Another champion has emerged in the national battle to contain health care expenses. Thisone is targeting prices charged to consumers, and ultimately totheir insurers, by providers in markets with little or no truecompetition for services.

|

The National Academy of Social Insurance announced the findingsof a panel of experts it convened to examine the dynamics of healthcare costs in markets with dominant providers.

|

The panelists represent a wide range of professionals whoseinterests and work intersects with health care, from those in theinsurance, medical and legal fields to consultants and universityprofessors.

|

The panel examined markets for evidence of providers andinsurers taking advantage of their “market power,” a term thatdescribes the clout a given player has in a market.

|

In its report, Addressing Pricing Power in Health Care Markets:Principles and Policy Options to Strengthen and Shape Markets,the panel found that providers were by far the major cost increaseculprits.

|

“Whether it was looking at claims data or payment rates, thereis evidence that dominant hospitals and large physician grouppractices are able to negotiate prices that are often double ortriple what Medicare pays for the same medical services,” thereport said. “While the concentration of insurers may be high inmost markets, the evidence that it drives prices up is notstrong.”

|

Identifying the responsible parties is just step one — and byfar the easiest, the report said.

|

“Introducing more competition into the marketplace is the bestway to address the issue of market power, but ….introducing morecompetition may not be viable in some markets, which will insteadrequire regulatory intervention,” the panel concluded. “Wheremarket competition is ineffective, public policy can enhance marketcompetition or, if that is not likely to be successful, regulateprices directly.”

|

Read: Lack of competition drove up PPACA costs

|

In the national interest of reducing overall health care costs,state and federal regulators will need to take action if the costof market power in underserved markets is to be effectivelyaddressed, the panel said. And developing effective regulationswill be a tricky challenge. The general public’s lack of knowledgeabout and understanding of the components of the cost of medicalcare represents a major barrier to putting downward pressure onproviders’ charges in these markets, the report said. Often itisn’t consumers who pay the inflated price, but their insurers.

|

“Greater transparency of the prices of health care services andthe quality of care provided is needed to help consumers makebetter choices about their care,” the panel said. “While payment and delivery system reforms mayimprove quality, they may also contribute to excessive providerconsolidation within markets; before making exceptions for specificdelivery and payment reforms, the costs and benefits of the newmodels should be fully evaluated.”

|

The report is intended as a starting point for discussionsaround the added cost of market power, its authors said.

|

“For too long, unreasonably high and widely varying hospital andphysician prices have been the unacknowledged ‘elephant in theroom’ in discussions about the ongoing challenge of excessivehealth care spending. Without more explicit attention to theproblem, promising reforms like accountable care organizationscould actually exacerbate pricing problems,” said Robert Berenson,M.D., Institute Fellow at the Urban Institute.

|

The study panel and report were funded by the Robert WoodJohnson Foundation, the California HealthCare Foundation and theJayne Koskinas Ted Giovanis Foundation for Health andPolicy.

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Dan Cook

Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.