Moreover, hospitals are linked to significant trends that have caught the attention of legislators across the spectrum, including mergers and acquisitions, telehealth, drug pricing and cybersecurity.
As a result, the hospital sector found itself the target of many unwelcome bills as the 118th Congress began its pre-election recess Wednesday and headed toward an expected lame duck session in December.
On Sept. 11 — two days after Congress returned from its summer recess — the House Education and the Workforce Committee passed a measure to bar health systems from demanding health insurance companies include all of their locations in group health plan provider networks, rather than individual facilities. The panel also advanced a telehealth bill with site-neutrality provisions that would limit the facility fees hospitals charge when delivering services remotely.
"With 82% of Americans opposing these fees, this legislation is a common-sense solution that will protect patients and employers from unjustified costs," Education and the Workforce Committee Chair Virginia Foxx (R-N.C.) said of the site-neutrality provisions.
"These anticompetitive practices must be reined in," said Rep. Bobby Scott (D-Va.) of the network contract provisions.
The next day, the Senate Health, Education, Labor and Pensions Committee held a hearing on bankruptcy of Steward Health Care, during which lawmakers slammed no-show Chair and CEO Dr. Ralph de la Torre and decried greed in the hospital industry more broadly. On Wednesday, the Senate unanimously voted to refer de la Torre to federal prosecutors on contempt of Congress charges.
Other bills have targeted hospital transparency, growing use of the 340B Drug Discount Program and consolidation in healthcare, and threatened to cut off federal assistance in cybersecurity breaches. The White House proposed Medicare payment penalties against hospitals for cybersecurity failures as soon as 2029, and Senate Finance Committee Chair Ron Wyden (R-Ore.) and Intelligence Committee Chair Mark Warner (D-Va.) dropped a bill Thursday including that and other provisions. Meanwhile, the Federal Trade Commission instituted a ban on noncompete contracts that hospitals vehemently oppose, although a federal court suspended the regulation last month.
"There's a lot that needs to be addressed" with the hospital industry that relates to broader problems in the health sector, said HELP Committee Chair Bernie Sanders (I-Vt.), who issued a report critical of hospitals' delivery of charity care last year.
"You've got a healthcare system that is broken. It is dysfunctional," Sanders said. "It has a lot to do with the insurance companies — the greed of the insurance companies — the greed of the pharmaceutical industries and the poor functioning of hospitals all over America. Those are the tripods of a broken system."
Site-neutral payment
Just to take one example of bipartisan attention that hospitals do not like, site-neutrality legislation has popped up in multiple committees. Sanders and Republicans including Sen. Dr. Roger Marshall (Kan.) have a bill in their committee. Sens. Maggie Hassan (D-N.H.) and Mike Braun (R-Ind.) are leading a related effort.
Braun said his major concern is with large hospitals that are doing very well financially while they buy up doctors' practices and off-site clinics and then charge higher hospital rates for the same services, he said. This contributes to consolidation, while at the same time stifling price transparency and competition, he said.
"Whenever they buy another location, they'll take the prices up from what they were having there before," Braun said. "They're the biggest part of our healthcare dollar, and they get more expensive each year."
At a GOP Doctors Caucus event Sept. 20, Rep. Dr. Michael Burgess (R-Texas), a proponent of site-neutrality bills and skeptic of hospital consolidation, said that letting hospitals charge hospital rates in outpatient settings makes no sense. "Why does it cost three times more to do something in a hospital outpatient department than it does in my medical office?" he said.
There are arguments on both sides of the site-neutral debate, including those made by the lawmakers about consolidation and savings for Medicare and patients, said Zachary Levinson, director of the Project on Hospital Costs at the health policy research institution KFF.
But Levinson pointed out that hospitals justify higher costs at off-site facilities by pointing out that they support the higher overhead costs at hospitals, and get added value from their connections to full-service hospitals.
