Happy Birthday, Obamacare

March 23 marked the 14th anniversary of the enactment of the Patient Protection and Affordable Care Act (PPACA, a/k/a "ACA" and "Obamacare"). and the 10th anniversary of its full implementation (minus occasional trimming by the Congress and the Supreme Court). As Paul Krugman observed today in his subscribers-only newsletter, the program has been a considerable success, defying the predictions and warnings of critics on the right and the left.

The ACA certainly enjoys substantial public support. Krugman points to a graphic from the Kaiser Family Foundation:

(click on image to enlarge)

The newsletter is worth reading, but "fair use" dictates that I share only a little of Krugman's take on the ACA's success:

In any case, Obamacare has worked. It didn’t provide universal coverage, but it did provide health insurance to millions of Americans, some of whom desperately needed that safety net — and it did so without breaking the bank. Predictions that the A.C.A. would be unworkable have been proved wrong. 

This paragraph ends with a warning:

At this point, the only serious threat the program faces — and it is a serious threat — is political: People who kept insisting, wrongly, that health reform would die of its own accord may simply step in to kill it.

Texas Medical Board Publishes Proposed Rules Re: Exceptions to Texas's Abortion Ban

It took a strongly worded "suggestion" from the Texas Supreme Court (in its "know-nothing" opinion in the Kate Cox case [HealthLawBlog 12/12/23], but the TMB has finally published a proposed rule that provides some detail about the medical exceptions to the state's ban on abortions.

• Notice and Statement of TMB Chair
• Proposed Rule Amendment
• Official Form for Submission of Public Comments (optional but preferred method)

Most of the proposed rule is a cut-and-paste job, providing definitions of key terms such as:

1. abortion (copied from the Abortion Facilities Licensing law)
2. ectopic pregnancy (same)
3. reasonable medical judgment (copied from one of statutory bans on abortion)
4. medical emergency (same)
5. major bodily function (Texas Labor Code)

For 1, 2, and 5, the proposed rule would make clear that these definitions in other Texas codes apply to the medical exceptions to the abortion bans, which is guidance of a sort.

The remainder of the proposed rule describes the documentation that must be completed if an abortion is going to be performed when one of the exceptions applies as well as "the procedures that the Board will utilize in the event a complaint is received."

$100 Million Medicare Fraud => 9-Year Sentence

Defendant Andrew Chmiel got a one-way ticket to federal prison for 9 years following his conviction for Medicare fraud, courtesy of the U.S. Attorney's office in the District of South Carolina. He was also ordered to pay $98,935,533.00 in restitution.

Touting this as one of the biggest Medicare fraud cases ever, the press release on this case described the essentials of the scheme (emphasis added): 

Chmiel’s charges were brought in 2019 as part of Operation Brace Yourself, an investigation that originated in South Carolina. Operation Brace Yourself, which was prosecuted in conjunction with the Department of Justice’s Criminal Division Fraud Section, was a multi-jurisdictional investigation that involved the execution of more than 80 search warrants in 17 federal districts.

As for Chmiel’s criminal conduct, evidence presented to the court showed that Chmiel controlled and operated at least 10 DME companies, which were located throughout the United States. These DME companies were used by Chmiel and his co-conspirators to submit false and fraudulent claims to Medicare for braces that were not medically necessary and/or were obtained through the payment of kickbacks and bribes. 

To effectuate the scheme, these DME companies entered into agreements with an offshore call center to purchase completed doctors’ orders so the DME companies could bill Medicare. This offshore call center was advertising through television and internet advertisements.  Once a Medicare beneficiary called a 1-800 number that was on the advertisements, that Medicare beneficiary would be screened for eligibility and then convinced that he or she needed a brace, and oftentimes upsold on other braces.  The call center would then contact a telemedicine company whose physician and/or or nurse practitioner would issue a prescription without regard to the medical necessity.  Throughout the investigation the evidence revealed that beneficiaries were prescribed braces without ever being examined by, seeing, or, in some instances, even speaking to a medical professional. Evidence presented showed that Chmiel was attempting to hide that he was purchasing completed doctors’ orders by creating fraudulent and false invoices for alleged marketing and business processing services.

