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Federal policy update from the American Hospital Association [PODCAST]

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The Hospital Finance Podcast

In this episode, we are joined by Erik Rasmussen of the American Hospital Association to discuss federal issues related to healthcare in 2020.       

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Highlights of this episode include:

  • An overview of the 2020 US Congressional agenda as it relates to healthcare.
  • What two dates will dictate the congressional agenda during this important election year.
  • What is in-store for hospitals in relation to Medicaid DSH cuts?
  • How healthcare and Medicare-for-all could become the top issue in the presidential election.
  • And more…

Mike Passanante: Hi, this is Mike Passanante. And welcome back to the award-winning Hospital Finance Podcast®. Healthcare is always a major issue at the federal level. Today I’m joined by Erik Rasmussen of the American Hospital Association for an update on what to expect from Washington this year. Erik works in the Federal Relations Department of the American Hospital Association as vice president of the Advocacy and Public Policy Group. Erik is responsible for representing AHA’s interests before the US Congress. His primary goals are to promote hospital’s interests with primary congressional committees that have the greatest importance to hospitals. Erik, welcome to the show.

Erik Rasmussen: Thanks, Mike. I’m happy to be here. You’ve got a good crew listening to this podcast. I’m happy to get a few minutes with you.

Mike: Erik, we were talking before the show, and you had a rather extensive presentation that you gave earlier this year looking at a variety of federal issues. So we’re going to go through just a few of them here on this show today because I know we could be on for quite a while if we did them all. But why don’t you start out by giving us a brief overview of the 2020 Congressional Agenda and what they’re looking at related to health care?

Erik: Got it. So the Congressional agenda is going to be dictated by two dates this year, by May 22nd and by November 2nd. November 2nd, of course, is the presidential election. Everything’s geared towards that. But May 22nd is a less known date. At the end of the last Congress, the Congress thought they were pretty close on two big issues, on finishing legislation on surprise billing and on drug pricing. And so they had a package of must-pass health care extenders, things like Medicaid DSH cuts, funding for community health centers and a number of other dogs and cats. And so rather than simply date those things with the rest of the federal budget, which is through October 1st, they decided to put those things on a timeline of May 22nd, which provides a mid-year must-pass bill. And if you ever listen to Speaker Pelosi, you’ve learned that getting something to the US Senate is very, very hard and frustrating. But this packages has to get to the US Senate by May 22nd. And so that’s a different date than usually happens. And so because those must-pass things have got to get done by May 22nd, other things are going to get on to that train. And the leaders in Congress want to get surprise billing and drug pricing into that or one or the other of those. They’d like to get both, but they may only be able to get one. And then they’ll be what I usually call ornaments on a Christmas tree because this stuff usually happens around Christmas time. But it’s near Memorial Day, so it’s probably like crap to put in the back of your car for the family vacation. But other legislative things get packed onto a must-pass bill. And so there could be other things in the health care space that get added on to it. And there could be– if there are pay-for issues, if they’ve got to raise money– let’s say they want to do something on surprise billing, but it’ll cost money. Then they’ve got to save some money somewhere else. So cuts could pop up in other areas. And so that’s the general agenda. Things are targeted through May 22nd. And so with the President’s budget coming out, the dominoes are going to start to fall, and we’re going to have a very busy next four months.

Mike: Great. Let’s dive into some issues that are specific to hospitals that are out there. Why don’t you tell us a little bit about what might be coming related to Medicaid DSH?

Erik: So Medicaid DSH– they delayed the cuts to Medicaid DSH to May 22nd. So you may recall Medicaid DSH it was kind of tied in the to Medicaid expansion. Medicaid didn’t end up expanding, and so we have gone to the Congress and said, “Hey, since Medicaid didn’t expand everywhere in the way that you planned, these DSH cuts, it’s unfair to keep them going.” Medicaid DSH is scheduled to get cut by $4 billion in 2020, and then by $8 billion in 2021 through 2025. So they were very glad that delaying of the Medicaid DSH cut has gotten put into this Extenders package where they realize they have to pass it. The issue is, it expires on May 22nd. So technically on May 23rd, the full Medicaid DSH cuts are supposed to go into effect. No member of Congress wants to go to their local hospital – their DSH hospital – and say, “Hey, you treat the poorest of the poor and the sickest of the sick, and we’re going to cut you by hundreds of millions of dollars.” And so we think that Congress wants to do the right thing, both politically, and because they do have a heart. And so the challenge becomes, where does that money come from and making sure that that stays with that Extenders package of must-pass; that it doesn’t fall out of the package.

Mike: Okay, great, and what do you think might change around site-neutral payments? That’s been an issue for a little while now, as well.

