AHA report: Hospitals spend almost $3 trillion, support more than 16 million jobs

Posted on June 10, 2018 by henrykotula • Posted in Uncategorized • Tagged AHA, Community Benefit, Community Employment, Economic Cornerstones, Health System, Healthcare Expenditures, Healthcare Industry Jobs, Hospital, M&A, Ripple Effect • Leave a comment

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Every dollar a hospital spends yields roughly $2.30 of additional business activity; for every hospital job, another two are supported.

A new report from the American Hospital Association highlights just how much hospitals are driving their local economies, as well the national one, with data showing hospitals directly employ nearly 6 million people and purchase more than $900 billion worth of goods and services from other businesses.

But that’s not all. Enter the ripple effect. The goods and services hospitals buy drive economic vitality throughout their communities, with each hospital job supporting roughly two additional jobs in the community. Every dollar a hospital spends yields roughly $2.30 of additional business activity.

When you incorporate that ripple effects into calculations, the AHA reported hospitals actually support 16.5 million jobs nationwide and almost $3 trillion in economic activity.

“In 2016, America’s hospitals treated 143 million people in their emergency departments, provided 605 million outpatient visits, performed over 27 million surgeries and delivered nearly 4 million babies. Every year, hospitals provide vital health care services like these to hundreds of millions of people in thousands of communities. However, the importance of hospitals to their communities extends far beyond health care,” the AHA said.

When it come to states whose hospitals send the most money into the their economies, it’s no surprise that California is the top spender, with $103 billion in total expenditures. Factor in that ripple effect and the Golden State’s total economic output from its hospitals more than doubles to $230 billion.

New York, Texas, Florida and Pennsylvania rounded out the top five states that are most impacted by hospital expenditures, the report said.

When it comes to a hospitals impact on the state’s labor force, it’s not just about who creates the most. Maine is actually the state most impacted by hospital job creation with total of 38,105 hospital jobs. That hospital workforce makes up a little more than 14 percent of the states overall workforce. Ohio was the second most impacted state, with 298,371 hospital jobs that constitute just almost 13 percent of the state’s workforce.

Minnesota, West Virginia and Massachusetts rounded out the other top five states whose workforce is impacted by hospital jobs. Minnesota’s hospital workforce constitutes a little more than 12 percent of the overall state force, West Virginia’s hospital workforce was nearly 11.7 percent and Massachusetts was almost the same with 11.6 percent.

As both healthcare and economic cornerstones of their communities, the pressure is greater for hospitals leaders to find new ways to add value, maintain financial margins and keep doors open. That is one of the drivers behind the rash of merger and acquisition activity. With ever-increasing regulatory burdens that require more manpower or physician’s time to manage, coupled with the need to make much needed updates in technology, modernize facilities to meet current trends or just maintain appropriate levels of care and accommodation for patients, not to mention staying competitive for hospitals in areas where other systems want to dip into their patient volumes, hospital leaders are eyeing mergers as a means of keeping doors open sot they can continue to support their communities both clinically and economically.

CMS Administrator Seema Verma promotes cuts to 340B drug payments

Posted on May 17, 2018 by henrykotula • Posted in Uncategorized • Tagged 340B Drug Discount Program, AHA, CMS, GAO, Health System, Hospital, Inspector General, Lack of Transparency, Medicare 340B Drug Discount Program, Safety Net Care Providers • Leave a comment

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Senate committee is taking a closer look at the drug discount program.

The Centers for Medicare and Medicaid Services’ focus on lowering drug prices now includes the contentious 340B drug pricing program.

On Wednesday, CMS Administrator Seema Verma told the Pharmacy Quality Alliance that the agency’s change in the 340B payment rate to qualifying hospitals would save Medicare beneficiaries $320 million this year.

Under 340B, hospitals that serve a large number of vulnerable patients are able to buy drugs from manufacturers at discounted prices. However, Verma said Wednesday, “these discounts were not being passed on to our beneficiaries. So, CMS reduced the amount that beneficiaries and the federal government will pay hospitals for drugs that they acquire through this program.”

Medicare beneficiaries will save a total of $320 million in drug spending this year from the change, Verma said.

Last November, several hospital groups including the American Hospital Association, sued CMS for the $1.6 billion in cuts, representing a 28 percent decrease.

On Tuesday, a Senate health committee got involved when members questioned why a rule that would set ceiling prices on drugs in the program has been delayed five times.

The final rule would impose monetary penalties for manufacturers that charge more than the ceiling price for an outpatient drug and imposes other restrictions.

340B hospitals want to see the rule enforced.

The Government Accountability Office will be looking into the issue and the work of the Health Resource and Services Administration, the agency which manages the program and is responsible for the latest delay in implementation of the final rule until July 2019.

The problem is that states and providers do not know the ceiling prices. Confidentiality rules prevent the HRSA from sharing ceiling prices with states or 340B providers.

Because of this, 340B hospitals don’t know what they ought to be paying for discounted drugs, according to Ann Maxwell, assistant inspector general for evaluation and inspections for the Office of the Inspector General, speaking before the Senate Committee on Health, Education, Labor and Pensions.

This lack of transparency prevents ensuring that 340B providers are not overpaying pharmaceutical manufacturers and that state Medicaid programs are not overpaying 340B providers, Maxwell said.

The 340B drug pricing program debate pits the hospitals that benefit from the discounted prices of the program against organizations that contend these providers are taking advantage of the financial incentive.

The 340B program, established in 1992, generates savings for certain safety-net providers by allowing them to purchase outpatient drugs at discounted prices.

Opponents of 340B say seniors get none of the benefit and pay full price and that the disproportionate share hospitals that get the discount take advantage of the financial incentive by buying larger quantities of drugs and more expensive drugs.

HRSA reported that total 340B sales in 2016 amounted to approximately $16 billion, or about 3.6 percent of the U.S. drug market.

The Alliance for Integrity and Reform of 340B, or AIR340B released a new report with analytics by the Berkeley Research Group on Medicare Part B hospital outpatient reimbursements that found in 2016, 340B hospitals accounted for nearly two-thirds of Medicare Part B reimbursements – while only representing slightly more than half of all Medicare hospital outpatient revenue.

“Medicare patients treated in 340B hospitals have disproportionately high outpatient drug spend as compared to patients treated at non-340B hospitals,” AIR340B said

PhRMA said it was encouraged to see the Senate HELP Committee continuing to take a closer look at issues within the 340B program.

The New England Journal of Medicine concluded that financial gains for 340B hospitals have not been associated with clear evidence of expanded care or lower mortality among low-income patients, PhRMA said.

340B also drives a shift of treatment to more expensive hospital settings for physician-administered medicines, PhRMA said.

Hospitals and proponents say the 340B drug pricing program is one of the few federal programs to curb drug costs that is working.

“Sadly, the administration’s policy proposals would erode that progress and just put more money into the pockets of pharmaceutical companies,” 340B Heath said. “The administration’s proposals are based on a faulty understanding of the 340B program and the pharmaceutical market. The notion that 340B discounts are raising drug prices is simply false. Drug companies set the prices for their products and they, alone, decide how high those prices go.”

Hospitals participating in the 340B program account for 60 percent of all uncompensated care in the U.S. and serve a high proportion of low-income patients on Medicaid, 340B Health said.

“There is a clear history of manufacturers overcharging 340B providers. Delaying enforcement of this rule will have a tremendous adverse impact on hospitals, clinics and health systems caring for low-income and rural patients,” said Maureen Testoni, interim president and CEO of 340B Health.

America’s Essential Hospitals said federal scrutiny of manufacturer pricing practices has found overcharges in the 340B drug pricing program.

“These overcharges undermine the program’s ability to make drugs affordable for vulnerable patients and increase costs for their hospitals, which already operate with thin margins,” the group said.

California Hospital Giant Sutter Health Faces Heavy Backlash On Prices

Posted on May 16, 2018 by henrykotula • Posted in Uncategorized • Tagged AHA, All or Nothing Contracting Approach, Anticompetitive Behavior, Antitrust, Excessively High Out-of-Network Rates, Health System, Hospital, Intentionally Destroying Evidence, M&A, Market Consolidation, Market Power, Price Gouging, Public Backlash, State AG, State Investigation • Leave a comment

http://www.healthleadersmedia.com/quality/california-hospital-giant-sutter-health-faces-heavy-backlash-prices?utm_source=silverpop&utm_medium=email&utm_campaign=20180516_HLM_Daily_resend%20(1)&spMailingID=13521389&spUserID=MTY3ODg4NTg1MzQ4S0&spJobID=1401466260&spReportId=MTQwMTQ2NjI2MAS2

The state’s top cop is suing Sutter, accusing one of the nation’s biggest health systems of systematically overcharging patients and illegally driving out competition.

Cooking dinner one night in March, Mark Frizzell sliced his pinkie finger while peeling a butternut squash and couldn’t stop the bleeding.

The 51-year-old businessman headed to the emergency room at Sutter Health’s California Pacific Medical Center in San Francisco. Sutter charged $1,555 for the 10 minutes it treated him, including $55 for a gel bandage and $487 for a tetanus shot.

“It was ridiculous,” he said. “Health insurance costs are through the roof because of things like this.”

California Attorney General Xavier Becerra couldn’t agree more. The state’s top cop is suing Sutter, accusing one of the nation’s biggest health systems of systematically overcharging patients and illegally driving out competition in Northern California.

