The problems include 'a legal shield' enjoyed by nonprofit hospitals, and the solutions include more retrospective analysis of close calls, says Rebecca Kelly Slaughter.
Federal Trade Commissioner Rebecca Kelly Slaughter told a liberal think tank Tuesday that antitrust regulators should take a more assertive approach to protect competitive forces among healthcare providers.
Slaughter, a Democrat appointed to the FTC by President Trump and confirmed last year, made the remarks in a speech at the Center for American Progress in Washington, D.C., where she took issue with what she described as "a legal shield for anticompetitive conduct" at nonprofit hospitals.
The FTC is allowed to review all hospital mergers, but it cannot enforce antitrust laws against nonprofits, including more than 45% of U.S. hospitals, she said.
"So, for example, if a non-profit hospital merger itself is not anticompetitive, but the newly merged entity engages in anticompetitive practices, the FTC is stuck on the sidelines," Slaughter said in her prepared remarks.
"In effect, this means that all of the healthcare industry expertise that the FTC has worked for decades to, and continues to, develop cannot be deployed alongside the DOJ and state enforcers to stop anticompetitive practices by roughly half of all hospitals nationwide," she added. "This is a significant lost opportunity."
Slaughter called for greater scrutiny of horizontal and vertical mergers alike both in the future and in the past.
"I believe that the FTC should conduct a new round of retrospectives of healthcare provider mergers," Slaughter said.
Studying the past has led the FTC to some of its biggest improvements in understanding market forces, as was the case with former Chairman Timothy J. Muris' retrospective analysis of hospital mergers in the early 2000s, Slaughter said.
Moving forward, Slaughter said, the FTC should take another look at recently cleared "close-call hospital mergers" and those that were shielded from antitrust scrutiny by state laws despite posing significant concerns. This is consistent, she said, with a statement the FTC issued last fall when it decided not to challenge a proposed affiliation involving CareGroup Inc., Lahey Health System Inc., Seacoast Regional Health System, and others.
The FTC should also consider taking another look at vertical integration among healthcare providers, such as transactions involving hospitals and physician groups, she said.
"[W]e should be as aggressive as possible in challenging the mergers we encounter today, especially where the proposed consolidation involves new structural arrangements rather than traditional horizontal concerns," Slaughter added. "It is important for parties considering mergers to know we will not shy away from challenging, for example, anticompetitive vertical organizations."
"I am sensitive to the concern that we might lose litigation," she added, "but our obligation is to identify the right outcome and fight for it."
The selected witnesses will be allowed to testify up to eight hours total early next month in a hearing that is definitely not a trial.
The federal judge who will decide whether CVS Health and Aetna may finalize their nearly $70 billion merger under an agreement reached with the U.S. Department of Justice hand-picked six witnesses to testify at a hearing early next month.
The parties and amici curiae had proposed 13 witnesses in total after U.S. District Judge Richard Leon said last month that he wanted to hear testimony on the pending transaction before deciding whether to sign off on the DOJ-approved agreement.
The parties, which proposed five witnesses, had urged Leon to block at least some of the amici's seven proposed witnesses from testifying, arguing that their planned testimony included irrelevant arguments. Leon denied that request in an order Monday but selected only three witnesses from each side, based on his own determination of who "would be most helpful" for the hearing.
In outlining how the hearing will proceed, Leon wrote, "it is worth stressing, at the outset, that this hearing is not a trial." Rather, it is an information-gathering exercise for the court. The government won't have to produce evidence; the witnesses won't be subject to cross-examination; and there will be no formal opening or closing arguments, he wrote.
"In short, this hearing is merely an opportunity for the parties and the amici to provide the Court with whatever additional information and analysis they believe will aid the Court in determining whether the Government's proposed final judgment is in the public interest," Leon wrote.
The order scheduled up to eight hours of testimony to begin Tuesday, June 4, at 10:30 a.m. in the U.S. District Court for the District of Columbia. The hearing will wrap up by 5:30 p.m. each day and reconvene at 10:30 a.m. each morning for up to three days of testimony to end no later than Thursday, June 6, Leon wrote.
