Health Policy Report – April 30, 2024

Dr. Mark T. Fleming Pens LTE In Response to Op-Ed by Former HHS Secretaries on Site Neutral Payment Reform
Dr. Mark T. Fleming, Chair of The Network’s National Policy Board, recently penned a letter to the editor (LTE) in STAT News on the need for Congress to finish the job on site neutral payment reform. The piece followed a recently published op-ed by Alex Azar (Trump Administration) and Kathleen G. Sebelius (Obama Administration), former Secretaries of the Department of Health and Human Services (HHS), that highlighted how hospitals have used site-of-service payment differentials to acquire physician practices and benefit from a higher payment rate. 

The op-ed by the former Secretaries highlighted how both administrations advanced site neutral payment reforms: President Obama signed the Bipartisan Budget Act of 2015 into law which first implemented site neutral payment policy for the Medicare program, President Trump expanded this policy to include E/M visits in previously exempt facilities, and both presidents included site neutral policies in their budget proposals.

In his LTE, Dr. Fleming emphasizes that site neutral payment reform is a bipartisan issue that deserves immediate attention. However, Dr. Fleming notes that previous reforms didn’t fulfill their intended purpose. “Congressional reform efforts in 2015 only applied to newly built HOPDs, which only account for 2.3% of Medicare outpatient spending, allowing older HOPDs to continue benefiting from a higher payment rate. It is time to fully address this problem once and for all,” he wrote. 

Dr. Fleming concludes by urging Congress to go further and pass the Lower Costs, More Transparency Act (H.R. 5378), which passed the House of Representatives in a strong, bipartisan vote last year.  

To read Dr. Fleming’s LTE, CLICK HERE.

To read the op-ed from former secretaries Alex Azar and Kathleen G. Sebelius, CLICK HERE. 

Dr. David Cosgrove Thanks Oregon Lawmakers for Passing White Bagging Legislation in LTE

In a recent letter to the editor (LTE) published in The Oregonian, Dr. David Cosgrove of Compass Oncology thanks Oregon policymakers for enacting HB 4012, which will restrict health insurers and pharmacy benefit managers’ (PBMs) use of “white bagging” practices for cancer care.

In the piece, Dr. Cosgrove highlights that the overwhelming majority (87%) of Oregon residents support the regulation of insurance companies and their affiliated PBMs. He describes how white bagging mandates delay treatment, increase costs, and introduce safety risks due to the potential mishandling of sensitive medications.

The legislation, led by Representative Rob Nosse and signed by Governor Tina Kotek, is a critical step in a nationwide movement to remove insurers and their PBMs from the patient-physician decision-making process.

To read the letter to the editor, CLICK HERE.

FDA Issues Final Rule to Regulate Lab-Developed Tests

The Food & Drug Administration (FDA) has issued a final rule that will regulate lab-developed tests (LDTs), marking a significant shift in the oversight of these diagnostic tools. Historically, LDTs, which are tests developed and performed within a single laboratory, have been exempt from FDA regulation. However, the new rule aims to ensure the accuracy and reliability of LDTs by requiring laboratories to seek FDA authorization before marketing them.

Under the rule, laboratories will need to demonstrate that their LDTs meet certain standards for analytical and clinical validity. This involves providing evidence that the tests accurately detect the intended conditions and that the results are clinically meaningful. Additionally, laboratories will be required to comply with quality system regulations to ensure consistent and reliable testing procedures.

When the FDA first introduced its regulation plan in September, it was met with fierce pushback from lab associations and hospitals, weary of the costs associated with submitting tests to the FDA. The rule, critics asserted, would negatively impact patient access to testing and innovation in the laboratory space. However, the final rule is far easier on the industry, giving labs four years to comply with FDA requirements.

Federal lawmakers have long called for legislation, rather than FDA regulation, to oversee LDTs. For example, the Verifying Accurate Leading-edge IVCT Development (VALID) Act, which would put stricter approval requirements on higher-risk tests, came close to passage in 2022 but did not ultimately pass.

“We are disappointed that the FDA has moved ahead with a burdensome rule based on an inflexible statute that was never designed to regulate in vitro diagnostics,” Representatives Larry Bucshon (R-IN) and Diana DeGette (D-CO) said in response to the final rule. “However, we also recognize that FDA’s action today is because Congress hasn’t acted yet.”