Throughout the health care fraud scheme, Chmiel’s companies, which included 10 DME companies, two dropship companies, and two additional companies that were used to facilitate the fraud – D.O. Delivery and Pain Center – billed Medicare in excess of $200 million and Medicare paid Chmiel’s companies in excess of $95 million.

For the past two decades, durable medical equipment has been a fertile field for fraud and, correspondingly, for federal fraud prosecutions. The perpetrators of these schemes apparently fail to take into account the investigatory tools available to the Department of Justice and the fact that the government has computers that can crunch a lot of Medicare claims. $200 million worth of DME orders from 10 DME companies was bound to be picked up by some computer's filter or algorithm. 

Chevron Deference: Its Diminished Role (and Imminent Demise?)

The Chevron doctrine says that federal courts will defer to agency interpretations of federal statutes as long as the statute in question is either silent or ambiguous on the subject in question and as long as the agency interpretation is "reasonable." 

Note first the weasel words in my description of the Chevron doctrine:

• ambiguous: When is a statute ambiguous? Language is inherently ambiguous, and law schools train students to find ambiguity and exploit it for their clients whenever possible. Ambiguity is often in the eye of the beholder. Post-Chevron cases amply illustrate that the Supreme Court can split 5-4 over this very question.
• reasonable: The most overused word in the entire legal lexicon. What one judge regards as a reasonable interpretation may strike another judge as an outrageous overreach by the agency.

The result of the subjective nature of key terms in the Chevron doctrine has been controversy over the legitimacy of the doctrine itself. In fact, if memory serves, the very next agency case after the Court's decision in Chevron was decided without so much as a reference to Chevron. And since then, the Court has engrafted exceptions to the Chevron doctrine -- up to an including the Court's current fondness for striking down agency decisions by applying the Major Question Doctrine, itself a controversial development. ("What does "major" mean? Is it entirely in the eye of the beholder?)

A trusted source tells me the Court hasn't actually relied on Chevron in an agency case since 2014. That hasn't stopped conservative members of the Court who are unhappy about the "activist" policy choices of certain agencies' progressive agendas from expressing their disapproval of Chevron deference.

A number of cases are presently before the Court this term that may lead to a 6-3 or at least 5-4 disavowal of Chevron once and for all. One is Garland v. Cargill, No. 22-976, which raises the question whether a bump stock device is a “machinegun” as defined in 26 U.S.C. § 5845(b). The Justice Department says yes, and Michael Cargill argues that is wrong. Maybe the statute is unambiguous, in which case Chevron by its terms would not apply at all. The government, perhaps cannily, does not argue for Chevron deference in its principal brief on the merits and argues against Chevron deference in its reply brief (at p. 20):

4. Respondent next argues (Br. 48-50) that this Court does not owe deference to ATF’s interpretation under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).  But as the government has explained (Br. 43), it does not seek any such deference here because ATF’s regulation is not a legislative rule carrying the force and effect of law; instead, it is simply an interpretive rule announcing ATF’s understanding of the statute.  That should be the end of the matter.  See HollyFrontier Cheyenne Refining v. Renewable Fuels Ass’n, 141 S. Ct. 2172, 2180 (2021) (“ ‘[T]he government is not invoking Chevron.’  * * *  We therefore decline to consider whether any deference might be due its regulation.”) (citation omitted).  

Probably the best cases for a showdown over Chevron's continued existence involve a regulation involving fisheries, as discussed in a free article in JAMA posted to its website today:

Two cases currently before the US Supreme Court, Loper Bright Enterprises v Raimondo and Relentless, Inc v Department of Commerce, could potentially lead to the end of Chevron. Six commercial fishing ventures have challenged a rule requiring that fishermen pay the cost of government-approved observers who guard against illegal overfishing. Although the lower courts in both cases upheld the regulation under Chevron, the fisheries contend that the rule and Chevron itself are threatening the way of life for small, family-owned businesses. Justice Gorsuch was receptive, expressing concern during oral arguments that Chevron places a thumb on the scale in favor of the government at the expense of “the immigrant, the veteran seeking his benefits, the Social Security Disability applicant, who have no power to influence Agencies.” Justice Kavanaugh, meanwhile, noted that the historic role of the judiciary has been “to police the line between the legislature and the executive to make sure that the executive is not operating as a king,” seemingly implying that Chevron places agencies in the position of royalty.

