State Policies on Provider Market Power

Source: Suzanne Delbanco and Shaudi Bazzaz, National Academy of Social Insurance (NASI) and Catalyst for Payment Reform (CPR), July 2914

From the press release:
Today, the National Academy of Social Insurance (NASI) and Catalyst for Payment Reform (CPR) released a comprehensive evaluation of state laws addressing the power of health care providers to negotiate higher prices. This report, State Policies on Provider Market Power, catalogues the laws and regulations state governments are using to maintain or increase competition in health care markets, which the recent wave of mergers among hospitals and other consolidation among providers has significantly reduced.

The report reveals a number of common strategies states are using, including laws and regulations pertaining to: antitrust; price and quality transparency; competition in health plan contracting; price regulation; the development of Accountable Care Organizations (ACOs); expanding the authority of state Departments of Insurance; and facilitating the entry of new providers into the marketplace. Key findings include:
• Forty-two states have laws related to price transparency, mandating that hospitals and/or providers share some type of price information publicly. However, the information is frequently not available in a format that is highly useful or accessible to consumers.
• Eighteen states have attempted to limit providers’ influence through banning most favored nation contracting clauses (which can prevent other health plans from entering local markets, stifling competition).
• A growing number of states are forming regulatory bodies to monitor health care prices. Delaware, Maryland, and Massachusetts, among others, have legislation establishing health care commissions to monitor and review health care 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 (e.g., Alabama) have included provisions intended to grant provider groups exemptions from state antitrust laws and immunity from federal antitrust laws through the state action doctrine.

Five states currently have Certificate of Public Advantage statutes that permit exemption from antitrust provisions for providers merging or consolidating for the purposes of cooperation and health care delivery improvements…