Kaiser Health News
US Military Says National Security Depends on ‘Forever Chemicals’
Patricia Kime
Mon, 20 Nov 2023 10:00:00 +0000
The Department of Defense relies on hundreds, if not thousands, of weapons and products such as uniforms, batteries, and microelectronics that contain PFAS, a family of chemicals linked to serious health conditions.
Now, as regulators propose restrictions on their use or manufacturing, Pentagon officials have told Congress that eliminating the chemicals would undermine military readiness.
PFAS, known as “forever chemicals” because they don't break down in the environment and can build up in the human body, have been associated with such health problems as cancer. In July, a new federal study showed a direct link between testicular cancer and PFOS, a PFAS chemical that has been found in the blood of thousands of military personnel.
Congress has pressured the Defense Department to clean up U.S. military sites and take health concerns more seriously. Under the fiscal 2023 James M. Inhofe National Defense Authorization Act, the Pentagon was required to assess the ubiquity of per- and polyfluoroalkyl substances, or PFAS, in products and equipment used by the military.
In a report delivered to Congress in August, Defense Department officials pushed back against health concerns raised by environmental groups and regulators. “DoD is reliant on the critically important chemical and physical properties of PFAS to provide required performance for the technologies and consumable items and articles which enable military readiness and sustainment,” the authors said.
Further, they wrote: “Losing access to PFAS due to overly broad regulations or severe market contractions would greatly impact national security and DoD's ability to fulfill its mission.”
According to the report, most major weapons systems, their components, microelectronic chips, lithium-ion batteries, and other products contain PFAS chemicals. These include helicopters, airplanes, submarines, missiles, torpedoes, tanks, and assault vehicles; munitions; semiconductors and microelectronics; and metalworking, cooling, and fire suppression systems — the latter especially aboard Navy ships.
PFAS are also present in textiles such as uniforms, footwear, tents, and duffel bags, for which the chemicals help repel water and oil and increase durability, as well as nuclear, chemical, and biological warfare protective gear, the report says.
The Pentagon's report to Congress was released last month by the American Chemistry Council.
Defending a Tradition of Defense
Military officials' defense of PFAS use comes as concerns mount over the health risks associated with the chemicals. Beyond cancer, some types of PFAS have been linked to low birth weight, developmental delays in children, thyroid dysfunction, and reduced response to immunizations. Health concerns grew with the release of the study definitively linking testicular cancer in military firefighters to a foam retardant containing PFAS.
But that wasn't the first time U.S. military officials were warned about the potential health threat. In the 1970s, Air Force researchers found that firefighting foam containing PFAS was poisonous to fish and, by the 1980s, to mice.
In 1991, the U.S. Army Corps of Engineers told Fort Carson, Colorado, to stop using firefighting retardants containing PFAS because they were “considered hazardous material in a number of states.”
The Environmental Protection Agency has struggled to determine whether there are acceptable levels of PFAS in drinking water supplies, given the existence of hundreds of varieties of these chemicals. But in March, the EPA did propose federal limits on the levels of PFAS in drinking water supplies.
The regulation would dramatically reduce limits on six types of the chemicals, with caps on the most common compounds, known as PFOA and PFOS, at 4 parts per trillion. Currently, the Defense Department's threshold for drinking water is 70 parts per trillion based on a 2016 EPA advisory. As part of a widespread testing program, if levels are found on installations or in communities above that amount, the military furnishes alternative drinking water supplies.
The Defense Department has used PFAS-laced firefighting foam along with other products containing the chemicals for more than a half-century, leading to the contamination of at least 359 military sites or nearby communities, with an additional 248 under investigation, according to the department.
In its report, however, the Department of Defense did not address the health concerns and noted that there is “no consensus definition of PFAS as a chemical class.” Further, it said that the broad term, which addresses thousands of man-made chemical chains, “does not inform whether a compound is harmful or not.”
Researchers with the Environmental Working Group, an advocacy group that focuses on PFAS contamination nationwide, said the report lacked acknowledgment of the health risks or concerns posed by PFAS and ignored the availability of PFAS-free replacements for material, tents, and duffel bags.
