DCMedical News: Wednesday, February 14, 2018
DCMedical News
Washington, D.C.
Wednesday, February 14, 2018
To our new readers: This is an independent newsletter, published every day that one or another House of Congress is in session. Subscription information will be found at the bottom of these pages.
THE BIG STORY TODAY IN HEALTH CARE
The proposed FY2019 budget continues to make news. In a letter to the Speaker of the House (found here), OMB Director Mulvaney lays out modification of the budget request to account for the new cap levels (associated with what is now called the Bipartisan Budget Act of 2018, found here). The 26-page letter proposes spending below the new non-defense caps, but higher than might have been the case in the original 2019 budget request. In addition to the letter, an 11-page chart and exhibit with discretionary additions (only for the truly committed, found here) shows HHS priorities (pages 6-7).
DOCTORS AND OTHER HEALTH PROFESSIONALS
Consolidation and Monopoly in Health Care:
Physician practice consolidation will be examined as part of the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations hearings today. Of special interest is hospital acquisition of physician practices. A GAO report (“Medicare: Increasing Hospital-Physician Consolidation Highlights Need for Payment Reform,” found here) noted that the number of “vertically integrated” hospitals totaled 1,700 in 2014 and the number of physicians involved in such integration increased in the seven years prior to that time from 96,000 to 182,000. At the same time, Medicare spending in hospital outpatient departments rose at 8.3% from 2007 to 2013, faster than overall Part B spending and faster than other parts of hospital spending.
The staff report contrasts claims by providers for coordination, enhanced efficiencies, reduced cost of capital and economies of scale, by noting that research shows that consolidation may increase the cost of care and does not necessarily improve quality.
Hospital Acquisition of Physician Practices:
A report from MedPAC (found here) concluded “Vertical physician-hospital consolidation increases both commercial and Medicare prices for physician services. Commercial physician prices can increase because of the market power of the hospitals owning the practices. Medicare prices increase as the program pays the physician fee and the hospital fee for an office visit that would have been paid only a physician fee if the visit had been provided in a freestanding physician office.”
Two studies are cited in the staff report demonstrating the impact of hospital acquisition of physician practices on Medicare expenditures. A Milliman study showed that the cost of cancer care increases when the site of chemotherapy infusion goes from the lower cost physician office setting to the higher cost hospital outpatient setting. A study of the 340B drug discount program (see DCMN edition of February 5) found that the 340B program, rather than underpinning indigent care, has fueled hospital acquisition of oncologists’ and ophthalmologists’ practices.
Immigration:
The Senate Majority Leader has indicated that he would like to conclude action on the Senate’s immigration bill this week. Unremarked generally are implications of proposals involving immigration on physician training and on the medical workforce in the United States. It has long been recognized (for example, here and here) that there are a significant number of physicians practicing in the United States who are International Medical Graduates (IMGs), many of whom are not U.S. citizens. In 2015, the Educational Commission for Foreign Medical Graduates (ECFMG), the official conduit for non-U.S.-trained physicians, said 24% of practicing physicians in the U.S. are IMGs. In the 2016 residency match, there were 7,460 IMGs who were not U.S. citizens, 21% of all applicants.
Physician groups have been leaders in articulating health service and medical training issues with immigration. For a comprehensive statement of policy (and a useful bibliography) see here, a report of the Council on Medical Education of the American Medical Association adopted at their 2017 annual meeting.
Noting that one out of four physicians practicing in the U.S. is foreign born, and are disproportionately in primary care, the AMA Council notes that “Foreign born physicians offer high quality care, with low mortality rates among their patients.” They note further that 13,000 physicians in the United States come from the six Muslim-majority countries with suspended entry under the original Administration immigration prohibition. “If this group of physicians were not replaced, given the size of the average primary care patient panel (2,500 patients), the ban could affect more than 1 million patients nationally.”
Physicians in training in 2015 included 2,889 IMG residents with H Visas, and 6,394 residents with J Visas. The majority of physician trainees in H1B (temporary worker) and J1 (exchange) visas were in primary care programs, 50% in internal medicine, for example. With regard to the physicians from Iran, Libya, Somalia, Sudan, Syria and Yemen, 94% of Americans reside in a community that hosts at least one doctor from one of these countries. The AMA Council report notes that the residency 2017 match had 7,233 positions offered in internal medicine; more than 2,000 of them were filled by non-U.S. IMGs. Some subspecialties also depend heavily on non-U.S. citizen graduates of international medical schools, including 45% of nephrology fellowship positions, 42% of vascular neurology positions, 39% of endocrinology and diabetes positions, 37% of interventional pulmonary positions, and 35% of abdominal transplant surgery positions.
