Hospitals, insurers object to rule posting their negotiated rates

https://www.healthcarefinancenews.com/news/hospitals-object-posting-negotiated-rates-and-other-payment-rules?mkt_tok=eyJpIjoiWkdNMU56WmxabVl3TWpRMSIsInQiOiI0dlhaYUJpT2xBU0FqeDNmWkRlZHVZYnRsZ2xBK3pxMmN6RG5kS3Q1UWgrWFYyNllIK2lLZEYzclRDWUYyTFwvOGdhUzRVSnlscG5MQjBtY0NwT2d1TjZHdXJYRUlYRGszVEhrQmY5b0xhRDlFTWNTNUEwWnVvWGUwZXE3ME9kdGgifQ%3D%3D

CMS is proposing that hospitals make public their payer-specific negotiated charges for a limited set of “shoppable” services.

Hospitals and insurers have made clear their opposition to the Centers for Medicare and Medicaid Services proposed rule requiring the disclosure of their privately negotiated contract rates.

CMS is proposing that hospitals make public their payer-specific negotiated charges for a limited set of “shoppable” services or face civil monetary penalties, in a rule to go into effect on January 1, 2020. Comments were due by September 27.

Under the rule, hospitals would display payer-specific negotiated charges for at least 300 shoppable services, including 70 selected by CMS and 230 by the provider.

The American Hospital Association called it the wrong approach, even though it said it supported ensuring patients have the information they need, including knowing what their expected out-of-pocket costs would be. However, the AHA said, “Instead of helping patients estimate their out-of-pocket obligations, it would introduce confusion and fuel anticompetitive behavior among commercial health insurers in an already highly-concentrated insurance industry, seriously limiting the choices available to patients.”

America’s Essential Hospitals said, “We are particularly concerned that the agency’s proposals regarding the public posting of charges, in particular the posting of negotiated rates, offer little benefit to the consumer, add substantial burden to hospitals, and pose harm to competition, potentially driving up prices.”

America’s Health Insurance plans said that forcing disclosure of privately and competitively negotiated rates will not provide consumers with information that is actionable or helpful. I

“Instead,”AHIP said, “it will hamper competitive negotiations and push healthcare prices and premiums higher for patients, consumers, businesses and taxpayers. This proposed rule also has significant implications for, and is interconnected with, other proposed rules regarding interoperability of health care data. We are concerned that unknown entities will have open access to the data, with few restrictions on how they may use it.”

WHY THIS MATTERS

CMS released the proposals on July 29 in the 2020 hospital outpatient prospective payment and ambulatory surgical center payment rule.

The rule also has three additional proposed policies that run afoul of the law, the AHA said.

Specifically, the AHA opposes completion of the phase-in of payment reductions for the hospital outpatient clinic visit in excepted off-campus provider-based departments to the “physician fee schedule equivalent” rate of 40% of the outpatient prospective payment system rate.

The AHA said the proposal “exceeds the Administration’s legal authority and should be abandoned.”

The AHA has already won a case in court on the government’s site neutral payment policy.

“On the clinic visit policy, we remind CMS that the agency was recently found by the courts to have exceeded its statutory authority when it cut the payment rate for clinic services at excepted off-campus provider-based departments,” the AHA said.

Hospitals also object to continuing the current policy that pays for separately payable drugs acquired through the 340B drug savings program at the rate of average sales price minus 22.5%.

And the AHA objects to the implementation of a prior authorization process for five categories of outpatient department services.

THE LARGER TREND

On September 17, a federal judge ruled in favor of the AHA and hospital organizations, saying CMS exceeded its statutory authority when it reduced payments for hospital outpatient services provided in off-campus provider-based departments that were grandfathered under the Bipartisan Budget Act of 2015.

The AHA, joined by the Association of American Medical Colleges and several member hospitals, had filed the lawsuit in December.

ON THE RECORD

America’s Essential Hospitals said, “These cuts deter hospitals from expanding access in communities with the most need for healthcare services and run counter to CMS’ goal of integrated, coordinated healthcare.

“Taken together, these proposals would have a chilling effect on beneficiary access to care while also increasing regulatory burden,” the AHA said.

