Under the state’s certificate-of-need laws, providers must get state approval for expansion projects or new construction. The FTC says that limits competition and doesn’t benefit consumers.
The Federal Trade Commission weighed in last week on a healthcare policy change being considered by the Alaska legislature, testifying in favor of repealing the state’s certificate-of-need (CON) laws.
The federal government’s vocal opposition to state-level CON laws brings the debate full circle. It was the federal government, after all, that pushed states to enact such policies more than four decades ago, in an effort to keep healthcare costs under control. Now the feds argue the laws don’t work.
Daniel Gilman, attorney advisor for the FTC Office of Policy Planning, told members of the Alaska Senate Committee on Labor & Commerce that the laws were enacted with the laudable goals of reducing healthcare spending and improving access to care.
“However, after considerable experience, it has become apparent that CON laws do not provide the benefits they originally promised. Worse, in operation, CON laws can undermine some of the very policy goals they were originally intended to advance,” Gilman told lawmakers Tuesday via teleconference.
Alaska’s CON laws require a formal review process before certain healthcare facility projects can move forward. The process evaluates whether the plan fits a community’s needs, and it includes an opportunity for public comment.
Gilman said such laws create three big problems: (1) They impose barriers to entry and expansion, which can limit healthcare options in a market and drive costs; (2) they can enable existing organizations to block or delay competition from newcomers; and (3) they can withhold from consumers certain legal remedies following an anticompetitive merger.
Others testified in favor of keeping the laws, arguing that Alaska’s rural populations and unique geography necessitate protections the free market does not provide.
A brief history
In 1964, New York enacted the first CON law program in the nation, according to a report by Matthew D. Mitchell, a senior research fellow and director of the Project for the Study of American Capitalism at the Mercatus Center at George Mason University. A number of other states then followed suit.
In 1974, President Gerald Ford signed the National Health Planning and Resources Development Act, which withheld funding from any state that failed to enact CON laws to regulate healthcare facilities, Mitchell noted. Within the decade, every state except Louisiana had established a CON program in one form or another.
In 1986, however, Congress repealed the federal law, lifting the requirement it had imposed on states. Since then, only 15 states have repealed their laws.
Mitchell, who also testified before the committee via teleconference, said states with CON laws have fewer hospitals and other healthcare facilities than states without such laws, so Alaska would be better off without the policy.
“The data suggest that Alaska without CON would have 45% more rural hospitals than it currently does,” Mitchell told the committee.
But State Sen. Gary Stevens, a Republican, sounded unconvinced.
“That makes absolutely no sense to me,” Stevens said. “Half of our population lives in rural Alaska, half in urban. I can’t imagine 45% more hospitals in rural Alaska.”
Alaska’s unique needs
Becky Hultberg, president and CEO of the Alaska State Hospital and Nursing Home Association, who testified in person in favor of keeping the state’s CON laws, said Mitchell’s numbers might work on paper but not in the real world.
“I think that was a mathematical equation that doesn’t necessarily take into account the geographic realities of this state,” Hultberg said. “And while I appreciate the research that was done, I do not think that it necessarily applies to our market.”
Alaska, which is more than twice the size of Texas, is both the biggest and most sparsely populated state in the country, home to about 750,000 people. (There are more people living in Charlotte, N.C., which is less than 300 square miles, than there are in all of Alaska’s more than 660,000 square miles.)
This low population density, combined with the region’s harsh winters and many islands, exacerbate the challenges of rural healthcare, Hultberg said.
“It was great to hear those perspectives from folks who are in the lower 48,” she said after listening to presentations by a number of experts, advocates, and researchers in other states. “I think their perspectives are perhaps valuable and relevant to a lot of markets, but I want to turn the attention back specifically to Alaska.”
Critics of CON laws say they’re often used by existing healthcare organizations to keep potential competitors at bay, but Hultberg said Alaska’s policies provide a rigorous approval process overseen by state officials, without needing the assent of incumbent organizations in any market.
The FTC’s message
State Senate Majority Leader Peter Micciche, a Republican, asked the FTC’s messenger whether eliminating CON laws might undermine the availability of care provided on a charitable basis.
In reply, Gilman said the existing body of research based on the experiences of the 15 states that have already repealed their CON laws should be enough for Alaska lawmakers to confidently repeal theirs as well.
“In some respects, Alaska is unique, but we do have other states with substantial rural regions, and we do have other large states where many people have concerns about care being delivered in rural areas. Many people have concerns about critical access hospitals and so forth,” Gilman said.
“We have not done a special study about this issue in Alaska, and maybe in some ways that’s missing, but in some ways that’s an advantage,” he continued. “What we have seen nationally is that CON laws, including in rural states, do not improve charity care.”
Gilman addressed the committee at the invitation of State Sen. David Wilson, a Republican, who denounced the CON laws as “a substantial threat for the proper performance of healthcare markets and services,” one which stifles innovation and limits choice.
“Alaskans need and deserve a free market where laws of supply and demand direct production of goods and services,” Wilson said. “The force of competition can help keep price low.”
A vote on the bill had not been scheduled as of Monday morning.
