March 4, 2019
YOUTUBE
Joe Grogan
Speaks to Federation of American Hospitals (18 minutes)
(J
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Joe Grogan also
had an OP Ed at Real Clear Politics on “The Trouble with BernieCare”, April
22, 2019,
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(Condensed
version appeared online at CNN on May 10, 2019 as Op Ed focused on surprise
billing, https://www.cnn.com/2019/05/10/opinions/stop-surprise-medical-billing-opinion-grogan/index.html
).
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|
(Seema
Verma spoke at the same FAH conference;
her prepared
remarks are online at CMS:
|
GROGAN: Good morning everyone. It's great to
be with you. I want to thank Chip for the invitation and that very kind
introduction, and I want to thank all of you for coming to Washington DC and
getting involved in the process of debating these issues. As Americans, we all
have a responsibility to fight for what we believe in and make our voices
heard. At a time when too many people are shouting others down and walking away
from civil discourse, I want to thank you for joining the debate. I've had the
opportunity to address a subset of the federation in the past, and I'm always
happy to be with you, as hospitals plays such a critical role in our nation's
healthcare system.
It will be critical
that hospitals engage constructively as we work to confront the unprecedented
challenges our healthcare system faces. Hospitals must have a central role to
play in the future, though that role may look a little different than it does
today. That is a good thing, as innovation will create more efficient mechanisms
of care delivery that build on the existing knowhow, expertise, infrastructure,
and employees of hospitals. I say this to stress that the administration sees
hospitals as partners in our mission to reform American healthcare, building on
the positive aspects of our current system.
US healthcare is
spending accounts to nearly 18% of gross domestic product, an outlier when
compared with other developed nations that hover around 10% to 12%, and we have
no improved outcomes to show for that extra money. It is imperative that change
occur to address this spending disparity. I will focus today on three areas. We
have prioritized at the President's direction: Empowering patients, the
value-based transformation of our healthcare system through choice and competition,
and bringing down drug prices.
On empowering
patients, our current opaque pricing system fails to empower patients to
control their own healthcare. To focus on an egregious example, surprise
medical billing has gotten increasing attention as it has grown to be
increasingly frustrating for the American people. Providers point fingers at
payers. Payers point fingers at providers, and the American people are left at
the mercy of a cruel and indifferent process. In any other market, people expect
to be told the price upfront, that they can agree to pay, negotiate down or
walk away from. The medical system too often takes advantage of people in the
moments when they do not have any leverage. I'm thinking of patients charged
multiples of costs for an emergency airlift, or someone who reasonably did not
know to check if the anesthesiologist on shift was in network after confirming
that the surgeon that would do their operation and hospital were in network.
It is not
acceptable to see institutions ostensibly committed to the mission of patient
care profess helplessness when patients receive large bills from out of network
physicians that they have expressly permitted to practice in their facility.
It's not acceptable when these same institutions sell the right to airlift
patients to company sponsored by private equity firms who then send enormous
bills to patients. Recently I was in a discussion with a member of the United
States Senate, and we were discussing a number of important issues. Suddenly he
went off topic. He grew animated when he discussed an incomprehensibly large
bill, and an incomprehensible bill to him to understand, for a grandchild's
emergency room visit. He described how he began to sleuth out the source of the
multi thousand dollar visit to the emergency room, which probably involved an
irate call to a CEO of a hospital or a health insurer. This was not a crazy
senator. This is somebody that's been in the Senate for a long time and an
active sage voice on these issues.
It has hit me personally,
as I have stared at medical charges for services that I know don't cost that
much, and it hits members of our local communities. The point is that surprise
medical bills have gotten the attention of the White House and the United
States Congress, and something sooner or later needs to change. If hospitals,
providers and issuers don't protect these patients from financial harm,
Congress and the administration will need to act. We've heard a number of
proposals, ranging from arbitration, to fixed rate setting, to bundling, but we
need an answer and we need your help. Caring for patients can't begin and end
with attention to the clinical aspects of care, and you must agree, we need to
provide information so patients can make informed decisions. We cannot tolerate
a system where patients get taken advantage of financially any more than we can
tolerate one where they are subject to substandard medical care.
Another part of
empowering patients is giving them freedom to choose the coverage that is right
for them. I will never understand mandating one size fits all coverage for
every American, but then again, I'm not in favor of coercion over freedom. I
believe in giving people freedom to choose. I believe in choices, and I believe
in the power of competitive markets. That is why I'm incredibly proud to serve
in an administration that opened up affordable freedom plans through short term
limited duration insurance and association health plans. A recent report found
that 28 new AHPs have been created since the regulation to open up AHPs was
finalized, and more on the way. The Congressional Budget Office estimates these
plans will achieve premium savings of 30% and will lower premiums in the entire
small group market through greater competition. Side by side with the
exchanges, these plans aim to give Americans the choice and control they want,
the affordability they need, and the quality they deserve.
Freedom from
coercion is also the key reason why the Trump administration eliminated the
individual mandate penalty, and this past fall the administration proposed new
options for employers and employees by proposing to expand health reimbursement
arrangements through administrative action. These changes are still out there
with all their mandates and coverage requirements. They serve as an option.
They shouldn't be the only choice, however, but this is not how everyone sees
it. There are those out there who want to take away choices from the American
people and aren't content with the mandates of the ACA.
The Medicare For
All single payer plan introduced in the House of Representatives, which would
ban private insurance, can be broken down into three core components. One,
centralized control that will dictate pricing, utilization management, and
minimum service levels, beyond which there will be little incentive to improve.
Two, deeper government regulation to define rules and standards that limit the
basis of competition and continue to encourage consolidation. Third, one size
fits all. Benefits that spread spend indiscriminantly across the population and
will not improve affordability.
In contrast, if I
were to lay out a system we believe in as an administration, our three points
would be, one, empowering patients to choose what is best for them. Create
downward price pressure. Control unnecessarily utilization, and improve service
levels. Two, ensuring government policies promote value, encourage competition,
an unleash innovation. And third, recognizing that people are different, and
that some Americans, through no fault of their own, have to confront
preexisting conditions. They should be taken care of, but no one, including our
government, should be bankrupted by the healthcare system.
To be perfectly
frank about this, the Medicare For All plan goes in exactly the wrong
direction. More regulation, more centralized control, one size fits all,
designed by a distant elite group of super regulators. We need to empower
patients, promote choice and competition, and take care of people who truly
need it, because we are a compassionate, caring society. Compassionate and
caring, however, does not mean divorced from reality. Central planning doesn't
work. The centrally planned government designed exchange subsidies haven't
delivered, as an example. Per the congressional budget office, we now spend
more than $50 billion per year on subsidies in the Obamacare individual
marketplace. This annual cost has led to an increase from 10.6 million
enrollees in the individual market in 2013, before the ACA subsidies kicked in,
to 14.4 million enrollees in the first quarter of 2018. $50 billion for an
improvement of less than four million enrollees. This is not progress.
I remain a skeptic
of complicated models designed to drive value, and I believe the only way to
drive a value based transformation into our healthcare system is through choice
and competition. Our delivery system should be incentivized to deliver the best
outcomes for patients in the most efficient manner possible. It is no surprise
that we aren't meeting that standard, given the way Medicare reimbursement
works. The Kaiser Family Foundation found that hospital admissions for several
common preventable diseases are more frequent in the United States than in
comparable countries. As hospital admissions are expensive and take people away
from other things they would rather be doing, this is not an area we should
lead on, but it does make sense that we are in this state. Our traditional fee
for service structure pays providers for performing services and focusing on
codes rather than for improving health. As a result, providers perform a lot of
unnecessary services and spend too much time recording them to ensure they will
be reimbursed.
Our doctors and
nurses are focused on iPads and computer screens when they should be focused on
the patient. Government payment policies have also contributed to higher costs
in both Medicare and commercial insurance, by encouraging consolidation among
hospitals, among physician practices, and between hospitals and physician
practices. The first two forms of consolidation have spurred increased market
power to demand higher prices from commercial insurance and a growing disparity
between Medicare and commercial payment rates. The consolidation between
hospitals and physician practices increase prices for both commercial and
Medicare physician services.
