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Illinois hospital will have to meet constitutional charity standards, judge rules
An Illinois judge has ruled that the operator of Carle Foundation Hospital in Urbana must meet constitutional standards for charitable organizations in order to receive tax exemptions, The News-Gazette reports.
The Carle Foundation is seeking retroactive property tax exemptions for 2004-2011 and a refund for taxes it paid to local authorities during that time. However, Champaign County Judge Randy Rosenbaum agreed with the recent Illinois Supreme Court ruling that hospitals seeking tax exemptions must not only offer as much charity care as they would have paid in taxes; they also must extend charity care to an indefinite number of people and not create any barriers to it.
Hospitals looking for a tax exemption also must show they do not have any capital, stock or shareholders. Carle Foundation attorneys have argued that they need only show that the hospital complies with the terms of the hospital tax-exemption law.
John Colombo, a retired law professor at the University of at Illinois Urbana-Champaign, said that the ruling is important for the Carle Foundation’s upcoming trial, but does not clearly define charitable use for the future of Illinois hospitals.
“The Illinois Supreme Court is going to have to say at some point, ‘Here’s what it takes for an Illinois hospital to be tax-exempt,'” said Mr. Colombo.
BETH ISRAEL, LAHEY HEALTH MERGER GETS FTC, MASSACHUSETTS AG’S APPROVAL
he condition-laden approval stipulates a seven-year price cap that guarantees that the merged health system’s price increases will be kept below the state’s healthcare cost growth benchmarks.
KEY TAKEAWAYS
The Federal Trade Commission calls the merger ‘a close call’ but defers to state regulators.
The merged health system will provide $71 million for care in underserved areas.
The merged, 13-hospital health system will be one of the largest in the Bay State.
The proposed merger of Beth Israel Deaconess Medical Center and Lahey Health System cleared a huge hurdle today when Massachusetts Attorney General Maura Healey announced her conditional support.
The approval comes with what Healey called an “unprecedented” seven-year price cap that guarantees that the merged health system’s price increases will be kept below the state’s Health Care Cost Growth benchmark.
“Through this settlement, Beth Israel Lahey Health will cap its prices, strengthen safety net providers across the region, and invest in needed behavioral health services,” Healey said in a media release.
“These enforceable conditions, combined with rigorous monitoring and public reporting, create the right incentives to keep care in community settings and ensure all our residents can access the high-quality health care they deserve,” she said.
The deal also cleared a key federal hurdle when the Federal Trade Commission voted to close its investigation in light of Healey’s agreement.
“The assessment of whether to take enforcement action was a close call. However, based on Commission staff’s work and in light of the settlement obtained by the Massachusetts AG, we have decided to close this investigation,” the FTC said in a media release.
Kevin Tabb, MD, CEO of Beth Israel Deaconess Medical Center, who will serve as CEO of Beth Israel Lahey Health, called the state and federal approvals “an important step forward in making our vision a reality.”
“We appreciate the enormous effort that the Attorney General, her staff and the Federal Trade Commission have devoted to our proposal. We share their commitment to health care innovation in Massachusetts, and we are eager to build on the strengths of our legacy organizations and deliver on our promise to our patients, their families and our communities,” Tabb said.
Massachusetts’ Health Care Cost Growth benchmark controls the annual growth of total medical spending in the state and is now set at 3.1%. Over the seven-year term, the cap will avoid more than $1 billion of the potential cost increases projected by the state’s Health Policy Commission.
When finalized, the merged, 13-hospital health system will be will one of the largest in the Bay State.
The merger push began in 2017, with Beth Israel and Lahey justifying the consolidation as a market-based attempt to address rising costs, price disparities, and healthcare access issues.
However, the deal has faced headwinds since its inception.
Even as late as this September, the Massachusetts Health Policy Commission noted that the merger would create a health system roughly the same size as Partner’s HealthCare System, the state’s largest health system, which would “increase substantially” market concentration in eastern Massachusetts.
“BILH’s enhanced bargaining leverage would enable it to substantially increase commercial prices that could increase total healthcare spending by an estimated $128.4 million to $170.8 million annually for inpatient, outpatient, and adult primary care services,” MHPC said.
In addition, the commission said spending on specialty physician services could increase by as much as $60 million annually if the merged health system obtains similar prices increases for those services.
“These would be in addition to the price increases the parties would have otherwise received,” the commission wrote. “These figures are likely to be conservative. The parties could obtain these projected price increases, significantly increasing healthcare spending, while remaining lower-priced than Partners.”
Those concerns appeared to have been alleviated on Thursday, when MHPC Commissioner Martin Cohen said “the investments required by the settlement will have a real impact on access to treatment for mental health and substance use disorders for patients across Eastern Massachusetts.”
Healey’s assurance of discontinuance also includes requirements that the merged Beth Israel Lahey Health pledge $71.6 million to support healthcare services for underserved areas.
The deal also requires BILH to strengthen its commitment to MassHealth; engage in business planning with its safety net hospital affiliates; enhance access to mental health and substance use disorder treatment; and retain a third-party monitor to ensure compliance with the terms.
The deal exempts affiliated safety net hospitals from the price-cap constraints. Lawrence General Hospital CEO Dianne J. Anderson said the exemption for her safety net will “ensure a commitment to joint, long-term planning for distribution of health care resources across the region.”
The $71.6 million that BILH will spend over eight years for underserved areas will include:
- $41 million to fund affiliated community health centers and safety net hospitals, which guarantees support at the systems’ historic levels.
- At least $8.8 million in additional financial support for affiliated community health centers and safety net hospitals.
- At least $5 million in strategic investment to expand access to healthcare for low-income communities through community health centers.
- At least $16.9 million to develop and expand behavioral health services across the BILH system.
“THROUGH THIS SETTLEMENT, BETH ISRAEL LAHEY HEALTH WILL CAP ITS PRICES, STRENGTHEN SAFETY NET PROVIDERS ACROSS THE REGION, AND INVEST IN NEEDED BEHAVIORAL HEALTH SERVICES.”
MASSACHUSETTS ATTORNEY GENERAL MAURA HEALY
Number of uninsured children increases for first time in a decade
The number of uninsured children in the U.S. increased for the first time in a decade, according to a new report that puts much of the blame on policies spearheaded by Republicans.
An estimated 3.9 million children did not have health insurance in 2017, an increase of 276,000 compared to the previous year, according to the Georgetown University Center for Children and Families.
No state made statistically significant progress on children’s coverage last year, despite an improving economy and low unemployment rate, according to the report, which noted that the District of Columbia made substantive gains in 2017.
Researchers said the rising number for states was due to a variety of factors, though they said GOP-led states refusing to expand Medicaid played a major role, as well as Republican efforts in Congress to repeal ObamaCare and cap federal Medicaid funding.
Three-quarters of the children who lost coverage between 2016 and 2017 live in states that have not expanded Medicaid coverage to parents and other low-income adults, the report found. The uninsured rates for children in non-expansion states increased at almost triple the rate as states that have expanded Medicaid.
The report also noted that Congress eliminated the health law’s individual mandate and the Trump administration dramatically cut ObamaCare outreach and enrollment grants while shortening the open enrollment period.
“All of these changes in the national political and policy realm mark a sharp reversal after many years of successful efforts to reduce the uninsured rate for children and families,” the researchers wrote.
The report’s prognosis for the future was not encouraging.
“Barring new and serious efforts to get back on track, there is every reason to believe the decline in coverage is likely to continue and may get worse in 2018,” researchers concluded.
The number of uninsured children in the U.S. was particularly high in Florida and Texas, the two largest states that have not expanded Medicaid, according to the report.
Texas had an estimated 80,000 more children uninsured in 2017 than in 2016, and Florida had 37,000 more.
Researchers also pointed to President Trump‘s recent crackdown on immigration as a reason why the number of uninsured kids is rising.
One quarter of all children under 18 living in the United States have a parent who is an immigrant, according to the report. Several policies targeting immigrant communities, like the administration’s “public charge” proposal, are likely deterring parents from enrolling their eligible children in Medicaid or the Children’s Health Insurance Program, despite the fact that most of these children are U.S. citizens.