The Independent Payment Advisory Board (IPAB), which has had 15 empty seats since it was formed, is on the chopping block amid negotiations on Capitol Hill.
Despite having never been used, the Independent Payment Advisory Board (IPAB) has been controversial since it was first authorized by the Affordable Care Act in 2010.
Lawmakers have tried repeatedly to eliminate the Medicare cost-saving mechanism, and with Thursday’s push to finalize a spending package to avert a second government shutdown in as many months, they seem closer to the goal than ever.
Although final details were still being hammered out, Kaiser Health News reported Thursday that a deal taking shape in the Senate includes a repeal of the IPAB provisions. The repeal is unlikely to generate much resistance in the House, where members voted 307-111 to kill IPAB in a standalone bill last fall.
That vote came after the Congressional Budget Office (CBO) released a report estimating the impact eliminating IPAB would have on the budget. The move would increase direct spending by an estimated $17.5 billion over the next decade, according to the CBO report, which included a note of caution that the prediction could be way off.
“That estimate is extremely uncertain because it is not clear whether the mechanism for spending reductions under the IPAB authority will be invoked under current law for most of the next ten years,” the report states.
The idea behind IPAB was to slow the rate at which Medicare costs were rising by installing a 15-member panel of outside experts appointed by the president with Senate confirmation. The board would be required to propose Medicare spending reductions when the program’s projected spending exceeds a prescribed threshold.
But spending growth has stayed below the target growth rate each year since 2013, so no such recommendations have been required, and no one has ever been appointed to the board, according to the Kaiser Family Foundation.
The Centers for Medicare and Medicaid Services Actuary does project, however, that Medicare spending growth will exceed the threshold for the first time in 2021, which would trigger the IPAB’s statutorily required recommendations. The CBO report includes the expected savings under current law in estimating how much repealing IPAB would cost.
Critics have voiced concerns the board usurps legislative power and puts it in the hands of the executive branch, while some have worried the IPAB’s recommendations could harm Medicare beneficiaries.
In an opinion piece for The Hill last month, Forbes Media Chairman and Editor-in-Chief Steve Forbes called IPAB “one of the most repulsive and punitive parts of ObamaCare” and referred to it as “the ‘death panel’” that ACA opponents had warned against.
“In the name of keeping costs ‘under control’, it can slash expenditures, which will hit seniors particularly hard,” Forbes wrote. “Cutting expenses here means rationing medical care.”
Others contend that claims of healthcare “rationing” are unwarranted fear-mongering.
“Efforts to repeal IPAB are misguided,” wrote Paul N. Van de Water, a senior fellow at the Center on Budget and Policy Priorities. “If successful, such efforts could lead to more draconian steps, such as replacing guaranteed Medicare benefits with a premium support system, or voucher, whose value would fall farther behind the cost of health care each year.”
The strategy moves into a state where multiple other healthcare nonprofits are already jockeying for market share.
Back-to-back announcements made this week by the organization formerly known as Carolinas HealthCare System foretell more changes to the Southeast’s healthcare industry landscape.
The system, based in Charlotte, N.C., announced Wednesday that it would take on a new name: Atrium Health. Then the organization announced Thursday it would branch out of its current service areas in North and South Carolina, to enter into a strategic partnership in Georgia.
Atrium signed a letter of intent with Macon-based nonprofit Navicent Health, with Navicent expected to become part of the Atrium organization.
“This is the first major partnership of its type in the Southeast region and ensures a Macon-based institution will continue to be the leading driver of healthcare in central Georgia and beyond, while continuing to elevate the care that is provided locally,” Navicent Health President and CEO Ninfa M. Saunders, MD, FACHE, said in a statement Thursday.
“This will also give us access to Atrium Health’s wide array of award-winning, proven successes and best practices in healthcare delivery that we can deploy in our service areas,” Saunders added.
Atrium is also looking to combine forces with UNC Health Care, based in Chapel Hill, N.C. The plan, announced last summer, is expected to create one of the largest hospital systems in the country, with 60 hospitals and about 90,000 employees, as The Charlotte Observer reported.
Although the details have not been finalized, the Atrium-Navicent letter of intent will pave the way for more thorough discussion, negotiation, and due diligence, Thursday’s announcement stated.
The Atrium incursion into Georgia comes as multiple other nonprofit health systems are pursuing mergers and acquisitions of their own in the state. Emory Healthcare signed a letter of intent late last fall with DeKalb Medical Center in Decatur, and Piedmont Healthcare is awaiting final approval on a deal with Columbus Regional Health.
Atrium President and CEO Gene Woods said the Navicent partnership is "another way to breathe life into our mission to care for all."
The top five highest paid employees of any nonprofit organization will pay a 21% excise tax on compensation above $1 million, so organizations are looking for ways to limit their tax liability.
There are about 400 nonprofit hospital organizations with one or more employees earning at least $1 million annually, the Wall Street Journal's Melanie Evans and Andrea Fuller reported this week, citing analysis of the organizations' most recent returns.
