Healthcare Leadership Council

Provider Payments

Provider Payments

Provider Payments & Healthcare Costs

Provider Payments & Healthcare Costs

Issue:  The Patient Protection and Affordable Care Act (PPACA) imposed a number of fees, taxes, and payment reductions for insurers, providers, as well as device and pharmaceutical manufacturers.  Pharmaceutical manufacturers are required to pay fees totaling $3 billion in 2014, based on their market share of the sale of branded prescription drugs.  Last year, the medical device tax began requiring manufacturers to pay a 2.3 percent excise tax, expected to total $1.7 billion in the first year.  This year, health insurers are required to pay annual taxes totaling $8 billion and increasing to $14.3 billion in 2018, rising with premium trends thereafter.  PPACA changes also reduced Medicare provider and plan payments by nearly $500 billion over 10 years.  Congress continues to seek a permanent solution to the sustainable growth rate (SGR) Medicare physician payment formula.  Finally, arbitrary healthcare cuts remain a threat through the yet-to-be-formed Independent Payment Advisory Board (IPAB). 

HLC Position:   HLC is concerned that cuts in provider payments to maintain program solvency, without long-term structural reforms, will limit patient access to quality health services.  Provider payments should be structured to encourage care coordination and reward quality care and positive outcomes in both the public and private sectors.  HLC supports user fee programs, such as the Prescription Drug User Fee Act (PDUFA) and the Medical Device User Fee Act (MDUFA), as a way to facilitate transparent and expedient review of lifesaving drugs and medical devices.  However, HLC is concerned that nonuser fees and taxes, such as the medical device excise tax and pharmaceutical and insurer fees, may be passed on to the consumer in the form of higher prices for products and insurance premiums.  These fees could also decrease innovation and inhibit job creation by draining funds that would otherwise be available for investment by manufacturers on the cutting edge of ground-breaking new therapies and technologies.  HLC continues to oppose the IPAB and continues to lead a coalition dedicated to repealing it.  

HLC Recent Activity:  

  • In early May, HLC wrote in support of the “American Research and Competitiveness Act of 2014” (H.R. 4438) to Rep. Kevin Brady (R-TX), the primary sponsor.  HLC also issued a press release in support of this legislation applauding bill cosponsors for taking action to protect jobs in the United States and support the development of lifesaving treatments for patients.
  • HLC leads an informal coalition of stakeholders opposing the Independent Payment Advisory Board (IPAB) and utilized this group to conduct outreach and collect signatures for a letter asking lawmakers to repeal IPAB.  These efforts have convened over 500 stakeholders, representing a breadth of entities including all sectors of the healthcare industry, employers of different sizes and geographic locations, purchasers of care, consumers, and patients.  HLC continues to leverage its social media platforms to raise HLC’s concerns with IPAB and to urge repeal.
  • HLC works to educate congressional leaders about how a consistent, long-term policy to replace the Medicare SGR would increase innovation and improve quality across the entire healthcare industry.  HLC emphasizes how the unpredictability in costs and revenues due to SGR negatively affects long-term strategies to improve healthcare through the innovative new approaches of HLC members and urges Congress to seek a long-term solution.
  • HLC closely tracks the ongoing activities related to the recommendations of the Food and Drug Administration Safety Innovation Act (FDASIA) federal advisory workgroup and subsequent report issued by the Office of the National Coordinator (ONC) for Health Information Technology (HIT), the Federal Communications Commission (FCC), and the Food and Drug Administration (FDA).  HIT software could become subject to a new tax, depending on the results of regulatory or congressional activity on this issue.
    • In November, HLC submitted a letter to the sponsors of the “Sensible Oversight for Technology Which Advances Regulatory Efficiency (SOFTWARE) Act” (H.R. 3303) in conjunction with a hearing on the legislation.  HLC encouraged a balanced process that incorporates the concerns of all stakeholders, including any refinements needed to the legislation.
  • HLC continues to stress the negative impact of the sequester cuts mandated by the Budget Control Act of 2011.  Hospitals, physicians, and other care providers, including Medicare Advantage plans and the companies running Medicare Part D plans, are subject to an additional 2 percent in ongoing automatic spending cuts on top of the already more than $700 billion in cuts from the 2010 healthcare law.
  • HLC monitors the regulatory implementation of the FDA user fee law.
  • HLC continues ongoing efforts to publicize the negative ramifications of the medical device tax and other fees and taxes that are a burden on all stakeholders, particularly consumers.  HLC emphasizes to policymakers how seemingly arbitrary spending decisions do little to address many significant concerns of the health industry, one of the nation’s leading job creators.
    • HLC joined with other organizations in running an ad urging Congress to eliminate the medical device tax.
    • HLC President Mary R. Grealy and HLC staff have given speeches and presentations before healthcare leaders and policymakers.
    • HLC uses in-district meetings as a venue to demonstrate the local impact of burdensome fees and taxes on the healthcare industry and support their repeal.
    • HLC leverages its social media platforms to support the repeal of health industry fees and taxes that ultimately are passed on to consumers and customers.