Erik: Yeah. Site-neutral’s been an interesting thing because site-neutral is a pay-for, or in other words, it’s something that cuts spending and so Congress can spend other things. And members of Congress like spending things on things they like. They’re like a kid in a candy store. So site-neutral is something that you can also turn a dial on it. So you can start with a small site-neutral amount and then you can ramp it up. And site-neutral, for listeners who aren’t aware, is just the concept that you pay the same amount for a service, regardless of what setting its in. So for an evaluation of management, or ENM visit, if you paid $30 for that in a doctor’s office, it should be paid $30 in the hospital. Our opposition to that is because hospitals– all the studies show hospitals see the sickest of the sick. We see a sicker population, a poorer population. We see an older– our patients are more likely to be Medicaid or Medicaid/Medicare dual eligibles, and we also see patients 24 hours a day. And so we see a more expensive patient, and that’s why Medicare, in its wisdom over the years, has said, “We will pay a higher amount in hospitals and a lower amount in physicians’ offices.” Part of that’s also because doctors’ offices literally have a third of the cost of ours in everything. They only have to have lights on from 9:00 to 5:00. We have to be open 24 hours a day. We have to have surgical suites and a hand specialist on call and ambulance services. All the things that make a hospital a hospital. And so site-neutral cuts are challenging for us almost on an existential level, because they’re saying, “Okay, hospital. We want to pay you like a physician’s office.” And we’re not a physician’s office. If you pay hospitals like a physician’s office, you know what you’ll get? You’ll get a physician’s office, and you won’t get all the things that we have decided that we want to have in this country. And so that’s the problem with site-neutral, generally.

What can change? They can always dial things up on site-neutral. So the President’s budget’s out on February 10th. Last year’s budget proposed making site-neutral payment for more and more services. Currently, on-campus hospitals and outpatient facilities that were operating before December of 2015 get to retain that outpatient payment amount. And the President has proposed changing that. In fact, he tried to do it by regulation, and we sued him and won so we’re always worried that more site-neutral payment cuts could pop up in the budget, or that Congress could turn a dial and raise 3, 5, 10, 20 billion depending on what they need via various site-neutral payment changes. So it hangs like a specter over most must pass bills for us.

Mike: Great explanation, Erik. Why don’t we shift a little bit and talk about the election? Because I couldn’t have you on without looking at something like that. So Medicare For All. I know it’s something that’s been talked about a lot. We’ve talked about it on the show before, and it’s likely to get some more airtime as the election cycle heats up. Where are we at right now? Where do you think this is going?

Erik: So we’re what? Nine months from the election? And yeah, Medicare For All is an interesting component of the debate. Because of Iowa kind of screwing the pooch, we haven’t had the dropout that we usually have in a presidential election. So we’re going on to New Hampshire and South Carolina. And so usually in a primary, both teams go to their wing areas. So democrats campaign more liberally, republicans campaign more conservatively, and they come back for the general to the center. Medicare For All is I think going to be part of that. The thing is that Medicare For All means different things to different people. If you look at the debate stage, Medicare For All for Sanders and Warren truly means Medicare for all. It gets rid of private insurance. It makes it illegal and everyone’s in. It actually gets rid of Medicare too. And it puts everyone in a Medicare-like system. But then if you’re Joe Biden or Pete Buttigieg, Medicare For All looks a lot more like the ACA. It’s a public option standing alongside the private pay. And there’s everything along that spectrum from Warren to Buttigieg. Because Warren and Sanders have been around for so long, they’re not going to tack back to the center the way a traditional presidential candidate does. So if senators Sanders and Warren win the nomination, then I think the general is going to be a very clear dichotomy between a true Medicare for all, which is again, private pay would be gone. So if you enjoy your Blue Cross Blue Shield plan, it’s over. You’re getting tossed into Medicare. That versus President Trump and the vision he laid out in the State of the Union, which people may not agree with, but he thinks that that health care is a winning issue if he’s running against Sanders or Warren. If it was Biden or Buttigieg and they tack back to the center of the political world the way most presidential candidates do, then I think healthcare becomes less of a big issue. Because you’re tinkering with the relative edges, rather than kind of overthrowing the entirety of the healthcare world. Now, we at the HA I should– and for full disclosure, we do not support– we oppose Medicare For All. And there’s a million policy reasons but the easiest way to explain it is healthcare is between one-fifth and one-sixth of the US economy. It’s a significant portion of what happens in this country. It would be less disruptive for the government to take over the TV, film, auto-making and vacation industries, and make that all government-run. That would be less disruptive than taking over the healthcare system. And it’s I mean we’d see massive lay-offs. It would be really, really life-changing . That would be like saying, you’re moving to Mars next year. We don’t know what we don’t know about how crazy it would be.