The amici witnesses Leon selected are as follows:
Neeraj Sood, PhD, a health policy professor and vice dean for research at the University of Southern California Sol Price School of Public Policy, was put forward by the American Medical Association. Sood may testify for up to two hours.
Diana L. Moss, PhD, president of the nonprofit American Antitrust Institute and an adjunct faculty member in the Department of Economics at the University of Colorado at Boulder, was put forward by Consumer Action and the U.S. Public Interest Research Group (PIRG). Moss may testify for up to one hour.
Michael B. Wohlfeiler, MD, JD, chief medical officer for the AIDS healthcare Foundation, was put forward by the foundation. Wohlfeiler may testify for up to one hour.
The party witnesses Leon selected are as follows:
Alan Lotvin, executive vice president of transformation for CVS Health, who reports directly to CVS President and CEO Larry Merlo and plans to testify on purported consumer benefits of the CVS-Aetna deal, was put forward by his employer. Lotvin may testify for up to one hour.
Terri Swanson, vice president of Medicare product and Part D business at Aetna since 2010, was put forward by both CVS and the DOJ. Swanson may testify for up to one hour.
Lawrence Wu, PhD, president of the economic consulting firm NERA, who is expected to testify that the CVS-Aetna transaction won't lead to price increases for consumers, was put forward by CVS. Wu may testify for up to two hours.
The proposed amici witnesses whom Leon did not select were Richard M. Scheffler, PhD; Thomas L. Greaney, JD; Hal Singer, PhD; and Lawton R. "Rob" Burns, PhD, MBA. The proposed party witnesses whom Leon did not select were Michael Radu, MBA and Nicholas Hill, PhD, MSc.
Leon noted that this hearing won't be the last in his review of the DOJ's proposed final judgment, as he will "undoubtedly hear attorney arguments at a later date."
In the likely event that the settlement is finalized, the nonprofit health system plans to back away from its pending petition.
Intermountain Healthcare says it has reached a settlement in principle with the cardiologist who filed a False Claims Act lawsuit seven years ago against the Salt Lake City–based nonprofit health system.
Intermountain had asked the U.S. Supreme Court to review the dispute, seeking relief from the long and costly slog of discovery proceedings at the District Court level. Once the settlement is finalized, however, Intermountain plans to ask the Supreme Court to dismiss its pending petition, thereby dropping its claim that the FCA's qui tam provisions are unconstitutional.
The health system's legal team revealed the plan in a letter late last month to the Supreme Court clerk. Intermountain asked the court to defer its consideration of the case until September to give the parties sufficient time to consummate an agreement.
"At present, Intermountain does not know how long it will take to obtain the government's necessary approval and to finalize and execute the relevant settlement documents," M. Miller Baker of the firm McDermott Will & Emery wrote.
The letter—which has not been published in the online docket but which HealthLeaders obtained from the court—says the possibility that this settlement will fall through is unlikely.
A spokesperson for Intermountain said Friday afternoon that the system is unable to provide additional information at this time. The relator and his attorney did not immediately respond Friday afternoon to a request for comment.
Warnings Ignored 'For The Money'?
The cardiologist who filed the 2012 lawsuit, Gerald Polukoff, MD, alleged that Intermountain Medical Center and St. Mark's Hospital in Salt Lake City, had knowingly participated in a scheme to perform unnecessary heart surgeries and bill government payers for the procedures.
Polukoff said cardiologist Sherman Sorensen, MD, routinely closed a small hole in a patient's heart, even in cases when such procedures are widely viewed as medically unnecessary, and he accused Intermountain of being complicit in the lucrative practice, as Polukoff's legal team explained in a brief filed last month with the Supreme Court.
"Sorensen did not act alone," the brief states. "Indeed, surgeons almost never act alone: they need somebody to provide them with a suitable venue, supplies, and support staff to make the surgeries happen."
Polukoff alleges that Intermountain was reckless since at least 2006, when published industry guidelines made clear that Sorensen's surgeries were unnecessary. Intermountain's administration had furthermore been warned repeatedly about Sorensen's practices, he alleges.
"Intermountain ignored these warnings for the money," the brief states.
Polukoff argues that Intermountain acknowledged the misbehavior when it changed its policies in 2011, audited Sorensen's practice, and revoked his privileges. (Notably, St. Mark's didn't join in Intermountain's request for Supreme Court review.)
