Health Care

Doctor: Hospital using federal program to undercut our price

Christine Murray
Dr. Christine Murray, a reproductive endocrinologist who co-founded Northeastern Reproductive Medicine in Colchester. Photo by Erin Mansfield/VTDigger
COLCHESTER — An independent fertility doctor says the University of Vermont Medical Center is abusing a federal program designed for low-income people in a way that could put her practice out of business.

Dr. Christine Murray left a high-level position at the hospital in 2014 to co-found Northeastern Reproductive Medicine in Colchester. Within five days of opening, the hospital hit her and her business partner with a lawsuit that she considers frivolous, but the hospital defends.

Now, the UVM Medical Center has cut its prices for a cycle in-vitro fertilization — a process to help women get pregnant that usually requires them to buy expensive prescription drugs — by at least half from the price charged four years ago.

The medical center has bundled the cost of those prescription drugs into a global pricing mechanism that is thousands of dollars below what patients pay at the independent practice. The hospital now says it offers one of the lowest prices in New England.

Murray said one of the main reasons she left the hospital was to open a practice that offered services patients could afford. At the time, the hospital was charging $9,600 per cycle of in-vitro fertilization, before the cost of prescription drugs, she said.

Medicaid, Medicare and commercial insurance companies rarely pay for in-vitro fertilization services or the drugs. Murray said most patients need to pay out of pocket, so the upfront cost of the service and prescription drugs affects whether they can get pregnant.

Murray said she tried for years to get UVM Medical Center to lower the price or set up payment plans for patients. Murray said she was told repeatedly that lowering the price would cause the hospital to lose money.

Dr. Elizabeth McGee, the current division chief of endocrinology and infertility at the UVM Medical Center, said in May that patients used to pay the hospital up to $18,000 for services and drugs associated with in-vitro fertilization.

Technology worker
A technology worker at Northeastern Reproductive Medicine. Courtesy photo
When Northeastern Reproductive Medicine opened, the practice started charging $7,000 for services, and the patient must pay between $3,000 and $8,000 for drugs, Murray has said.

Since 2016, the hospital has charged “just under $7,000” per cycle, according to McGee.

McGee said in an interview Monday that, when she started her job, she thoughtfully looked at how much it costs to provide nurses, doctors and other services. To pay for the prescription drugs, McGee said she used a federal program known as 340B to purchase them at a low price.

“I just came here in 2013, and that was my goal from the very beginning is to increase access towards a wider group of the population to have access to these life-changing services,” McGee said. “Some people get to build their families, and other people can’t because they don’t have the money. That’s always been something that bothered me about my field.”

McGee said she set the price like this: “I started kind of at zero and I built up what it costs us to do one cycle of IVF to cover all of our costs. … I put that together and accounted for each bit of that expense and put it together kind of as a spreadsheet to arrive at the final cost.”

The New York Post reported in 2014 that the average cost of a cycle of in-vitro fertilization in the country was $12,400. An infertility center in Albany, New York, said it charges $6,500 for the procedure, but the patient must pay an additional $4,000 to $6,000 for medications.

Murray questions the price cut and the motives behind it. “If what they were saying is true,” when administrators said lowering the price would lose money, “then a) they found a way to do it without losing money or b) they’re losing money just to get rid of us,” she said.

Mike Noble, the spokesperson for UVM Medical Center, has explained it differently. He said in March that Murray and her business partner, Dr. Peter Casson, did not attempt to lower prices while working at the hospital and that the hospital’s decision to lower prices was not in response to the new business.

“We began to examine our fee structure beginning in 2013, when Dr. Casson was directing our IVF program, as we recognized the need for our program to be financially accessible for patients,” Noble wrote in an email in March.

“The fee structure at that time had been created and supported by Drs. Casson and Murray in their roles as IVF doctors here at UVMMC,” he wrote. “Rather than move to revise our fee structure Drs. Murray and Casson chose, along with other reasons, to leave UVMMC and open NRM.”

On Thursday, Noble said he was unable to reconfirm that Murray and her business partner did not seek to lower prices while they were still working for the hospital because the people who made those comments no longer worked for the hospital.

John Brumsted
Dr. John Brumsted, the CEO of the University of Vermont Medical Center. File photo by Erin Mansfield/VTDigger
In May, Dr. John Brumsted, the CEO of the UVM Health Network and the UVM Medical Center, told state regulators, “There’s nothing that we do that is trying to drive those folks out of business. There are other environmental factors.”

He said: “I really take it personally when people blame the medical center or an evolving health care network for the inhospitable environment for independent practitioners, many of whom are on the medical staffs of our open staff hospital.”

The 340B program

The University of Vermont Medical Center is able to get discounted prescription drugs, including drugs for in-vitro fertilization, because it participates in a federal program called 340B.

The federal government created the 340B program in 1992 to help certain health care facilities that treat low-income patients buy cheap prescription drugs. Today, thousands of hospitals throughout the country use the program to pay pennies on the dollar for prescription drugs.

The 340B program “was intended to provide assistance to medical providers who serve poor, underinsured patients,” according to a 2015 article in the American Journal of Managed Care. But the law does not explicitly require that the providers “limit the patients who receive the discounted drugs to those who are poor and in need.”

