Three doctors, nine others in western half of Kentucky are indicted in the largest-ever federal 'takedown' of Medicaid fraud

Former Dr. Fred Gott of Bowling Green was arrested.
(Photo: Miranda Pederson, Bowling Green Daily News)

Twelve people in the western half of Kentucky, including three doctors, have been charged with Medicaid fraud in what the federal government calls its biggest-ever "takedown" of the problem, Andrew Wolfson of The Courier-Journal reports.

The indictments allege "a half-dozen schemes involving nearly $8 million in alleged fraudulent billings," Wolfson writes. "The offenses include $5 million in false billings for muscle-relaxant injections that were never delivered to patients, as well as a staged car wreck in which three people allegedly conspired to get controlled substances and fraudulent reimbursements."

In another case, Wolfson reports, "a medical practice that treated car wreck patients is accused of using the DEA numbers of nurse practitioners to order hydrocodone for herself and falsely billing it to an insurance company. Nationally, the sweep resulted in charges against 243 people, including 46 doctors, nurses and other licensed medical professionals."

John Kuhn, acting U.S. attorney for the Western District of Kentucky, told Wolfson that about $1 billion of annual Medicare and Medicaid expenses are fraudulent. Medicare is the federal health-insurance program for people over 65; Medicaid is the federal-state program for the poor and disabled.

Former Dr. Fred Gott of Bowling Green, a 63-year-old cardiologist, was charged with "conspiracy to dispense controlled substances, health care fraud and money laundering," Deborah Highland reports for the Bowling Green Daily News. "The Bowling Green-Warren County Drug Task Force opened an investigation into Gott’s practices after Warren County Coroner Kevin Kirby alerted the task force about drug overdose deaths involving Gott’s patients, task force director Tommy Loving said."

Seniors get a lot of anti-anxiety drugs, sometimes in dangerous combination with narcotics; Ky. ranks third in the nation in that

When Medicare's drug program, called Part D, was put into place more than a decade ago, Congress decided to not pay for anti-anxiety medications. In 2013, when Medicare started paying for them, the program went from spending nothing for these medications to paying more than $377 million, Charles Ornstein and Ryann Grochowski Jones report for ProPublica, a nonprofit, investigative news organization.

Using anti-anxiety drugs in combination with narcotics increases the risk of overdoses, but Kentucky has many doctors who prescribe a lot of both. More than 100 Kentucky doctors each wrote at least 1,000 prescriptions for both types of drugs in 2013, according to data compiled by ProPublica.

That ranked Kentucky third in the nation, trailing only Florida and Alabama. Other southeastern states dominated the top 10. California, the nation's most populous state, ranked eighth; Tennessee was fourth and Ohio was ninth.

ProPublica has an application that lets you look up, by doctors' names, cities or ZIP codes, the number of Medicare claims they filed in 2013, the amount of money, the number of patients and the number of prescriptions for brand-name drugs.

The anti-anxiety drugs, some known as benzodiazepines, include popular tranquilizers such as Valium, Xanax and Ativan. 

Lawmakers initially chose to keep them out of Medicare Part D because they had been linked to abuse and an increased risk of falls among the elderly. Doctors kept prescribing them to Medicare enrollees, who found other ways to pay for them.

In 2013, the year Medicare started covering benzodiazepines, it paid for nearly 40 million prescriptions, ProPublica found. Generic versions of Xanax (alprazolam), Ativan (lorazepam) and Klonopin (clonazepam) were among the top 32 most-prescribed medications in Medicare Part D that year.

The American Geriatrics Society "discourages the use of benzodiazepines in seniors for agitation, insomnia or delirium because they can be habit-forming and disorienting and their effects last longer in older patients." The society does say the drugs "are appropriate to treat seizure disorders, severe anxiety, withdrawal and in end-of-life care," ProPublica notes.

One geriatric psychiatrist told ProPublica that the drugs are a "very real safety concern" for the elderly, and that he and others in his field don't use them as a "first-, second-, or third- line of treatment." Some geriatric psychiatrists have voiced concerns that these drugs are now being used instead of antipsychotics, since Medicare has pushed to reduce the use of antipsychotics, particularly in nursing homes, because of their risks.

Several doctors who rank among Medicare's top prescribers of the drugs told ProPublica that any risks of anti-anxiety drugs are outweighed by their benefits. One said that the drugs worked well for his patients, many of whom were trying to kick addictions to narcotics, but struggled with anxiety and depression.

However, ProPublica also found that some doctors appear to be prescribing benzodiazepines and narcotic painkillers to the same patients, which increased the risk of misuse and overdose. That's where Kentucky ranked third.

Dr. Leonard J. Paulozzi, a medical epidemiologist at the federal Centers for Disease Control and Prevention, co-authored an analysis showing that benzodiazepines were involved in about 30 percent of the fatal narcotic overdoses that occurred nationwide in 2010, ProPublica reports.

Newspapers' data analysis finds that Kentucky's seniors on Medicare are among the sickest in U.S.; local data available

Red counties are over 21%. For map with data, click here.

The top 10 Kentucky counties with the highest percentage of seniors on Medicare who have six or more chronic conditions are also in the nation's top 50 for sick seniors, according to government data analyzed by USA Today and The Courier-Journal. Nine of the top 10 counties are in Appalachia.

"That's not surprising," Fran Feltner, director of the University of Kentucky Center of Excellence in Rural Health, told The C-J's Laura Ungar. "And when you're having breathing problems, high blood pressure problems and other problems, to me it seems like you're waging a daily battle against the chronic diseases. It's hard to fight the battle ... and as you get older, it's harder."

The top 10 Kentucky counties ranked by percentage of the 65-and-older Medicare population with six or more chronic conditions are Clay, 27.1 percent; Breathitt, 26.3 percent; Johnson, 26.2 percent; Knott, 25.1 percent; Perry, 24.6 percent; Letcher, 24.2 percent; Bell, 24 percent; Floyd, 23.8 percent; Wolfe, 23.7 percent; and Taylor, 23.6 percent. Taylor County (Campbellsville) is not in Appalachia but borders three non-coal Appalachian counties.

Beve Cotton (C-J photo by Mark Mahan)

Beve Cotton, 81 and with a long list of chronic diseases, is one of those seniors. He lives in Manchester, the seat of Clay County, which ranks 12th among more than 3,100 counties nationally for the percentage of seniors on Medicare with six or more chronic conditions, Ungar reports.

"I'm a mess," said Cotton, who gets around in a power chair and wears a full set of dentures after losing all his teeth. "I'm not able to do things. I'm an accomplished cook, but I can't do that anymore ... I can't drive. My legs don't cooperate. ... It's very hard."

