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Working through the pain at Tesla
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After being called out for hiding worker injuries at its factory, Tesla decides to double down. Plus, a report card on diversity in Silicon Valley.
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Tuesday, November 6, 2018
Becton Dickinson price target lowered to $250 from $257 at Piper Jaffray
Piper Jaffray analyst William Quirk lowered his price target for Becton Dickinson to $250 and keeps an Overweight rating on the name following the company’s Q4 results. The analyst believes currency headwinds are masking Becton’s “solid’ results. Adjusting for 600 basis points of headwinds, the fiscal 2019 outlook reflects a strengthening business and some typical guidance conservatism, Quirk tells investors in a post-earnings research note.
https://thefly.com/landingPageNews.php?id=2818585
Ovarian Cancer Risk Reduced with Postmenopausal Statins
Women who started taking a statin at the age of 50 or older had a significantly lower risk of developing any histologic type of ovarian cancer over the next decade than non-statin users did, according to a large, case-control study.
The study by Daniel Cramer, MD, of Harvard Medical School in Boston, and colleagues also found that the effect was independent of use of any other concomitant medication.
The analysis, published in the International Journal of Cancer, compared 2,040 women with epithelial ovarian cancer (EOC) and 2,100 women without the disease, and found that the risk of ovarian cancer was 32% lower among statin users compared with those who did not use a statin (OR 0.68; 95% CI 0.54-0.85).
“To our knowledge, this is the first population-based case-control study to report a reduced risk for EOC, along with its major histologic subtypes, associated with statin use,” the investigators wrote.
“We think it is noteworthy that the reduction in risk was seen within a decade of [statin] introduction, with relatively short-term use,” the team added.
The New England Case Control (NEC) study enrolled participants in three time periods: 1992-1998, 1998-2002, and 2003-2008. “The participants were asked if they ever used statins for at least 6 consecutive months … age at first use of statins, type and quantity, and the duration of use,” the researchers noted. The dose consumed by statin users was determined by recording the number of tablets women took over a specific time period and whether or not the statin was lipophilic or hydrophilic.
An association between statin use and ovarian cancer was not apparent in the 1992-1998 data, but the benefit of taking a statin on ovarian cancer risk became apparent in the later data set between 1998 and 2002 and gained significance in the 2003 to 2008 data set, Cramer and co-authors found.
“No association between statin use and ovarian cancer was seen in women who began use before age 50,” the team cautioned.
On the other hand, the risk of ovarian cancer was 37% lower in statin users between the ages of 50 and 59 compared with non-users, at an OR of 0.63 (95% CI 0.46-0.87). Among women age 60 and older, the risk of ovarian cancer was 39% lower among statin users versus non-users, at an odds ratio of 0.61 (95% CI 0.44-0.85).
The reduction in ovarian cancer risk was also most apparent among women who had taken a statin for 2.o to 4.9 years, but the benefit was apparent for all invasive cancers as well as for both early and late-stage disease.
Cramer and colleagues also noted that the decreased risk of ovarian cancer was seen for all types of ovarian cancer, including serous invasive cancers, high-grade serous cancer, all non-serous invasive cancers, and mucinous cancers.
The benefit of taking a statin on ovarian cancer risk was greater for women who used both a statin and either a non-steroidal anti-inflammatory drug or a statin plus aspirin. In contrast, the reduction in ovarian cancer risk with statin use was apparent only in women who did not have obesity, who had a body mass index of less than 30 kg/m2, and who did not have either type 1 or type 2 diabetes.
Impressive Magnitude of Risk Reduction
Asked by MedPage Today if he was surprised by the effect statins had on ovarian cancer risk, Cramer said no, though he was still impressed with the magnitude of risk reduction seen in this study. He noted that earlier research in patients at very high risk for either esophageal or colorectal cancer had also shown that statin use significantly reduced the risk of both of these cancers compared with non-statin use.
“We’ve speculated on various ways statins might derive this benefit, and one way is that they would certainly reduce the amount of estrogen formed from precursors of estrogen in the fat,” Cramer suggested. He also pointed out that since cholesterol has a key role in activating inflammation and angiogenesis, reducing cholesterol with statin use may well block both of these pathways. In addition, he said, the 32% reduction in ovarian cancer risk seen with statin use is relatively similar to the effect observed with oral contraceptive use or tubal ligation.