 

 

 

 

 

 

 

 

 

Why is healthcare so expensive? This Johns Hopkins surgeon might have the answers

https://www.fiercehealthcare.com/hospitals-health-systems/why-healthcare-so-expensive-johns-hopkins-surgeon-might-have-answers?mkt_tok=eyJpIjoiTTJNMVpURTNNelJpTVRBeiIsInQiOiJEYTZVeG1LN2VxWEMzUXRTb3dQWWkrbDNKdHBnSzQ5NUpuZVZoXC9US1QzQVwvcUVDSU9mMHZLR2pwZWFcLzNkbk9XYTdPRUtTM2tRVU5oOXhhMXRhSFd5STFZY2VzVlo2UTl0cGxOZjdSMUROVjhZVFZNeXFrMWRZdEdIRVBFS0M2VyJ9&mrkid=959610

For a small group of vascular surgery centers in metropolitan Washington, D.C., it was local churches that turned out to be surprisingly lucrative.

It was at health screening fairs hosted by these houses of worship where Marty Makary, M.D., found surgeons drumming up business for pricey—and often unnecessary—leg stents. It’s among the collection of systemic and human examples Makary examines in his new book “The Price We Pay: What Broke American Health Care—and How to Fix It” as driving forces behind rising U.S. health costs.

Makary, a surgeon at Johns Hopkins and New York Times best-selling author, hits every segment of the market, from a health system in New Mexico that has sued 1 in 5 residents in town to a health insurance conference where brokers described over drinks why they usually aren’t helping employers get the best deal.

“Healthcare has adopted a business model that uses middlemen, price gouging and sometimes delivers care that can be inappropriate, and this bloated economy has a tremendous amount of waste,” Makary said. “So our research really asks the question: ‘What is the experience of the everyday American interfacing with our healthcare system?’”

I caught up with Makary recently to discuss some of the problems he highlights in his new book, which is being released Sept. 10, and some of his ideas on how we solve them.

FierceHealthcare: Why did you write this book?

Marty Makary: Hospitals are amazing places and there is a tremendous amount of public trust in hospitals. But I’ve been seriously concerned about the erosion of public trust by the price gouging and predatory billing practices that patients are describing all over America. Our research team found bills are marked up as much as 23 times higher than what hospitals will accept from Medicare. We kept hearing over and over again that, ‘No one is expected to pay these bills. Hospital CEOs assured me when I showed them inflated bills that nobody is expected to pay the sticker price.’ But that didn’t seem to match the stories we were hearing on the ground.

FH: One of the hospitals you highlight in this book in Carlsbad, New Mexico, had a practice of hiking prices and suing patients who were unable to pay. What did you find there?

MM: We decided to shift our research into the question: “Are Americans asked to pay the sticker price and if so, what happens when they can’t afford it?”

A woman sent me a message where not only was the bill inflated, but the care was—in her opinion, unnecessary—and the hospital had sued her. When I reached out, she said, “They’ve sued all my friends as well and garnished our paychecks.” I couldn’t believe this, and so I flew out to Carlsbad. The driver of the Chamber of Commerce taxi service that picked us up from the airport, the receptionist at the hotel, the waitress at the breakfast place, the clerk’s office staff, families in the courthouse: You couldn’t believe it. Everywhere you turned, people had been terrorized financially by this local community hospital. I thought: “Where is the spirit of medicine? Do these executives even know the consequences on the ground of these billing practices?”

FH: In the book, you mention many hospital executives don’t even know they’re suing patients.

MM: Oftentimes, there’s detachment. And when we’re detached from the consequences or problems, that’s when horrible things happen in societies historically. I found sometimes hospital executives, board members and certainly our research supports doctors not knowing about this practice. And when they find out, the clinicians are outraged. By and large, board members want it to stop … I think if you look at any major issue in the United States, whether it be race, poverty or healthcare, if we are not proximate to the problem, we tend to rationalize financial systems that enable the problem. In healthcare, what I’ve noticed is, when I would share these stories at conferences, other healthcare experts argued it was not a problem that was diabolical, they just weren’t proximate to the issue.

FH:  You also document that many hospitals are doing the right thing.

MM: Most hospitals try to do the right thing. But I think it tells us a lot about the practice of suing patients and that it’s unnecessary. When all the revenue generated from suing patients amounts to less than the amount of the CEO pay increase in one year, which is something we’ve seen, the argument that it’s essential to sue patients in order for the hospital to be sustainable melts away.

FH: But obviously, the problem is not just about hospitals, right?

