficient deterrent. And, I found the OCC's announcement forceful and appropriate, while the CFPB's announcement seemed to soft-pedal things by saying the absolute minimum.

What do you think? Will the fine curb executive wrongdoing?

Report: Several Impacts From Technology Changes Within The Financial Services Industry

For better or worse, the type of smart device you use can identify you in ways you may not expect. First, a report by London-based Privacy International highlighted the changes within the financial services industry:

"Financial services are changing, with technology being a key driver. It is affecting the nature of financial services from credit and lending through to insurance and even the future of money itself. The field known as “fintech” is where the attention and investment is flowing. Within it, new sources of data are being used by existing institutions and new entrants. They are using new forms of data analysis. These changes are significant to this sector and the lives of the people it serves. We are seeing dramatic changes in the ways that financial products make decisions. The nature of the decision-making is changing, transforming the products in the market and impacting on end results and bottom lines. However, this also means that treatment of individuals will change. This changing terrain of finance has implications for human rights, privacy and identity... Data that people would consider as having nothing to do with the financial sphere, such as their text-messages, is being used at an increasing rate by the financial sector...  Yet protections are weak or absent... It is essential that these innovations are subject to scrutiny... Fintech covers a broad array of sectors and technologies. A non-exhaustive list includes:

• Alternative credit scoring (new data sources for credit scoring)
• Payments (new ways of paying for goods and services that often have implications for the data generated)
• Insurtech (the use of technology in the insurance sector)
• Regtech (the use of technology to meet regulatory requirements)."

"Similarly, a breadth of technologies are used in the sector, including: Artificial Intelligence; Blockchain; the Internet of Things; Telematics and connected cars..."

While the study focused upon India and Kenya, it has implications for consumers worldwide. More observations and concerns:

"Social media is another source of data for companies in the fintech space. However, decisions are made not on just on the content of posts, but rather social media is being used in other ways: to authenticate customers via facial recognition, for instance... blockchain, or distributed ledger technology, is still best known for cryptocurrencies like BitCoin. However, the technology is being used more broadly, such as the World Bank-backed initiative in Kenya for blockchain-backed bonds¹⁰. Yet it is also used in other fields, like the push in digital identities¹¹. A controversial example of this was a very small-scale scheme in the UK to pay benefits using blockchain technology, via an app developed by the fintech GovCoin¹² (since renamed DISC). The trial raised concerns, with the BBC reporting a former member of the Government Digital Service describing this as "a potentially efficient way for Department of Work and Pensions to restrict, audit and control exactly what each benefits payment is actually spent on, without the government being perceived as a big brother¹³..."

Many consumers know that you can buy a wide variety of internet-connected devices for your home. That includes both devices you'd expect (e.g., televisions, printers, smart speakers and assistants, security systems, door locks and cameras, utility meters, hot water heaters, thermostats, refrigerators, robotic vacuum cleaners, lawn mowers) and devices you might not expect (e.g., sex toys, smart watches for children, mouse traps, wine bottles, crock pots, toy dolls, and trash/recycle bins). Add your car or truck to the list:

"With an increasing number of sensors being built into cars, they are increasingly “connected” and communicating with actors including manufacturers, insurers and other vehicles¹⁵. Insurers are making use of this data to make decisions about the pricing of insurance, looking for features like sharp acceleration and braking and time of day¹⁶. This raises privacy concerns: movements can be tracked, and much about the driver’s life derived from their car use patterns..."

And, there are hidden prices for the convenience of making payments with your favorite smart device:

"The payments sector is a key area of growth in the fintech sector: in 2016, this sector received 40% of the total investment in fintech²². Transactions paid by most electronic means can be tracked, even those in physical shops. In the US, Google has access to 70% of credit and debit card transactions—through Google’s "third-party partnerships", the details of which have not been confirmed²³. The growth of alternatives to cash can be seen all over the world... There is a concerted effort against cash from elements of the development community... A disturbing aspect of the cashless debate is the emphasis on the immorality of cash—and, by extension, the immorality of anonymity. A UK Treasury minister, in 2012, said that paying tradesman by cash was "morally wrong"²⁶, as it facilitated tax avoidance... MasterCard states: "Contrary to transactions made with a MasterCard product, the anonymity of digital currency transactions enables any party to facilitate the purchase of illegal goods or services; to launder money or finance terrorism; and to pursue other activity that introduces consumer and social harm without detection by regulatory or police authority."²⁷"

The report cited a loss of control by consumers over their personal information. Going forward, the report included general and actor-specific recommendations. General recommendations:

• "Protecting the human right to privacy should be an essential element of fintech.
• Current national and international privacy regulations should be applicable to fintech.
• Customers should be at the centre of fintech, not their product.
• Fintech is not a single technology or business model. Any attempt to implement or regulate fintech should take these differences into account, and be based on the type activities they perform, rather than the type of institutions involved."

Want to learn more? Follow Privacy International on Facebook, on Twitter, or read about 10 ways of "Invisible Manipulation" of consumers.

Some U.S. Hospitals Don’t Put Americans First for Liver Transplants

[Editor's note: today's guest blog post, by the reporters at ProPublica, discusses a largely unknown practice by some hospitals in the health care industry. Is this practice right? Ethical? Today's post is reprinted with permission.]

By Charles Ornstein, ProPublica

Earlier this fall, a leader of the busiest hospital for organ transplants in New York state — where livers are particularly scarce — pleaded for fairer treatment for ailing New Yorkers.

“Patients in equal need of a liver transplant should not have to wait and suffer differently because of the U.S. state where they reside,” wrote Dr. Herbert Pardes, former chief executive and now executive vice president of the board at NewYork-Presbyterian Hospital.

But Pardes left out his hospital’s own contribution to the shortage: From 2013 to 2016, it gave 20 livers to foreign nationals who came to the United States solely for a transplant — essentially exporting the organs and removing them from the pool available to New Yorkers.

That represented 5.2 percent of the hospital’s liver transplants during that time, one of the highest ratios in the country.

Little known to the public, or to sick patients and their families, organs donated domestically are sometimes given to patients flying in from other countries, who often pay a premium. Some hospitals even seek out foreign patients in need of a transplant. A Saudi Arabian company, Ansaq Medical Co., whose stated aim is to “facilitate the procedures and mechanisms of ‘medical tourism,’” said it signed an agreement with Ochsner Medical Center in New Orleans in 2015.

The practice is legal, and foreign nationals must wait their turn for an organ in the same way as domestic patients. Transplant centers justify it on medical and humanitarian grounds. But at a time when President Donald Trump is espousing an “America First” policy and seeking to ban visitors and refugees from certain countries, allocating domestic organs to foreigners may run counter to the national mood.

Even beyond the realm of health care, some are questioning whether foreigners should be able to access limited spots that might otherwise be available to U.S. citizens. For instance, public colleges compensate for reductions in state funding by accepting more foreign students paying higher tuition, and critics say in-state students are being denied opportunities as a result.

Dr. Sander Florman, director of the transplant institute at the Mount Sinai Hospital in New York, said he struggles with “in essence, selling the organs we do have to foreign nationals with bushels of money.”

Mount Sinai has not performed any transplants on patients who came to this country specifically for that purpose, but it has done so for international patients here for other reasons.

Between 2013 and 2016, 252 foreigners came to the U.S. purely to receive livers at American hospitals. In 2016, the most recent year for which data is available, the majority of foreign recipients were from countries in the Middle East, including Saudi Arabia, Kuwait, Israel and United Arab Emirates. Another 100 foreigners staying in the U.S. as non-residents also received livers.