For years, economists and researchers have warned of the dangers posed by large health systems across the country that are gobbling up hospitals, surgery centers and physicians’ offices — enabling them to limit competition and hike prices.

Becerra’s suit amounts to a giant test case with the potential for national repercussions. If California prevails and is able to tame prices at Northern California’s most powerful, dominant health system, regulators and politicians in other states are likely to follow.

“A major court ruling in California could be a deterrent to other hospital systems,” said Ge Bai, an assistant professor at Johns Hopkins University who has researched hospital prices nationwide. “We’re getting to a tipping point where the nation cannot afford these out-of-control prices.”

Reflecting that sense of public desperation, Sutter faces two other major suits — from employers and consumers — which are wending their way through the courts, both alleging anticompetitive conduct and inflated pricing. Meanwhile, California lawmakers are considering a bill that would ban some contracting practices used by large health systems to corner markets.

Sutter, a nonprofit chain, is pushing back hard, denying anticompetitive behavior and accusing Becerra in court papers of a “sweeping and unprecedented effort to intrude into private contracting.” Recognizing the broader implications of the suit, both the American Hospital Association and its California counterpart asked to file amicus briefs in support of Sutter.

In his 49-page complaint, Becerra cited a recent study finding that, on average, an inpatient procedure in Northern California costs 70 percent more than one in Southern California. He said there was no justification for that difference and stopped just short of dropping an expletive to make his point.

“This is a big ‘F’ deal,” Becerra declared at his March 30 news conference to unveil the lawsuit. In an interview last week, he said, “We don’t believe it’s fair to allow consolidation to end up artificially driving up prices. … This anticompetitive behavior is not only bad for consumers, it’s bad for the state and for businesses.”

To lessen Sutter’s market power, the state’s lawsuit seeks to force Sutter to negotiate reimbursements separately for each of its hospitals — precluding an “all or nothing” approach — and to bar Sutter employees from sharing the details of those negotiations across its facilities. Becerra said Sutter has required insurers and employers to contract with its facilities systemwide or face “excessively high out-of-network rates.”

Heft In The Marketplace

Overall, Sutter has 24 hospitals, 36 surgery centers and more than 5,500 physicians in its network. The system boasts more than $12 billion in annual revenue and posted net income of $958 million last year.

The company’s heft in the marketplace is one reason why Northern California is the most expensive place in the country to have a baby, according to a 2016 report. A cesarean delivery in Sacramento, where Sutter is based, cost $27,067, nearly double what it costs in Los Angeles and New York City.

For years, doctors and consumers have also accused Sutter of cutting hospital beds and critical services in rural communities to maximize revenue. “Patients are the ones getting hurt,” said Dr. Greg Duncan, an orthopedic surgeon and former board member at Sutter Coast Hospital in Crescent City, Calif.

Sutter says patients across Northern California have plenty of providers to choose from and that it has held its average rate increases to health plans to less than 3 percent annually since 2012. It also says it does not require all facilities to be included in every contract — that insurers have excluded parts of its system from their networks.

As for emergency room patients like Frizzell, Sutter says its charges reflect the cost of maintaining services round-the-clock and that for some patients urgent-care centers are a less costly option.

“The California Attorney General’s lawsuit gets the facts wrong,” Sutter said in a statement. “Our integrated network of high-quality doctors and care centers aims to provide better, more efficient care — and has proven to help lower costs.”

Regulators in other states also have sought to block deals they view as potentially harmful.

In North Carolina, for instance, the state’s attorney general and treasurer both expressed concerns about a proposed merger between the University of North Carolina Health Care system and Charlotte-based Atrium Health. The two dropped their bid in March. The combined system would have had roughly $14 billion in revenue and more than 50 hospitals.

Last year, in Illinois, state and federal officials persuaded a judge to block the merger between Advocate Health Care and NorthShore University HealthSystem. The Federal Trade Commission said the new entity would have had 60 percent market share in Chicago’s northern suburbs. Still, Advocate won approval for a new deal with Wisconsin’s Aurora Health Care last month, creating a system with $11 billion in annual revenue.

Antitrust experts say states can deliver a meaningful counterpunch to health care monopolies, but they warn that these cases aren’t easy to win and it could be too little, too late in some markets.

“How do you unscramble the egg?” said Zack Cooper, an assistant professor of economics and health policy at Yale University. “There aren’t a lot of great solutions.”

A Seven-Year Investigation

California authorities took their time sounding the alarm over Sutter — a fact Sutter is now using against the state in court.

The state attorney general’s office, under the leadership of Democrat Kamala Harris, now a U.S. senator, started investigating Sutter seven years ago with a 2011 subpoena, court documents show. Sutter said the investigation appeared to go dormant in March 2015, just as Harris began ramping up her Senate campaign.

