May 16, 2023
By Casey Korba, Director of Policy
For years, independent primary care practices have been at risk from massive health care consolidation, proven to drive up health care costs without improving quality. Primary care is the lowest paid specialty, and small practices operate on thin margins with little or no financial reserves. The COVID-19 pandemic accelerated this trend.
On April 26, the Energy and Commerce Committee Subcommittee on Health held a bipartisan hearing on “Lowering Unaffordable Costs: Legislative Solutions to Increase Transparency and Competition in Health Care.” The Committee is considering 17 bills that target improving price transparency in health care and improving competition amongst health plans and providers to help lower costs for patients. We were fortunate that the Committee invited Aledade’s Chief Policy Officer, Sean Cavanaugh, to testify and recommend other strategies federal policymakers can take to promote competition.
Chair Brett Guthrie (R-KY) and Chair Cathy McMorris Rodgers (R-WA), provided opening remarks followed by testimony from Chiquita Brooks-LaSure, Administrator for the Centers for Medicare and Medicaid Services. Next, a panel of expert witnesses including Cavanaugh gave remarks and answered questions from the Committee on issues related to market competition, hospital pricing transparency, and recommendations on how Congress can address increasing, untenable costs for patients.
Cavanaugh’s testimony described Aledade’s role as the largest network of independent primary care in the country and its mission to bring the benefits of value-based care to communities nationwide. He shared analysis of CMS data that shows physician-sponsored accountable care organizations (ACOs) are generating outstanding results, through real improvements in primary care services delivered to Medicare beneficiaries. In 2021, the most recent data released by Medicare, primary care organizations working with Aledade helped their patients avoid more than 24,000 unnecessary hospitalizations and more than 120,000 unnecessary visits to the emergency room.
After laying that groundwork, Cavanaugh’s testimony focused on how increasing competition is central to improving health outcomes and lowering costs, and outlined the pro-competitive provisions included in several bills the Committee is considering. He spoke about his experience as a regulator during his time at CMS, acknowledging that we should rely on regulation only when market competition isn’t feasible, or has failed.
To give markets a chance to work, we have to establish an environment that fosters competition. Unfortunately, the current health care system has a number of market failures, including payer and provider consolidation, and our laws permit practices that undermine competition.
Provider concentration increases the local bargaining power of large health systems, which allows them to demand higher prices for services from health plans. And without alternative providers to generate competition, there is little incentive to provide higher quality care. Smaller practices and safety net hospitals entered the pandemic invulnerable financial positions and were less likely to access emergency relief funding.
Reversing these trends and establishing the framework for a high performance health system will require more than legislation, but in Aledade’s view, the Committee has an opportunity to take meaningful action to promote competition and transparency in health care.
Aledade’s recommendations to the Committee and Congress were:
- Support greater investments in primary care, including community health centers and independent practices, since these organizations are the foundation of true health care transformation.
- Eliminate existing Medicare policies that inhibit competition in health care. Several bills before the committee would move Medicare toward site neutral payments, which is an important first step.
- Curtail anti-competitive contracting such as gag clauses, anti-tiering, anti-steering, as well as all-or-nothing clauses, which are prime examples of excess market power enabling anti-competitive behavior.
- Optimize MSSP for rural practices. While some claim that banning these market distorting practices could limit the power of health systems to negotiate higher rates that support some rural hospitals, the solution to inadequate funding is not to promote anti-competitive behavior and opaque cross-subsidies. Direct subsidies would be a more efficient and transparent mechanism for rural hospitals and providers in need.
- Refine the MSSP to use cost setting principles, or benchmarking, that creates an enduring opportunity for rural health to succeed in value-based care. As Congress considers updating the 2015 Medicare Access and CHIP Reauthorization Act (MACRA), we urge members to direct CMS to set benchmarks that do not decrease as ACOs reduce costs.
- Improve access to capital for independent practices. Independent practices, especially primary care physicians, perform better in value-based models, but their financial status is often weak. Congress could expand loan repayment programs to providers who serve in rural areas, even if they work at private practices. Congress could also focus on Small Business Administration loans targeted at rural private practices.
Cavanaugh offered additional recommendations on reforming certificate of need, reinvigorating antitrust enforcement, and regulating anti-competitive data-sharing practices.
“One of the reasons I’m here today is that it is difficult to do this type of care – and if health systems consolidate there is no impetus for them to try. If they can consolidate and negotiate higher fee-for-service rates, then why do the hard work of population health and value-based care?”
– Sean Cavanaugh, Aledade’s Chief Policy Officer
After all the panelists made their opening remarks, they fielded questions from the Committee. Rep. Kim Schrier (D-WA) expressed her support for the Center for Medicare and Medicaid Innovation and asked Cavanaugh about models like direct primary care to innovate care delivery and lower costs while improving quality versus merely skimping on care and access. Cavanaugh explained that, while Aledade ACO members do not participate in the direct primary care model, there are some analogies. Aledade practices work with Medicare, Medicare Advantage, commercial plans, and Medicaid plans to accept accountability for the total cost of care as well as quality of care and access.
He agreed that there are two ways to save money in health care: skimping on care and discouraging access and services, or providing high value care, such as wellness and prevention, transitions of care services, and managing chronic conditions. The decade-plus experience in MSSP has shown over and over that clinicians who use the second approach – providing high value primary care and being held accountable by Medicare and others to deliver on quality measures, have been successful at reducing cost.
“One of the reasons I’m here today is that it is difficult to do this type of care – and if health systems consolidate there is no impetus for them to try. If they can consolidate and negotiate higher fee-for-service rates, then why do the hard work of population health and value-based care?” Cavanaugh said.
The Aledade Policy Team will continue to track the federal legislation Congress is considering to address competition, and advocate for legislation at the state level, to ensure that independent primary care practices can thrive in delivering high value care in their communities.