News Roundup: AMA Opposes Health Plan Mega-Mergers

The American Medical Association says large-scale health plan consolidation will limit competition, medical choices, and leverage; safety net hospitals fare poorly under value-based reimbursement models; and an IL state law adds teeth to a federal law designed to help victims of rape.

Some major changes to healthcare in the news this week—that's an understatement—captured my attention. Here's the rundown:

• The proposed mergers of Aetna/Humana and Anthem/Cigna are getting scrutiny not only from federal regulators, but from the AMA, AHA, and Moody's.
• Value-based reimbursement may seem relatively new, but pilot programs have been in place for a few years and data on their effectiveness is starting to come out. But safety net hospitals are not benefiting financially, research shows.
• Hospitals in Illinois are under scrutiny to make sure they are following the spirit of a federal law that aims to help rape victims.

Let's dig into the details.

AMA Details Its Opposition to Health Plan Mega-mergers
The American Medical Association is joining a chorus of industry heavyweights who say the proposed mergers between Anthem and Cigna and Aetna and Humana will limit competition, medical choices, and leverage.

An AMA analysis of commercial health plan competition across the country found that 154 metropolitan areas in 23 states would see less competition. AMA President Steven J. Stack, MD, said in a statement, "…physicians may be pressured to accept unfair terms that undermine their role as patient advocates and their ability to provide high-quality care."

The relationships between physicians and payers have always been characterized as somewhat icy, though that chill has thawed among some physician groups and hospitals who participate in bonus programs that commercial payers have set up to mirror the CMS effort to improve quality. Both mergers still have to go through a lengthy federal approval process are not expected to be complete, if allowed to go through, until the end of 2016.

The AMA is the most recent group to criticize the proposed multi-billion dollar mergers. The American Hospital Association has already sent two letters to the U.S. Department of Justice's Antitrust Division and to the Department of Health & Human Services raising concerns that both deals would negatively impact patients.

Moody's Investors Service weighed in on the mergers in August, issuing a report that predicted hospital revenues would shrink because the new entities would have even greater control over reimbursement rates.

Both Cigna and Aetna have reportedly hired lobbyists to help secure their respective deals.

Safety-net Hospitals Fare Poorly Under CMS Pay-for-Performance Programs
Two pay-for-performance programs launched by the Centers for Medicare & Medicaid Services disproportionately penalize safety-net hospitals according to a study published in the Annals of Internal Medicine this week.

The study did not look at whether quality or readmission rates improved at the hospitals. Instead, researchers evaluated the financial impact from the value-based purchasing (VBP) and hospital readmissions reduction programs that CMS administers. The goal of both programs is to improve quality and readmission rates by either penalizing hospitals for not meeting goals or paying them a bonus when they do.

Researchers looked at data from 3,022 acute care hospitals that are participating in both CMS programs; 755 were identified safety-net hospitals.

For this study researchers looked at two factors: the percentage of disproportionate share hospital (DSH) patients and the uncompensated care (UCC) payment per bed.

DSH payments used to be the principal way that safety-net hospitals received financial help because they care for a larger percentage of patients who are poor and uninsured. DSH payments are still a factor for hospitals, but now UCC payments make up a larger portion of financial help to account for the rising numbers of insured.

The data shows that safety-net hospitals received higher penalties depending on whether researchers considered DSH or UCC definitions. For example, 63% of safety-net hospitals, as defined by DSH payments received a reduced payment rate under VBP; applying the UCC definition showed 60% of hospitals getting dinged under VBP compared to 51% of non-safety-net hospitals. In dollars, the penalties amounted to $18,400 and $12,348.

The results were worse for safety-net hospitals when researchers looked at the readmissions program. Under the UCC definition, 82% were penalized compared to 69% of non-safety-net hospitals, and 81% received readmission penalties using the DSH definition. The financial penalties are for readmissions are greater using the UCC definition, which accounts for a greater percentage of how CMS attempts to compensate hospitals.

IL Law Fines Hospitals for Billing Rape Victims
Beginning in January 2016, hospitals in Illinois that bill rape victims for their ER visit and evidence collection will be fined $500.

The federal Violence Against Women Act, enacted in 2013, dictates that rape victims should not be forced to pay for the cost of rape exams. The Illinois law, signed by Gov. Bruce Rauner (R) last month, strengthens the federal mandate by issuing state fines for violations. There is also a clause in the law that fines hospitals $500 per day if a victim's bill is in collections.

In addition to issuing fines, hospitals also must tell rape victims in writing that they are not liable for their testing in the ER while also giving a phone number patients can use when/if they receive a bill from the hospital.

Victim's advocates have long fought against billing rape victims, and there are state agencies set up to reimburse rape victims though they aren't widely known about or used.

Some hospitals will write off the charges as uncompensated or charity care, but some send bills to victims, which can lead to being re-traumatized.

Rape is an underreported offense, and while law enforcement take the lead in investigating the assaults, nurses and emergency department staff are key figures because they are the first stop for evidence collection.