CMS Administrator Seema Verma on Monday took swings at Medicare's "hospital-centric payment model," touting the Trump administration's recent site-neutral payment policy and decrying provider consolidation.
Verma condemned Democratic proposals for a public insurance option at a policy summit for the Better Medicare Alliance, which represents Medicare Advantage plans. Medicare or Medicaid buy-in proposals are rapidly gaining momentum among leading Democratic presidential candidates and lawmakers as the next step to cover uninsured Americans or offer cheaper plans.
Verma echoed the strong rhetoric that hospital and physician groups wield to fight off the Democratic proposals. She particularly condemned rate-setting.
"The secret of the public option is that it's only cheaper because it uses the force of government to strong-arm doctors and hospitals into accepting below-market payment rate," she said. "But the government cannot wave a wand and impose lower rates on some providers while holding everyone else harmless."
She touted another policy, hated by hospitals, that determines some Medicare payments: site-neutral payment regulations that cut Medicare dollars for some hospital services that can also be performed in physicians' offices. Last year the CMS finalized a watered-down version of a site-neutral payment rule, prompting a major lawsuit from hospital groups. It's unclear whether the Trump administration will go further in the upcoming outpatient payment rule.
"Medicare actually pays more for many services when they're performed in a hospital," Verma said, in reference to the site-neutral payment fight. "This has led to a surplus of hospital beds in the country; and hospital spending is the largest driver of healthcare costs. Shortages and surpluses—these are the hallmarks of government price-setting."
From there, Verma doubled down on another topic that makes major health systems nervous: the growth of hospital monopolies and the "upward trend in provider consolidation."
"Hospitals are buying up physician practices, and mergers of large health systems and health plans are a common occurrence," she said. " But without competition in a market, consumers have fewer choices, prices go up, and incentives to improve quality go down."
Verma also tackled the 340B drug discount program, another policy area where the Trump administration has been battling hospitals. The American Hospital Association and America's Essential Hospitals successfully beat back a steep pay cut to 340B hospitals.
She described this program's rules as driving more hospitals to buy up physician practices.
"We've reduced this incentive, but much damage has been done, with many outpatient practices now owned by hospitals," she said.
