By Robert Appel, M.D.
The Wake County Board of Commissioners just voted to approve Atrium
Health, North Carolina’s largest hospital chain, merging with WakeMed,
a move that left some state officials “profoundly concerned.” North
Carolinians should share these concerns about hospital consolidation,
especially the estimated 71,650 residents diagnosed with cancer last
year that deserve world-class, affordable care.
Hospital consolidation stands in the way of cancer care affordability.
Under current Medicare rules, hospital-owned cancer centers often
receive higher reimbursement rates than independent physician
practices for the same services. Those payment advantages encourage
large health systems to acquire more physician practices and
outpatient clinics.
At the same time, larger hospital systems gain greater leverage to
negotiate higher prices from private insurers, reducing competition
and ultimately driving up costs for patients receiving treatments such
as chemotherapy. Look at Atrium Health: it owns 40 hospitals and more
than 1,400 outpatient care centers that bill at higher rates than
independent physicians. State officials like State Treasurer Brad
Briner know this, explaining that “Hospital consolidation leads to
less competition and higher prices” in a recent statement.
Lawmakers can help bring costs down by implementing site-neutral
payments, reforms that would pay hospital-owned facilities and
independent physician practices the same amount for delivering the
same care. Legislation like the Same Care, Lower Costs Act would end
Medicare’s practice of paying more for services delivered in
hospital-owned outpatient facilities than in independent physician
offices, removing a major incentive for hospital acquisitions and
helping reduce cancer care costs.
As it stands, the cost of cancer care is too high for average North
Carolinians. Recent research found that cancer patients incur roughly
$4,100 in additional out-of-pocket costs within only the first seven
months after diagnosis, even when they have insurance, cutting the
average North Carolinian’s liquid savings of around $12,000 by a third
within only the first few months.
By contrast, site-neutral payments could save Medicare cancer patients
more than $1,000 in out-of-pocket costs during their first year of
treatment, while reducing Medicare spending by more than $5,500 per
patient on average. Those savings could mean the difference between a
patient missing a treatment and finding a steady path to recovery.
Cancer patients on private insurance could also benefit from
site-neutral payments. Medicare’s reimbursement policies often
influence how private insurers structure their own payment rates, and
reducing payment disparities between hospitals and independent
physician practices could put downward pressure on commercial prices
as well.
Site neutral reforms do not come without criticism from the hospital
industry. Hospitals justify high prices by claiming to offer higher
quality, more complex care to their patients than other providers. But
many of the services targeted by site-neutral payment proposals are
routine outpatient services— imaging, laboratory testing, drug
administration, and evaluation and management visits—that can be
delivered well in lower-cost settings.
The evidence is especially compelling in cancer care. Research has
found that community oncology practices deliver outcomes that are
comparable to, and in some cases better than, hospital outpatient
departments while doing so at substantially lower cost. Other research
found cancer care costs were substantially higher when treatment was
delivered in hospital outpatient facilities rather than independent
oncology practices.
Hospitals are not at fault for simply taking advantage of favorable
government incentives. But that doesn’t change the core problem:
consolidated providers hold too much pricing power in a healthcare
market that should work for patients.
North Carolina is counting on its lawmakers to support site-neutral
policies that would lower costs for vulnerable patients.
Representatives like Chuck Edwards have been supporters of
site-neutral policies. But it will take a bipartisan effort among
North Carolina lawmakers to pass the Same Care, Lower Cost Act, which
has the power to significantly lower care costs in our state.
North Carolina is a world-class cancer research hub. Our cancer care
should match. Passing the Same Care, Lower Costs Act would end a
payment system that rewards hospital acquisitions rather than better
patient care.
Robert Appel, M.D. is a urologist based in Fayetteville, North Carolina.