That means about 16% of the nonprofit hospital organizations in the U.S. are on course to be affected by the newly enacted excise tax on highly paid nonprofit employees. The GOP tax reform law, which President Donald Trump signed late last year, imposes a 21% tax on compensation above $1 million for each of a nonprofit organization's five highest-paid employees, effectively redefining "reasonable" compensation for such organizations.
Healthcare leaders are scrambling to tabulate how much the change will cost them, as their organizations look for ways to limit their tax liability.
“With all of the other pressures we have on [us] from an organizational perspective, it’s another one that we’ll have to evaluate and determine, how do we navigate through it?” Kevin Brown, president and CEO of the Atlanta-based nonprofit system Piedmont Healthcare, tells HealthLeaders Media.
Brown earned more than $1.8 million and Chief Operating Officer Gregory A. Hurst earned more than $1.9 million in reportable compensation from the organization in 2015, according to Piedmont's most recently available Form 990 filing. The 21% excise tax on those two pay checks alone would cost the system more than $350,000 per year moving forward.
Although the law applies to a nonprofit's top five earners, there's a catch that could result in some organizations paying the excise on more than five salaries each year.
"Once you become a covered employee, you're always a covered employee," attorney Bill Robinson, who specializes in compensation and benefits for the firm Baker Donelson, told HealthLeaders Media last month.
Largely because of deferred compensation, nonprofits will have to keep a "running list" of employees covered by this new excise tax provision—which has initiated some creative problem-solving.
A couple of options
Ralph DeJong, a partner with McDermott Will & Emery told the Journal that some health systems have moved to minimize the law's impact by hastening the vesting date for deferred compensation packages.
Others have considered consolidating the workforce from a number of related organizations under a unified payroll structure to reduce the number of highly compensated workers subject to the tax, DeJong said.
This idea to restructure could make a lot of sense for organizations like 59-hospital system Trinity Health, based in Michigan, which has 40 separate nonprofit entities. A system spokesperson told the Journal that as many as 15 of Trinity's officials could be subject to the tax.
Phoenix-based Banner Health, by contrast, had 11 employees who earned at least $1 million in 2015, the Journal noted. But only five of these executives would be initially subject to the tax because Banner's 28 hospitals are part of a single nonprofit entity.
The Atlanta-based nonprofit system is poised to double its number of hospitals in just three years.
By the end of this month, the Georgia Attorney General’s Office is expected to release a report that could give Atlanta-based Piedmont Healthcare the go-ahead to continue its aggressive growth strategy in the state, where massive nonprofit providers are jockeying for healthcare market share.
Having already executed a number of mergers and acquisitions in recent years, Piedmont has turned its attention to Columbus Regional Health, a nonprofit system consisting of two hospitals and a number of other facilities in western Georgia.
Piedmont President and CEO Kevin Brown says the goal is to establish a third regional center around which related services will be oriented and expanded.
“We call it kind of a ‘hub-and-hub’ strategy,” Brown tells HealthLeaders Media. “We’ll now have kind of three clinical hubs: Atlanta, Athens, Columbus. And then as other opportunities present themselves, we’ll be looking at other metropolitan markets as well.”
If everything goes through as planned, then Piedmont will soon be operating in markets that represent about 70% of Georgia’s population, Brown says.
The hospital authority that governs Columbus Regional approved a letter of intentwith Piedmont last October, and the Federal Trade Commission issued a brief notice last month indicating that it and the Department of Justice Antitrust Division had completed their reviews of the deal and decided against taking any enforcement actions.
That leaves approval from the state’s top attorney as Piedmont’s last big hurdle. A public hearing on the pending acquisition was held January 25, and the attorney general’s report is expected to be released February 26.
Piedmont has committed to assuming about $280 million in Columbus Regional’s debt, spending $30-50 million on a new electronic medical records system, and investing $250 million in capital improvement projects in the Columbus market over the next eight years, The Ledger-Enquirer reported last month.
Scott Hill, president and CEO for Columbus Regional, is expected to join the post-merger Piedmont senior leadership team.
'Cautious and selective'
With the addition of Columbus Regional’s two main campuses, Piedmont will have doubled its number of hospitals, from five to 10, in the past three years.
In 2015, the Georgia Attorney General’s Office signed off on Piedmont’s acquisition of Newton Medical Center in Covington, which is about 35 miles east of Atlanta. In 2016, it signed off on Piedmont’s deal with Athens Regional Health System.
In 2017, Piedmont announced it had signed an agreement with LifePoint Health to purchase Rockdale Medical Center in Conyers, located between Atlanta and Covington.
Despite its rapid M&A strategy, Piedmont has remained “cautious and selective” throughout the process, Brown says.
“We’ve passed on about 18 opportunities in the last 24 months,” he says.
Piedmont has been looking for partners that will mesh both strategically and culturally, and it’s been looking for communities in which it can invest for the long haul, Brown says.
"This isn’t a holding company strategy,” he says. “It’s an operating company strategy.”
Finance and philanthropy
Regardless of their size and composition, health systems nationwide are being forced to reckon with intensifying financial pressures.
“It’s probably the most difficult time from a fiscal perspective in a long, long time to operate in a healthcare environment,” Brown says.
