| | | | |  | | By Ben Leonard and Chelsea Cirruzzo | | Presented by |  | | | | | | | 
The House Budget Committee, led by ranking member Brendan Boyle (left) and Chair Jodey Arrington (right), is set to meet this week on the trend of health care consolidations. | Francis Chung/POLITICO | CONSOLIDATION FEARS INCREASE — A growing wave of hospital mergers, large firms buying physician practices, pharmacy benefit manager consolidation and private equity’s acquisitions of nursing homes and hospitals are drawing increasing bipartisan scrutiny from Congress. The House Budget Committee is expected to hold a hearing later this week on “breaking up health care monopolies” — the latest in increased attention from lawmakers concerned that consolidation across the sector is driving up costs for patients as they look to rein in health care spending. What the trend has meant: Economists testifying before Congress have said that consolidation has led to rising prices and decreased access to care by increasing costs for patients. Research has shown consolidation has driven higher prices in some areas, but the impact on quality so far has been less clear. “Mergers involve trade-offs. On one hand, they could allow hospitals and health systems to operate more efficiently. … But there have also been concerns that some hospitals may charge more," Zachary Levinson, program director of KFF’s Medicare policy practice, told Pulse. “The largest evidence we have is that consolidation leads to higher prices." What can be done about it: There are limits to what policymakers can do about private business practices, but they have some tools. Some legislative efforts thus far have focused on ownership transparency measures and required reports of the impacts of consolidation, like those in the Lower Costs, More Transparency Act that passed the House late last year. So-called site-neutral payments in the package could also disincentivize hospitals from buying doctors’ practices. Those payments mean hospitals are paid the same amount for the same service, regardless of whether it’s in an outpatient setting or at an independent doctor’s office. Negotiations to get the package into a spending measure earlier this year broke down amid debate over its scope. Hospitals have opposed the reforms, saying they would devastate access to care. “Policymakers should focus their attention on the consolidation and reach of corporate commercial insurers, many of which sit atop the Fortune 500 list and are continuing to acquire physician practices,” an American Hospital Association spokesperson told Pulse. Mike Tuffin, the CEO of insurer group AHIP, told Pulse that health plans endeavor to make care and coverage “as affordable and accessible as possible in the face of barriers to competition. The data are clear that when hospitals in the same market consolidate or private equity firms acquire clinical assets … health care costs increase.” The Biden administration has also cracked down on a number of mergers in the sector through the Federal Trade Commission. What’s next: The House Budget Committee hearing Thursday will focus on the potential budgetary impacts of consolidation. Also expect some lawmakers to zero in on policies from the committee’s budget resolution and the impacts of consolidation on cybersecurity after the Change Healthcare ransomware attack left ripple effects across the sector. WELCOME TO TUESDAY PULSE. Ducks at the Capitol are using duck ramps to get into the reflecting pool, and we love it. Reach us and send us your tips, news and scoops at bleonard@politico.com or ccirruzzo@politico.com. Follow along @_BenLeonard_ and @ChelseaCirruzzo.
| | | | A message from PhRMA: The size of the 340B drug pricing program has ballooned in recent years, but patients aren’t seeing the benefit. Instead, hospital systems, chain pharmacies and PBMs are exploiting the program to generate massive profits. Let’s fix 340B so it better helps patients. | | | | | | | 
Congress has a number of health care hearings on this week's agenda. | Francis Chung/POLITICO | WHAT TO WATCH THIS WEEK — Both chambers of Congress are in town for their last week before a break for Memorial Day, and many health care hearings are in store. On the agenda: — The Senate Judiciary Committee holds a hearing today on “ensuring competition in the prescription drug market.” Outside experts, including academics and groups representing patients and pharmaceutical companies, will testify. — A Senate Health, Education, Labor and Pensions subcommittee meets today to discuss “food is medicine.” — A House Energy and Commerce subcommittee meets Wednesday to scrutinize the FDA’s regulation of drugs, biologics and devices, with several top officials testifying. — The House Select Subcommittee on the Coronavirus Pandemic meets Wednesday for a hearing with Dr. David Morens, a former top adviser to Dr. Anthony Fauci, after subpoenaing him earlier this month. — The Senate HELP Committee meets Thursday to reauthorize a number of programs, including one meant to mitigate provider burnout. — The Senate Appropriations Committee meets Thursday on the NIH’s proposed fiscal 2025 budget. NIH Director Monica Bertagnolli is set to testify. — The Senate Finance Committee meets Thursday to tackle the fentanyl crisis. WHAT’S IN THE NDAA FOR HEALTH CARE — The House Armed Services Committee is set to mark up on Wednesday the chamber’s version of the National Defense Authorization Act, which has several health care-related provisions. Last year, House Republicans tried and failed to add a number of controversial provisions to the defense bill, including some related to abortion and gender-affirming care. Those are absent so far, but lawmakers could attempt to add those or other bills like the BIOSECURE Act, which would effectively prohibit Chinese biotech companies from doing business in the U.S. Some health care provisions so far in the House version of the package contain requirements for: — Mental health: The Defense Department would have to allow access to the 988 suicide and crisis lifeline from all agency facilities. It would also create a pilot program to address mental health conditions in pregnant and postpartum service members or covered beneficiaries. — Dental: Co-pays would be waived for selected reserve members in the TRICARE Dental Program. — Psychedelics: The Defense Department would have to brief the committee on a program to study treatment using psychedelics. — Obesity: The Defense Department would have to brief the committee on work to treat obesity and remote patient-monitoring policies. — Artificial intelligence: The Defense Department would have to create a plan to test AI models trained on biological data.
