|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
The Supreme Court lets site-neutral payment policies proceed
This week, the Supreme Court declined to hear an appeal challenging Medicare’s 2019 regulation calling for “site-neutral payment” for services provided by hospitals in outpatient settings, clearing the way for the rule’s implementation. The appeal was filed by the American Hospital Association (AHA), along with numerous hospitals and health systems, after a lower court ruling last year upheld the change to Medicare’s reimbursement policies. The rule aims to level the playing field between independent providers and hospital-owned clinics by curtailing hospitals’ ability to charge higher “facility fees” for services provided in locations they own. Site-neutral payment has been a longstanding target of criticism by health economists and policymakers, who cite the pricing advantage as a driver of consolidation in the industry, which has tended to push the cost of care upward. The AHA expressed disappointment in the Court’s decision not to hear the appeal, saying that the changes to payment policy “directly undercut the clear intent of Congress to protect them because of the many real and crucial differences between them and other sites of care.” The primary difference, of course, is hospitals’ need to fully allocate their costs across all the services they bill for, making care in lower-acuity settings more expensive than similar care delivered by practices that don’t have to subsidize inpatient hospitals and other costly assets. Over the years that legitimate business need has turned into a deliberate business model—purchasing independent practices in order to take advantage of higher hospital pricing. As Medicare looks to manage Baby Boomer-driven cost growth, and employers and consumers grapple with rising health spending, expect increasingly rigorous efforts to push back against these kinds of pricing strategies.
Biden administration begins to implement a ban on surprise bills
On Thursday, the Biden administration issued the first of what is expected to be a series of new regulations aimed at implementing the No Surprises Act, passed by Congress last year and signed into law by President Trump, which bans so-called “surprise billing” by out-of-network providers involved in a patient’s in-network hospital visit. The interim final rule, which takes effect in 2022, prohibits surprise billing of patients covered by employer-sponsored and individual marketplace plans, requiring providers to give advance warning if out-of-network physicians will be part of a patient’s care, limiting the amount of patient cost-sharing for bills issued by those providers, and prohibiting balance billing of patients for fees in excess of in-network reimbursement amounts. The rule also establishes a process for determining allowable rates for out-of-network care, involving comparison to prevailing statewide rates or the involvement of a neutral arbitrator, but falls short of specifying a baseline price for arbitrators to use in determining allowable charges. That methodology, along with other details, will be part of future rulemaking, which will be issued later this year. Of note, the rule does not include a ban on surprise billing for ground ambulance services, which were excluded by Congress in the law’s final passage—even though more than half of all ambulance trips result in an out-of-network bill. Expect intense lobbying by industry interests to continue as the details of future rulemaking are worked out, as has been the case since before the law was passed. While burdensome for patients, surprise billing has become a lucrative business model for some large, investor-owned specialist groups, who will surely look to minimize the law’s impact on their profits.
Amedisys to acquire hospital at home provider Contessa
On Wednesday home-health and hospice provider Amedisys announced it would acquire hospital at home company Contessa for $250M, extending Amedisys’s traditional home care platform into higher acuity services. Launched in 2015, Contessa was one of the first companies to build and scale the hospital at home and skilled nursing at home models, partnering with a range of health systems including Mount Sinai Health System, Highmark Health and Marshfield Clinic, with plans to expand to over 100 hospitals across 28 states. While hospital at home has a proven track record of providing high quality, lower-cost care over two decades, a confluence of market forces has accelerated adoption of home-based care services. The pandemic sped up consumer adoption of in-home care, and payers have looked to add hospital at home to their growing portfolios of virtual and home-based care services, aiming to treat patients in lower-cost settings. The Centers for Medicare & Medicaid Services (CMS) waiver program has also opened up payment for home-hospital care during the pandemic. Provided that this waiver becomes permanent, as anticipated, we’d expect the rapid adoption of hospital at home to continue. In adding Contessa to its portfolio, Amedisys now offers a full suite of home-based care solutions, on par with the offerings assembled by health insurer Humana, which has focused its own vertical-integration strategies on building a comprehensive home-care platform. For health systems and payers looking to partners for these services, Amedisys could provide a “one-stop shop” for a complete, home care platform.