AHIP Urges 4 Types of Policies to Reduce Healthcare Spending

June 12, 2023 - AHIP offered four recommendations to the Senate Finance Committee on Consolidation and Competition (the Committee) to support healthy competition and lower healthcare spending in the healthcare industry.

“We support the bipartisan momentum of the Committee toward greater affordability and access through robust competition that is essential to providing Americans with more choices, better quality, and lower costs. We are committed to working with the Committee as well as other health care leaders to take decisive action to achieve these goals,” AHIP’s statement explained.

First, AHIP addressed the effects of consolidated health systems on prices. Consolidated health systems reduce competition and increase prices, the statement argued. It called on the Committee to support antitrust law enforcement from the Federal Trade Commission (FTC) and legislation that addresses anti-competitive contract terms.

Second, AHIP recommended pursuing more transparency in private equity acquisitions, which account for a significant share of mergers and acquisitions. The statement noted that these acquisitions have been associated with cost and access challenges due to private equity firms’ short-term financial perspective.

AHIP suggested that new legislation and the Department of Health and Human Services (HHS) should support identifying and reporting on contracts with private equity providers in areas with high concentration and high involvement from private equity firms. The Government Accountability Office (GAO) and FTC should conduct additional research.

Third, the statement focused on dialysis markets specifically and their responsibility for rising healthcare spending. Three-quarters of the Medicare dialysis market belongs to two companies, increasing costs for Medicare beneficiaries and health plans.

AHIP recommended reintroducing the Improving Access to Home Dialysis Act along with other efforts to support home dialysis. In addition to enacting supportive legislation, policymakers should withdraw support from legislation incentivizing higher dialysis prices.

Lastly, AHIP noted how reimbursement based on the site of care delivery had impacted healthcare spending; specifically, the impact of unequal reimbursement levels for similar services between physician and hospital offices has increased costs and consolidation.

“In addition to higher reimbursement rates, hospital-owned locations can charge a facility fee along with professional service fees for even low complexity services that can be safely performed at physician offices for a lower cost,” the AHIP statement explained.

“Patients should not pay more for the same service furnished with the same quality of care simply because a hospital owns their physician’s office.”

In response to this challenge, AHIP urged lawmakers to support site-neutral payment policies, implementing national provider identifier enumeration for off-campus hospital outpatient departments, allowing facility fees only for specific circumstances, and requiring that grandfathered hospital-based sites be subject to site-neutral payment legislation.

American Hospital Association also engaged in the Committee’s hearing which defended hospital consolidation and emphasized hospitals’ efforts to move toward price transparency.

Earlier in 2023, Blue Cross Blue Shield Association (BCBSA) affirmed many of these policy recommendations in a report that covered ways to reduce healthcare spending. Among the results, BCBSA emphasized the importance of provider competition and site-neutral payment policies.