How We Got Here
In 2017, Polukoff lost at the District Court level. But the Tenth Circuit reversed on appeal in 2018, directing Intermountain to return to the District Court level for discovery proceedings.
This year, rather than submitting to discovery, Intermountain filed its petition for the Supreme Court to review the matter, arguing that Polukoff's allegations were insufficient in their particularity and that the FCA's qui tam provisions violate the Appointments Clause of Article II of the U.S. Constitution.
Polukoff and the U.S. Department of Justice, which had declined to intervene in the case, initially said they would not file a formal response to Intermountain's petition.
Rand Nolen, an attorney with Fleming, Nolen & Jez LLP, who is co-counsel with Polukoff's attorney, told HealthLeaders in February that a formal response was not necessary because the team believed the justices would "swiftly" deny the petition.
"After reviewing Intermountain's petition for writ of certiorari, we don't believe that the Supreme Court is likely to grant the petition," Nolen said in an email. "The constitutionality of the False Claims Act is well settled in in the federal circuits and there is no circuit split on the issue."
The court requested that the parties submit formal responses anyway. Polukoff and the DOJ each did so on April 24. Intermountain's letter to the clerk signaling an expected settlement came five days later.
Potentially Costly Implications
The American Hospital Association (AHA) and Federation of American Hospitals (FAH) had urged the Supreme Court to grant Intermountain's petition.
"For healthcare providers, whether settled early or litigated to a conclusion, questionable and meritless FCA cases divert enormous resources away from providers' core responsibility: caring for patients," the hospital groups wrote in an amicus brief that argues most qui tam suits are meritless.
In fiscal year 1988, there were just five new HHS-related qui tam FCA cases filed, according to data released by the U.S. Department of Justice. Thirty years later, in fiscal year 2018, there were 446 such new cases. And that was by no means an outlier.
This proliferation of these lawsuits is especially noteworthy because the DOJ intervenes in only about 20% of these cases.
A spokesperson for AHA declined to comment Friday, and a spokesperson for FAH did not immediately respond.
Despite the benefits of primary care, there are some important steps healthcare incumbents should take in deciding whether and how to participate.
Organizations that are eligible to participate in the new CMS Primary Cares Initiative models have a big determination to make: whether now is the right time.
For organizations like Austin Regional Clinic, the decision would be easy, says Norman H. Chenven, MD, founding CEO for the Texas-based organization and vice chairman of the Council of Accountable Physician Practices. The multispecialty group of 320 physicians, most of them primary care physicians, has already been investing heavily in its value-based readiness for the past decade, with primary care at the center, he says.
"When patients do not have real engagement with their primary care physician, they may think they're getting the greatest care in the world" because they have their own personal lineup of specialists, Chenven says.
"The truth is what they have is very fragmented, disconnected, and possibly even dangerous care," he adds.
Despite the established benefits of primary care and the promising signs around the CMS Primary Cares Initiative, there are some important steps for health systems, provider groups, and other incumbents to take in deciding whether and how to participate:
1. Evaluate your existing contracts
If you are currently participating in the Medicare Shared Savings Program or another model, consider whether that is the best way to monetize the value you bring, says Dennis K. Butts, Jr., MBA, a managing director in Navigant's value transformation practice. A study by Navigant last year found that many ACOs are losing money. But your decision on whether to move to a Primary Care First (PCF) or Direct Contracting (DC) model depends on how it compares to what you have.
2. Assess your infrastructure.
Whether you have a long list of existing value-based contracts or not, you should ask yourself if you have made the necessary investments (or can muster the resources and will to make the investments in the near term) to support a value-based primary care undertaking, Chenven says. In addition to needing capacity for enhanced healthcare services and a powerful electronic health record system, you will need leaders in place at both the executive and physician levels, he says.
3. Gauge your PCP alignment.
Your primary care physicians and other groups may soon have new partnership opportunities, so don't take them for granted, Butts says. Be sure to engage them up front and bring them into conversations about the strategy, he adds.
