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This Week in Health Care Reform: June 21st, 2019

Stakeholders take aim at surprise medical bills; meanwhile, air ambulance costs are still sky-high; hospital execs prioritize revenue over cost-cutting; and, traditional fee-for-service threatens the long-term focus on SDoH.

Week in Review

Surprise Medical Bills: A lot of attention has understandably been paid to the pressing issue of surprise medical bills.  Stakeholders from across the health care spectrum have acknowledged the need to find a workable solution that protects consumers – through no fault of their own – from unexpected costs associated with receiving medical care.  Often those costs stem from patients having that care provided by physicians outside their insurance network.  The problem is especially egregious in emergency department settings, where the practice of emergency room doctors remaining outside of these networks in order to bill patients directly at extraordinary rates, can be intentional.  Although the path forward remains legislatively murky, lawmakers have focused their energies on addressing the issue, most recently by Sens. Lamar Alexander (R-Tennessee) and Patty Murray (D-Washington), who on Wednesday formally introduced their wide-ranging, bipartisan bill.  Experts, however, caution that whatever measures are advanced must not, in turn, create new problems, say, for instance, driving up hospital consolidation.  With the conversation quickly coalescing around finding meaningful solutions, a coalition of stakeholder voices has come together to support efforts that protect patients, maintain fair and equitable payments for providers, and help reduce costs by avoiding costly arbitration and additional bureaucracy.

Air Ambulance Costs: With so much legislative energy going towards better protecting health care consumers from unexpected bills, it should come as no surprise that the sky-high costs associated with air ambulance medical services have increasingly found themselves in regulators’ crosshairs.  However, despite the increased scrutiny, prior to the aforementioned bill released earlier this week by Sens. Alexander and Murray, the issue had yet to be meaningfully addressed in any of the proposals introduced or circulated by lawmakers.  (And, the Congressional decision late last year calling for the creation of a panel to study air ambulance billing has yet to even take off the ground.)  As has been previously covered, the average cost of these air emergency services in 2017 was over $36,000 – with more than two-thirds taking place outside of the patients’ insurance network.  Air ambulances serve more than half a million patients a year and can often be the quickest way to get critical patients to trauma centers and burn units.  The continued deterioration of the rural hospital network has only exacerbated the role that these air services play.  As could be expected, this has led to a boom in the air ambulance industry, which saw the number of helicopters in service nearly double from 2003 to 2015.  While some of these services are owned or controlled by hospitals or government agencies, an increasing proportion are owned and operated by private companies.  And, as the industry has expanded, so too have prices, with the median price for an air ambulance doubling from 2010 to 2014.  However, efforts to bring these costs under control have been hamstrung by the Airline Deregulation Act of 1978, which was originally intended to encourage more competition by prohibiting states from regulating prices for any air carrier – including air ambulances.

Hospital Revenues: It was recently reported that private insurance plans, on average, pay hospitals 241 percent of what Medicare pays.  Contextually, this matters: since hospitals have been shown to account for the largest portion of health care spending, even people who don’t use these services are paying for them through higher premiums.  Hospital executives defend this “cost-shifting” as necessary, arguing that they have to charge commercial patients more in order to make up for the lower payments they receive from government-sponsored programs like Medicare and Medicaid.  However, a new survey would seem to undermine this justification.  Conducted by the Advisory Board, that survey polled 90 C-level hospital executives, finding a marked shift in focus away from cost-cutting and towards revenue growth, which now occupies the top spot on their list of priorities.  In fact, preparing for sustainable cost control, which had been last year’s top priority, didn’t even make this year’s top ten.  When asked to single out their most pressing concern, 21 percent of respondents pointed to revenue growth, as executives eye ambulatory and primary care access points and other potential downstream, nontraditional, alternative revenue sources

SDoH Sustainability:
Evidence continues to establish the vital role that non-medical factors play in whole-person health.  These social determinants of health (SDoH) – such as economic stability, education, and access to healthy foods – influence an individual’s ability to effectively manage their health in a holistic, comprehensive way.  As our health care system works to reshape itself around better integrating SDoH into our care delivery model, it’s becoming more apparent to health system leaders that a corresponding change to the existing payment system must also be a part of this evolution.  In a gathering of stakeholders earlier this month, industry executives shared their experiences working to address the unmet social needs issues plaguing their communities.  Despite their ongoing efforts, however, they cautioned that scalability and institutionalizing a viable, long-term approach to tackling SDoH is economically unsustainable under the current fee-for-service reimbursement payment model.      

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