Hospitals Sue Over Site-Neutral Payments

[drusso]

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All MD/DO's need to join together in letting regulators know that site of service arbitrage is bad for patients...

Dozens of hospitals sue to end site-neutral payment policy
By Tara Bannow | January 22, 2019
Thirty-eight hospitals sued HHS on Friday over a new rule that cuts Medicare payments for some services provided at off-campus hospital sites.

The lawsuit claims HHS Secretary Alex Azar acted beyond his statutory authority when he cut payment rates for evaluation and management services provided at the hospital sites so that they aligned with those paid to physicians' offices; the final rule took effect Jan. 1.

"The secretary's rule is irrational, a patent misconstruction of the Social Security Act and a blatant attempt to circumvent the will of Congress clearly expressed in Section 603," the complaint said.

Plaintiffs in the lawsuit include Montefiore Health System, Ochsner Medical Center, OSF HealthCare, Atrium Health, the University of Virginia Medical Center and Vanderbilt University Medical Center. Hospital representatives and attorneys with King & Spalding, the law firm representing the hospitals, declined to comment. An HHS spokeswoman also did not return a request seeking comment.

Medical procedures are moving into outpatient facilities, mainly due to technological advances such as minimally invasive surgical procedures. But value-based care incentives are also playing a role in this trend.

The site-neutral payment policy will translate to total payment reductions of $380 million in 2019 and $760 million in 2020, according to the complaint filed in U.S. District Court for the District of Columbia. In addition to allegedly violating Congress' directive, the lawsuit says the cuts weren't budget-neutral, which Congress requires for all such payment adjustments. HHS needed to make funding increases to offset the anticipated losses.

Under Section 603 of the Bipartisan Budget Act of 2015, the Medicare program now pays the same rates for medical services whether they're provided in a physician's office or a hospital department located off of the hospital's main campus. Congress made an exception for off-campus hospital departments that were providing services before Nov. 2, 2015. But Azar reversed course and issued a final rule that eliminates the higher payment rate for the grandfathered hospital departments.

The American Hospital Association is leading a similar lawsuit filed in December, before the site-neutral payment policy took effect. The Association of American Medical Colleges joined that suit, as did three independent health systems. King & Spalding is not involved in that lawsuit.

The lawsuits could end up being combined, much like what happened with lawsuits from the AHA and other associations over CMS' so-called "two-midnight" rule in 2014.

In their complaint, the hospitals wrote that in general, services provided in hospital outpatient departments are costlier to provide than in physicians' offices. That's because hospitals have to provide a wider range of services and meet stricter regulatory requirements than free-standing physician offices, according to the complaint, which cites the requirement that hospitals offer 24-hour nursing care, maintain discharge planning protocols and meet health and safety requirements as examples.

"None of these conditions for participating in Medicare and other federal healthcare programs apply to an independent physician's office," the complaint said.

One of the plaintiffs, Tampa General Hospital, runs two off-site clinics that primarily serve the most vulnerable patient populations in the metro area. The patients are very different from those treated in the average physician's office, the hospital said.

"These patients are more medically complex and have a substantially higher proportion of social determinants of health—such as housing, transportation, literacy and nutrition—which provide additional challenges and add to the complexity of care," the complaint said.

The payment cuts compound already precarious financial situations at the hospitals, according to the suit.

"Even prior to this rate cut, plaintiffs were under significant financial strain from steadily increasing costs in the healthcare marketplace and reimbursement cuts from the government and private insurers alike," the lawsuit said.

 

[TheLoneWolf]

They argue they need this to keep the lights on. Maybe true in the small hospitals in rural areas. I suspect that the average hospital with record profits, bloated administration and bureaucracy are the ones funding this movement with their lobbyists.

 

[drusso]

They argue they need this to keep the lights on. Maybe true in the small hospitals in rural areas. I suspect that the average hospital with record profits, bloated administration and bureaucracy are the ones funding this movement with their lobbyists.

Critical access hospitals get added perks, plus 340B pharmacy subsidies. They're raking it in...

Reforming the 340B Program Will Lower the Price of Prescription Drugs

"The covered entities purchase drugs at the 340B discounted price, but are reimbursed for a large percentage of these sales at the full price of the medicine. The covered entities will then pocket the difference as a government protected profit."

 

[Ducttape]

Yet not all hospitals are “taking it in”...

These 11 hospitals closed in 2018: Here's why

 

[drusso]

Yet not all hospitals are “taking it in”...

These 11 hospitals closed in 2018: Here's why

Healthcare Reform Creates Provider Monopolies | The Lund Report

"Since 2012 the number of hospital-owned physician practices has nearly doubled. Now, hospitals and healthcare networks employ over 38% of all physicians in many markets across the country. In my community, the number of hospital-employed MD’s has quadrupled since 2007. Approximately 22% of physician markets are experiencing this level of concentration, raising antitrust concerns based on federal guidelines. Unfortunately, these mergers are too small (one or two physician groups at a time) to attract the attention of federal regulators, so this trend is expected to continue."