Ungar reports that Clay County, population 21,147, has many of the factors that combine to cause poor health.: "Nearly 38 percent of residents live below the poverty level, compared with a state average of 19 percent, according to the Census Bureau. Median household income is about $22,000 a year, about half the state average.Access to health care, especially specialists, is limited, and there are few well-stocked grocery stores or safe places to exercise. Smoking and obesity rates are sky-high."

Carmen Webb, who directs the senior center in Manchester, told Ungar that many seniors struggle with being able to afford staples, let alone healthy food and also the high cost of transportation, making it difficult to get to doctors appointments to manage their illnesses.

Cotton, who grew up in Manchester, told Ungar that he depends on others for rides, frequently to doctors' appointments, including many at the Veterans Affairs Medical Center in Lexington, about 100 miles away. Webb noted that public transportation in the area costs $1.50 per mile.

Feltner added that many seniors in the area don't know how to prevent chronic disease, some have fatalistic attitudes and because many of them are on multiple medications, they face the dangers of drug interactions and side effects, Ungar reports.

Experts say that such high levels of illness hurts communities, "hastening a downward economic spiral locally and requiring huge portions of Medicare budgets," Ungar writes. It also overtaxes the medical communities in rural counties even thinner.

"These patients need to be seen frequently by doctors, and they need much longer visits. ... These folks need intense care," Dr. Michael Karpf, executive vice president for health affairs at UK, told Ungar. "Given the shortage of primary care in Appalachia, this kind of patient just exacerbates that shortage."

"The real issue is prevention — weight control, exercise, food habits," Karpf said. "But it's hard. Fast food is cheaper than wholesome, healthy food, and (the way people eat) is partly cultural. Those things are hard to change. It's a generational process."

Kentucky hospitals say they're losing money on Obamacare, as cost of treating new Medicaid patients exceeds reimbursements

By Melissa Patrick
Kentucky Health News

Kentucky hospitals are struggling financially because of the billions of dollars in cuts caused by the implementation of the Patient Protection and Affordable Care Act, and many aren't sure they will survive, the Kentucky Hospital Association said at its annual meeting May 8.

KHA applauded the successful implementation of the federal health reform in Kentucky, which has extended health insurance coverage to approximately 500,000 more Kentuckians, mainly through expansion of Medicaid, but said that has come at a "significant cost to our commonwealth hospitals."

"The expansion [of Medicaid] has infused money into some of our hospitals, which is good, but the rest of the story is the cuts," KHA President Michael Rust said.

KHA Chair Dennis Johnson, CEO of Hardin Memorial Health in Elizabethtown, said  the revenue from the expansion "is less than the cuts Kentucky hospitals will experience in order to finance the ACA."

Kevin Halter, KHA's incoming chair and CEO of Our Lady of Bellefonte Hospital in Ashland, said,
“Much has been made about the fact that Kentucky hospitals have received an additional $506 million in Medicaid payments last year through the expansion, suggesting that hospitals' bottom lines are healthier as a result, but what is often not mentioned is that hospitals lose money on every Medicaid patient they treat.”

The report says that changes in the way hospitals are paid under Obamacare are projected to result in the loss of almost $7 billion in federal cuts to Kentucky hospitals through 2024:

• Lower-than-cost Medicaid and Medicare reimbursements, 82 percent and 86 percent respectively, with actual Medicaid and Medicare payment cuts from 2010 to 2024 projected to be $4.6 billion
• Readmission penalties, which can be as much as 3 percent of Medicare payments, imposed on hospitals that readmit patients within 30 days of discharge, regardless of the reason
• Medicare cuts to hospitals that have any increase in hospital-acquired infections
• Cuts, delayed until 2017, in extra payments to hospitals that have a "disproportionate share" of Medicare and Medicaid patients.

KHA also cited impacts that aren't associated with the reform law, such as sequestration, or automatic across-the-board federal budget cuts, and other cuts in Medicare.

Hospital officials said that rural hospitals have been hit hardest by these changes because 72 percent of their patients are on Medicaid or Medicare. A recent report by state Auditor Adam Edelen found that 68 percent of Kentucky's rural hospitals have below-average of poor financial health, with 34 percent of the total in the latter classification.

Part of the problem is that the law was built on the nationwide presumption that about half of the newly insured would have private health insurance and the other half Medicaid, but in Kentucky, a poor state, 75 percent of the newly insured are covered by the Medicaid expansion, which covers those earning less than 138 percent of the federal poverty line, or about $33,000 for a family of four.

Halter said while hospitals got $506 million for treating patients covered by the expansion, that treatment costs the hospitals $617 million to deliver that care. While low Medicaid reimbursement is not a new problem, Johnson said, "There's no question it's been accelerated under the ACA."

Gov. Steve Beshear said expanded Medicaid payments had "blunted the impact of other fiscal pressures on hospitals. . . . We are very aware of the challenges that medical providers face in Kentucky. Rather than trying to turn back the clock and return to old business practices, we are working directly with providers to help them develop new strategies for better, more efficient, quality health care delivery."

The challenges are real.

A September 2014 survey found that more than 65 percent of the 109 responding Kentucky hospitals had reduced staff since June 2013, eliminating more than 7,700 positions, with more jobs lost in rural hospitals than the urban ones. About 44 percent had frozen or reduced wages, and 40 percent of had cut costs by reducing or eliminating programs, such as closing psychiatric units and outpatient clinics.

"The reality is that hospitals are being forced to reduce costs to deal with these financial pressures," said Charles Lovell, CEO Caldwell Medical Center in Princeton. "This is the third year without our employees getting an increase."

While Obamacare has reduced hospitals' losses on patients who can't pay, Halter noted that 12 percent of Kentuckians remain uninsured, and the report said hospital emergency rooms are still the first choice for many new Medicaid patients because they have't found a regular physician. Many Kentucky counties are short of doctors.

Most Kentucky hospitals did average or better in new patient satisfaction ratings; seven got top rating and six got bottom rating

Most of the Kentucky hospitals that were rated on a newly released five-star scale for patient satisfaction got three and four stars. Seven of them got a five-star rating and six got a two-star rating, the lowest rating given to any of the Kentucky hospitals that were evaluated.

The star ratings can be found on Medicare's Hospital Compare website and are based on a patient satisfaction survey given to randomly selected patients, not just those on Medicare, at nearly 3,500 Medicare-certified acute care hospitals across the country. The ratings are based on patient admissions between July 2013 and June 2014. Hospitals were not included if they did not have enough surveys completed during that period.