The military report also did not address possible solutions or research on non-PFAS alternatives or address replacement costs, noted EWG's Jared Hayes, a senior policy analyst, and David Andrews, a senior scientist.
“It's kind of like that report you turn in at school,” Andrews said, “when you get a comment back that you did the minimum amount possible.”
Andrews added that the report fell short in effort and scope.
The Defense Department announced this year it would stop buying firefighting foam containing PFAS by year's end and phase it out altogether in 2024. It stopped using the foam for training in 2020, by order of Congress.
The report noted, however, that while new Navy ships are being designed with alternative fire suppression systems such as water mists, “limited use of [PFAS-containing systems] remains for those spaces where the alternatives are not appropriate,” such as existing ships where there is no alternative foam that could be swapped into current systems.
According to the report, “the safety and survivability of naval ships and crew” from fires on ships depends on current PFAS-based firefighting foams and their use will continue until a capable alternative is found.
Pervasive Yet Elusive
Commercially, PFAS chemicals are used in food packaging, nonstick cookware, stain repellents, cosmetics, and other consumer products.
The fiscal 2023 National Defense Authorization Act also required the Defense Department to identify consumer products containing PFAS and stop purchasing them, including nonstick cookware and utensils in dining facilities and ship galleys as well as stain-repellent upholstered furniture, carpeting, and rugs.
But in a briefing to Congress in August accompanying the report on essential uses, Pentagon officials said they couldn't comply with the law's deadline of April 1, 2023, because manufacturers don't usually disclose the levels of PFAS in their products and no federal laws require them to do so.
Come Jan. 1, however, makers of these chemicals and products containing them will be required to identify these chemicals and notify “downstream” manufacturers of other products of the levels of PFAS contained in such products and ingredients, even in low concentrations, according to a federal rule published Oct. 31 by the EPA.
This would include household items like shampoo, dental floss, and food containers.
Officials reiterated that the Defense Department is committed to phasing out nonessential and noncritical products containing PFAS, including those named above as well as food packaging and personal protective firefighting equipment.
And it is “developing an approach” to remove items containing PFAS from military stores, known as exchanges, also required by the fiscal 2023 NDAA.
Risk-Benefit Assessments
In terms of “mission critical PFAS uses,” however, the Pentagon said the chemicals provide “significant benefits to the framework of U.S. critical infrastructure and national and economic security.”
Andrews of EWG noted that the industry is stepping up production of the chemicals due to market demand and added that the federal government has not proposed banning PFAS chemicals, as the Defense Department alluded to when it emphasized the critical role these substances play in national security and warned against “overly broad regulations.”
“The statements are completely unsubstantiated, and it's almost a fear-mongering statement,” Andrews said. “I think the statement is really going beyond anything that's even being considered in the regulatory space.”
“There haven't been realistic proposals policy-wise of a complete ban on PFAS,” his colleague Hayes added. “What people have been pushing for and talking about are certain categories of products where there are viable alternatives, where there is a PFAS-free option. But to ban it outright? I haven't really seen that as a realistic policy proposal.”
Kevin Fay, executive director of the Sustainable PFAS Action Network, a coalition of corporations, industry advocates, and researchers who support the use and management of PFAS compounds, said the Defense Department has a point and it is up to federal regulators to “responsibly manage” these chemicals and their use to strike a balance among environmental, health, and industrial needs.
“The U.S. Department of Defense's report on critical PFAS uses is crystal clear: regulating PFAS through a one-size fits all approach will gravely harm national security and economic competitiveness,” Fay wrote in an email to KFF Health News.
Adding that not all PFAS compounds are the same and arguing that not all are harmful to human health, Fay said risk-based categorization and control is vital to the continued use of the chemicals.
But, he added, in locations where the chemicals pose a risk to human health, the government should act.
