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  • Washington Highlights

    House Subcommittee Examines Hospital Transparency and Site-Neutral Legislation


    Sinead Hunt, Legislative Analyst
    Christa Wagner, Manager, Government Relations
    For Media Inquiries

    On April 26, the House Energy and Commerce Health Subcommittee held a legislative hearing, “Lowering Unaffordable Costs: Legislative Solutions to Increase Transparency and Competition in Health Care.” During the hearing, the subcommittee considered 17 bills aimed at increasing transparency and curtailing consolidation across the health care sector, including legislation to implement so-called site-neutral payment policies in the Medicare program, establish additional oversight and transparency mechanisms in the 340B Drug Pricing Program, and require health care entities to report additional data on mergers, acquisitions, and changes in ownership. The subcommittee previously explored these issues during a March 28 hearing [refer to Washington Highlights, March 31].  

    During the two-part hearing, Centers for Medicare & Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure testified on the department’s strategy to reduce health care spending, including efforts to implement drug pricing provisions of the Inflation Reduction Act (P.L. 117-169), rectify overpayments to Medicare Advantage plans, and enforce hospital price transparency rules. The subcommittee also heard testimony from several industry leaders and academics, including Ashley Thompson, MHA, senior vice president for public policy analysis and development at the American Hospital Association (AHA). In her testimony, Thompson underscored the financial challenges facing the hospital sector, emphasizing the detrimental impact of site-neutral payment cuts on access to care in rural and historically marginalized communities.  

    The subcommittee considered legislation to establish so-called site-neutral payment rates in the Medicare program, thereby equalizing reimbursement to hospital outpatient departments (HOPDs), physician offices, and ambulatory surgical centers. The AAMC and other hospital groups have historically opposed these cuts to HOPD reimbursement, citing their higher level of clinical complexity; additional licensing, accreditation, and regulatory requirements; and essential role in medical education [refer Washington Highlights, Oct. 30, 2015]. Several members expressed interest in site-neutral payment policies, noting concerns HOPDs’ higher level of reimbursement imposes additional cost-sharing requirements on Medicare beneficiaries and incentivizes consolidation across the health care sector. “In 2019 and 2020, almost 50,000 physicians left private practice to work for hospitals or other entities,” noted Rep. Mariannette Miller-Meeks, MD (R-Iowa), claiming that hospitals are incentivized to “gobble up physician practices because they are able to bill Medicare at roughly double the amount that private practices are.” Rep. Lori Trahan (D-Mass.) expressed concerns that site-neutral payment cuts would have a disproportionate impact on safety-net hospitals. “There are exemptions [to site-neutral payment policies] for rural, sole community hospitals, cancer hospitals and children’s hospitals to maintain access to appropriate care, and asked if CMS has measured how extending similar exemptions to safety-net hospitals would help them financially. 

    The subcommittee considered a discussion draft introduced by Rep. Larry Bucshon, MD (R-Ind.) requiring additional oversight of hospitals participating in the 340B Drug Pricing Program. This legislation would authorize the Health Resources and Services Administration (HRSA) to audit how 340B hospitals use their savings, as well as require additional reporting by 340B hospitals. When Rep. Bill Johnson (R-Ohio) inquired about the compliance costs and administrative burden that this legislation would pose on 340B hospitals, Thompson highlighted existing reporting requirements, noting, “Hospitals are reporting … to CMS on the Medicare cost report, we are reporting to the IRS on schedule H, and we are reporting to HRSA, which audits the program.” She also expressed concerns that the additional metrics hospitals would be required to report “do not show the true value of the program.” Rep. Doris Matsui (D-Calif.) spoke in support of the program, stating, “While some of these bills are ostensibly about transparency, I think that, in reality, they will disincentivize participation in 340B.” She inquired whether it is possible to craft reporting requirements that “demonstrate the true value of 340B,” to which Thompson cited the AHA’s 340B Good Stewardship Principles, which allow hospitals to calculate the savings they achieve from the program in a standardized manner and publicly disclose these data. 

    The subcommittee also considered the Supporting Safety Net Hospitals Act (H.R. 2665), sponsored by Reps. Yvette Clarke (D-N.Y.), Diana DeGette (D-Colo.), Michael Burgess, MD (R-Texas), and Dan Crenshaw (R-Texas), which would address scheduled reductions to the Medicaid disproportionate share hospital (DSH) program. The DSH cuts, which were originally included in the Affordable Care Act (ACA) under the assumption that expanded insurance coverage would result in less uncompensated care, have been legislatively delayed several times since the ACA’s enactment. The AAMC and other hospital groups have consistently advocated to either delay or eliminate these cuts, including most recently in a letter to congressional leadership [refer to Washington Highlights, March 10]. Crenshaw praised the Medicaid DSH program, noting, “The DSH program is an example of where we provide very transparent payment to hospitals that provide charity care.” 

    The House Education and Workforce Committee Subcommittee on Health, Education, Labor, and Pensions discussed similar topics during their April 26 hearing, “Reducing Health Care Costs for Working Americans and their Families.” During this hearing, members discussed how hospitals’ acquisition of physician practices contributes to high health care spending, calling for additional transparency across the health care sector.