MM: A lot of people are getting rich in healthcare. We’ve created tens of thousands of millionaires that are not patient-facing. If you look at the earnings on Wall Street of some of these healthcare companies, for example, UnitedHealth Group reported a 25% increase in earnings in a recent earnings report. How do earnings go up 25% in an actuarial insurance business? They said on their call it was in part due to their pharmacy benefit manager (PBM), a well-known middleman that profits from spread pricing and money games. Hospitals are on target this year for their highest margin in history—5.1% based on early 2019 data. At the same time rural hospitals are closing, large hospitals are making barrels of money. Although they are claiming razor-thin margins, the cost shift accounting is so sophisticated, that they can use their profit to buy new buildings, pay down debt, buy more real estate, increase executive pay. What we have right now is an arms race of profiteering in healthcare where all the stakeholders are making a lot of money except for one, and that’s the patient.

FH: In the book, you talk about efforts to address practice outliers like those vascular surgeons through the use of big data, which led to the creation of the “Improving Wisely” initiative. What did you do?

MM:  Most doctors do the right thing or always try to. But the fraction that are responding to the consumerist culture or the perverse incentives or are just not practicing state of the art care can cost the system a lot more money than those who aren’t … Instead of hammering doctors that do the right thing with reporting burdens and other hassles, we can shunt those resources to address outliers identified in the data using metrics endorsed by the experts in each specialty, and gold card the good doctors so they don’t have to deal with reporting hassles and the expense of the reporting hassles.

In studying the issue of inappropriate care and delivering measures of the appropriateness of care, we’ve been meeting with individual specialists around the country and many of these doctors are telling us about the practice pattern that a fraction of specialists in their field are doing that represents overuse. Our work called “Improving Wisely” partners with associations to send outlier physicians their data around a specialty-endorsed measure of overuse. What we’ve seen is, among doctors, among outlier physicians who see their data with a confidential dear doctor letter, that 83% reduce their pattern of overuse. The initial project two years ago that cost $150,000 has resulted in $27 million worth of savings. This is an example of a high consensus approach that results in real savings that you just don’t see in other areas. By and large, politicians are talking about different ways to fund the broken healthcare system and not ways to fix it. We need to talk about how to fix it.

FH: In the book, you really seem to try to take on everyone: doctors, hospitals, air ambulances, workplace wellness companies, PBMs.

MM:  Almost all the voices in healthcare are beholden to some special interest or stakeholder. We desperately need a global critique of how this system has gone awry and there’s a lot of finger-pointing going on right now, especially at the insurance companies and pharma. But the reality is, we all have a piece of this pie. I don’t think there’s really any one villain in the healthcare system. I don’t even think there’s much deliberate malfeasance that goes on. I think we have a system that’s largely run by people doing what they are told to do and they are doing it in a place where they may not be proximate to the hardship the system creates.

FH: So the big question: How do we fix the problems?

MM: For every problem I described, I tried to describe one of the most exciting disrupters in this space. With the pricing failure problem, I highlight the Free Market Medical Association and the individuals who are saying they are going to make all prices transparent and fair regardless of who’s paying whether it’s a patient or an insurance company. There’s one fair price. Keith Smith of the Surgery Center of Oklahoma is offering one fair true price. Not a sticker price but a true price, regardless of who’s paying. You look at MDsave and Clear Health Costs. They are offering ways for people to shop. If the government does nothing on healthcare, I’m still optimistic we are moving in the right direction because businesses in American are realizing that they’re getting ripped off on their healthcare and pharmacy plans. They’re increasingly doing direct contracting and looking closely at their health insurance benefits and pharmacy design and realizing there is a lot of money wasted.

One of the root issues in healthcare is the way we physicians are educated. It uses a model that’s highly flawed, relying highly on rote memorization of things that are easily available on the Internet today and omits training in effective communication, public policy and healthcare literacy. It turns out that many doctors feel paralyzed in fixing this broken system even as they’re suspicious of the waste in it. One of the goals of writing the book was creating healthcare literacy because we in the field are taught medical literacy but we’re never taught healthcare literacy. One of the exciting disrupters I had the privilege of spending time was the Sidney Kimmel Medical College (in Philadelphia). They have an academic standard in the admissions process. Once people meet that academic standard, everybody is considered based on their empathy, self-awareness and communication skills. It’s revolutionary as simple as it sounds. But they’re focusing on what matters.

 

 

 

 

US health care: An industry too big to fail

https://theconversation.com/us-health-care-an-industry-too-big-to-fail-118895

Image result for US health care: An industry too big to fail

As I spoke recently with colleagues at a conference in Florence, Italy about health care innovation, a fundamental truth resurfaced in my mind: the U.S. health care industry is just that. An industry, an economic force, Big Business, first and foremost. It is a vehicle for returns on investment first and the success of our society second.