Thus, for postmenopausal women at high risk for ovarian cancer, Cramer said statin use might be considered as a means for reducing this risk, although the same does not hold true for either premenopausal women or women harboring the BCRA 1 or 2 mutation: “If a woman knows she has either of these mutations, she really needs to be very closely followed by her gynecologist or oncologist,” Cramer cautioned.
“But for postmenopausal women at high risk for ovarian cancer, it does make some sense,” he added.
The study was sponsored by the National Institutes of Health.
Cramer reported having no conflicts of interest.
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Inside Tesla’s factory, a medical clinic designed to ignore injured workers
When a worker gets smashed by a car part on Tesla’s factory floor, medical staff are forbidden from calling 911 without permission.
The electric carmaker’s contract doctors rarely grant it, instead often insisting that seriously injured workers – including one who severed the top a finger – be sent to the emergency room in a Lyft.
Injured employees have been systematically sent back to the production line to work through their pain with no modifications, according to former clinic employees, Tesla factory workers and medical records. Some could barely walk.
The on-site medical clinic serving some 10,000 employees at Tesla Inc.’s California assembly plant has failed to properly care for seriously hurt workers, an investigation by Reveal from The Center for Investigative Reporting has found.
The clinic’s practices are unsafe and unethical, five former clinic employees said.
But denying medical care and work restrictions to injured workers is good for one thing: making real injuries disappear.
“The goal of the clinic was to keep as many patients off of the books as possible,” said Anna Watson, a physician assistant who worked at Tesla’s medical clinic for three weeks in August.
Watson has nearly 20 years of experience as a medical professional, examining patients, diagnosing ailments and prescribing medications. She’s treated patients at a petroleum refinery, a steel plant, emergency rooms and a trauma center. But she said she’s never seen anything like what’s happening at Tesla.
“The way they were implementing it was very out of control,” said Watson, who was fired in August after she raised her concerns. “Every company that I’ve worked at is motivated to keep things not recordable. But I’ve never seen anybody do it at the expense of treating the patient.”
Workers with chest pain, breathing problems or extreme headaches have been dismissed as having issues unrelated to their work, without being fully evaluated or having workplace exposures considered, former employees said. The clinic has turned away temp workers who got hurt on Tesla’s assembly lines, leaving them without on-site care. And medical assistants, who are supposed to have on-site supervision, say they were left on their own at night, unprepared to deal with a stream of night-shift injuries.
If a work injury requires certain medical equipment – such as stitches or hard braces – then it has to be counted in legally mandated logs. But some employees who needed stitches for a cut instead were given butterfly bandages, said Watson and another former clinic employee. At one point, hard braces were removed from the clinic so they wouldn’t be used, according to Watson and a former medical assistant.
As Tesla races to revolutionize the automobile industry and build a more sustainable future, it has left its factory workers in the past, still painfully vulnerable to the dangers of manufacturing.
An investigation by Reveal in April showed that Tesla prioritized style and speed over safety, undercounted injuries and ignored the concerns of its own safety professionals. CEO Elon Musk’s distaste for the color yellow and beeping forklifts eroded factory safety, former safety team members said.
The new revelations about the on-site clinic show that even as the company forcefully pushed back against Reveal’s reporting, behind the scenes, it doubled down on its efforts to hide serious injuries from the government and public.
In June, Tesla hired a new company, Access Omnicare, to run its factory health center after the company promised Tesla it could help reduce the number of recordable injuries and emergency room visits, according to records.
A former high-level Access Omnicare employee said Tesla pressured the clinic’s owner, who then made his staff dismiss injuries as minor or not related to work.
“It was bullying and pressuring to do things people didn’t believe were correct,” said the former employee, whom Reveal granted anonymity because of the worker’s fear of being blackballed in the industry.
Dr. Basil Besh, the Fremont, California, hand surgeon who owns Access Omnicare, said the clinic drives down Tesla’s injury count with more accurate diagnoses, not because of pressure from Tesla. Injured workers, he said, don’t always understand what’s best for them.
“We treat the Tesla employees just the same way we treat our professional athletes,” he said. “If Steph Curry twists his knee on a Thursday night game, that guy’s in the MRI scanner on Friday morning.”
Yet at one point, Watson said a Tesla lawyer and a company safety official told her and other clinic staff to stop prescribing exercises to injured workers so they wouldn’t have to count the injuries. Recommending stretches to treat an injured back or range-of-motion exercises for an injured shoulder was no longer allowed, she said.
