They then build market power towers that affect prices for the insured, perhaps even affecting premiums for participants in the new health insurance exchanges.
"You aren't just a big hospital anymore," Jha says. "Now you have nursing homes and home health agencies, and you own all of it, and your ability to negotiate with an insurance company has just gotten a lot stronger and a lot better. And you're going to extract higher prices from that insurance company. That's the part that insurance companies worry about, and I am very sympathetic to that," Jha says.
He sees pushback from other federal agencies who might say, "all of this is encouraging provider consolidation, and that's actually not helping lower costs."
Officials for the Centers for Medicare & Medicaid Services don't agree.
This efficiency measure "incentivizes hospitals to work on redesigning care systems and coordinating with other providers of care, which can have a significant impact on the quality and efficiency of services provided to the Medicare beneficiaries they serve," they said in a recent rule finalizing the measure.
They added, "we also continue to believe that hospitals have a significant influence on Medicare spending during the episode surrounding a hospitalization, through the provision of appropriate, high-quality care before and during inpatient hospitalization and through proper hospital discharge planning, care coordination, and care transitions."