AAOS February 20, 2018
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House Subcommittee Discusses Consolidation

On February 14, 2018, the House Energy and Commerce Subcommittee on Oversight and Investigations convened a hearing titled “Examining the Impact of Health Care Consolidation.” The American Association of Orthopaedic Surgeons (AAOS) appreciates the subcommittee’s focus on this important issue and welcomes an in-depth examination of the consolidation trends in the health care sector, the reasons behind those trends, and the effects they have on the cost and quality of care.

As subcommittee chairman Gregg Harper (R-Miss.) highlighted, the price of health care in the United States has steadily risen for several decades, and consolidation is a contributing factor. AAOS urges the subcommittee to consider the below recommendations, which address the needs of our members and the mutual goal of delivering high quality affordable care to patients.

First, full committee chairman Greg Walden (R-Ore.) appropriately noted the committee has “heard a lot about how disparities in payments across sites of service may result in market consolidation.” While Congress began to address this issue through the Bipartisan Budget Act of 2015, further expanding site-neutral payment policy – and in particular, equalizing rates for office visits and in-office procedures as well as Ambulatory Surgery Center (ASC) procedures – will continue the progress made towards addressing health care choice and consolidation. Significant differences in payments by site creates economic inefficiencies that result in unnecessary expenditures by payers like Medicare and Medicaid. AAOS 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.

Second, increasing competition and expanding patient choice not only improves quality of care but can help slow the consolidation trend. Specifically, repealing Section 6001 of the Affordable Care Act – which restricts patient choice by limiting the ability of physician-owned hospitals to expand and serve Medicare and Medicaid patients – would permit physicians to address the growing demand for high quality health care services in their community and would allow patients to receive care at the hospital of their choice. As Rep. Michael Burgess, MD (R-Texas) noted in the hearing, we live in a world where hospitals can own doctors, but doctors are not allowed to own hospitals. This must be remedied. Read more about this issue online here.

Third, AAOS has significant concerns related to antitrust and especially, the McCarran-Ferguson Act, which effectively exempts insurance companies from the very antitrust laws all 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. 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. AAOS urges Congress to secure passage of this legislation as soon as possible.

Finally, it is worth noting that the shift from volume to value-based care across Medicare, Medicaid, other public payers, and the commercial health insurance markets may have speeded consolidation of physician practices, hospitals, post-acute care providers, and others. To address this issue, it is imperative that all models of medical practice are allowed and incentivized, including in Medicare’s Quality Payment Program. AAOS appreciates the steps to ease participation and reporting burdens for small, solo and rural medical practices and urges both Congress and CMS to continue these efforts.

AAOS commends the subcommittee for highlighting these important issues and looks forward to working with Congress to address the consolidation trends in the health care sector.

For more detailed information on AAOS’s solutions for health care choice and competition, read our Jan. 24, 2018 letter to the Department of Health and Human Services online here.