The next day, she wrote her friend a text message in outrage: “I had to meet with lawyers yesterday to literally learn how not to take care of people.”
Tesla declined interview requests for this story and said it had no comment in response to detailed questions. But after Reveal pressed the company for answers, Tesla officials took time on their October earnings call to enthusiastically praise the clinic.
“I’m really super happy with the care they’re giving, and I think the employees are as well,” said Laurie Shelby, Tesla’s vice president for environment, health and safety.
Musk complained about “unfair accusations” that Tesla undercounts its injuries and promised “first-class health care available right on the spot when people need it.”
Welcome to the new Tesla clinic
Back in June, on stage at Tesla’s shareholder meeting, Musk announced a declining injury rate for his electric car factory.
“This is a super important thing to me because we obviously owe a great debt to the people who are building the car. I really care about this issue,” Musk said to applause.
It wasn’t long after that that Stephon Nelson joined the company. Working the overnight shift Aug. 13, Nelson got a sudden introduction to Tesla’s new model of care.
He was bent over putting caulk inside the trunk of a Model X. Something slipped and the hatchback crunched down on his back. Nelson froze up in agonizing pain. He had deep red bruises across his back.
“I couldn’t walk, I couldn’t sit down. I couldn’t even stand up straight,” said Nelson, who’s 30 and used to play semiprofessional football.
He asked for an ambulance, but the on-call Tesla doctor said no – he could take a Lyft to the hospital instead.
“I just felt heartbroken,” Nelson said. “What they was telling us in the orientation, that Tesla is a company that cares about their employees’ safety, it just seemed like it was just a whole reversal.”
No one was allowed to call 911 without a doctor’s permission, said Watson and two medical assistants who used to work at the clinic under Besh’s direction. Anyone who did so would get in trouble, they said.
“There was a strong push not to send anybody in an ambulance,” Watson said.
It’s unclear why there was such a focus on avoiding 911, though some former employees thought it was to save money. Also, 911 logs become public records. And first responders, unlike drivers for ride-hailing services, are required to report severe work injuries to California’s Division of Occupational Safety and Health, the state’s workplace safety agency. Besh said ambulance use is based on “clinical judgment only.”
The system was especially problematic on the night shift, as the factory continued churning out vehicles around the clock, but there were no doctors or nurses around, former employees said.
Two medical assistants who used to work there said they often were left on their own – one on duty at a time – and struggled to tend to all the injured. Both had to do things such as take vital signs, which medical assistants aren’t allowed to do without on-site supervision, according to the Medical Board of California. Reveal granted them anonymity because they fear speaking out will hurt their careers. Besh said no one works alone.
For a severely injured worker lying on the assembly line, it could take 10 to 15 minutes for a medical assistant to arrive and then contact on-call doctors, a medical assistant said. Getting a code for Tesla’s Lyft account was a drawn-out process that could take hours, she said.
The medical assistants said they were alarmed and uncomfortable with the doctors’ orders to use Lyft because they worried some patients could pass out or need help en route. One worker directed to take a Lyft was light-headed and dizzy. Another had his fingers badly broken, contorted and mangled.
Besh, who often serves as the on-call doctor, said anyone could call 911 in a life-threatening situation. He said he recommends using Lyft for workers who don’t need advanced life support.
Besh gave the example of a worker who had the top of his finger cut off. He needed to go to the hospital, but not by ambulance, Besh said. He likened the situation to people at home who get a ride to the hospital instead of calling an ambulance.
“We right-size the care,” he said. “Obviously, it’s all about the appropriate care given for the appropriate situation.”
It’s a doctor’s judgment call to use Lyft, but many on the factory floor found it inhumane. In some cases, including the worker with an amputated fingertip, factory supervisors refused to put their employees in a Lyft and instead drove them to the hospital, according to a medical assistant.
Injured workers sent back to work
In Nelson’s case, he called his girlfriend to take him to the hospital. But he said his supervisor told him that he had to show up for work the next day or Nelson would get in trouble.
Nelson needed the job, so he forced himself to come in. He shuffled slowly, hunched over in pain, to his department, he said. When it was clear he couldn’t do the job, he was sent to the Tesla health center, a small clinic on an upper level of the factory.
Workers too injured to do their regular jobs are supposed to receive job restrictions and a modified assignment that won’t make the injury worse.
But the health center wouldn’t give Nelson any accommodations. He could go home that day, but he had to report to work full duty the following day, he said.
By law, work-related injuries must be recorded on injury logs if they require medical treatment beyond first aid, days away from work or job restrictions. The clinic’s practices were designed to avoid those triggers, said Anna Watson, the physician assistant.
There was a clinic rule, for example, that injured employees could not be given work restrictions, Watson said. No matter what type of injuries workers came in with – burns, lacerations, strains and sprains – clinic staff were under instructions to send them back to work full duty, she said. Watson said she even had to send one back to work with what appeared to be a broken ankle.
Medical clinics are supposed to treat injuries and keep workers safe, she said, “and none of that’s happening. So at the most acute time of their injury, they don’t have any support, really.”
A medical assistant who formerly worked at the clinic remembered an employee who was sent back to work even though he couldn’t stand on one of his feet. Another employee passed out face down on the assembly line – then went back to work.
“You always put back to full duty, no matter what,” said the medical assistant.
Dr. Basil Besh said patients are given work restrictions when appropriate. He said those hurt at night get first aid and triage, followed by an accurate diagnosis from a physician the next day.
“There’s always going to be somebody who says, ‘No, I shouldn’t be working,’ ” he said. “But if you look objectively at the totality of the medical examination, that’s not always the case.”
Four days after Nelson’s injury, Watson herself sent him back to work with no restrictions, according to medical records he provided. Nelson said this happened repeatedly as he hobbled in pain.
But Watson did what she could to help: She referred him to Access Omnicare’s main clinic, about 5 miles from the auto factory. It was allowed to give work restrictions, Watson said. But most workers aren’t sent there, and it can take a while to get an appointment.
Eight days after his injury, the outside clinic diagnosed Nelson with a “crushing injury of back,” contusions and “intractable” pain. He finally was given work restrictions that said he shouldn’t be bending, squatting, kneeling, climbing stairs or lifting more than 10 pounds.
Even after that, the health center at one point sent Nelson back to his department in a wheelchair, he said.
“And I’m rocking back and forth, just ready to fall out of the wheelchair because I’m in so much pain,” he said.
In September, Nelson got a warehouse job at another company. It was a pay cut, but he quit Tesla right away. “I feel like it’s really not safe at all,” he said.
Besh said he couldn’t comment on a specific case without a signed release from the patient. But, he said, “a physician examined that patient and saw that there was not a safety issue.”
Besh was named chairman of the American Academy of Orthopaedic Surgeons’ Board of Councilors this year. A Tesla spokeswoman set up and monitored his interview with Reveal.
There’s been a “culture shift” at the health center since Tesla hired him to take over, he said.
“So culturally, there were folks in the past who were expecting that any time they come to the clinic, they would be taken off of work,” he said. “And when we told them, ‘No, we really want to do what’s best for you’ … it’s taking some time to get buy-in.”
In the end, Tesla counted Nelson on its injury logs, which is how Reveal identified him. That’s another reason the system didn’t make sense to Watson: Some workers whose injuries were so serious that they eventually would have to be counted still were denied proper care when they needed it most, she said.
Many more injured workers never were counted, she said. Tesla’s official injury logs, provided to Reveal by a former employee, show 48 injuries in August. Watson reviewed the list for the three weeks she was there and estimated that more than twice as many injuries should have been counted if Tesla had provided appropriate care and counted accurately.
Other ways Tesla’s clinic avoids treating workers
The clinic seemed geared toward sending workers away instead of treating them, Watson said. The culture of the clinic, she said, was to discount workers’ complaints and assume they were exaggerating.
The clinic would look for reasons to dismiss injuries as not work-related, even when they seemed to be, former employees said.
Watson recalled one worker who had passed out on the job and went to the hospital because of her exposure to fumes in the factory. Even though a work-related loss of consciousness is required to be counted, no such injury was recorded on Tesla’s injury logs.
Temp workers hurt on the production line also were often rebuffed by the clinic, said former clinic employees. At one point, there was a blanket policy to turn away temps, they said.
Tracy Lee developed a repetitive stress injury over the summer when a machine broke and she had to lift car parts by hand, she said. Lee said the health center sent her away without evaluating her because she wasn’t a permanent employee.
“I really think that’s messed up,” said Lee, who later sought medical treatment on her own. “Don’t discriminate just because we’re temps. We’re working for you.”
By law, Tesla is required to record injuries of temp workers who work under its supervision, no matter where they get treatment. But not all of them were. Lee said her Tesla supervisor knew about the injury. But Lee’s name doesn’t appear on Tesla’s injury logs.
Besh pushed back on the claims of his former employees.
He said the clinic didn’t treat some temp workers because Access Omnicare wasn’t a designated health care provider for their staffing agencies. About half of the agencies now are able to use the clinic, and the rest should be early next year, he said.
Besh said a physician accurately and carefully determines whether an injury is work-related and the clinic is not set up to treat personal medical issues. He said the clinic is fully stocked.
As for prescribing exercises, Besh said the clinic automatically was giving exercise recommendations to workers who were not injured and simply fixed the error.
WORK STATUS REPORTS
These sample Work Status Reports, posted in Tesla’s health center, show how clinic staff were instructed to handle different situations. The document on the left, labeled “Work Related,” is marked “First Aid Only” and “Return to full duty with no limitations or restrictions,” scenarios that would mean Tesla wouldn’t have to count the injury. Those were the only options, says Anna Watson, a physician assistant who used to work there. One document for contract employees such as temp workers (center) and another for non-occupational injuries (right) both say to refer the patients elsewhere.Credit: Obtained by Reveal
Clinic source: Tesla pressured doctor
Access Omnicare’s proposal for running Tesla’s health center states that Tesla’s priorities include reducing recordable injuries and emergency room visits, according to a copy obtained by Reveal.
It says Access Omnicare’s model, with more accurate diagnoses, reduces “un-necessary use of Emergency Departments and prevents inadvertent over-reporting of OSHA (Occupational Safety and Health Administration) recordability.”
Even before Access Omnicare took over the on-site health center in June, Tesla sent many injured workers to its main clinic as one of the automaker’s preferred providers.
Tesla exercised an alarming amount of pressure on the clinic to alter how it treated patients in order to keep injury rates down, said the former high-level Access Omnicare employee.
“There was a huge, huge push from Tesla to keep things nonrecordable,” said the former employee.
A Tesla workers’ compensation official routinely would contact the clinic to intervene in individual cases, said the former employee. Tesla would take issue with diagnoses and treatment decisions, arguing that specific workers should be sent back to work full duty or have their injuries labeled as unrelated to work. The clinic gave Tesla what it wanted, the former employee said.
For example, Bill Casillas’ diagnosis suddenly was changed by Access Omnicare after discussions with Tesla.
In December, Casillas was working in Tesla’s seat factory. When he touched a forklift, he felt an electric shock jolt him back. Later that shift, it happened again. He said he felt disoriented and found he had urinated on himself.
Casillas said he hasn’t been the same since. He struggles with pain, tingling and numbness. At 47, he’s unsteady, uses a cane and hasn’t been able to work, he said.
A doctor at Access Omnicare diagnosed a work-related “injury due to electrical exposure” and gave him severe work restrictions and physical therapy, medical records show.
Then, nearly two months after his injury, another Access Omnicare physician, Dr. Muhannad Hafi, stepped in and dismissed the injury.
“I have spoken again with (the workers’ compensation official) at Tesla and he informed that the forklift did not have electric current running. With that said, in my medical opinion, the patient does not have an industrial injury attributed to an electrical current,” he wrote.
Hafi, who’s no longer with Access Omnicare, didn’t respond to questions. Besh said he can’t discuss patient details.
The co-worker who was in the forklift during the second shock, Paul Calderon, said he disagrees with the Tesla official but no one asked him. He backed up Casillas’ account and said Tesla “tried to really downplay what happened to him.”
Hafi’s January report noted that Casillas said he was “miserable,” used a cane and had pain all over his body. But he discharged him back to work full duty, writing, “No further symptoms of concern.”
A Tesla safety team manager informed Casillas last month that his injury was not counted because it was “determined to not be work-related.” Casillas is still a Tesla employee, but he’s off work because of his injury. His workers’ comp claim was denied based on Hafi’s report, but his lawyer, Sue Borg, is seeking an independent medical evaluation.
Besh said Tesla does not pressure him to dismiss injuries.
“What Tesla pressures us on is accurate documentation,” he said. “What they want is their OSHA log to be as accurate as possible, so what they’ll push back on is, ‘Doctor I need more clarity on this report.’ And we do that for them.”
“They are not in the business of making clinical determinations at all,” he said. “We make those clinical determinations only based on what the patient needs.”