Piedmont owes some of its success to an internal task force dedicated to rooting out inefficiencies systemwide. The group has made more than $250 million in non-labor improvements over the past three years, Brown says.
“If we hadn’t been ahead of this curve, we’d be struggling to kind of catch up,” he adds.
As a nonprofit organization, Piedmont’s financial footing also depends on philanthropy. In 2016, the system received a $75 million gift—the largest in its history—from The Marcus Foundation to support Piedmont’s heart and vascular program.
Piedmont isn’t the only Atlanta-based nonprofit health system to benefit from recent high-dollar gifts. Emory University received a $400 million pledge last month from the Robert W. Woodruff Foundation, as The Atlanta Journal-Constitution reported. The money will go toward capital improvement projects that will also benefit Emory Healthcare.
“We’re in a fantastic community that has done incredible things from a philanthropic perspective,” Brown says. “We feel blessed to be in it.”
As Emory and Piedmont each pursue their own M&A strategies in Georgia, Piedmont announced last week that it had plucked an executive from Emory and added him to its own team.
Mike Mandl, who had served most recently as executive vice president for business and administration at Emory University, joined Piedmont as the system’s only executive vice president, answering directly to Brown, the organization announced Friday.
Mandl founded the business advisory firm Mandl & Co. with partner Jack Tillman, who has also joined the Piedmont executive leadership team. Tillman will serve as vice president and chief of real estate.
“Piedmont’s rapid growth and strong prospects for creative yet disciplined approaches to building, buying, and selling assets are part of the opportunity set that led Mike and I to join with Kevin and his team and transition away from our advisory work,” Tillman said in a statement. “We look forward to executing on this work in the months and years ahead.”
A bit of advice
Speaking from personal experience, Brown advises current and future health leaders to take risks and learn as much as possible about the business by working in a wide array of roles.
“I’ve had the opportunity to have a very broad spectrum of opportunities," Brown says.
“I grew up in rural Wisconsin, and I worked in and around … a rural hospital, doing everything from mowing the lawn to painting, to working in the gift shop, to collecting bad debts,” he says.
That diversity of experiences has continued throughout his professional experiences. He’s run a medical group, worked in the for-profit HMO sector, and worked in small and mid-sized hospitals. He credits his mentors with giving him a number of those opportunities.
Before taking his job at Piedmont in 2013, Brown served as CEO for Swedish Health Services, based in Seattle.
“It would have been easy for me to stay on the West Coast,” he says. “I came to Georgia, a place that I’d never been to in my life, or at least spent any significant time … I’m very glad that I made the decision to do it because it’s everything I had hoped it would be, both professionally and personally.
“I feel like we’re making a difference here in Georgia for Georgians.”
The principal deputy director—who already served much of 2017 as acting CDC director—stepped back into the role for the time being.
After less than seven months on the job, Brenda Fitzgerald, MD, resigned from her post Wednesday as director of the Centers for Disease Control and Prevention, following a report that she had continued trading tobacco stock while overseeing the CDC’s smoking cessation programs.
The resignation—which followed a Politico report Tuesday night that Fitzgerald had bought tobacco company shares even after taking the CDC leadership position last July—creates a vacancy once again in a high-ranking public health position that was empty nearly half of last year.
Thomas R. Frieden, MD, MPH, who led the CDC all eight years of President Barack Obama’s time in office, said he has been impressed by Fitzgerald’s commitment to public health and wishes her well in her future endeavors.
“I have spoken with Dr. Fitzgerald & believe her when she says she was unaware a tobacco company investment had been made, she understands that any affiliation between the tobacco industry & public health is unacceptable, & that when she learned of it she directed that it be sold,” Frieden said Wednesday in a tweet.
Health and Human Services Secretary Alex Azar, who was sworn in earlier this week, accepted Fitzgerald’s resignation Wednesday morning on the basis that her “complex financial interests” had resulted in her needing to recuse herself from so many duties that it impeded her ability to do her job, according to a statement released by HHS spokesperson Matt Lloyd.
“Due to the nature of these financial interests, Dr. Fitzgerald could not divest from them in a definitive time period,” the statement said.
Azar took the top job at HHS after his predecessor, Tom Price, resigned last September amid controversy over his expensive travel habits, after less than eight months on the job. Fitzgerald was tapped to helm CDC during Price’s short tenure. Investigative reporting by Politico has been credited as a major factor in both of their resignations.
Who’s in charge?
Frieden resigned last year with the inauguration of President Donald Trump.
Principal Deputy Director Anne Schuchat, MD, (RADM, USPHS), then served as acting director from January 20, 2017, through July 7, 2017, when Fitzgerald was named director. Wednesday’s resignation means Schuchat stepped back in again as acting director. (The CDC website was updated about noon Wednesday to reflect Fitzgerald's resignation and Schuchat's return to the acting director role.)
Schuchat began working for CDC in 1988 as an epidemic intelligence service officer, and she’s been principal deputy director since 2015, according to her bio. She worked with CDC’s Washington, D.C., team during the 2001 anthrax response, led the agency’s SARS response in Beijing in 2003, and served as chief health officer for CDC’s response to the H1N1 flu pandemic in 2009.
