Advocacy Correspondence: HAP Opposes New Mandates that Impede Care (Pennsylvania House of Representatives)

June 28, 2024

Honorable Members
Pennsylvania House of Representatives
Main Capitol Building
Harrisburg, PA 17120-2023

Dear Representatives:

Now is not the time to implement new state government mandates that impede the delivery of health care in Pennsylvania and hinder the very tools that keep health care in communities. HAP and the hospital community are committed to ensuring access to high-quality patient care in every community across the commonwealth. The biggest threat to this goal is financial viability.

This week, the Pennsylvania Health Care Cost Containment Council (PHC4) released its fiscal year (FY) 2023 financial analysis for general acute care hospitals. This objective, nonpartisan organization’s data paints the most dire picture of Pennsylvania hospital stability in recent memory. PHC4’s data reveals:

• More than half of Pennsylvania general acute care hospitals are operating in the red, an increase of nearly a third from 39 percent in FY 2022. Another 15 percent posted an operating margin of less than 4 percent, which is not sustainable long-term.
• Hospitals face multi-year losses. The statewide average operating margin—2.26 percent for FY 2023—was cut in half for the second consecutive year. The share of hospitals that lost money over three years increased to 33 percent for FY 2021–2023 from 27 percent for FY 2020–2022.
• Hospitals that receive more than half their patient revenue from Medicare and Medicaid are more than twice as likely to operate at a loss. Among hospitals with negative operating margins, 81 percent relied on government payors for at least half their patient revenue, compared to 41 percent of those positive margins.

Please vote against measures that create new state government mandates on hospital operations, which divert focus from patient care and drive-up health care costs, feeding the spiral of instability. HAP strongly opposes House Bill 2344 and House Bill 2339, which impose burdensome and duplicative requirements related to health care mergers and acquisitions and pricing transparency.

Joining, merging, or partnering with health systems are among many strategies hospitals have deployed to secure the future of care in their communities. HAP’s analysis found that 40 percent of the Pennsylvania hospital mergers and acquisitions over the past decade involved a financially distressed hospital, most of which (80%) continue to serve their communities today.

The Pennsylvania Office of Attorney General already has authority over transactions involving non-profit health care entities, which includes more than 93 percent of the commonwealth’s general acute care hospitals. Corporate transactions between hospital—regardless of whether the entities are nonprofit—also undergo rigorous review by the U.S. Department of Justice and the Federal Trade Commission. Health care entities must comply with substantial mandates required by the Sherman Act, the Clayton Act, and the Hart-Scott-Rodino Act, among others.

Likewise, there is already a significant government framework in place to ensure pricing transparency in health care. The Hospital Price Transparency Rule, the Health Insurer Transparency in Coverage Rule, and the No Surprises Act each mandate methods for providing patients with useful and understandable price-related information prior to treatment. The No Suprises Act also includes hospital compliance requirements and protects patients from balance billing. Hospitals are working hard to expand or adjust their machine-readable files to comply with the new CMS template, data specifications, and data dictionary that will take effect July 1.

There are already numerous resources for hospital price transparency, including hospitals’ online patient cost estimators and machine-readable files; health insurers’ online cost estimators, advanced explanations of benefits and machine-readable files; and provider-created good faith estimates. Unfortunately, these resources may be calculated in different ways and generate different responses. More, uncoordinated mandates have the potential to exacerbate patients’ confusion and providers’ administrative burden without any meaningful benefit.

Rather than impose new mandates in areas that are already highly regulated, we urge state policymakers to work together to productively address the underlying causes of hospital financial instability, including persistent underpayment across payers, outdated regulations that drive administrative burden and cost, and continuum-wide workforce shortages. We stand ready to work with you on these challenges.

Thank you for your time and consideration. If you have any questions, please do not hesitate to contact me at (717) 561-5314 or nstallings@haponline.org; or Heather Tyler, HAP’s vice present, state legislative advocacy, at (717) 433-1997 or htyler@haponline.org.

Sincerely,

 

Nicole Stallings
President and Chief Executive Officer

 

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Topics: Access to Care, Billing/Transparency, Regulatory Advocacy, State Advocacy

Revision Date: 6/28/2024

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