Michigan had most nursing homes cited for violating vaccine mandate

DUSTIN WALSH

Michigan’s health care industry violated the federal COVID-19 vaccination mandate more than any other state, according to data released by the Centers for Medicare and Medicaid Services.

CMS cited 66 nursing homes, or about 15 percent of all locations in the state, in the year since the mandate went into e ect. at’s the most facilities cited in any state in the U.S., ahead of Pennsylvania with 64 and California with 58 citations.

Nationwide, CMS cited about 750 nursing homes, according to data analyzed by the Associated Press, meaning Michigan accounted for nearly 9 percent of all citations.

Out of the Michigan total, 26 of the cited nursing homes were located in metro Detroit, including Beaconshire Nursing Center in Detroit, Green eld Rehab and Nursing Center in Royal Oak, Medilodge of South eld, Lakeside Manor Nursing and Rehabilitation Center in Sterling Heights, Maple Manor of Novi and more.

Gene

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“ e treatments are life-saving or life-altering,” said Bret Jackson, president and CEO of the Economic Alliance of Michigan, an industry group that advocates for lower health care costs for some of the state’s largest employers. “ ey are truly miracles of modern science, but the costs are life-altering too. It’s the ticking time bomb for the private health insurance system.”

How does it work?

Cellular therapy is where cells are injected or implanted in a patient to repair or replace damaged cells. Gene therapy involves altering genes to treat a disease or repair genetic material.

A major shift occurred in 2017 when the U.S. Food and Drug Administration approved the rst personalized, cell-based immunotherapy, called chimeric antigen receptor or CAR T cell therapy, for people with acute lymphoblastic leukemia. Scientists had unlocked a way to genetically engineer a patient’s own immune system to make a protein that could latch onto cancer cells and destroy the deadly blood cancer.

e FDA approval opened the oodgates to the creation of new, life-saving therapies that could oneday potentially eradicate deadly genetic diseases. Prior to that, therapies of this nature were only used in experimental clinical trials.

e e ectiveness of the treatments has pushed the FDA to approve more and more gene- and cellular-based therapies. In 2020, there were nine therapies approved for use. is year, the FDA is expected to approve 13 more with the list of these treatments projected to grow to as many as 100 by 2025 with thousands of therapies currently in clinical trials.

Roughly 200 applications for gene and cellular therapies are being sent to the FDA annually, said Chris Bouschet, president of the Michigan market for employee bene ts consulting rm Marsh McLennan Agency.

In 2020, the Alliance for Regenerative Medicine estimated that 1,100 gene and cellular therapy developers

Several nursing homes cited did not return emails and calls to comment on the citations.

Industry groups representing the state’s nursing homes and hospitals told Crain’s the rules were confusing and application uneven, leading to the mass of violations in the state.

Mandate in place

CMS published a rule in November were in operation globally, rising by more than 100 new developers annually.

“ e pipeline is signi cant,” Bouschet said. “It’s not the largest component of the health care spend (in the U.S.), but it’s the fastest growing.”

At what cost?

While these new therapies hold the power to unlock a chance at extended and improved life for those who su er from deadly diseases, the question of who is going to cover the extraordinary costs is a growing concern among employers.

A single CAR T cell therapy to treat acute lymphoblastic leukemia costs at least $370,000 with an all-in cost nearing $1.5 million.

In Michigan, 88 percent of companies with 5,000 employees or more and 93 percent of companies with 1,000 to 4,999 employees surveyed by Marsh McLennan in 2022 have a self-funded insurance plan, where they assume the nancial risk of health care services to their employees. Typically, an insurance company administers the claims and payments, but self-funded companies pay for the entire services rendered. at means if a bill for a gene- or cellular therapy is issued, the employer is on the hook to cover it. e bill for a single employee needing a gene- or cellular-therapy could bankrupt a company or severely reduce their ability to operatenancially, Bouschet said.

“ ese therapies are rapidly becoming the focal point of health care because they hold so much potential,” Bouschet said. “But they are staggeringly expensive. Historically, companies viewed really expensive claims as the odds of being struck by lightning. ey were willing to take that risk. But with the number of these therapies growing rapidly, the odds of being struck by lightning are changing.”

Many companies, particularly those with fewer than 5,000 employees carry an extra insurance plan called stop-loss coverage. is caps the employers’ per-employee spend annually. For Michigan companies with fewer than 500 employees, the median cap is $125,000, according to members — all of which have since been struck down, repealed or partially blocked. for the state’s nursing home industry.

As a result of the court battles, the mandate took e ect in some states sooner than others, but a U.S. Supreme Court ruling in January 2022 allowed the mandate to go forward nationwide. CMS has been enforcing the requirement in all states since Feb. 20 last year.

“It wasn’t clear that contract workers and individuals such as delivery drivers were required to be included on provider vaccination logs, and providers were cited. Clari cation came slowly. However, our data from the last few months shows very few citations around this issue.”

2021 mandating that health care facilities receiving Medicare or Medicaid funding require their workers get at least the initial doses of a COVID-19 vaccine. e health care vaccination mandate was part of a broader e ort by President Joe Biden’s administration to boost vaccination rates nationally.

Similar mandates were issued for employers with more than 100 workers, federal contractors and military

Marsh McLennan data. For companies with 1,000 to 4,999 employees the median cap rises to $300,000. e median cap for companies with 5,000 or more employees — only about 50 percent of these companies in Michigan carry stop-loss coverage — is at least $500,000.

