After capping insulin copays, states sets sights on EpiPens

Cap at $60

BY HELEN SANTORO KAISER HEALTH NEWS

Almost four years after becoming the rst state to cap insulin copayments, Colorado may limit what consumers pay for epinephrine autoinjectors, also known as EpiPens, which treat serious allergic reactions.

A proposed state law would cap out-of-pocket copays at $60 for a two-pack of epinephrine autoinjec- tors. In 2007, the wholesale price of a single EpiPen was about $47. Today, two brand-name autoinjectors cost just under $636 at a Walgreens in Denver, according to GoodRx. At some pharmacies a generic pen sells for $100 to $200, which is still expensive for many people. e bill is the latest example in a nationwide push by states to address the soaring prices of lifesaving drugs. New Hampshire passed a law in 2020 requiring insurance to cover the autoinjectors, and Rhode Island

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health care ght at the state Capitol this legislative session.

e issue has to do with facility fees, charges that hospitals bill to insurers and patients to cover their own costs of providing care, separate from what a doctor gets paid. To consumer advocates, these fees too often seem like predatory add-on charges meant to enhance the hospital’s bottom line at the expense of the patient’s pocketbook. Hospitals say these fees are vital sources of revenue — often the only way they can get paid to keep nurses employed, the lights on and the oors clean at the clinic.

e practice of charging facility fees has proliferated in recent years — both in Colorado and nationally — as hospitals acquire once-independent doctor’s o ces, open their own ocampus clinics and increasingly encourage patients to receive treatment in outpatient settings.

But this has created confusion and frustration for patients. Doctor’s visits that used to come with only one charge now come with two. And the facility fee can also hide in bills, often not being labeled even as clearly as it was in the Kruses’ bills.

Now, Democrats at the state legislature have introduced a proposal to ban hospitals from charging facility fees in most outpatient circumstances.

e legislation, House Bill 1215, would prohibit facility fees for outpatient visits at clinics and o ces that are not on a hospital’s main campus. It would also prohibit hospitals from charging facility fees for outpatient services at on-campus locations, such as in the hospital, if the state Medical Services Board rules that the service could have been provided safely at an o -campus location.

“Facility fees are simply another way that hospital CEOs are lining their pockets at the expense of patients, and we simply can’t let this continue,” state Rep. Emily Sirota, D-Denver, said in a statement after the bill was introduced last month.

at’s one version of what the bill would do: reduce runaway health care costs for patients while not really harming hospitals’ ability to provide needed care.

Hospitals, of course, see it di erently. ey estimate the nancial hit to hospitals statewide would be $9 billion, and they warn that could result in hospitals closing outpatient clinics and shifting more people to costlier inpatient care, while pushing some rural health systems to the brink of insolvency. e rst is what is called the professional fee. is is the money that goes to the doctor, and in olden times it was likely the only major charge that patients saw. You had an earache, you went to your local, independent doctor’s o ce and the doctor charged you a professional fee for the treatment visit. at fee covered the entire cost of care — from the doctor’s salary all the way down to the clinic’s trash bill.

“ is proposal is so incredibly vast and all-encompassing, it’s just completely disconnected from the way things really work,” said Zach Zaslow, the interim vice president of population health and advocacy at Children’s Hospital Colorado.

Finding the truth in the rhetoric ese two versions of the story can’t both be true. So, which one is?

Glen Mays, an expert on health systems at the Colorado School of Public Health, says both stories contain a bit of truth. Undeniably, facility fees are being charged more often in more places, he said. And those fees increase the overall cost of health care.

But hospitals also have come to depend on facility fees. If they lose much of that revenue and can’t replace it by increasing charges elsewhere, they could be in a real bind.

“ e question would be: What is the magnitude of that kind of impact?” Mays said.

To understand the potential magnitude, it helps to know what goes into a medical bill. Hospitals — and their a liated clinics — can charge for the drugs they administer or the equipment they use. But a bill is generally made up of two big fees.

But hospitals were in a unique spot: Especially in places like their emergency departments, hospitals needed to be fully sta ed and ready to go even when patients weren’t coming in. us was born the facility fee, something that hospitals could charge patients to help fund the facility’s operations, and it’s been around for decades.

“It’s a distortion in payment that’s been baked into Medicare and it’s been baked into a lot of private health insurance plans,” Mays said.

As hospitals have bought up outpa- tient clinics — or opened their own — facility fees have begun popping up on bills in more places, even on things like telehealth visits where a patient doesn’t leave their own home for care. Citing Medicare data, Mays said professional fees charged at a clinic often decrease when the clinic becomes a liated with a hospital system. But, with a facility fee added on, the overall cost of care goes up, putting more burden on insurers and patients.

“ e combined fee is higher than a single fee,” Mays said.

So, for proponents of the new legislation, this suggests a tidy solution: If facility fees are banned in most outpatient settings, hospitals will switch to recouping their expenses through the professional fee and the entire charge will be less than what it was when facility fees were being charged.

“We see that these facility fees do not always connect to the cost of care in any understandable way,” said Isabel Cruz, the policy manager for the Colorado Consumer Health Initiative, which supports the bill. “And our understanding is that the professional fee does reimburse them for costs.”

But what happens if the answer isn’t so tidy?

When hospitals don’t employ doctors e hospital also does not charge its physicians for the use of its facilities. at means, according to the hospital, that the facility fee is the only way for Children’s to get paid for the care its nurses and therapists provide, for its administrative sta , for its child life specialists who make the hospital a less-scary place for young patients.

Children’s Hospital Colorado is one of the U.S. West’s premier pediatric health systems. But, despite expecting nearly 1 million patient visits this year, Children’s employs almost no doctors.

