United States: Takeaways From The FTC/DOJ Workshop On Health Care Competition

The Federal Trade Commission and Department of Justice Antitrust Division held their second public workshop on health care competition on February 24-25, 2015. The workshop is part of the FTC and DOJ's commitment to periodically "step back" from the work of day-to-day antitrust enforcement to take in a broader perspective of trends in the health care industry. This workshop was intended to focus on recent developments related to health care provider organizations and payment models that may affect competition. The workshop included panels that brought together representatives from the industry, government, academia, think tanks, and the private bar. The workshop also featured remarks from policymakers, including remarks by the nation's two top antitrust enforcers: FTC Chairwoman Edith Ramirez and Assistant Attorney General Bill Baer.

The workshop was held in Washington, D.C. and broadcast live over the Internet; a video recording and transcript of the event will be made available on the FTC website. But for those who can't wait (or who don't have two days to spend watching video), below is a quick recap of some of the ideas exchanged at the workshop and key takeaways that we see for businesses.

Day One: Opening Remarks by FTC Chairwoman Ramirez

  • Chairwoman Ramirez noted that health care remains one of the top priorities of the FTC's competition agency. She also repeated the common refrain from regulators that federal health care reform does not supplant the antitrust laws. Rather, she explained, the goals of the antitrust laws are complementary with the goals of federal health care reform.
  • Chairwoman Ramirez also noted that while the FTC has focused much of its resources on horizontal mergers, there is growing agency concern that "non-overlap" mergers such as downtown, urban hospitals acquiring smaller, suburban hospitals, or vertical acquisitions, may also warrant antitrust attention.

Presentation by Dr. Ezekiel Emanuel

  • Dr. Ezekiel Emanuel, a professor at the University of Pennsylvania, gave a presentation on the state of the health care system in the United States. Dr. Emanuel noted that the health care system in this country is undergoing more structural changes today than at any time in the past century, and that past models used to predict effects may not apply in this new and changing environment.
  • Dr. Emanuel noted that 83% of health care costs in the United States relate to the treatment of chronic illnesses, and he suggested that antitrust enforcers should pay particular attention to how provider consolidations will impact the treatment of the chronically ill.
  • Dr. Emanuel noted major trends moving forward, including changes in payments to focus more on value and risk.
  • Dr. Emanuel said that future consolidation of payors and providers is inevitable to a degree, and also noted ongoing efforts by providers to integrate vertically into the direct taking of patient risk. He commented on the desirability of ensuring that there are multiple, integrated delivery systems left after the dust settles to ensure competitive markets in the future.

Panel on Network Design and Contracting Practices

  • The first panel of the workshop focused primarily on the value and risks to consumers related to the rise of tiered and limited-network plans.
  • The panel praised the move towards measuring the true price of health care to include quality. The panel indicated that efforts to incentivize cost-lowering and quality-enhancement by providers—such as network products that steer consumers to lower-cost and higher-quality care—are undoubtedly a positive development, but the effectiveness of those initiatives depends on several factors.
  • One key factor identified to the success of such products is ensuring that consumers feel that they have sufficient choice such that insurance products are appealing and effective. In this respect, it was noted that tiered-network products may have an advantage over older managed care options, as tiered-network products allow consumers to make valuable choices in real time at the point of service, rather than just annually at the point of enrollment.
  • The panel also agreed that in order for consumer choice to be meaningful, it needs to be based on good information. That information includes resources as simple as accurate, audited provider directories as well as tools that may be more difficult to design, such as giving consumers the means to evaluate network adequacy.

Panel on the Health Insurance Exchanges

  • The second panel offered early observations on the impacts of the ACA insurance exchanges on competition. Based on two years of data, an estimated 11 to 12 million individuals have purchased insurance through the exchanges as of the start of 2015. Most individuals purchasing policies through the exchanges were previously uninsured, such that the nationwide market for individual insurance plans has doubled in size since 2013.
  • Based on two years' experience, insurer participation is broadly up year-after-year. Only three states experienced a decrease in the number of insurers on their exchanges between 2013 and 2014.
  • Of all the various exchange models, the lowest premiums have been realized by clearinghouse models, whereby the exchange allows all qualified health plans to participate.
  • One study in California suggests that the premium rates on the exchange correlate more closely to the concentration level of providers in any given region (as measured by HHI) than to the concentration level of payors.

Day Two: Opening Remarks by AAG Baer

  • AAG Baer praised innovations that the regulators are seeing in the marketplace to reduce costs, such as narrow networks and tiered networks. But by the same token, he said that efforts to frustrate such innovations—such as anti-tiering and anti-steering provisions—will be a particular area of agency focus going forward.
  • AAG Baer also noted that vertical combinations between hospitals and physician groups is an area of current agency focus. While such arrangements do, in some cases, result in better care and lower costs, AAG Baer expressed concerns that these arrangements can also create "conglomerates" with bargaining leverage over payors.
  • Finally, when the agencies do bring enforcement actions, AAG Baer reiterated the agencies' strong preference to obtain "structural" remedies such as divestitures, rather than "conduct" remedies like negotiated price caps, which require supervision and policing to implement.

Panel on Accountable Care Organizations

  • The first panel of Day Two focused on the perceived successes and failures of ACOs in achieving cost savings and improving the quality of care.
  • It was broadly agreed that ACOs are a valuable innovation, but it also was agreed that true capitation should be the ultimate goal of reform. In other words, ACOs are best viewed as a bridge, rather than a destination.
  • Panelists expressed the view that there needs to be a real effort to ensure that small, provider-based practices get the necessary capital investments to successfully build the infrastructure that they currently lack, and that these small practices are especially useful because they have the advantage of highly motivated and engaged practitioners. Without this investment in small practices, some panelists expressed a concern that the overall system will devolve into a small number of large systems that already have the necessary infrastructure but lack engaged practitioners.
  • From a regulatory perspective, it was observed that the government can play a role in piecing ACOs together. Government-developed ACOs have served as a magnet for similar models for commercially insured patients.

Panel on Alternatives to Fee-for-Service Payment Models

  • The next panel discussed the shift towards pay-for-performance reimbursement. A number of experiences with different models were discussed. On one extreme was disconnecting oncologist reimbursement from drug payments, which resulted in $33 million in savings across just 810 patients. On the other extreme was a per-member-per-month incentive payment tied to meeting process measures, which resulted in meeting the process measures but had no measurable (short-term) effect on outcome improvements or medical expenditure savings.
  • It was observed that the industry-wide shift to pay-for-performance needs to be tied to methods that have a demonstrable connection to improving quality. Otherwise the entire process might be a very large effort with no actual effect.
  • The panel discussed what role transparency should play in moving the industry to pay-for-performance. It was broadly agreed that pay-for-performance reimbursement models are inherently complicated, and they do not tell patients the information they really need. Rather, it was noted that the key to furthering quality competition is to make quality data more transparent for patients, to enable patients to choose the best providers and thereby reward performance through volume rather than through price.

Panel on Provider Consolidation

  • The next panel discussed consolidations involving providers. The panel covered not only horizontal mergers between competing providers, but also vertical mergers, cross-market mergers, and transactions between payors and providers.
  • Several panelists expressed the view that there is a mounting body of evidence that costs tend to increase with provider consolidations, and there appeared to be consensus that tracking price competition in health care markets will continue to be important and complex, especially as the relevant metric shifts from prices of individual services to more risk-based measures.
  • The panel also discussed new research purporting to show that consolidation across non-overlapping service and geographic markets may be followed by higher prices. The panel also discussed the rising trend of non-exclusive affiliations among systems in non-adjacent geographic markets, noting that it will be interesting to see whether efficiencies can be generated in these cases through the consolidation of back-office or administrative functions.

Roundtable on Antitrust Perspectives

  • The final session of the workshop was a roundtable discussion about the antitrust implications of the changes being seen in the health care industry. The panel began by discussing ACOs. The early indications are that ACOs have not caused antitrust problems, although there is relatively little data on this point either way. This might also be a function of the fact that the first ACOs were relatively small.
  • The panel discussed what role efficiencies should play in merger analysis, especially in the wake of a recent decision by the Ninth Circuit that cast doubt on the efficiencies defense. Although the panel did not go as far as the Ninth Circuit, it was noted that efficiencies are rarely (if ever) dispositive on their own in a merger analysis. It was also broadly agreed that efficiencies defenses require evidence of forward-looking effects that are very difficult to project or calculate with precision.
  • The panel agreed with earlier sessions that the insurance exchanges are facilitating the development of narrow-network plans. The panelists believe that the growth of such networks can translate into increased competition between providers.
  • In closing, several panelists commented that the health care industry is in the midst of a period of rapid change. Therefore, while antitrust enforcement is necessary to protect competition, such enforcement should not come at the expense of stifling new, innovative models of care delivery or plan design.

Closing Remarks by DOJ Chief of Legal Policy Bob Potter

  • In closing the workshop, the Chief of Legal Policy for the DOJ thanked the many panelists for their contributions. He noted that the more the agencies learn from the industry about changes, the more the agencies need to learn about effects. In other words, there is not enough evidence or data yet to draw conclusions and the agencies need to keep educating themselves to better understand health care markets, especially in this period of transition.

The workshop provided useful insights into the views of the federal antitrust regulators, and the perspectives and ideas exchanged will help inform the agencies as they continue to enforce the antitrust laws going forward.

Parties interested in submitting written comments to the DOJ and FTC relating to the workshop may do so until April 30, 2015.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions