Legislation lowers costs, blocks price increases, and stops unneeded consolidation

House Republicans including Speaker Matt Hall and state Reps. Joe Aragona, Jay DeBoyer, and Mike Harris today announced their plan to tackle out-of-control healthcare costs through sweeping reforms.

The legislation, House Bills 6116-19, includes comprehensive hospital pricing and consolidation reform, aimed at both lowering costs in the short term and decreasing long-term cost trajectories. The four-bill package addresses the crisis by:

• Creating a hospital pricing board that reviews hospital budgets and prices.
• Limiting hospital prices and price increases.
• Preventing consolidation by limiting maximum market share and prices
• Prohibiting physician non-compete agreements for large hospital systems.

Speaker Hall’s bill would require nonprofit hospitals to reduce their prices by 10% when the bill becomes law.  Under the plan, the facilities would be barred from increasing prices unless they could directly justify the price increase with increased costs for providing health services like an increased medication or labor cost. Additionally, prices could never be increased above the rate of inflation, even if there are increases to the hospital.

Speaker Hall’s bill creates also the Hospital Cost Review Board, which would require nonprofit hospitals to submit comprehensive information – including detailed financial reports, scope of service information, a Medicare cost report, and detailed data on rate increases – to the board, limit nonprofit hospital profits, and prohibit unjustified price increases.

The board would be made up of 5 members appointed by the governor and the 4 primary legislative leaders – the Speaker of the House, House Minority Leader, Senate Minority Leader, and Senate Majority Leader.

The board will also have authority to go after operations that violate the rules created through the new House Republican plan. If a hospital is in violation, it would have 30 days to fix the violation. If the operation fails to correct the error, the board would impose a penalty equal to the value of the non-profit state tax exemption, effectively revoking the hospital’s non-profit status for the year.

Rep. Harris’ bill takes any revenue generated from fines imposed on bad actors and ensures those resources are reinvested through a grant program to preserve healthcare access in rural areas.

“If the state is collecting revenue from corruption in the healthcare system, we have to ensure those dollars are reinvested to support the most vulnerable parts of our healthcare infrastructure,” said Harris, R-Waterford. “Rural hospitals throughout Michigan struggle to survive while large corporations continue to increase their profits. This plan lowers the cost of healthcare for all residents and guarantees resources for the operations providing for our most isolated communities.”

Rep. DeBoyer’s bill creates the Hospital Consolidation Prevention Act, which heavily discourages or outright prevents consolidation of hospitals or other healthcare facilities. Under the plan, any operation seeking consolidation must obtain board approval to acquire or merge with another hospital or any other health facility. Consolidation requests would also have a $10,000 application fee.

“This plan will prevent health care deserts and instances where people are forced to travel long distances just to be able to access care for themselves or their families,” said DeBoyer R-Clay Township. “More access to care and lower costs. That’s what people we all represent are calling for and that these measures will deliver.”

The requests can only receive board approval under specific conditions. To obtain approval, the applicant must also commit to an immediate 2% price decrease and price freeze at the acquired facility. The applicant must also pay for a consolidation prevention assessment, equal to 12% of the worth of the acquired facility.

Rep. Aragona’s bill prohibits large hospital systems – employers with annual revenue exceeding $2 billion – from requiring their physicians to sign non-compete agreements, unless the non-compete agreement only limits employment with other large hospital systems.

“We want to give Michigan families more access to healthcare and help them afford that care when they need it,” said Aragona, R-Clinton Township. “Hospital charges are out of control right now, and it’s all of us who are paying the price. Our plan gives people more peace of mind about their family’s finances and makes life more affordable for everyone in Michigan.”

The House Republican Healthcare Cost Reduction plan was referred to the House Government Operations Committee for further consideration.

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