| | | | THE GOLD STANDARD OF HEALTHCARE POLICY REPORTING & INTELLIGENCE: POLITICO has more than 500 journalists delivering unrivaled reporting and illuminating the policy and regulatory landscape for those who need to know what’s next. Throughout the election and the legislative and regulatory pushes that will follow, POLITICO Pro is indispensable to those who need to make informed decisions fast. The Pro platform dives deeper into critical and quickly evolving sectors and industries, like healthcare, equipping policymakers and those who shape legislation and regulation with essential news and intelligence from the world’s best politics and policy journalists.
Our newsroom is deeper, more experienced and better sourced than any other. Our healthcare reporting team—including Alice Miranda Ollstein, Megan Messerly and Robert King—is embedded with the market-moving legislative committees and agencies in Washington and across states, delivering unparalleled coverage of health policy and the healthcare industry. We bring subscribers inside the conversations that determine policy outcomes and the future of industries, providing insight that cannot be found anywhere else. Get the premier news and policy intelligence service, SUBSCRIBE TO POLITICO PRO TODAY. | | | | | | | | | A FIRST IN STATE AI LAW — Democratic Colorado Gov. Jared Polis has signed the first sweeping state law to regulate artificial intelligence use in the private sector, including health care. The new law offers what could be a national model for AI regulation as lawmakers in Congress are still in the early stages of AI policymaking. What it would do: The legislation would bolster consumer protections when key decisions are made via AI relating to health care and add requirements for developers and deployers to address algorithmic bias based on reproductive health, genetic information and other data. Developers also have to make disclosures about high-risk AI systems. Exemptions: The legislation has carve-outs for technology complying with ONC's standards, research backing an application for a product’s FDA approval and HIPAA-covered providers using AI systems making recommendations that aren’t “high risk.” The legislation has “major implications for health care,” Kirk Nahra, co-chair of law firm WilmerHale’s artificial intelligence practice, told Pulse. “We know the need to deal with discrimination, but it’s increasingly hard to do that with privacy limitations.” Nahra said that the “most likely” outcome is a variety of state laws going forward without a common national framework. The 2026 implementation date could aid efforts in Congress by setting a deadline of sorts, Rachel Snyder Good, strategic counsel at law firm Epstein Becker Green, said.
| | | | A message from PhRMA:   | | | | | MORE OPM ISSUES — The Office of Personnel Management, which oversees health insurance for federal workers, is responding to cyber-enabled fraud, with hackers attempting to get money from federal workers’ flexible spending accounts, two people familiar with the investigation told POLITICO’s Joseph Gedeon and John Sakellariadis. HealthEquity, which operates the FSA program, told OPM that someone was creating fake accounts on behalf of government workers or sometimes accessing existing accounts illegally, the people said. They were granted anonymity due to an ongoing probe. So far, the impact has been relatively modest, with one of the people saying the government’s latest estimate pegs the swindle at a few hundred thousand dollars total. OPM said it's “working with the vendor to secure impacted accounts, compensate impacted individuals, and implement additional anti-fraud controls.” The bigger picture: It’s just the latest in fraud-related issues for OPM. The office has never checked the eligibility of those on its rolls, according to a Government Accountability Office report. Its failure to do so has cost taxpayers billions and raised premiums for millions of civil servants, POLITICO’s Kelly Hooper reported earlier this year. OPM has said it takes program integrity “very seriously” but has no plans to conduct an audit because it says it would be too costly. Congress is considering requiring OPM to check the eligibility of people enrolled.
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| | POLITICO’s Megan R. Wilson reports on BIO's “restructuring" and layoffs of more than two dozen employees. STAT reports that Senate HELP Chair Bernie Sanders (I-Vt.) could be hitting the limits of his pharma pressure campaign.
| | | | A message from PhRMA: A recent report from the Berkeley Research Group shows the 340B program is the second largest federal drug program for another year in a row. Despite its massive size, 340B has zero reporting requirements and zero patient protections to ensure the program is working as it should. Let’s fix 340B so it better helps patients. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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