Washington Update: Monday, May 1, 2023
AMRPA hosted its spring conference in Washington last week.
AMRPA hosted an event for Rep. Don Beyer (D-VA) which was equally sponsored by Select Medical, Encompass Health and AMRPA. Congressman Beyer sits on the House Ways & Means Committee. CMS’s Susanne Seagrave, Ph.D., discussed CMS’ work on unified post-acute care proposals. MedPAC’s David Grabowski discussed his six years on MedPAC and what policies MedPAC may consider now that unified payment seems less unlikely.
House Republicans pass bill to raise debt ceiling and cut federal spending.
The bill was approved, along party lines, 217 to 215. The bill is going nowhere since Senate Democrats and the White House are firmly opposed. Still, House Republicans regard the vote as a crucial step to strengthen their negotiating position amid questions whether Speaker McCarthy would be able to unite his fractious conference to pass any fiscal outline at all. President Biden has called on Republicans to raise the debt ceiling without conditions to avert a default on debt.
President Biden announces campaign; Pennsylvania is the key swing state.
Joe Biden won Pennsylvania by 1.2% in 2020. Pennsylvania is generally considered a battleground state, although it voted Democratic in the six elections prior to 2016. That election saw Donald Trump win the state by 0.7%, one of three 'blue wall' states (along with Michigan and Wisconsin) that Trump won on his way to winning the 2016 presidential election. While still an important prize, with 19 electoral votes, Pennsylvania, like many industrial northern states, has seen population migrate away in recent decades. Pennsylvania now has just half the 38 electoral votes it once had.
Ways & Means hearing raises doubts about Tax-Exempt Hospitals
The Ways & Means Committee held a hearing questioning whether charity care, provided by non-profit hospitals has been inadequate compared to the value of their tax exemption. Chairman Jason Smith (R-MO) said he is considering legislation which might impose (1) new care requirements from these hospitals; (2) changes in billing practice; (3) limits on executive compensation and (4) abuses in the 340B program. The tax-exempt status is worth about $30 billion per year.
And… that hearing won’t be the end of it: Other legislation is coming.
A new bill by two House members – one from the far right and one from the far left – will soon be introduced which would subject non-profit hospitals to the jurisdiction of the Federal Trade Commission (FTC). The bill would give the FTC broad new authority to investigate hospitals’ “anticompetitive” behavior. The House members are concerned about the growing size of non-profit hospital systems (see below item) and their exemption from both taxes and oversight.
Kaiser will acquire Geisinger and establish new national hospital system.
The Kaiser health system will acquire Geisinger and fold into a new company, (Risant Health), that will operate nonprofit community health systems. Risant will operate separately from Kaiser and be led by Geisinger CEO Jaewon Ryu. The new joint venture will be based in Washington. Kaiser is based in Oakland, California and Geisinger is based in Danville, Pennsylvania. A Modern Healthcare article on the deal is attached.
Meanwhile…Humana profits rose 33% up as Medicare Advantage grows
It’s earnings season and Humana CEO Bruce Broussard reported their profits had risen by 33% to $1.2 billion in the first quarter of the year, as inpatient hospital claims remained low. Humana announced this year it would focus on MA and end its employer service line. Despite new regulations and stricter audits, Humana’s MA membership is expected to grow in the high single digits for the 2024 plan year. Humana is the nation’s fourth largest insurer with 7% market share.
House committee passes bill to loosen doc-owned hospital growth.
A bill to make it easier to develop physician-owned hospitals was approved last week by the the House Energy and Commerce health subcommittee. Rep. Michael Burgess (R-TX) is the lead sponsor of HR 977. The American Hospital Association and Federation of American Hospitals oppose the legislation. The bill is unlikely to be approved in the Senate so the debate will continue. In 2010, the Affordable Care Act (ACA) limited the growth of physician-owned hospitals.
West Virginia Governor Jim Justice (R) will run for the US Senate.
Jim Justice is planning to challenge Sen. Joe Manchin (D-WV) next year. Justice is a strong recruit for Republicans who need just two seats to win control of the US Senate. Manchin is the most vulnerable Democratic senator – in a state that Republican Donald Trump won in 2020 by almost 40%. Before being able to take on Manchin, Justice will have to get thru a primary election where Rep. Alex Mooney (R-WV) has already announced he is also running for the nomination.
MODERN HEALTHCARE
April 26, 2023
Kaiser, Geisinger launch nonprofit to buy hospitals
Kaiser Foundation Hospitals and Geisinger Health are launching a nonprofit entity to acquire health systems and create a national network for value-based care. The entity, named Risant Health and headquartered in Washington, D.C., will become an affiliate of Oakland, California-based Kaiser but will operate as a separate organization from Kaiser's core integrated operations.
Risant plans to acquire Danville, Pennsylvania-based Geisinger as its first system, contingent upon receiving state and federal regulatory approval. There is no acquisition cost, a Kaiser spokesperson said. Kaiser has pledged to invest up to $5 billion in Risant over five years for technology, tools, and services.
The plan is a different approach to dealing with the headwinds that have battered the industry in recent years and led to consolidation. Hospital mergers and acquisitions slowed during the pandemic but are expected to rebound somewhat in 2023, especially in a challenging economic environment. Hospital systems also face a host of new competitors, ranging from Amazon to Walgreens and Dollar General, that are moving into healthcare services and grabbing market share from more traditional providers.
The announcement also marks another example of healthcare systems looking to partner despite operating in different regions. Advocate Health and Atrium Health, for example, closed a merger in December, creating a footprint spanning the Southeast and Midwest.
Kaiser Permanente CEO Greg Adams said Tuesday he views the strategy as an opportunity to stay innovative and relevant in the industry. "I do see [Risant] as a counterbalance to some of the disrupters," Adams said. "As you look at where healthcare is in this country, [as] you look at the dynamics that are playing out, there are new entrants. We've got technologies changing healthcare. We've got retail. I mean, healthcare is going through certainly the most significant transformation in my career."
Over the next five years, Risant plans to acquire five to six health systems to become a $30 billion to $35 billion organization, Adams said. Executives did not share when they anticipate the Geisinger acquisition to close or if they are in talks with other systems.
Geisinger, which reported roughly $7 billion in 2022 revenue, would keep its name post-transaction, and help develop Risant's operating strategy. Geisinger operates 10 hospital campuses and a health plan with more than 500,000 members.
Health systems that join Risant will continue to operate as community-based providers drawing support from the larger organization. Through Risant, Geisinger will have access to capital and other resources to expand on its existing clinical services, value-based contracting and rural care delivery methods, executive said.
If the Geisinger acquisition is approved by regulators, Dr. Jaewon Ryu, president and CEO at Geisinger, would become Risant's CEO. Geisinger has not named a successor to oversee its operations.
"It's not like your typical acquisition," Ryu said. "It really is about turbo-boosting some of these capabilities that we know are necessary on this journey towards deepening our chops in value-based care. We've always been an organization that's been on that journey and pretty far out ahead in that journey, but we also know that Kaiser has been sort of defining the gold standard of what that represents across the industry."
Risant's CEO will report to the Kaiser Foundation Hospitals chair and CEO and the Risant board of directors, which will initially be comprised mostly of Kaiser representatives, plus two Geisinger directors and one independent director, the spokesperson said.