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).
The Trump administration said Thursday that states could bypass major requirements of the Affordable Care Act by using federal funds for a wide range of health insurance programs that do not comply with the law.
Federal officials encouraged states to seek waivers from provisions of the law that specify who is eligible for premium subsidies, how much they get and what medical benefits they receive.
It was “a mistake to federalize so much of health care policy under the Affordable Care Act,” Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, told state officials at a conference in Washington.
The new policy outlined by the administration on Thursday upends a premise of the Affordable Care Act: that federal subsidies can be used only for insurance that meets federal standards and is purchased through public marketplaces, also known as insurance exchanges.
Under the new policy, states could use federal subsidies to help people pay for employer-sponsored insurance. Consumers could combine federal funds with employer contributions to buy other types of insurance.
Under the Affordable Care Act, premium tax credits are available to people with incomes up to four times the poverty level, roughly $83,000 a year for a family of three. With a waiver, states could provide assistance to higher-income families.
The Trump administration laid out templates for state programs — waiver concepts — that could significantly depart from the model enacted by Congress in 2010.
Alex M. Azar II, the secretary of health and human services, said states could use the suggestions to “create more choices and greater flexibility in their health insurance markets, helping to bring down costs and expand access to care.”
Democrats assailed the initiative as an audacious effort to undermine the Affordable Care Act. And they said the administration was ignoring the midterm election success of Democrats who had promised to defend health care that they said was threatened by President Trump and Republicans in Congress.
“The American people just delivered an overwhelming verdict against Republicans’ cruel assault on families’ health care,” said the House Democratic leader, Nancy Pelosi of California. “But instead of heeding the will of the people or the requirements of the law, the Trump administration is still cynically working to make health insurance more expensive and to leave more Americans without dependable coverage.”
Senator Ron Wyden of Oregon, the senior Democrat on the Finance Committee, said the administration was creating a fast lane for swift approval of “junk insurance.”
The Affordable Care Act prohibits insurers from denying coverage or charging higher premiums to people with pre-existing medical conditions. At campaign rallies this fall, Mr. Trump repeatedly promised: “We will always protect Americans with pre-existing conditions. Always.”
Ms. Verma said Thursday that “the A.C.A.’s pre-existing condition protections cannot be waived.”
But states could use federal funds to subsidize short-term plans and “association health plans,” in which employers band together to provide coverage for employees. Such plans are free to limit or omit coverage of benefits required by the Affordable Care Act, such as mental health care, emergency services and prescription drugs.
A provision of the Affordable Care Act allows waivers for innovations in state health policy. The federal law stipulates that state programs must provide coverage that is “at least as comprehensive” as that available under the Affordable Care Act and must cover “at least a comparable number” of people.
Two powerful House Democrats said the new guidance issued by the Trump administration was illegal because it did not meet the standards for waivers set forth in the Affordable Care Act.
“It is contrary to the plain language of the statute, and it appears to be part of the administration’s ideologically motivated efforts to sabotage the Affordable Care Act,” said a letter sent to Mr. Azar by Representatives Frank Pallone Jr. of New Jersey and Richard E. Neal of Massachusetts.
In issuing the guidance, they said, Mr. Azar also violated the Administrative Procedure Act, which generally requires agencies to provide an opportunity for public comment before adopting new rules.
Republican governors have been pleading with federal officials to give states more authority to regulate health insurance.
Paul Edwards, a deputy chief of staff to Gov. Gary Herbert of Utah, a Republican, said, “Utah welcomes all efforts that give us maximum flexibility to structure our health care programs to the unique needs of our citizens.” State officials “will look closely at how these new rules could benefit Utahns,” he said.
Brenna Smith, a spokeswoman for Gov. Kim Reynolds of Iowa, a Republican, said the governor “has a proven track record of expanding health care options for Iowans and is eager to see the new opportunities this proposal might open up.”
Iowa tried last year to get a waiver under Obama-era guidance, seeking essentially to opt out of the Affordable Care Act marketplace by offering customers a single plan with lower premiums and a high deductible.
Ms. Reynolds ultimately withdrew the request in frustration, saying at the time that “Obamacare’s waiver rules are as inflexible as the law itself.”
One option for states is to take federal funds and put the money into accounts that consumers could use to pay insurance premiums or medical expenses.
Likewise, Ms. Verma said: “States can develop a new state premium subsidy structure and decide how premium subsidies should be targeted. States can set the rules for what type of health plan is eligible for state premium subsidies.”
She was speaking Thursday at a conference of the American Legislative Exchange Council, a conservative group that promotes limited government and drafts model legislation.