Why does JAMA care? Because of the critical role of the federal government, acting through agency rules and decisions, to protect the health of the public:

From health care to climate change, federal agencies were created to marshal the resources and power of the government to improve the lives of individuals in the US. A longstanding pillar supporting these agencies, a legal doctrine called Chevron deference, grants them flexibility in carrying out their mandates to maximize policy impact and keeps them nimble amid changing circumstances. Now, a majority of the US Supreme Court, led most vocally by Justices Thomas and Gorsuch, appears poised to overturn this bedrock principle. The loss of Chevron could exalt policy choices made by judges over the expertise-based decisions by executive agencies, such as the Food and Drug Administration (FDA), Environmental Protection Agency (EPA), and Centers for Disease Control and Prevention (CDC). 

Prior Authorization & Your Health Insurer

Once upon a time, the way health insurance worked was this: Patients with insurance were seen by their doctors, received prescriptions for medications, and got the surgeries and other procedures their doctors believed were justified. Under these "indemnity plans," after the fact, invoices were submitted to health insurance companies, and -- by and large -- the invoices were paid. Not necessarily in full -- there were deductibles that needed to be met each year and reductions in "reimbursement" for the patient's co-pay or co-insurance obligation. But coverage was seldom an issue. Insurance companies conducted retroactive reviews to determine that the service or item was "medically necessary and appropriate," but most claims for payment were approved most of the time.

Until they weren't.

As new technologies and high-priced drugs and devices drove up the cost of health care, insurers looked for ways to control the amounts they paid out in claims. Under the broad banner of "managed care," insurers instituted various reforms that fundamentally changed the delivery of health care goods and services. 

One reform was to create panels or networks of approved providers, in exchange for which the insurance companies demanded deep discounts in physicians' fees and hospitals' charges. Patients who received their care -- even emergency care -- from providers who were "out of network" typically received no coverage for that care or reduced coverage, putting more of the cost of care on patients (i.e., the insurers' customers). 

Another reform was the integration of health insurance and healthcare provider. The purest form of this were the HMOs. Some provided health care services to their insureds; others contracted with providers to diagnose and treat their insureds. In both instances, a single entity was financially (and legally and ethically) obligated to write health insurance policies and provide care (either directly or indirectly) to their insureds.

A third reform relates to the title of this post: prior authorization, to which I would add concurrent authorization. "Prior authorization" gives the insurance company up-front veto power over referrals to specialists or for hospitalizations, for prescriptions for drugs and devices,  and for procedures (diagnostic (CT scans, e.g.) or treatment (including surgeries). "Concurrent authorization" gives insurance companies the same type of veto power throughout a course of treatment. This might be denial of a request for an MRI to see whether or how much a disease has progressed or denial of a request for an additional number of days of hospitalization to deal with post-procedure complications. And "retroactive review" -- which, under indemnity plans, were relatively benign efforts to determine medical appropriateness and necessity -- became a more rigorous process of "retroactive authorization."

Although managed care was originally justified as a necessary form of cost control, including screening insurance claims for those that were not for medically necessary appropriate care, managed care itself evolved into something that was increasingly regarded as abusive. The pattern of denying coverage for unarguably necessary and appropriate care produced a backlash over the past two decades, including legislative and regulatory reforms at the federal and state level to address the worst features of managed care.

A recent opinion video on the New York Times website (Mar. 14, 2024; subject to paywall) provides excellent evidence that insurance companies continue to use prior and concurrent authorizations to to delay or avoid altogether their contractual obligation to pay for care that is necessary and appropriate. (I can provide free access to eights readers of this post; if you want access, just let me know at tmayo@smu.edu.)

A handful of states have passed "gold card" laws that are intended to allow physicians who have successfully received prior authorizations to bypass that process altogether. According to the Texas Medical Association, two years after passage of the state's "gold card" law, "the Texas Department of Insurance (TDI) reports that only 3% of physicians and health care professionals have received gold cards because of the current eligibility threshold, which requires physicians to submit a minimum of five eligible prior authorization requests for a given health care service or medication within the six-month review period."