The survey, also known as Hospital Consumer Assessment of Healthcare Providers and Systems Survey, includes questions about patient satisfaction related to how their doctors, nurses and hospital staff communicated with them, how well their pain was addressed during their hospital stay, how well they were prepared to go home, cleanliness of the hospital and if they would recommend the hospital to others.

Kaiser Health News analyzed the data from the Centers for Medicare & Medicaid Services and found that 76 Kentucky hospitals were included in the patient satisfaction star ratings and 17 Kentucky hospitals were not. Kaiser found that the average for all of the rated hospitals in Kentucky was 3.4 stars, one-third, or 25, got four stars; half, or 38, got three.

HealthWatch USA, a non-profit organization that promotes health care transparency and patient advocacy based in Somerset, further analyzed the data and named the hospitals in each state by its star rating.

The seven with five-star ratings are: Clinton County Hospital, Marshall County Hospital, Westlake Regional Hospital, Saint Joseph Martin, Rockcastle County Hospital, Pikeville Medical Center and Russell County Hospital.

The six with two-star ratings are: Georgetown Community Hospital, Harlan ARH Hospital, Hazard ARH Regional Medical Center, Spring View Hospital in Lebanon, University of Louisville Hospital and Lake Cumberland Regional Hospital in Somerset.

The Centers for Medicare and Medicaid Services reminds consumers that these patient satisfaction star ratings are just one tool to help decide which hospital to use, and encourages them to use multiple factors to make this decision, including clinical outcomes, their health-care providers opinion and other publicly reported data.

Federal agency offers a consumer-friendly website that ranks patients' experiences in your local hospitals

Consumers now have access to a website that ranks 3,500 hospitals around the country on patients' experiences to help them choose a hospital and better understand the quality of care participating hospitals offer, according to a Centers for Medicare and Medicaid Services press release.

The 12 star ratings on Hospital Compare are based on 11 of the publicly reported measures from the Hospital Consumer Assessment of Healthcare Providers and Systems Survey, and a summary rating for the survey. The survey asks patients questions about nine topics:communication with doctors, communication with nurses, responsiveness of hospital staff, pain management, communication about medicines, discharge information, cleanliness of the hospital environment, quietness of the hospital environment, and transition of care. This survey information is self-reported by patients and will be updated quarterly.

“The patient experience star ratings will make it easier for consumers to use the information on the Hospital Compare website and spotlight excellence in health care quality,” Dr. Patrick Conway, acting principal deputy administrator for the CMS, said in the release.

Consumers already have access to Medicare star systems to rate nursing homes, dialysis centers, private Medicare Advantage insurance plans and certain situations for physicians and group practices, but are they using it?

Not much, according to a recent Kaiser Family Foundation poll. It found that only 31 percent of those polled had seen any information comparing doctors, hospitals, and health insurance plans in the past 12 months. When asked specifically if they had seen information comparing prices or quality across plans and providers, fewer than 1 in 5 people said they had seen such information, and fewer than one in 10 reported using such information.

CMS said the website helps meet goals of the Patient Protection and Affordable Care Act, which calls for transparent, easily understood and widely available public reporting. The agency also reminds consumers that the site is just one tool to help them make a decision abut which hospital to use, and encourages them to talk to their health-care providers about hospital quality, and to use "multiple factors" when deciding about a hospital, such as clinical outcomes and other publicly reported data that is on the website.

To see the rankings:

• Go to the Hospital Compare website
• Type in your ZIP code, or the name of a particular hospital
• Click on "Search"
• Choose three hospitals, by clicking on the "Add to Compare" button
• Click on "Compare Now," located at the top of the screen
• Click on "Survey of Patients' Experiences"
• Scroll down and view star ranking and additional information results

This is a screen shot of the final screen, with a bar of options to click on.

Auditor will hold meetings in Prestonsburg, Princeton and Sonerset to discuss his report on financial status of rural hospitals

State Auditor Adam Edelen will hold three public meetings in rural communities to discuss the findings of his special report about the financial health of rural hospitals.

The meetings will be held Monday, April 21 at 1 p.m. at the Mountain Arts Center in Prestonsburg; Monday, May 4 at 11 a.m. (CT) at the Caldwell County Memorial Hospital in Princeton; and Thursday, May 6 at 1 p.m. at the Liberty center of Somerset Community College.

The report, which covers fiscal years 2011 through 2013, found that as many as one-third of Kentucky's rural hospitals were in poor financial shape, with 68 percent of them ranking below the national average financially.

“Although closure may be an unfortunate reality for some," Edelen said in the press conference, "I believe more can and should be done to help these hospitals rethink their models of business in delivering health care in the 21st century." He went on to suggest rural hospitals consider hiring outside managers, merge with larger hospitals, form coalitions with other rural hospitals or find a specialized health niche as possible alternate business models to consider.

The report calls for the creation of a state work group to monitor rural hospitals, including making sure state law gives them the flexibility to retool their business models. Susan Zepeda, president and CEO of the Foundation for a Healthy Kentucky, suggested that the proposed work "could be incorporated into the work already under way under a State Innovation Model grant, which is engaging many sectors of health service in Kentucky in an ambitious, collaborative redesign effort."

Edelen said some of the primary problems faced by rural hospitals stem from the many changes in health care since the inception of Medicaid managed care, a decrease in the number of health-care providers, and an economic climate in some areas that doesn't support the current health payment model, which depends on the majority of its users to have private health insurance.

The report suggested that the Cabinet for Health and Family Services negotiate better contracts with managed-care organizations as it approaches the June 30 deadline, especially to address provider payments, stricter penalties for non-compliance and increased administrative burdens that managed care has put on hospitals. Edelen and Haynes sounded hopeful that this was going to happen.

Gov. Steve Beshear called Edelen's report "a dated snapshot" because the 2013 data used in the report does not include 2014 information,when the federal health reform was fully implemented through expansion of Medicaid to people with incomes up to 138 percent of the federal poverty line. Beshear said hospitals received $506 million to care for such people in 2014 while seeing significant reductions in losses on patients who couldn't or wouldn't pay.

Edelen's spokeswoman, Stephenie Hoelscher, said in an email that Edelen believes the full effect of all the changes in health care to hospitals' bottom line is still not clear, and his report establishes a baseline for critical analysis going forward.

