Hospital consolidation could increase under a Senate proposal to clamp down on unexpected, expensive medical bills, the Congressional Budget Office warned in a preliminary assessment.
While several economists disagreed with the nonpartisan budget office’s assessment, the finding could complicate Senate efforts to tackle surprise medical bills because Congress doesn’t want to be perceived as driving more hospital mergers.
The Senate Health, Education, Labor, and Pensions Committee has a collection of measures to address unexpected medical bills caused by a patient unknowingly receiving coverage from an out-of-network provider.
The package would create an arbitration process for bills, let providers choose to join a health plan’s network or bill through the facility where they practice rather than sending separate bills, or accept a payment based on a median contracted rate for the services.
The Senate package would save a combined $54 billion over the next decade, according to a Republican staffer, but not all of those components may move forward. The CBO said all three proposals to stop surprise medical bills could lead to provider consolidation, but the specifics have not yet been explained publicly because these are preliminary scores that were leaked before CBO wrote a formal analysis, a Senate aide said.
Hospital consolidation can lead to fewer choices and higher costs for patients. It can also drive up the price the government pays for Medicare and Medicaid coverage. The rate of mergers is on the increase with 115 in 2017, up from 50 in 2009.
However, it’s unlikely that these proposals would “meaningfully increase the kind of consolidation that we worry about the most,” where hospitals buy up other medical facilities, Ben Ippolito, an economic policy research fellow at the conservative American Enterprise Institute, said.
Ippolito and Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy, separately said they didn’t see how the surprise billing package would affect hospital consolidation, which is already driven by market forces.
The Senate package already includes some measures to prevent further consolidation, Adler said.
Consolidation Has Benefits
Not all consolidation is the same. Though Congress has worried about hospitals buying up rivals, it could also drive more doctors to establish relationships with existing hospitals. That form of consolidation likely wouldn’t change the total cost of care, Zack Cooper, an associate professor of health policy and economics at Yale University, said.
That would make the doctors more like employees of the hospitals, Christopher Garmon, an assistant professor of health administration at the University of Missouri, Kansas City and former staff economist at the Federal Trade Commission, said.
However, there is limited evidence those types of mergers also drive up prices, Adler said. Only three studies from 2014 and 2018 showed that hospital ownership of physician practices led to increased hospital prices.
Hospitals may already want more control over doctors’ billing and rates if the surprise billing attention begins to harm their reputations, Emily Gee, a health economist at the Center for American Progress, said.
The extent to which the arbitration and median contract rate proposals would lead to consolidation is going to come down to how the median network rate is calculated, Garmon said.
—With assistance from Alex Ruoff