This is critical to consider as presidential candidates unveil their health care plans. The candidates and the electorate seem to forget that health care in our country is a huge business.

Health care accounts for almost 20% of GDP and is a, if not the, job engine for the U.S. economy. The sector added 2.8 million jobs between 2006 and 2016, higher than all other sectors, and the Bureau of Labor Statistics projects another 18% growth in health sector jobs between now and 2026. Big Business indeed.

This basic truth separates us from every other nation whose life expectancy, maternal and infant mortality or incidence of diabetes we’d like to replicate or, better still, outperform.

As politicians and the public they serve grapple with issues such as prescription drug prices, “surprise” medical bills and other health-related issues, I believe it critical that we better understand some of the less visible drivers of these costs so that any proposed solutions have a fighting chance to deflect the health cost curve downward.

As both associate chief medical officer for clinical integration and director of the center for health policy at the University of Virginia, I find that the tension between a profit-driven health care system and high costs occupies me every day.

The power of the market

Housing prices are market-driven. Car prices are market-driven. Food prices are market-driven.

And so are health care services. That includes physician fees, prescription drug prices and non-prescription drug prices. So is the case for hospital administrator salaries and medical devices.

All of these goods or services are profit-seeking, and all are motivated to maximize profits and minimize the cost of doing business. All must adhere to sound business principles, or they will fail. None of them disclose their cost drivers, or those things that increase prices. In other words, there are costs that are hidden to consumers that manifest in the final unit prices.

To my knowledge, no one has suggested that Rolls-Royce Motor Cars should price its cars similarly to Ford Motor Company. The invisible hand of “the market” tells Rolls Royce and Ford what their vehicles are worth.

Prescription drugs pricing has different rules

Ford can (they won’t) tell you precisely how much each vehicle costs to produce, including all the component parts that they acquire from other firms. But this is not true of prescription drugs. How much a novel therapeutic costs to develop and bring to market is a proverbial black box. Companies don’t share those numbers. Researchers at the Tufts Center for the Study of Drug Development have estimated the costs to be as high as US$2.87 billion, but that number has been hotly debated.

What we can reliably say is that it’s very expensive, and a drug company must produce new drugs to stay in business. The millions of research and development(R&D) dollars invested by Big Pharma has two aims. The first is to bring the “next big thing” to market. The second is to secure the almighty patent for it.

U.S. drug patents typically last 20 years, but according to the legal services website Upcounsel.com: “Due to the rigorous amount of testing that goes into a drug patent, many larger pharmaceutical companies file several patents on the same drug, aiming to extend the 20-year period and block generic competitors from producing the same drug.” As a result, drug firms have 30, 40-plus years to protect their investment from any competition and market forces to lower prices are not in play.

Here’s the hidden cost punchline: concurrently, several other drugs in their R&D pipelines fail along the way, resulting in significant product-specific losses . How is a poor firm to stay afloat? Simple, really. Build those costs and losses into the price of the successes. Next thing you know, insulin is nearly US$1,500 for a 20-milliliter vial, when that same vial 15 years ago was about $157.

It’s actually a bit more complicated than that, but my point is that business principles drive drug prices because drug companies are businesses. Societal welfare is not the underlying use. This is most true in the U.S., where the public doesn’t purchase most of the pharmaceuticals – private individuals do, albeit through a third party, an insurer. The group purchasing power of 300 million Americans becomes the commercial power of markets. Prices go up.

The cost of doing business, er, treating

I hope that most people would agree that physicians provide a societal good. Whether it’s in the setting of a trusted health confidant, or the doctor whose hands are surgically stopping the bleeding from your spleen after that jerk cut you off on the highway, we physicians pride ourselves on being there for our patients, no matter what, insured or not.

Allow me to state two fundamental facts that often seem to elude patient and policymaker alike. They are inextricably linked, foundational to our national dialogue on health care costs and oft-ignored: physicians are among the highest earners in America, and we make our money from patients. Not from investment portfolios, or patents. Patients.

Like Ford or pharmaceutical giant Eli Lilly, physician practices also need to achieve a profit margin to remain in business. Similarly, there are hidden-to-consumer costs as well; in this case, education and training. Medical school is the most expensive professional degree money can buy in the U.S. The American Association of Medical Colleges reports that median indebtedness for U.S. medical schools was $200,000.00 in 2018, for the 75% of us who financed our educations rather than paying cash.
Our “R&D” – that is, four years each of college and medical school, three to 11 years of post doctoral training costs – gets incorporated into our fees. They have to. Just like Ford Motors. Business 101: the cost of doing business must be factored into the price of the good or service.

For policymakers to meaningfully impact the rising costs of U.S. health care, from drugs to bills to and everything in between, they must decide if this is to remain an industry or truly become a social good. If we continue to treat and regulate health care as an industry, we should continue to expect surprise bills and expensive drugs.

It’s not personal, it’s just…business. The question before the U.S. is: business-as-usual, or shall we get busy charting a new way of achieving a healthy society? Personally and professionally, I prefer the latter.

 

 

 

Trade Secrets Challenge Could Trip Up Trump Hospital Prices Plan

https://news.bloomberglaw.com/health-law-and-business/trade-secrets-challenge-could-trip-up-trump-hospital-prices-plan

Image result for Trade Secrets Challenge Could Trip Up Trump Hospital Prices Plan

A legal fight is looming over a Trump administration proposal that would require hospitals to list their standard prices for medical services and their negotiated rates with insurance companies—prices some believe are proprietary.

Hospital and insurance groups are likely to sue if the administration moves forward with a final rule, and the litigation could raise thorny legal questions about a company’s right to be competitive and a patient’s right to make informed health-care choices.

One way hospitals and insurance groups may try to fight the rule is by claiming their negotiated prices are trade secrets, health attorneys say.

“We’ve been looking in our research group at whether health-care prices can be trade secrets, and the law is very unsettled on this issue,” said Jaime King, associate dean and professor of law at the University of California Hastings College of Law in San Francisco.

The Centers for Medicare & Medicaid Services issued the proposed rule July 29 as part of a Trump administration push to make health-care costs more transparent.

It would require hospitals to list their standard prices and what individual insurers have agreed to pay for 70 “shoppable” medical services—like psychotherapy, blood tests, MRIs and ultrasounds—that can be scheduled in advance.

The government’s goal is to give consumers the information they need to compare what hospitals charge for similar services and to help them understand their potential financial liability for services they obtain at the hospital. Hospitals that fail to comply would be fined.

Listing the negotiated price an insurance company will pay on a patient’s behalf will show consumers how effective different health insurers are at negotiating lower out-of-pocket costs, attorneys say.

“We believe that this, in turn, will enable health-care consumers to make more informed decisions, increase market competition, and ultimately drive down the cost of health-care services, making them more affordable for all patients,” the CMS said in its proposal.

Legal Authority Questioned

The American Hospital Association was quick to object, contending in a prepared statement that the plan “exceeds the administration’s legal authority.” If the proposal is finalized, the trade group said it would look at its legal options.

“I think it’s reasonable for hospital groups to be looking at potential challenges if the rule is finalized as proposed,” said Philo Hall, senior counsel in Epstein, Becker and Green LLP’s health-care and life sciences practice.

The Affordable Care Act amended the Public Health Service Act by requiring hospitals to make public their “standard prices” for items and services. Attorneys say the CMS is now interpreting standard prices to also include the privately negotiated rates for each individual insurer.

But neither Congress, the Department of Health and Human Services, nor hospital groups have ever considered the standard prices provision in the ACA to include commercial and financial information that is treated as confidential in a highly competitive industry, said Hall. Hall served as counsel to the George W. Bush administration’s HHS Secretary Michael Leavitt and worked closely in that role with Alex Azar, the current HHS chief.

“The concern that the government is overstepping is not frivolous,” said Michael Adelberg, a former senior CMS official who now leads the health-care strategy practice of the Faegre, Baker, Daniels Consulting.

“I don’t know if you can say to two entities ‘You can engage in a contract in a competitive market, but the most important terms of that contract are public,’” he said. “I don’t know if you can do that.”

In a statement, America’s Health Insurance Plans said the CMS proposal would make it harder for insurance companies to bargain for lower rates. The group said even the Federal Trade Commission agrees that making hospitals disclose their privately negotiated rates would create a floor—not a ceiling—for what hospitals would be willing to accept.

When the HHS Office of the National Coordinator for Health Information Technology indicated in a proposal that it was considering adding network discounts and pricing data to the definition of electronic health information, UnitedHealth Group told the agency the details of the negotiated rates and the overall cost of its networks is a trade secret.