A federal version of the gold card law -- H.R. 4968, "Getting Over Lengthy Delays in Care As Required by Doctors Act of 2023" (or the "GOLD CARD Act of 2023") -- was referred last July 23 to the Subcommittee on Health of the House Ways and Means Committee, where it remains to this day. Even if it becomes law, exempts physicians from prior authorization requirements only under Medicare Advantage plans with respect to specific items and services if at least 90% of the physician's requests for such items and services were approved during the previous plan year. Outside of Medicare, patients and their providers would not be helped by the GOLD CARD Act.

HHS's Office of Civil Rights Launches Investigation into Cyberattack on UnitedHealth's Subsidiary, Change Healthcare

On Feb. 12, Change Healthcare experienced a ransomware attack. Most of us had not heard of Change Healthcare before then, but the effect of the cyberattack was felt widely around the country. Associated Press states that "Change Healthcare provides technology used to submit and process insurance claims — and handles about 14 billion transactions a year."As reported by Becker's CFO Report (3/13/24), 

Change Healthcare . . . processes 1 in 3 healthcare claims in the U.S. . . .  The attack has crippled many operations for hospitals, insurers, physician practices and pharmacies across the country, with the American Hospital Association calling it the "most significant cyberattack" on healthcare in U.S. history.

The attackers (identified as the BlackCat Group) allegedly "stole 6 terabytes of data from Change, including medical records and Social Security numbers, and has since received $22 million in bitcoins, according to Reuters."

Getting back to business as usual is taking a lot of time:

As of March 7, Change Healthcare's pharmacy electronic prescribing is fully functional for claim submission and payment transmission. Change is expected to have its electronic payment platform available for connection March 15. Its medical claims network and software are expected to start testing for reconnection March 18, with the company working throughout that week to restore service. 

Meanwhile, AP reports that "[t]he Office for Civil Rights said Wednesday that it also will examine whether Change Healthcare followed laws protecting patient privacy." The HHS press release (3/13/24) is here. It states in part (emphasis added):

The cyberattack is disrupting health care and billing information operations nationwide and poses a direct threat to critically needed patient care and essential operations of the health care industry.

OCR enforces the HIPAA Privacy, Security, and Breach Notification Rules, which sets forth the requirements that HIPAA covered entities (most health care providers, health plans, and health care clearinghouses) and their business associates must follow to protect the privacy and security of protected health information and the required notifications to HHS and affected individuals following a breach.

Ransomware and hacking are the primary cyber-threats in health care. Over the past five years, there has been a 256% increase in large breaches reported to OCR involving hacking and a 264% increase in ransomware. In 2023, hacking accounted for 79% of the large breaches reported to OCR. The large breaches reported in 2023 affected over 134 million individuals, a 141% increase from 2022.

"Automatic Enrollment in Health Insurance" (Commonwealth Fund Report)

The Commonwealth Fund just published "Automatic Enrollment in Health Insurance: A Pathway to Increased Coverage for People with Low Income" (March 11, 2023) by John Holahan, Michael Simpson, and Jason Levitis. By way of introduction, the Commonwealth Fund writes: "The number of uninsured Americans — more than 26 million — remains stubbornly high, despite the availability of free or low-cost health coverage to those with low incomes. But there is a pathway to coverage that could have a substantial impact on the uninsured rate: automatically enrolling people who qualify for no-cost coverage in either Medicaid or marketplace plans." 

The basic model would expand upon existing law in a bold way:

The Inflation Reduction Act of 2022 eliminated marketplace premiums for eligible people with incomes below 150 percent of FPL. As a result, all individuals at that income level who live in states that have expanded Medicaid can now receive zero-premium coverage, unless they have an “affordable” offer from an employer or are excluded because of immigration status. If the remaining 10 states expanded Medicaid, or if eligible people with incomes below 100 percent of FPL in nonexpansion states were permitted to have subsidized coverage in the marketplace, then most legal residents with incomes below 150 percent of FPL could be covered with no premiums. Zero-premium coverage could also be extended to higher incomes, either through further enhancement of federal premium tax credits or by states adopting a Basic Health Program or adding state premium subsidies. [footnotes omitted]

Here's the Abstract:

Issue: The number of uninsured Americans remains stubbornly high, and many Americans do not obtain the coverage for which they are eligible — even when insurance is free.

