Industry Content   /   November 2019

Healthcare Policy News: What’s Going On in Washington

Healthcare Policy News: What’s Going On in Washington

The year is winding down and impeachment is dominating the headlines- but there is still a lot of important healthcare policy news coming out of Washington D.C. and state governments.

Here are some of the most important stories to keep an eye on:

Trump administration announce plan to promote transparency in hospital pricing

The Trump administration recently announced a plan that it says will increase transparency in hospital pricing. This policy was put forward by the Center for Medicare and Medicaid Services (CMS).

Under the new rules, hospitals would be required to publicly disclose the negotiated price for specific items. Prices must be easily accessible to consumers. Most employer health plans and individual plans must also make pricing information publicly available. They will be required to disclose information about negotiated in-network prices as well as out-of-network services.

CMS and Trump administration officials believe this will help consumers by enabling them to make informed choices about their healthcare. They say that current regulations do not provide adequate information for consumers. The new rule is set to go into effect on January 1, 2021.

However, many provider and payer groups object to the proposed rule. Many major industry groups have already condemned the rule, and it is expected that these groups will mount a legal challenge to the new rule. The challenge will center on the issue on whether CMS has the authority to enact this rule under the Public Health Service Act.

CMS announces new proposal regulating Medicaid payments

CMS Administrator Seema Verma has announced several new proposals regarding Medicaid payments. Proposed rules would require states to report more information on supplemental Medicaid spending. Like other proposed rules, this is an effort to increase transparency in healthcare pricing. Verma also hopes it will reduce Medicaid costs.

CMS refers to the proposed rule as Medicaid Fiscal Accountability (MFAR). It will increase scrutiny on supplemental Medicaid payments. Many providers have raised objections to MFAR because some states rely heavily on supplemental payments to offset the low rates of standard Medicaid reimbursements. Struggling hospitals oftentimes rely on these payments. The advocacy organization American Essential Hospitals (AEH), which represents more than 300 hospitals, has asked CMS to withdraw MFAR.

However, some government oversight agencies support the change, including the Government Accountability Office and the Office of Inspector General.

Congressional advisory committee finds that consolidation is associated with higher prices

The Medicare Payment Advisory Committee (MPAC) recently released a study on how mergers and acquisitions in the healthcare industry impact consumer prices. MPAC found that providers with a higher market share tended to have higher profit margins, hence causing higher costs per discharge. Medicare and consumer payers are all seeing higher costs as a result of the trend towards consolidation.

MPAC examined vertical consolidation in addition to horizontal consolidation. Its findings suggest that the trend of hospitals acquiring smaller physician practices are likely contributing to higher costs. This study is one of a growing body of literature with similar findings.

Although the Federal Trade Commission (FTC) has won several challenges to mergers and acquisitions in the healthcare sector over the past ten years, it has been quite rare for the FTC to mount a challenge.

It is not yet clear how lawmakers will respond to these findings. MPAC will likely release more findings in the new year.

Georgia governor attempts major changes to ACA markets

Georgia Governor Brian Kemp announced a plan to make major changes to the state’s individual health insurance market under the ACA. The plan would move $2.7 billion in health insurance subsidies from federal control to state control. It also provides about $300 million to carriers for reinsurance in health plans. The purpose of this is to protect insurers against high claims.

Kemp’s plan would bypass Georgia will not build its own healthcare exchange to replace the federal exchange. Instead, consumers would find health plans on websites run by private brokers and insurers. The marketplace would include health plans that are not compliant with ACA provisions.

For the plan to go through, the Trump administration must approve the waiver that Georgia has applied for. Kemp has said he is confident the waiver will be approved.

Although Kemp has said his proposal will reduce the costs of insurance premiums for Georgia, others have criticized it. Critics believe that offering subsidies to non-ACA-compliant plans will destabilize the health insurance markets.

The future of healthcare policy—like so much else in Washington—is uncertain. But these potential changes to payment transparency, Medicaid, and the ACA are worth keeping an eye on.


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