There’s still a budget to settle, but to Senate Minority Leader Len Fasano, the sense of urgency as the legislative session approaches its final weeks lies in addressing the state’s health care landscape, particularly the growth of large health systems that control multiple hospitals and physician practices.
At stake, he said, are health care costs, consolidation, concentrated market power and hospital closures.
“I do believe that absent the budget, this is the next major issue, because if another year goes by and we don’t take some aggressive steps…in another year or two, we’re going to wake up and there won’t be anything we can do,” Fasano, R-North Haven, said.
But as is sometimes the case with major legislation, it’s still unclear exactly what shape it will take. Hospital officials have sharply criticized some of the proposals, warning that they could destabilize Connecticut hospitals, set the state back in adapting to changes in care delivery and run counter to market trends occurring nationwide.
The series of bills proposed by Fasano and Senate President Pro Tem Martin M. Looney aim to reduce the advantages large health systems gain by acquiring hospitals and physician practices. They also seek to increase transparency about health care costs and quality, and create infrastructure to allow electronic health records to be shared between medical providers.
Among the things going for them: The measures are the product of a partnership between the Senate’s Democrat and Republican leaders, two New Haven-area lawmakers who don’t always see eye-to-eye but have teamed up over shared concerns. The House Republican taking a lead role on the matter is Rep. Prasad Srinivasan, a Glastonbury physician who also has significant concerns about consolidation and calls the proposals ambitious but critical.
“This needs to be done,” Srinivasan said. “And so the only question is how are we going to make it happen?”
Among the challenges: Nonpartisan fiscal analysts indicated that the proposals, taken as a whole, could cost state agencies more than $1.5 million and hospitals millions more. Legislators on the Appropriations Committee included $1 million per year for the measures in their budget proposal released this week, but that funding must still get through final negotiations in a tight budget year.
The proposals’ viability in the House also remains unclear, particularly among Democrats, the majority in that chamber.
Rep. Matt Ritter, D-Hartford, the House chair of the Public Health Committee, said he’d consider it a successful session if legislators passed a transparency measure that gives consumers more information and options.
While other proposals are aimed at addressing concerns about doctors giving up independent practice to work in large groups or for hospitals, Ritter questioned whether legislative action would have an effect on a trend that many see as inevitable, reflecting market forces and the choice of young doctors not to open their own practices.
“The buzzword that I’m hearing from a lot of people is transparency,” he said. “Transparency in pricing, in costs.”
As the Public Health Committee considered the latest version of one of the bills Wednesday, Rep. Jason Perillo, R-Shelton, raised concerns about the process, saying lawmakers could end up trying to address a very complex set of issues at the last minute by cobbling together multiple bills that might contradict each other.
“This is really where we cause the most damage,” he said.
It’s also not yet clear how Gov. Dannel P. Malloy will come down on the issues.
“A significant amount of work has gone into these proposals, which raise some important questions about health care in Connecticut,” Malloy spokesman Devon Puglia said. “We are currently reviewing the legislation and look forward to further discussions with its proponents.”
More tools for the state or setting back progress?
Looney and Fasano have raised concerns about large health care systems raising the price of care and making it harder for independent doctors and hospitals to compete. Size can give hospital systems leverage in negotiating prices with insurance companies, while hospital-owned physician practices and outpatient facilities can command higher prices than the same services would if not connected to a hospital.
And Looney and Fasano say the state needs the tools to address the changing landscape.
“All this effort was to say we are going to make conscious decisions of what we want our health care to look like,” Fasano said. “Up to now it’s been unconscious decisions. Decisions have been made for us by others, either the industry or letting trends go by unchecked.”
But hospital officials note that consolidation has been occurring nationally. Having more facilities can lead to economies of scale that help trim costs as Medicare reimbursement rates and state funding drop and demands for capital to buy things like costly electronic record systems and medical technology increase.
Size is also viewed as a key factor in adapting to new ways the federal government and insurance companies are expected to pay for care. Those models are expected to tie compensation to providers’ ability to manage patients’ health, something that requires better coordination between hospitals, community physicians, nursing homes, home health agencies, and other providers.
Several elements of the Senate leaders’ proposals are aimed at reducing advantages large health systems can gain or stemming the price increases that can come with consolidation. Those include measures that would:
- Allow insurance companies to request separate contract negotiations with each of a health system’s hospitals, rather than having to contract with them as a package.
- Require insurers to include “site-neutral” reimbursement policies in their contracts, rather than paying a different rate for the same service based on whether it’s provided at an independent physician office or a hospital outpatient department. Currently, the prices can vary widely.
- Restrict the use of “facility fees” — charges patients can face when they receive care at outpatient facilities or physician offices owned by hospitals. In some cases, the fees can amount to hundreds or thousands of dollars more than if the facility were not part of a hospital.
- Create a health information exchange, the infrastructure that would allow a patient’s health care providers to access the person’s medical records. Currently, there is no central system in the state that facilitates sharing.
- Allow health care providers to work together to coordinate patient care and jointly contract with insurers without being part of the same organization.
Other provisions are aimed at increasing transparency. Those include requiring the creation of a website people could use to compare price, cost and quality information for common health care services; requiring insurers, hospitals and outpatient surgical facilities to make information on the cost of care available; and creating a commission to study health care cost trends and analyze potential mergers and acquisitions.
On some measures, particularly those related to transparency, hospital officials and doctors have said they support the concepts, although they suggested changes to the details.
But hospital officials have had harsh words for some of the other proposals, particularly the proposed limits on their ability to negotiate payment contracts as systems.
That bill “defeats the purpose of being part of a hospital system,” the Yale New Haven Health System said in written testimony. “It only serves to handicap our ability to comply with the [Affordable Care Act] and become a more efficient healthcare institution that can focus on our mission of providing high-quality healthcare to all our patients.”
And the Connecticut Hospital Association has warned that some of the proposed billing restrictions could carry a financial cost to hospitals that are already facing payment cuts under Malloy’s proposed budget.
What they’ll cost
The price tag for the proposals, projected by the legislature’s nonpartisan Office of Fiscal Analysis, includes more than $1.5 million for state agencies to handle new regulations and programs — largely by hiring new staff — and millions of dollars in costs to UConn’s John Dempsey Hospital.
The legislative analysts study costs to the state, which is why they examined the fiscal impact on Dempsey. That could offer a glimpse at the costs all hospitals would face.
The costs to Dempsey stem largely from provisions aimed at restricting how hospitals bill for services at outpatient facilities and electronic health records. In some cases, the exact numbers reflect ambiguity in the way the draft bills were written.
The bill limiting the use of facility fees, for example, could lead to a significant revenue loss for the hospital — up to $145 million, analysts wrote — although that could vary depending on how “facility fee” is defined.
In addition, the proposal aimed at expanding the use of electronic health records and building an exchange system for sharing them was projected to require $50 million in bonding, with potentially significant state costs for tax credits for health care providers implementing or upgrading electronic records systems and hospitals that donate equipment to providers.
Srinivasan said the potential costs of the package are a significant consideration to address at a time when many services are facing budget cuts.
“Can we go out and get $50 million in bonds, and do that when…we are slashing the services of patients with disabilities?” he said. “That becomes a tug-of-war. Not just financially, but even morally, what is the right thing for us to do as a legislature, given the fact that we have this very difficult dance to do?”
Looney and Fasano said they would look to whittle down costs, and have already removed some potentially costly provisions. The proposed budget released by the legislature’s Appropriations Committee this week includes $1 million per year to implement the hospital-related measures.
“Obviously in some cases, some money may need to be put in to recognize those needs,” Looney said of the projected costs to state agencies. “In others, we may ask the department to go back and justify the fiscal note and indicate that in some cases, it might be able to be done within available appropriations.”