Goal: To outline a system for automatically enrolling people with low incomes in health coverage and then model the impact on coverage and spending at the federal and state levels.

Methods: The Urban Institute’s Health Insurance Policy Simulation Model was used to analyze alternative auto-enrollment approaches. These include identifying uninsured individuals who are tax filers or recipients of the Supplemental Nutrition Assistance Program (SNAP), unemployment insurance, or Social Security and enrolling people who are eligible for free coverage.

Key Findings and Conclusions: We show results for the nation and for three states (California, Georgia, and Michigan). If all states adopted an auto-enrollment policy for those with incomes at or below 150 percent of the federal poverty level, 4.3 million uninsured people would be identified and enrolled. An additional 1.8 million would be “deemed” covered, either auto-enrolled through provider contact or contingently covered and thus protected from huge medical bills. Provider spending on uncompensated care would fall 32 percent, while federal spending would increase by $30.3 billion and state spending would increase by $7.7 billion per year.

The report discusses two implementation models: nationwide enrollment pursuant to federal legislation or, absent that, state-by-state legislative implementation. 

It's hard to imagine either model would escape contentious litigation lasting years. Recall Chief Justice Roberts's opinion in the 2012 case of Sebelius v. NFIB, in which the individual mandate was deemed to exceed Congress's powers under the Commerce Clause: 

The individual mandate, however, does not regulate existing commercial activity. It instead compels individuals to become active in commerce by purchasing a product, on the ground that their failure to do so affects interstate commerce. Construing the Commerce Clause to permit Congress to regulate individuals precisely because they are doing nothing would open a new and potentially vast do-main to congressional authority.

Make a change to these sentences and you have the essence of the brief we can expect from opponents of automatic enrollment:

The individual mandate, however, does not regulate existing commercial activity. It instead compels individuals to become active in commerce by enrolling them in a product, on the ground that their failure to do so affects interstate commerce. Construing the Commerce Clause to permit Congress to regulate individuals precisely because they are doing nothing would open a new and potentially vast do-main to congressional authority. 

In Sebelius Roberts saved the individual mandate by characterizing the penalty for not purchasing health care coverage as a tax. It would be a real stretch to characterize a free insurance policy as an exercise of the Taxing Clause. Would it fly under the Spending Clause? 

By way of counter-argument, don't we already have a nationwide automatic-enrollment scheme for Medicare Part A? Would a broader scheme be any different?

Criminal Liability of Health Care Providers

Some types of criminal prosecutions of health care providers are rare, while others are not.

1. Not-so-rare. This category includes fraud (against private insurers and public health programs like Medicare, Medicare, and Tricare); criminal prosecutions involving violations of the Anti-Kickback Law are announced by DOJ and state AGs every week (if not every day). Last Friday, for example, the Massachusetts Attorney General announced indictments against a dentist and his dental practice for billing the Medicaid program for services that were never rendered or were not rendered by the dentist. The charges included multiple counts of Medicaid False Claims and Larceny Over $1,200. 

Violations of state and federal Controlled Substances Acts often have a provider -- a physician, nurse, or pharmacy worker -- with access to drugs in the middle of the scheme. A recent example comes from the U.S. Attorney for the Northern District of New York. whose office announced on March 1 that a nurse practitioner received a 70-month sentence "for distributing controlled substances outside the course of professional practice and for no legitimate medical purpose." In her plea agreement, the defendant admitted that she 

unlawfully prescribed controlled substances to a total of 54 patients.  Simonson issued hundreds of unlawful prescriptions, including for the opioids hydrocodone and oxycodone, benzodiazepines (clonazepam, diazepam, and lorazepam), and the stimulants amphetamine (e.g. Adderall) and methylphenidate.  For instance, Simonson admitted that she issued a total of 63 oxycodone prescriptions to two residents of Suffolk County, New York, without treating either of them for a medical condition. The Suffolk County residents usually paid Simonson by mailing her packages of cash concealed within DVD cases.

To settle the government's civil case against her, the defendant "admitted that she improperly prescribed controlled substances to 105 patients (including the 54 listed in her criminal plea agreement), often without ever examining patients and maintaining medical records justifying her decision to prescribe controlled substances."