4. Define a comprehensive strategy.
This value-based primary care initiative will be just one piece of each participating organization's Medicare business, so you should think of it in terms of a spectrum that includes fee-for-service, Medicare Advantage beneficiaries, and others, Butts says. Focus your energy on "no-regrets" strategies that will benefit Medicare beneficiaries across all those contracting vehicles, he says.
5. Embrace your tech-driven potential.
That may mean embracing a partner's technological expertise. If another organization can build a better app than you or facilitate telemedicine more effectively, don't be too quick to think of them purely as a competitor, Butts says.
Even as some important questions remain unanswered, the CMS Primary Cares Initiative is generating a lot of excitement. Observers say it opens the door to more competitors for healthcare incumbents.
The shift to value-based care has sputtered a bit in the past two years, as hospitals and health systems have waited to see what innovative reforms the Trump administration would push across the healthcare policymaking finish line.
Despite a litany of attempts—and two years of a Republican-controlled Congress—the administration has neither repealed nor replaced the Affordable Care Act and the value-based payment provisions embedded within it. Even with its individual mandate neutralized and its constitutionality under judicial review, the ACA remains law, and officials in the Centers for Medicare & Medicaid Services are using the ACA's authority to roll out a potentially transformative undertaking: the CMS Primary Cares Initiative.
That initiative, industry stakeholders say, is poised to kickstart value-based care in Medicare and beyond, ushering in a new wave of consumer-centric competition that could help to shake off some healthcare providers' risk aversion.
"There was a sense that things were flattening out. It wasn't going backwards. It wasn't going down. It just was not progressing as fast as we all had hoped," says Norman H. Chenven, MD, founding CEO of Austin Regional Clinic in Texas and vice chairman of the Council of Accountable Physician Practices.
"With this announcement for Medicare—again, with the caveat that the devil is in the details—there is a sense that this is going to be a shot in the arm and we're going to see some real new energy, innovation, and evolution of the value-based movement," Chenven tells HealthLeaders.
The initiative, which CMS announced last month, has a total of five voluntary payment model options split between two paths. There are two options under the Primary Care First (PCF) path and three options under the Direct Contracting (DC) path. The idea behind all five options is to demonstrate how risk and reward can lead to investment in primary care that ultimately reduces overall healthcare spending and boosts quality outcomes.
While there are still key details we don't know about how the new models will operate, they appear to present opportunities for healthcare providers that are strategically positioned to make big moves in value-based primary care.
But there also seem to be significant threats, including potential competition from some unlikely sources.
Beware New Entrants
These new primary care models are being built on foundational lessons learned through past pilots by the CMS Innovation Center, the agency says.
An organization doesn't need to be a large physician group or hospital to form an ACO or similar entity to participate. The new PCF models are open to primary care providers with as few as 125 attributed Medicare beneficiaries at a particular location. That helps to empower individual physician groups that might otherwise feel the need to align themselves with health systems, says Dennis K. Butts, Jr., MBA, a managing director in Navigant's value transformation practice.
And the new DC models include language that makes clear healthcare's transformation will not be constrained to the current provider landscape, Butts says. That means incumbent providers could find themselves up against some new competitors.
Participants in the third of the three DC models may include health plans, technology companies, and others interested in taking on risk for Medicare fee-for-service beneficiaries in a specific geographic area, CMS said in a fact sheet. (The agency is collecting comments on that idea through May 23.)
"The market is ripe for transformation and disruption, and this new model lowers the bar of entry and is actually encouraging those new market entrants to play a very active role in this space," Butts tells HealthLeaders.
These newer entrants have already been making moves in primary care. It's not just CVS Health and Walgreens that are expanding services in their retail clinics. It's major insurers, like Blue Cross Blue Shield of Texas, opening clinics of their own. That's in addition to whatever the Amazon-backed healthcare venture Haven ultimately decides to do. (For what it's worth, CEO Atul Gawande, MD, called the CMS Primary Cares Initiative "a big deal.")
"All of those new players in these models for direct-contracting now can actually get in the game as a primary participant and no longer have to sit on the sidelines," Butts says.
"I think we'll probably look back at this moment a few years from now as when the move to value really began to kick up in the healthcare marketplace," he adds.
Remember, though, that we are still waiting on CMS to fill in some key details about this initiative.