Plight of woman needing lung transplant, who has fallen through the cracks of the health-care system, gets attention from CNN

Update: CNN reports that Kentucky issued a Medicaid provider number to the University of Pittsburgh Medical Center, and the hospital confirmed that they now have enrolled in Kentucky Medicaid and are working to complete the enrollment of some of their physicians, all of which helps clear the way for Katie Prager to get her lung transplant.  "Kentucky Medicaid executives are helping us to get this done in a streamlined fashion that overcomes previous administrative hurdles and misunderstandings in this complex case," Wendy Zellner, a spokeswoman for UPMC, told CNN. Dalton, Katie's husband, has since been discharged from the Pittsburgh hospital where he received his lung transplants in November and has returned to Kentucky. CNN reports Katie and Dalton were only able to communicate through the doorway of her University of Kentucky hospital room because of his risk of getting Katie's infection, which could kill him.

A 24-year-old Kentucky woman with cystic fibrosis who needs a lung transplant to live is caught in the middle of a financial and policy battle among Medicare, Medicaid, a state agency and the University of Pittsburgh Medical Center, one of only two hospitals in the United States qualified to do lung transplants on patients with her specialized condition.

Prager at University of Kentucky hospital (Image from CNN)

"I feel like they're putting a dollar sign on my life," Katie Prager of Ewing, in Fleming County, told CNN. "I don't want to die because of money. That's stupid. Nobody should have to do that." Katie's story was first reported by The Ledger Independent of Maysville and excerpted in Kentucky Health News.

Katie longs to be with her husband, Dalton Prager, but can't until she gets her lung transplant because in addition to cystic fibrosis, she has an infection, Burkholderia cepacia, that is "horribly dangerous" to him, Elizabeth Cohen and John Bonifield report for CNN. Dalton, who also has cystic fibrosis, received his lung transplants Nov. 17 at the Pittsburgh hospital, and the immunity-suppressing drugs he takes for the transplants make him highly vulnerable to infection.

"I just want to make it to see our four-year anniversary in July and be able to hold hands and just hug. That's all I really want -- to be able to hug my husband on our fourth anniversary," Katie told CNN.

Katie and Dalton met on Facebook in 2009 when they were 18 and Dalton lived in Missouri and Katie in Kentucky. And though Katie's doctors had warned her many times that it was dangerous to be around other CF patients because of the risk of shared infections, Katie decided to meet Dalton, even after he had told her he had Burkholderia cepacia, CNN reports. They married two years later.

Photo from CNN

"I told Dalton I'd rather be happy -- like really, really happy -- for five years of my life and die sooner than be mediocre happy and live for 20 years," she told CNN. "That was definitely something I had to think about, but when you have those feelings, you just know."

Their health "quickly deteriorated, and within months, they went on oxygen full time" and had to quit work, CNN reports. They entered the Pittsburgh hospital together in August 2014 to wait for new lungs. Dalton got his in November; Katie is still waiting.

One month after Dalton got his transplants, UPMC discharged Katie because they told her "It would be psychologically good for her to get out for a while," she told CNN. After only three days out she began to have "serious trouble breathing" and tried to go back into the hospital, but was told she could not return because "she had used up her supply of Medicare days."

Medicare wouldn't pay for another hospitalization until Katie had been out of the hospital for 60 days. She is too sick to do that, and has since been a patient at the University of Kentucky, where she relies on the federal-state Medicaid program for the poor and disabled to pay for her care, and doctors have predicted that she won't live a year without new lungs, CNN reports.

Medicaid cannot pay the Pittsburgh hospital because it is not in the state's network of health-care providers. CNN reports that Katie's doctor wrote a letter to Medicaid begging them to make an exception, but the state denied his plea. In a statement to CNN, a spokeswoman for the state Cabinet for Health and Family Services said the hospital had declined to enroll as a Kentucky Medicaid provider. "Medicaid policies allow for a simplified enrollment process for out-of-state providers in such situations," Gwenda Bond, spokeswoman for the cabinet wrote, offering to expedite their application when they choose to sign up.

Hospital officials counter that Kentucky officials said they would have to "sign up hundreds of their doctors to accept Kentucky Medicaid patients," which hospital spokeswoman Wendy Zellner said is "an unusually restrictive approach and contrary to single-case agreements that we have signed with other state Medicaid programs. . . . It is up to Kentucky Medicaid to address this situation."

Katie has also since had a discussion with a federal Centers for Medicare and Medicaid Services caseworker that "didn't go very well," CNN reports. Katie told CNN that the caller was "rude, mean, and angry" and "acted like it was just a pain to have to be talking to me," but said "she would look into her situation." On April 1, CMS spokesman Aaron Albright told CNN that the federal agency was "reaching out to the state agency," and later in the day Zellner said the state agency "has reached out to us to talk. So stay tuned."

The news cheered the Pragers, who continued to talk via Skype and work on their fundraising Facebook page, while dreaming of a future together, CNN reports.

Doctors don't tell most patients or caregivers about a diagnosis of Alzheimer's until the disease advances, advocacy group says

Every 67 seconds someone in the U.S. develops Alzheimer’s disease and most don't find out they have it until their disease becomes more advanced, according to a report by the Alzheimer's Association.

The organization's 2015 Alzheimer's Disease Facts and Figures report says only 45 percent of people with the disease, or their caregivers, were told their diagnosis by their doctor.

One reason, the report says, is that they don't want to cause the patient emotional distress, but the report says studies have found that "few patients become depressed or have other long-term emotional problems" when they learn of their diagnosis.

The Alzheimer's Association says early disclosure of the diagnosis "should be standard practice" because it allows the patient to participate in early decision making about their care plans, deal with legal and financial issues, decide if they would like to participate in research, and gives them time to fulfill lifelong plans. The association said in the release that not enough resources and education are in place to help medical providers with "best practices for telling patients and their families."

"Telling patients the truth about their diagnosis allows them to seek treatment early, when it’s likely to be more effective, and gives them a voice in planning how they want to live the rest of their lives," DeeAnna Esslinger, executive director of the Greater Kentucky and Southern Indiana Chapter of the Alzheimer’s Association, said in a press release.

The report says an estimated 5.3 million Americans have Alzheimer’s disease, including 68,000 Kentuckians. And barring the development of medical breakthroughs, the report says the number of Americans with the disease will rise to 13.8 million by 2050. Other items from the report:

• Almost half a million people age 65 or older will develop Alzheimer’s in the U.S. this year.
• By 2050, an American will develop the disease an average of every 33 seconds.
• Two-thirds of Americans over age 65 with Alzheimer’s (3.2 million) are women.
• Alzheimer’sis the sixth-leading cause of death in the U.S.
• In Kentucky, 1,462 people died with Alzheimer’s in 2012, a 74 percent increase since 2000.
• Nationwide from 2000-2013, the number of Alzheimer’s deaths increased 71 percent, while deaths from other major diseases decreased.

