DCMedical News: Thursday, June 20, 2019
DCMedical News-DCMN
Washington, D.C.
Thursday, June 20, 2019
DCMedical News is published every day both the House and the Senate are in session. Subscription information below.
THE BIG STORY IN HEALTH CARE
Surprise Bill for Hospitals: Providers Who Didn’t Like “Network Alignment” Get “Rate-Setting”
The omnibus health bill to be offered by the Senate Health, Education, Labor and Pensions Committee (bill text here, summary here) provides protection for patients against surprise bills by using a “benchmark rate.” The bill would prohibit balance billing, for example when a patient receives a bill for out-of-network services at an in-network facility. The “benchmark rate” the insurers would pay providers (in lieu of the out-of-network charges) in such cases would be at the median in-network rate for a defined geographic area. The alternative, favored by the Committee Chair, was an “in-network guarantee” that would require any provider at a facility that wasn’t in an insurance company’s network to in fact be considered as being in that network. Notwithstanding that the “benchmark” would limit reimbursement, it would also save hospital executives from having to negotiate with their out-of-network physicians to induce them to become in-network. In remarks about the bill, Senator Alexander cited the opinion of the Congressional Budget Office that the “benchmark” rate is the most effective at lowering costs, in comparison to the in-network guarantee or arbitration, the other two alternatives.
Third Executive Order? Hospitals and Health Plans Wait for Transparency
The Administration has issued two executive orders intended to influence prices and competition in the health field, the first immediately after inauguration (here), aimed at undoing regulations associated with the Patient Protection and Affordable Care Act, the second, in October of 2017 (here), intended to remove barriers to the sale of “alternative insurance” with lesser coverage, fewer protections, and, possibly, lower prices. A third executive order for the health field, promised for a month now (here), would compel disclosure of negotiated rates (actual prices paid to hospitals by health plans). A spokesperson for America’s Health Insurance Plans labeled this “bad transparency.”
DOCTORS, NURSES AND OTHER HEALTH PROFESSIONALS
Unprofessional Behavior a Predictor of Surgical Mishap
A study in JAMA Surgery (here) found that “Patients whose surgeons had higher numbers of coworker reports about unprofessional behavior in the 36 months before the patient’s operation appeared to be at increased risk of surgical and medical complications.”
MEDICARE, MEDICAID AND COMMERCIAL HEALTH INSURANCE
Work Requirements Do Not Preserve Health Insurance Coverage, or Jobs
A study in this week’s New England Journal of Medicine (here) concluded that “[I]n Arkansas and three comparison states, we found that implementation of the first-ever work requirements in Medicaid in 2018 was associated with significant losses in health insurance coverage in the initial 6 months of the policy but no significant change in employment.”
FTC on DaVita Medical Group’s Acquisition by UnitedHealth
The Federal Trade Commission has blessed the acquisition of DaVita Medical Group (DMG) by UnitedHealth, contingent on DMG’s divestiture of a medical group (Health Partners of Nevada) in Las Vegas, to Intermountain Health Care. The FTC complaint is here, final order (subject to comment) here, opinion of Commissioners Phillips and Watson here, opinion of Commissioners Slaughter and Chopra here. “According to the complaint, in the Las Vegas Area, the proposed acquisition would eliminate competition between UnitedHealth Group’s OptumCare and DaVita Medical Group’s HealthCare Partners of Nevada, resulting in a near monopoly controlling more than 80 percent of the market for services delivered by MCPOs [Managed Care Provider Organizations] to Medicare Advantage insurers.”
The acquisition, however, also involves medical groups in Colorado, Florida, New Mexico, Nevada and Washington, but only Nevada was targeted in the order. Commissioners Phillips and Watson summarized their thinking, and appear to have summarized that of Slaughter and Chopra, as well, as follows: “Our colleagues write separately, stating they would have asked a federal judge to block United’s acquisition of DMG based on their belief that the vertical integration of United’s health insurance business and DMG’s MCPOs and physicians in Colorado would harm consumers . . . As Commissioners Slaughter and Chopra point out, the acquisition in Colorado is purely vertical. In other words, in that state the transaction combines firms that operate at different levels of the supply chain and do not compete with one another. Specifically, DMG’s MCPO services and physicians serve as ‘inputs’ to the MA insurance plans that United and other health insurers sell to employers and individuals. The putative theory of harm in Colorado involved raising rivals’ costs (‘RRC’). It posited that, after acquiring DMG, United would find it profitable to raise DMG’s prices to rival MA insurance plans, because doing so would reduce these plans’ benefits and induce some customers to switch to United’s MA products. The more business United recaptures in the market for MA plans, the greater its incentive to raise DMG’s prices to rivals. We do not rule out the possibility that vertical mergers can harm competition under a RRC theory. . . But vertical mergers often generate procompetitive benefits that must also factor into the antitrust analysis. A major source of these benefits is the elimination of double-marginalization, which places downward pressure on prices in the output market. We conclude that the evidence in Colorado, quantitative and qualitative, reflected both dynamics, with mixed results. In our view, taken together, the evidence would not have convinced a judge that the proposed acquisition was likely, on balance, to harm consumers in Colorado. As our colleagues note, a lawsuit based upon this evidence posed significant litigation risk. Among other things, the law on vertical mergers is relatively underdeveloped, and an adverse decision can impact enforcement in later cases that present clearer harm. Of course, all litigation presents risks, and sometimes the risks are worth taking. But, faced with a body of evidence of harm that was ambiguous in the first place, we cannot agree with our colleagues that this was a case on which to roll the dice.” (Italics added.)
In their statement Commissioners Slaughter and Chopra confined themselves to this consolation: “Fortunately, the Attorney General of Colorado has taken action in an effort to address some of the harmful effects of the merger in a separate action. We hope all state attorneys general actively enforce the antitrust laws to protect their residents from harmful mergers and anticompetitive practices.”
READINGS AND REFERENCES
“The Campus [Health System] Innovation Myth,” from The Chronicle of Higher Education June 21, 2019.
Which of these phrases applied to “innovation” offices and efforts of universities also apply to innovation efforts in modern American health systems? “Imagine if public relations pronouncements from universities had to live up to the rigors of peer review.” “The increasing influence of tech giants in higher education portends a new level of top down decision-making.” “Campus innovation initiatives are meant to generate growth by commercializing scientific discoveries…such efforts rarely succeed…university tech transfer offices, which focus on patents and licensing, have similarly failed to deliver.” The Chronicle reports that for 20 years 87% of university innovation offices lost money.
Washington State
Balance Billing Legislation, Rule Development (here) and Web Page for the new balance bill prohibition is here: https://www.insurance.wa.gov/balance-billing-protection-act-r2019-04?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=
Also from Washington and Inslee-care, the Governor kicks off (here) first meeting on Cascade Care, the nation’s first state-sponsored public option health insurance plan.
U.S. House of Representatives:
Members at https://www.house.gov/representatives.
Committees and Members at https://www.house.gov/committees.
U. S. Senate:
Members at https://www.senate.gov/general/contact_information/senators_cfm.cfm.
Committees and Members at https://www.senate.gov/committees/membership_assignments.htm.
House and Senate 2019 Calendar of Regularly Scheduled Sessions, here.
PUBLICATION SCHEDULE FOR DCMEDICAL NEWS
June publication dates: 21, 24, 25, 26, 27
July publication dates: 9, 10, 11, 12, 15, 16, 17, 18, 23, 24, 25, 26
August publications dates: None
Notes to: Fred Hyde, MD, JD, MBA; fredhyde@aol.com.