Hospitals sue over Medicare cuts


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The nation’s primary hospital lobbying groups are suing the federal government to stop a new regulation that will cut Medicare payments for routine checkups in doctors’ offices that are owned by hospitals, Axios’ Bob Herman reports.

The big picture: This lawsuit was expected after the Centers for Medicare & Medicaid Services finalized the rule in November.

  • CMS said the policy, which would cut payments by $760 million in 2019, “will control unnecessary volume increases,” but hospitals are arguing the government overstepped its legal authority by “making draconian payment reductions targeting only specific services.”

Why it matters: This suit is another reminder of just how hard any sort of aggressive cost control is.

  • Any number of experts will tell you that hospitals’ acquisitions of doctors’ practices is driving costs upward, and Medicare isn’t even proposing to stop those acquisitions — the rule would only affect less than 1% of Medicare’s outpatient spending.
  • Hospitals very well may lose this lawsuit, of course, but it’s still a reminder of how hard industry will fight any threat to its bottom line.
  • Don’t be surprised to see similar lawsuits from the pharmaceutical industry once the Trump administration finalizes some of its plans to cut drug costs (unless industry can kill them before it gets that far).

 

 

 

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