Michigan House Speaker Matt Hall has introduced legislation that would create a hospital cost review board, impose new restrictions on hospital consolidation and cap certain healthcare prices, according to the Michigan Health & Hospital Association.
Hospitals would be subject to the following new requirements from the proposed cost review board or other statutory language:
- Hospitals would be required to immediately reduce prices by 10% or lose nonprofit status.
- Annual hospital price increases would be subject to board approval and be limited to the rate of inflation or lower.
- No hospital would be allowed to control more than 8% of the statewide bed share, or 3% of statewide market share.
- No hospital would be allowed to control more than 15% of a state prosperity region bed share, or 15% of a state prosperity region market share.
- Mergers and acquisitions would be subject to board approval and only be allowed to proceed if rates are reduced by at least 2%.
- M&As would also be subject to a 12% tax on the purchase price.
- All hospital reimbursement would be capped at 200% of Medicare.
- Charges for cash pay patients would be capped at 150% of Medicare.
- The board could review any data related to budget, cost reports, executive compensation and utilization.
“Proposals that introduce additional administrative burdens and arbitrary government price controls would exacerbate the affordability challenges they seek to address,” MHA CEO Brian Peters said in a June 22 statement. “Neighboring states that have adopted similar policies face significantly higher costs than Michigan, which ranks third lowest in the country for hospital prices relative to Medicare. The reality is hospitals continue to operate despite a challenging financial environment, where real consequences are hospital closures, as we recently saw this week with the closure of a 101-year-old rural nonprofit Michigan hospital facility.”
The hospital closure Mr. Peters referred to was Sturgis (Mich.) Hospital, which shut down June 19 after years of financial challenges. Sturgis Hospital, which opened in 1925, became one of the first hospitals in the nation — and the first in Michigan — to convert to a rural emergency hospital in 2023.
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