 

[pastafan]

THE NEW HEALTH CARE

Hospital Mergers Improve Health? Evidence Shows the Opposite
The claim was that larger organizations would be able to harness economies of scale and offer better care.


An M.R.I. technologist at the Yale-New Haven Hospital Saint Raphael Campus. A merger of the hospitals in 2012 raised hospital prices in New Haven. But there are also questions about whether such mergers can hurt the quality of care. CreditChristopher Capozziello for The New York Times

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An M.R.I. technologist at the Yale-New Haven Hospital Saint Raphael Campus. A merger of the hospitals in 2012 raised hospital prices in New Haven. But there are also questions about whether such mergers can hurt the quality of care. CreditCreditChristopher Capozziello for The New York Times

By Austin Frakt

• Feb. 11, 2019

Many things affect your health. Genetics. Lifestyle. Modern medicine. The environment in which you live and work.

But although we rarely consider it, the degree of competition among health care organizations does so as well.

Markets for both hospitals and physicians have become more concentrated in recent years. Although higher prices are the consequences most often discussed, such consolidation can also resultin worse health care. Studies show that rates of mortality and of major health setbacks grow when competition falls.

This runs counter to claims some in the health care industry have made in favor of mergers. By harnessing economies of scale and scope, they’ve argued, larger organizations can offer better care at lower costs.

merge, forming a 68-hospital system. The systems have since abandoned the plan, but not before Jim Hinton, Baylor Scott & White’s chief executive, told The Wall Street Journal that “the end, the more important end, is to improve care.”

Yet Martin Gaynor, a Carnegie Mellon University economist who been an author of several reviews exploring the consequences of hospital consolidation, said that “evidence from three decades of hospital mergers does not support the claim that consolidation improves quality.” This is especially true when government constrains prices, as is the case for Medicare in the United States and Britain’s National Health Service.

“When prices are set by the government, hospitals don’t compete on price; they compete on quality,” Mr. Gaynor said. But this doesn’t happen in markets that are highly consolidated.

In 2006, the National Health Service introduced a policy that increased competition among hospitals. When recommending hospital care, it required general practitioners to provide patients with five options, as well as quality data for each. Because hospital payments are fixed by the government — whichever hospital a patient chooses gets the payment for care provided to that patient — hospitals ended up competing on quality.

Mr. Gaynor was an author of a study showing that consequences of this policy included shorter hospital stays and lower mortality. According to the study, for every decrease of 10 percentage points in hospital market concentration, 30-day mortality for heart attacks fell nearly 3 percent.

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Another study found that hospital competition in the N.H.S. decreased heart attack mortality, and several studies of Medicare also found that hospital competition results in lower rates of mortality from heart attacks and pneumonia.

Another piece of evidence in the competition-quality connection comes from other types of health care providers, including doctors. Recently, investigators from the Federal Trade Commission examined what happens when cardiologists team up into larger groups. The study, published in Health Services Research, focused on the health care outcomes of about two million Medicare beneficiaries who had been treated for hypertension, for a cardiac ailment or for a heart attack from 2005 to 2012.

The study found that when cardiology markets are more concentrated, these kinds of patients are more likely to have heart attacks, visit the emergency department, be readmitted to the hospital or die. These effects of market concentration are large.

To illustrate, consider a cardiology market with five practices in which one becomes more dominant — going from just below a 40 percent market share to a 60 percent market share (with the rest of the market split equally across the other four practices). The study found that the chance of having a heart attack would go up 5 to 7 percent as the largest cardiology practice became more dominant. The chance of visiting the emergency department, being readmitted to the hospital or dying would go up similarly.

The study also found that greater market concentration led to higher spending. And a different study of family doctors in England found that quality and patient satisfaction increased with competition.

For many goods and services, Americans are comfortable with the idea that competition leads to lower prices and better quality. But we often think of health care as different — that it somehow shouldn’t be “market based.”

What the research shows, though, is that there are lots of ways markets can function, with more or less government involvement. Even when the government is highly involved, as is the case with the British National Health Service or American Medicare, competition is a valuable tool that can drive health care toward greater value.


Austin Frakt is director of the Partnered Evidence-Based Policy Resource Center at the V.A. Boston Healthcare System; associate professor with Boston University’s School of Public Health; and adjunct associate professor with the Harvard T.H. Chan School of Public Health. He blogs at The Incidental Economist. @afrakt

A version of this article appears in print on Feb. 11, 2019, on Page B7 of the New York edition with the headline: Competition? It’s What the Doctor Ordered. Order Reprints | Today’s Paper | Subscribe