The CDC’s organizational chart, which was last updated earlier this month, notes that the chief of staff position is still vacant, and three other prominent members of the CDC team are, like Schuchat, serving on an acting basis: Associate Director for Science Leslie Dauphin, PhD; Associate Director for Policy Von Nguyen, MD, MPH; and CDC Washington Director Mitch Wolfe, MD, MPH (RADM, USPHS).
Rima Khabbaz, MD, is listed as leading the Office of Infectious Disease on an acting basis as well.
Neither the CDC nor HHS responded Wednesday morning to requests for clarification on the CDC’s interim leadership arrangement.
The large for-profit hospital operator has been pursuing an aggressive M&A strategy.
Shares for HCA Healthcare Inc. were trading higher Tuesday morning on news that an increase in patient admissions drove the major hospital operator’s earnings up by 8.6% in 2017’s fourth quarter.
The recent growth in revenue stemmed primarily from the company’s 2.3% rise in same-facility equivalent admissions compared to 2016’s fourth quarter, the company said in its earnings statement.
Although low admissions have been putting financial pressure on hospitals nationwide in recent quarters, HCA has been acquiring facilities from its competitors, as Reuters reported.
“We’re pleased with the number of transactions we were able to complete in 2017,” Chairman and CEO R. Milton Johnson said during a conference call with investors Tuesday, noting that the company will assume operation of the latest target in its acquisition “pipeline,” Savannah Memorial Health in Georgia, within two days.
The local hospital authority approved the sale just last week, as the Savannah Morning News reported.
“We’re very excited about entering that new market and the prospects for our future in Savannah,” Johnson added.
While acknowledging that HCA isn’t the only large hospital operator aggressively pursuing mergers and acquisitions, Johnson said HCA doesn’t feel threatened by the recent M&A spree among other large health systems.
“With respect to some of the other consolidation activities, we don’t see that having at this point a major impact on our outlook. We’re not, when you think about those consolidations, we’re not adding new competitors in any of our markets,” he said. “They do maybe benefit from scale. But, again, in here over the intermediate term, we don’t foresee those transactions that have been announced having an impact on our outlook.”
Johnson made a couple of other noteworthy statements about HCA’s technology and taxes:
Technology: “The use of our continuously expanding clinical data warehouse supports our clinical excellence program and positions us well for emerging approaches like artificial intelligence,” Milton said. “Over the next three years, the company plans to deploy approximately 100,000 iPhones as part of our nursing technology agenda.”
Taxes: “As a result of the recent passage of the Tax Cuts and Jobs Act, we currently estimate the company’s effective tax rate in 2018 to be 25% and estimate that the reduction in cash taxes in 2018 to be approximately $500 million. It is our plan to reinvest these expected savings into our markets and into workforce development.”
Despite the savings attributed to the tax reform law, HCA also saw a $301 million tax-related charge that Reuters reported had lowered net income attributable to HCA by 48.5%.
HCA Executive Vice President and CFO William B. Rutherford said during Tuesday’s call that this $301 million charge related to the tax law’s estimated impact on deferred tax assets and liabilities.
“This estimate may be refined as further information becomes available,” Rutherford noted.
Officials added counties in Alabama, Mississippi, and California to the list of locations covered under the MIPS ‘automatic extreme and uncontrollable circumstance policy.’
Another 25 counties have been added to the list of disaster-plagued areas that will automatically qualify for special treatment under the 2017 data-submission requirements for the Merit-based Incentive Payment System (MIPS), the Centers for Medicare and Medicaid Services announced Monday.
The additions were made to include counties in Alabama and Mississippi affected by hurricane Nate last fall, as well as more California counties affected by wildfires. Clinicians working in the specified areas don’t need to take any action, CMS said, because those affected will be identified automatically.
That being said, anyone who is automatically identified as eligible for the “automatic extreme and uncontrollable circumstance policy” but who submits data for two or more MIPS performance categories anyway will be scored on those categories.
For transition year 2017, the MIPS data submission period runs from January 2 through March 31.
The newly identified counties are as follows:
Alabama: Autauga, Baldwin, Choctaw, Clarke, Dallas, Macon, Mobile, and Washington
Mississippi: George, Greene, Hancock, Harrison, Jackson, and Stone
California: Butte, Lake, Mendocino, Napa, Nevada, Orange, Santa Barbara, Solano, Sonoma, Ventura, and Yuba
Those newly identified counties will be added to the long list of counties affected by hurricanes Harvey, Irma, and Maria:
Florida: All 67 counties.
Georgia: All 159 counties.
Louisiana (parishes): Acadia, Allen, Assumption, Beauregard, Calcasieu, Cameron, De Soto, Iberia, Jefferson Davis, Lafayette, Lafourche, Natchitoches, Plaquemines, Rapides, Red River, Sabine, St. Charles, St. Mary, Vermilion, and Vernon.
Puerto Rico: All 78 municipios.