State regulators not interested
By late August, Watson, the physician assistant, reached her breaking point. She got into an argument with Besh, who fired her for not deferring to doctors.
Afterward, she filed a complaint to Cal/OSHA, California’s workplace safety agency.
“I just see the workers at Tesla as having absolutely no voice,” she said. “I do feel extra responsible to try to speak up for what’s going on there.”
Watson thought Cal/OSHA would put an immediate stop to the practices she witnessed. But the agency wasn’t interested.
Cal/OSHA sent her a letter saying it folded her complaint into the investigation it started in April after Reveal’s first story ran. The letter said it had investigated and cited Tesla for a recordkeeping violation.
But Cal/OSHA already had closed that investigation two weeks before Watson’s complaint. The agency issued a fine of $400 for a single injury it said was not recorded within the required time period. Tesla appealed, calling it an administrative error.
Reveal had documented many other cases of injuries that Tesla had failed to record. But the agency had only about six months from the date of an injury to fine a company. By the time Cal/OSHA concluded its four-month investigation, the statute of limitations had run out.
After Reveal reported that the time limitation makes it difficult to hold employers accountable, state legislators passed a bill giving investigators six months from when Cal/OSHA first learns of the violation. It was signed by Gov. Jerry Brown, but it was too late for the Tesla investigation.
A Cal/OSHA spokeswoman said the investigation found four other “injury recording violations that fell outside of the statute of limitations.” Even if those other violations had been included, the spokeswoman said Cal/OSHA would have had to combine them in a single $400 citation.
Tesla, meanwhile, inaccurately cites Cal/OSHA’s investigation as vindication.
“We do get these quite unfair accusations,” Musk said on his October earnings call. “One of them was that we were underreporting injuries. And it’s worth noting that OSHA completed their investigation and concluded that we had not been doing anything of the sort.”
Watson called Cal/OSHA officials to insist they investigate her complaint. She told them that she had detailed knowledge of a system that undercounted injuries by failing to treat injured workers.
But Cal/OSHA officials told her that it wasn’t the agency’s responsibility, she said. They suggested contacting another agency, such as the medical board or workers’ compensation regulators.
As Watson kept pushing and Reveal began asking questions, a Cal/OSHA spokeswoman said her complaint now is being investigated.
Watson has a new job at an urgent care clinic. She said she just wants someone to make sure that Tesla workers get the care they need.
“You go to Tesla and you think it’s going to be this innovative, great, wonderful place to be, like this kind of futuristic company,” she said. “And I guess it’s just kind of disappointing that that’s our future, basically, where the worker still doesn’t matter.”
Billions In ‘Questionable Payments’ Went To Cal. Medicaid Insurers And Providers
California’s Medicaid program made at least $4 billion in questionable payments to health insurers and medical providers over a four-year period because as many as 453,000 people were ineligible for the public benefits, according to a state audit released Tuesday.
In one case, the state paid a managed-care plan $383,635 to care for a person in Los Angeles County who had been dead for more than four years, according to California State Auditor Elaine Howle.
She said she found “pervasive discrepancies” in Medicaid enrollment in which state and county records didn’t match up from 2014 to 2017, leading to other errors that persisted for years. The bulk of the questionable payments, or $3 billion, went to health plans that contract with the state to care for 80 percent of enrollees in California’s Medicaid program, known as Medi-Cal.
The program for low-income residents is the nation’s largest and funded by both the federal and state governments. The state findings echo similar problems cited by federal officials and come at a time when the Trump administration has applied extra scrutiny to California’s spending on Medicaid.
In the report, the state auditor said it’s critical for the state to have accurate information on eligibility “because it pays managed care plans a monthly premium for an increasing number of Medi-Cal beneficiaries regardless of whether beneficiaries receive services.”
California’s Medicaid program has 13.2 million enrollees, covering about 1 in 3 residents. It has an annual budget of $107 billion, counting federal and state funds. Nearly 11 million of those enrollees are in managed care plans, in which insurers are paid a monthly fee per enrollee to coordinate care.
The state’s Medicaid enrollment soared by more than 50 percent since 2013 due to the rollout of the Affordable Care Act and the expansion of Medicaid. Enrollment grew from 8.6 million in December 2013 to more than 13 million in December 2017, according to the audit report.
In the case of the dead patient, a family member had notified the county of the enrollee’s death in April 2014. However, the person’s name remained active in the state system, and California officials assigned the patient to a managed-care plan in November of that year.
