AHIP urges 4 types of policies to reduce health care spending

June 12, 2023 – AHIP offered four recommendations to the Senate Finance Committee on Consolidation and Competition (the committee) to support healthy competition and reduce health care spending in the health care sector.

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

First, AHIP addressed the effects of established healthcare systems on prices. Established healthcare systems reduce competition and increase prices, the statement said. He called on the Committee to support the Federal Trade Commission’s (FTC) antitrust enforcement and legislation addressing anticompetitive contract terms.

Second, the AHIP recommended pursuing greater 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 issues due to the short-term financial prospects of private equity firms.

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

Third, the statement focused specifically on dialysis markets and their responsibility for rising healthcare spending. Three-quarters of the Medicare dialysis market is owned by two companies, driving up costs for Medicare beneficiaries and health plans.

The AHIP has recommended reintroducing the Improving Access to Home Dialysis Act along with other efforts to support home dialysis. In addition to enacting supportive legislation, policy makers should withdraw support from legislation that incentivizes higher dialysis prices.

Finally, AHIP noted how reimbursement based on location of care had an impact on health care spending; in particular, the impact of unequal reimbursement levels for similar services between physicians and hospital practices has increased costs and consolidation.

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

“Patients shouldn’t have to pay more for the same service provided with the same quality of care simply because a hospital owns its own doctor’s office.”

In response to this challenge, AHIP has urged lawmakers to support site-independent payment policies, implementing enumeration of national provider identifiers for off-campus hospital outpatient departments, allowing facility fees only for specific circumstances, and requiring sites based on Grandfather Hospital to be subject to site-neutral payment legislation.

The American Hospital Association also engaged in the committee hearing that defended hospital consolidation and highlighted hospitals’ efforts to move toward pricing transparency.

In early 2023, the Blue Cross Blue Shield Association (BCBSA) affirmed many of these policy recommendations in a report that covered ways to reduce health care spending. Among the findings, BCBSA highlighted the importance of vendor competition and site-neutral payment policies.