Becerra, a Democrat and former member of Congress, was appointed to replace Harris last year, took over the investigation and sued Sutter on March 29. His aggressive action comes as he prepares for a June 5 primary against three opponents.

Sutter faces a separate class-action suit in San Francisco state court, spearheaded by a health plan covering unionized grocery workers and representing more than 2,000 employer-funded health plans. The plaintiffs are seeking to recoup $700 million for alleged overcharges plus damages of $1.4 billion if Sutter is found liable for antitrust violations. Sutter also has been sued in federal court by five consumers who blame the health system for inflating their insurance premiums and copays. The plaintiffs are seeking class-action status.

San Francisco County Superior Court Judge Curtis E.A. Karnow granted Becerra’s request to consolidate his case with the grocery workers’ suit, which is slated for trial in June 2019.

The judge sanctioned Sutter in November after finding that Sutter was “grossly reckless” in intentionally destroying 192 boxes of evidence that were relevant to antitrust issues. As a result, Karnow said, he will consider issuing jury instructions that are adverse to Sutter.

In a note to employees, Sutter chief executive Sarah Krevans said she deeply regretted the situation but “mistakes do happen.”

In an April 27 court filing, Sutter’s lawyers criticized the state for piggybacking onto the grocery workers’ case. “The government sat on its hands for seven years, exposing the public to the alleged anticompetitive conduct. … Rather than driving the agenda, the Attorney General seeks to ride coattails.”

Outside court, California legislators are taking aim at “all or nothing” contracting terms used by Sutter and other hospital chains. The proposed law stalled last year amid opposition from the hospital industry. But consumer and labor groups are seeking to revive it this year.

In the meantime, Frizzell said he will probably wind up at one of Sutter’s hospitals again despite his disgust over his ER bill. “Most of the hospitals here are Sutter,” he said. “It’s difficult to avoid them.”

Bipartisan group of senators seek to block Trump cuts to drug discount program

Posted on December 10, 2017 by henrykotula • Posted in Uncategorized • Tagged 340B Drug Discount Program, Access to Care, AHA, America's Essential Hospitals, Association of American Medical Colleges (AAMC), Bipartisanship, CMS, Health Policy, Medicaid Cuts, Medicare Cuts • Leave a comment

http://thehill.com/policy/healthcare/363772-gop-senators-move-to-block-trump-administrations-cuts-to-drug-discount?utm_source=&utm_medium=email&utm_campaign=12524

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Six senators, including three Republicans, are asking GOP leadership to block a Trump administration rule that slashes funding for a federal drug discount program.

The program, called 340B, requires drug companies give discounts to health-care organizations that serve high volumes of low-income patients.

But a new rule from the Centers for Medicare and Medicaid Services, which takes effect Jan. 1, cuts Medicare payments to hospitals enrolled in the program by $1.6 billion.

The senators are urging the cuts to be reversed in the year-end spending deal.

“We recognize there are opportunities to strengthen the program through targeted clarifications and improvements to ensure it continues to fulfill its purpose with integrity and efficiency and are willing to work with stakeholders to find productive solutions in this space,” the senators wrote in a letter to Senate Majority Leader Mitch McConnell (R-Ky.) and Minority Leader Charles Schumer (D-N.Y.).

“However, with a January 1, 2018 start date and over half of the Senate and half of the House of Representatives having expressed concerns with CMS’ rule, we request your help in ensuring the long-term sustainability of the 340B program by preventing these changes in an end of the year package.”

Sens. John Thune (R-S.D.), Rob Portman (R-Ohio), Shelley Moore Capito (R-W.Va.), Bill Nelson (D-Fla.), Tammy Baldwin (D-Wis.) and Debbie Stabenow(D-Mich.) all signed the letter.

The request follows a letter 51 senators sent to CMS earlier this year expressing concerns over the changes.

Hospital groups argue the rule would jeopardize the ability to serve low-income patients.

The American Hospital Association, America’s Essential Hospitals and the Association of American Medical Colleges are suing the administration to block the rule.

CMS has argued that the changes will increase access to care and lower out-of-pocket drug costs for Medicare beneficiaries.