“The federal government should implement plans to identify and remediate contaminated sites, properly identify risk profiles of the many types of PFAS compounds, and encourage innovation by clearing the regulatory path for viable alternatives to specific dangerous compounds,” Fay wrote.
Assessments are completed or underway at 714 active and former military installations, National Guard facilities, and other former defense sites to determine the extent of contamination in groundwater, soil, and the water supply to these locations and nearby communities.
Last year, the Pentagon issued a temporary moratorium on burning materials containing PFAS. Studies have shown that the practice can release toxic gases. But on July 11, the Defense Department lifted the moratorium on incineration, along with interim guidance on PFAS disposal.
Military personnel who were exposed to PFAS — including through firefighting foam — say they live in fear that they or their family members will develop cancer as a result of their service.
“I've got more of some of those materials in my system than 90-plus percent of those on the planet. This is bad. It doesn't go away,” said Christian Jacobs, who served in the Army for four years and worked as a civilian Defense Department firefighter for nearly three decades. “It keeps me up at night.”
KFF Health News visual reporter Hannah Norman contributed to this report.
KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.
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By: Patricia Kime
Title: US Military Says National Security Depends on ‘Forever Chemicals'
Sourced From: kffhealthnews.org/news/article/us-military-says-national-security-depends-on-forever-chemicals/
Published Date: Mon, 20 Nov 2023 10:00:00 +0000
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‘Forever Chemicals’ Found in Freshwater Fish, Yet Most States Don’t Warn Residents
Hannah Norman, KFF Health News
Fri, 01 Dec 2023 10:00:00 +0000
Bill Eisenman has always fished.
“Growing up, we ate whatever we caught — catfish, carp, freshwater drum,” he said. “That was the only real source of fish in our diet as a family, and we ate a lot of it.”
Today, a branch of the Rouge River runs through Eisenman's property in a suburb north of Detroit. But in recent years, he has been wary about a group of chemicals known as PFAS, also referred to as “forever chemicals,” which don't break down quickly in the environment and accumulate in soil, water, fish, and our bodies.
The chemicals have spewed from manufacturing plants and landfills into local ecosystems, polluting surface water and groundwater, and the wildlife living there. And hundreds of military bases have been pinpointed as sources of PFAS chemicals leaching into nearby communities.
Researchers, anglers, and environmental activists nationwide worry about the staggering amount of PFAS found in freshwater fish. At least 17 states have issued PFAS-related fish consumption advisories, KFF Health News found, with some warning residents not to eat any fish caught in particular lakes or rivers because of dangerous levels of forever chemicals.
With no federal guidance, what is considered safe to eat varies significantly among states, most of which provide no regulation.
Eating a single serving of freshwater fish can be the equivalent of drinking water contaminated with high levels of PFAS for a month, according to a recent study from the Environmental Working Group, a research and advocacy organization that tracks PFAS. It's an unsettling revelation, especially for rural, Indigenous, and low-income communities that depend on subsistence fishing. Fish remain a large part of cultural dishes, as well as an otherwise healthy source of protein and omega-3s.
“PFAS in freshwater fish is at such a concentration that for anyone consuming, even infrequently, it would likely be their major source of exposure over the course of the year,” said David Andrews, a co-author of the study and researcher at EWG. “We're talking thousands of times higher than what's typically seen in drinking water.”
Dianne Kopec, a researcher and faculty fellow at the University of Maine who studies PFAS and mercury in wildlife, warned that eating fish with high concentrations of PFAS may be more harmful than mercury, which long ago was found to be a neurotoxin most damaging to a developing fetus. The minimal risk level — an estimate of how much a person can eat, drink, or breathe daily without “detectable risk” to health — for PFOS, a common PFAS chemical, is 50 times as low as for methylmercury, the form of mercury that accumulates in fish, according to the federal Agency for Toxic Substances and Disease Registry. But she emphasized, “They're both really nasty.”
Just like mercury, PFAS bioaccumulate up the food chain, so bigger fish, like largemouth bass, generally contain more chemicals than smaller fish. Mercury is more widespread in Maine, but Kopec said PFAS levels near contamination sources are concerningly high.
