Skip to main content

As States Regulate Provider Competition, Common Threads Emerge

 |  By John Commins  
   July 21, 2014

 

A new report catalogs state laws that attempt to regulate or encourage competition within healthcare markets in the face of industry consolidations.

States are taking a number of measures to regulate hospital and provider competition within their borders as healthcare sector consolidation accelerates, a new study has found.

The joint report,State Policies on Provider Market Power, from the National Academy of Social Insurance and Catalyst for Payment Reform catalogs state laws that attempt to regulate or encourage competition within healthcare markets in the face of this wave of consolidations.

"Really, it's not a best-practices type of study. It just shows what exists," says Shaudi Bazzaz, Program Manager at CPR, and a coauthor of the report. "It is difficult to say what works because so much of healthcare is market specific. What works in one market might not work in another."

"There are a lot of dynamics that go into healthcare pricing, hospital costs, and all that. The paper is not saying what is the best thing to and that would be a very difficult thing to do as a generalization."

Among the findings:

  • Forty-two states have laws on price transparency, requiring hospitals and other providers to make pubic price information. However, the information is frequently not easily accessible to consumers.
  • Eighteen states have banned anti-competitive favored nation clauses that can prevent new health plans from entering local markets.
  • States are forming regulatory bodies to monitor healthcare prices. Delaware, Maryland, Massachusetts, and others have passed legislation establishing healthcare commissions to monitor and review prices.
  • Texas is the only state that has passed legislation that supports market competition during the development and implementation of ACOs. Other states that have passed legislation supporting the development of ACOs, such as Alabama, have provisions to grant provider groups exemptions from state antitrust laws and immunity from federal antitrust laws through the state action doctrine.
  • Five states have Certificate of Public Advantage statutes that permit exemption from antitrust provisions for providers merging or consolidating for the purposes of cooperation and healthcare delivery improvements.

"Some of the regulations out there that are providing safe harbors for providers to consolidate outside of antitrust scrutiny, I didn't realize existed, so that was a little bit scary to find out about," Bazzaz says.

"Especially given the environment where we are looking at trying to promote coordination, and to let providers bypass antitrust scrutiny in order to get that coordination is a little bit concerning."

Bazzaz says there is tension in the healthcare sector right now between antitrust concerns of some states and federal regulators, and the move toward consolidation, which is tacitly encouraged with the adoption of capitated payments for population health and narrow networks to contain costs.  

"I don't know how this is going to turn out, but I definitely can identify that the friction exists," Bazzaz says. "The idea that coordination of care can only happen though consolidation feels faulty to me. If we had a history where consolidation had resulted in improved efficiencies and quality and coordination I don't think we would be having this discussion right now. "

"But the fact is we have had negative outcomes due to consolidation. We don't have a strong body of evidence that says 'consolidate and we are going to get you improved coordination of care.'"

Bazzaz says many in the healthcare sector lump together the distinctly separate ideas of coordinated care and consolidated care.

Bazzaz says many in the healthcare sector lump together the distinctly separate ideas of coordinated care and consolidated care.

"The issue is not that care should be coordinated," she says. "The issue is will consolidation get us there and is that the primary motivator of consolidation? If you can show coordinated care is the best way to achieve it through consolidation I don't think anybody would have a problem with that. That is not what we have seen in the past. Consolidation shouldn't be our first avenue we are going down to try to coordinate care."   

The report is a part of a larger NASI project on Addressing Pricing Power in Health Care Markets, and it is funded in part by the Robert Wood Johnson Foundation. Both CPR and NASI describe themselves as independent non-profit organizations.

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

Tagged Under:


Get the latest on healthcare leadership in your inbox.