Instead, nearly 98% of the physicians who work at the hospital are employed by CU Medicine, an arm of the University of Colorado School of Medicine. What this means from a billing perspective is that CU Medicine charges the professional fee, not Children’s.

“Children’s Hospital Colorado does not and cannot bene t from this fee,” Dr. David Brumbaugh, Children’s chief medical o cer, wrote in an email.

Roughly 98% of the care that the hospital provides is outpatient — part of a concerted e ort by hospitals across the state and country to move patients from costlier inpatient settings into more e cient and accessible outpatient ones.

“It’s a misguided approach that will only intensify access-to-care challenges,” Zaslow said.

“ is thing comes out of nowhere at you.”

Kruse said she and her husband did all the due diligence they could to avoid an unexpected medical bill. But facility fees often hide under other names.

“If you go online, they roll the facility fee into something that looks like it’s doctors care,” she said. is only adds to the confusion when patients receive a separate charge or bill for the professional fee.

As an example, look at UCHealth. e giant health system, Colorado’s largest, posts price lists online for all the services it o ers, in compliance with federal rules. If you are insured through Anthem, for instance, and you get an outpatient colonoscopy at the University of Colorado Hospital, the price list says the charge will be $2,394.76.

Except, that’s not the full price. It’s just the facility fee — even though it’s not labeled as such. e cost for the doctor and potentially other services, like anesthesia, will be more. is confusion shows up again and again in patient stories. A dad in Colorado Springs who thought he was only going to be charged $238 professional fee for a brain scan for his son was shocked when a $2,518 facility fee bill later arrived.

“ ere’s nothing you can call it besides a surprise bill,” he told Fox 31, which investigated the bill and was told that it was ultimately reduced. When Kruse realized there was a di erence between the doctor’s fee and the facility fee for her husband’s cardiology visits at National Jewish, she was upset. Why hadn’t anyone explained this to her?

“ ey said you have to ask about it,” she said. “How do you ask about something you don’t know exists?”

“ is thing comes out of nowhere at you.” is story is from e Colorado Sun, a journalist-owned news outlet based in Denver and covering the state. For more, and to support e Colorado Sun, visit coloradosun.com. e Colorado Sun is a partner in the Colorado News Conservancy, owner of Colorado Community Media. lawmakers are considering a similar measure this year. No state has capped what consumers pay for EpiPens, though the New Jersey Senate passed a bill in June to do so; that measure is pending in the legislature’s lower house. e average launch prices of drugs in the United States increased nearly 11% every year from 2008 to 2021, according to a study published last year. Price increases can skyrocket even higher for items such as epinephrine autoinjectors, a market dominated by EpiPen maker Viatris, a global pharmaceutical company.

“If you have very little competition in the market, the way the U.S. drug pricing system works is that the manufacturers get to set the price at which they want to sell the drug, and they can increase it whenever they so choose,” said Erin Taylor, a senior health care policy researcher at Rand Corp., a global policy think tank. “One way to shift costs back to health plans and manufacturers, and to help patients pay less for their drugs, is to apply these caps.” e Colorado legislation would cap EpiPen copays for both insured and uninsured people starting in 2024. Almost 566,000 Coloradans have life-threatening food allergies, according to the bill. People can also have severe reactions to insect bites, medications, and latex.

“ e need for EpiPens doesn’t discriminate based on who you are,” said state Rep. Iman Jodeh, a Democrat who is sponsoring the bill. “ is unfortunate trend we were seeing of lifesaving medication being completely unattainable or out of reach for people is something that we are really trying to put an end to.”

Colorado was the rst to limit copays for insulin

In 2019, Colorado became the rst state to enact a law that set a $100 limit on monthly copays for insulin, a hormone that regulates the blood sugar of people with diabetes.

Since then, 21 other states, plus Washington, D.C., have implemented laws limiting insulin costs. Congress imposed a $35 insulin copay cap for seniors on Medicare, and, in his recent State of the Union address, President Joe Biden called for expanding this cap to every American.

“Insulin has been the poster child of copay caps,” said Geo rey Joyce, director of health policy at the University of Southern California Schae er Center for Health Policy & Economics.

However, the caps are an imperfect solution to high prescription costs. Decreasing the price of a drug for some insurance members means increasing premiums for others, said Taylor. “A cap doesn’t lower the list price of the drug, so somebody else has to pick up the di erence,” she said. Caps also don’t address why drugs are so expensive in the rst place.

Drug manufacturers and pharmacy bene t managers, or PBMs — the go-between companies that negotiate with drugmakers on how much insurance plans and consumers will pay for drugs — both play a signi cant role in drug pricing, Joyce said. Besides pricing their products high enough to ensure a hefty pro t, manufacturers often give PBMs a rebate in exchange for having their product included in the PBM’s list of preferred drugs, which in uences what consumers buy. Rising rebates demanded by PBMs are associated with increasing prices for prescription drugs, according to a white paper by USC Schae er.

“Everybody has their hand in the trough,” said Joyce. In response to broader concerns about the drug pricing system, diabetes activists have been pushing for caps on insulin prices, not just copays.

It’s hard to say whether more states will follow Colorado’s lead and cap out-of-pocket costs for drugs like EpiPens, but there does seem to be a political appetite for controlling specialty drug costs, said Taylor.

“It bothers people fundamentally and ethically that these lifesaving drugs are inaccessible for people,” said Joyce. “People need access to these drugs.”

KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. Together with Policy Analysis and Polling, KHN is one of the three major operating programs at KFF (Kaiser Family Foundation). KFF is an endowed nonpro t organization providing information on health issues to the nation.