50 Essentia Health workers fired for refusing flu vaccine

Posted on November 28, 2017 by henrykotula • Posted in Uncategorized • Tagged AHA, CDC, Court Injunction, Employee Terminations, Equal Employment Opportunity Commission (EEOC), Health System, Hospital, Labor Unions, Legal Considerations, Mandatory Flu Vaccination Policy, Patient Safety, Policies and Procedures • 1 Comment

https://www.hrdive.com/news/50-essentia-health-workers-fired-for-refusing-flu-vaccine/511593/

Dive Brief:

Essentia Health terminated 50 employees for refusing to get the flu vaccination, reports the Star Tribune. Hundreds of other workers agreed to be vaccinated after the Duluth, Minnesota-based healthcare system threatened to fire them if they refused.
The new policy requires all employees to get vaccinated to protect patients, Dr. Rajesh Prabhu, Essentia’s chief patient safety officer and an infectious disease specialist, told the Tribune. He said severely ill patients are more susceptible to complications and death from the flu, which is why the need to vaccinate employees is greater.
The Tribune says three unions oppose the new policy, which covers 15 hospitals in the system and 75 clinics. The United Steelworkers, which represents some employees, failed to get a court injunction to block the terminations.

The American Hospital Association (AHA), along with the National Business Group on Health and the American Academy of Family Physicians, strongly supports vaccinations to prevent the spread of the flu. The AHA backs mandatory patient safety policies that require workers to get flu vaccinations or wear hygienic masks when coming in contact with patients during the flu season.

Statistics from the Centers for Disease Control (CDC) show that less than 45.6% of Americans got flu shots during the 2015 to 2016 flu season. According to the CDC, some people don’t think the flu vaccination is effective, while others don’t think they’ll come down with the flu or think the side effects will be worse than the disease. Other workers might be eligible for a medical or religious exemption.

Employees routinely come to work ill, spreading infections to coworkers. Some 80% of employees came to work sick last year based on findings from Staple Business Advantage’s cold and flu survey. The cost of the flu alone is $10.4 billion in medical expenses and, for employees, $16.3 billion in lost earnings each year.

Healthcare statistics would seem to support the argument for mandatory flu vaccinations. However, legal considerations come into play. States like New York allow employers to have blanket mandatory flu vaccination policies, but the Equal Employment Opportunity Commission (EEOC) is against mandatory policies. Employers will need to pay attention to local and state law before making any such policies of their own.

Hospital groups, health systems sue HHS to halt $1.6B in payment cuts

Posted on November 17, 2017 by henrykotula • Posted in Uncategorized • Tagged 340B Drug Discount Program, AHA, America's Essential Hospitals, American Association of Medical Colleges, CMS, Federal Lawsuit, Health System, Hospital, Medicare Cuts, US District Court, Vulnerable Populations • Leave a comment

https://www.beckershospitalreview.com/finance/hospital-groups-health-systems-sue-hhs-to-halt-1-6b-in-payment-cuts.html

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Three hospital groups and three provider organizations sued HHS Monday in an attempt to stop payment cuts for drugs purchased through the 340B Drug Pricing Program.

The lawsuit, which was filed in U.S. District Court for the District of Columbia, was filed by the following hospital groups: the American Hospital Association, America’s Essential Hospitals and the Association of American Medical Colleges. The groups were joined in the lawsuit by three health systems: Brewer, Maine-based Eastern Maine Healthcare Systems; Detroit-based Henry Ford Health System; and Hendersonville, N.C.-based Park Ridge Health.

Earlier this month, CMS released its 2018 Medicare Outpatient Prospective Payment System rule, which finalizes a proposal to pay hospitals 22.5 percent less than the average sales price for drugs purchased through the 340B program. That’s compared to the current payment rate of average sales price plus 6 percent. This change would reduce Medicare payments to hospitals by $1.6 billion.

The lawsuit argues the 340B provisions of the OPPS final rule violate the Social Security Act and should be set aside. The lawsuit further alleges the 340B provisions are outside of the HHS secretary’s statutory authority.

The hospital groups and health systems are seeking an injunction that would prohibit HHS from implementing the 340B provisions of the OPPS final rule pending resolution of the lawsuit.

“From its beginning, the 340B Drug Pricing Program has been critical in helping hospitals stretch scarce federal resources to enhance comprehensive patient services and access to care,” said Rick Pollack, president and CEO of the AHA. “CMS’s decision to cut Medicare payments for so many hospitals for drugs covered under the 340B program will dramatically threaten access to healthcare for many patients, including uninsured and other vulnerable populations. This lawsuit will prevent these significant cuts from moving forward.”

Health Care for Millions at Risk as Tax Writers Look for Revenue

Posted on November 16, 2017 by henrykotula • Posted in Uncategorized • Tagged AARP, ACA, AHA, AHIP, CBO Bill Scoring, Health Insurance Individual Market, Health Insurance Market Uncertainty, Health Policy, Healthcare Advocacy Groups, Higher Premiums, Individual Mandate, Out of Pocket Expenses, Tax Policy, Underinsured, Uninsured • Leave a comment

https://www.bloomberg.com/news/articles/2017-11-16/health-care-for-millions-at-risk-as-tax-writers-look-for-revenue

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The Republican tax plans are suddenly looking a lot more like health-care bills, with provisions that may affect coverage and increase medical expenses for millions of families.

