On Wednesday, lawmakers hammered CMS Administrator Chiquita Brooks-LaSure on a variety of healthcare issues in her first appearance before a congressional panel since being confirmed to her post.
One of the hearing’s biggest themes was site neutrality, as members of the House Energy and Commerce health subcommittee queried the administrator on why the government pays hospital-owned outpatient sites more than other physician offices for the same services.
Lawmakers on both sides of the aisle expressed support for enacting site-neutral payments, policies fiercely opposed by hospitals because they would lower revenue.
“Today, patients and Medicare pay more at hospitals than outpatient centers or physician offices for the same services,” said Rep. Cathy Rodgers, R-Wash. “Ideas for site-neutral payments are bipartisan. Presidents Obama and Trump proposed them in their budgets ... This is the right thing to do for patients.”
Critics say the unequal payment structure drives up expenses for the Medicare program and patients through higher cost sharing. It also creates adverse incentives for consolidation, as hospitals acquire physician offices, change their designation and bring in more revenue for providing the same care.
When asked about plans to implement site-neutral payments, Brooks-LaSure testified that the CMS can’t take unilateral action without express approval from Congress.
“For the most part, Medicare payment policy is determined by statute,” Brooks-LaSure said. “In some limited circumstances, we have implemented site-neutral payments where we feel that we have authority.”
Members of the health subcommittee on both sides of the aisle suggested site-neutral payment reforms would save the government money and tamp down on provider consolidation.
“Hospitals are motivated to gobble up physician practices because they’re able to bill Medicare roughly double the amount that private practices can,” said Rep. Mariannette Miller-Meeks, R-Iowa. “I’m very sensitive to the concerns of my rural hospitals, but when we’re talking about the entire healthcare system and the cost of the healthcare system and trying to provide increased access and increased quality of care, I think this is concerning.”
Site-neutral payment reforms could save Medicare more than $100 billion over a decade, according to various projections cited by lawmakers.
The panel’s legislative hearing focused on a number of bills around transparency and competition, including several aimed at changing Medicare to pay hospitals the same as doctor’s offices for certain services.
One bill on the table would bring Medicare hospital payments for certain low-acuity services in line with the lower rates paid to doctors’ offices, including for certain imaging procedures and diagnostic tests. Other bills would expand site neutral provisions to more off-campus outpatient departments and equalize payments for drugs administered by physicians in outpatient settings.
Site-neutral policies don’t take into account “fundamental differences” between hospital outpatient departments and other sites of care, AHA SVP of public policy Ashley Thomas said in testimony before the subcommittee.
Hospital outpatient sites generally see sicker patients and have higher overhead costs, including investments in standby capacity in event of disasters and around-the-clock emergency care, Thomas said.
Witnesses in a second panel following Brooks-LaSure’s appearance — including Sean Cavanaugh, chief policy officer of value-based company Aledade; Ilyse Schuman, SVP of health policy for the American Benefits Council; and Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy — said they strongly supported site neutrality legislation to lower costs and remove an incentive for provider consolidation.
Site-neutral policies are supported by everyone in the healthcare ecosystem but hospitals, Adler testified.
“Lobbyists are pretty much the only opposition,” Adler said.
Price transparency, PBMs
Lawmakers also grilled Brooks-LaSure on hospital compliance with sweeping price transparency rules, arguing the CMS isn’t doing enough to enforce the regulations after having imposed fines on only four hospitals to date.
Brooks-LaSure said the CMS plans to be more aggressive with compliance, announcing the agency will soon shorten the time a hospital must comply to 90 days after the CMS issues a corrective action plan.
In addition, the CMS will no longer send hospitals a warning notice if they don’t make an attempt to come in line with transparency requirements, but instead immediately request a corrective action plan, Brooks-LaSure said.
The hearing also focused on the role that pharmacy benefit managers play in driving up the cost of medication in the U.S. Draft bills under discussion would significantly increase PBM oversight by requiring them to disclose more information about negotiation and pricing, as the companies — the biggest of which are all owned by major insurers — face rising criticism over anti-competitive business practices.
Kristin Bass, chief policy officer of PBM lobby the Pharmaceutical Care Management Association, argued the PBM bills would limit choice and release confidential information that would give drug companies unfair leverage during drug negotiations.
“We should avoid government mandates,” Bass said.
ABC’s Schuman noted more transparent drug pricing information would restore competition, as employers would know if any negotiated rebates are flowing back to them or being retained by the PBM as profit. And lawmakers weren’t buying the argument that transparency would raise costs.
“I hope our committee really stands up to what needs to be done relative to PBMs, because there’s a lot of work to do there,” Eshoo, chairwoman of the health subcommittee, said.