Cost Reduction

On Costs, Congress Eyes Transparency, Billing, Consolidation

July 3, 2018 8:56 am

While many states have started to address the issue of surprise billing, the federal government would need to legislate changes that impact ERISA-regulated insurance.

July 2—Members of Congress say they are increasingly concerned about rising healthcare costs and are looking at policies around transparency, balance billing, and provider consolidation.

Efforts to improve price and quality-data transparency attracted the broadest interest during a June 27 hearing by the Senate Health, Education, Labor and Pensions (HELP) Committee on ways to reduce healthcare costs.

For instance, Sen. Lamar Alexander (R-Tenn.), the chairman of the HELP Committee, named transparency as a key to reducing healthcare costs—along with tackling waste and implementing “private-sector solutions.”

But the discussion of ways to increase transparency also illustrated the complexity of doing so.

“When we have price transparency, we also need an evaluation of quality,” said Sen. Susan Collins (R-Maine), because otherwise patients would conflate high prices with high quality.

Members of the committee include a bipartisan group of six senators who wrote a letter to healthcare stakeholders earlier this year as part of their effort to write new transparency legislation. The group is still formulating details of that legislation, but one member, Sen. Bill Cassidy (R-La.), released a list of priorities in May that included a statutory requirement for healthcare entities to provide “price transparency for elective medical services.”

One factor that determines the efficacy of transparency data is whether patients have a choice of providers, Ashish Jha, MD, director of the Harvard Global Health Institute, told the panel.

“Because without competition, transparency alone won’t get us there,” Jha said.

Senators echoed concerns about increased consolidation among healthcare providers, and Cassidy wondered whether antitrust enforcement agencies require greater power from Congress to increase their interventions in such deals.

David Hyman, MD, JD, a professor at Georgetown University Law Center, said Congress needs to determine whether hospital consolidation is driving recent healthcare price increases. He noted his recent research finding that among enrollees in employer-sponsored insurance, hospitalizations decreased by 13 percent in 2012-16, even as hospital spending on those enrollees increased by 8 percent.

The American Hospital Association pushed back on the focus on hospital prices by noting in written testimony to the committee that from 2008 to 2017, hospital prices increased by an average of 2 percent, compared to annual increases of 3 percent in the overall price of medical care and 5.6 percent in drug prices.

Another approach suggested by Cassidy would allow some insurers to set rates for all providers in a market based on a share of the Medicare rate.

Cassidy noted that he did not want to cause closures among financially struggling hospitals that need to merge with financially healthier organizations to survive.

But Jha said such deals are “the exception” among hospital mergers and acquisitions.

“In bigger cities, we could probably stand to have fewer hospitals,” Jha said. “When those hospitals get bought up by bigger systems, they stay in business and then the market power makes a real challenge for increasing prices.”

Ways to improve competition in rural areas include broadened access through telemedicine and state expansions of the scope of practice for allied health professionals, Hyman told the committee.

Melinda Buntin, PhD, professor and chair of the Health Policy Department at Vanderbilt University School of Medicine, said federal, state, and commercial insurers could increase competition among rural hospitals by basing more of their payment on benchmarks that measure whether hospitals reduce their own costs of providing care or keep costs lower than those of similar hospitals in other locations.

“It’s a really large challenge for rural areas, and we probably can’t use the same methods of competition as we can in urban areas, but we can get creative about the types of competition we introduce into the system,” Buntin said.

Balance Billing

Alexander also raised concerns about the practice of balance-billing of patients, who often are surprised to learn they received care from an out-of-network provider that was co-located with an in-network provider.

Jha cited estimates that 14 percent of emergency department (ED) visits will result in a “surprise bill” due to care from an out-of-network provider. So far, 21 states have undertaken efforts to reduce such bills, including six states that have enacted legislation either to require negotiation between insurers and providers in those cases or to limit payments for care to some multiple of Medicare rates.

However, the federal government would need to take action to impact situations that involve ERISA-regulated (i.e., most employer-sponsored) insurance.

Cassidy said providers also need to do more to help patients understand the financial ramifications of their care and find ways to reduce their costs.

Sen. Bob Casey (D-Pa.) also was critical of the rise of high-deductible health plans (HDHPs), which some research has credited with the post-recession slowdown in healthcare spending. Casey noted that even when HDHPs are coupled with health savings accounts or first-dollar coverage of preventive services, enrollees still avoid needed care. 

Value-Based Care

Some senators also urged an expansion of value-based payment (VBP) models to help control costs.

For instance, Sen. Patty Murray (D-Wash.), the ranking Democrat on the committee, hailed savings from existing models and criticized the Trump administration for deciding, in 2017, to partially curtail a mandatory bundled payment model and, more recently, to abandon the Obama administration’s goal to shift 50 percent of Medicare payments to VBP models by the end of 2018. Health and Human Services Secretary Alex Azar said at a recent event that he was looking to replace that goal.

Buntin said such goals “change the conversation in the C-suite about what investments need to be made,” such as whether to buy expensive new imaging equipment that can be marketed.

“Convincing providers that we are going to keep the pressure on in terms of value-based payment makes a big difference,” even outside of Medicare, Buntin said.

Although Cassidy echoed questions that some research has raised over whether accountable care organizations are saving Medicare any money, witnesses told the committee that the benefits of various payment models may still yet be revealed. For example, Jha noted that federal-spending forecasters never expected Medicare Advantage plans to produce the large cost savings that those plans have achieved. 

“We need more experimentation, we need new models,” Jha said.

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


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