340B FINAL RULE WILL LAUNCH ON JANUARY 1, 2019
https://www.healthleadersmedia.com/340b-final-rule-will-launch-january-1-2019
HHS shortens the 340B final rule implantation by six months after determining that it would not ‘interfere’ with the departments ‘comprehensive policies’ to address high drug costs.
KEY TAKEAWAYS
PhRMA says the ‘overly burdensome’ final rule fails to address hospital abuse of the program.
The new rule provides drug pricing information to 340B participants through a closed website.
Proponents scoff at drug makers’ claims that more time is needed before the oft-delayed final rule is implemented.
After several delays, hundreds of public comments, a lawsuit, and an eight-year-old Congressional mandate, the federal government on Thursday bumped up the starting date of its 340B drug pricing final rule by six months.
In a notice published this week in the Federal Register, the Department of Health and Human Services said the final rule—which is designed to protect hospitals from being overcharged by drug manufacturers—would take effect on January 1, 2019, instead of July 1, 2019.
The final rule was supposed to take effect on January. 5, 2017, but HHS delayed implementation because it said it was in the midst of “developing new comprehensive policies to address the rising costs of prescription drugs.”
Hospitals got tired of waiting and filed suit, asking a federal judge to order the Trump Administration to launch the final rule on January 1, 2019. The hospitals allege that the delays are causing significant financial harm to the nearly 2,500 hospitals nationwide that participate in the 340B Drug Pricing Program.
In late October, the Trump Administration said it was considering accelerating implementation.
In bumping up the final rule implantation by six months, HHS said it “has determined that the finalization of the 340B ceiling price and civil monetary penalty rule will not interfere with HHS’s development of these comprehensive policies.”
Under the new rule, federal regulators will provide pricing information to 340B hospitals through a closed website, which proponents of the rule say is essential for ceiling price enforcement.
As expected, hospitals praised the action, and drug makers expressed disappointment.
“This rule is good for patients and for essential hospitals, which rely on 340B savings to make affordable drugs and health care services available to vulnerable people and underserved communities,” said America’s Essential Hospitals President and CEO Bruce Siegel, MD.
“It also ends years of delay for much-needed measures to hold drug companies accountable for knowingly overcharging covered entities in the 340B program,” Siegel said.
Maureen Testoni, interim president and CEO of 340B Health, called the announcement “a big step toward stopping drug companies from overcharging 340B hospitals, clinics, and health centers.”
“The next step toward ensuring true 340B drug maker transparency is for the administration to launch its ceiling price website so hospitals, clinics, and health centers can ascertain that they are paying the correct amounts for 340B medications,” Testoni said.
“We are encouraged that HHS says it will release that pricing reporting system shortly and that the department will communicate additional updates through its website,” she said.
PhRMA said it was “disappointed the Administration did not issue new proposals for this rule as it repeatedly stated it would.”
The pharmaceutical industry advocates said HHS “ignored the numerous concerns raised by stakeholders on the proposed ceiling price calculations, offset policy and civil monetary penalty provisions.”
Drug makers allege that hospitals have been scamming the 340B program, and PhRMA said Thursday that the final rule’s “flawed policies are not in line with the 340B statute and fail to address root problems in the 340B program that have enabled private 340B hospitals to generate record profit without commensurate benefit to patients.”
“Not only is the final rule itself overly burdensome in its requirements, but moving up its effective date also leaves manufacturers with very little time to make operational changes to systems and procedures,” PhRMA said.
Testoni scoffed at claims that more time was needed.
“The regulation now will be going into effect more than eight years after Congress mandated it—and only after a lawsuit filed by 340B Health and other hospital organizations to stop repeated administrative delays to the effective date,” Testoni said.
“As today’s final rule notes, these delays have given drug makers ‘more than enough time to prepare for its requirements.'”
“THESE DELAYS HAVE GIVEN DRUG MAKERS MORE THAN ENOUGH TIME TO PREPARE FOR ITS REQUIREMENTS.”
MAUREEN TESTONI, INTERIM PRESIDENT AND CEO OF 340B HEALTH
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HENRY KOTULA 