To read the press release from the FDA, CLICK HERE.

To read FDA’s FAQ, CLICK HERE.

To read the statement from Reps. Bucshon and DeGette, CLICK HERE.

To read more, CLICK HERE.

House Energy & Commerce Health Subcommittee Holds Hearing on Change Healthcare Cyberattack

On April 16, the House Energy & Commerce Health Subcommittee convened for the first Congressional hearing on the Change Healthcare cyberattack, which caused nationwide disruptions in healthcare and billing processes earlier this year. During the nearly three-hour-long hearing, lawmakers raised concerns about the growing influence of vertically integrated healthcare actors, like UnitedHealth Group. Specifically, lawmakers argued that growing consolidation within the healthcare sector has created vulnerabilities to cyberattacks.

Though Congress is still in the early stages of crafting a potential legislative solution, the hearing indicated lawmakers’ willingness to scrutinize vertical mergers. Ranking Member Anna Eschoo (D-CA) expressed concern regarding the risks posed by the growing consolidation in the healthcare industry, arguing that the cyberattack shows how UnitedHealth Group’s “anti-competitive practices present a national security risk because its operations now extend through every point of the healthcare system.”

Despite the company’s significant financial losses resulting from the breach, Andrew Witty, CEO of UnitedHealth Group, asserted in a recent statement that UnitedHealth’s ownership of Change Healthcare facilitated a more robust recovery process. Witty is scheduled to appear before the House Energy & Commerce Oversight Subcommittee on Wednesday, May 1, where lawmakers look to gain a better sense of the full scope of the incident.

To watch the Energy & Commerce Health Subcommittee hearing, CLICK HERE.

To read more about the hearing, CLICK HERE.

New PAI Study Shows Decade-Long Decline of Independent Physicians

A recent study released by the Physicians Advocacy Institute (PAI) highlights a decline in the number of independent physicians in the United States, revealing that 77.6% of doctors are now employed by hospitals or corporate entities as of early 2024. This marks a stark difference from over ten years ago when just about a quarter of physicians (25.8%) were employed by hospitals and health systems.

The study notes that hospitals, health systems, and corporate entities have increasingly employed physicians from private practices, a trend that accelerated in 2019. Growth in hospital-employed physicians has been driven by the consolidation of private practices through mergers and acquisitions, though corporate entities have also significantly increased their share of practice ownership. As of January 2024, corporate entities own 30.1% of practices, surpassing hospital and health system ownership, which accounts for 28.4%.

Amid growing concern over potential conflicts between corporate profit motives and physician responsibility to provide patient-centered care, the study’s findings are likely to fuel current efforts to curb healthcare consolidation and anti-competitive practices.  

To read the study, CLICK HERE.  

To read more, CLICK HERE.

Lawmakers Press HHS Secretary Becerra on Site Neutral Payment

During a House Energy & Commerce Health Subcommittee hearing on the President’s proposed HHS budget for fiscal year 2025, HHS Secretary Xavier Becerra faced questioning from lawmakers on the Biden administration’s commitment to healthcare providers, particularly those working in independent practices. 

Representative Michael Burgess (R-TX), who chairs the Health Care Task Force of the House Budget Committee, questioned the absence of site neutrality in the President’s proposed budget. He argued that this omission signals the Biden administration’s lack of concern for independent physicians and noted that such reforms are critical to stem the rising tide of consolidation in the healthcare marketplace. 

“It seems intuitively obvious to the casual observer that this administration prefers larger healthcare systems and neglect smaller providers,” Burgess said. “So, what is this administration doing to help preserve independent practice as an option for physicians and patients?” In response, Secretary Becerra pointed to other policies to support smaller providers, including efforts to restrict facility fees. 

Following the hearing, Representative Jodey Arrington (R-TX) proposed an amendment to enact site neutral payments in Medicare to pay for the $95 billion national security supplemental bill and reduce the deficit by an additional $50 billion. In proposing the amendment, which exempts hospitals in rural areas from the site neutral requirements, Arrington also stressed the historical bipartisan support for site neutral payment reform. Though the amendment did not pass, it signals that lawmakers remain optimistic about advancing site neutral provisions in this legislative session.

To read more, CLICK HERE. 

To watch the hearing, CLICK HERE.

To read Representative Arrington’s proposed amendment, CLICK HERE.