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October 03, 2023 Notes

Inflated Health Care Costs: Why Hospital Billing Practices Are Problematic and How Federal Procurement Can Help

Sophie Marsh

Abstract

Hospitals charge excessively high prices for their services. The government has combated this overcharging by paying hospitals far less than what hospitals normally charge and by requiring hospitals to be more transparent about their prices. However, more needs to be done because hospitals shift this lost opportunity for profit from Medicare onto private insurers and because hospitals are largely not complying with these price transparency requirements.

To reduce hospital overcharging, the Office of Federal Contract Compliance Programs (OFCCP) should issue a federal directive stating that all hospitals participating in Medicare Advantage Health Maintenance Organization (HMO) plans are federal subcontractors. Next, the Department of Health and Human Services (HHS) should regulate private health insurance contractors and their hospital subcontractors by using a new contract clause aimed at reducing hospital overcharging. The new clause in all Medicare Advantage HMO contracts should require both the insurance prime contractors and the hospital subcontractors to make good-faith efforts to negotiate lower rates for health care services in their commercial, non-government contracts that create not more than a fifty percent gross profit margin for the hospital subcontractors. Additionally, if either the contractor or the subcontractor is unable to reach such an agreement, it must provide a written explanation why it cannot.

This use of government contracts to regulate non-government contracts is likely appropriate because (1) the government already places requirements on federal subcontractors to further social policy; (2) the government already places requirements on Medicare participants; and (3) the government has a history of prohibiting discriminatory ratemaking. Further, hospital subcontractors are likely to comply, given the negative consequences of failing to comply with a government contract, such as termination for default.

I. Introduction

Patricia Kaufman, a woman with a spine condition requiring multiple back surgeries, had always been pleased with her surgery results.1 One day, however, she received a bill for her routine surgery that had a new $250,000 charge from a surgeon outside the hospital who closed her wound, a procedure that had previously always been done by residents in the hospital at no extra charge.2 In another case, a man from Canada who spent his winters in Arizona received a bill for $210,000 for a U.S. health care provider’s unsuccessful attempt to remove an infected hip implant.3 That bill did not cover the $28,000 cost of the air ambulance that brought him to Canada, whose health care system offered a free, successful surgery.4

Health care in the United States is so expensive that this sentence arguably does not need a footnote.5 The common practice of health care providers, such as hospitals, overcharging for their services is a substantial cause of the costliness of U.S. health care.6 Hospitals in the United States charge up to ten times the cost of production for a service or procedure, leaving both insurers and patients stuck with huge medical bills.7 In 2018, 27.5 million people in the United States did not have any health insurance.8 It is these uninsured individuals who suffer the most from hospital overcharging.9 Even where patients have insurance providers to cover most of their hospital costs, insurance providers typically raise their premiums to make up for having to pay these huge hospital bills.10 This, in turn, makes health care more expensive for insured patients, too.11 U.S. health care is so expensive that, in 2019, 137.1 million Americans struggled with medical debt.12

Medicare, a federal health insurance program, has made successful attempts at controlling these health care costs, mostly by refusing to pay the high prices hospitals charge private insurers.13 However, this method of cost control is not as successful as it appears because hospitals often shift what Medicare does not pay them onto private insurers.14 To make a bigger impact, the Office of Federal Contract Compliance Programs (OFCCP) should first issue a federal directive stating that hospitals participating in Medicare Advantage HMO plans are federal subcontractors so that they can be easily regulated. Next, the Department of Health and Human Services (HHS) should add a clause to its Medicare Advantage HMO government contracts to help reduce hospital overcharging by requiring insurance contractors and their hospital subcontractors to “make a good faith effort” to negotiate lower rates for health care services in their commercial, non-government contracts.15

This Note will discuss the issue of hospital overcharging, how the federal health care program called Medicare Advantage works, and the market power that Medicare has over hospitals. This Note will also examine past attempts to control U.S. health care costs, the regulation of federal subcontractors through government contracts to further social policy, and explanations for why certain hospitals are federal subcontractors. This Note will then explain why the government should unambiguously state that hospitals participating in Medicare Advantage HMO plans are federal subcontractors.

Next, this Note will propose adding a new clause to all Medicare Advantage HMO government contracts. The clause should state that both the insurance prime contractors and the hospital subcontractors must “make a good-faith effort” to negotiate lower rates for health care services in their commercial, non-government contracts that creates, at most, a fifty percent gross profit margin for the hospital subcontractors.16 The clause should also state that if either the contractor or the subcontractor is unable to do so, it must provide a written explanation as to why it cannot. Finally, this Note will explain why the use of government contracts to regulate non-government contracts is appropriate as well as why federal procurement should be involved in health reform.

II. Inflated Health Care Costs, Medicare Advantage, and Hospitals

A. Overview

Hospital overcharging is a substantial cause of expensive health care in the United States, and Medicare can help mitigate this concern.17 Medicare is a federal program that provides health insurance to the elderly.18 Medicare Advantage, one part of the Medicare program, involves government contracts with private health insurers.19 These private insurers also have separate contracts with hospitals.20 Medicare has a large amount of market power when negotiating with hospitals.21 The government has attempted to control health care costs in the past by requiring hospitals to be transparent about their pricing and by paying far less for Medicare patients compared to the amount that hospitals charge private insurers,22 but these attempts have been insufficient. Because the federal government often regulates its contractors and subcontractors to further major social policies, knowing exactly which hospitals are subcontractors to the federal government is necessary for effective regulation of these hospital subcontractors.

B. Hospital Overcharging

Providers, such as hospitals, overcharging for their services is a substantial cause of the problem of costly health care in the United States.23 Hospitals have the power to overcharge because they have market dominance.24 When private health insurance was first created in the United States to help patients pay for their health care, and when hospitals realized insurance would be footing the bill instead of patients struggling to pay out of pocket, hospitals started charging more for their services.25 Once hospitals started charging more, their services became unaffordable for the uninsured and for those whose insurance could not cover the increased costs.26

The amount that hospitals charge for their services does not represent a realistic price from a realistic market.27 A hospital has a master list of prices for every service it provides, known as the chargemaster.28 A hospital’s chargemaster is similar to a manufacturer’s suggested retail prices (MSRPs), but, unlike an MSRP, the public has only relatively recently been able to see the chargemaster’s prices.29 Hospital prices are often “grossly inflated” compared to the cost of production of any given service.30

Hospitals charge as much as ten times the cost of production for their services.31 The most expensive hospitals in the United States charge between $1,129 and $1,808 for every $100 spent.32 This overcharging yields a gross profit margin of a whopping ninety percent.33 In most other industries, ten percent is typically considered a healthy margin, and twenty percent is typically considered a high margin.34 In 2013, overcharging accounted for $105 billion out of over $750 billion in “total excess costs” of the U.S. health care system.35 As a result, many patients are forced to forgo health care due to the cost.36

As Elizabeth Rosenthal, MD, has stated, “There are no standards for billing.”37 Insurers and patients both end up paying large amounts because hospitals charge arbitrarily high amounts.38 And even though an insured patient is usually only obligated to pay a small portion of the hospital’s total price charged (i.e., even though the patient’s insurer pays most of the bill), insurers shift these costs to insured patients by raising their monthly premiums.39 Even worse, uninsured patients are often charged up to four times what insurers pay,40 thus paying the “highest price of all.”41

C. Medicare Advantage

The federal government must know who the contracting parties are to reduce hospital overcharging. Knowing which parties are involved in federal contracting is particularly relevant in the context of Medicare. Medicare is a federal health insurance program financed by taxes that provides health care coverage to the elderly.42 Medicare Advantage was added to the Medicare program in 2003 to expand the role of private health insurers in the Medicare program.43

Medicare Advantage health plans are administered by private health insurers who have been awarded government contracts with the Centers for Medicare & Medicaid Services (CMS).44 CMS pays for the premiums of these private health insurer contractors, and these health insurer contractors in turn pay providers (e.g., hospitals and physicians) for the health services provided to Medicare Advantage patients.45 Hospitals participating in Medicare Advantage contract with these health insurance prime contractors to be in the Medicare Advantage provider network.46 Even though Medicare Advantage beneficiaries have a slightly limited choice of physicians and hospitals under their plan, they also have reduced out-of-pocket costs.47

The private health insurers that contract with CMS (e.g., Humana, United-Healthcare, and Anthem Blue Cross Blue Shield) are prime contractors because of their Medicare Advantage contracts.48 Most Medicare Advantage plans are either Health Maintenance Organizations (HMOs) or Preferred Provider Organizations (PPOs).49 This Note will only focus on HMOs. HMOs are insurers with an established network of providers (e.g., hospitals and physicians).50 HMOs do not merely provide insurance coverage, but are also considered to provide medical services because of, and through, their established network of providers.51

In sum, government contracts permeate health care and provide an adequate basis for greater regulation of prices. The Medicare Advantage program involves government contracts between CMS and private health insurers.52 Under these government contracts, the private health insurance companies administer the Medicare Advantage HMO health plans for the government.53 These private health insurance companies administering the Medicare Advantage HMO plans also have contracts with hospitals for the hospitals to accept Medicare Advantage HMO patients.54

D. Medicare’s Market Power

Medicare is the biggest source of profit for U.S. hospitals.55 Medicare Advantage pays for the health care of about 9.4 million people, which accounts for about one-fifth of all Medicare beneficiaries.56 Additionally, on average, sixty percent of any given patient’s health care spending occurs beyond age sixty-five, the age of Medicare eligibility.57 Because of the high health care spending from Medicare patients (due to age), most hospitals and doctors accept Medicare, and need to, so that they can keep their businesses running.58 Because (1) most hospitals accept Medicare,59 (2) Medicare Advantage is part of Medicare, and (3) many (i.e., one-fifth of) Medicare beneficiaries have a Medicare Advantage plan,60 it follows that many hospitals accept Medicare Advantage beneficiaries.61 As such, Medicare has strong leverage over hospitals to curtail overcharging because hospitals typically must accept Medicare’s payment rates if they want to receive Medicare patients, and providers are likely to do so because almost all providers are unwilling or unable to refuse Medicare patients.62 Medicare’s extensive market power will be helpful in the charge to curtail overcharging through Medicare Advantage contracts and subcontracts.

E. Past Government Responses to High Provider Costs

The federal government has taken steps in the past to make health care more affordable, but these steps have not been enough. On January 1, 2021, CMS started requiring hospitals to make their prices more transparent per the Hospital Price Transparency Final Rule.63 Theoretically, having to publicly disclose prices might prevent hospitals from overcharging.64 However, this transparency has not been common.65 CMS now requires all hospitals in the United States to make the following information publicly available: (1) the prices on their chargemasters for individual items and services before any discounts; (2) discounted prices for individuals paying for hospital items or services out-of-pocket (i.e., without insurance); (3) the prices hospitals have negotiated with insurance providers; (4) the lowest price a hospital negotiated with an insurance provider; and (5) the highest price a hospital negotiated with an insurance provider.66

CMS also has the authority to monitor hospital compliance and, when it finds a hospital to be noncompliant, it may issue a warning, “request a corrective action plan,” impose a monetary penalty (at most $300 per day), “and publicize the penalty on a CMS website.”67 Additionally, in an Executive Order titled “An America-First Healthcare Plan” on September 24, 2020, President Trump augmented these price transparency requirements by directing HHS to publicly post whether U.S. hospitals are complying with Medicare’s Hospital Compare website.68 In March 2021, eighty-three percent of hospitals in the United States were not in full compliance with the Hospital Price Transparency Final Rule.69

Medicare also controls health care costs by using its payment system called the “resource-based relative value scale” (RBRVS), which contains established prices for specific services and procedures that Medicare is willing to pay.70 Medicare payments from the RBRVS are calculated based on the costs of a service multiplied by an amount calculated by CMS to uphold the principle that payments for health care services should be more closely based on the cost of producing those services.71 Medicare Advantage plans also pay a similar amount, paying only 100% to 105% of other Medicare rates, if not less.72 Even though Medicare places successful price controls on hospitals by capping payment at an amount closer to the actual cost of production, private insurers pay, on average, nearly double the rates that Medicare pays for hospital services.73 Thus, hospitals still get to overcharge private insurers for many services because private insurers accept having to pay prices that are too high.74 Further, when Medicare pays less than what a private insurer would pay, hospitals shift the remaining costs onto private insurers.75

Instead of private insurers using their negotiating power to get hospitals to charge less, as Medicare does, private insurers tend to game the market by selecting low-cost enrollees (i.e., by choosing to insure healthy people who will likely be less of an expense to the insurer by theoretically needing less expensive health care services).76 This allows health care providers to keep charging excessively high prices.77 When health care providers continue to charge excessively high prices, private insurers can barely control what they end up paying these providers.78 And when private insurers can barely control what they end up paying providers, private insurers respond by raising their monthly premiums.79 Thus, health care providers continuing to overcharge inflates the cost of health care, and, as long as providers have this negotiating power over private insurers, relief from this inflation will be difficult to achieve.80 Additional efforts are needed because these efforts to make health care more affordable have not been enough.

F. The Federal Government Can Regulate Its Federal Contractors and Subcontractors to Further Social Policies

One solution to the problem of hospital overcharging is additional regulation via government contracts. The federal government can regulate its contractors as well as its subcontractors to further social policy by putting in government contract clauses requiring the contractors and subcontractors to act in certain ways.81 For example, the government currently requires clauses containing affirmative action and equal opportunity requirements to flow down from the prime contract to any subcontracts.82 As mentioned above, Medicare Advantage prime contractors are private insurers who also have contracts with hospitals.83 If these hospitals are subcontractors to the federal government, the government could create clauses requiring affordable health care that flow down from the prime contract to the subcontract, effectively regulating hospital subcontractors.

G. When Is a Hospital a Subcontractor to the Federal Government?

The federal government can place certain regulations on hospitals when those hospitals are subcontractors to the federal government.84 A hospital is a subcontractor to the federal government when the hospital contracts with an HMO insurer to provide medical services and when that same HMO insurer contracts with a federal agency to provide insurance coverage and the services of an HMO.85 HMOs are insurers that do not merely provide insurance coverage but also provide medical services because of, and through, their established network of providers.86

In UPMC Braddock v. Harris, the D.C. District Court grappled with the issue of whether a hospital was a subcontractor to the federal government and thus subject to certain federal regulations.87 The parties argued about whether the hospital had a subcontract per the definition of “subcontract” in the Code of Federal Regulations, which states that a subcontract is an agreement to provide nonpersonal services “necessary to the performance” of the prime contract.88 The hospital argued that it was not a subcontractor because the hospital’s services were not “necessary to the performance” of the prime contract, arguing that their subcontract to provide medical services and supplies was not part of their prime contract to provide coverage and the services of an HMO.89 The prime contract in this case was to provide insurance coverage and the services of an HMO to the federal government.90

The court nonetheless held that the hospital was a subcontractor because the hospital did provide services “necessary to the performance” of the prime contract.91 The court found that because the insurer’s prime contract with the federal government was to provide coverage and the services of an HMO, and because the insurer was an HMO, the promise to provide medical services and supplies was inherent in, and thus “necessary to the performance” of, the insurer’s promise to provide coverage and the services of an HMO.92 The court reasoned that HMOs are unique from other insurers because they not only provide health care coverage, but also provide health care itself (i.e., medical services), because the HMO’s promise to provide medical services and supplies is “inherent in” the HMO’s promise to provide coverage.93 HMOs provide health care because HMOs have an established network of providers (e.g., hospitals and doctors) who have agreed to provide certain services for certain prices to the patients insured by the HMO.94

Thus, when an HMO promises to provide coverage and the services of an HMO to the federal government, inherent in that promise is also a promise to provide medical services and supplies, because an HMO “by its nature arranges and provides for the medical services” provided by the medical providers (e.g., hospitals) with which the HMO contracts.95 Thus, when a hospital agrees to provide medical services and supplies to an HMO insurer, as the hospital did in UPMC Braddock, and when that same HMO insurer agrees to provide coverage and the services of an HMO to the federal government, that hospital is a subcontractor to the federal government.96 This rule from UPMC Braddock is crucial because the government must know which hospitals are federal subcontractors for regulation purposes.

III. OFCCP and HHS: Two Federal Agencies That Can Help Reduce Hospital Overcharging

A. An Action Plan Overview for OFCCP and HHS

OFCCP and HHS should take steps to reduce hospital overcharging. First, OFCCP should issue a federal directive stating that all hospitals participating in Medicare Advantage HMO plans are federal subcontractors, as explained in UPMC Braddock. Second, HHS should impose regulations on both private health insurance contractors and on their hospital subcontractors in the next round of Medicare Advantage contracts to reduce hospital overcharging. HHS should impose regulations by adding a clause to these contracts and subcontracts requiring both the insurer contractors and the hospital subcontractors to “make a good faith effort” to negotiate lower rates for health care services in their commercial contracts.97

B. OFCCP

1. Why Should OFCCP Issue a New Federal Directive Stating That All Hospitals Participating in Medicare Advantage HMO Plans Are Federal Subcontractors?

OFCCP should issue a new federal directive stating that all hospitals participating in Medicare Advantage HMO plans are federal subcontractors because (1) OFCCP previously issued a very similar directive;98 (2) case law likely supports this finding; and (3) as of 2019, OFCCP believes providers participating in certain federal HMO plans are federal subcontractors.99

2. OFCCP’s Past Opinions on When Hospitals Are Federal Subcontractors and Relevant Case Law

OFCCP made a formal statement in Directive No. 293 on December 16, 2010, that Medicare Advantage “may subject a health care provider to the OFCCP’s jurisdiction” and that OFCCP “believes” health care providers partaking in Medicare Advantage are within its jurisdiction.100 When an entity is subject to OFCCP’s jurisdiction, the entity is either a federal contractor or subcontractor.101 OFCCP rescinded Directive No. 293 on April 25, 2012, and President Barack Obama similarly exempted health care providers from being considered federal subcontractors where their only tie to the federal government is their participation in TRICARE, another federal health care program.102 The decision to rescind Directive No. 293 resulted in confusion and uncertainty for health care providers, leaving them wondering whether they are federal subcontractors.103

However, OFCCP v. UPMC Braddock, the case which was later appealed as UPMC Braddock v. Harris in the D.C. District Court, was only pending when OFCCP rescinded Directive No. 293.104 The court’s decision in UPMC Braddock v. Harris provides more guidance for hospitals regarding whether they are subject to OFCCP jurisdiction and are thus federal subcontractors. The court in UPMC Braddock held that a hospital is a subcontractor to the federal government when the hospital contracts with an HMO insurer to provide medical services and when that same HMO insurer contracts with a federal agency to provide insurance coverage and the services of an HMO.105 Other hospitals who fit this definition are thus also federal subcontractors.

3. Hospitals with Medicare Advantage HMO Contracts Are Likely Federal Subcontractors Based on Case Law

Because of the holding in UPMC Braddock, hospitals participating in Medicare Advantage HMO plans are likely federal subcontractors. This is true because, in Medicare Advantage HMO Plans, private health insurance companies contract with CMS, a federal agency.106 Under these government contracts, the private health insurance companies administer the health plans for the government.107 Additionally, before OFCCP rescinded Directive No. 293, one law firm stated that classifying health care providers participating in Medicare Advantage as federal subcontractors could have a “vast reach.”108 Thus, following the rule from UPMC Braddock, if (1) a hospital has contracts with Medicare Advantage HMO plans to provide medical services, and if (2) the Medicare Advantage HMO government contracts are for contractors to provide insurance coverage and the services of an HMO, then those hospitals are federal subcontractors.

With Medicare Advantage, the government contracts are between CMS, a federal government agency, and private health insurance companies such as Humana, UnitedHealthcare, and Anthem Blue Cross Blue Shield.109 These health insurance prime contractors then contract with hospitals around the country so that these hospitals accept Medicare Advantage patients.110 This Note argues that the contracts between hospitals and these health insurance government contractors are for hospitals to provide medical services to Medicare Advantage patients because the main reason hospitals exist is to provide medical services to patients.

This Note also argues that the government contracts between the HMO private health insurers and CMS exist for the insurers to provide CMS with the coverage and services of an HMO. This is true because these insurers are contracting with the government to administer government HMO and PPO health insurance plans (because most Medicare Advantage plans are HMOs or PPOs)111 and because administering a health plan for the government is part of, and therefore necessitates, providing the services of that health plan to the government. Whether the contracts between hospitals and the health insurers are for hospitals to provide medical services to their covered Medicare patients and whether the government contracts between the health insurers and CMS are for the health insurers to provide coverage and the services of an HMO to the federal government are factual inquiries that can be answered by looking to the language of these contracts.