HOSPITALS AND HEALTH CARE FACILITIES
Hospital consolidation will also be scrutinized by the Oversight Subcommittee in today’s hearing. Among the witnesses will be “stars” of the field, Professor Leemore Dafny, frequently cited for her work in consolidation, and Professor Martin Gaynor, most recently noted for his work (together with Prof. Zack Cooper) on prices. A background paper by the Committee Majority Staff (found here) has useful data on health care expenditures and discussion of the impact of consolidation on higher hospital prices and the parallel increase in physician prices with practice consolidation and the acquisition of physician practices by hospitals.
One pioneering study not cited in the Oversight Subcommittee staff paper is that of former Massachusetts Attorney General Martha Coakley. Ms. Coakley’s study (found here) notes that higher prices found in leading Massachusetts hospitals stemmed not from the burdens of charity care, volume of Medicaid patients, commitment to research or teaching, or sicker patients, all factors frequently cited by hospitals as reasons for higher prices. Rather, market power through consolidation was the prime determinant of higher prices—hospitals received higher prices because they were “must have” in an insurance network. The 2009 study is the only one known to have conducted with the assistance of subpoena power.
HEALTH INSURANCE, MEDICARE, MEDICAID, COMMERCIAL
Commercial health insurers may also find their consolidation under scrutiny by the Subcommittee. The staff paper reports that the market share of the largest four insurers increased from 74% in 2006 to 83% in 2014. The American Medical Association, which conducts a study of market consolidation each year, reported that in 2016 43% of Metropolitan Statistical Areas had one insurer with at least 50% of the market. Medicare Advantage (MA) is even more consolidated at the national level; a Kaiser Family Foundation report indicated in 2015 that four insurers controlled 61% of the MA market nationally. Today’s Committee hearing will focus on whether there are federal laws or policies which incentivize this consolidation, or, in the alternative, might discourage it.
PHARMA
Pharmacy benefit managers may not escape scrutiny by the Oversight Subcommittee. The staff found that three PBMs account for more than 70% of 2016 market revenues. In addition, the four largest brand name pharmaceutical manufacturers accounted for more than 40% of total industry revenue, and the top three generic pharmaceutical manufacturing companies in the United States accounted for 21.6% of industry revenue in 2017.
EVENTS & MEETINGS
Your February & March Calendar:
February 14
10:00 a.m., Ways and Means Committee, Budget proposals for the Department of Health and Human Services, livestreamed at waysandmeans.house.gov/live.
February 15
Noon, CMS Open Forum on BPCI Advanced, https://engage.vevent.com/rt/cms2/index.jsp?ecid=780.
12:30 p.m., The Health Subcommittee of Energy and Commerce will hold a hearing entitled, “Oversight of the Department of Health and Human Services.” Livestreamed.
February 21
11:00, at Medicare.gov, Physician Compare 90-minute webinar on PQRS.
February 27
10:00-11:30 a.m., The Future Role of Government in Health IT and Digital Health, Bipartisan Policy Center, 1225 Eye Street NW, Suite 1000, Washington, DC 20005.
March 1
MedPAC, Ronald Reagan Building, Horizon Ballroom, 1300 Pennsylvania Ave, continuing March 2.
MACPAC, advisory body on Medicaid and the Children’s Health Insurance Program, continuing March 2.
March 6
8:00-11:00 a.m., Roll Call and CQ News present Health Care Decoded, at the Newseum, information at: http://go.cq.com/2018HealthCareDecoded_01.RegistrationPage.html?utm_medium=newsletter&utm_source=hbmorning.
March 26
PTAC, Physician-Focused Payment Model Technical Advisory Committee, continuing March 27, information at www.regonline.com/PTACMeetingsRegistration or livestream at www.hhs.gov/live.
FOR REFERENCE
Members of the Senate (here) and Members of Senate Committees (here), Senate Calendar (here).
Members of the House with their House Committees (here), House Calendar (here).
DCMN: February publication dates: 15, 16, 26, 27, 28.
Notes to: Fred Hyde, MD, JD, MBA; fredhyde@aol.com