"What has been revealed so far is fairly general. It's directional, but it is certainly not absolutely clear how all of this will work," Chenven says. "The business model is, again, directional but not definitive."
What We Don't Know
Past experience with Medicare Advantage may serve as some guide for how CMS will proceed with its primary care initiative, but the details are not final until they are in writing. That's why the request for applications (RFA) that CMS is expected to release within the next few months is so important, says Chris Dawe, senior vice president of Medicare partnerships for Evolent Health.
Dawe, who has served as a White House healthcare policy advisor and the director of delivery system reform at Health and Human Services, says he will be looking for several specific bits of information, including how benchmarks will be established and calculated, how risk adjustment will work, and what waivers CMS will allow for participating organizations. The fine print on each of those items could dramatically change an organization's risk/reward assessment.
Dawe advises organizations to keep their options open because CMS has generally been accommodating in the past to those that apply for multiple options and then pick one later.
Don't forget, furthermore, that the CMS Innovation Center's statutory authority is rooted in the ACA, which the Trump administration has urged the Fifth Circuit to invalidate in its entirety. If the entire ACA were to be invalidated or repealed without a replacement, then the CMS Primary Cares Initiative ostensibly would fall with it.
When asked about the possibility that an invalidated ACA could undermine the Trump administration's own healthcare policymaking agenda, an HHS spokesperson said advancing the healthcare system's value-based transformation ranks among Secretary Alex Azar's top priorities, so he will not be deterred.
"This administration will continue to champion that priority in the context of any health reform effort," the HHS spokesperson told HealthLeaders in an email.
While fee-for-service payments will likely remain as a major source of revenue for years to come, industry watchers and policymakers agree that value-based contracting is ascendant once again, regardless of how the details of the CMS Primary Cares Initiative shake out.
"If you want to be able to capture all or mostly all of the value that you're actually creating in the market, you're going to have to take on downside risk," Dawe says. "To me, it's just a necessary part of the end-game here."
The growing pharmacy chain and PBM picked up Premier's specialty pharmacy business for $22.5 million, plus up to $20 million for inventory.
Premier Inc. said this week that it's ejecting its specialty pharmacy operation in a deal that means more customers for CVS Health.
Premier currently serves 367 hospitals sprinkled across 66 health systems, through its Acro Pharmaceutical Services and Commcare Pharmacy assets. Those customers will be transitioned to CVS subsidiary ProCare Pharmacy LLC in a deal expected to close by the end of next month, Premier said.
Premier valued the sale at $22.5 million, plus up to $20 million more for inventory. Exiting the specialty pharmacy business will translate into a $87-92 million non-cash impairment charge for Premier, the company said. Carrying out the transaction will also cost another $11-15 million in fees and benefits.
"Although specialty pharmacy continues to be an important component in healthcare, today's market dynamics are challenging and have resulted in new pressures across the industry," Premier President Michael Alkire said in a statement. "Exiting the business better positions Premier to capitalize on our strengths and enhance our focus on core, growing business lines encompassing our supply chain, enterprise analytics and performance improvement capabilities."
Premier said its adjusted margin should rise to about 45%, from 34%, after the transaction, while reducing annual consolidated net revenue by about $470 million and increasing annual pre-tax income by about $6 million.
While the company saw growing revenue from net administrative fees, that increase was offset by compression in the specialty pharmacy business and increases in product-related costs, Premier said in its third-quarter earnings data released Tuesday. The company's third-quarter adjusted earnings from the supply chain services segment fell slightly to $133.7 million, from $135.3 million a year prior.
The two CEOs say they hope to enhance care for their communities, bring costs down, and become 'the preeminent rural healthcare organization in the country.'
Two nonprofit health systems based in Wisconsin announced this week they are thinking about merging their operations to form a top-tier rural healthcare organization.
The CEOs of Gundersen Health System, based in La Crosse, and Marshfield Clinic Health System, based in Marshfield, said their potential union would aim to enhance care for the communities they serve and bring down the cost of care—objectives that healthcare executives pursuing efficiency through mergers and acquisitions might find equally familiar and elusive.