“Although federal courts have upheld regulations compelling the disclosure of Medicare cost report information, there is a significant difference between government payment information held by the government and the internal, proprietary information that the proposed regulation would compel UHC to disclose,” the insurance company said in comments in June.

CMS Could Prevail

The CMS proposal is similar to an HHS rule that would have required pharmaceutical companies to disclose the list price of their drugs in TV advertisements. A federal district court judge in July said the rule exceeded the administration’s regulatory authority and blocked it from taking effect.

In the drug pricing rule, the agency pointed to two provisions in the Social Security Act that tell the HHS secretary to make rules necessary for the “efficient administration of the Medicare and Medicaid program” as the source of authority.

But the U.S. District Court for the District of Columbia said there’s nothing in the law’s text, structure, or context to indicate Congress intended to give the HHS the power to issue a rule that forces drugmakers to disclose their list prices.

Attorneys say the agency’s authority to issue the hospital pricing rule is more explicit in the ACA.

“In this case, we have a different statutory provision that delegates the agency with a more specific task,” a former HHS attorney, who asked not to be identified, said in a conversation with Bloomberg Law.

“We’re not talking about a general statute concerning the efficient administration of the Medicare program to drug companies,” the former HHS attorney said. “We’re talking about an explicit statutory provision that directs the agency to require federally funded hospitals to disclose their ‘standard charges.’”

On that, the former HHS attorney said, the CMS could prevail. But it depends on how the agency defines “standard charges.” The agency could ultimately decide not to include negotiated rates after it considers the public comments.

In a statement, the CMS said its proposal is consistent with the ACA and responsive to patients and their advocates who say knowledge of negotiated rates is necessary for individuals to be able to determine their out-of-pocket costs for hospital services.

“All Americans have the right to know the price of their health care up front,” an agency spokesperson said. “Health-care prices shouldn’t be a mystery and consumers will be able to shop for health care just like they do for everything else they buy.”

 

 

 

Lowering Out-of-Pocket Health Costs Isn’t Easy. States Have Tried

https://www.governing.com/topics/health-human-services/gov-trump-prescription-drug-prices-states-canada-import.html?utm_term=Lowering%20Out-of-Pocket%20Health%20Costs%20Isn%27t%20Easy.%20States%20Have%20Tried.&utm_campaign=Lowering%20Out-of-Pocket%20Health%20Costs%20Isn%27t%20Easy.%20States%20Have%20Tried.%20Now%20Congress%20Is%20Giving%20It%20a%20Shot.&utm_content=email&utm_source=Act-On+Software&utm_medium=email

U.S. Sen. Bill Cassidy shows a chart during a congressional hearing.

Congress has promised to tackle high consumer health-care costs this year. It’s one of the few issues where lawmakers on both sides of the aisle find common ground.

The Lower Health Care Costs Act, introduced in June, is an almost 200-page piece of legislation that seeks to prevent surprise medical bills, lower prescription drug prices and force hospitals to be more transparent about what they bill insurance companies.

But there are already signs of potential failure.

Despite early momentum, Congressional leaders postponed a vote on the measure until after August recess. The pharmaceutical industry as well as hospital and provider groups have started to lobby against the legislation, meeting with President Trump in July to make their case.

Although the Affordable Care Act led to more people having health insurance, many Americans still struggle with out-of-pocket costs, especially ones they weren’t expecting. Meanwhile, health care is taking up an ever-growing size of state budgets. Governors and lawmakers try to tackle this issue almost every legislative session, but few have succeeded in a meaningful way.

“It’s usually a third of state budgets. States have every reason to try and control health-care costs. And yet, everybody struggles to,” says Josh Shaferstein, vice dean of Johns Hopkins University’s Office of Public Health Practice and Training, and a former health secretary for the state of Maryland.

Battling the Health-Care Industry

The first and usually biggest hurdle is private interest groups who see reforms as a threat to their livelihood.

“There are a lot of stakeholders that have vested interest and lobbyists on the ground that will fight tooth and nail, whether it’s doctors and nurses groups or insurance companies. They are perhaps moreso willing to fight at the state level,” says Sabrina Corlette, research professor at Georgetown University’s Center on Health Insurance Reforms.

She points to a bill introduced in Colorado this year that would have capped payments to hospitals in order to lower premiums. After pushback from hospital groups, lawmakers amended the legislation — which was signed into law — so that hospitals will be paid the same but will have to pay back a portion of their revenue to help lower premiums. 

In Washington state, which passed a first-in-the-nation “public option” bill this year, lawmakers rewrote the original legislation after doctor and hospital groups fought a provision that would have set the same cap on provider payments as Medicare. The final legislation reflected a compromise for insurers to pay providers 160 percent of Medicare rates.

At least eight other states discussed or introduced public option bills this year, but they failed to gain traction.

In Delaware — a state that ranks third in health-care spending but 31st in health outcomes — Gov. Jay Carney signed an executive order in November that outlines eight goals the state will work toward to curb the growth in health spending. But Kara Odom Walker, the state’s health secretary, concedes that they weren’t able to convince stakeholders to enact new penalties or regulations.

“Being a small state makes it a lot harder to do things that might be unpopular. Any conversation that includes words like ‘penalty’ or ‘payment cap’ is like a bomb going off,” she says.

The health-care industry is one of the biggest in the country. That gives it a lot of leverage.

“The health systems are often the largest employers in town. The governor says they want to slow health-care spending growth, and the hospital group will say, ‘that means losing jobs,’” says Robert Mechanic, executive director of the Health Industry Forum.

But as Congress tries to lower out-of-pocket costs, they have an asset that states don’t: better data. Corlette says states often lack impartial numbers on potential policies, hurting their ability to assess and defend legislation.

“It’s very hard for your average state legislator to pierce the veil,” Corlette says. “There’s an imbalance of info for legislators to really tackle the problem. They don’t have a Congressional Budget Office.”

One Person’s Savings Are Another’s Costs

Many compare efforts to control health-care costs to a game of whack-a-mole. A state might successfully regulate spending in one area only to see costs skyrocket in another.

“You might be able to cut rates in Medicaid, but then rates will pop up in private insurance. The standard toolkit for states is fraught with political danger,” says Shaferstein.

“Health care is so complex, and there are so many different players. It’s really hard to get your arm around the whole bundle,” says Mechanic.

For instance, Medicare lowered the limit for how long older patients can stay in hospitals. But there’s some evidence that the Medicare savings became extra costs for nursing homes because hospitals started providing fewer services for elderly patients altogether.

State Legislation

When it comes to controlling drug prices, states haven’t made much progress. They have made more headway regulating surprise medical bills.

Half the states have passed surprise billing laws. Only nine of them, though, included “comprehensive protections” that apply to all insurance plans, according to the Commonwealth Fund.

While states have struggled to actually lower drug prices, like Congress plans to do, they have passed laws to make them more transparent and to clamp down on pharmacy benefit managers — middlemen who negotiate drug benefits for plans.

Five states have enacted laws that require drug companies to notify them if they will significantly raise the price of a drug, and at least a dozen have restricted the power that a pharmacy benefit manager can have, like requiring them to register with the state.

Solutions That Have Worked

There are some success stories and lessons learned that Congress could use to lower health-care spending in general.

“States should be thinking of more global solutions because you kind of have to go big. Oftentimes people are looking to save $1 to $2 million a year, but that’s not going to make much of a difference,” says Shafterstein.

Only a couple of states have “gone big” in this sense.

Massachusetts passed what became the framework for the federal Affordable Care Act in 2006, known as “RomneyCare,” which requires residents to have health insurance. Health-care spending has since slowed in recent years. Mechanic credits that to the law’s requirements for private health entities to publicly justify price hikes and high spending.

In Maryland, it has taken decades to get health-care spending under control. The state has had an all-payer system for hospitals since the 1970s, meaning they get a fixed sum every month rather than bill insurers for every claim. While that system — which is only used by one other state, Vermont — curbed hospital spending per patient, hospital spending overall grew at a slightly higher rate than the national average.

So in 2014, Maryland forced hospitals to limit their spending to 0.5 percent less than the national growth rate. It has largely been deemed a success, with a report commissioned by the federal Centers for Medicare and Medicaid Services finding that “Maryland hospitals were able to operate within their global budgets without adverse effects on their financial status.”

On a less global scale, states have been able to drive down premiums by implementing reinsurance programs, meaning the government pays for the most expensive patients, taking that bill off insurance companies’ plate.

But reinsurance is like slapping a band-aid on a much larger wound.

“Recent state efforts on reinsurance have worked, but they aren’t really getting at the overall cost of coverage,” says Kevin Lucia, research professor at Georgetown University’s Health Policy Institute.