‘Fishing Is a Way of Life'
The Ecology Center, an environmental group in Michigan, educates anglers about consumption advisories and related health impacts. But Erica Bloom, its toxics campaign director, noted that for many people out on the river, “fishing is a way of life.”
Eisenman participated in an Ecology Center community-based study published this year, which tested fish from Michigan's Huron and Rouge rivers for PFAS that poured out from auto and other industry contamination. Across 15 sites, anglers caught 100 fish samples from a dozen species, and what they found scared him.
“There were no sites that registered zero,” said Eisenman, noting that some had significantly higher levels of chemicals than others. “You need to make a value judgment. I'm going to still eat fish, but I don't know if that's a good thing.”
Last year, the National Academies of Sciences, Engineering, and Medicine published a sweeping federally funded report that associated PFAS exposure with health effects like decreased response to vaccines, cancer, and low birth weight.
There are thousands of PFAS, or perfluoroalkyl and polyfluoroalkyl substances, many of them used to make both household and industrial products stain-resistant or nonstick. They're in fire-retardant foam used for decades by fire departments and the military, as well as in cookware, water-repellent clothing, carpets, food wrappers, and other consumer goods.
In late October, the EPA added hundreds of PFAS compounds to its list of “chemicals of special concern.” This will require manufacturers to report the presence of those PFAS chemicals in their products — even in small amounts or in mixtures — starting Jan. 1.
Sparse Testing Leaves Blind Spots
About 200 miles north of Detroit, in rural Oscoda, Michigan, state officials have warned against eating fish or deer caught or killed near the former Wurtsmith Air Force Base because of PFAS contamination.
“We have a 9-mile stretch of river system in which the state determined way back in 2012 that it wasn't safe to even eat a single fish,” said Tony Spaniola, an advocate for communities affected by PFAS. He owns a home across a lake from the shuttered military site.
In Alaska, several lakes are designated catch and release only because of PFAS contamination from firefighting foam. A study by the U.S. Geological Survey and Pennsylvania Department of Environmental Protection released in August led to a warning to avoid eating fish from the Neshaminy Creek watershed.
Nationwide, use of firefighting foam and other PFAS-loaded products by the Department of Defense alone has led to the contamination of at least 359 military bases and communities that need to be cleaned up, with an additional 248 still under investigation as of June.
But many lakes and streams haven't been tested for PFAS contamination, and researchers worry far more sites hold fish laced with high levels of PFAS.
Federal efforts to curb PFAS exposure have focused mostly on drinking water. Earlier this year, the EPA proposed the nation's first PFAS drinking water standards, which would limit contamination from six types of chemicals, with levels for the two most common compounds, PFOA and PFOS, set at 4 parts per trillion.
But the EWG researchers found that one serving of fish can be equivalent to a month's worth of drinking water contaminated with 48 parts per trillion of PFOS.
Store-bought fish caught in the ocean, like imported Atlantic salmon and canned chunk tuna, appear to have lower PFAS levels, according to FDA research.
A biomonitoring project focused on the San Francisco Bay Area's Asian and Pacific Islander community measured PFAS levels in the blood and found higher amounts of the compounds compared with national levels. The researchers also surveyed participants about their fish consumption and found that 56% of those who ate locally caught fish did so at least once a month.
Eating a fish's fillet is often recommended, as it accumulates fewer chemicals than organs or eggs, but many participants reported eating other parts of the fish, too.
California is one of many states with no fish consumption advisories in place for PFAS. Jay Davis, senior scientist at the San Francisco Estuary Institute, said that's in part because of “limited monitoring dollars” and a priority on legacy chemicals like PCBs as well as mercury left over in particularly high concentrations from gold and mercury mining.
Wesley Smith, a senior toxicologist with California's Office of Environmental Health Hazard Assessment, said the state is reviewing the latest scientific literature but needs more data to develop an advisory that is “neither too restrictive nor too permissive.”
