I’ve got questions on Rep. Neal, Partners

Why did congressman buckle? Is outpatient expansion good for us?

AS DECEMBER DRAWS to a close, there have been a number of “happenings” in health care, both nationally and locally, that have major implications for policy. A few are worth pondering as we approach a new year, particularly since they are puzzling to me.

Failure of a federal surprise bill and out-of-network payment legislation

How could our own Congressman Richard Neal of Springfield, the chair of the powerful House Ways and Means Committee, be at the center of this fiasco? Passage of the legislation would have ended, for both self- and fully-insured people, the receipt of surprise bills from out-of-network doctors (mainly emergency department docs, pathologists, anesthesiologists and radiologists) when they go for care at in-network facilities.

While competing versions of legislation to fix this problem would have protected the consumer from having to pay an often large, out-of-pocket surprise bill, the battle was over how best to establish the payment level for the provider who has refused to contract with the insurer. This latter issue matters, because sticking it to the insurance company for some level of egregious charges only leads to consumers and businesses paying higher premiums.  Read this story if you really want your blood to boil.

Many groups that benefit from large out-of-network payments lobbied for a bill that would have created a baseball-style arbitration, with the insurer and the provider submitting bills to an arbitrator who would decide what was fair. But that approach, adopted by the state of New York, doesn’t seem fair at all, linked to inflated charges, as Harvard Professor Ashish K. Jha pointed out a few weeks ago.

A more reasonable approach—which seemed to gain bipartisan support in Congress – would have fixed the default rate closer to the median contracted price in the marketplace. That approach was working its way toward being included in the final version of the law when the whole effort died, apparently because Neal seemed to buckle under to the special interests who have donated thousands of dollars to his campaign fund.

Will someone explain to me how and why Neal would want us all to pay more for medical care, either through out-of-pocket payments or through higher premiums, for what is essentially a money grab by an already well-paid group of providers?

With a federal fix on hold for now, the focus now turns to the Massachusetts Legislature, to see if our local lawmakers can come up with a solution that both protects at least fully insured consumers from a surprise bill, and establishes a fair price which will not unduly raise our premiums.

Affordable Care Act legal challenge

A federal appeals court in New Orleans on December 18 sided with a lower court judge who rules that Congress’s decision to set the individual mandate penalty at zero means that section of the Affordable Care Act has no constitutional basis to remain part of the law. The appellate court, however, refused to rule the entire ACA unconstitutional. Instead, the court sent the case back to the lower court judge to decide what, if any, other specific provisions in the ACA are “inextricably linked” to the individual mandate provision, and therefore would justify being struck down as unconstitutional.

Congress set the mandate penalty at zero in December 2017, suggesting that the legislative body wanted to keep the rest of the law in place. A prior Supreme Court decision makes clear that when one provision of a law is ruled unconstitutional, “…it must be evident that [Congress] would not have enacted” other provisions in the same law had it known that the law may need to go forward without those sections that were struck down.

So will someone please explain to me how this isn’t just a waste of time now for a lower court judge to scrutinize what Congress was thinking when it made this surgical change to the law and left the rest intact?

Sutter Health settles antitrust suit with California attorney general

After almost six years of litigation, California’s attorney general was able to extract $575 million from northern California’s largest health care system, Sutter Health, for settlement of a lawsuit charging antitrust violations. The basis of the lawsuit was that the health system used its market power through its contracting practices with insurers to both raise prices above the market, and make it difficult for insurers to structure and make viable lower-priced health plan offerings which did not include Sutter providers.

For those of us in Massachusetts, doesn’t that issue sound familiar?

In addition to paying out $575 million over a 10-year period, the settlement requirements placed on Sutter should lead to much more competition in the northern California marketplaces. Insurers can create high-value tiered or limited network products that can contract selectively and include some Sutter providers and not others—so called component contracting.  The settlement agreement also places a limit on Sutter’s out-of-network rates, so the system can’t gain financially by refusing to contract with insurers for their various product offerings.

While the facts of the Sutter system are not identical to the market dysfunction issues that we experience here in Massachusetts, can someone explain to me why our Legislature or Attorney General Maura Healey aren’t more assertive through consumer protection laws to take on some of the same market dysfunction issues and related spending impacts that flow from Sutter-like practices in our state?

Partners HealthCare and its planned expansion of outpatient sites

Just after Partners said it was going to go through an expensive name change to Mass General Brigham, the hospital system revealed that it planned to spend $400 million on expanding its outpatient footprint at four locations. The locations are in wealthier communities where Partners has no or limited brick-and-mortar presence. “We are trying to skate where the puck is going,” said John Fernandez, president of the newly formed Partners Ambulatory Care as well as the existing Mass Eye and Ear.

For Partners, the goal is to have that puck finds its way into a lucrative net. The four communities being targeted are by no means safety net communities; they are in communities with commercially insured populations that already have good access to a set of local providers—often at much lower prices.

When you add this planned expansion effort to its currently pending determination of need  application for three MRI facilities in the Assembly Square area of Somerville, you see the challenge that former Tufts Medical Center CEO Ellen Zane spoke about to the Health Policy Commission a few years ago.  She noted that Partners’ real impact on spending and competition comes not from the system owning more beds, but from controlling the doctors and related services in the community marketplace.

Once you get primary care and other doctors and ancillary services under your control, it is the referral business from these community doctors or imaging centers that will flow to other specialists and hospitals in their system (often Mass General or Brigham and Women’s) and the resultant increases in spending which result.

And really, it is not just the immediate spending burden from higher prices in these community settings that should worry us. The outpatient expansion could take market share away from competitors who can’t often pay what Partners pays its doctors, and possibly threaten the existence of community hospitals and their affiliated providers.

In areas like ambulatory surgery, which is part of this expansion, our premium dollars have already gone to the local competitors in these areas to pay for creating their capital infrastructure. Now this proposal comes along to duplicate that infrastructure. And so we pay again for its creation, and to possibly pay a higher price for the same quality of care already being provided. The strategy may also weaken Partners’ competitors if it saps their revenue and steals some of their doctors.

I  can only imagine how UMass Health System, one that is struggling to get to break even and is located near the planned Westborough expansion site announced by Partners, feels about this project idea.  You have to wonder if getting to break even in the future will become an even more difficult challenge for them.

I worry that the current regulatory laws on the books, specifically the determination of need law and the Department of Public Health’s oversight of it, seem to insufficiently operate to protect against or mitigate harms.  A case in point is the hospital rebuilding and bed expansion going on right now at Boston Children’s Hospital. I worry greatly about that project’s long-term impact on the pediatric provider market and health care affordability for premium payers as that project nears completion and their additional beds and outpatient clinics come on-line.

Can somebody please explain to me why federal or state antitrust laws, state consumer protection laws, and/or the determination of need laws seem to always miss the mark when  it comes to truly protecting us from harms which result from provider system acquisitions, expansions,  or the addition of new services, technologies, or sites of care.

Meet the Author

Paul A. Hattis

Associate professor, Tufts University Medical School
As December rolls into 2020, I certainly hope to get better answers to some of the questions I raise here.

Dr. Paul A. Hattis is an associate professor at Tufts University Medical School.