4. More Recent Guidance from OFCCP and the Courts

As of 2016, OFCCP’s webpage was silent as to whether it has jurisdiction over Medicare Advantage, which has been viewed as “leaving open the possibility” for OFCCP to assert its jurisdiction over hospitals participating in Medicare Advantage.112 As of 2019, OFCCP has not fully explained whether it has jurisdiction over Medicare Advantage, and no litigation has occurred over whether OFCCP has this jurisdiction.113 Additionally, as of 2019, both OFCCP and the courts believe providers participating in certain federal HMO plans are within OFCCP’s jurisdiction.114

OFCCP should definitively state that hospitals that participate in Medicare Advantage HMO plans are federal subcontractors because of the three reasons mentioned in Part III.B.1 to clarify the uncertainty. If OFCCP finds that these hospitals are federal subcontractors, as OFCCP had found in 2010, these hospitals can be subject to certain government contracts clauses, effectively creating a means for government regulation of these hospitals.115

C. HHS

1. The Secretary of HHS Should Use Its Existing Statutory Authority to Add to All Medicare Advantage Contracts a New Clause Discouraging Hospital Overcharging

Once hospitals participating in Medicare Advantage HMO plans are deemed federal subcontractors by OFCCP, the government can then regulate them using its government contracting authority. The Secretary of HHS (Secretary) should use its existing authority “to impose conditions on the receipt of . . . Medicare funds that ‘the Secretary finds necessary in the interest of the health and safety’” of patients receiving Medicare services to impose regulations on both private health insurance contractors and on their hospital subcontractors in the next round of Medicare Advantage contracts to reduce hospital overcharging.116

Per this grant of authority, the Secretary should add a clause to these contracts requiring both the insurers and the hospitals to “make a good faith effort” to negotiate lower, fairer rates for health care services in their commercial contracts.117 Lowering health care prices furthers the statutory goal of improving the “health and safety” of Medicare patients because many individuals choose to forgo much needed health care, and reduced cost makes health care more available, thus making forgoing care less likely and improving the health of those who would have otherwise had to forgo care.118

2. Incentives and Objectives Behind the New Clause

The main purpose of implementing this new clause in future Medicare Advantage HMO contracts is to encourage insurers and hospitals to lower health care costs. This new clause will require Medicare Advantage prime contractors (i.e., the private health insurers) to pay hospitals less. If private health insurers pay lower and fairer prices to their hospital subcontractors for hospital items and services utilized by insurers’ non-Medicare customers—prices that are closer to the actual cost of production with an allowance for profit—then health care will be much more affordable across the country.

This new clause should go further than require hospitals to be more transparent about their standard and negotiated prices because requiring price transparency will likely not be enough.119 CMS only recently began to enforce the price transparency rule since it became effective in January 2021, and hospitals have been noncompliant.120 Zack Cooper, a Health Policy and Economics Professor at Yale University, opined that patients using a price transparency tool to figure out which provider to go to “is just not realistic.”121 Even if patients do utilize this price transparency tool, and even if the government enforces compliance with fines, the effects might only be modest.122

Additionally, hospitals charge up to ten times the cost of production,123 creating an extremely high gross profit margin of ninety percent.124 This is much higher than the gross profit margins for most other industries; ten percent is typically considered a healthy average margin, and twenty percent a high margin.125 Hospitals should not create such a high gross profit margin for themselves at the expense of patients. Further regulation can preserve hospitals’ abilities to recover some profits, while capping these profits at reasonable amounts that are comparable to other industries.

3. What the New Clause Should Look Like

The Secretary should use its existing authority as granted by Congress to implement this new clause.126 Congress authorized the Secretary “to impose conditions on the receipt of . . . Medicare funds that ‘the Secretary finds necessary in the interest of the health and safety’” of patients receiving Medicare services.127 This new clause is an appropriate exercise of this authority because affordable health care will further the health and safety of those patients who, without lowered costs, would have to forgo needed health care.128

Using this authority, the Secretary should add a clause to all Medicare Advantage contracts stating that the prime contractor health insurer must “make a good faith effort” to negotiate a lower rate that allows for not more than a fifty percent gross profit margin for hospitals, with its hospital subcontractors for all patients the insurer covers (i.e., not just Medicare Advantage patients).129 If the contractor is unable to negotiate a lower rate for non-Medicare patients and insurers, it must explain to the contracting officer, in writing, why it cannot.130

This new clause should also state that any hospital subcontractor (e.g., any hospital or provider participating in Medicare Advantage HMO plans) must also “make a good faith effort” to agree to a lower, fairer rate (i.e., one that creates not more than a fifty percent gross profit margin).131 Further, if the subcontractor is unable to agree to this lower rate, it must similarly provide a written explanation why it cannot to the health insurer, who must in turn report it to the contracting officer.132 Lastly, this new clause should state that the prime contractor must flow this clause down to any hospital subcontractor, and that if the clause is not in the subcontract, the government will read this clause into the subcontract per the prime government contract.

Hospitals should charge a lower, fairer rate for patients and insurers, and therefore accept the lower, more reasonable, gross profit margin of not more than fifty percent because (1) a ninety percent gross profit margin is much higher than what is considered a high margin;133 (2) the result of this extremely high profit margin for hospitals results in patients struggling with medical debt or being forced to forgo needed care;134 and (3) a fifty percent gross profit margin is still much higher than what is considered a high margin.135

HHS should use this “good faith effort” language because the government has successfully used this language to further a different socioeconomic goal: promoting small businesses.136 The government similarly places this “good faith effort or a written explanation” requirement on its contractors who use subcontractors to encourage subcontracting to small businesses whenever possible.137 To promote small businesses, the government requires an offeror or bidder to “make a good faith effort” to subcontract to small businesses, and, if the offeror or bidder fails to subcontract to small businesses, the offeror or bidder must provide the contracting officer with a written explanation as to why it was unable to subcontract to a small business.138

The government could identify which hospitals are federal subcontractors by looking at which hospitals bill Medicare Advantage. The government could then give notice to these hospitals informing them that they are federal subcontractors subject to the new clause on hospital overcharging per the health insurer’s Medicare Advantage HMO prime contract. Lastly, the government can audit and fine insurers and/or their hospital subcontractors that are not compliant with this new clause. If private health insurance contractors or their hospital subcontractors do not comply, the government could take a small percentage (e.g., two percent) from the total amount of money the government would have paid the private health insurance contractor.139 If noncompliance continues, the government could impose more serious penalties such as termination for default.140

IV. Analogous Past Government Action

A. Overview

It is likely permissible to use a contract clause in a government contract to govern non-government contracts (i.e., a government contractor’s commercial subcontracts) because (1) the government already regulates federal subcontractors to further social policy; (2) the government already places conditions on the receipt of Medicare dollars; and (3) the government has a history of prohibiting discriminatory ratemaking in private industry.

B. Placing Social Policy Requirements on Federal Subcontractors

The government already regulates federal subcontractors to further social policy via the Christian Doctrine.141 Certain clauses such as Termination, Disputes, Changes, Affirmative Action, Equal Opportunity, and the Buy America Act, among others, will also be read into subcontracts, regardless of the contract language, by operation of law, otherwise known as the Christian Doctrine.142 These clauses placed on non-government subcontractors, especially the Affirmative Action, Equal Opportunity, and Buy America Act clauses, are comparable examples of the government regulating non-government contractors (i.e., a prime’s subcontractors) to further a social policy (i.e., affirmative action, equal opportunity, and buying United States-made products). Likewise, here, the government would be regulating non-government contractors through non-government contracts to further the social policy of affordable health care.

This new clause regulating hospital prices is within the scope of these government contracts because the hospital subcontractors are providing services that are “necessary to the performance of” the contract, and the government is regulating those services necessary to the government.143 Specifically, the government is regulating subcontractors’ commercial prices similar to how the government regulates subcontractors’ methods of hiring new employees through affirmative action and equal opportunity. All government subcontractors are subject to affirmative action and equal opportunity requirements, and those requirements extend beyond the government subcontract into the subcontractor’s non-government commercial contracts because the goal of those requirements is to change the way the subcontractor functions (i.e., by having affirmative action and equal opportunity programs), yet they are still considered to be within the contract’s scope. These provisions are still considered to be within the scope of the government’s subcontract even though they apply to non-government commercial contracts made by the subcontractor.

Likewise, here, the government would be placing requirements on hospital subcontractors extending beyond the government subcontract into the subcontractor’s non-government commercial contracts to change the way the subcontractor functions (i.e., by lowering their commercial prices). Additionally, affirmative action and equal opportunity requirements are placed on all federal subcontractors and are thus not closely related to the nature of each government contract, but here, health care prices are closely related to the nature of the Medicare Advantage HMO government contract. If it can be allowed there, it should be allowed here. This problem also still might affect the government because the government might want to utilize the hospital’s commercial prices if those prices can be reduced enough due to this new clause.

C. Placing Conditions on Medicare Participants

The Supreme Court recently issued a ruling involving the government regulation of private health care entities. In Biden v. Missouri, the Supreme Court held that the Secretary of HHS (Secretary) may require private entities participating in Medicare and Medicaid to require their employees to get the COVID-19 vaccine to be eligible to receive Medicare and Medicaid funds.144 The court found this requirement to be valid because requiring the COVID-19 vaccine falls within the Secretary’s statutory authority granted by Congress to “impose conditions on the receipt of” Medicare and Medicaid dollars that the Secretary finds to be necessary in furthering the interest of the safety and health of individuals receiving Medicare and Medicaid services.145 The court also mentioned that “the Secretary routinely imposes conditions of participation” related to “the qualification and duties of [health care] workers themselves.”146

The Secretary adding this new clause for Medicare contracts is similar to the situation addressed in Biden v. Missouri because there, regulations were placed on private entities participating in Medicare, and here, the new clause similarly involves regulations being placed on private entities participating in Medicare (i.e., the health insurer contractors). Additionally, in Biden v. Missouri, the Secretary had the statutory authority to impose conditions on the receipt of Medicare dollars. Here, the new clause similarly involves the Secretary having statutory authority to impose conditions on the receipt of Medicare dollars. Thus, because the Secretary “routinely imposes conditions of participation,” adding another condition of participation seems both feasible and reasonable.147

Biden v. Missouri is one example of how the government may regulate the marketplace where it needs help. Restrictions may be placed on private enterprises in situations where it is necessary for the public good. The crisis of soaring costs of health care in the United States is one such situation.

D. Prohibiting Discriminatory Ratemaking

A non-procurement example concerning railroads also illustrates how the government can and will use regulation to reduce discriminatory ratemaking practices and re-balance economic power for the sake of the public’s interest.148 In 1887, Western farmers complained to the government about railroads having too much economic power and using that power to charge discriminatory rates (e.g., to overcharge).149 Congress created the Interstate Commerce Commission (ICC) in response.150

To deter railroad overcharging, Congress authorized the ICC to enforce anti-discriminatory rules and determine “reasonable and just” rates that railroad services must charge.151 This type of ratemaking has been almost completely eliminated, and the current rationale is that the government does not need to engage in ratemaking for private industry except for rare circumstances.152 While no longer a common practice for the government, hospital overcharging is certainly a rare circumstance where the government should step in because many are being forced to forgo needed care and millions are struggling with medical debt due to hospital overcharging.153

Regarding the problem of hospital overcharging, the government should similarly tip the scales away from the seller by using the government’s buying power. A government requirement of reasonable rates from its subcontractors (i.e., hospitals participating in Medicare Advantage HMO plans) could tip the scales away from the seller, who currently has disproportionate power in the health care market, and towards other buyers of health care. This requirement could give other buyers more power by refusing to pay a price that is too high, just as the government refuses to do with Medicare contracts. If other buyers have buying power on par with that of the U.S. government, U.S. health care will far be more affordable for ordinary consumers.

Medicare is no stranger to regulating hospital billing practices; Medicare has explicitly prohibited a practice called double billing where providers charge for the same service twice, effectively doubling the price of the service.154 Double billing happens when physician assistants (PA) and nurse practitioners (NP) perform services under the supervision of a physician.155 Physicians get paid even though they did not perform the work.156

Because these physicians are not performing the actual services themselves and are instead only supervising or being on call, these physicians can bill for the same service (for example, delivering anesthesia) for multiple different patients at one time.157 This used to be permissible even though it is physically impossible for one physician to be performing the same service in multiple different places at once and despite having never seen the patient.158 As of January 1, 2021, CMS explicitly prohibits double billing for anesthesia services paid by Medicare.159 The National Correct Coding Initiative Policy Manual for Medicare Services states that physicians must not report more than one code if only one code could describe the services the physician performed.160

V. Why Involve Federal Procurement in Health Reform?

This type of health reform should be initiated by federal procurement because enforcement would likely be easier and more successful than if federal procurement was not involved. CMS has only recently begun to enforce the price transparency rule since it became effective in January 2021, and hospitals have largely not been complying.161 Hospitals would likely be more willing to comply when they are deemed to be federal subcontractors because, as federal subcontractors, their reputations and business interests would be at greater risk than if they were not federal subcontractors.

The government should use federal procurement to deal with this problem of hospital overcharging because CMS’s Price Transparency Rule along with an executive order requiring hospitals to be more transparent about their prices has not been enough to lower costs. When hospitals do not comply with price transparency requirements, hospitals retain their market power, which means hospitals continue to overcharge for their services.

Federal contractors have a unique interest in complying with federal regulations, more so than entities who are not government contractors, because a private entity’s demonstration that they successfully performed a government contract can open doors for business elsewhere and can help those entities become subcontractors to future government contracts. Theoretically, hospital subcontractors will want to be considered for future government contracts if they want to be able to continue to receive Medicare Advantage patients.

Noncompliance in government contracts can have widespread effects. If a subcontractor refuses to comply with mandatory clauses in their subcontracts, the government could terminate for default.162 If the government terminates the prime contract with the insurer, the insurer will likely subsequently terminate its subcontract with the hospital.163 If a hospital’s subcontract is terminated, the hospital would lose its ability to accept Medicare Advantage HMO patients, resulting in the loss of business from approximately 9.4 million people.164 The subcontractor’s noncompliance can also affect the prime contractor’s cash flow, impact the prime contractor’s ability to continue working on the contract, and possibly cause a termination for default, which could effectively end the prime contractor’s career as a government contractor.165 The prime contractor insurers therefore might include additional compliance and enforcement provisions in their subcontracts with hospitals because they bear all the responsibility and risks for their subcontracts and any subcontractor noncompliance.166

Congress should utilize federal procurement in this type of health reform because the government, as a buyer, has an interest in its health insurance prime contractors lowering their commercial prices. Otherwise, the government’s preference to buy commercial goods and services is compromised. When procuring goods and services, the government has a right to know a contractor’s commercial prices. Buying commercial allows the government to use streamlined acquisitions, thus lowering the government’s transaction costs.167 If the market has already validated the things consumers buy, the government should not have to reinvent prices from scratch and should use simplified acquisitions for commercial items to “avoid unnecessary burdens.”168

Buying commercial is common sense for many items and services that the government procures, such as health care services, but paying commercial health care prices as they currently stand does not make sense for the government, or for any buyer. Commercial health care prices are unfairly expensive, so much so that the government has created its own master list of prices that the government is willing to pay for health care services.169 With U.S. health care, the market has arguably not validated its commercial prices because the prices are too high, and, thus, the theory and preference for buying commercial in government procurement does not hold water when it comes to buying health care services.

Overcharging creates administrative difficulty and inefficiency for the government in two ways. First, the government must determine fair market prices for hospital items and services because the commercial marketplace has not done so. Second, the government must also review prices every five years at a minimum to keep up with prices based on ever-changing factors.170

VI. Conclusion

The current health care market is undesirable. Hospitals charge non-Medicare patients prices that are too high for their services, and private insurers simply pay these prices.171 The government pays hospitals far less than what the same hospitals charge private insurers.172 The government also creates its own list of prices for hospital items and services that are closer to the actual cost of production.173 Even though the government saves money and pays a fair price for hospital services, hospitals shift their “lost profits” from Medicare onto private insurers, who again simply pay these prices.174

To reduce hospital overcharging, OFCCP should first issue a federal directive stating that all hospitals participating in Medicare Advantage HMO plans are federal subcontractors. Next, HHS should leverage this status to regulate private health insurance contractors and their hospital subcontractors by using a new contract clause aimed to reduce hospital overcharging. The new clause in all Medicare Advantage HMO contracts should require both the insurance prime contractors and the hospital subcontractors to make good faith efforts to negotiate lower rates for health care services in their commercial, non-government contracts that generate not more than a fifty percent gross profit margin for the hospital subcontractors. Additionally, if either the contractor or the subcontractor is unable to agree to these terms, it must provide a written explanation why it cannot.

Private health insurance contractors will likely be advocates of this clause because they would get to pay lower, fairer prices than what they are currently paying hospitals. Hospital subcontractors are also likely to comply given the negative consequences of not complying with a government contract. Further, using government contracts to regulate non-government contracts is likely a proper use of government contracts because (1) the government already places requirements on federal subcontractors to further social policy; (2) the government already places requirements on Medicare participants; and (3) the government has a history of prohibiting discriminatory ratemaking.

Endnotes

1. See Elizabeth Rosenthal, An American Sickness: How Healthcare Became Big Business And How You Can Take It Back 34 (2017).

2. See id.

3. See id. at 35.

4. See id.

5. See Mark Smith et al., Best Care at Lower Cost: The Path to Continuously Learning Health Care in America 99 (2013); see also Eric E. Schneider et al., Mirror, Mirror 2021: Reflecting Poorly, Commonwealth Fund (Aug. 4, 2021), https://www.commonwealthfund.org/publications/fund-reports/2021/aug/mirror-mirror-2021-reflecting-poorly [https://perma.cc/LX4S-HEHX].

6. See Sarah Kliff, We Spend $750 Billion on Unnecessary Health Care. Two Charts Explain Why., Wash. Post (Sept. 7, 2012), https://www.washingtonpost.com/news/wonk/wp/2012/09/07/we-spend-750-billion-on-unnecessary-health-care-two-charts-explain-why [https://perma.cc/6YEN-T3YV].

7. See Robert Pearl, M.D., 3 Ways Hospitals Overcharge You (And What Can Be Done About It), Forbes (Sept. 5, 2017), https://www.forbes.com/sites/robertpearl/2017/09/05/3-ways-hospitals-overcharge-you-and-what-can-be-done-about-it/?sh=262a21fb2f1d [https://perma.cc/9PH6-QLUN].

8. Edward R. Berchick et al., Health Insurance Coverage in the United States: 2018, U.S. Census Bureau (Nov. 8, 2019), https://www.census.gov/library/publications/2019/demo/p60-267.html [https://perma.cc/A845-75VL].

9. See Rosenthal, supra note 1, at 8.

10. See Karyn Schwartz et al., Limiting Private Insurance Reimbursement to Medicare Rates Would Reduce Health Spending by About $350 Billion in 2021, Kaiser Fam. Found. (Mar. 1, 2021), https://www.kff.org/report-section/limiting-private-insurance-reimbursement-to-medicare-rates-would-reduce-health-spending-by-about-350-billion-in-2021-issue-brief [https://perma.cc/SNE3-WNG2].

11. See id.

12. New Study—Hospitals Hike Charges by Up to 18 Times Cost, Nat’l Nurses United (Nov. 16, 2020), https://www.nationalnursesunited.org/press/new-study-hospitals-hike-charges-18-times-cost [https://perma.cc/9LZR-HSM8].

13. See RBRVS Overview, Am. Med. Ass’n, https://www.ama-assn.org/about/rvs-update-committee-ruc/rbrvs-overview [https://perma.cc/CZQ7-Z582] (last visited Apr. 2, 2022) [hereinafter AMA]; see also Eric Lopez et al., How Much More Than Medicare Do Private Insurers Pay? A Review of the Literature, Kaiser Fam. Found. (Apr. 15, 2020), https://www.kff.org/medicare/issue-brief/how-much-more-than-medicare-do-private-insurers-pay-a-review-of-the-literature [https://perma.cc/N46G-9QKL].

14. See Dana Miller Ervin, Here’s Why Hospital Bills Are So High in the U.S. Health Care System, WFAE (Sept. 7, 2021), https://www.wfae.org/health/2021-09-07/heres-why-hospital-bills-are-so-high-in-the-u-s-health-care-system [https://perma.cc/WG6N-H7E4]; see also Austin B. Frakt, How Much Do Hospitals Cost Shift? A Review of the Evidence, 89 Milbank Q. 90, 107 (2011).

15. 15 U.S.C. § 637(d)(6)(I).

16. Id.

17. See Kliff, supra note 6.

18. See Thomas Bodenheimer & Kevin Grumbach, Understanding Health Policy: A Clinical Approach 11 (2020).

19. See Medicare Advantage, Medicare Interactive, https://www.medicareinteractive.org/get-answers/medicare-basics/medicare-coverage-overview/medicare-advantage [https://perma.cc/NYV7-CB7U] (last visited Apr. 2, 2022).

20. See Robert A. Berenson et al., Why Medicare Advantage Plans Pay Hospitals Traditional Medicare Prices, Health Affs. (Aug. 2015), https://www.healthaffairs.org/doi/10.1377/hlthaff.2014.1427 [https://perma.cc/Y27K-WK8N] (noting the “contract negotiations . . . between [Medicare Advantage] plans and hospitals.”

21. Hal Levy, Do All Doctors Accept Medicare, MedicareGuide (July 15, 2021), https://medicareguide.com/doctors-accept-medicare-289905 [https://perma.cc/9Q8D-7B9A] (stating that most providers accept Medicare, “especially if they want to stay in business”).

22. See Rhonda Sheppard & Terri Postma, Hospital Price Transparency Final Rule, MLN Webcast (Dec. 8, 2020), https://www.cms.gov/files/document/2020-12-08-hospital-presentation.pdf [https://perma.cc/3KZL-SUF3]; see also AMA, supra note 13; Lopez et al., supra note 13.