 

 

 

Hospital CEO says more price disclosure won’t bring down healthcare costs

https://finance.yahoo.com/news/mount-sinai-hospital-ceo-more-price-disclosure-wont-bring-down-health-care-costs-161029331.html

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The Trump administration is pushing ahead with a new rule that could require hospitals to reveal the prices they negotiated with insurance companies. The White House says the move could help bring the free market into the murky world of health care.

The Trump administration is pushing ahead with a new rule that could require hospitals to reveal the prices they negotiated with insurance companies. The White House says the move could help bring the free market into the murky world of health care.

But the CEO of one of the nation’s largest hospital systems says the rule will just lead to more confusion for consumers.

“You won’t still know what your cost will be even when you look at our prices,” Dr. Kenneth Davis, CEO of the Mount Sinai Health System, told Yahoo Finance’s The First Trade. He says insurers like Cigna (CI), UnitedHealth (UNH), Anthem (ANTM) and Aetna parent CVS Health (CVS) should be the ones to house that information and help customers make sense of it.

“There are so many nuances in the insurance policies that going on our site isn’t going to tell you what you’re really going to pay,” he said. “You need the insurance information, and that’s the information that’s available from the insurance company. They know negotiated prices. So you’re really asking the wrong people to disclose the information.”

The rule could show how widely prices vary between regions and even at hospitals and clinics in the same city. In an interview with the Wall Street Journal, Centers for Medicare and Medicaid Services Administrator Seema Verma called it a “turning point in health care and a turning point to the free market in health care.”

But the hospital industry’s main lobbying group, the American Hospital Association, said in a statement that move could “seriously limit the choices available to patients in the private market and fuel anticompetitive behavior among commercial health insurers in an already highly concentrated insurance industry.”

Hospitals and insurance companies are notoriously secretive about their contract deals, something Dr. Davis attributes to competition between care providers and the insurance companies. Insurers are looking for the best deal, he said, while providers want the highest payment.

“Everyone’s worried about what they will then negotiate with the insurance company,” he said. “The insurance companies are worried, in turn, that other health networks like ours might ask for higher prices.”

Dr. Davis says regulators should be pushing the insurance companies and not the hospitals to disclose pricing.

“We have thousands of items that we would list items on,” he told Yahoo Finance’s Alexis Christoforous and Brian Sozzi. “If I have an insurance policy and I go online, I don’t know — still — what my co-pays and deductibles are going to be. Where that information should be is on the insurance company website.”

“I don’t have a problem disclosing that information,” he said. “I just think it’s important that people be able to use that information validly.

Without knowing what their insurance policy covers, he said, “they won’t know what they’re going to pay anyway.”

 

 

When a hospital wields monopoly power

https://www.axios.com/newsletters/axios-vitals-1b40c794-c913-4681-b2ac-7a6e9746718f.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

Illustration of a giant health plus on top of a pile of cash, the ground underneath is cracking.

NorthBay Healthcare, a not-for-profit hospital system in California, recently gave a candid look into how it operates, telling investors it has used its negotiating clout to extract “very lucrative contracts” from health insurance companies.

Why it matters: This is a living example of the economic theories and research that suggest hospitals will charge whatever they want if they have little or no competition, Axios’ Bob Herman reports.

Details: NorthBay owns two hospitals and several clinics in California’s Solano County. Kaiser Permanente owns the only other full-service hospital in the county, and Sutter Health operates some medical offices. (A NorthBay spokesperson argued the system is “more akin to the David among two Goliaths.“)

Three health insurers have terminated their contracts with NorthBay over the past couple years. During a June 19 call with bondholders, executives explained why this has happened.

“We’ve been able to maintain very lucrative contracts without the competition. And what the payers are saying is, they would like us to be like 90% of the rest of the United States in terms of contract structure.”

Jim Strong, interim CFO, NorthBay Healthcare

Between the lines: NorthBay’s revenue has increased by 50% over the past few years, from $400 million in 2013 to $600 million in 2018, due in large part to its natural monopoly and oligopoly over hospital services.

  • This is exactly what we should expect to happen when sellers have the upper hand over buyers, economists say.

NorthBay also serves as a cautionary tale for price transparency, the policy fix du jour.

  • If the health care system is consolidated, consumers don’t have anywhere else to go,” said Sunita Desai, a health economist at NYU. “Even if they see the prices of a given hospital, they’re limited in terms of how much they can ‘shop’ across providers.”

 

 

 

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