South Carolina: Allendale; Anderson; Bamberg; Barnwell; Beaufort; Berkeley; Charleston; Colleton; Dorchester; Edgefield; Georgetown; Hampton; Jasper; McCormick; Oconee; and Pickens.
Texas: Aransas; Austin; Bastrop; Bee; Bexar; Brazoria; Burleson; Caldwell; Calhoun; Chambers; Colorado; Comal; Dallas; Dewitt; Fayette; Fort Bend; Galveston; Goliad; Gonzales; Grimes; Guadalupe; Hardin; Harris; Jackson; Jasper; Jefferson; Jim Wells; Karnes; Kleberg; Lavaca; Lee; Liberty; Madison; Matagorda; Milam; Montgomery; Newton; Nueces; Orange; Polk; Refugio; Sabine; San Augustine; San Jacinto; San Patricio; Tarrant; Travis; Tyler; Victoria; Walker; Waller; Washington; and Wharton.
Virgin Islands: All of the U.S. Virgin Islands.
Questions should be directed to 1-866-288-8292 (TTY 1-877-715-6222), Monday through Friday, 8 a.m. through 8 p.m. Eastern Time, or via email: QPP@cms.hhs.gov.
A years-long tug-of-war pits the rights of patients against those of physicians and healthcare organizations—all of whom have legal rights to refuse certain medical procedures on moral or religious grounds.
There’s a peculiar footnote buried deep inside a dense document drafted by the Department of Health and Human Services.
That document, which spans 51 pages in last Friday’s edition of the Federal Register, outlines proposed rulemaking for the HHS Office for Civil Rights (OCR), which recently announced it would add a new Conscience and Religious Freedom Division as part of an effort to ramp up enforcement of existing laws that protect a healthcare worker’s right to decline to participate in abortion and other services on moral or religious grounds.
The document argues these conscience laws, some of which have been on the books for decades, went under-enforced during President Barack Obama’s eight years in office. And it argues that many doctors and nurses across the U.S. would benefit from the government taking a renewed interest in guaranteeing their conscience rights are respected.
The HHS proposal supports its arguments with a variety of sources, including one odd citation about two-thirds of the way through.
“A 2011 study released by the American College of Obstetrics and Gynecology revealed that, ‘while 97% of ob-gyns reported having encountered women seeking an abortion, only 14% were willing to perform the service,’” the HHS proposal states.
What’s odd about that passage is that it doesn’t quote from the ACOG study itself. Rather, it quotes from a blog post published by Freakonomics, a website based on a bestselling book by the same name. A footnote cites the blog post’s title and URL as its source.
Although the Freakonomics post cites and links to the ACOG study, it fails to accurately paraphrase the study’s central finding. By quoting the blog, HHS incorporated that error into its proposed rulemaking.
The study, which surveyed 1,800 practicing OB-GYNs, didn’t find that 14% “were willing to perform” abortions. It didn’t even ask respondents whether they were willing to perform abortions. The surveyors posed two questions on the topic: (1) “in your practice, do you ever encounter patients seeking an abortion?” and (2) “do you provide abortion services?”
The first sentence of the results section clearly reports how respondents answered: “Among practicing OB-GYNs, 97% encountered patients seeking abortions, whereas 14% performed them.”
The HHS proposal uses the survey’s tally to suggest that OB-GYNs overwhelmingly object to participating in abortion on personal moral or religious grounds. But that’s “a dangerous misrepresentation of the study,” says lead author Debra Stulberg, MD, MAPP, associate professor and director of research in the Department of Family Medicine at the University of Chicago.
“It obscures the fact that many doctors who are willing to provide abortion are unable to do so due to legal or institutional barriers. These institutional barriers include religious hospital policies that prevent doctors from providing full-scope reproductive services.” Stulberg tells HealthLeaders Media.
A spokesperson for the HHS OCR says any misrepresentation of scholarly work cited in the proposal was unintentional. The public will have 60 days to submit comments while HHS prepares its final rule.
Does it matter?
Less than 1% of the HHS proposal relies on the faulty footnote for sourcing. Officials could strike the citation and a few sentences from the document without changing its overall argument. At the same time, this footnote is a microcosm of the broader debate over whose rights are in greatest need of protection.
Despite assessing the same healthcare sector, different stakeholders reach different conclusions as to what the problems are and how they should be solved. That debate has propelled the health policy pendulum back and forth for years.
This story is much bigger than President Donald Trump’s efforts to undo the healthcare policymaking of his predecessor, says Aasim I. Padela, MD, MSc, director of the Program on Medicine and Religion at the University of Chicago.
“You have to have a longer history on these issues, where there is sort of a ping-ponging, I would say, a yo-yoing between … putting different people or different interests first,” Padela tells HealthLeaders Media.
What makes this policymaking so tricky is that neither side’s top priority is dispensable. A liberal democracy that values ethical pluralism must value the rights of patients and providers alike, Padela says.
“We have to find a balanced solution between both views, and that is the challenge,” he says.
The pendulum swung toward physicians’ rights of conscience in late 2008, when HHS issued a final rule in the twilight of President George W. Bush’s second term.