But an employee receiving one of these therapies is not a cut-and-dry bill for employers, Bouschet said.

“ ese programs (stop-loss insurance) have annual renewal processes,” Bouschet said. “ e insurers will absorb the loss the rst year, but a new rate will be renegotiated with the employer the following year.” e rising prevalence of these therapies means employers will undoubtedly be stuck with higher benets costs.

Complicating matters further is that stop-loss insurers have the ability to “laser” out an employee from coverage if that employee has previously cost them lots of money from these therapies. e insurers can even laser out certain treatments, such as the gene- and cellular therapies if it’s causing massive overages.

A bene ts manager from one of the state’s largest employers, who spoke to Crain under the condition of anonymity, said the company has yet to receive a bill for a gene or cellular therapy and currently does not carry stop-loss coverage. However, conversations are beginning on how it plans to pay for these therapies as they become more prevalent.

Cruel decisions

If an employer is saddled with one of these high-cost claims, their entire bene ts package is now at risk, said Jackson.

“ ere’s a tremendous amount of concern in the market place over these high-cost claims,” Jackson said.

“Some of the bigger companies, even with a million dollar claim, they can weather the storm. But a company of 500 to 1,000 employees? A bill that size impacts all of their other employees by putting their health plan at risk. ese are life-and-death decisions, for the employee and the company.”

Companies can elect to carve out these therapies from coverage under

Facilities can be cited for vaccination violations for a variety of reasons, including for failing to document vaccination exemptions granted for medical or religious reasons and failure to follow their own infection-control protocols, such as requiring unvaccinated sta to wear N95 masks.

CMS does not list the speci c reasons for violations, and the facilities are given time to correct the de ciencies before a follow-up inspection.

“When the mandate was rst issued, providers had a lot of questions about who was meant to be included in the tracking,” said Melissa Samuel, CEO of the Health Care Association of Michigan, the main advocacy group their bene ts plan, but doing so is a potential death blow for employees needing these treatments.

“Sometimes, the company is literally choosing whether the company survives or the patient gets coverage,” Jackson said. “It’s not the company’s fault. ey want to help the employee but only so much can be done if one person’s coverage takes down the coverage for the rest of the employees.”

Jackson said his group recently met with a pharmaceutical company about a $2 million therapy. e pharmaceutical rm expressed interest in creating a ve-year payment plan for self-funded employers to cover the cost of the therapy over time. But questions arose over who pays that liability if an employee dies, retires or takes a job with another company, Jackson said.

“How do we even make the payments for these sustainable?” Jackson asked. “Does the bill follow the employee or is the company stuck with the liability? ere’s simply no answers for this today.”

Blue Cross Blue Shield of Michigan, one of the state’s largest insurers, said it is maintaining balance between cost and e cacy.

“We currently cover gene and cell therapies in our fully insured business and for employer groups,” BCBSM said in a statement.

“We are monitoring the drug pipeline and studies of the potential e ectiveness of these therapies as more of them are expected to become available over the next few years. e therapies are being o ered at an extraordinary cost that needs to be evaluated against their actual success rate. We want to serve our members but there is a need for the health care system to reconcile their enormous price tag with maintaining a ordability and access for not only our members but for everyone.”

Kollet Koulianos, vice president of payer relations for the National Hemophilia Foundation who moved to Northville last year, believes developers of these therapies will have to reduce costs for the treatments to be e ective and sustainable.

“If I had a crystal ball, I believe it

It’s not just nursing homes that face citations. Among 110 hospitals cited by CMS nationwide, 15 were in Michigan.

Four Corewell Health East hospitals (formerly Beaumont Health facilities) were cited — Dearborn, Trenton, Taylor and Wayne.

Other hospitals include Henry Ford Health Hospital in Detroit, Detroit Medical Center’s Harper University Hospital in Detroit and Trinity Health Livonia Hospital.

Since March 2020, more than 3 million cases of COVID-19 have been reported in Michigan, resulting in nearly 42,000 deaths.

Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh would indicate that the greatest chance for success will include manufacturers bringing these products to market at reasonable prices (not what the market will bear) and transitioning from the current fee-forservice payment model to one or more solutions that ties payment to performance,” Koulianos wrote in an op-ed published in late 2021 in the journal Molecular erapy. “Whether paid in a lump-sum, up-front payment or paid over a period of time when performance metrics are met, health plans will need some assurance that they will not be paying several million dollars for a new treatment if the response or durability is not guaranteed.”

Bouschet said his rm is already advising companies on how to handle these claims as they stand currently. Speci cally, he advises acting in advance in hard negotiations with stop-loss providers. His advice is to negotiate a cap on how much the annual rate can increase, even with the presence of these expensive therapies. Another avenue is for companies to negotiate stop-loss coverage with a no lasering clause that prevent the insurer from carving out employees or treatments from the coverage.

“ ere are gaps and exposures (for employers) everywhere,” Bouschet said. “ e reality is the majority of companies have never received one of these bills, but I can assure you that when they do — and they will — the experience will alter their path. Employers will let the rst one (gene or cellular therapy) through, but they will then evaluate their future risk and exposure of their health plan. If their protections are not ironclad, the results could be devastating to their business.”

Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh