Over hospital objections, House passes Lower Costs, More Transparency Act | Bills and Laws

The skinny

Lawmakers say bipartisan legislation, the Lower Costs, More Transparency Act (H.R. 5378), will help consumers and could reduce healthcare bills for patients. Hospitals protest a core component of the legislation that they say would reduce Medicare funding. The House passed the bill Monday night.

U.S. Rep. Cathy McMorris Rodgers, R-Wash., is the prime sponsor of the Lower Costs, More Transparency Act. (Image: U.S. Congress)

Sponsors

U.S. Rep. Cathy McMorris Rodgers (R-Wash.), the chairperson of the House Energy and Commerce Committee, is the lead sponsor. She spoke on the House floor Monday to rally fellow lawmakers to pass the bill.

Co-sponsors include U.S. Rep. Frank Pallone (D-N.J.), the committee’s ranking Democrat, U.S. Rep. Jason Smith (R-Mo.), head of the House Committee on Ways and Means, and U.S. Rep. Virginia Foxx (R-N.C.), chairwoman of the House Committee on Education and the Workforce.

Summary

The sponsors say the measure would require hospitals and insurance companies to spell out more clearly their costs to consumers. With better information on costs before procedures, patients could make better decisions and potentially save on their healthcare needs, lawmakers say.

Lawmakers tout a provision that would reduce Medicare payments to hospitals for some services that are also provided in outpatient facilities and doctor’s offices. Sponsors say this parity in Medicare payments would help patients and reduce Medicare spending. Supporters also say the bill would require more transparency in pricing from pharmacy benefit managers.

The House approved the measure with a 320-71 vote, and it passed with bipartisan support. With unusually broad backing, 166 Republicans and 154 Democrats approved the bill.

The measure now moves to the Senate.

Critics

Hospitals have denounced “site-neutral” funding proposals for Medicare payments and say it will hurt them financially and reduce their ability to provide care.

Health systems have complained that Medicare is already falling short in its reimbursement to hospitals, and they say additional cuts would be a blow at a time when many hospitals continue to struggle financially. Hospitals argue that they must provide capacity around the clock, and they treat patients with more complex conditions and have greater emergency treatment requirements.

Rick Pollack, the president and CEO of the American Hospital Association, urged lawmakers to remove the “site-neutral” language, or to reject the bill if the provisions remain.

“We have been very clear regarding the harm that would be done to our nation’s hospitals if so-called site-neutral cuts to Medicare were adopted,” Pollack said in a statement Monday. “We have strongly urged that those cuts be eliminated from this legislation.”

Charles N. Kahn III, president and CEO of the Federation of American Hospitals, which represents for-profit hospitals, said the cuts in Medicare funding would threaten access to patient care, especially in rural areas.

In a letter to lawmakers last week, he wrote, “Hospitals are already only paid 80 cents on the dollar by Medicare and hospitals require more funding than other sites of care because we treat sicker, lower-income patients.”

Sr. Mary Haddad, president and CEO of the Catholic Hospital Association of the United States, also urged lawmakers to reject the site-neutral provision.

“The cost of care delivered in hospitals and health systems must take into account the unique benefits that they provide to their communities, such as round-the-clock access to critical care,” Haddad wrote in a Dec. 7 letter. “This site-neutral proposal also must be rejected in light of providers' continued fiscal challenges, especially in rural and underserved areas.”

The Association of American Medical Colleges said teaching hospitals would be hurt by the reduction in Medicare funding. "The AAMC strongly opposes so-called 'site-neutral' payment policies that are, in fact, simply cuts to hospitals," the group said in a statement.

Hospitals have welcomed one element of the legislation: the measure would delay cuts of billions of dollars in Medicaid funding.

The Medicaid disproportionate share hospital (DSH) program is slated to be cut by $8 billion annually over the next four years. But the measure would postpone Medicaid’s DSH cuts for two years.

Hospital groups say they’re encouraged by the delay in cuts, since the funding is essential to hospitals, particularly safety-net hospitals.

Supporters

Proponents say the legislation would help consumers avoid eye-popping healthcare bills, and at least give them a chance to look around at less expensive options for care.

Patricia Kelmar, PIRG’s senior director of health care campaigns, said in a statement Monday the legislation represents “a major milestone on the road to price transparency in health care.” Kelmar said it helps consumers that have faced higher costs in the wake of the increasing consolidation of the healthcare industry.

McMorris Rodgers has pointed to polls showing Americans say they’re paying too much for healthcare, and has argued that consumers need relief. “We all know that healthcare is too expensive, and the system is far too complicated,” McMorris Rodgers said on the House floor Monday.

She urged House lawmakers to pass the measure.

“In sum, this bill is a legislative opportunity: bipartisan, regular order, and fully paid for,” McMorris Rodgers said. “It advances foundational health care reforms for patients, lowers health care costs, and reduces the deficit.”

Speaking in the House Monday, Pallone said the bipartisan bill “delivers lower healthcare costs for the American people, and brings much-needed transparency to our nation’s healthcare system.”