Sen. Patty Murray (D-Wash.) on Wednesday called for reviving bipartisan efforts to reach a deal to fix ObamaCare after an agreement she was part of collapsed last year.
“Mr. Chairman, I’m really hopeful that we can revive discussions in the new Congress and find a way past the ideological standoffs of the past,” Murray said to Sen. Lamar Alexander (R-Tenn.), her Republican partner in forging last year’s deal, at a hearing on health care costs.
The deal last year, which came to be known as Alexander-Murray, sought to lower premiums and stabilize the ObamaCare markets, but was stalled for months amid the bitter partisan divide over the health law and a dispute about including abortion restrictions on the funding in the bill.
Alexander on Wednesday expressed skepticism about the ability to reach a new agreement, but said he is willing to try if Murray wants to.
“We can revisit the so-called Alexander-Murray proposal if you would like,” Alexander said, but added that Democrats opposed the previous version, in his view, because they would not support restrictions on abortion funding known as the Hyde Amendment. Democrats countered that the measure actually would have expanded the scope of the abortion restrictions in an unacceptable way.
“I regretted that that didn’t work and maybe we can find a way to make it work in the new session,” Alexander added. “Certainly we’ll try on the issue of health care costs, which are the larger issue.”
There is still no clear path beyond the abortion dispute, making a new agreement difficult.
The ground has also shifted since last year, making many Democrats call for bolder action, like expanding the generosity of ObamaCare’s financial assistance and overruling actions President Trump has taken that Democrats say undermine the market.
Both of those proposals would be hard for many Republicans to support.
Still, Alexander and Murray have not sat down to reopen negotiations and it is unclear what each side would be pushing for in these early stages.
One change is that Democrats will control the House next year, which could add new pressures. Many Democrats saw House Republicans as the main obstacle to a deal last year, so it could change the dynamic that House Republicans will have less power next year in the minority.
Two of the nation’s largest healthcare groups are suing the Trump administration over a final rule to institute site-neutral payments for clinic visits, saying the policy would hurt patients.
Last month, the Centers for Medicare & Medicaid Services (CMS) finalized the 2019 Outpatient Prospective Payment System (OPPS) rule (PDF), which will gradually institute site-neutral payments in the Medicare program over the next two years. Agency officials said site-neutral payments for clinic visits will lower out-of-pocket costs for beneficiaries and save the program as much as $380 million in 2019.
In a complaint filed in the U.S. District Court for the District of Columbia, the American Hospital Association (AHA) and the Association of American Medical Colleges (AAMC) said the rule would lead to access problems as hospitals cut services, hurting vulnerable patients. The associations claimed the administration is overstepping its legal bounds and were joined in the legal action by Olympic Medical Center in Port Angeles, Washington; Mercy Health in Muskegon, Michigan; and York Hospital in York, Maine.
“These cuts directly undercut the clear intent of Congress to protect hospital outpatient departments because of the real and crucial differences between them and other sites of care,” said Rick Pollack, president and CEO of the AHA, in a statement.
AHA said it was planning legal action shortly after the rule was finalized.
Physician groups, including the American Association of Family Physicians (AAFP) and the American College of Physicians (ACP) as well as groups like the Cancer Oncology Alliance, have supported site-neutral payments for some time. AAFP has said site-neutral payments can also help community clinics stay open at a time many have had to close due to vertical integration, consequently advancing patient choice and reducing costs.
But hospital groups oppose the rule, which also expands a CMS policy limiting how much drug companies can charge hospitals for their products in the 340B program.
“Patients who receive care in a hospital outpatient department are more likely to be poorer and have more severe chronic conditions than patients treated in an independent physician office,” Pollack said. “In addition, only hospitals provide 24/7 access to care for patients, regardless of their ability to pay, hospitals are held to far higher regulatory requirements, and hospital outpatient departments in inner cities and rural areas are often the only sites of care that provide the services they do.”
Most recently, AHA had sued CMS over the 340B program changes before HHS bumped up the implementation date last month for changes that would set price ceilings and add civil monetary penalties for manufacturers—two changes the AHA supported.
West Reading, Pa.-based Tower Health reduced charges by an average of 30 percent at nearly all of its hospitals after reviewing a third-party report on costs at other regional hospitals, according to WFMZ.
The cost reductions affect a wide array of services, procedures, tests and medications at Tower’s hospitals in Brandywine, Chestunt Chestnut Hill, Jennersville, Phoenixville and Pottstown, all in Pennsylvania. They went into effect Dec. 1.
The prices at Reading (Pa.) Hospital will not change, as the independent report found that its charges were already in line with local competitors.