Mike: Yeah. It’s certainly a huge, huge undertaking. Let me tack back to something you touched on a minute ago because– and a lot of the surveys and the polls that I’ve seen and other guests that we’ve talked to about this, pretty consistently healthcare comes up at the top of voters’ concerns, I mean really just above almost everything else. And I’m wondering, how will the candidates ultimately respond to that? Will they treat it with the same level of importance that voters do? Or do you think they’re going to look for other issues to focus on and this will be somewhere in the mix but not at the top of their list as it is maybe for the voting public?

Erik: Yeah. It’ll be interesting. I think part of it’ll depend on what gets done by May 22nd and I should mention in that May 22nd, rural issues. It’s Senator Grassley who chairs the Senate Finance Committee. It’s his last year as chairman of the Senate Finance Committee and he would like to get something done on rural healthcare and we would as well on something that– and so that’s a priority I didn’t mention earlier, but that rural health issues will come up in the election for those rural states. As you see certain states that are more in play, like Iowa, Ohio, Arizona, Nevada, some of those purple states have got big rural areas so that’s going to be an issue. If rural stuff gets done by May 22nd, then it’s less of a presidential issue. If it doesn’t, then it becomes a high issue. And then from there, you’ve got the big things. And you can almost see from the president’s State of the Union, because he does polling before he goes and gives that speech, what’s going to pop up. And surprise billing– I’m sorry, not surprise billing. Drug pricing is going to be a big issue. Most Americans are sick of paying high prices for drugs and most can’t fathom why a drug costs $5,000 a month for these little pills. And so I think that’s going to be a big issue. I mean you’ve got the standard-bearer of the Republican party is saying we have to cut drug prices. He’s saying essentially the same talking points that Nancy Pelosi has. I think it’s going to be an issue during the campaign where people are going to want that to get done. They’re going to want to elect people that care about the actual healthcare pocketbook issue.

And then other things we expect, I think it’s going to be interesting how Medicare for All plays out based on who the Democratic nominee is. I think we’ve seen some of the messaging the president’s going to probably have. He’s going to call anything like Medicare for All, Socialism and so I think that’ll be a fairly black and white type of debate, even if it shouldn’t be. And then, yeah. It’s going to be interesting setting both sides will focus on healthcare because they both think it’s a winning issue, which is unique. If you look at the 2010 election, right after the ACA, Republicans focused on healthcare because it was a winning issue for them. People were concerned about the ACA, they didn’t know what was going to happen, they’d had a success with the Tea Party movement in the summer of 2010. And then boom, Republicans take 66 seats in the House, a historical wave. And then Democrats in 2018, they go out and they talk about, “Oh, those Republicans, they wanted to repeal your protections on pre-existing conditions.” So they made 2018 about healthcare. Now that’s debatable. 2018, that election was probably more about Donald Trump. And the coming election’s probably more about Donald Trump. But because both Democrats and Republicans think healthcare’s a winning issue for them in 2020, that’s going to be the biggest proxy war between Trump and whoever he runs against. And especially if it’s one the senators, Sanders or Warren, it’s going to be a real, real different policy debate. And so it’s going to be fascinating either way and healthcare’s going to come up a lot either way. And so buckle up folks, it’s going to be a good one.

Mike: You bet. And we’ll be looking forward to May 22nd then and seeing what the first steps are and hear as we look at healthcare in 2020. Eric, great conversation. I do want to ask you where our listeners can go if they’d like to learn more about AHA and what you do with regard to advocacy and public policy.

Erik: So the aha.org website is a great place to go to for all of our stuff. But you can follow us on Twitter or on Facebook. I don’t know if we have a Snapchat thing yet but we’ll get there eventually. So yeah, follow us on Twitter and you can find our things on aha.org. We also put out a daily AHA news every day. And so if you folks aren’t getting that, just ask someone. They can call at the friendly neighborhood AHA outpost and we can get them sent. Send into that or someone at their facility’s probably already getting it. And so that’s the easiest way, is just have that email pop into your inbox. It takes 60 seconds to read at the end of every day and that tells you what’s going on in the hospital space. So that would be the easiest thing to do, just get on that email list for AHA news.

Mike: Thank you, Eric.

Erik: You’re welcome. Thanks for having me. And we have our annual meeting coming up in April and so if folks haven’t registered yet, please go and register for the AHA annual meeting. I like working for the hospitals because it’s like working for a bunch of do-gooders. So it’s fun to see everyone in April. So thanks for having me and I’ll talk to you next time.


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