The cost to care for Americans with Alzheimer's and other dementias in 2015 are estimated at $226 billion, of which $153 billion is the cost to Medicare and Medicaid alone, making Alzheimer's the costliest disease to society, the release says. The report projected this cost will increase to more than $1 trillion in 2050.

“Alzheimer’s is a triple threat unlike any other disease — with soaring prevalence, lack of effective treatment and enormous costs. Promising research is ready for the pipeline, but there’s an urgent need to accelerate federal funding to find treatment options that effectively prevent and treat Alzheimer’s," Beth Kallmyer, vice president of constituent services for the Alzheimer’s Association, said in a release.

Up to 1/3 of rural hospitals in poor financial shape, auditor finds, calling report a baseline for local decisions that could be tough

By Melissa Patrick and Al Cross
Kentucky Health News
For a video of Edelen's press conference, click here. For a cn|2 report with video, go here.

FRANKFORT, Ky. -- As many as one-third of Kentucky's rural hospitals are in poor financial shape, and the survival of some will likely depend on their willingness to adopt new business models, state Auditor Adam Edelen said Monday.

Unveiling a nine-month study, Edelen said 15 of the 44 hospitals examined were in "poor financial health," and warned, "Closure may be an unfortunate reality for some."

Rural hospitals in purple declined to make useful financial information available to the auditor's office.

The study did not include 22 of the 66 Kentucky hospitals that are located outside metropolitan areas, which declined to participate or didn't provide the type of information requested. Edelen said those hospitals are mainly privately owned. If they had been included, Kentucky Hospital Association CEO Michael Rust said, the financial picture "would be better, but I don't think they would be substantially different."

Gov. Steve Beshear said the report was "a dated snapshot" because its most recent data was from 2013, before federal health reform was fully implemented. "Conditions are no longer the same," Beshear said in a news release. "Hospitals received more than $506 million in 2014 through new Medicaid expansion payments, while seeing significant reductions in uncompensated care costs.  Those are huge changes to hospitals’ bottom lines that are not shown here."

Edelen, who was Beshear's first chief of staff, said the full effect of federal health reform isn't certain. His report noted that Kentucky hospitals have had higher-than-average penalties from Medicare for readmitting patients within 30 days, a newly implemented feature of the law. Forty of the 63 hospitals penalized were rural, and nine of the 39 in the U.S. that got the maximum penalty were in Kentucky.

"This report doesn't speak to causation" by the reform law or the state's relatively new managed-care system for Medicaid, Edelen said, it is "not a rebuke" of either, but provides "a baseline for monitoring" by policymakers at the state and local levels.

The report says that to survive, rural hospitals must adapt to new business models, such as merging with larger hospitals or hiring them as managers, forming coalitions with other rural hospitals, or finding a health-care niche that hasn't been served.

Edelen cited Rockcastle Regional Hospital, which has become a niche provider of ventilator dependent care and the coalition formed by Morehead's St. Claire Regional Medical Center and Highlands Regional Hospital in Paintsville to provide more efficient care, improve patient access and adapt to changes under the reform law.

Adaptations might be a hard pill to swallow for many rural hospitals because they call for yet more change in the rapidly changing health-care landscape of electronic health records, managed care, Medicaid expansion and full implementation of the Patient Protection and Affordable Care Act.

Edelen said adaptation is important for rural communities, for whom "the importance of rural hospitals cannot be understated. They provide health care to 45 percent of Kentuckians and in every community they serve they act as one of the larger employers, paying a significantly higher wage than the average the community experiences."

He also cited the many small hospitals that have formed relationships with larger networks to relieve the increased administrative burden associated with the three-year-old managed-care system. The report says half the hospitals studied have reported an increase in hours spent on administration.

The report suggested that the state Cabinet for Health and Family Services negotiate better contracts with managed-care organizations, partly to streamline MCO rules and paperwork to reduce the administrative burden. "We are optimistic that the current work of the cabinet to improve those contracts is going to bear real fruit," Edelen said.

The new contracts will start July 1. In an interview, cabinet Secretary Audrey Haynes sounded optimistic about them but said she couldn't give details.

Haynes has been saying since she became secretary three years ago that many hospitals must change the way they do business. She said in an interview that the readmission penalties have forced hospitals to change by providing better discharge planning, and utilizing outpatient services like home health, nursing homes and rehabilitation.

One Kentucky hospital, in Nicholas County, has closed in the last year. Haynes said the cabinet is working with Fulton County, whose hospital is scheduled to close March 31, to explore how to continue providing care at the facility, such as an emergency room or an ambulatory surgical center.

Haynes recommended in the interview that all nonprofit hospitals put audited financial records and their tax returns on their websites and adhere to open-meeting laws.

In a lengthy response, included in the report, Haynes rejected Edelen's suggestion that her cabinet regularly monitor the fiscal strength of rural hospitals. She said in the interview that would pose a conflict of interest, since the cabinet regulates the hospitals.

Edelen's analysis of hospitals' financial health was based on percentage of revenue kept as profit, number of days of cash on hand, debt financing and depreciation. It found that the financial condition of 68 percent of Kentucky’s rural hospitals scored below the national average.

Edelen's office also surveyed rural hospital administrators, held 11 public hearings and met with representatives of all five Medicaid managed-care companies. His report found that:

• Rural hospitals that were geographically well-positioned, such as Pikeville Medical Center, scored high while geographically-isolated hospitals, like those in Clinton and Wayne counties, scored low. The Clinton County Hospital is in bankruptcy to restructure debt incurred for an expansion and modernization.
• The Pikeville hospital, formerly Pikeville Methodist, was one of only three judged to be in excellent financial health. The others were critical-access hospitals in Franklin and Morganfield.
• Critical-access hospitals, which limit their beds, services and patient stays to qualify for federal reimbursement at 101 percent of cost, scored better than regular acute-care hospitals. They accounted for seven of the 14 that were above the national average and thus were rated "good."
• Fifteen hospitals were rated "fair" and 15 were rated "poor." Westlake Regional Hospital in Columbia, which is in bankruptcy, was at the bottom, far worse than the next highest, St. Joseph Mount Sterling.
• The number of health-care providers across the state – particularly in rural Kentucky – dropped significantly between 2013 and 2014. The cabinet disputed that finding, based on different measurements.

Here are the rankings (click on the image for a slightly larger version):

Woman needing lung transplant falls through cracks of health-care system, says she's treated as nothing more than a 'price tag'

Katie Prager, a 24-year-old cystic fibrosis patient from Ewing in Fleming County, needs a lung transplant, but has been denied one because she has met her lifetime maximum on Medicare, Christy Hoots reports for The Ledger Independent in Maysville.

Photo from The Ledger Independent

"They've put a price tag on my name. That's all I am to these people right now," Prager told Hoots from her hospital bed at the University of Kentucky's Chandler Medical Center.

Prager has had cystic fibrosis her entire life, but it was a diagnosis of an infection called burkholderia cepacia in 2009 that caused her lung function to rapidly decline and caused the need for a lung transplant. She was told in 2013 that the UK Center for Cystic Fibrosis does not do transplants on cystic fibrosis patients with this infection, so she was sent to the University of Cincinnati hospital, Hoots reports.

She and her husband Dalton Prager, who also has cystic fibrosis, were then sent to the University of Pittsburgh Medical Center because it is only one of two hospitals that will transplant a lung into a patient with this infection. They began evaluations in January 2013.

Dalton Prager was quickly approved and successfully received a double lung transplant in November 2013. Katie Prager wasn't approved until June 2013. While waiting for a donor lung, she was discharged to spend Christmas with her family, only to hear from the hospital that she could not return there because the Medicare maximum had been reached.

"At first, I thought I might be able to use Medicaid, but was told that it wouldn't cover my transplant due to UPMC being out of network," Katie Prager told Hoots. "After explaining to Medicaid that there are only two places in the country who would operate, due to cepacia, they still refused to work together to help me. In January 2015 I filed an appeal with Medicaid to have them reconsider. The appeal was denied."

She was recently told she would never be eligible to return to UPMC for a transplant and there was nothing else they could do for her, Hoots reports.

"They told me to basically stop wasting my time," she told Hoots. "These are people who we're trusting with our lives and they say that. Most people have no problems when they have to have medical treatments or transplants, and I'm being given the runaround. I'm not trying to be a burden on the system -- that isn't what I want. If I could work and get my own insurance, I would. All I want is a normal chance at life. I want to get my bachelor's degree, get up every day and go to work, run a 5K and have a normal life with my husband. I want to do all the things that young people in love get to do. Is that so much to ask?"

Study suggests there's too much imaging of low-risk prostate- and breast-cancer patients in the Evansville and Louisville areas

Hospitals and doctors in the Evansville and Louisville areas may be doing too much medical imaging on patients with low-risk prostate or breast cancer, according to a study of cases in the middle of the last decade.

Researchers at New York University examined Medicare records from 2004 through 2007 of 9,219 men with low-risk prostate cancer and 30,398 women with low-risk breast cancer, across 84 of the nation's hospital referral regions. They concluded that unnecessary imaging was done in 44 percent of men and 42 percent of women, they report in the journal JAMA Oncology.

The report did not give rates for each hospital region, but ranked them, and Evansville was second, right behind Slidell, La., and Louisville was 24th. Owensboro was 37th. Other regions listed were Paducah, 45th; Nashville, 57th; and Lexington, 78th. For the study appendix, listing the hospital areas and their rankings, click here.

The study found that "hospitals in the Northeast reported higher use of imaging tests for low-risk patients, while other regions, such as the Northwest and Utah, demonstrated more appropriate use of imaging," an NYU press release said. It quoted Dr. Danil V. Makarov, the lead investigator and professor, as saying, “Policy makers and researchers need to target high-utilization regions and promote incentives for appropriate care. Such a focus would enhance efforts to cut excessive health spending and build value-based strategies into health care practice.”

Imaging for prostate cancer generally involves CT scans or bone scans. Imaging for breast cancer generally involves CT, MR and PET scans.

Former smokers get newly funded scan for lung cancer and encourage others to do the same, after finding cancer in time

The number of smokers choosing to get low-dose CT scans to see if they have lung cancer is steadily increasing, especially since this screening was recently approved for payment by Medicare, Grace Schneider reports for The Courier-Journal.

Janet Overman and Roger Cross Sr., both 70 and heavy smokers since they were teens, decided to get this screening and both learned they had lung cancer, but with different outcomes.

Overman, a retired administrative assistant from Louisville, told Schneider that she had smoked two packs a day until a health scare in the late 1990s caused her to quit after 35 years of smoking. She said that she knew she was considered a high risk for lung cancer and this prompted her decision to get screened at the James Graham Brown Cancer Center in November 2013.

Her original screening showed she had lung cancer, but a follow-up scan and biopsy showed no cancer. She has been placed on a monitoring program with no treatment necessary, Schneider reports. "I'm sure it was prayer," Overman told Schneider.

Cross, a Bullitt County resident and owner of a small freight-delivery service, said he quit smoking 18 years ago and also credits his diagnosis to "divine intervention," Schneider writes.

He told Schneider that while driving on Interstate 65, he spotted a billboard that urged people to get screened for lung cancer. "The Lord put that right on my windshield," he said.

That happened a year ago, prompting Cross to pay $185 for his screening at Norton Healthcare, where he learned that he had Stage 3 lung cancer. He has since had surgery to remove a lung lobe, plus four rounds of chemotherapy, and is doing well, Schneider reports.

Both survivors spend their time encouraging other longtime smokers and ex-smokers to get screened "while there's a chance to beat the disease," Schneider writes.

Overman's story is an example of why counseling is so important for people who get this lung cancer screening. CT scans are so much more sensitive than traditional chest X-rays, "detecting abnormalities the size of a grain of rice," and can often turn up false positive results, which requires future scans and test, Schneider writes. These scans also reveal other health conditions such as emphysema, coronary-artery disease and chronic obstructive pulmonary disease.

Kentucky leads the nation in lung cancer and deaths from lung cancer, with deaths from the disease nearly 50 percent higher than the national average, according to the Kentucky Cancer Consortium.

Medicare announced in February that it will pay for low-dose CT scans for people at high risk of getting lung cancer. This includes people from 55 to 77 who are either current smokers, have quit smoking within the last 15 years or who have smoked at least a pack a day for 30 years, or the equivalent, two packs a day for 15.

This is welcomed news because early detection is the key to survival. People diagnosed early who have Stage 1 lung cancer have a 57 percent chance of surviving for five years, Schneider reports.

Schneider noted that last November, Kentucky received a $7 million grant to improve survival rates for lung cancer through a project called Kentucky LEADS (Lung Cancer, Education, Awareness, Detection, Survivorship) Collaborative, which will be led by the University of Kentucky, the University of Louisville and the Lung Cancer Alliance.

Economic upturn boosts share of Kentuckians on employer-based health coverage; health reform boosts number on public plans

Half of Kentucky's working-age adults now get health insurance through their employers, up from 37 percent two years ago, reversing a downward trend that began with the Great Recession.

Meanwhile, under federal health reform, many more Kentuckians are on public insurance, mostly Medicaid, and many fewer report being uninsured. Those are among the findings in the latest Kentucky Health Issues Poll, taken Oct. 8 through Nov. 6.