The rule gave HHS OCR responsibility to investigate complaints based on the conscience protections found in three laws: the Church Amendments, the Public Health Service Act, and the Weldon Amendment. It also required certain recipients of HHS funding to certify in writing that they would comply with the three laws.
Within three months, however, the Obama administration proposed rescinding the 2008 rule in its entirety. The health policy pendulum then began swinging toward favoring the rights of patients to have unfettered access to care, Padela says.
The Affordable Care Act was passed in 2010, and the Obama administration finalized its own HHS conscience rule in 2011, rescinding most of the 2008 rule and angering many conservatives.
“It’s no surprise that an administration that wants to take over health care wants to dictate how health workers treat patients,” then-Rep. Joe Pitts, R-Pa., said at the time.
The 2018 proposal would restore much of what HHS had finalized at the tail end of the Bush administration. But it would also go significantly further.
The proposal says it would delegate to HHS OCR “full enforcement authority over a significantly larger universe” of statutes than the 2008 and 2011 rules had, including about two dozen existing laws. It would also require HHS and certain recipients of HHS funds to notify employees, patients, and the public of the federal conscience laws and related statutes.
The proposal argues that more forcefully defending the rights of physicians and healthcare organizations will improve patient care by guaranteeing a channel for clear communication at the outset of the physician-patient relationship.
“A pro-life woman may seek a pro-life ob-gyn to advise her on decisions relating to her fertility and reproductive choices,” the proposal states. “A pro-vaccination parent may seek a pediatrician who shares his views.”
There are often ways to accommodate a patient’s wishes without coercing physicians to act contrary to their deeply held views, Padela says. But a purely free-market approach—in which each patient self-selects likeminded providers, and providers are free to refrain from offering services that contradict their ethical and moral understandings of human life and health—should not be considered a viable cure-all, he adds.
“I don’t think the market can solve the problems of inequity that we have,” Padela says.
And some critics worry the HHS proposal will prove particularly detrimental to certain marginalized groups.
Serving LGBT patients
When the Trump administration hired Roger Severino last spring to lead HHS OCR, there was no press release or public announcement. His name, photo, and biography simply appeared on the office’s website.
A former trial attorney for the Department of Justice’s Civil Rights Division, Severino had been serving as director of the DeVos Center for Religion and Civil Society in the Institute for Family, Community, and Opportunity at conservative think tank The Heritage Foundation, where his thought leadership on matters of sexual orientation and gender identity riled LGBT rights advocates.
Jennifer C. Pizer, JD, law and policy director for the pro-LGBT advocacy organization Lambda Legal, says Severino has long shown hostility to transgender people and same-sex relationships.
“His work has been high-profile, and it was deeply alarming to us when he was tapped for that position,” Pizer tells HealthLeaders Media. “And these recent actions by that agency under his direction are profoundly concerning. But I can’t say they’re an immense surprise.”
Pizer worries that same-sex couples and transgender people, in particular, could face additional discrimination in healthcare if HHS OCR follows through on its new direction-setting.
In 2008, Pizer won a case before the California Supreme Court on behalf of Guadalupe Benitez, a lesbian woman who had been denied care by a fertility doctor at a for-profit clinic due to the doctor’s religious beliefs. The victory relied on a state law that bars discrimination based on sexual orientation or gender identity.
The principle is clear, Pizer says: Physicians and institutions that offer a particular service to some people cannot violate a civil rights law by barring other people from the same service.
That principle, however, is not universally agreed upon.
Last year, the American Civil Liberties Union of Northern California filed a lawsuit against Dignity Health, alleging the Catholic system had violated the same California law by discriminating against Evan Minton, a transgender man who had been scheduled to receive a hysterectomy at Dignity’s Mercy San Juan Medical Center (MSJMC).
Minton’s physician had agreed to the procedure. It was the religious institution that objected and canceled his operation.
“I routinely perform hysterectomies at Mercy San Juan,” Lindsey Dawson, MD, said in a statement at the time. “This is the first time the hospital has prevented me from doing this surgery. It’s very clear to me that the surgery was canceled because Evan is transgender.”
But even if Minton’s gender identity was what prompted the cancelation, the procedure was successfully rescheduled at another facility a few days later, so Minton’s case didn’t hold water, a judge ruled, finding in favor of Dignity Health late last fall.
“Mr. Minton has not alleged, nor does it appear that it is reasonably possible for him to allege, that his receiving the procedure he desired from the physician he selected to perform that procedure three days later than he had planned at a different hospital than he desired deprived him of full and equal access to the procedure, even, assuming … that Dignity Health’s refusal to have the procedure performed at MSJMC was substantially motivated by Mr. Minton’s gender identity,” Superior Court Judge Harold E. Kahn wrote.
Elizabeth Gill, JD, a senior staff attorney for the ACLU of Northern California, says Minton is in the process of appealing the decision.
“From our perspective, Dignity Health is an enormous operation. They’re the largest hospital chain in the state of California, and they’re a business, and they’re open to the general public,” Gill tells HealthLeaders Media.
