Former hospital CEO Rick Scott’s healthcare bills steer clear of hospitals

The market-based philosophy of Scott’s recent proposals could lead to higher health insurance premiums and disproportionately focus on costs imposed by drug companies and insurers instead of hospitals.
U.S. Sen. Rick Scott [OCTAVIO JONES   |   Times]
U.S. Sen. Rick Scott [OCTAVIO JONES | Times] [ JONES, OCTAVIO JONES | Tampa Bay Times ]
Published Aug. 23, 2019|Updated Aug. 23, 2019

Rick Scott is on a healthcare kick.

The Republican senator from Florida has introduced four bills in the last five months related to curbing healthcare costs, each accompanied by a press conference, TV appearances and op-eds in national media outlets.

On the surface, his proposals to lower prescription drug costs and eliminate surprise medical bills sound like such common sense ideas that they could win bipartisan support. One of the bills, a plan to require drugs sold in the U.S. to match prices that are paid in Canada, sounds almost as though it might have been introduced by a left-leaning politician like Sen. Bernie Sanders.

But experts say Scott’s healthcare initiatives in the U.S. Senate actually aren’t much of a departure from his lifelong record as a hospital CEO — a lucrative career that funded two gubernatorial campaigns and a barrage of TV ads fueled by $63.5 million of his own money to flip a Senate seat in an election year that wasn’t good for Republicans nationwide.

“The way I look at it as a U.S. senator — and I was governor for eight years — is that I’m a fiduciary for the taxpayer,” Scott said in an interview last month, comparing himself to a type of trusted financial adviser who’s supposed to look out for investors. “I’ve spent my time when I ran a large hospital company trying to figure out how you get the cost of healthcare down. I started to do that as a governor and I’ve been up here for seven months.”

Scott’s focus on price transparency comes at least in part from his time in the private sector, when he once opened clinics that provided limited healthcare services accompanied with a restaurant-like price menu.

“He is consistent over time on his idea that you ought to know in advance how much something is going to cost you,” said Linda Quick, the former president of the South Florida Hospital and Healthcare Association. “Where Rick and I differ is he believes competition is a good thing, excess capacity would lower prices and increase quality. It’s been my experience in 40 years that the reverse is true, people don’t select healthcare they way they do hamburgers.”

Healthcare experts say most patients make decisions based on the expertise of doctors. The market-based philosophy of Scott’s recent proposals could lead to higher health insurance premiums and disproportionately focus on costs imposed by drug companies and insurers instead of hospitals.

And Scott’s political opponents have for years raised his tenure as head of the Columbia/HCA hospital chain, when it was hit with $1.7 billion in criminal fines for Medicare and Medicaid fraud, as a trust issue for voters, especially when it comes to healthcare. Scott resigned before the fines were levied and never faced criminal charges.

“Somebody who comes to health policy from the perspective of hospital administration is going to have a very skewed view of how to fix our healthcare system,” said Christen Linke Young, a fellow at the USC-Brookings Schaeffer Initiative for Health Policy. “It is easy to demonize insurance and drug companies but in many cases a former hospital executive is not in the greatest position to embrace that and solve healthcare problems.”

In some ways, Scott’s federal healthcare push to change medical billing and drug pricing while staunchly opposing Democratic ideas like Medicare for All has parallels to his time as Florida governor, when he pursued medical price transparency for consumers even as he refused to expand Medicaid coverage for about 850,000 Floridians.

Quick said Scott’s latest healthcare push could be viewed as “hypocritical,” but others say it’s a smart way to connect with retirees in a state where 20 percent of the population is 65 or older.

“It’s got kind of a populist tinge to it,” said Justin Sayfie, a Republican and partner at the lobbying firm Ballard Partners. “I think it’s a reflection of the potency of the drug pricing issue and the perceived affordability of prescription drugs, particularly in a state like Florida with such a large senior population.”

Scott’s four bills have a total of five cosponsors, and only one of them is a Democrat.

The three bills that have Republican-only support — related to surprise medical billing, creating a database of drug prices and compelling U.S. drug prices to match prices in other countries — appear to mostly benefit hospitals, experts say, and patients could end up with higher healthcare costs compared to other plans being offered in Congress.

“This is a very provider-friendly approach to the problem which is consistent with his background as a hospital system administrator,” said Young, the USC-Brookings think tank member.

Scott’s first healthcare-related bill, the Transparent Drug Pricing Act, was a succinct, two-page document introduced in April. In a few paragraphs, the legislation seeks to restrict drug prices in the U.S. so they match the lowest retail price offered in Canada, France, the United Kingdom, Japan or Germany and requires that pharmacies show patients the out-of-pocket costs for their drugs.

But experts say the bill, while consistent with recent efforts by the Trump administration to allow the importation of prescription drugs from Canada, would not automatically compel drug companies to charge lower prices to U.S. consumers.

“We think the industry would find ways to work around this,” said Juliette Cubanski, an associate director of the Kaiser Family Foundation’s Medicare program. “There would be nothing to stop [companies from] raising prices in those other countries, so the amount of savings may not be what one may hope at the outset.”

A spokesperson at Scott’s office said the bill applies to all drugs and is written in a way that allows price controls to go into effect immediately, without needing to wait for new federal regulations because the price controls end after five years.

Scott’s second bill aims to end surprise medical bills — when patients are unexpectedly charged thousands of dollars for out-of-network services. His bill is a “much more provider-friendly approach” than other proposals moving through Congress, according to Young.

Scott’s bill would allow healthcare providers to bill insurance companies for an out-of-network rate and then go to an arbitrator to get the money, rather than charging the patient directly.

Young said the arbitration process would send more money into providers’ pockets compared to other bills filed in Washington that would compel insurers to pay a set price: the median in-network price: “It’s going to lead to providers getting paid much higher rates.”

Scott’s third bill, the Prescription Drug Price Reporting Act, creates an online search tool for drug prices and drug companies are required to explain price changes to the public. Republican Sens. Susan Collins of Maine, John Cornyn of Texas and Cory Gardner of Colorado signed onto the legislation.

Cubanski, the Kaiser Family Foundation’s associate director, said there are limitations to the benefits of transparency when patients put most of their major healthcare decisions in the hands of a doctor.

“There’s been a pushback around the transparency initiative. People question how useful it will be,” Cubanski said. “Their doctors prescribe certain medications for health reasons and they may not have the ability to shop around.”

But while Scott’s first three bills were largely panned by healthcare experts as pro-hospital and inefficient compared to other proposals on the same topics, his prescription pricing bill offered in partnership with Maryland Democratic Sen. Chris Van Hollen was praised as a sensible solution.

Scott and Van Hollen’s bill establishes price controls for drugs developed with federal tax money, about 20 to 25 percent of prescription drugs that go to market after the bill is passed. It hasn’t been formally introduced yet, so no additional co-sponsors have signed on.

Families USA, a liberal healthcare advocacy group that does not support the first three bills Scott proposed, praised the bill with Van Hollen as a sensible way to lower the costs of some drugs.

“I think what he’s proposed is both smart policy and politically a smart way to go as well,” said Shawn Gremminger, the senior director for federal relations at Families USA.

Gremminger said Scott came to Washington burdened by a negative reputation on healthcare among liberal policy wonks because of the fraud settlement, but that his willingness to at least criticize the pharmaceutical industry has won him some credit for having a larger independent streak than many other Republicans.

“Many people saw him as a flack for the hospital industry but that hasn’t been the case,” Gremminger said. “He seems to be fairly balanced. I think the jury is still out.”