The House version of the tax bill, which President Donald Trump endorsed on Tuesday, would end a deduction that allows families of disabled children and elderly people to write off large medical expenses. The Senate plan would repeal the Obamacare requirement that most Americans carry insurance, a move that insurers promise would raise premiums in the nationwide individual insurance market.

The provisions would help offset the cost of large tax cuts for corporations and individuals. But the move has sparked a new wave of opposition from the health-care industry and others who are concerned about its impact — the same political headwinds that tanked Republican efforts to repeal the Affordable Care Act earlier this year.

Either proposal, if signed into law, “could be devastating for some families with disabilities,” said Kim Musheno, vice president of public policy at the Autism Society, a Bethesda, Maryland, organization that advocates for people with autism. “Families depend on that deduction. And if they deal with the individual mandate, that’s going to cut 13 million people from their health care,” she said, citing a Congressional Budget Office estimate.

Republicans and some conservative groups, though, argue that removing the penalty for uninsured individuals would represent a tax cut for many low-income people who pay it now. Americans for Tax Reform, the group led by anti-tax crusader Grover Norquist, said that Internal Revenue Service data from tax year 2015 show that 79 percent of households that paid the penalty earned less than $50,000 a year.

Most Americans already think the tax legislation is designed to benefit the rich and oppose the bill by a two-to-one margin, according to a Quinnipiac University poll released on Wednesday. The survey was conducted between Nov. 7 and Nov. 13 — before the repeal of the Obamacare mandate was introduced — and has a margin of error of 3 percentage points. Some of the details in both tax plans have changed since the survey, and the Senate tax-writing committee is still working on its draft.

Republican Concerns

Few Republicans have spoken out about the House bill’s repeal of the medical-expense break. The bill faces a vote on the House floor Thursday. But some criticism has begun to surface as advocacy groups including the AARP and the American Cancer Society have highlighted the harm the House bill could have on families battling diseases and on the elderly. People with tens of thousands of dollars in annual medical expenses often rely on the tax deduction to make ends meet.

Representative Walter Jones, a North Carolina Republican, said Wednesday he’ll vote against the House bill in part because it eliminates the deduction for out-of-pocket medical expenses.

“There are a lot of seniors in my district and this is life and death for them,” he said.

The deduction is allowed under current law if medical expenses exceed 10 percent of a taxpayer’s adjusted gross income. Almost 9 million taxpayers deducted about $87 billion in medical expenses for the 2015 tax year, according to the IRS.

Representative Greg Walden, an Oregon Republican who chairs the Energy and Commerce Committee, said some of his constituents who live in expensive elder-care facilities could be harmed if the deduction is scrapped.

“I think it’s one we have to continue to massage a bit,” he said. “There’s a lot of things out there and there’s maybe going to be an opportunity to adjust some of them.”

He declined to elaborate.

Obamacare Repeal

On the other side of the Capitol, Senate Republican leaders’ sudden decision to add a partial Obamacare repeal to their bill has energized Democratic opposition.

“You don’t fix the health insurance system by throwing it into a tax bill and causing premiums to go up 10 percent,” Senator Sherrod Brown, an Ohio Democrat, told reporters Wednesday.

Were the ACA’s insurance mandate repealed absent a new policy to compel the purchase of coverage, the CBO projects that premiums would rise 10 percent for people who buy insurance on their own and more than 13 million Americans would lose or drop their coverage.

But a reduction in the number of people with insurance also translates to less taxpayer money spent to provide subsidies for premiums under the ACA. Ending the requirement as of 2019 would save the government an estimated $318 billion, helping to offset the cost of lowering the corporate tax rate.

In addition, the Senate’s tax plan could trigger sharp cuts to Medicare and other programs in order to meet budget deficit rules, according to CBO.

Easy Ads

The move to target Obamacare comes after Republicans lost elections in Virginia and other states earlier this month. Health care was a significant factor in those races and Republicans will face punishing campaign ads if they try to chip away at Obamacare or end the medical-expense deduction while cutting taxes, said political analyst David Axelrod, a former top adviser to President Barack Obama.

“The thing that makes it more of a potent issue is that it’s all being done to facilitate what essentially is a massive corporate tax cut and an individual tax cut that’s skewed to wealthy Americans,” he said in an interview. “You don’t have to work very hard to make those ads.”

The White House argues that the ACA’s insurance mandate isn’t popular and disproportionately affects low- and middle-income Americans who are forced to buy insurance that may be more expensive than they can afford.

