In fight over Medicare payments, the hospital lobby shows its strength
In the battle to control health care costs, hospitals are deploying their political power to protect their bottom lines.
The point of contention: For decades, Medicare has paid hospitals — including hospital-owned physician practices that may not be physically located in a hospital building — about double the rates it pays other doctors and facilities for the same services, such as mammograms, colonoscopies, and blood tests.
The rationale has been that hospitals have higher fixed costs, such as 24/7 emergency rooms and uncompensated care for uninsured people.
Insurers, doctors, and consumer advocates have long complained it's an unequal and unfair arrangement that results in higher costs for patients and taxpayers. It's also a profit incentive for hospitals to buy up physician practices, which health economists say can lead to hospital consolidation and higher prices.
In December, the House passed a bill that included a provision requiring Medicare to pay the same rates for medical infusions, like chemotherapy and many treatments for autoimmune conditions, regardless of whether they're done in a doctor's office or clinic owned by a hospital or by a different entity. The policy, known as site-neutral payment, has sparked a ferocious lobbying battle in the Senate, not the first of its kind, with hospitals determined to kill such legislation.
Don't bet against them. The House legislation would save Medicare an estimated $3.7 billion over a decade, according to the Congressional Budget Office. To put this in perspective, the program is projected to pay hospitals upward of $2 trillion during that same period. But hospitals have long argued that any adoption of siteneutral payments would force them to cut jobs or services, or close facilities altogether — particularly in rural areas. And senators are listening.
“The Senate is very much attuned to rural concerns,” Sen. Ron Wyden (D-Ore.), who chairs the Finance Committee, told California Healthline. His panel has jurisdiction over Medicare, the health program for seniors and people with disabilities.
“I have heard lots of questions about how these proposals would affect rural communities and rural facilities,” he said. “So we're taking a look at it.”
Outpatient departments at rural hospitals can have outsize importance to their communities. Taking any funding away from standalone rural hospitals is seen as risky. Scores have closed in the past decade due to financial problems. With fewer patients, rural hospitals often struggle to attract doctors and update technology amid rising costs.
Sen. Bill Cassidy (R-La.), a physician who also serves on the Finance Committee, indicated he was apprehensive about the legislation.
“In some cases,” he said, higher Medicare payments for hospitals are “justified.”
“In some cases, it doesn't seem to be,” he said. He told California Healthline he was planning to introduce legislation on the issue but didn't provide details, and his office didn't respond to inquiries.
As the two senators show, the issue doesn't break cleanly along partisan lines. In December, the House easily passed the Lower Costs, More Transparency Act, the broader bill that included this Medicare payment change, with 166 Republicans and 154 Democrats voting in favor.