“And if they choose to operate as a business open to the general public,” Gill adds, “then they should be subject to the same rules that apply to other businesses [open] to the general public, which in the state of California explicitly include that you cannot discriminate based on someone’s gender identity.”
Pizer says hospitals that receive public money to serve the public should do so “according to medical standards, not religious standards.”
Nature of medicine
Underlying this debate over the conscience rights of patients, physicians, and healthcare institutions, there’s a more fundamental dispute over what medicine’s aim should be, says 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.
Some promote what could be described as “new medicine,” which pursues a sense of wellbeing in accordance with the patient’s wishes, Curlin says, while others hold to what could be described as the “traditional approach,” which sees health as “an objective, bodily norm, not wholly determined by what patients or governing bodies want or value.”
The traditional approach demands that physicians and the healthcare organizations where they work retain the discretion to refuse to provide services that the physician or organization believes to be contrary to the patient’s health, Curlin says.
“If a physician believes that sterilization and abortion are essential to the health of her patients, she should probably decide not to work in a Catholic hospital. But a Catholic hospital must be allowed to forbid sterilization and abortion in its premises,” Curlin tells HealthLeaders Media in an email.
“Otherwise, there is no possibility for physicians and patients and others, who believe that sterilization and abortion contradict patient health, to form institutions in which they can practice medicine according to this longstanding and principled understanding.”
Curlin, by the way, is a co-author on the OB-GYN survey cited by the HHS proposal via Freakonomics.
Section 1557 of the ACA prohibits certain health programs and activities from discriminating based on several characteristics, including sex. Under the Obama administration, in 2016, HHS issued a final rule that interpreted the ban on sex discrimination as protecting gender identity and expression as well.
To ensure that transgender patients have access to healthcare, the Obama administration said its view of unlawful sex discrimination would include a physician or institution declining to participate in gender transition services.
“This was new, and ominous,” Curlin says. “Under the guise of prohibiting discrimination against transgender patients, it actually coerced physicians to set aside their judgment about what good medical care for these patients entails.”
Opponents sued, and the U.S. District Court for the Northern District of Texas blocked HHS OCR from enforcing Section 1557’s prohibition on gender identity discrimination.
Pizer says it’s unreasonable to think refusing to provide medical services to a transgender patient falls outside the scope of “sex discrimination” as contemplated by Section 1557.
“We believe that the only coherent way to understand that term is that it should cover discrimination based on gender identity or sexual orientation as forms of sex discrimination,” Pizer says. “Ultimately, that issue may go to the Supreme Court.”
Status updates filed in the Northern District of Texas indicate, however, that HHS has been reevaluating the so-called transgender mandate, as part of a rulemaking process pertaining to nondiscrimination laws—a process that would likely lead the administration to drop its defense of the Obama-era rule.
“The Trump administration’s efforts are merely restoring the prior status quo—in which it was taken for granted that physicians must care for those who are sick, regardless of the patient’s other characteristics, including sex and gender,” Curlin says, “but physicians are not required to do that which they believe contradicts the health of their patients.
“So, for example, they must care for a transgender patient who has an infection, or a heart attack, or diabetes, but they are not required to participate in ‘gender transition services’ if they believe such services contradict the patient’s health.”
The two systems announced an extension this week to their letter of intent and exclusivity, with a not-yet-finished definitive agreement as the ultimate goal.
Partners Healthcare of Massachusetts and Care New England Health System (CNE), based in Providence, R.I., released a joint statement Thursday indicating that the two systems are still finalizing their acquisition plans.
It’s been nine months since CNE announced it had signed a letter of intent to be acquired by Partners. During that time, the systems have devised “a plan for CNE to regain solid financial footing in the coming years,” the statement said, signaling that there’s still a lot of work to be done before the deal would be sent to state and federal regulators for approval.
This week’s announcement extended the letter of intent and exclusivity agreement announced last year.
“Our lengthy discussions and due diligence with CNE have strengthened our relationship and further solidified our interest in building on the successful clinical collaboration we have already developed together,” said Partners Healthcare President and CEO David Torchiana, MD, in a statement.
“We are also aware of and deeply respectful of the other components of the Rhode Island health care landscape and hope to find common ground and mutually beneficial pathways to improve the academic strength of the hospital programs and maximize the benefit to the Rhode Island economy,” Torchiana added.
Earlier this month, Brown University proposed an alternative to the Partners-CNE deal, announcing that the university would join with a California-based hospital chain to buy CNE, “adding an unexpected twist” to the negotiations, as The Boston Globe reported.
“I feel strongly that letting this acquisition go forward would be wrong for Rhode Island and for Brown,” Brown President Christina Paxson said in a letter, as the Globe reported. “Doing so is likely to lead to specialty health-care shifting to Massachusetts, impeding access to health care for Rhode Islanders and especially for members of the state’s underserved communities.”
CNE President and CEO James E. Fanale, MD, offered reassurances Thursday that the negotiations would keep sight of community needs.
“We will continue to focus our efforts on the remaining work while doing so with perseverance that reflects the needs of our patients and the ever-changing health care landscape,” Fanale said in the statement.