"The world is changing, and the same is true in healthcare. We must adapt and be innovative in order to continue to deliver quality care to the communities that we serve," Gundersen CEO Scott Rathgaber, MD, told La Crosse Tribune.
"We can work on our services and how to better deliver those across the whole continuum of care," Rathgaber added. "Ultimately, together and larger, we really hope to bring the cost of care down by working with those efficiencies and bringing that directly to our patients."
While research suggests that some M&A activity among hospitals can reduce costs, there is significant variation from one deal to the next, and actual savings often underperform expectations. Savings also can depend on which hospital or system is acquiring which.
In the case of a Gundersen-Marshfield deal, however, the systems are considering a "merger of equals," Rathgaber told the Tribune.
Combining the two would form a 13-hospital system with more than 100 clinics and more than 19,000 employees serving patients across Wisconsin, northeast Iowa, and southeastern Minnesota, the organizations said in their joint announcement. Gundersen currently has six hospitals and more than 8,000 employees, and Marshfield currently has six hospitals and more than 11,000 employees. (Marshfield is also expanding a clinic in Minocqua into a 12-bed hospital that's expected to open next year.)
Although the markets served are contiguous, the geographic overlap is minimal, the CEOs said.
Marshfield CEO Susan Turney, MD, FACP, told the Marshfield News-Heraldthat discussions about the potential merger began several months ago. Each organization's board approved the discussions in recent weeks, and staff members were notified on Monday, Turney reportedly said.
There's no word yet on what a combined Gundersen-Marshfield organization would be named. Whatever is selected will honor the legacy of each antecedent, Turney told the News-Herald, noting that no layoffs are planned at this time.
"Over the last few years, we have worked relentlessly to position ourselves for the future and create a better framework for serving our patients and communities," Turney said in a statement. "While at the same time, the disruption in the industry and competitive nature of healthcare has made it vital we construct a dynamic and strong integrated health system."
"This merger would give us an opportunity to combine the unique strengths of our systems to become the preeminent rural healthcare organization in the country," Turney added.
The proposed witnesses include executives from CVS, Aetna, and Wellcare, plus consultants with government experience.
CVS Health and the U.S. Department of Justice have named five potential witnesses to testify in favor of the pharmacy chain's Aetna acquisition at a hearing expected this month.
The DOJ approved the CVS-Aetna megamerger last fall, but U.S. District Judge Richard Leon in Washington, D.C., said he wanted to hear from witnesses before deciding whether to sign off on the DOJ's agreement, which prompted Aetna to sell its Medicare Part D business to WellCare Health Plans.
That divestiture is insufficient in the eyes of some organizations that have voiced concerns over the anticompetitive effects the CVS-Aetna deal could bring. Those groups put forward seven witnesses last month who wish to testify against the pending merger.
Attorneys for CVS argued that none of the seven witnesses should be allowed to testify. Both CVS and the DOJ argued that any hearing should be limited to only those topics relevant to the Tunney Act proceeding at hand, rather than allowing "a forum for airing competitors' grievances."
Now CVS and DOJ have, in separate filings, put forward a list of five proposed witnesses for Leon's consideration:
Michael Radu, MBA, executive vice president of clinical operations and business development for WellCare, plans to testify that Aetna selling its Part D plans to WellCare will likely improve WellCare's competitive stance in the marketplace, according to the DOJ filing. Radu will also testify that WellCare decidedly independently that contracting with pharmacy benefit manger (PBM) CVS Caremark was in its financial interest, the DOJ filing states.
Nicholas Hill, PhD, MSc, a consultant who worked previously as an assistant section chief in the DOJ antitrust division's economic analysis group and as an economist in the Federal Trade Commission's economics bureau, plans to argue that the divestiture to WellCare is likely to maintain competition in Medicare Part D markets, that moderate levels of market concentration "often do not lead to anticompetitive effects," and that WellCare isn't likely to face vertical foreclosure following Aetna's divestiture, according to the DOJ filing.
Terri Swanson, vice president of Medicare product and Part D business at Aetna since 2010, is knowledgeable on the nature of Part D competition; Aetna's relationship with its PBM, CVS Caremark; and Aetna's planned divestiture, according to the CVS filing. Swanson was named as a proposed witness in both the CVS and DOJ filings.