If the hospital passes on the discount to patients, the patients can save money. But, over the past 25 years, many hospitals have been buying the drugs at the discounted price and charging insurance companies a higher reimbursement as a way to raise revenue, according to a 2015 report by the Medicare Payment Advisory Commission, or MedPAC.

“They were probably earning from me alone, somewhere in the neighborhood of $200,000 a year on just the drug, separate from any of the other billing for my services,” said Dr. Scott Benjamin, a physical medicine doctor who worked at the UVM Medical Center for 14 years.

Benjamin, who just opened a practice in Williston, said the hospital used the 340B program to pay $370 for a drug his patients used frequently. At his new independent practice, he expects to spend $579 on the same prescription drug and lose money while treating Medicaid patients.

UVM Medical Center interior
UVM Medical Center. File photo by Mike Dougherty/VTDigger
McGee said the program is not specifically for low-income patients, but for facilities to provide prescription drugs to their patients. She said it’s new for the UVM Medical Center to use the program for in-vitro fertilization drugs, but not new by national standards.

She described 340B as “a federal program for qualifying hospitals and clinics, and I’m not sure about all of the intricate details about how clinics can qualify, but it’s not just about low-income. It’s about the patients of specific hospitals, clinics, and service providers.”

Murray questioned UVM Medical Center’s use of the program. She said in-vitro fertilization patients tend to be middle-income or high-income.

“These aren’t in general the population that the program was meant for,” Murray said. “They’re not underinsured. They’re not Medicaid, Medicare. They’re people who getting this service anywhere else would be required to pay the full price.”

She said of the hospital: “They’re following the letter of the law by doing it, I guess, but not the spirit of the law.”

Ongoing controversy around 340B

Federal watchdogs have raised questions about the 340B program for years. They have questioned the growth in the program and whether participating hospitals are using it the way it’s intended.

In 2011, the Government Accountability Office said the Health Resources and Services Administration, which oversees the 340B program, “primarily relies on participant self-policing to ensure program compliance.”

“However, its guidance on program requirements often lacks the necessary level of specificity to provide clear direction, making participants’ ability to self-police difficult and raising concerns that the guidance may be interpreted in ways inconsistent with the agency’s intent,” the report said.

At that point, the agency had “never conducted an audit to determine whether program violations have occurred,” even though the 340B program was being used in hospitals, “where the risk of improper purchase of 340B drugs is greater, in part because they serve both 340B and non-340B eligible patients.”

In 2014, the Health Resources and Services Administration tried to create a new regulation on the definition of a patient. The agency withdrew its request to create the regulation after the Pharmaceutical Manufacturers and Researchers of America, or PhRMA, sued the agency in federal court.

In 2015, a representative for the same Government Accountability Office told members of Congress that the Health Resources and Services Administration still planned to issue guidance on the definition of a patient.

That same year, researchers said they studied a sample of 940 hospitals across the country and found evidence to support “the criticism that the 340B program is being converted from one that serves vulnerable patient populations to one that enriches hospitals and their affiliated clinics.”

On Thursday, a spokesperson for the Health Resources and Services Administration said patients who receive their care through a 340B facility are eligible for the program. However, the law that created 340B does not require the savings to benefit patients with a specific type of insurance or specific income levels.

“The intent of the 340B program is to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services,” the spokesperson said. “The statute is silent as to how the 340B savings generated from the 340B program must be used.”

A shrinking IVF market

Dartmouth-Hitchcock Medical Center in Lebanon, New Hampshire, ran the other major hospital-based fertility program serving Vermonters. That hospital shut down its program effective May 31.

Rick Adams, a spokesperson for Dartmouth-Hitchcock, said he did not know how much the hospital used to charge for in-vitro fertilization. Murray said the price was about $9,600, before prescription drugs.

Dartmouth Hitchcock Medical Center
Main entrance of Dartmouth Hitchcock Medical Center. Mark Washburn/Dartmouth-Hitchcock
Adams declined to comment on the reasons for the closure. He said a prepared statement is the only communication the hospital is willing to have on the subject.

“In the end, it is clear that we cannot sustain the program, and our belief is that ending our (reproductive endocrinology and infertility) program and helping our patients find a program that can support them is in those patients’ best interest,” the statement said.

The statement said “an inability to maintain the highly specialized clinical resources required for a program of this caliber has led to our determination that the program is not sustainable.” The statement also pointed to a requirement that the program provide seven-day coverage for patients.

Murray said UVM Medical Center’s price cut is a challenge to her practice also staying afloat.

“I’m nervous,” she said. “If given the choice, very few patients would choose UVMMC over here except for price, and you can hardly blame people if they have the option to save that much money on medication.”

“It’s going to be a big challenge for us,” she said. But if it weren’t for all the patients who pay cash, or all the people who come down to Colchester from Canada to get their treatment, the practice would not have survived this long, she said.

“I am beat down — not as a doctor, literally as a citizen — by watching what’s happening,” Murray said. “When is it ever good to take away people’s choice?”

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Erin Mansfield

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