States like New Hampshire, Washington, Maine, and New Jersey have some of the most protective guidance, while other states, such as Maryland and Michigan, lag when it comes to designating fish unsafe to eat.
Advisory levels for at-risk groups — such as children and women of childbearing age — are usually lower, while “do not eat” thresholds for the general population range from 25.7 parts per billion in New Hampshire to 300 ppb in Michigan, 408 ppb in Maryland, and 800 ppb in Alabama.
“That's wicked outdated to have levels that high and consider that safe for folks to eat,” said Kopec, the University of Maine researcher.
Though it is no longer made in the U.S., PFOS remains the most commonly found — and tested for — PFAS chemical in fish today.
The primary maker of PFOS, 3M, announced it would begin phasing the chemical out in 2000. This year, the company said it would pay at least $10.3 billion to settle a class-action lawsuit brought by public water system operators. But in July, attorneys general from 22 states asked the court to reject the settlement, saying it was insufficient to cover the damages.
The military first documented health concerns surrounding PFAS chemicals in the 1970s yet continued to use firefighting foam made with them. Mandated by Congress, the Defense Department was required to stop buying retardant containing PFAS by Oct. 1 and phase it out altogether by 2024. A recently published study linked testicular cancer among military personnel to PFOS.
Tackling Pollution at the Source
Pat Elder, an activist and director of the environmental advocacy group Military Poisons, has tested water for PFAS up and down the East Coast, including in Piscataway Creek, which drains from Joint Base Andrews, the home of Air Force One.
In 2021, after testing fish from Piscataway Creek, Maryland officials released the state's sole PFAS fish consumption advisory to date. But Elder worries Maryland has not gone far enough to protect its residents.
“People eat the fish from this creek, and it creates an acute health hazard that no one seems to be paying attention to,” Elder said.
Since then, Maryland's Department of the Environment has conducted more fish monitoring in water bodies near potential PFAS sources, as well as at spots regularly used by subsistence anglers, said spokesperson Jay Apperson. He added that the state plans to put out more advisories based on the results, though declined to give a timeline or share the locations.
Part of the challenge of getting the word out and setting location-specific consumption advisories is that contamination levels vary significantly from lake to lake, as well as species to species, said Brandon Reid, a toxicologist and the manager of Michigan's Eat Safe Fish program.
Michigan set its screening values for fish consumption advisories in 2014, and the state is in the process of updating them within the next year, Reid said.
But to see the chemicals dip to healthier levels, the pollution needs to stop, too. There is hope: Andrews, the EWG researcher, compared EPA fish sample data from five years apart and found about a 30% drop on average in PFAS contamination.
Bloom has watched this cycle happen in the Huron River in southeastern Michigan, where PFAS chemicals upstream seeped into the water from a chrome plating facility. While the levels of PFAS in the water have slowly gone down, the chemicals remain, she said.
“It's very, very hard to completely clean up the entire river,” Bloom said. “If we don't tackle it at the source, we're going to just keep having to spend taxpayer money to clean it up and deal with fish advisories.”
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By: Hannah Norman, KFF Health News
Title: ‘Forever Chemicals' Found in Freshwater Fish, Yet Most States Don't Warn Residents
Sourced From: kffhealthnews.org/news/article/pfas-forever-chemicals-freshwater-fish-regulatory-gap/
Published Date: Fri, 01 Dec 2023 10:00:00 +0000
Kaiser Health News
In Congress, Calls Mount for Social Security to Address Clawbacks
David Hilzenrath and Jodie Fleischer, Cox Media Group
Thu, 30 Nov 2023 18:55:00 +0000
An investigation by KFF Health News and Cox Media Group gained further traction on Capitol Hill this week as additional members of Congress formally demanded answers from the Social Security Administration about billions of dollars it mistakenly paid to beneficiaries — and then ordered they repay.
Two members of a Senate panel that oversees Social Security sent a letter to the agency's acting commissioner, Kilolo Kijakazi, urging her to do more to prevent overpayments and “limit harm to vulnerable beneficiaries” when trying to recover the money.
As KFF Health News and Cox Media Group television stations jointly reported in September, the Social Security Administration routinely sends notices to beneficiaries saying they received benefits to which they weren't entitled — and demanding they pay the government back, often within 30 days.
In the 2022 federal fiscal year, for example, the agency sent overpayment notices to more than 1 million people, Kijakazi told Congress in mid-October.
Alleged overpayments can continue for years before the government notifies a recipient and seeks repayment. By then, the amount a beneficiary allegedly owes the government can reach tens of thousands of dollars or more. People living check to check likely would have spent the money.
To recoup money owed, the government can reduce or stop people's monthly benefit checks.
“[W]e have been deeply concerned by stories from our constituents and recent reports of the extreme financial hardship placed upon beneficiaries who are asked to quickly repay in full or whose payments are halted, reduced, or reclaimed as the agency attempts to correct improper payments, many of which occurred due to agency error,” Sens. Maggie Hassan (D-N.H.) and Bill Cassidy (R-La.) wrote in a Nov. 28 letter to Kijakazi.
Citing the news organizations' reporting, the senators asked what Kijakazi is doing to prevent harm to beneficiaries and what Congress can do.
Hassan and Cassidy are on the Senate Finance Committee's Subcommittee on Social Security, Pensions, and Family Policy.
Meanwhile, Sen. Rick Scott (R-Fla.) sent Kijakazi a letter on Nov. 17 calling the agency's actions “unacceptable.”
“If anyone intentionally defrauded the system or lied to receive payments at other taxpayers' expense, they should absolutely be held accountable and repay this debt to taxpayers,” Scott wrote. “But it's completely wrong for the federal government to go after well-intentioned Americans who did all the right things and trusted that their government was doing the right thing, too.”
Many of the people affected are disabled, low-income, or both and are enrolled in the Social Security Administration's Disability Insurance or Supplemental Security Income programs.
In the 2022 fiscal year, the agency issued an estimated $4.6 billion in SSI overpayments, which represented 8% of payments in that program, according to the agency's latest annual financial report.
Kijakazi recently told a House subcommittee the 8% was “a small percentage.”
In other programs administered by the agency, there were an estimated $6.5 billion in overpayments in fiscal 2022, which amounted to one-half of 1%. Kijakazi called that overpayment rate “extremely low.”
During the 2023 fiscal year, which ended on Sept. 30, the agency recovered $4.9 billion in overpayments, according to a recent statement by Social Security's inspector general. At the end of that period, an additional $23 billion of accumulated overpayments remained uncollected, the statement said.
Since KFF Health News and Cox Media Group TV stations published and broadcast news reports on overpayment clawbacks in September, several members of the House and Senate have written to the Social Security Administration calling for change or answers.
“Many of these overpayment notices come as a complete surprise to SSA beneficiaries, leaving them confused, shocked, and scared that they cannot pay what SSA says they owe,” Rep. Ruben Gallego, an Arizona Democrat and Senate candidate, said in a Sept. 29 letter. “And, because of an indefinite ‘look-back period', SSA can collect funds from a recipient for an error going back decades,” he added.
Asked about the latest letters from lawmakers, Social Security spokesperson Nicole Tiggemann said the agency “will respond directly to the requestors.”
Kijakazi said in October that she ordered a “top-to-bottom” review of how the agency handles overpayments.
Under federal law, the agency must seek recovery of overpaid amounts unless circumstances warrant waiving the debts, Kijakazi said in recent testimony to Congress. There's no time limit on efforts to collect the debts, she said.
In their letter to the acting commissioner, Cassidy and Hassan asked what the agency is doing to make it less burdensome for beneficiaries to appeal or seek a waiver when an overpayment is the government's fault.
In response to questions for this article, Tiggemann, the Social Security spokesperson, said, “We will examine our policies and procedures — including our regulations — to determine where administrative updates to the overpayment recovery and waiver process may reduce the complexity and burden for the people we serve.”