All the while, more than 14,000 people, nearly all of them American citizens, are waiting for liver transplants, a figure that has remained stubbornly high for decades. By comparison, fewer than 8,000 liver transplants were performed last year in the United States — and that was an all-time high. The national median wait time for a liver is more than 14 months, and in states like New York, the wait is far longer. (The wait for livers varies from one state to the next, depending on such factors as the number of organ donors, and the resourcefulness of organ procurement agencies.)

Many patients die before reaching the front of the line. In 2016, more than 2,600 patients were removed from waiting lists nationally because they either died or were too sick to receive a liver transplant.

Most transplant centers only serve American citizens or residents, either by happenstance or by design. Foreign transplants are concentrated among a handful of centers, including NewYork-Presbyterian, Memorial Hermann-Texas Medical Center in Houston (31 such transplants from 2013 to 2016), Ochsner (30), and Cleveland Clinic in Ohio (21).

“When you take people from other parts of the world and provide an organ transplant to them rather than someone who’s here, there’s a real cost, there’s a real life that’s lost,” said Jane Hartsock, a visiting assistant professor of medical humanities and health studies at the Indiana University School of Liberal Arts. Hartsock and her colleagues wrote a journal article published last year saying foreigners should be last in line for a transplant.

NewYork-Presbyterian said it does not advertise its transplant program to foreign patients and that the majority of the transplants it performed on foreign nationals traveling to New York for that reason — 11 of the 20 — were on children under 18.

In a statement, the hospital and its academic partner Columbia University said they follow federal guidelines. “We strongly support efforts that aim to address the critical issue of equitable distribution of livers for transplant and are working closely with a wide range of stakeholders to help increase the number of organ donor registrations in New York State.”

A spokeswoman for the Cleveland Clinic, Eileen Sheil, said her hospital does not actively seek out foreign national business and has a “thoughtful and ethical approach that is well within the rules and aligned with our overall mission for taking care of patients.” Ochsner similarly said, “patients seek out Ochsner’s expertise because of our relentless commitment to provide the highest-quality, complex care.” Memorial Hermann did not respond to requests for comment.

To be sure, the proportion of available livers that go to foreigners is tiny — slightly less than 1 percent of liver transplants nationwide from 2013 to 16. The figure appears to be dropping further in 2017. Even if all recipients were Americans, wait times would still be substantial. Moreover, foreigners queue up on the waitlist like everybody else — although it may be easier for them, since they aren’t rooted in any particular state, to choose a hospital in an area with a shorter wait, such as Ochsner. And some Americans discouraged by the lengthy wait in this country have gone abroad for transplants.

The transplant figures in this article do not include transplants involving living donors, meaning a relative or friend who donates part of his or her liver to a patient. No one interviewed for this story said it is inappropriate for a foreign national to come to the U.S. for a procedure with a living donor.

There’s also an important distinction between giving an organ to a foreigner who happens to be in the U.S. — someone on a student visa or even an undocumented immigrant — and giving one to someone flying over just for surgery. Someone in the first group would be eligible to donate an organ if something happened to them in this country; someone in the latter group would not because livers must be transplanted quickly and there wouldn’t be enough time to ship them.

“If you live in the United States, no matter what your [citizenship] status is, you could potentially be an organ donor if you get hit by a car or something happens to you,” said Dr. Gabriel M. Danovitch, medical director of the kidney and pancreas transplant program at Ronald Reagan UCLA Medical Center, who previously led the UNOS international relations committee. “But if your home is somewhere else, a long way away, there’s no way that you can be a donor or your family or your friends could be donors.

“And in some respects, when you then come to the United States, you are using up a valuable resource that is in great shortage here.”

Foreign patients generally are not entitled to the same discounts as those with private insurance or Medicare, the federal insurance program for seniors and the disabled. In 2015, for instance, the average sticker price for a liver transplant at NewYork-Presbyterian was $371,203, but the average payment for patients in Medicare was less than one-third of that, $112,469, according to data from the Centers for Medicare and Medicaid Services, which runs Medicare. In the case of Saudi Arabia, its embassy in Washington often guarantees payment for patients.

The topic is emerging now because the nation’s transplant leaders will meet next month to consider rewriting the rules governing how livers are distributed, giving programs in New York City, Los Angeles, Chicago and other areas greater access to organs from people who die in nearby regions. The proposal by a committee of the United Network for Organ Sharing, the federal contractor that runs the national transplant system, faces opposition from programs and regions that stand to lose organs. Pardes’ comments were posted in an online comment forum devoted to the proposal, which does not address the issue of transplants for foreigners.

UNOS said it has worked to get better data on foreigners that receive transplants in this country but ultimately, federal law doesn’t prohibit these transplants.

“This is an individual medical decision that the individual transplant hospital makes,” spokesman Joel Newman said. “If we addressed citizenship or residency as a particular reason for whether to accept a patient or not, then that would open up the door to lots of other nonmedical criteria — religion, race, political preference, any number of things that as a community we have decided from an ethical standpoint not to consider.”

UNOS has the authority to ask questions of transplant centers about surgeries on foreign nationals, but Newman said UNOS committees are still trying to figure out what information they would want, and, in any event, the transplant centers don’t have to answer the questions.

The federal rules governing the transplant system, written more than three decades ago, say organ allocation decisions must be based on medical criteria, which would exclude consideration of a person’s nationality or citizenship. While centers can perform as many transplants on foreigners as they want, many programs have tried to keep them below 5 percent of all transplants for each organ type. Until several years ago, 5 percent was the threshold above which UNOS could audit a program. No programs were ever formally audited, and the cutoff was eventually eliminated.

It’s time to revisit the rules, some lawmakers say.

“As a general rule, you’ve got to take care of Americans first as long as you have more demand than supply,” said Sen. John Kennedy, R-La., whose state is home to Ochsner, a leader in transplants for foreign nationals. Kennedy said he would favor curbing transplants for foreigners, while creating a national board that could make exceptions. “But what you don’t want to get into, it seems to me, is subjective areas like well, ‘If this person could live an extra few years, what could they contribute to society?’”

There have been scandals in the past about foreigners and organ transplants. In 2005, a liver transplant center in Los Angeles shut its doors after disclosing that its team had taken a liver that should have gone to a patient at another hospital and instead had implanted it in a Saudi national. The hospital said its staff members falsified documents to cover up the incident.

The University of California, Los Angeles, came under fire in 2008 for performing liver transplants on a powerful Japanese gang boss and other men linked to Japanese gangs, and then receiving donations afterward from at least two of the men. The hospital and its surgeon said they do not make moral judgments about patients.

Further complicating matters is a 2008 document endorsed by transplant organizations around the world, called the Declaration of Istanbul, which seeks to eliminate organ trafficking and reduce transplant tourism internationally. One concern was that patients went to China and received transplants using organs from prisoners. (China said it was stopping the practice in 2015, but experts question whether that has happened.) Another concern was that if a country’s wealthiest or most powerful residents could get transplants overseas, its leaders may not have an incentive to set up a system of their own.

The non-binding declaration also says that there should be a ban on “soliciting, or brokering for the purpose of transplant commercialism, organ trafficking, or transplant tourism.” It was endorsed by UNOS and other national transplant groups.

Former Ochsner employees say they recall Saudi nationals coming for transplants, some wealthy and some not. A New Orleans bar posted a photo on Facebook in 2015 of a young man who brought his mom from Saudi Arabia for a transplant.

Ochsner said in a statement that it was proud of its liver transplant program, which is the nation’s largest. It said that it is willing to accept donated organs that other centers turn down for medical reasons, expanding its ability to help patients while keeping its survival rate high. And it noted that the median waiting time for its patients is only 2.1 months, far below the national median.

“UNOS does not have any restrictions preventing transplant for international patients and they are subject to the same guidelines as domestic patients,” the statement said.

Still, many American candidates for livers don’t make Ochsner’s waiting list. It refused to put Brian “Bubba” Greenlee Jr. on its list right after Christmas in 2015, because of his “poor insight into his drinking and lack of proper social support,” his medical records show. He had cirrhosis and died weeks later at age 45.

His sister, Theresa Greenlee-Jeffers, said Ochsner led her brother to believe that he would get a new liver. Her brother had stopped drinking and she had volunteered to take care of him after a transplant, but then the hospital suddenly reversed course.

“His last Christmas, he was given false hope that he was going to get a transplant. That’s not OK. You don’t play with somebody’s emotions like that,” Greenlee-Jeffers said.

Ocshner did not answer questions about Greenlee’s care but said in its statement, “Not every patient is a candidate for transplant.” It said its criteria are similar to those of other liver transplant centers.

“At Ochsner, we are caregivers, dedicated to providing our patients with high-quality care, improved outcomes and the gift of a second chance at life,” its statement said.

Greenlee-Jeffers wonders if Ochsner excluded her brother and other Americans to make room for foreigners willing to pay more. “It’s not OK,” she said. “We need to take care of our people here at home first. We don’t have enough of this to go around.”

Filed under:

• Health Care

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Consequences And New Threats From The Massive Equifax Breach

To protect themselves and their sensitive information, many victims of the massive Equifax data breach have signed up for the free credit monitoring and fraud resolution services Equifax arranged. That's a good start. Some victims have gone a step further and placed Fraud Alerts or Security Freezes on their credit reports at Equifax, Experian, and TransUnion. That's good, too. But, is that enough?

The answer to that question requires an understanding of what criminals can do with the sensitive information accessed stolen during the Equifax breach. Criminals can commit types of fraud which credit monitoring, credit report alerts, and freezes cannot stop. Consumer Reports (CR) explained:

"Freezing your credit report specifically at Equifax will also prevent crooks from registering as you at the government website, my Social Security, and block them from attempting to steal your Social Security benefits. But taking these steps won't protect you against every identity fraud threat arising from the Equifax data breach."

Sadly, besides credit and loan fraud the Equifax breach exposed breach victims to tax refund fraud, health care fraud, and driver's license (identity) fraud. This is what makes the data breach particularly nasty. CR also listed the data elements criminals use with each type of fraud:

"With your Social Security number, crooks can file false income tax returns in your name, take bogus deductions, and steal the resulting refund. More than 14,000 fraudulent 2016 tax returns, with $92 million in unwarranted refunds, were detected and stopped by the Internal Revenue Service (IRS) as of last March... Data from the Equifax breach can be used to steal your benefits from private health insurance, Medicare, or Medicaid when the identity thief uses your coverage to pay for his own medical treatment and prescriptions... Using your driver’s license number, identity thieves can create bogus driver’s licenses and hang their moving violations on you...."

The CR article suggested several ways for consumers to protect themselves from each type of fraud: a) request an Identity Protection PIN number from the IRS; b) request copies of your medical file from your providers and review your MIB Consumer File each year; and c) request a copy of your driving license record and get your free annual consumer report from ChexSystems, Certegy, and TeleCheck -  the three major check verification companies.

Never considered reviewing your tax account with the IRS? You can. Never heard of a Consumer MIB File? I'm not surprised. Most people haven't. I encourage consumers to read the entire CR article. While at the CR site, read their review of TrustedID Premier service which Equifax arranged for breach victims. It's an eye-opener.

Do these solutions sound like a lot of preventative work? They are. You have Equifax to thank for that. Will Equifax help breach victims with the time and effort required to research and implement the solutions CR recommended? Will Equifax compensate breach victims for the costs incurred with these solutions? These are questions breach victims should ask Equifax and TrustedID Premier.

Consumers and breach victims are slowly learning the consequences of a data breach are extensive. The consequences include time, effort, money, and aggravation. You might say breach victims have been mugged. Worse, consumers are saddled the burden from the consequences. That isn't fair. The companies making money by selling consumers' credit reports and information should be responsible for the burdens. Things are out of balance.

What are your opinions?

$5.5 Million Settlement Agreement Between Nationwide Insurance And 32 States

Last week, 32 states inked a settlement agreement with Nationwide Mutual Insurance for the insurance company's data breach in 2012. The Attorney General's Office for the Commonwealth of Massachusetts participated in the agreement, and explained in an announcement: that the data breach reach in 2012 was:

"... allegedly caused by Nationwide’s failure to apply a critical software security patch. The breach resulted in the loss of personal information belonging to 1.27 million consumers, with nearly 950 in Massachusetts, including their social security numbers, driver’s license numbers, credit scoring information, and other personal data. The lost personal information was collected by Nationwide in order to provide insurance quotes to consumers applying for insurance. AG Healey’s Office is not aware of any fraud or identity theft involving Massachusetts residents related to this data breach."

Other states participating in the settlement agreement include the Attorneys General of Alaska, Arizona, Arkansas, Connecticut, Florida, Hawaii, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Vermont, Washington, and the District of Columbia. Terms of the settlement agreement require Nationwide to:

"... both generally update its security practices and to ensure that it keeps software up-to-date, including timely applying patches and other updates to its software. Nationwide must also hire a technology officer responsible for monitoring and managing software and application security updates, including supervising employees responsible for evaluating and coordinating the maintenance, management, and application of all security patches and software and application security updates.

Many of the consumers whose data was lost as a result of the data breach were consumers who never became Nationwide’s insureds, but whose information was retained by the company in order to provide the consumers re-quotes at a later date. The settlement requires Nationwide to be more transparent about its data collection practices by requiring it to disclose to consumers that it retains their personal information even if they do not become its customers."

950 Massachusetts residents were affected. Massachusetts' share of the payment is $100,000. Massachusetts Attorney General (AG) Maura Healey said in a statement:

"People shopping for financial products should be assured that companies collecting their personal information will protect it no matter what... Nationwide knew their software was vulnerable to hacking but did not promptly address it, leaving sensitive data vulnerable to identity thieves. This settlement holds the company accountable for subjecting our residents to this avoidable risk."

2,810 New York residents were affected. New York State's share of the payment is $107,736. New York State AG Eric T. Schneiderman said:

"Nationwide demonstrated true carelessness while collecting and retaining information from prospective customers, needlessly exposing their personal data in the process... This settlement should serve as a reminder that companies have a responsibility to protect consumers’ personal information regardless of whether or not those consumers become customers..."

774 Connecticut residents were affected. Connecticut's share of the payment is $256,559. Connecticut AG George Jepsen said:

"Connecticut law requires that anyone in possession of another person's personal information safeguard that data... It is critically important that companies take seriously the maintenance of their computer software systems and their data security protocols..."

Homeowners Receive $6.3 Million In Refunds Due To Improper Charges By Insurance Company

Last week, the Attorney General's office for the Commonwealth of Massachusetts announced the results of a post-settlement agreement audit with American Security Insurance Company, a subsidiary of Assurant, Inc., where homeowners in the state will receive $6.3 million in refunds for improper "forced-place insurance" charges. The announcement explained:

"Force-placed insurance is a type of property insurance that mortgage servicers can purchase on behalf of borrowers if they fail to maintain adequate homeowners insurance coverage on mortgaged properties. Mortgage servicers often hire insurance companies like Assurant to monitor whether borrowers are maintaining adequate homeowners insurance coverage and to issue force-placed insurance policies when appropriate homeowners coverage is not in place.

Premiums for force-placed policies are high—often two or three times as expensive as regular homeowners insurance—and the coverage provided is quite limited. Some mortgage servicers accept commission payments from force-placed insurers, which contribute to the high cost of force-placed insurance and create conflicts of interest for mortgage servicers."

The settlement agreement was first announced in November, 2015. The latest announcement described the results of the audit:

"Although force-placed insurance is only intended for circumstances in which the borrower has failed to adequately insure the mortgaged property, the Attorney General’s audit of Assurant found thousands of cases of duplicative insurance coverage for Massachusetts homeowners. Borrowers eligible for settlement money were previously required by their mortgage servicer to purchase force-placed insurance from Assurant, or were overcharged for force-placed insurance because they were mistakenly sold commercial policies rather than less expensive residential policies..."

4,500 homeowners were improperly charged. The average refund per homeowner is about $1,400. Refund checks were mailed last week to affected homeowners.

Wells Fargo Forced Customers To Buy Unwanted And Unnecessary Auto Insurance

Just when it seems that executives at Wells Fargo Bank have seen the light and turned the ethics corner, along comes a news report about another fraudulent program at the bank. The New York Times reported:

"More than 800,000 people who took out car loans from Wells Fargo were charged for auto insurance they did not need, and some of them are still paying for it, according to an internal report prepared for the bank’s executives.

The expense of the unneeded insurance, which covered collision damage, pushed roughly 274,000 Wells Fargo customers into delinquency and resulted in almost 25,000 wrongful vehicle repossessions, according to the 60-page report, which was obtained by The New York Times. Among the Wells Fargo customers hurt by the practice were military service members on active duty."

The internal report, by the consulting firm Oliver Wyman, investigated auto insurance policies sold from January 2012 through July 2016. While this was happening, the bank has been recovering from a scandal where employees opened millions of phony accounts in order to game an incentive system.

Wells Fargo released a statement about how it will help affected with unwanted and unnecessary insurance, and fix its Collateral Protection Insurance (CPI) policies:

"Wells Fargo reviewed policies placed between 2012 and 2017 and identified approximately 570,000 customers who may have been impacted and will receive refunds and other payments as compensation. In total, approximately $64 million of cash remediation will be sent to customers in the coming months, along with $16 million of account adjustments, for a total of approximately $80 million in remediation... in July 2016 Wells Fargo initiated a review of the CPI program and related third-party vendor practices. Based on the initial findings, the company discontinued its CPI program in September 2016... Wells Fargo’s review determined that certain external vendor processes and internal controls were inadequate. As a result, customers may have been charged premiums for CPI even if they were paying for their own vehicle insurance, as required, and in some cases the CPI premiums may have contributed to a default that led to their vehicle’s repossession... Wells Fargo already has been providing CPI-related refunds to some customers and, beginning in August, will send letters and refund checks to customers who are due additional payments. The process is expected to be complete by the end of the year and is as follows:

i) Approximately 490,000 customers had CPI placed for some or all of the time they had adequate vehicle insurance coverage of their own... These customers will receive additional refunds of certain fees and some additional interest. Refunds for this group total approximately $25 million;

ii) In five states that have specific notification and disclosure requirements, approximately 60,000 customers did not receive complete disclosures from our vendor as required prior to CPI placement. In these cases, even if CPI was required, customers will receive a refund including premiums, fees and interest. Refunds for this group total approximately $39 million:

iii) For approximately 20,000 customers, the additional costs of the CPI could have contributed to a default that resulted in the repossession of their vehicle. Those customers will receive additional payments as compensation for the loss of their vehicle. The payment amount will depend on each customer’s situation..."

Do the math. 490,000 customers were overcharged about $25 million, or about $51 per person. 60,000 customers were overcharged $39 million or about $1,950 per person. 34 percent of borrowers (274,000 divided by 800,000) were reportedly pushed into delinquency. Substantial amounts.

Besides reimbursements, the bank said it will work with credit reporting agencies to correct affected borrowers’ credit records. That seems to be the minimum solution. Not only did the bank overcharge some customers, but it also had inadequate controls for both internal processes and external vendors. Which managers were reprimanded, or fired, for those lapses? The bank's statement didn't say. Where were the bank's auditors throughout this mess?

National General Insurance (NGI) underwrote the auto insurance policies for Wells Fargo. A lawsuit by customers named both Wells Fargo and NGI as defendants. And, at least one other law firm is investigating a possible class-action suit.

How does unwanted and unnecessary insurance help customers? Not in any way I can see. Well, it probably helped the bank's profitability for a while.

Reportedly, military service members and their families were among the affected borrowers. And, this latest program isn't the first abuse by the bank of military members and their families. Last fall, the U.S. Justice Department (DOJ) sanctioned the bank for improperly repossessing cars owned by members of the military. The DOJ alleged 413 violations of the Servicemembers Civil Relief Act, and the bank agreed to pay more than $4 million to compensate borrowers affected by seven years of unlawful repossessions.

In June, one U.S. Senator called for the firing of all 12 board members for failing to protect account holders. It seems that unethical executive behavior at the bank will stop only when guilty executives serve jail time; not fines the bank can easily afford.

The whole sordid affair makes one wonder what other programs at the bank remain hidden. What are your opinions? If you received a refund letter and check, please share what you safely can about it below.

3 Strategies To Defend GOP Health Bill: Euphemisms, False Statements and Deleted Comments

[Editor's Note: today's guest post is by the reporters as ProPublica. Affordable health care and coverage are important to many, if not most, Americans. It is reprinted with permission.]

by Charles Ornstein, ProPublica

Earlier this month, a day after the House of Representatives passed a bill to repeal and replace major parts of the Affordable Care Act, Ashleigh Morley visited her congressman's Facebook page to voice her dismay.

"Your vote yesterday was unthinkably irresponsible and does not begin to account for the thousands of constituents in your district who rely upon many of the services and provisions provided for them by the ACA," Morley wrote on the page affiliated with the campaign of Representative Peter King (Republican, New York). "You never had my vote and this confirms why."

The next day, Morley said, her comment was deleted and she was blocked from commenting on or reacting to King's posts. The same thing has happened to others critical of King's positions on health care and other matters. King has deleted negative feedback and blocked critics from his Facebook page, several of his constituents say, sharing screenshots of comments that are no longer there.

"Having my voice and opinions shut down by the person who represents me -- especially when my voice and opinion wasn't vulgar and obscene -- is frustrating, it's disheartening, and I think it points to perhaps a larger problem with our representatives and maybe their priorities," Morley said in an interview.

King's office did not respond to requests for comment.

As Republican members of Congress seek to roll back the Affordable Care Act, commonly called Obamacare, and replace it with the American Health Care Act, they have adopted various strategies to influence and cope with public opinion, which polls show mostly opposes their plan. ProPublica, with our partners at Kaiser Health News, Stat and Vox, has been fact-checking members of Congress in this debate and we've found misstatements on both sides, though more by Republicans than Democrats. The Washington Post's Fact Checker has similarly found misstatements by both sides.

Today, we're back with more examples of how legislators are interacting with constituents about repealing Obamacare, whether online or in traditional correspondence. Their more controversial tactics seem to fall into three main categories: providing incorrect information, using euphemisms for the impact of their actions, and deleting comments critical of them. (Share your correspondence with members of Congress with us.)

Incorrect Information

Representative Vicky Hartzler (Republican, Missouri) sent a note to constituents this month explaining her vote in favor of the Republican bill. First, she outlined why she believes the ACA is not sustainable -- namely, higher premiums and few choices. Then she said it was important to have a smooth transition from one system to another.

"This is why I supported the AHCA to follow through on our promise to have an immediate replacement ready to go should the ACA be repealed," she wrote. "The AHCA keeps the ACA for the next three years then phases in a new approach to give people, states, and insurance markets plenty of time to make adjustments."

Except that's not true.

"There are quite a number of changes in the AHCA that take effect within the next three years," wrote ACA expert Timothy Jost, an emeritus professor at Washington and Lee University School of Law, in an email to ProPublica.

The current law's penalties on individuals who do not purchase insurance and on employers who do not offer it would be repealed retroactively to 2016, which could remove the incentive for some employers to offer coverage to their workers. Moreover, beginning in 2018, older people could be charged premiums up to five times more than younger people -- up from three times under current law. The way in which premium tax credits would be calculated would change as well, benefiting younger people at the expense of older ones, Jost said.

"It is certainly not correct to say that everything stays the same for the next three years," he wrote.

In an email, Hartzler spokesman Casey Harper replied, "I can see how this sentence in the letter could be misconstrued. It's very important to the Congresswoman that we give clear, accurate information to her constituents. Thanks for pointing that out."

Other lawmakers have similarly shared incorrect information after voting to repeal the ACA. Representative Diane Black (Republican, Tennessee) wrote in a May 19 email to a constituent that "in 16 of our counties, there are no plans available at all. This system is crumbling before our eyes and we cannot wait another year to act."

Black was referring to the possibility that, in 16 Tennessee counties around Knoxville, there might not have been any insurance options in the ACA marketplace next year. However, 10 days earlier, before she sent her email, BlueCross BlueShield of Tennessee announced that it was willing to provide coverage in those counties and would work with the state Department of Commerce and Insurance "to set the right conditions that would allow our return."

"We stand by our statement of the facts, and Congressman Black is working hard to repeal and replace Obamacare with a system that actually works for Tennessee families and individuals," her deputy chief of staff Dean Thompson said in an email.

On the Democratic side, the Washington Post Fact Checker has called out representatives for saying the AHCA would consider rape or sexual assault as pre-existing conditions. The bill would not do that, although critics counter that any resulting mental health issues or sexually transmitted diseases could be considered existing illnesses.

Euphemisms

A number of lawmakers have posted information taken from talking points put out by the House Republican Conference that try to frame the changes in the Republican bill as kinder and gentler than most experts expect them to be.

An answer to one frequently asked question pushes back against criticism that the Republican bill would gut Medicaid, the federal-state health insurance program for the poor, and appears on the websites of Representative Garret Graves (Republican, Louisiana) and others.

"Our plan responsibly unwinds Obamacare's Medicaid expansion," the answer says. "We freeze enrollment and allow natural turnover in the Medicaid program as beneficiaries see their life circumstances change. This strategy is both fiscally responsible and fair, ensuring we don't pull the rug out on anyone while also ending the Obamacare expansion that unfairly prioritizes able-bodied working adults over the most vulnerable."

That is highly misleading, experts say.

The Affordable Care Act allowed states to expand Medicaid eligibility to anyone who earned less than 138 percent of the federal poverty level, with the federal government picking up almost the entire tab. Thirty-one states and the District of Columbia opted to do so. As a result, the program now covers more than 74 million beneficiaries, nearly 17 million more than it did at the end of 2013.

The GOP health care bill would pare that back. Beginning in 2020, it would reduce the share the federal government pays for new enrollees in the Medicaid expansion to the rate it pays for other enrollees in the state, which is considerably less. Also in 2020, the legislation would cap the spending growth rate per Medicaid beneficiary. As a result, a Congressional Budget Office review released Wednesday estimates that millions of Americans would become uninsured.

Sara Rosenbaum, a professor of health law and policy at the Milken Institute School of Public Health at George Washington University, said the GOP's characterization of its Medicaid plan is wrong on many levels. People naturally cycle on and off Medicaid, she said, often because of temporary events, not changing life circumstances -- seasonal workers, for instance, may see their wages rise in summer months before falling back.

"A terrible blow to millions of poor people is recast as an easing off of benefits that really aren't all that important, in a humane way," she said.

Moreover, the GOP bill actually would speed up the "natural turnover" in the Medicaid program, said Diane Rowland, executive vice president of the Kaiser Family Foundation, a health care think tank. Under the ACA, states were only permitted to recheck enrollees' eligibility for Medicaid once a year because cumbersome paperwork requirements have been shown to cause people to lose their coverage. The American Health Care Act would require these checks every six months -- and even give states more money to conduct them.

Rowland also took issue with the GOP talking point that the expansion "unfairly prioritizes able-bodied working adults over the most vulnerable." At a House Energy and Commerce Committee hearing earlier this year, GOP representatives maintained that the Medicaid expansion may be creating longer waits for home- and community-based programs for sick and disabled Medicaid patients needing long-term care, "putting care for some of the most vulnerable Americans at risk."

Research from the Kaiser Family Foundation, however, showed that there was no relationship between waiting lists and states that expanded Medicaid. Such waiting lists pre-dated the expansion and they were worse in states that did not expand Medicaid than in states that did.

"This is a complete misrepresentation of the facts," Rosenbaum said.

Graves' office said the information on his site came from the House Republican Conference. Emails to the conference's press office were not returned.

The GOP talking points also play up a new Patient and State Stability Fund included in the AHCA, which is intended to defray the costs of covering people with expensive health conditions. "All told, $130 billion dollars would be made available to states to finance innovative programs to address their unique patient populations," the information says. "This new stability fund ensures these programs have the necessary funding to protect patients while also giving states the ability to design insurance markets that will lower costs and increase choice."

The fund was modeled after a program in Maine, called an invisible high-risk pool, which advocates say has kept premiums in check in the state. But Senator Susan Collins (Republican, Maine) says the House bill's stability fund wasn't allocated enough money to keep premiums stable.

"In order to do the Maine model 2014 which I've heard many House people say that is what they're aiming for -- it would take $15 billion in the first year and that is not in the House bill," Collins told Politico. "There is actually $3 billion specifically designated for high-risk pools in the first year."

Deleting Comments

Morley, 28, a branded content editor who lives in Seaford, New York, said she moved into Representative King's Long Island district shortly before the 2016 election. She said she did not vote for him and, like many others across the country, said the election results galvanized her into becoming more politically active.

Earlier this year, Morley found an online conversation among King's constituents who said their critical comments were being deleted from his Facebook page. Because she doesn't agree with King's stances, she said she wanted to reserve her comment for an issue she felt strongly about.

A day after the House voted to repeal the ACA, Morley posted her thoughts. "I kind of felt that that was when I wanted to use my one comment, my one strike as it would be," she said.

By noon the next day, it had been deleted and she had been blocked.

"I even wrote in my comment that you can block me but I'm still going to call your office," Morley said in an interview.

Some negative comments about King remain on his Facebook page. But King's critics say his deletions fit a broader pattern. He has declined to hold an in-person town hall meeting this year, saying, "to me all they do is just turn into a screaming session," according to CNN. He held a telephonic town hall meeting but only answered a small fraction of the questions submitted. And he met with Liuba Grechen Shirley, the founder of a local Democratic group in his district, but only after her group held a protest in front of his office that drew around 400 people.

"He's not losing his health care," Grechen Shirley said. "It doesn't affect him. It's a death sentence for many and he doesn't even care enough to meet with his constituents."

King's deleted comments even caught the eye of Andy Slavitt, who until January was the acting administrator of the Centers for Medicare and Medicaid Services. Slavitt has been traveling the country pushing back against attempts to gut the ACA.

.@RepPeteKing, are you silencing your constituents who send you questions? Assume ppl in district will respond if this is happening.

-- Andy Slavitt (@ASlavitt) May 12, 2017

Since the election, other activists across the country who oppose the president's agenda have posted online that they have been blocked from following their elected officials on Twitter or commenting on their Facebook pages because of critical statements they've made about the AHCA and other issues.

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.

We Fact-Checked Lawmakers' Letters To Constituents on Health Care

[Editor's Note: today's guest post, by the reporters at ProPublica, explores the problem of "fake news" and whether elected officials contribute to the problem while discussing health care legislation. The article was originally published yesterday, and is reprinted with permission. Interested persons wanting to help ProPublica's ongoing fact-checking efforts can share with ProPublica messages you have received from your elected officials.]

by Charles Ornstein, ProPublica

When Louisiana resident Andrea Mongler wrote to her senator, Bill Cassidy, in support of the Affordable Care Act, she wasn't surprised to get an email back detailing the law's faults. Cassidy, a Republican who is also a physician, has been a vocal critic.

"Obamacare" he wrote in January, "does not lower costs or improve quality, but rather it raises taxes and allows a presidentially handpicked 'Health Choices Commissioner' to determine what coverage and treatments are available to you."

There's one problem with Cassidy's ominous-sounding assertion: It's false.

The Affordable Care Act, commonly called Obamacare, includes no "Health Choices Commissioner." Another bill introduced in Congress in 2009 did include such a position, but the bill died 2014 and besides, the job as outlined in that legislation didn't have the powers Cassidy ascribed to it.

As the debate to repeal the law heats up in Congress, constituents are flooding their representatives with notes of support or concern, and the lawmakers are responding, sometimes with form letters that are misleading. A review of more than 200 such letters by ProPublica and its partners at Kaiser Health News, Stat and Vox, found dozens of errors and mis-characterizations about the ACA and its proposed replacement. The legislators have cited wrong statistics, conflated health care terms and made statements that don't stand up to verification.

It's not clear if this is intentional or if the lawmakers and their staffs don't understand the current law or the proposals to alter it. Either way, the issue of what is wrong -- and right -- about the current system has become critical as the House prepares to vote on the GOP's replacement bill today.

"If you get something like that in writing from your U.S. senator, you should be able to just believe that," said Mongler, 34, a freelance writer and editor who is pursuing a master's degree in public health. "I hate that people are being fed falsehoods, and a lot of people are buying it and not questioning it. It's far beyond politics as usual."

Cassidy's staff did not respond to questions about his letter.

Political debates about complex policy issues are prone to hyperbole and health care is no exception. And to be sure, many of the assertions in the lawmakers' letters are at least partially based in fact.

Democrats, for instance, have been emphasizing to their constituents that millions of previously uninsured people now have medical coverage thanks to the law. They say insurance companies can no longer discriminate against millions of patients with pre-existing conditions. And they credit the law with allowing adults under age 26 to stay on their parents' health plans. All true.

For their part, Republicans criticize the law for not living up to its promises. They say former President Obama pledged that people could keep their health plans and doctors and premiums would go down. Neither has happened. They also say that insurers are dropping out of the market and that monthly premiums and deductibles (the amount people must pay before their coverage kicks in) have gone up. All true.

But elected officials in both parties have incorrectly cited statistics and left out important context. We decided to take a closer look after finding misleading statements in an email Senator Roy Blunt (R-Missouri) sent to his constituents. We solicited letters from the public and found a wealth of misinformation, from statements that were simply misleading to whoppers. More Republicans fudged than Democrats, though both had their moments.

An aide to Rep. Dana Rohrabacher (R-California) defended his hyperbole as "within the range of respected interpretations."

"Do most people pay that much attention to what their congressman says? Probably not," said Sherry Glied, dean of New York University's Robert F. Wagner Graduate School of Public Service, who served as an assistant Health and Human Services secretary from 2010 to 2012. "But I think misinformation or inaccurate information is a bad thing and not knowing what you're voting on is a really bad thing."

We reviewed the emails and letters sent by 51 senators and 134 members of the House within the past few months. Here are some of the most glaring errors and omissions:

Rep. Pat Tiberi (R-Ohio) incorrectly cited the number of Ohio counties that had only one insurer on the Affordable Care Act insurance exchange.

What he wrote: "In Ohio, almost one third of counties will have only one insurer participating in the exchange."

What's misleading: In fact, only 23 percent (less than one quarter) had only one option, according to an analysis by the Kaiser Family Foundation.

His response: A Tiberi spokesperson defended the statement. "The letter says 'almost' because only 9 more counties in Ohio need to start offering only 1 plan on the exchanges to be one third."

Why his response is misleading: Ohio has 88 counties. A 10 percent difference is not "almost."

Representative Kevin Yoder (R-Kansas) said that the quality of health care in the country has declined because of the ACA, offering no proof.

What he wrote: "Quality of care has decreased as doctors have been burdened with increased regulations on their profession."

Why it's misleading: Some data shows that health care has improved after the passage of the ACA. Patients are less likely to be readmitted to a hospital within 30 days after they have been discharged, for instance. Also, payments have been increasingly linked to patients' outcomes rather than just the quantity of services delivered. A 2016 report by the Commonwealth Fund, a health care nonprofit think tank, found that the quality care has improved in many communities following the ACA.

His response: None.

Representative Anna Eshoo (D-California) misstated the percentage of Medicaid spending that covers the cost of long-term care, such as nursing home stays.

What she wrote: "It's important to note that 60 percent of Medicaid goes to long-term care and with the evisceration of it in the bill, this critical coverage is severely compromised."

What's misleading: Medicaid does not spend 60 percent of its budget on long-term care. The figure is closer to a quarter, according to the Center on Budget and Policy Priorities, a liberal think tank. Medicaid does, however, cover more than 60 percent of all nursing home residents.

Her response: Eshoo's office said the statistic was based on a subset of enrollees who are dually enrolled in Medicaid and Medicare. For this smaller group, 62 percent of Medicaid expenditures were for long-term support services, according to the Kaiser Family Foundation.

What's misleading about the response: Eshoo's letter makes no reference to this population, but instead refers to the 75 million Americans on Medicaid.

Representative Chuck Fleischmann (R-Tennessee) pointed to the number of uninsured Americans as a failure of the ACA, without noting that the law had dramatically reduced the number of uninsured.

What he wrote: "According to the U.S. Census Bureau, approximately thirty-three million Americans are still living without health care coverage and many more have coverage that does not adequately meet their health care needs."

Why it's misleading: The actual number of uninsured in 2015 was about 29 million, a drop of 4 million from the prior year, the Census Bureau reported in September. Fleischmann's number was from the previous year.

Beyond that, reducing the number of uninsured by more than 12 million people from 2013 to 2015 has been seen as a success of Obamacare. And the Republican repeal-and-replace bill is projected to increase the number of uninsured.

His response: None.

Rep. Joseph P. Kennedy III (D-Massachusetts) overstated the number of young adults who were able to stay on their parents' health plan as a result of the law.

What he wrote: The ACA "allowed 6.1 million young adults to remain covered by their parents' insurance plans."

What's misleading: A 2016 report by the U.S. Department of Health and Human Services, released during the Obama administration, however, pegged the number at 2.3 million.

Kennedy may have gotten to 6.1 million by including 3.8 million young adults who gained health insurance coverage through insurance marketplaces from October 2013 through early 2016.

His response: A spokeswoman for Kennedy said the office had indeed added those two numbers together and would fix future letters.

Representative Blaine Luetkemeyer (R-Missouri.) said that 75 percent of health insurance marketplaces run by states have failed. They have not.

What he said: "Nearly 75 percent of state-run exchanges have already collapsed, forcing more than 800,000 Americans to find new coverage."

What's misleading: When the ACA first launched, 16 states and the District of Columbia opted to set up their own exchanges for residents to purchase insurance, instead of using the federal marketplace, known as Healthcare.gov.

Of the 16, four state exchanges, in Oregon, Hawaii, New Mexico and Nevada, failed, and Kentucky plans to close its exchange this year, according to a report by the House Energy and Commerce Committee. While the report casts doubt on the viability of other state exchanges, it is clear that 3/4 have not failed.

His response: None.

Representative Dana Rohrabacher (R-California) overstated that the ACA "distorted labor markets," prompting employers to shift workers from full-time jobs to part-time jobs.

What he said: "It has also, through the requirement that employees that work thirty hours or more be considered full time and thus be offered health insurance by their employer, distorted the labor market."

What's misleading: A number of studies have found little to back up that assertion. A 2016 study published by the journal Health Affairs examined data on hours worked, reason for working part time, age, education and health insurance status. "We found only limited evidence to support this speculation" that the law led to an increase in part-time employment, the authors wrote. Another study found much the same.

In addition, PolitiFact labeled as false a statement last June by President Donald Trump in which he said, "Because of Obamacare, you have so many part-time jobs."

His response: Rohrabacher spokesman Ken Grubbs said the congressman's statement was based on an article that said, "Are Republicans right that employers are capping workers' hours to avoid offering health insurance? The evidence suggests the answer is 'yes,' although the number of workers affected is fairly small."

We pointed out that "fairly small" was hardly akin to distorting the labor market. To which Grubbs replied, "The congressman's letter is well within the range of respected interpretations. That employers would react to Obamacare's impact in such way is so obvious, so nearly axiomatic, that it is pointless to get lost in the weeds," Grubbs said.

Representative Mike Bishop (R-Michigan) appears to have cited a speculative 2013 report by a GOP-led House committee as evidence of current and future premium increases under the ACA.

What he wrote: "Health insurance premiums are slated to increase significantly. Existing customers can expect an average increase of 73 percent, while the average change due to Obamacare for those purchasing a new plan will be a 96 percent increase in premiums. The average cost for a new customer in the individual market is expected to rise $1,812 per year."

What's misleading: The figures seem to have come from a report issued before the Obamacare insurance marketplaces launched and before 2014 premiums had been announced. The letter implies these figures are current. In fact, premium increases by and large have been moderate under Obamacare. The average monthly premium for a benchmark plan, upon which federal subsidies are calculated, increased about 2 percent from 2014 to 2015; 7 percent from 2015 to 2016; and 25 percent this year, for states that take part in the federal insurance marketplace.

His response: None

Representative Dan Newhouse (R-Washington) misstated the reasons why Medicaid costs per person were higher than expected in 2015.

What he wrote: "A Medicaid actuarial report from August 2016 found that the average cost per enrollee was 49 percent higher than estimated just a year prior 2014 in large part due to beneficiaries seeking care at more expensive hospital emergency rooms due to difficulty finding a doctor and long waits for appointments."

What's misleading: The report did not blame the higher costs on the difficulty patients had finding doctors. Among the reasons the report did cite: patients who were sicker than anticipated and required a raft of services after being previously uninsured. The report also noted that costs are expected to decrease in the future.

His response: None

Senator Dick Durbin (D-Ill.) wrongly stated that family premiums are declining under Obamacare.

What he wrote: "Families are seeing lower premiums on their insurance, seniors are saving money on prescription drug costs, and hospital readmission rates are dropping."

What's misleading: Durbin's second and third points are true. The first, however, is misleading. Family insurance premiums have increased in recent years, although with government subsidies, some low- and middle-income families may be paying less for their health coverage than they once did.

His response: Durbin's office said it based its statement on an analysis published in the journal Health Affairs that said that individual health insurance premiums dropped between 2013 and 2014, the year that Obamacare insurance marketplaces began. It also pointed to a Washington Post opinion piece that said that premiums under the law are lower than they would have been without the law.

Why his response is misleading: The Post piece his office cites states clearly, "Yes, insurance premiums are going up, both in the health care exchanges and in the employer-based insurance market."

Representative Susan Brooks (R-Ind.) told constituents that premiums nationwide were slated to jump from 2016 to 2017, but failed to mention that premiums for some plans in her home state actually decreased.

What she wrote: "Since the enactment of the ACA, deductibles are up, on average, 63 percent. To make matters worse, monthly premiums for the "bronze plan" rose 21 percent from 2016 to 2017. 2026 Families and individuals covered through their employer are forced to make the difficult choice: pay their premium each month or pay their bills."

What's misleading: Brooks accurately cited national data from the website HealthPocket, but her statement is misleading. Indiana was one of two states in which the premium for a benchmark health plan -- the plan used to calculate federal subsidies -- actually went down between 2016 and 2017. Moreover, more than 80 percent of marketplace consumers in Indiana receive subsidies that lowered their premium costs. The HealthPocket figures refer to people who do not qualify for those subsidies.

Her response: Brooks' office referred to a press release from Indiana's Department of Insurance, which took issue with an Indianapolis Star story about premiums going down. The release, from October, when Vice President Mike Pence was Indiana's governor, said that the average premiums would go up more than 18 percent over 2016 rates based on enrollment at that time. In addition, the release noted, 68,000 Indiana residents lost their health plans when their insurers withdrew from the market.

Why her response is misleading: For Indiana consumers who shopped around, which many did, there was an opportunity to find a cheaper plan.

Senator Ron Wyden (D-Ore.) incorrectly said that the Republican bill to repeal Obamacare would cut funding for seniors in nursing homes.

What he wrote: "It's terrible for seniors. Trumpcare forces older Americans to pay 5 times the amount younger Americans will -- an age tax -- and slashes Medicaid benefits for nursing home care that two out of three Americans in nursing homes rely on."

What's misleading: Wyden is correct that the GOP bill, known as the American Health Care Act, would allow insurance companies to charge older adults five times higher premiums than younger ones, compared to three times higher premiums under the existing law. However, it does not directly slash Medicaid benefits for nursing home residents. It proposes cutting Medicaid funding and giving states a greater say in setting their own priorities. States may, as a result, end up cutting services, jeopardizing nursing home care for poor seniors, advocates say, because it is one of the most expensive parts of the program.

His response: Taylor Harvey, a spokesman for Wyden, defended the statement, noting that the GOP health bill cuts Medicaid funding by $880 billion over 10 years and places a cap on spending. "Cuts to Medicaid would force states to nickel and dime nursing homes, restricting access to care for older Americans and making it a benefit in name only," he wrote.

Why his response is misleading: The GOP bill does not spell out how states make such cuts.

Representative Derek Kilmer (D-Washington) misleadingly said premiums would rise under the Obamacare replacement bill now being considered by the House.

What he wrote: "It's about the 24 million Americans expected to lose their insurance under the Trumpcare plan and for every person who will see their insurance premiums rise 2014 on average 10-15 percent."

Why it's misleading: First, the Congressional Budget Office did estimate that the GOP legislation would cover 24 million fewer Americans by 2026. But not all of those people would "lose their insurance." Some would choose to drop coverage because the bill would no longer make it mandatory to have health insurance, as is the case now.

Second, the budget office did say that in 2018 and 2019, premiums under the GOP bill would be 15-20 percent higher than they would have been under Obamacare because the share of unhealthy patients would increase as some of those who are healthy drop out. But it noted that after that, premiums would be lower than under the ACA.

His response: None.

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The Boston Keep ACA Rally on January 15 And Senator Warren's Remarks

On Sunday January 15, 2017 I attended the healthcare rally in Boston at iconic Faneuil Hall. It was one of a dozen rallies around the United States. Several people spoke, including Boston Mayor Marty Walsh, U.S. Senator Elizabeth Warren, activist Sarah Grow, Carla Leviano, and U.S. Senator Edward Markey. The attendance was great and far exceeded the capacity for the auditorium inside Faneuil Hall, where it was originally planned.

The event continued outside with what I estimated at least five thousand people standing in the cold 27 degrees Fahrenheit temperature. This blog post contains several photographs I took. The photo on the right shows the crowd gather more than hour before the official 1:00 pm start of the rally.

Carla Lievano, a single-mother whose family is on MassHealth, is worried about losing her health benefits if the Affordable Care Act is repealed. She said:

"I could lose my health benefits... I’m very low income. I don’t know how I would take care of [my daughter]..."

Grow shared the story of her mother's battle against cancer, and how the Affordable Care Act (ACA and a//k/a Obamacare) saved her mother's life. Her mother was able to find a replacement plan under the ACA. Below is the transcript of Senator Elizabeth Warren's remarks (courtesy of the Boston Globe):

"For eight years, Republicans in Congress have complained about health care in America, heaping most of the blame on President Obama. Meanwhile, they’ve hung out on the sidelines making doomsday predictions and cheering every stumble, but refusing to lift a finger to actually improve our health care system.

The GOP is about to control the White House, Senate, and House. So what’s the first thing on their agenda? Are they working to bring down premiums and deductibles? Are they making fixes to expand the network of doctors and the number of plans people can choose from? Nope. The number one priority for congressional Republicans is repealing the Affordable Care Act and breaking up our health care system while offering zero solutions.

Their strategy? Repeal and run.

Many Massachusetts families are watching this play out, worried about what will happen — including thousands from across the Commonwealth that I joined at Faneuil Hall on Sunday to rally in support of the ACA. Hospitals and insurers are watching too, concerned that repealing the ACA will create chaos in the health insurance market and send costs spiraling out of control.

Health care reform in Massachusetts wasn’t partisan. Democrats, Republicans, business leaders, hospitals, insurers, doctors, and consumers all came together behind a commitment that every single person in our Commonwealth deserves access to affordable, high-quality care. When Republican Governor Mitt Romney signed Massachusetts health reform into law in 2006, our state took huge strides toward offering universal health care coverage and financial security to millions of Bay State residents.

That law was a major step forward. Today, more than 97 percent of Bay Staters are covered — the highest rate of any state in the country.

But Massachusetts still has a lot to lose if the ACA is repealed. One big reason for our state’s health care success is that we took advantage of the new opportunities offered under the ACA. In addition to making care more accessible and efficient, our state expanded Medicaid, using federal funds to help even more people. And we combined federal and state dollars to help reduce the cost of insurance on the Health Connector.

When the ACA passed, Massachusetts already had in place some of the best consumer protections in the nation. But the ACA still made a big difference. It strengthened protections for people in Massachusetts with pre-existing conditions, allowed for free preventive care visits, and — for the first time in our state — banned setting lifetime caps on benefits.

If the ACA is repealed, our health care system would hang in the balance. Half a million people in the Commonwealth would risk losing their coverage. People who now have an iron-clad guarantee that they can’t be turned away due to their pre-existing conditions or discriminated against because of their gender could lose that security. Preventive health care, community health centers, and rural hospitals could lose crucial support. In short, the Massachusetts health care law is a big achievement and a national model, but it also depends on the ACA and a strong partnership with the federal government.

If the cost-sharing subsidies provided by the ACA are slashed to zero, Massachusetts will have a tough time keeping down the cost of plans on the Health Connector. The state can’t make funds appear out of thin air to help families on the Medicaid expansion if Republicans yank away support. And our ability to address the opioid crisis will be severely hampered if people lose access to health insurance or if the federal funding provided through the Medicaid waiver disappears. Even in states with strong health care systems — states like Massachusetts — the ACA is critical.

The current system isn’t perfect — not by a long shot. There are important steps Congress could take to lower deductibles and premiums, to expand the network of doctors people can see on their plans, and to increase the stability and predictability of the market. We should be working together to make health care better all across the country, just like we’ve tried to do here in Massachusetts.

This doesn’t need to be a partisan fight. But if congressional Republicans continue to pursue repeal of the ACA with nothing more than vague assurances that they might — someday — think up a replacement plan, the millions of Americans who believe in guaranteeing people’s access to affordable health care will fight back every step of the way.

Repeal and run is for cowards."

Want to read more? Try these hashtags on social networking sites: #repealandrun #ourfirststand #savehealthcare #CareNotChaos. Below are more photos from Sunday's event in Boston.

Protester sign. Boston healthcare rally. 1/15/17

Protester sign at Boston healthcare rally. 1/15/17

Mayor Marty Walsh speaking at healthcare rally. 1/15/17

View from crowd at Boston healthcare rally. 1/15/17

Survey: Bankers Expect Consumers To Use Wearable And Smart Home Devices For Banking

Would you use a smart watch, fitness band, or other wearable device for banking? How about your smart television or refrigerator? Many bankers think you will, and are racing to integrate a broader range of mobile devices and technologies into their banking services. A recent survey of financial executives found that:

"... 20 per cent expect it to be common for consumers to make financial transactions using wearables within one year, 59 per cent within two years and 91 per cent within five years... 87 per cent expect it to be common for consumers to make financial transactions using Smart TVs and 68 per cent via home appliances."

The survey included 500 executives globally in several financial areas: banking, financial advice, consumer finance, investment management, insurance, and payments. So, consumers are likely to see these changes not just at your bank, but in a variety of financial and insurance transactions. Here's why:

"... too many banks are out of touch with what customers really want: one survey found 62 per cent of retail banking executives believed their bank offered excellent service compared to just 35 per cent of customers.... Millennials will have annual spending power of US$1. trillion [in 2020] and represent 30 per cent of total retail sales... Millennials not only have an appetite for disruptive new technologies but also an affinity with brand-savvy digital leaders... The Millennial Disruption Index, a three-year study of industry disruption conducted by Viacom subsidiary Scratch, found that banking was most vulnerable to disruption..."

The report discussed the desire by executives to serve customers via a variety of methods:

"Today’s customers expect a flawless end-to-end experience across all channels, yet fewer than 4 per cent of our respondents say they have achieved full omni-channel integration... by 2020, 89 per cent of our respondents expect to achieve full omni-channel integration. This either suggests a massive surge of investment over the next five years – or an industry in denial about the scale of the task ahead... 70 per cent expect video chat to largely replace branch appointments. Indeed, six out of ten now believe a digital-only channel model is viable."

Bankers view the Internet-of-Things (IoT) as both a collection of endpoint devices to provide services through, and a rich source of data:

"...93 per cent agree that finding innovative ways to provide value-added services to customers based on data-driven insight will be crucial to long-term success... 86 per cent agree that once consumers recognize the data potential of the IoT they will increasingly seek to benchmark their own behavior against their peers..."

Banks will probably develop more non-human (e.g., self-service) interfaces:

"... 76 per cent agree the widespread use of virtual assistants such as Siri on the iPhone means customers are more willing to engage with automated assistance and advice... almost three quarters of our respondents agree that in the future customers will interact with a human-like avatar..."

Another technology being considered:

"... 60 per cent [of survey respondents] believe that blockchain, a distributed public ledger which can securely record any information and the ownership of any asset, will prove to be the most significant technology development to affect financial services since the Internet and 45 per cent think the combination of blockchain wallets and peerto-peer (P2P) lending could herald the end of banking as we know it... 12 per cent expect the settlement of insurance claims using IoT data, blockchain and smart contracts to be mainstream practice within two years and 74 per cent expect it to be mainstream by 2025..."

Don't expect your bank to provide these new services next week or next month. It will take them time. New systems must be built, tested, debugged, and integrated with legacy computer systems and processes. All of this suggests that to fund their investments in innovation projects, banks probably won't lower their retail banking prices and fees (e.g., checking, savings, etc.) any time soon. While writing this blog the past 8+ years, I've found it wise to always keep an eye on the banks.

Download "The Future of Retail Financial Services" report by Cognizant, Marketforce, and Pegasystems.