“The President’s priorities for tax reform have been clear from the beginning: make our businesses globally competitive, and deliver tax cuts to the middle class,” White House spokesman Raj Shah said in a statement. “He is glad to see the Senate is considering including the repeal of the onerous mandates of Obamacare in its tax reform legislation and hopes that those savings will be used to further reduce the burden it has placed on middle-class families.”

‘Cut Top Rate’

Trump, though, has said proceeds from repealing the insurance mandate should be used to cut taxes even further for wealthy people.

“How about ending the unfair & highly unpopular Indiv Mandate in OCare & reducing taxes even further?” Trump said Monday in a tweet. “Cut top rate to 35% w/all of the rest going to middle income cuts?”

Like Republicans’ failed attempts to repeal the ACA, the tax plan is amassing a growing list of opponents from the world of medicine.

Insurers, hospital groups and disability advocates have spoken out forcefully against the health-care proposals in the bill. Hospitals and insurance groups wrote a letter to Congressional leaders on Tuesday warning of dire health-care outcomes if the tax measure becomes law.

“Repealing the individual mandate without a workable alternative will reduce enrollment, further destabilizing an already fragile individual and small group health insurance market on which more than 10 million Americans rely,” said the letter, signed by six health-care groups, including the American Hospital Association and America’s Health Insurance Plans.

200 health, business groups endorse bipartisan ObamaCare bill

Posted on November 6, 2017 by henrykotula • Posted in Uncategorized • Tagged ACA, AHA, AMA, Bipartisanship, Business Groups, Cost Sharing Reduction Payments, Health Insurance Market Uncertainty, Health Policy • Leave a comment

200 health, business groups endorse bipartisan ObamaCare bill

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More than 200 health and business groups have endorsed a bipartisan bill to shore up ObamaCare’s insurance markets.

Senate Health Committee Chairman Lamar Alexander (R-Tenn.) and ranking member Patty Murray (D-Wash.) announced the support Wednesday as part of their latest push to get the bill passed.

Those in support include influential groups such as the American Medical Association and the American Hospital Association.

But the bill still faces an uphill battle to becoming law. While it appears to have the support needed to pass the Senate, Majority Leader Mitch McConnell (R-Ky.) has said he won’t call it for a vote without approval from President Trump.

The bill would fund ObamaCare’s insurer subsidy payments for two years and give states additional flexibility to change their ObamaCare requirements.

Trump has called the bill a bailout for insurance companies and is pushing for more conservative changes.

But Murray said Tuesday she hasn’t had any discussions with the White House about making changes to the legislation, calling for it to be brought up as is.

The bill thus appears to be at a standstill. Many observers think its only real chance is to be included in a larger deal on spending in December.

House GOP tax cut bill has pluses and pitfalls for healthcare stakeholders

Posted on November 5, 2017 by henrykotula • Posted in Uncategorized • Tagged ACA Funding Cuts, AHA, Budget Reconciliation Process, Excise Tax on Executive Compensation, Health Policy, Healthcare Industry, Itemized Deduction for High Medical Expenses, Lower Corporate Tax Rates, Medicaid Cuts, Medicare Cuts, MGMA, Mortgate Interest Deduction, National Debt, Tax Exempt Status, Tax Policy, Tax-Exempt Bonds, US Budget Deficit • Leave a comment

http://www.modernhealthcare.com/article/20171102/NEWS/171109965/house-gop-tax-cut-bill-has-pluses-and-pitfalls-for-healthcare

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Healthcare companies, executives and professionals could enjoy lower business and personal taxes while facing reduced revenue due to Medicare and Medicaid cuts that may be used to pay for the tax reductions, under the House Republican tax reform bill released Thursday.

The 429-page Tax Cuts and Jobs Act—which congressional Republicans hope to pass quickly through the expedited budget reconciliation process with little or no Democratic support—would slash the corporate tax rate from 35% to 20%. That would benefit profitable companies like UnitedHealth Group, HCA and Universal Health Services, according to an analysis by Mizuho Securities.

The tax plan also would sharply raise the income threshold for individuals and families paying the top personal tax rate of 39.6%, to $500,000 for individuals and $1 million for married couples. In addition, it would abolish the alternative minimum tax. Those provisions would reduce personal income taxes for many healthcare executives and professionals.

But at the same time, the bill would cap corporate interest deductions at 30% of earnings before interest, taxes, depreciation and amortization. That could hurt companies carrying large debt loads such as Tenet Healthcare Corp. and Community Health Systems, which declined to comment on the bill.

“For companies that are profitable, the lower corporate tax rate is a powerful generator of cash flow,” said Sheryl Skolnick, managing director at Mizuho. “But for highly levered companies, the interest deduction is quite powerful for them in reducing their tax bill. If that deduction is no longer available, that would be a negative for money-losing companies with little cash flow to begin with.”