Alan Lotvin, executive vice president of transformation for CVS Health, reports directly to CVS President and CEO Larry Merlo and plans to testify on purported consumer benefits of the CVS-Aetna deal, according to the CVS filing.
Lawrence Wu, PhD, president of the economic consulting firm NERA, is expected to testify that the CVS-Aetna transaction won't lead to price increases for consumers, based on economic modeling used to assess vertical mergers, according to the CVS filing.
Now it's up to Leon to decide who, if anyone, he will let testify as he mulls whether to sign off on the DOJ's terms.
At least one federal lawsuit has been filed to block the rule, which highlights disagreement over the nature of discrimination and accommodation in healthcare.
The city of San Francisco wasted no time when the Trump administration unveiled its final rule last Thursday to bolster providers' right to abstain from healthcare services as a matter of conscience or religious observance.
That same day, the city filed a federal lawsuit asking a judge to block the Health and Human Services rule from taking effect and ultimately to declare it unconstitutional. The case highlights a deep and long-running dispute over the nature of discrimination and accommodation in U.S. healthcare.
While current leadership of the HHS Office for Civil Rights says the Obama administration failed to defend religious providers' existing legal rights, others contend that patients from marginalized groups are the ones in greatest need of government protection.
"At its core, this rule is about denying people medical care," San Francisco City Attorney Dennis J. Herrera said in a statement announcing the lawsuit. "This administration is willing to sacrifice patients' health and lives—particularly those of women, members of the LGBTQ community, and low-income families—to score right-wing political points. It's reprehensible."
Herrera argues the final rule would reduce healthcare access and could cost San Francisco nearly $1 billion in federal funding if it refuses to comply. His office accuses HHS of exceeding its legal authority, violating the Administrative Procedure Act, and breaching several provisions of the U.S. Constitution.
Proponents of the final rule, however, say it appropriately respects physicians' right to refrain from healthcare services they see as contrary to their ethical obligations. That conscientious objection to a particular service is entirely different from a physician declining to care for one or more classes of people, said Farr A. Curlin, MD, a professor of medicine and medical humanities at the Duke University School of Medicine and co-director of the Theology, Medicine and Culture Initiative at Duke Divinity School.
"They are not refusing to care for gays or transgender patients or anyone else who is sick and in need of healing. Rather, they are objecting to practices that they believe contradict their profession to heal only, and never to harm," Curlin told HealthLeaders in an email. "With respect to sterilization, assisted suicide, surgeries to change secondary sex characteristics, and a number of other practices, there are reasonable concerns that the practices are not good medicine. We need physicians to have the freedom to refuse to cooperate in practices that they believe harm their patients."
Curlin said the final rule helps to sustain an openness to any provider who is willing to care for the sick and promote their health, ensuring a diverse provider landscape.
When the final rule was announced last week, HHS OCR Director Roger Severino said it would help to preserve consumer choice, encouraging providers to communicate openly about their own religious and ethical views so that patients may self-select like-minded providers. When asked during a press call how that would work in geographic areas dominated by provider organizations with a distinct religious perspective, such as Catholic-affiliated systems, for consumers who may not have the ability to go elsewhere for care, Severino reframed the question as a matter of life or death for religious providers.
"If the hospital's not there, no one gets care in many circumstances," he said, "so there's benefit to allowing diversity of belief in healthcare providers."
"Patients have options in America, and that is a good thing," Severino added. "We don't believe that anything will change with respect to patients having options with this rule. This rule merely provides enforcement tools for laws that are already in existence, already on the books, already the law."
Some who agree that physicians should not be coerced to act contrary to their deeply held views remain skeptical that a free-market approach to healthcare, in which consumers shop around for providers who agree with them, is sufficient.
"I don't think the market can solve the problems of inequity that we have," Aasim I. Padela, MD, MSc, director of the Program on Medicine and Religion at the University of Chicago, told HealthLeaders last year after HHS released its proposed rule.
Padela said there are often ways to accommodate both a patient's wishes and a provider's conscience when the two conflict.