"Just as these reforms would lead to savings for the government and for beneficiaries, they could also reduce revenues for hospitals," Levinson said. "Opponents have expressed concern about the impact this would have on access to care, especially for rural and low-income populations."
'People have been critical'
American Hospital Association President and CEO Rick Pollack certainly has noticed the negative turn.
"For us, it is a little bit odd that just a few years ago people were banging on pots and pans and thanking us and our frontline caregivers for what we did through COVID, and then all of a sudden now we're faced with some of these tough issues," Pollack said at the Modern Healthcare Leadership Symposium Sept. 12.
While it may be jarring, Pollack said it can be seen as a manifestation of the national mood and falling trust in institutions across the board as politicians and voters look to populist solutions.
"People have been critical of us, and it's no secret, but they've also been very critical of companies," Pollack said. "People have been very critical of the insurance companies. People have been very critical of high tech, and there is this sort of populist flavor of a lot of folks being critical of big organizations and institutions."
Pollack also argued that other players in the healthcare sector who have different interests are pushing some of the initiatives hospitals don't like.
For instance, pharmaceutical companies, which have been suing over 340B and restricting where hospitals can dispense the drugs they get at reduced rates, have attracted support from lawmakers who have proposed measures to funnel more of the savings to patients.
Insurance companies that favor site-neutrality rules have found some friendly ears for those arguments, as they have for their case that large health systems should not be able exclude plans with what are known as anticompetitive contracts.
"It's important to recognize as we go through those issues that there are people that have advocacy agendas, who have different objectives than we do, and they do seek to undermine public confidence and trust in us," Pollack said.
At the same time, hospitals have a history of winning fights on Capitol Hill. Every year when safety-net hospitals have faced multibillion dollar reductions in Medicaid Disproportionate Share Hospital payments they get for treating uninsured and underinsured patients, lawmakers have relented and delayed those the cuts, which originated in the Affordable Care Act of 2010.
And those bills that hospitals believe would negatively impact them have yet to pass, although some came close during negotiations in last year's budget battles. Complaints raised by hospital lobbyists played a role in delaying their advancement as part of a broad healthcare legislative package, congressional staffers said at the time, as did Congress' own dysfunction.
Pollack said hospitals have been winning "on the merits," and they have capably mobilized their natural and influential base.
"Our secret sauce is the fact that we have grassroots that are in every single congressional district," Pollack said. "We're often the largest employer in many of these communities, and we have trustees that serve on boards, volunteer trustees that are very influential people that are highly respected in those communities. And I think it's that kind of reinforcement that we get from at home which allows us to be effective."
Employing a coherent and concerted push gives hospitals an edge when legislation they oppose comes from such varied and disparate sources, said Julius Hobson, a senior policy adviser at the Polsinelli Law Firm.
"It's not organized, which is why the hospitals can win," Hobson said, likening the lobbying battle to a military campaign.
"You fight off the enemy in detail, meaning you hit this one, and then you hit that one. And if the opposition ever got organized, they run over you. But they're not," Hobson said. "You fight noncompetes over here. You fight 340B over there. You fight site-neutral there."
Post-election plans
The battle is likely to continue this fall in the lame duck session after Election Day, during which many lawmakers aim to advance the stalled healthcare package. There are numerous items that could be included that hospitals favor, such as forestalling the DSH cuts again, reining in pharmacy benefit managers, curbing the growing use of prior authorizations by insurers, and extending pandemic-era telehealth rules without new restrictions.
But some of the bills Pollack and his members do not support are still in the mix, including many that share a characteristic that may make them attractive to lawmakers interested in cutting deals: They would save the federal government money.
Burgess raised that idea during the GOP Doctors Caucus roundtable, pointing out that many items lawmakers want to pass would increase spending, and under House rules and Medicare budget rules, new costs are supposed to be balanced by cuts elsewhere.
"If you need an offset to pay for additional things in public health, why not use site-neutral [payments] to offset the budget neutrality that you're going to need?" Burgess said.
