HHS role gives Xavier Becerra new tools to challenge healthcare consolidation

As California's top watchdog, Xavier Becerra has sought to revive competition in healthcare using lawsuits. As HHS chief, he'd have a new go-to: regulation.

HHS is a massive $1 trillion-plus department that contains key federal functions like Medicare and Medicaid, drug regulation and public health. While it doesn't handle antitrust issues—the main thrust of Becerra's current role as California's attorney general—some experts say he'll still be able to affect broad change from his new post, if confirmed.

"The lever of regulation is different than the tool of litigation, but it's toward the same ends of making sure people have the care and coverage they need, the patient protections they need and can navigate the politics of a complicated health system," said Anthony Wright, executive director of the consumer advocacy group Health Access California.

Members of the Congressional Hispanic Caucus pushed President-elect Joe Biden last week to name Becerra to lead the U.S. Department of Justice, an appointment that would rightfully have had merger-hungry hospitals shaking in their boots. Becerra has gained a reputation for being tough on healthcare deals, pushing a bill that would have given him more control over healthcare mergers and even suing Sutter Health over its anticompetitive practices.

"The case settled in late 2019, and the settlement includes several features that could find resonance in HHS policy initiatives, such as price transparency requirements and constraints on out-of-network billing," said Bradley Arant Boult Cummings Partner Travis Lloyd.

Antitrust enforcement is not within HHS' purview, but that's also just one component of protecting healthcare competition, said Glenn Melnick, a professor of public policy at the University of Southern California's Sol Price School of Public Policy. Becerra has proven himself an expert in how the healthcare market works, and understands that prices are the reason healthcare spending is through the roof, he said.

"The reason prices are rising in a lot of markets is because we've lost competitiveness," Melnick said. "I'm optimistic and hopeful he'll take some of his lessons from California and spread them across the country."

At the top of Melnick's wish list: Regulation to cap hospitals' emergency department charges at 160% of their costs, a change that would generate billions of dollars' worth of savings per year. Melnick said a huge cost driver is hospitals pulling out of insurers' networks and charging up to 500% market rates for emergency services.

It's unclear if such a change could happen using regulation, however. When it comes to price controls, Congress would likely need to be involved, said Stephanie Kennan, a member of McGuireWoods Consulting's federal public affairs group. That said, "HHS secretary is a pretty big bully pulpit," so Becerra would still be able to steer the conversation there if he wanted to, Kennan said.

"Even if that's not part of the formal process, I think that HHS can make its opinion known," she said. "There are ways to do it around the edges."

Becerra has become known above all else as a champion for health equity and access over his years in Congress and California's justice department. He was active in helping pass the Affordable Care Act as a member of House Democratic leadership in Congress and when he became attorney general, he put together a team of "healthcare strike force" attorneys that worked to defend the law, said Jen Flory, a policy advocate with the Western Center on Law & Poverty. That required a deep understanding of everything HHS does, including regulating insurance exchanges and Medicare rates.

"He's not a traditional former health agency director but he definitely has healthcare policy chops," Flory said.

Eric Klein, a partner and healthcare team leader at Sheppard, Mullin, Richter & Hampton, framed Becerra's work to limit provider consolidation in California as part of his work on health equity and consumer advocacy. Becerra could continue to pursue those principles even without litigation levers through advocating price transparency and focusing on Medicaid and social determinants of health.

"If you think about it, a lot of what Attorney General Becerra was focusing on in provider consolidation was price and access for underserved communities," Klein said.

If Becerra wanted to get creative to go after healthcare industry consolidation as HHS secretary, he could consider changing CMS' enrollment and certification criteria for mergers, said Polsinelli attorney Colleen Faddick. The process hasn't yet been used as a political tool, but that could change if the agency is committed to change. With everything on Becerra's plate he wouldn't likely get to the issue anytime soon, Faddick said.

The focus during the first year of Becerra's tenure will undoubtedly be addressing the COVID-19 pandemic and ensuring people have adequate health coverage and access, said Suzanne Delbanco, executive director of Catalyst for Payment Reform. Once the crisis is over, Becerra can use CMS' Center for Medicare & Medicaid Innovation to develop new Medicare and Medicaid models that expand access and transparency.

Providers are likely to push back against significant reform, citing the difficulty of the pandemic. The main question going forward ought to be whether the pandemic can be an excuse for treading lightly on reform, Delbanco said.

"I think he's going to see it differently," she said. "I think that precisely that it was a difficult period is a reason to think differently on how to deliver care and pay for it."

Becerra also worked in California to crack down on drugmakers' pay for delay practices. He has also worked to protect access to reproductive healthcare and access to care for LGBTQ individuals and was among the attorneys general who sued the Trump administration over its public charge rule, which discourages immigrants from using health, nutrition and housing programs.

"He has not been afraid to use his authority to protect patients even against some powerful healthcare interests," Wright said.

Though Becerra brings his own experiences and interests to the position, Buchanan Ingersoll & Rooney Federal Government Relations practice leader Michael Strazzella said ultimately he was hired to implement Biden's agenda.

"There must have been enough synergy that Biden felt Xavier Becerra as HHS secretary would feel comfortable carrying his priorities out," Strazzella said.