Scott, the Florida Republican, asked if the review Kijakazi announced in October would be disclosed to the public. In a written response to questions for this article, the Social Security spokesperson didn't say.
Do you have an experience with Social Security overpayments you'd like to share? Click here to contact our reporting team.
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By: David Hilzenrath and Jodie Fleischer, Cox Media Group
Title: In Congress, Calls Mount for Social Security to Address Clawbacks
Sourced From: kffhealthnews.org/news/article/social-security-senators-letter-cox-media-group-kff-health-news/
Published Date: Thu, 30 Nov 2023 18:55:00 +0000
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FTC Chief Gears Up for a Showdown With Private Equity
Harris Meyer
Thu, 30 Nov 2023 10:00:00 +0000
A recent Federal Trade Commission civil lawsuit accusing one of the nation's largest anesthesiology groups of monopolistic practices that sharply drove up prices is a warning to private equity investors that could temper their big push to snap up physician groups.
Over the past three years, FTC and Department of Justice officials have signaled they would apply more scrutiny to private equity acquisitions in health care, including roll-up deals in which larger provider groups buy smaller groups in a local market.
Nothing happened until September, when the FTC sued U.S. Anesthesia Partners and the private equity firm Welsh, Carson, Anderson & Stowe in federal court in Houston, alleging they had rolled up nearly all large anesthesiology practices in Texas. In the first FTC legal challenge against a private equity purchase of medical practices, the federal agency targeted one of the most aggressive private equity firms involved in building large, market-dominating medical groups.
In an interview, FTC Chair Lina Khan confirmed that her agency wants to send a message with this suit. Welsh Carson and USAP “bought up the largest anesthesiology practices, then jacked up prices and entered into price-setting and market-allocation schemes,” said Khan, who was appointed by President Joe Biden in 2021 to head the antitrust enforcement agency, with a mandate to combat health care consolidation. “This action puts the market on notice that we will scrutinize roll-up schemes.”
The large and growing volume of private equity acquisitions of physician groups in recent years has raised mounting concerns about the impact on health costs, quality of care, and providers' clinical autonomy. A JAMA Internal Medicine study published last year found that prices charged by anesthesiology groups increased 26% after they were acquired by private equity firms.
“Now we're seeing that scrutiny with this suit,” said Ambar La Forgia, an assistant professor of business management at the University of California-Berkeley, who co-authored the JAMA article. “This suit will cause companies to be more careful not to create too much local market power.”
The FTC's lawsuit alleges that USAP and Welsh Carson engaged in an anti-competitive scheme to gain market power and drive up prices for hospital anesthesiology services. The FTC also accuses USAP and Welsh Carson — which established the medical group in 2012 and has expanded it to eight states — of cutting deals with competing anesthesiology groups to raise prices and stay out of one another's markets.
USAP now controls 60% of Texas' hospital anesthesia market, and its prices are double the median rates of other anesthesia providers in the state, according to the lawsuit. Learning that USAP would boost rates following one acquisition, a USAP executive wrote, “Awesome! Cha-ching,” the civil complaint said.
In a written statement, Welsh Carson, which also holds sizable ownership shares in radiology, orthopedic, and primary care groups, called the FTC lawsuit “without merit in fact or law.” It said USAP's commercial rates “have not exceeded the rate of medical cost inflation for close to 10 years.”
The New York firm also said its investment in USAP “has allowed independent anesthesiologists to deliver superior clinical outcomes to underserved populations” and that the FTC's action will harm clinicians and patients. Welsh Carson declined a request for interviews with its executives.
“This is a pretty common roll-up strategy, and some of the big private equity companies must be wondering if more FTC complaints are coming,” said Loren Adler, associate director of the Brookings Schaeffer Initiative on Health Policy. “If the FTC is successful in court, it will have a chilling effect.”
Since the FTC filed the USAP lawsuit, Khan said, the agency has received information from people in other health fields about roll-ups it should scrutinize. “We have limited resources, but it's an area we are interested in,” she said. “We want to focus on where we see the most significant harm.”
