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ICYMI: AAOS Responds to RFI on Choice and Competition

On January 24, 2018, AAOS sent a letter to the Department of Health and Human Services’ (HHS) regarding their “Promoting Healthcare Choice and Competition Across the United States” Request for Information. In the letter, AAOS notes that it shares the Administration’s desire to see meaningful burden reduction while preserving valuable competition and patient choice and fulfilling statutory obligations. AAOS urged the Department to consider a number of recommendations, which address the needs of our members and the mutual goal of delivering high quality care at affordable prices to patients.

To start, AAOS expressed support for efforts to reduce payment differentials by site for the same services. AAOS has been supportive of making payments for services furnished in the physician office or the ASC equal to payments in the outpatient setting, but also noted that it has consistently recommended seeking this equilibrium not by bluntly reducing the outpatient payments to equal ASC or office payments but by also increasing payments in those settings toward a more middle ground.

“Expanding site-neutral payment policy – and in particular, equalizing rates for office visits and in-office procedures as well as ASC procedures – will continue the progress made towards addressing healthcare inefficiency and choice while increasing necessary competition in the healthcare system,” the letter states.

Another issue discussed was that of antitrust laws, which are designed to prevent restraints on trade that harm consumers and less powerful competitors. The issue of equal enforcement of antitrust laws and their applicability to physicians’ negotiations with health insurance plans remains a matter of great concern for AAOS. Presently, the McCarran-Ferguson Act effectively exempts insurance companies from the very antitrust laws which physicians are required to follow. While at one time the exemption protected small insurance companies, today this has led to consolidation and concentration within the health insurance industry. This creates a system in which insurance companies, health plans, and hospitals have an unfair advantage in setting
prices. Physicians are frequently placed in positions of diminished bargaining strength, and health plans can impose unilateral, non-negotiable contracts.

As expressed in the letter, equitable negotiations between physicians and health insurance plans could be accomplished through a combination of two approaches. First, the currently introduced H.R. 372 (“Competitive
Health Insurance Reform Act of 2017”) would amend the McCarren-Ferguson Act to ensure that federal antitrust laws apply to the business of health insurance. As was expressed in the March 21, 2017 Statement of Administration Policy, the bill “supports the goal of giving American families and businesses more control over their own healthcare choices by promoting greater health insurance competition.” Second, further antitrust reform that levels the playing field and proactively protects healthcare professionals would ensure patient access to affordable healthcare is not compromised as a result of insurer monopsony

On the issue of physician-owned hospitals, AAOS noted that expanding patient choice is a necessary step to improving quality of care. Section 6001 of the Affordable Care Act (ACA) restricts choice by limiting the ability of physician-owned hospitals (POH) to expand and serve Medicare and Medicaid patients. Under the law, physician-owned hospitals are limited to “the number of operating rooms, procedure rooms, and beds for which the hospital [was] licensed” at the time of enactment. The inability of physician-owned hospitals to address the growing demand for high-quality healthcare services in their community is bad for our entire healthcare system and penalizes patients who should have the right to receive care at the hospital of their choice.

“Through its restriction on the expansion of facility capacity, section 6001 limits both patient choice to demonstrably better-quality care, as well as restricts competition that could drive down both patient costs and costs to the government,” the letter states.

Read the full letter online here.