From then on, the state kept making monthly payments of about $8,300 to the health plan until August 2018, shortly after the auditor alerted officials of the error. Auditors didn’t identify the health plan.
There also were costly mistakes in cases in which Medi-Cal pays doctors and hospitals directly for patient care – a program known as “fee for service.”
For instance, the state auditor found that Medi-Cal paid roughly $1 million in claims for a female patient in Los Angeles County from June 2016 to December 2017 even though the county office had determined in 2016 that she was ineligible.
In a written response to the auditor, the California Department of Health Care Services said it agreed with the findings and vowed to implement the auditor’s recommendations. However, the agency warned it may not meet the auditor’s timeline, which called for the main problems to be addressed by June 2019.
In a statement to California Healthline, the agency said it is implementing a quality control process and “where appropriate, DHCS will recover erroneous payments.”
Early on in 2014, as the ACA rolled out, the state struggled to clear a massive backlog of Medi-Cal applications, which reached about 900,000 at one point. There were widespread computer glitches and consumer complaints amid the increased workload at the county and state level.
In addition to questionable payments for care of ineligible enrollees, Howle and her audit team also discovered some patients who may have been denied benefits improperly. The state auditor identified more than 54,000 people who were deemed eligible by county officials but were not enrolled at the state level. As a result, those people may have had trouble getting medical care.
In February, a federal watchdog estimated that California had signed up 450,000 people under Medicaid expansion who may not have been eligible for coverage.
The inspector general at the U.S. Department of Health and Human Services said California made $1.15 billion in questionable payments during the six-month period it reviewed, from Oct. 1, 2014, to March 31, 2015.
In August, Seema Verma, administrator of the U.S. Centers for Medicare and Medicaid Services, told a U.S. Senate committee that she was closely tracking California to ensure the state “returns a significant amount of funding owed to the federal government related to the state’s Medicaid expansion.”
Verma expressed concern that states had overpaid managed-care plans during the initial years of Medicaid expansion, resulting in “significant profits for insurance companies.” By year’s end, she said she expects the federal government to recoup about $9.5 billion from California’s Medicaid program, covering overpayments from 2014 to 2016.
Tony Cava, a spokesman for Medi-Cal, said the state has already returned about $6.9 billion to the federal government and expects more than $2 billion more to be sent back by December.
Chinese, Indian Stents Aim for Global Market
The developing world is lining up to disrupt the coronary revascularization device industry with competitive, home-grown stents and balloons reaching into Europe and toward the U.S.
China and India are expected to be the two largest international stent markets by 2020. Indian manufacturers are enjoying an increasing share of their home stent market (from 57% in 2016 to 61% in 2017), whereas Chinese stents already make up around 70% of the domestic market.
With rising sales at home (China had percutaneous coronary intervention hospitalizations grow 21-foldfrom under 10,000 in 2001 to more than 200,000 in 2011, for example), Indian and Chinese companies are well poised to fund research with an eye for fulfilling the FDA approval requirements for their cheaper stents.
“They have substantial revenue coming from India, China, and Europe so they can afford to go in the future through the effort and challenge of an IDE [FDA Investigational Device Exemption study],” said Patrick Serruys, MD, PhD, of Imperial College London, in an interview. “These two giants in intellectual capacity and technology want to expand the market to the Western countries, and Europe is kind of a springboard for the U.S. once they’ve got their CE Mark.”
One device on the European market for 5 years already is the Supraflex from SMT of India. At the Transcatheter Cardiovascular Therapeutics meeting this year in San Diego, Serruys and colleagues revealed that the sirolimus-eluting ultrathin stent was non-inferior to the gold-standard Xience stent from California’s Abbott Vascular in the TALENT trial.
“All the clinical trials so far are benchmarking against U.S. market leaders and what we’re seeing is that the safety and efficacy of new devices are really well-matched. Ultimately, what it will come down to is probably pricing and deliverability, the ability to deliver the stents,” Alexandra Lansky, MD, of Yale School of Medicine, told MedPage Today.
Importance of Price
Already price has impacted where technology goes and doesn’t go. “Some technology doesn’t get into Germany,” for example, Serruys said, because companies try to put a premium on their product. “They will claim ‘we have something superior so you have to pay more.'”
Going cheap gave Indian companies a home advantage when India capped drug-eluting stent (DES) prices at about $400, whereas some Western manufacturers pulled their devices out of that market. Chinese-made stents, similarly, are half the price of imported ones.
