Healthcare Business Trends

Trump Administration’s Plan to Boost Choice, Competition Draws Hospital Concerns

December 5, 2018 8:53 am

Hospitals were supportive of some administration priorities, such as efforts to broaden providers’ scope of practice and expand access to telehealth.

Dec. 4—An expansion of site-neutral payments, support for physician-owned hospitals, and changes to graduate medical education (GME) were among the newly revealed Trump administration priorities that drew early hospital opposition.

The administration’s plans were revealed this week in a comprehensive report that describes ways it aims to increase patient choice and healthcare competition.

Among the priorities garnering early opposition from hospital advocates was the administration’s backing of legislation that would overturn changes implemented by the Affordable Care Act (ACA) to physician self-referral statutes. The administration seeks to ease restrictions on physician-owned hospitals.

“The Congressional Budget Office, Medicare Payment Advisory Commission, and independent researchers have concluded that physician self-referral to facilities in which they have an ownership stake leads to greater per capita utilization of services and higher costs for the Medicare program,” Tom Nickels, executive vice president of the American Hospital Association (AHA), said in a statement. “Further, physician-owned hospitals tend to cherry-pick the most profitable patients, jeopardizing communities’ access to full-service care.”

The report also pushed for more “flexible network adequacy standards” for Medicare Advantage (MA) and other federally sponsored programs, as well as for allowing states more flexibility.

A November proposed rule would allow flexibility for states to set Medicaid plan network adequacy standards that account for new service delivery models like telehealth.

Brian Blase, special assistant to the president for healthcare policy, said in a Dec. 4 address at the American Enterprise Institute in Washington, D.C. that federal and state network adequacy standards limit consumer choice by preventing insurers from utilizing more telehealth or centers of excellence.

But hospital advocates warned such changes could undercut insurance coverage for needed healthcare services.

“Standards for network adequacy need to be strengthened, not relaxed, so consumers won’t be caught by surprise if their neighborhood hospitals are suddenly out-of-network or off limits,” Chip Kahn, president and CEO of the Federation of American Hospitals (FAH), said in a written statement.

The administration also urged legislation that establishes “site-neutral payment policies based on the anticipated clinical needs and risk factors of the patient, rather than the site of service.” Additionally, it urged state Medicaid programs to implement site-neutral payments.

Asked specifically about moving hospital service payment rates in Medicare to be in line with those paid to ambulatory surgical centers (ASCs), Blase said, “We have done most of what we can do.” Alex Azar, secretary of the U.S. Department of Health and Human Services, said in a Dec. 4 address that Medicare expects to save $380 million in 2019 through its latest implementation of site-neutral payments for hospitals.

Blase noted that the Centers for Medicare & Medicaid Services (CMS) is looking for additional areas of health care in which to implement site-neutral payments.

“Certainly, we’re going to drive toward that,” Azar said.

Nickels warned against “any expansion of site-neutral policies,” and hospitals have complained that such payment reductions ignore the greater costs that hospitals incur when providing such services.

“Further, the report ignores that a key to patient access is to ensure community hospitals have the resources they need to provide lifesaving care for anyone who walks through our doors 24/7,” Kahn said. “Hospitals are struggling to maintain critical service lines with hundreds of billions of dollars in Medicare cuts and negative 11 percent operating margins.”

The administration also backed efforts to “streamline” federal GME spending into a single GME grant program. The report said the HHS secretary needs the authority to “modify amounts distributed to hospitals based on the proportion of residents training in priority specialties or programs and based on other criteria identified by the secretary, including addressing healthcare professional shortages and educational priorities.”

But hospital advocates worried that restructuring GME funding would result in less federal support for physician training.

Positive Reactions

Hospitals were supportive of other administration priorities, such as calls to broaden providers’ scope of practice and expand access to telehealth.

The administration’s scope-of-practice priorities include urging state law changes to allow all healthcare providers to practice to the top of their license, as well as policy changes to allow payment directly to non-physician and non-dentist providers.

Other state law changes that are needed, according to the report, include eliminating requirements for “rigid collaborative practice and supervision agreements between physicians and dentists and their care extenders” and broadening the scope of practice of “emerging healthcare occupations, such as dental therapy.”

Blase said restrictive scope-of-practice rules most harm lower-income patients, who end up with less access to care.

The administration backed federal and state legislative and regulatory changes that spur more interstate compacts, and model laws that improve provider clinical license portability.

Similarly, the administration urged federal and state licensing rule changes to create additional opportunities for telehealth practice. It also urged changes to payment rules that block or limit alternatives to in-person services, “including covering telehealth services when they are an appropriate form of care delivery.” Specifically, the administration urged legislation to modify geographic-location and originating-site requirements in Medicare fee-for-service that restrict the provision of telehealth services to Medicare beneficiaries in their homes and in most geographic areas.

The likelihood of implementing some of the statutory and policy changes sought by the administration was downplayed by some healthcare policy advisers.

For instance, Jeff Goldsmith, PhD, a national adviser for Navigant Healthcare, doubted states would make large-scale expansions in scope of practice for allied health professionals, since state medical societies are “the most powerful political interest in the state.”

“This will be a very tough nut to crack,” Goldsmith said.

Other Provisions

The administration’s report was highly critical of the ongoing wave of hospital merger and acquisitions (M&A), as well hospitals’ large-scale purchases of physician practices. 

“While the studies cited above [in the report] do not definitively confirm that increased concentration has led to increased market power or increased payments, they do demonstrate a steady stream of transactions affecting the ownership of hospitals and physician services,” the report stated.

However, the administration did not spell out actions beyond “monitoring market competition, especially in areas that may be less competitive and thus more likely to be affected by alternative payment models.” It also plans more research to ascertain the impact on competition and prices of horizontal and vertical integration among provider practices.  

Barak Richman, JD, PhD, a professor at the Duke Law School, said states are unlikely to limit hospital M&A because those organizations are the leading employers in most counties.

Novel initiatives urged by the administration included allowing all Americans, including Medicare beneficiaries, to have a health savings account—not only those enrolled in high-deductible health plans. The administration also backed allowing direct negotiations between Medicare beneficiaries and providers “so that beneficiaries can access services at a price or under a payment plan that works for them.”

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare


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