In physician acquisition deals, PE firms typically use mostly borrowed money to acquire a controlling interest in a large medical group, pay the physician owners a substantial upfront sum in exchange for sharply cutting their future compensation, and install a management team. Then they seek to acquire smaller groups in the same geographic market and bolt them onto the original medical group for more bargaining clout and operating efficiencies.
The PE firm's goal is to garner at least 20% dividends a year and then sell the group to another investor for at least three times the purchase price in three to seven years. Critics say this short-term investment model spurs the investors and medical groups to boost prices and cut staffing to generate large profits as fast as possible.
“Private equity is trying to extract value quickly and sell the company for a profit, so there's a lot more incentive to increase prices quickly and extract higher revenue,” La Forgia said.
In the two years after a sale, PE-owned practices in dermatology, gastroenterology, and ophthalmology charged insurers 20% more per claim on average than did practices not owned by private equity, according to a JAMA study published last year.
There are similar concerns about hospital systems acquiring physician practices, which also have raised prices. “The evidence shows that both private equity and hospital acquisitions of physician practices are bad for consumers, and scrutiny should be applied to all acquirers,” Adler said.
Critics warn that private equity roll-ups of medical groups can jeopardize quality of care, too. Chris Strouse, a Denver anesthesiologist who served on USAP's national board of directors but left the company's Colorado group out of disapproval in 2020, cited patient safety issues arising from short staffing and mismanagement. He said USAP would schedule shifts so that three or four providers would hand off to each other a single surgical procedure, which he said is risky. In addition, USAP frequently asked anesthesiologists to work the day after working a 24-hour on-call shift, he said. “The literature shows that's outside the safety range,” he said. As a result, many providers have left USAP, he added.
The FTC has long been lax in monitoring roll-ups of physician groups, in part because federal law does not require public reporting of these deals unless they exceed $111.4 million in value, a threshold adjusted over time. Lowering the threshold would require congressional action. As a result, regulators may be unaware of many deals that lead to gradual market concentration, which allows providers to demand higher prices from insurers and employer health plans.
Recognizing that problem, the FTC proposed in June to beef up its reporting requirements for companies planning mergers, in hopes of spotting previous acquisitions of smaller groups that could lead to excessive market power and higher prices. In addition, in a draft of their merger review guidelines, issued in July, the FTC and the Department of Justice said they would consider the cumulative effect of a series of smaller acquisitions.
“The ways PE firms are making serial acquisitions, each individual acquisition is under the radar, but in aggregate they roll up the whole market,” Khan said. “Between the merger reporting form and the new merger guidelines, we want to be able to better catch unlawful roll-up schemes. … This would enable us to stop roll-ups earlier.”
But Brian Concklin, a lawyer with the law firm Clifford Chance, whose clients include private equity firms, said the FTC's proposed reporting requirements would hamper many legitimate mergers. “The notion that they need all that information to catch deals that lessen competition seems overblown and false, given that the vast majority of these deals do not lessen competition,” he said. “It will be a substantial burden on most if not all clients to comply.”
Researchers and employer groups, however, were encouraged by the FTC's action, though they fear it's too little, too late, because consolidation already has reduced competition sharply. Some even say the market has failed and price regulation is needed.
“Providers have been able to extort higher prices on services with no improvement in quality or value or access,” said Mike Thompson, CEO of the National Alliance of Healthcare Purchaser Coalitions. “The FTC stepping up its game is a good thing. But this horse is out of the barn. If we don't have better enforcement, we won't have a marketplace.”
——————————
By: Harris Meyer
Title: FTC Chief Gears Up for a Showdown With Private Equity
Sourced From: kffhealthnews.org/news/article/ftc-chair-lina-khan-private-equity-regulation/
Published Date: Thu, 30 Nov 2023 10:00:00 +0000
Did you miss our previous article…
https://www.biloxinewsevents.com/uncle-sam-wants-you-to-help-stop-insurers-bogus-medicare-advantage-sales-tactics/
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