Some healthcare experts view the Senate health committee's proposed reforms to hospital and insurer contracts as essential to try to sustain the employer-based insurance system in the face of bloating costs.
Yet even as the healthcare industry seems bent on defending the commercial market against calls for a single-payer system, hospitals are poised to fight at least some of these policies.
Comments on the draft legislation from Senate health committee Chair Lamar Alexander (R-Tenn.) and his Democratic counterpart, Sen. Patty Murray of Washington, are due Wednesday, and hospitals have already framed the potential restrictions to some of their contracting practices as another threat to rural healthcare.
The discussion draft includes a ban on "all-or-nothing" clauses, which force insurers to contract with all of a health system's facilities or none of them. American Hospital Association Executive Vice President Tom Nickels said this "could lead to even more narrow networks with fewer provider choices for patients, while adversely affecting access to care at rural and community hospitals."
The AHA declined to share all the group's comments on all the contract provisions before they send full feedback to the Senate health committee this week.
But in an October letter to Senate Finance Committee Chair Chuck Grassley (R-Iowa) about transparency measures, Nickels argued that insurers usually have the upper hand with most hospitals and health systems. He also contended that hospitals typically use their contract provisions for "pro-competitive and pro-consumer purposes" such as "value-based care alternatives or protecting the hospital and its patients from unwarranted denials."
The association echoed those criticisms in its comments on the Office of the National Coordinator for Health Information Technology's proposals to force hospital and insurer negotiations into the public eye.
Disclosing "price information actually would inhibit competition because it would create a platform for price-fixing," the AHA said. "Health plans would know what every other health plan was paying and could use that information indirectly to collude and drive prices below competitive levels, thereby reducing the incentives for actual competition in the marketplace, and threatening the viability of some of the nation's most vulnerable hospitals."
On rural healthcare specifically, an AHA representative pointed to the March Government Accountability Office report about insurance market consolidation — since states like Alabama, Alaska, Mississippi and Montana are dominated by a single company holding at least 80% of the market.
The rural healthcare argument draws strong skepticism from others.
"They do it because it's effective," Dr. Farzad Mostashari, co-founder and CEO of the primary-care company Aledade, said of the approach. "The Senate being what it is, and rurals and rural healthcare being a real concern, it really has political potency to talk about this. But in reality (fixing) the rural hospital closure problem would take a fraction of what they're proposing, which is to hold all hospitals harmless from any reform."
Mostashari also argued that the mere fact of bipartisan agreement in the Senate shows "how far beyond the pale hospitals and certain provider groups" have gone to get Congress to act.
"This is the thing: Congress hates to get involved in private contracts—hates it," he said.
Meanwhile, advocates for the employer system say hospitals have to give up something on costs.
And for many on the employers' side, the case to back the Senate proposals has been building in the courts.
North Carolina's Atrium Health only recently settled with the U.S. Justice Department over its anticompetitive steering clauses. Alexander's draft legislation would prohibit hospitals and insurers from entering into anti-steering agreements to keep patients from cheaper hospitals or clinics.
And California Attorney General Xavier Becerra's antitrust lawsuit against Sutter Health almost presents the Senate-proposed reforms point by point.
Becerra's case, filed in March 2018 and headed for oral arguments in August, described contracting strategies that allegedly caused regional healthcare costs to skyrocket in Northern California. One report from the University of California at Berkeley, detailed that average hospital inpatient procedures cost $90,000 per patient more in Northern California than Southern California.
The contracting tactics outlined in the Sutter Health lawsuit would get axed in the legislation from Alexander and Murray, who have proposed a ban on the "all-or-nothing" clauses deployed by Sutter, insurer-hospital collusion to keep patients from knowing the prices ahead of their treatments, and more.
Becerra blamed the "punitively high out-of-network hospital pricing in combination with the anticompetitive provisions in its agreements with network vendors" for making low-cost employer coverage "economically unfeasible."
With about half of Californians covered through an employer plan, "the economic damage to the state is quite substantial," the lawsuit said.
The panel's draft legislation coincided with the fallout of a recent RAND Health study, which sampled 25 states and found that on average hospitals get 241% of Medicare rates from employer insurance.
Some hospitals and hospital groups have questioned the study's accuracy, but the RAND researchers specifically highlighted hospital contractual clauses that inflate and obfuscate pricing—including "all-or-nothing" clauses and other gag clauses.
The White House has not commented specifically on the Senate health committee's proposal, but an official said that legislation addressing high healthcare costs "is exactly what the American people want Congress to do."
Mostashari predicted that the committee proposals will ultimately win out over any hospital objections.
"They've just gone too far," Mostashari said. "And the issue is, like drug pricing, people can see it in their own lives. You just have to go on any local news or Twitter or constituent letters to see thousands of examples of these abuses. They're going to try to do their usual lobbying tricks, but they don't have much to stand on. Maybe they should save their bullets."
Suzanne Delbanco, the executive director of the not-for-profit Catalyst for Payment Reform which helps employers try to find savings, said they have few options left now that they have come to rely on high-deductible plans that are proving too expensive for their workers.
"There are many parties who want to make sure employers can continue offering benefits, and employers want to," Delbanco said. "But it is a really challenging job when there is so much money in healthcare, and so many entities are holding that money close that it can feel like people forget that healthcare is ultimately about the patient."