In 2008, when the recession began, 55 percent of Kentuckians reported that they got insurance through their employer. That dropped to 44 percent in 2009 and declined to 37 percent in 2012. But the number rose to 44 percent in 2013, and to 50 percent last fall.

The expansion of Medicaid under federal health reform has greatly boosted the share of Kentuckians on public health insurance, to 29 percent. The number had risen from 11 percent to 27 percent between 2008 and 2012, then dropped to 20 percent in 2013.

Medicaid has been expanded to households with annual income up to 138 percent of the federal poverty level. In the poll, only 12 percent of people with such incomes said they were uninsured, down from 34 percent in 2013.

In the entire population, the percentage of uninsured is the same, showing the impact of Medicaid expansion. Overall, 12 percent in the latest poll reported being uninsured, and another 12 percent said they were insured but had been without health insurance at some point in the previous 12 months.

“This report gives us a snapshot of the changing health insurance situation for Kentucky adults,” ssaid Susan Zepeda, President/CEO of the Foundation for a Healthy Kentucky, which sponsored the poll with Interact for Health, formerly the Health Foundation of Greater Cincinnati. “Having health insurance is an important factor in having access to affordable, quality health care.”

Because 97 percent of seniors have Medicare or some other form of health coverage, the questions were asked only of working-age adults, ages 18 to 64. A random sample of 1,597 adults all over Kentucky was interviewed by telephone, including landlines and cell phones. The poll has a margin of error of plus or minus 2,5 percentage points.

Medicare to pay for CT scans of people at high risk of lung cancer

Medicare will now pay for low-dose CT scans for people at high risk of getting lung cancer, a change welcomed by officials in Kentucky, which leads the nation in lung cancer and deaths from it.

"This is an important new Medicare preventive benefit since lung cancer is the third most common cancer and the leading cause of cancer deaths in the United States," Dr. Patrick Conway, chief medical officer for the federal Centers for Medicare and Medicaid Services, said in a press release.

Lung cancer is especially deadly because it doesn't cause symptoms until it's too late, killing nearly 160,000 people a year, according to the American Cancer Society.

This new preventive coverage will allow Medicare to pay for a once-a-year, low-dose CT exam for people aged 55-77 who are either current smokers, have quit smoking within the last 15 years or who have smoked at least a pack a day for 30 years, or the equivalent and have a written order from a doctor, reports Maggie Fox of NBC News.

Some doctors question how many people will benefit from the test, which costs $250 to $300, and have voiced concerns that it doesn't always produce clear results, causing patients to endure further testing than might turn out to have been unnecessary. Federal officials disagree, and experts say it will prevent as many 20 percent of U.S. deaths from lung cancer, "making it akin to mammograms and colonoscopies in terms of saving lives," Fox reports.

Panel OKs new medical-order form that would clearly define a person's end-of-life wishes on nutrition, hydration, medication

A bill to create a medical order form that details a person's wishes for end-of-life care passed the Senate Health and Welfare Committee Feb. 4 and seems headed for passage in the full Senate.

Advocates say that while many physicians discuss end-of-life care with their patients and families and document it, this information is often buried deep in the chart and is not easily accessible in an emergency situation.

"This issue comes to play on a daily basis," Christian Furman, vice-chair of geriatric medicine at the University of Louisville and medical director of two nursing homes in Louisville, told the committee.

Sen. Tom Buford

Senate Bill 77, sponsored by Sen. Tom Buford, R-Nicholasville, would creates a new Medical Order for Scope of Treatment form to specifically direct the type of treatment a patient would like to have and how much medical intervention they would like to have during end-of-life care. The MOST form is used in 32 states, Furman said.

The form is more detailed than a living will because it addresses not only the question of resuscitation, but specifies which life-saving measures, such as nutrition, hydration and medication, that a person wants to receive and under what circumstances.

The form must be reviewed annually. It allows for information sharing between providers and is part of the patient's electronic health record.

Furman said the order of controlling documents for end-of-life care is clearly defined in the bill: the living will first, the MOST form second, and the health-care surrogate, which is chosen by the patient and listed on the form, third.

Sen. Ralph Alvarado, R-Winchester, who is a physician, told his fellow committee members that the MOST form will not only assure a person's personal wishes are honored, but will also save an "immense" amount of money "just in terms of doing unnecessary treatments for folks."

"Five percent of Medicare beneficiaries die each year and their end-of-life care accounts for about 30 percent of total Medicare spending with as much as one-third spent in the last month of life," Bill First writes for Morning Consult, citing an article from the peer-reviewed journal Health Affairs.

Sen. Reggie Thomas, D-Lexington, a lawyer, said the medical community and patients need to be made aware that such forms exist. Buford said he trusted this would happen.

Health care changes are driven by more than reform law; Beshear says patients need rewards for changing their behavior

"Your doctor's visits might get longer, you deductibles probably will be higher and you might be paying cash to be treated at a Wal-Mart near you as Kentucky adapts to a vastly changing health care landscape," Mary Meehan reports for the Lexington Herald-Leader. "Nearly everything you know about how health care is paid for and provided will change during the next few years as patients and providers sort out the nuts and bolts of the Affordable Care Act."

But it's not just the health-reform law that's changing health care, Meehan reports from the Health Leadership Summit, held Thursday in Frankfort by state government and the Kentucky Hospital Association. She paraphrases the main speaker, Chas Roades, chief research officer for The Advisory Board Co., a Washington-based health consultant firm:

Read more here: http://www.kentucky.com/2015/01/29/3668247/frankfort-summit-focuses-on-changing.html#storylink=cpy

"Even if parts of the law are dismantled, he said, the health care needs of aging baby boomers are driving a fundamental change in the system. If patients have more choice, he said, it will be important for doctors to make more personal connections with patients. The focus won't be rolling patients through the door at a furious clip but on spending time with them to find out what it is going on."

Roades said the focus is shifting from treatment of illnesses to prevention, so health-care providers will be rewarded for keeping people healthy, and the transition period for health-care providers will be tough. "We need to get from fee-for-service to fee-for-value," he said, but until all government programs pay on that basis, and 75 percent of private insurance does, "We won't break even . . . We have to get everybody moving in the same direction at the same time." But he said the transition will be tough for hospitals that are small, rural and not connected with a larger organization.

State Health Secretary Audrey Haynes, who convened the meeting, said "We have to figure out how to have quality health-care services in the rural area of the state just like we do in the urban area."