If these devices entered the U.S. market, even a small price cut would go a long way, Serruys suggested.
For example, a consortium in Germany buys “100,000 stents in one shot. So if you have a discount of €1, immediately it pays off,” he said.
Yet the globalization goes both ways, with U.S. companies also trying to go into the Chinese market. Venus Medical of China and U.S.-based Keystone Heart recently merged, and more such mergers may be expected, Lansky said. “This leverages this Chinese market for the U.S.-based company; and for the Chinese-based company coming now to the U.S., they will have infrastructure in both geographies.”
However, even without a price war from Indian- and Chinese-made competition, DES prices have been slumping downwards for years. In the U.S., the average DES price fell from $2,500 in 2006 to $1,500 in 2014, a recent Health Affairs study found.
Even so, that’s about $1,000 more than what was paid in Germany at both timepoints for identical models.
“It is commonly accepted that prices are confidential, which allows manufacturers to increase profits by charging different prices to different buyers, depending on their bargaining power. Manufacturers can also wield significant market power,” the study authors wrote.
“The need for investments in research and development and in obtaining regulatory approval and reimbursement, as well as brand loyalty of physicians, create entry barriers for new competitors. While entrepreneurial firms may be the sources of innovation, larger firms often acquire first-generation technologies and develop them further, leading to market concentration with few large competitors,” the group noted.
It’s difficult to predict who will rise and who will fall with the introduction of Indian and Chinese stents. Ultimately, it doesn’t matter if where the manufacturer is based, Serruys suggested.
“Their future is related to to their product, their engineering of the product, the organization of the company itself, and finally the people directing the company,” he said. “There are some captains of industry that are incredible and when they go away, the company spirals down.”
Room for Innovation
Price is not the only draw of Chinese and Indian stent-makers. They, too, are innovating to improve on the already-excellent outcomes seen with current-generation DES.
“In general, the Far East technology has already embraced the biodegradable coating, so they’re not necessarily using permanent coating. Some of them have a drug release which is shorter than 28 days,” Serruys said.
MicroPort’s Firehawk DES is one such technology from China. The sirolimus-eluting stent with a biodegradable polymer matched Xience in target lesion failure at 12 months and late lumen loss at 13 months in the TARGET All Comers study recently published in The Lancet.
From India, there are SMT’s Supraflex and the MicroSphere coated balloon from Envision Scientific/Concept Medical. The latter is able to elute sirolimus because of its lipid-membrane design that Serruys called an “original technology.”
And to compete in the trend toward ever thinner strut stents, Indian manufacturer Merill Life is making a DES that is only 50 μm thick, noted Serruys. “Everybody goes to the ultrathin struts.”
An End to the Stent Wars?
But how much room for improvement remains is unclear. Device makers now seldom target superiority on patient outcomes in head-to-head trials, Serruys pointed out.
“What I don’t like are these trials called non-inferiority in events like TLR [target lesion revascularization] and MACE [major adverse cardiovascular events] and TVF [target vessel failure]. Because slowly but surely we are reaching the bottom of event rule,” he said. “It used to be 8% events, then 6%, now it’s close to 5% and we’re starting to see below the level of 4%. It’s somewhat ridiculous to keep working on non-inferiority.”
“For me as a physician and clinician, the key point is the persistence of angina pectoris in one-fifth of patients. That’s what we should work on. That’s why the ABSORB IV trial was very important. Gregg Stone showed in double-blind approach that one out of five patients still have angina after the treatment. And it’s even worse in the female patients. That’s the new target,” he emphasized.
“If everyone is working toward non-inferiority, and everyone is a ‘me too,’ the manufacturing cost becomes a big issue. The cost of manufacturing depends on the work required … The second point is where is the manpower? If the manpower is in the state of Iowa or in Macau, that plays a major role,” Serruys said.
So will manufacturers that benefit from cheaper manpower ever see their stents sold for a low price in the U.S.?
“It will happen. It will take time. I’m impressed by the good organization of these Indian and Chinese companies. They really go for it with all the resources that you need for good investigation,” Serruys said, noting his experience from working at Cardialysis, a clinical research organization in Rotterdam that just celebrated 35 years working with more than 100 companies.
Lansky agreed: “My message is that, yes, we’re seeing the emergence of devices coming out of India and China… I’m seeing companies really step up in terms of quality and rigor of clinical research. We’re seeing the results, and the results are very solid.”
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