For its part, San Francisco claims to have struck a proper balance between patient and provider rights already. When a member of the medical staff requests not to take part in a procedure, their manager must determine if the worker's request would negatively impact the patient's care, Herrera explained. Accommodations will be made, if possible. But that could include transferring a worker to another area that wouldn't require them to perform the task to which they object, a policy that Herrera admits puts the city in violation of the new final rule.
While some have praised the policy as a necessary step to protect healthcare workers from discrimination, others worry it will lead to more discrimination for certain patient groups.
A final rule issued Thursday by Health and Human Services (HHS) aims to protect healthcare providers' right to refrain from participating in abortion and other services that may violate the person's or entity's conscience or religious views.
The controversial policy was proposed more than a year ago after the HHS Office for Civil Rights (OCR) launched its Conscience and Religious Freedom Division to ramp up enforcement of existing legal protections. While some religious groups have praised the policy, other groups have worried the change will lead to more discrimination against women and LGBT patients.
The rule enforces more than two dozen provisions already on the books, guarding the rights of individuals and organizations to decline to participate in, pay for, cover, or even refer for abortion, sterilization, assisted suicide, and other procedures. The rule overrides a 2011 version that the Trump administration regards as inadequate to enforce these conscience protections.
"This rule ensures that healthcare entities and professionals won't be bullied out of the health care field because they decline to participate in actions that violate their conscience, including the taking of human life," said HHS OCR Director Roger Severino in a statement. "Protecting conscience and religious freedom not only fosters greater diversity in healthcare, it's the law."
The National Health Law Program, however, said the rule will harm the health of groups that are already underprivileged.
"There are already problematic federal exemptions on the books. Trump is dangerously expanding them to allow providers and institutions to deny women, LGBTQ individuals, and others medically necessary care that is based in science and rigorous research," NHLP Reproductive and Sexual Health Director Susan Berke Fogel said in a statement. "People with the least resources will be most harmed by these rules if such a broad range of providers and other entities are allowed to deny access to comprehensive quality care based on their personal religious beliefs."
The new rule modified several key definitions, including those for "discrimination," "refer" or "referral," "healthcare entity," and "assist in the performance of."
Some who commented on the proposed rule raised concerns that the phrase "assist in the performance of" could give healthcare workers too much leeway to impede a patient's healthcare decisions. Emergency medical technicians, for example, might decline to provide ambulance transportation in certain circumstances, the commenters said. In response, HHS said an EMT being asked to transport someone to a hospital or clinic for a scheduled abortion could constitute a request to "assist in the performance of" an abortion.
The Office of Management and Budget (OMB) dashboard, which tracks executive agency rulemaking, still listed the HHS OCR final rule as pending OMB review Thursday afternoon, even after Severino hosted a press call about the announcement. A spokesperson for HHS OCR told HealthLeaders that OMB has completed its regulatory review. [Update: The rule was no longer listed on the OMB dashboard Friday morning.]
When asked during the press call when the final rule would be published in the Federal Register, Severino said "very, very soon." It will take effect 60 days thereafter. The document itself notes that it "may vary slightly from the published document if minor editorial changes are made during" the Office of the Federal Register's review process.
The HHS OCR spokesperson said the announcement was made to coincide with President Donald Trump's participation in a National Day of Prayer event Thursday in the White House Rose Garden "because of his steadfast commitment to the religious freedom of people of all faiths." This was the third time Trump has used the annual multifaith event to make announcements responsive to concerns of religious conservatives, as The Washington Post's Ariana Eunjung Cha and Sara Pulliam Bailey reported.
The final rule includes responses to more than 242,000 public comments on the proposal. Those comments included stories of healthcare workers being coerced and discriminated against for potentially protected objections, according to HHS OCR.
"With this final rule, the Department seeks to educate protected entities and covered entities as to their legal rights and obligations; to encourage individuals and organizations with religious beliefs or moral convictions to enter, or remain in, the health care industry; and to prevent others from being dissuaded from filing complaints due to prior OCR complaint resolutions or sub‐regulatory guidance that no longer reflect the views of the Department," the final rule, as presented by HHS OCR, states.
Editor's note: This story was updated Thursday to include a comment from an HHS OCR spokesperson and from the National Health Law Program. The story was updated Friday to include additional detail from the final rule.