One attendee at the meeting asked Roades when providers and payers could expect to see patients changing their behavior and being more responsible about their health. "We have to walk a fine line," he replied, suggesting that the focus needs to be on "rising risk" patients, 15 to 35 percent of the population, who may not have their chronic conditions under control.

Roades said educating people about better health should involve community organizations such as churches. "The average American has a fifth-grade health literacy," he said.

Gov. Steve Beshear said one key will be finding ways to reward patients for making responsible, informed choices: "We will fall short of our goals if we can't find ways to engage our patients in new and effective ways."

Read more here: http://www.kentucky.com/2015/01/29/3668247/frankfort-summit-focuses-on-changing.html#storylink=cpy

Medicare starts to overhaul the way it pays providers, rewarding them for quality, penalizing them for shortcomings

By Molly Burchett
Kentucky Health News

The Obama administration on Monday set a timeline for historic changes in how it pays doctors, hospitals and other health providers under Medicare, shifting away from the program's traditional fee-for-service model and towards a model that rewards care quality.

Rather than give the usual yearly fee increases to Medicare doctors for every procedure or service, the Department of Health and Human Services will tie 30 percent of traditional, fee-for-service payments to models like "accountable care organizations," which base payments (and penalties) on patients' health outcomes. The goal is for half of all Medicare payments to be handled this way by 2018, reports Jason Millman of The Washington Post.

"Today's announcement is about improving the quality of care we receive when we are sick, while at the same time spending our health-care dollars more wisely," said HHS Secretary Sylvia Burwell. "We believe these goals can drive transformative change, help us manage and track progress and create accountability for measurable improvement."

Medicare is the country's largest payer for health-care services, so these payment changes will affect doctors' offices and hospitals across the country. Many experts have viewed this broader shift to rewarding care quality as long overdue, but it's still uncertain how well the approach will work.

"We still know very little about how best to design and implement [value-based payment] programs to achieve stated goals and what constitutes a successful program," concluded a 2014 Rand Corp. study funded by HHS, Millman reports.

Some health-care professionals said Medicare is just aligning with what is already working in the private sector by moving away from fee-for-service, reports Alex Wayne of Bloomberg Businessweek.  “The private sector is further ahead than Medicare right now,” said Justine Handelman, vice president for legislative and regulatory policy at the Blue Cross and Blue Shield Association.

Since Medicare is already limiting payments as part of the 2010 health-reform law, the government must “ensure that only reforms proven to be efficient and effective are put in place,” Chip Kahn, CEO of the Federation of American Hospitals, told Wayne. “Further cuts would undermine our ability to invest in delivery system innovations needed to continue this trend.”

The announcement marks the first time that goals have been set to fundamentally change the way Medicare pays for health care, giving providers incentives to reduce unnecessary services.

Dr. Douglas Henley, CEO of the American Academy of Family Physicians, told CNBC: "We're all partners in this effort focused on a shared goal. Ultimately, this is about improving the health of each person by making the best use of our resources for patient good. We're on board, and we're committed to changing how we pay for and deliver care to achieve better health."

Elizabethtown doctors who paid millions to settle claims of bill-padding are sued by chemotherapy patients

"Eight former patients or their estates have sued the Elizabethtown cancer doctors who paid the government $3.7 million last June to settle claims they extended chemotherapy treatments to pad their bills," Andrew Wolfson reports for The Courier-Journal. "The ex-patients or their families say in a suit filed in Hardin Circuit Court that the clinic negligently treated them by diluting treatment drugs and extending treatment periods, which allowed them to bill more to Medicaid and other programs." As a result, the plaintiffs say, they suffered unnecessary pain and anguish, and those who died did so prematurely.

The physicians whom the suit identifies as owners of the clinic, Yusuf Deshmukh and Rafiq Rahman, are under investigation by the Kentucky Board of Medical Licensure. "The clinic's owners agreed to pay $3,739,325 last June to resolve allegations that they submitted false claims for payment to the Medicare, Medicaid and the military's medical provider for extending the duration of chemotherapy infusion treatment to patients, and for inappropriately billing office visits for infusion therapy," Wolfson reports.

Only 1/4 of estimated number eligible for subsidized, private health insurance through Kynect have signed up for it

While 85,000 people are covered by private health plans through Kynect, that's only one-fourth of the 340,000 that state officials estimated would be able to buy subsidized coverage through the state insurance exchange. That "underscores some of the challenges" of the federal health-reform law, Abby Goodnough reports for The New York Times, in the latest of series of stories using Kentucky as a bellwether for Obamacare.

"People earning between 138 and 400 percent of the poverty level — between about $16,000 and $47,000 for a single person — can get subsidies to help with the cost," Goodnough explains. "Even with that incentive, only about 76,000 Kentuckians signed up for these plans in 2014 and have renewed the coverage for next year. Since the enrollment period for 2015 began on Nov. 15, an additional 9,000 people have selected exchange plans."

2015 is the first year taxpayers will have to report on tax returns whether they had health insurance in the prior year. Unless they qualify for one of about 30 exemptions, mostly involving financial hardships, the health-reform law requires them to pay a penalty: $95 per adult and $47.50 per child, or 1 percent of the family’s modified adjusted gross income that is over the threshold the requires it to file a tax return. The penalties will increase next year, but for most people will remain below the cost of insurance, so many are expected to pay a penalty.

Kentucky is considered one of 13 states where people in the individual insurance market are better off under Obamacare than they were before, and compares well with other states, so why are so few getting coverage? "National polls have found that many people simply consider the exchange plans unaffordable, even with subsidies," Goodnough notes. Several thousand Kentuckians signed up for coverage but didn't pay the premiums.

David Elson gets dialysis. (NYT photo by William DeShazer)

One was David Elson, who "decided he could not afford the $350 monthly premium for a plan that included his doctors," Goodnough reports. "His poor health got worse, and in October, he landed in the hospital with end-stage kidney disease."

That enabled him to get special Medicare coverage for dialysis. But Elson, 61, of Louisville, told Goodnough, “The president gets up there and says, ‘We’ve got to get affordable health care for our people. It’s not.”

While Kentucky's private-plan enrollment is probably more modest than most states because it has more people living in near-poverty, the unwillingness of the near-poor to spend money on health insurance — something many of them have never or rarely done — may be the greatest long-term challenge to the new health-insurance system.

"Supporters say the private insurance exchanges will need robust business, including young and healthy customers that help balance the cost of sicker ones, to thrive," Goodnough notes. But her story also looks at people like Amanda Mayhew, 38, of Louisville, whose income is low enough for her to get free Medicaid coverage: "She has been to the dentist five times to begin salvaging her neglected teeth, has had a dermatologist remove a mole and has gotten medication for her depression."