2. Very rare. This category involves provider errors that result in iatrogenic injury. Most such cases, of course, are handled on the civil side by medical-malpractice and medical-negligence claims. In a small percentage of cases, though, a provider will be indicted. Most such cases involve extreme departures from the standard of care resulting in a patient's death. An example was reported by the NY Times earlier this month:

A Colorado paramedic convicted in the 2019 death of Elijah McClain, a young Black man whose case helped drive the national police reform movement, was sentenced on Friday to five years in prison.

The case was a rare criminal prosecution of emergency medical personnel, and stirred outrage among paramedics and firefighters across the nation who worry that urgent decisions made as part of their jobs can be criminalized.

The paramedic, Peter Cichuniec, 51, a former lieutenant with Aurora Fire Rescue, was convicted in December of criminally negligent homicide and second-degree assault for the unlawful administration of drugs. He was one of five police officers and paramedics prosecuted in state district court over three consecutive trials. . . .

In August 2019, Mr. McClain, a 23-year-old massage therapist, was returning home from a store when he was confronted by police who were responding to a 911 call about a suspicious person. During a quickly escalating encounter, Mr. McClain was forcefully restrained by police and placed in a carotid chokehold, a neck restraint that has since been banned in Aurora and other police departments. Paramedics then injected him with an overdose of the powerful sedative ketamine. He died in a hospital several days later.

Cyber Attack on United Healthcare Division Was Unprecedented in Scope

If you've tried to fill a prescription or get preauthorization for a drug or procedure or -- if you're a health care provider -- tried to submit a bill electronically, you have experienced the widespread crippling of our healthcare infrastructure that resulted from an unprecedented cyberhack. 

As reported by KFF Health News (March 8), 

The American Hospital Association calls the suspected ransomware attack on Change Healthcare, a unit of insurance giant UnitedHealth Group’s Optum division, “the most significant and consequential incident of its kind against the U.S. health care system in history.” While doctors’ practices, hospital systems, and pharmacies struggle to find workarounds, the attack is exposing the health system’s broad vulnerability to hackers, as well as shortcomings in the Biden administration’s response.

Despite the centrality of digital record-keeping, billing, and payment systems, there turns out to be no meaningful governmental involvement in this arena.

To date, government has relied on more voluntary standards to protect the health care system’s networks, Beau Woods, a co-founder of the cyber advocacy group I Am The Cavalry, said. But “the purely optional, do-this-out-of-the-goodness-of-your-heart model clearly is not working,” he said. The federal government needs to devote greater funding, and more focus, to the problem, he said. [emphasis added]

Restoration of full operability after a cyber attack typically takes 30 days, according to Mr. Woods, which means we can all expect slower response times to virtually all requests for health-related services at least through March and probably into April. Meaningful federal action will take much, much longer.

 

CDC Updates Guidance on COVID+ Infections

I noted in an earlier post that the Center for Disease Control & Prevention (CDC) was considering a significant change to their recommendations for patients who test positive for Covid-19 ("Chicken Soup for COVID?", 2/18/24). Things got busy at work, and I neglected to post a link to the final version of the recommendations, which CDC pushed out on March 1. You can find the press release here and the text of the recommendations here.

The new guidelines fairly drastically reduce the agency's previous quarantine recommendation:

When people get sick with a respiratory virus, the updated guidance recommends that they stay home and away from others. For people with COVID-19 and influenza, treatment is available and can lessen symptoms and lower the risk of severe illness. The recommendations suggest returning to normal activities when, for at least 24 hours, symptoms are improving overall, and if a fever was present, it has been gone without use of a fever-reducing medication.

Once people resume normal activities, they are encouraged to take additional prevention strategies for the next 5 days to curb disease spread, such as taking more steps for cleaner air, enhancing hygiene practices, wearing a well-fitting mask, keeping a distance from others, and/or getting tested for respiratory viruses. . . .

For all intents and purposes, the CDC recommends the same steps for dealing with COVID as for influenza. The absence of fever for 24 hours, not a negative COVID test, is the key to ending quarantine and returning to a mostly normal life. "Normal" in this case includes limiting close contact with others, wearing well-fitted masks, improving indoor air quality, and practicing good hygiene.

Revised Merger Guidelines from DOJ & FTC: What Effect on Hospital Acquisitions of Physician Practices?

 

On Dec. 18, 2023, the U.S. Department of Justice and the Federal Trade Commission issued their updated Merger Guidelines, hitting the "Refresh" button for the first time since the publication of their 2010 Horizontal Guidelines and 2020 Vertical Guidelines. [See Wilmer Hale newsletter, 12/22/23; see also Crowell & Moring newsletter, 12/19/23 (5 key takeaways); Gibson Dunn newsletter, 12/22/23 (3 key takeaways)]

The Merger Guidelines apply equally to acquisitions, so it is natural to ask about the potential impact of the revised Merger Guidelines on the growing trend of hospital acquisitions of physician practices. That question is asked and expanded, if not quite answered, in the March 9 issue of the New England Journal of Medicine in a piece by Dhruv Khullar, M.D., M.P.P., Lawrence P. Casalino, M.D., Ph.D., and Amelia M. Bond, Ph.D.: "Vertical Integration and the Transformation  of American Medicine," available for free here (HTML) and here (PDF).

The article identifies three broad areas of concern that will require a more nuanced approach fueled by a close factual inquiry in each case under review:

First, are the effects of vertical integration influenced by the form that the resulting health system takes? The Agency for Healthcare Research and Quality has defined a health system as an organization that has at least one hospital and at least one physician practice that provides comprehensive care, with the entities operating under common ownership or management. This broad definition is useful for systematically tracking growth in the number of health systems, but it masks tremendous heterogeneity in size, geography, not-for-profit versus for-profit status, provider specialties, and leadership structure. . . .

Second, how do practice acquisitions affect clinicians? Traditionally, antitrust agencies judging whether to challenge a proposed merger or acquisition have focused on prices paid by consumers. In recent years, however, they have started to take a more expansive view of potential benefits and harms. The new guidelines address the extent to which a merger lessens competition for workers and could result in lower wages, worse benefits, or poorer workplace conditions. Research on vertical integration in health care could examine its consequences for clinicians. Many clinicians may be satisfied after their practice is acquired; they may, for example, have an improved work–life balance, receive greater administrative support, and be relieved of managing the business-related aspects of medicine. Alternatively, they may work longer hours, have less autonomy and constrained job mobility, and experience more burnout or moral injury.

Third, and most important, when hospitals acquire practices, which patients benefit, and which are harmed? The effects of vertical integration are likely to vary depending on the medical and social needs of a health system’s patients. Patients who have multiple coexisting conditions and require frequent interactions with the health care system may be especially affected by changes in care protocols and referral networks after practice acquisitions. The types of practices that hospitals target also matters. The guidelines call attention to the potential for merged entities to limit access to products or services that rivals need to compete. It’s possible that in preferentially acquiring profitable practices, hospitals leave patients in poorly resourced practices worse off by weakening those practices’ leverage in negotiations with insurers, deprioritizing referrals for their patients, or hiring away their clinicians and staff. Future research could examine the effects of acquisitions not only on patients at practices that are acquired by hospitals, but also on patients at practices that, for whatever reason, are not.

The concluding paragraph summarizes the authors' concerns:

The rapid acquisition of physician practices by hospitals highlights an important tension in health care — between the possibility that integration can promote efficiency and improved quality and the concern that it distorts markets and can worsen health and financial outcomes. This tension reflects the conflicting values of coordination and competition. Resolving it — determining whether, how, and when regulators should act — will require a more nuanced understanding of the consequences of these acquisitions for patients, families, and clinicians. 

Biden's State of the Union Address: 13 Health Care Take-aways

Becker's Hospital Review takes a look at "13 healthcare takeaways" from President Biden's State of the Union address last evening. They include:

1. Expanding Medicare's drug price negotiation scope
2. Limiting drug costs
3. Expanding rebate requirement
4. Closing Medicaid coverage gap [for 10 states, including Texas, that haven't expanded eligibility]
5. Capping the cost of insulin
6. Abortion access
7. COVID-19
8. Affordable Care Act
9. Women's health
10. Taxes
11. Gun violence
12. PACT Act [Resources for Veterans]
13. ARPA-H (Advanced Research Projects Agency for Health )