Healthcare industry groups will have to consider how the long-term budget impact of the tax cuts will affect broader health policies.

“This is clearly a package that will increase the deficit significantly,” said Matt Fiedler, an economist at the Brookings Institution’s Center on Health Policy. “Ultimately the lower revenues need to be financed by reduced federal spending. Since healthcare programs are a large portion of the budget, this will create pressure for cuts in those programs.”

The release of the House GOP bill Thursday was the first step in what’s likely to be a politically difficult process of passing a bill in the House and reconciling it with a separate Senate GOP tax bill scheduled for release as early as next week. The legislation is likely to come under heavy fire from various industry and consumer groups as well as Democrats as the winners and losers are identified.

But congressional GOP leaders and President Donald Trump believe they can’t afford another legislative failure following the collapse of their efforts to repeal and replace the Affordable Care Act. “We made a promise to deliver tax reform that creates more jobs, fairer taxes, and bigger paychecks,” House Ways and Means Committee Chairman Kevin Brady (R-Texas) said in a written statementaccompany the bill’s release.

Paul Keckley, a veteran industry analyst, said healthcare companies will hold off on making any financial adjustments based on this bill because it’s certain to undergo substantial changes before anything is passed. “With all the darts that will be thrown at this thing, it’s a long way from the finish line,” he said.

Beyond the immediate tax impact, however, analysts cautioned that healthcare companies should beware of big cuts in Medicare, Medicaid and Affordable Care Act funding that Congress may consider to offset the revenue losses from the bill’s tax cuts. The House and Senate budget resolutions capped the 10-year cost of the tax cut package at $1.5 trillion.

A Democratic analysis of the Senate budget blueprint passed by Republicans last month found that it would cut Medicaid by $1 trillion and Medicare by $473 billion over 10 years.

“This massive tax cut for the rich would add trillions of dollars to the national debt, allowing Republicans to then come after Medicare, Medicaid, Social Security, and other middle-class priorities,” Sen. Patty Murray (D-Wash.) said in a written statement.

“There’s no way you can offset $1.5 trillion in tax cuts without looking at entitlements,” said Anders Gilberg, senior vice president for government affairs at the Medical Group Management Association.

He worried that if congressional Republicans seek to cut Medicare to recoup those revenue losses, that could destabilize the current transition of physicians from fee-for-service to value-based payment. “We’ll be looking at what the offsets are,” he said. “This sounds easy until you have tension between cutting taxes and being accountable for the deficit.”

Skolnick agreed that hospital leaders need to watch out for possible cuts in federal healthcare programs as a way to pay for the tax cuts. “Unless you pay a whole lot of whopping taxes, tax reform will be a net negative for the hospital sector, both for-profit and not-for-profit,” she predicted. “Careful what you wish for, you may get it.”

The American Hospital Association raised objections to two provisions of the bill affecting hospitals. One would stop treating tax-exempt bonds as investment property. The AHA warned that if hospitals’ access to tax-exempt financing is limited or eliminated, they would have a harder time investing in new technologies and renovations.

The other measure would impose a 20% excise tax on executive compensation above $1 million. The AHA said the law already requires a rigorous process for hospital boards to set compensation based on competitive market rates for top talent.

Physician groups were left behind on the bill’s provision reducing tax rates for pass-through entities. Passive owners of S corporations and limited liability corporations — the structures used by many medical groups — would be able to pay just a 25% tax rate rather than the 39.6% top rate for personal income. But medical groups and other professional service firms would not receive that reduced rate unless they were able to show the income was not labor-related.

“I’m disappointed we wouldn’t see a benefit for our members,” said Tina Hogeman, the MGMA’s chief financial officer.

She also worried about the bill’s $500,000 cap on home mortgage interest deductions, down from the current $1 million. “That’s a real problem for our members,” she said. “The average physician has a home that cost more than $500,000.”

A controversial provision of the House GOP bill that affects consumers is the proposed elimination of itemized deductions for high medical expenses, including long-term care costs. That deduction costs the Treasury about $10 billion a year. The AHA opposes ending that deduction.

The Brookings Institution’s Fiedler said that while the deduction isn’t well-targeted to help people with high medical costs, it’s a bad idea to repeal it to help pay for tax cuts for corporations and wealthier Americans.

“It could be sensible policy to repeal the deduction, but here it’s just financing regressive tax cuts,” Fiedler said.

Healthcare industry groups and supporters of the Affordable Care Act were relieved that the House GOP tax bill did not include provisions Republicans were considering to repeal the ACA’s individual mandate or erase the ACA’s taxes on wealthier people’s investment earnings. Those provisions could have undermined the individual insurance market and the financing for the law’s coverage subsidies.

“The bill is most notable for what’s not in there,” Fiedler said.