WASHINGTON D.C. – Federal policymakers have recently raised the alarm on the adverse impacts of vertical integration in the healthcare sector. The takeaways from recent Congressional hearings on these issues echo concerns that HME suppliers and stakeholders have been expressing about healthcare entities that control multiple aspects of the patient-care continuum.

Across multiple House and Senate hearings in May, legislators questioned the concentration of power in insurers that also own physician group practices, pharmacy benefit manager (PBM) groups, and claims processing companies. Senators and Representatives peppered their remarks and questions with turns of phrase such as:

• “We have already seen consolidation drive up prices and decrease access to patient care.” (Rep. John Joyce – R-PA)
• “The data spells out a troublesome picture of the current state of health care markets and the impact of consolidation on spending. In fact, CBO stated that consolidation has increased federal health spending and costs for patients while limiting their choices and decreasing patient access to quality care.” (Rep. Jodey Arrington – R-TX)

• “For patients in San Diego and across the U.S., consolidation and vertical integration often leads to higher costs and less price transparency, which we know is a really important aspect of competition in markets that are functioning.” (Rep. Scott Peters – D-CA)

• “This vertical integration that exists in health care in general has got to end.” (Rep. Buddy Carter – R-GA)

It’s encouraging to see Capitol Hill taking a closer look at these vertically integrated structures and how they can cause serious problems for patients and healthcare providers alike. HME suppliers are especially attuned to this issue as we face the prospect of insurance plans asserting more control over the provision of care to their members/beneficiaries, rendering the supplier to a subcontractor role.

With Medicare Advantage plans now providing coverage for more than 50% of Medicare beneficiaries, these plans are in a position to enact policies and practices that can reduce competition, shrink the HME supplier base, limit patient choice, and ultimately impact the quality of care.

AAHomecare and patient advocates for individuals with severe respiratory challenges have been shining a light on Medicare Advantage plans that are improperly employing denials or “fail-first” protocols as cost-saving measures in the ventilator space. These practices could become even more prevalent in vertically integrated entities, where companies can employ stricter or different medical criteria instead of following Medicare LCDs to determine care.

This framework raises issues concerning conflicts of interest where the insurer’s decision about what equipment to approve–and at what cost–can prioritize their own financial interests over patient needs. Patients served under these arrangements could also lose the support and advocacy that an independent supplier provides in appealing or pushing back against denials or other care limitations.

Policymakers are waking up to the idea that excessive consolidation and vertical integration in the healthcare space is an issue that deserves a lot more attention. The unprecedented disruption to claims and payment processes following the February cyberattack on Change Healthcare underscores the importance of identifying the fault lines that are being created in this new environment. Our industry needs to make sure that we’re complementing this scrutiny by making sure legislators, regulators, and healthcare stakeholders understand how these structures impact our patients and our businesses.

Tom Ryan is president and CEO of the American Association for Homecare.