23. See Kliff, supra note 6.

24. See Rosenthal, supra note 1, at 8.

25. See Bodenheimer & Grumbach, supra note 18, at 17.

26. See id.

27. See William M. Sage, Minding Ps and Qs: The Political and Policy Questions Framing Health Care Spending, 44 J. L., Med. & Ethics 559, 565 (2016).

28. Pearl, supra note 7.

29. See id.; see also Sheppard & Postma, supra note 22.

30. Pearl, supra note 7.

31. Id.

32. New Study – Hospitals Hike Charges by Up to 18 Times Cost, supra note 12.

33. See Brex, What Is a Good Profit Margin? Industry Averages and How to Improve Yours, Brex (July 30, 2020), https://www.brex.com/blog/what-is-a-good-profit-margin [https://perma.cc/JDU5-PGAK] (“Gross profit = revenue – cost of goods sold” and “[g]ross profit margin = (gross profit ÷ revenue) x 100.” If a hospital charges ten times the cost of production, and it buys a product for $5, it therefore sells that product for $50, its gross profit is $45 (45 = 50 – 5), and its gross profit margin is 90% ((45 ÷ 50) x 100 = 90)).

34. Id.

35. Kliff, supra note 6.

36. See Smith et al., supra note 5, at 101.

37. Rosenthal, supra note 1, at 8.

38. See Sage, supra note 27, at 565.

39. See Schwartz et al., supra note 10.

40. Rachel Garfield et al., The Uninsured and the ACA: A Primer—Key Facts About Health Insurance and the Uninsured Amidst Changes to the Affordable Care Act, Kaiser Fam. Found. (Jan. 25, 2019), https://www.kff.org/report-section/the-uninsured-and-the-aca-a-primer-key-facts-about-health-insurance-and-the-uninsured-amidst-changes-to-the-affordable-care-act-what-are-the-financial-implications-of-lacking-insu [https://perma.cc/4B9G-SB7L].

41. Rosenthal, supra note 1, at 8.

42. See Bodenheimer & Grumbach, supra note 18, at 11.

43. See id. at 12.

44. See Centers for Medicare & Medicaid Services, What’s a MAC, Ctrs for Medicare & Medicaid Servs. (Jan. 12, 2022), https://www.cms.gov/Medicare/Medicare-Contracting/Medicare-Administrative-Contractors/What-is-a-MAC [https://perma.cc/YFH7-R6Q9]; see also Medicare Advantage, supra note 19.

45. See Bodenheimer & Grumbach, supra note 18, at 12.

46. See Berenson et al., supra note 20, at 1290 (noting the “contract . . . between [Medicare Advantage] plans and hospitals”).

47. Bodenheimer & Grumbach, supra note 18, at 12.

48. See Medicare Interactive, supra note 19; see also Centers for Medicare & Medicaid Services, supra note 44; Bodenheimer & Grumbach, supra note 18, at 13.

49. Anthem, Understanding Medicare Advantage: HMO and PPO Plans, Anthem (Sept. 14, 2018), https://www.anthem.com/blog/health-insurance-basics/understanding-medicare-advantage-hmo-and-ppo-plans [https://perma.cc/M2BW-PFY8].

50. See UPMC Braddock v. Harris, 934 F. Supp. 2d 238, 253–54 (D.D.C. 2013).

51. See id.

52. See Medicare Interactive, supra note 19 (“[P]rivate health plans . . . contract with the federal government”); see also Centers for Medicare & Medicaid Services, supra note 44.

53. See Centers for Medicare & Medicaid Services, supra note 44.

54. See Berenson et al., supra note 20, at 1290 (noting “contract . . . between [Medicare Advantage] plans and hospitals”).

55. Bruce C. Vladeck, The Political Economy of Medicare, 18 Health Affs. 22, 27 (1999).

56. Ben Umans & K. Lynn Nonnemaker, The Medicare Beneficiary Population, AARP Pub. Pol’y Inst. (Jan. 2009), https://assets.aarp.org/rgcenter/health/fs149_medicare.pdf [https://perma.cc/JQ4B-4BDA].

57. Levy, supra note 21.

58. Id.

59. See id.

60. See Umans & Nonnemaker, supra note 56.

61. See Berenson et al., supra note 20.

62. See Schwartz et al., supra note 10.

63. See Sheppard & Postma, supra note 22.

64. Bodenheimer & Grumbach, supra note 18, at 109.

65. Id.

66. See Sheppard & Postma, supra note 22.

67. Id.

68. AAMC, President Trump Signs Executive Order to Expand Hospital Price Transparency, AAMC (Sept. 25, 2020), https://www.aamc.org/advocacy-policy/washington-highlights/president-trump-signs-executive-order-expand-hospital-price-transparency [https://perma.cc/Y4AP-9YCH].

69. Suhas Gondi et al., Early Hospital Compliance with Federal Requirements for Price Transparency, 181 JAMA Intern. Med. 1396, 1396–97 (2021).

70. See AMA, supra note 13.

71. Id.

72. See Berenson et al., supra note 20.

73. See AMA, supra note 13; see also Lopez et al., supra note 13.

74. See Lopez et al., supra note 13.

75. See Ervin, supra note 14.

76. See Bodenheimer & Grumbach, supra note 18, at 107.

77. See id.

78. See id. at 108.

79. See id.

80. See id.

81. Merle M. DeLancey Jr., What Is the Christian Doctrine and Why Should You Care?, Blank Rome (Nov. 19, 2018), https://governmentcontractsnavigator.com/2018/11/19/what-is-the-christian-doctrine-and-why-should-you-care [https://perma.cc/6TMW-KKN2].

82. Id.

83. See Medicare Interactive, supra note 19; see also Berenson et al., supra note 20 (noting “contract negotiation. . . between [Medicare Advantage] plans and hospitals”).

84. See UPMC Braddock v. Harris, 934 F. Supp. 2d 238, 241 (D.D.C. 2013).

85. See id. at 254–55.

86. See id. at 253–54.

87. See id. at 241.

88. Id. at 251; 41 C.F.R. § 60–1.3 (2020).

89. UPMC Braddock, 934 F. Supp. at 251–52.

90. See id. at 243.

91. Id. at 251–53, 255.

92. See id. at 252–53, 255.

93. See id. at 253.

94. See Humana, What Is an HMO?, Humana (Sept. 9, 2022), https://www.humana.com/medicare/what-is-hmo [https://perma.cc/AQY2-K26R].

95. UPMC Braddock, 934 F. Supp. at 253–55.

96. Id. at 254–55.

97. 15 U.S.C. § 637(d)(6)(I).

98. OFCCP Directive No. 293 Continues Expansion of Federal Contractor Status for Health Care Providers, Jones Day (Jan. 2011), https://www.jonesday.com/en/insights/2011/01/ofccp-directive-no-293-continues-expansion-of-federal-contractor-status-for-health-care-providers [https://perma.cc/EV94-46W2].

99. Laura F. Fryan, Compliance Checkup: Affirmative Action: Is Your Health Care Entity Subject to Affirmative Action Laws?, Lexology (Aug. 27, 2019), https://www.lexology.com/library/detail.aspx?g=514aa1c0-fe36-4792-860f-df42829d85b5 [https://perma.cc/837A-99GZ].

