fah hospital policy blog

Perspectives on health policy affecting America’s hospitals and the patients we serve.

Ways and Means Subcommittee Hearing to Focus on Improving Competition in Medicare

May 19, 2015 | FAH Hospital Policy Blog Team

Category: Affordable Care Act, Hearings, Legislation, Medicare

This morning, the House Ways & Means Subcommittee on Health will hold a hearing to discuss ideas about competition in Medicare titled “Improving Competition in Medicare: Removing Moratoria and Expanding Access.” Rich Umbdenstock, President and CEO of The American Hospital Association, will be offering testimony at today’s hearing taking place at 10:00 am.

A key focus of the hearing today will be on self-referral to physician-owned hospitals; that is doctors referring their patients to facilities they own.  There is an effort by some in Congress to unwind or weaken the current law in order to allow self-referral to proliferate.  

Over 15 years ago, the Congress began investigating these arrangements, and following two 18 month moratoriums, the Congress ultimately passed a permanent, prospective ban on these arrangements.  There is incontrovertible evidence showing these hospitals cherry-pick patients, taking the healthiest and wealthiest patients, increase utilization at a cost to the taxpayer, which may result in patient safety concerns. Free and fair competition occurs on a level playing field and self-referral to physician-owned hospitals is an inherent conflict of interest. 

We strongly agree with the U.S. Chamber of Commerce which sent a letter to Congressional leadership describing the devastating effects of self-referral to physician-owned hospitals -- “Balancing entrepreneurial spirit and sound public policy is no easy feat, but Congress achieved the right balance when it prohibited self-referral prospectively while grandfathering current arrangements…”

The letter further explains: “Unbridled, spiraling health care costs is one of the most important challenges facing our health care system today. One legal protection that currently helps combat unnecessary cost increases is a safeguard against certain self-referral practices. When the most profitable patient cases are referred to hospitals where physicians have a financial interest, “cherry-picking” occurs. While this referral practice increases profits for these physician-owned hospitals, such cherry-picking also has the negative impact of leaving the more complicated and poorly reimbursed cases to be treated by neighboring community hospitals.” “The Chamber urges Congress to not take a step backward on this policy which has historically enjoyed strong bipartisan support dating back over a decade. Although the Chamber and many lawmakers strongly opposed the Affordable Care Act (ACA) generally in 2010, the Chamber and many bipartisan lawmakers have for years supported the protections and safeguards codified in §6001 of the ACA. This provision is working by appropriately limiting the practice of self-referral to physician-owned hospitals, which increases utilization and costs to businesses and taxpayers, as well as distorting health care markets. The Chamber supports the current self-referral law and opposes any effort to unwind or weaken it.”

We appreciate the Committee taking another look at these concerning arrangements and urge the Congress to stand by their local community hospitals in support of a level playing field, free from conflicts of interest.