More than 40% of
physicians are now employed at hospitals, a market increase over the roughly
one quarter of physicians in 2012. Commercial insurance price increases due to
this market power continue to increase. Medicare spends more because it
generally pays a higher fee for a service provided by a hospital owned
physician service than it would for the same service in an independent doctor's
office. Medicare paid an estimated $1.6 billion more for physician visits in
2015 than it would have if the payment rates for all visits where the same as
those in independent doctors' offices. This increases not only Medicare
spending but seniors' out of pocket costs, and their spending on coinsurance
and copays. It contributes to future increases in part B premiums as well.
Providers and
systems willing to be paid based on the quality of care they deliver rather
than the services they perform should be freed from the reporting burdens
necessitated by our current structure, and we can break the cycle of these
terrible incentives. We have been working to change the current system through
efforts like CMS Administrator Seema Verma's Patients Over Paperwork
Initiative, which has decreased the hours and dollars clinicians and providers
spend on CMS mandated compliance and increased the proportion of tasks that CMS
customers can do in a completely digital way.
We further
simplified things with the first overhaul of the documentation and coding
requirements for physicians' evaluation and management visits in 20 years. How
much better would it be if incentives were focused on keeping people healthy
and out of the hospital? By partnering with hospital groups to eliminate
unhelpful regulations and shift to a system when patients are taken care of
holistically, we aim to place US healthcare spending on a more sustainable
trajectory. We are committed to pursuing rule making to implement the reforms
called for in the December report reforming America's healthcare system through
choice and competition. These reforms include specific recommendations
regarding the benefits of telehealth and streamlining quality measurement
programs among other areas. The reforms will often be deregulatory, recognizing
that it is distortions introduced by the federal government's payment and
regulatory policies that created the anti-competitive nature of our current
system.
These reforms will
initiate long overdue changes in the way the healthcare industry operates, and
we hope you will partner with the administration, Congress, and state
policymakers in transforming the way we reimburse and regulate our healthcare
system. As this report was issued in response to one of the most critical
executive orders the President has signed in the health space, you can rest
assured implementing its recommendations is one of our highest priorities, and
on the drug pricing front, we are committed to delivering on the President's
promise to lower drug prices for American patients, and I want to be clear about
the goals of this administration. We are interested in real, lasting structural
reforms.
Over the last
decade, we have seen the growth of significant problems in Medicare part B and
part D programs. From 2009 to 2017, spending in Medicare part B grew at roughly
6% per year. In Part D, we're growing at 9.5% per year. These costs impact
patients, particularly patients that use the programs the most. That is why as
an administration, we are committed to lowering list prices, lowering patient
out of pocket costs, and improving, or in some cases introducing, more
negotiation and competition into these programs. We also note with concern that
the use of the 340B discount program has expanded beyond its original purpose
of helping hospitals and facilities serving the most vulnerable members of our
society. From 2005 to 2018, we've seen 340B drug sales increase from $2.4
billion to over $19 billion. This kind of growth suggests that not all of the
money is being used to benefit patients, and hospitals end up profiting from
those discounts through higher reimbursement rates for Medicare.
There are too many
distortions, too many games being played, and too much money getting sucked out
of the pockets of American patients and taxpayers without fair value. It has to
stop. I know you will be hearing from Administrator Verma later today on our
efforts to promote interoperability, in addition to the topics I touched on
this morning. The changes HHS has proposed are critical, and I stand in
lockstep with the administrator and HHS in implementing them.
Working together to
empower patients, transform the delivery system to deliver value and lower drug
prices, we can help give Americans the choice and control they want, the
affordability they need, and the quality they deserve. This is not only good
policy or good business practice. It is our duty to our communities and the
American people as leaders in our healthcare system. America's hospitals don't
play just an important role in American healthcare. They play a sacred role in
American life, bringing new lives into the world, repairing bodies that are
critically injured, and caring for those struggling at the end of life's
journey. On behalf of the Trump administration, I am asking the Federation of
American Hospitals to partner with us as we work on reforms to improve the
American healthcare system. Thank you.
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