100. Jones Day, supra note 98.

101. See Kenneth A. Rosenberg, Hospitals and Health Care Providers Beware: You May Be Subject to Federal Affirmative Action and Equal Employment Opportunity Hiring Requirements and Not Even Know It!, Fox Rothschild LLP (last visited June 12, 2023), https://www.foxrothschild.com/publications/hospitals-and-health-care-providers-beware-you-may-be-subject-to-federal-affirmative-action-and-equal-employment-opportunity-hiring-requirements-and-not-even-know-it [https://perma.cc/B6AL-QEVQ].

102. Laura A. Mitchell, OFCCP Rescinds Directive 293, Creates Further Jurisdictional Uncertainty over Healthcare Providers, JacksonLewis (May 1, 2012), https://www.jacksonlewis.com/resources-publication/ofccp-rescinds-directive-293-creates-further-jurisdictional-uncertainty-over-healthcare-providers [https://perma.cc/YWG9-6ZRS].

103. Id.

104. Id.

105. See UPMC Braddock v. Harris, 934 F. Supp. 2d 238, 254–55 (D.D.C. 2013).

106. See Medicare Interactive, supra note 19 (“[P]rivate health plans . . . contract with the federal government”); see also Centers for Medicare & Medicaid Services, supra note 44.

107. See Centers for Medicare & Medicaid Services, supra note 44.

108. Jones Day, supra note 98.

109. See Medicare Interactive, supra note 19; see also Centers for Medicare & Medicaid Services, supra note 44; Bodenheimer & Grumbach, supra note 18, at 13.

110. See Levy, supra note 21; see also Umans & Nonnemaker, supra note 56; Berenson et al., supra note 20.

111. Anthem, supra note 49.

112. Leigh M. Nason, What Is The Status of OFCCP Jurisdiction over Healthcare Providers?, Ogletree Deakins (Mar. 4, 2016), https://ogletree.com/insights/what-is-the-status-of-ofccp-jurisdiction-over-healthcare-providers [https://perma.cc/QM5C-LSXG].

113. Fryan, supra note 99.

114. Id.

115. See Federal Contractor Compliance Advisor: Determining If You Are a Federal Contractor or Subcontractor Subject to the Laws Enforced by OFCCP, U.S. Dep’t of Lab., https://webapps.dol.gov/elaws/ofccp/fcca/determine.asp [https://perma.cc/9FVS-W2AD] (last visited Apr. 2, 2022) (stating that having a federal subcontract may subject you to “the civil rights requirements enforced by OFCCP”).

116. Biden v. Missouri, 142 U.S. 647, 652 (2022) (quoting 42 U.S.C. § 1395x(e)(9)).

117. 15 U.S.C. § 637(d)(6)(I).

118. 42 U.S.C. § 1395x(e)(9); Smith et al., supra note 5, at 101.

119. Alexandra Ellerbeck, The Health 202: Biden Says He’ll Enforce Trump-Era Rules Requiring Hospitals to Post Their Prices, Wash. Post (July 12, 2021), https://www.washingtonpost.com/politics/2021/07/12/health-202-biden-says-he-enforce-trump-era-rules-requiring-hospitals-post-their-prices [https://perma.cc/P3CS-GEEV].

120. See CMS Begins Enforcement of Hospital Price Transparency Rule, Bricker & Eckler (May 14, 2021), https://www.bricker.com/insights-resources/publications/cms-begins-enforcement-of-hospital-price-transparency-rule [https://perma.cc/394M-57U3]; see also Gondi et al., supra note 69, at 1396–97.

121. Ellerbeck, supra note 119.

122. Id.

123. See Pearl, supra note 7.

124. See Brex, supra note 33.

125. Id.

126. See 42 U.S.C. § 1395x(e)(9); see also Biden v. Missouri, 142 U.S. 647, 652 (2022).

127. Biden, 142 U.S. at 652 (quoting 42 U.S.C. § 1395x(e)(9)).

128. See Smith et al., supra note 5, at 101.

129. 15 U.S.C. § 637(d)(6)(I).

130. Id.

131. Id.

132. Id.

133. See Brex, supra note 33.

134. See Smith et al., supra note 5, at 101; see also New Study—Hospitals Hike Charges by Up to 18 Times Cost, supra note 12.

135. See Brex, supra note 33.

136. 15 U.S.C. § 637(d)(6)(I).

137. Id.

138. Id.

139. Part C and Part D Enforcement Actions, Ctrs. for Medicare & Medicaid Servs. (Dec. 1, 2021), https://www.cms.gov/Medicare/Compliance-and-Audits/Part-C-and-Part-D-Compliance-and-Audits/PartCandPartDEnforcementActions- [https://perma.cc/QPK6-5YUX].

140. See FAR 49.401(a).

141. DeLancey, supra note 81.

142. Id.

143. See 41 C.F.R. § 60-1.3 (2023).

144. See Biden v. Missouri, 142 U.S. 647, 652–53 (2022).

145. Id. at 652.

146. Id. at 653.

147. Id.

148. Kristin E. Hickman & Richard J. Pierce, Jr., Federal Administrative Law: Cases And Materials 20 (3d ed. 2010).

149. Id.

150. Id.

151. Id.

152. William F. Funk & Richard H. Seamon, Examples & Explanations: Administrative Law 177 (6th ed. 2020).

153. See Smith et al., supra note 5, at 101; see also New Study—Hospitals Hike Charges by Up to 18 Times Cost, supra note 12.

154. See Ctrs. for Medicare & Medicaid Servs., National Correct Coding Initiative Policy Manual For Medicare Services, Chapter II: Anesthesia Services § A (2021); see also Rosenthal, supra note 1, at 74–75.

155. Rosenthal, supra note 1, at 72.

156. See id.

157. See id.

158. See id. at 76.

159. See Ctrs. for Medicare & Medicaid Servs., supra note 154.

160. Id.

161. See Bricker & Eckler, supra note 120; see also Gondi et al., supra note 69, at 1396–97.

162. See Christoph Mlinarchik, Government Contracts In Plain English 41 (2019); see also FAR 49.401(a).

163. See Mlinarchik, supra note 162, at 41.

164. Umans & Nonnemaker, supra note 56.

165. Theodore P. Watson & Cheryl E. Adams, FAR Contract Flow Down Clauses in Federal Government Contracts, Watson & Associates, LLC (last visited Apr. 2, 2022), https://blog.theodorewatson.com/flow-down-clauses-in-federal-government-contracts [https://perma.cc/V39W-LF5R].

166. See Mlinarchik, supra note 162, at 41.

167. See U.S. Army, Contract Attorneys Deskbook 9-2, 10-1 (2021).

168. See id. at 9-2.

169. See AMA, supra note 13.

170. See id.

171. See Kliff, supra note 6; see also Pearl, supra note 7; Bodenheimer & Grumbach, supra note 18, at 107.

172. See AMA, supra note 13; see also Lopez et al., supra note 13.

173. See AMA, supra note 13.

174. See Ervin, supra note 14.

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Sophie Marsh

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Sophie Marsh is a 2023 graduate of The George Washington University Law School where she concentrated in government contract law. She was a Senior Articles Editor on the Public Contract Law Journal. Sophie received her BA in Philosophy and Psychology, with a minor in Communication Studies, from the University of Denver in 2018.