Foundational Concept of Managed Care Under Siege

Managed Care Castle Under Siege

If current proposals come to fruition, the issue of narrow networks or surprise billing will no longer be the consumers’ problem………providers could be left holding the bag if their ability to negotiate is undermined by disclosing rates to managed care entities …….the need to contract could conceivably be impacted and the foundational concept of managed care could break down.

SOURCE: MORGANLEWIS.COM

Will Hospitals and Insurers Have to Disclose Their Contracted Rates to Consumers Under Executive Order?

July 02, 2019

US President Donald Trump issued the Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First on June 24, another in a long line of recent executive and legislative branch efforts to address the issue of healthcare pricing and the apparent “black box” nature of those prices to the average consumer. The prevalence of health savings accounts (HSAs), high-deductible health plans, and narrow insurance networks has exposed the underbelly of healthcare pricing to the American consumer. Disputes among providers and insurers that land in the laps of patients and consumers have reached a fever pitch. The executive order is a response to the call to action regarding healthcare pricing, along with several bills making their way through Congress this year.

The executive order calls for the issuance of a proposed rule by the secretary of the US Department of Health and Human Services (HHS) within 60 days that requires hospitals to publicly post standard charge information, “including charges and information based on negotiated rates and for common or shoppable items and services,” in a user-friendly format. While we are uncertain as to how far the proposed HHS rule is likely to go, what will be included in the categories of “shoppable” items and services, or what the eventual implications for antitrust law will be, the constitutionality of such disclosures is being called into question by some constitutional scholars. For example, noting that hospitals already provide consumers with information on pricing, the American Hospital Association has observed that “publicly posting privately negotiated rates could, in fact, undermine competitive forces of private market dynamics.” The industry will need to look closely at the HHS proposed rule once issued.

The executive order also directs the secretary of HHS within 180 days to issue a report in consultation with the US attorney general and the Federal Trade Commission (FTC) describing how the federal government or the private sector is impeding healthcare price and quality transparency for patients, and providing recommendations for eliminating these impediments in a way that promotes competition. It is unclear where the Antitrust Division of the US Department of Justice (DOJ) and the FTC will ultimately come out on these issues. From an antitrust standpoint, there are arguments in favor of and against price and quality transparency. In one recent case in this area, United States et al. v. Carolinas Healthcare System, the DOJ Antitrust Division alleged that Carolinas (now Atrium Health), which the DOJ alleged is the dominant hospital system in Charlotte, used anti–price transparency and anti-steering provisions in its contracts with insurers to harm competition and consumers. The litigation settled in 2018 with Carolinas agreeing to no longer enforce or seek provisions that prevent transparency in its contracts with insurers.

In furtherance of the administration’s quality transparency goals, the executive order directs the secretary of HHS to produce a “Health Quality Roadmap” in consultation with the US Departments of Defense and Veterans Affairs (VA) “to align and improve reporting on data and quality measures” across Medicare, Medicaid, CHIP, the Health Insurance Marketplace, and the military and VA health systems. Included in the roadmap must be a strategy for (1) establishing, adopting, and publishing common quality measurements; (2) aligning inpatient and outpatient measures; and (3) eliminating low-value or counterproductive measures. The roadmap, which must be completed within 180 days, is a large undertaking for programs that cover vastly different patient populations, services, reimbursement constructs, and geographic areas.

In addition, within 180 days, the secretary of HHS, in consultation with the secretaries of the US Departments of Treasury, Defense, Labor, and VA and the director of the Office of Personnel Management, must increase access to de-identified claims data from taxpayer-funded healthcare programs and group health plans for researchers, innovators, providers, and entrepreneurs, consistent with law and in a way that ensures patients’ privacy and security. The purpose for the increased access is to facilitate the mining of such data to identify inefficiencies and opportunities for improvement. Of interest here, the Transformed Medicaid Statistical Information System (MSIS) is called out specifically as one of the datasets that should be addressed. The executive order does not address the lack of consistency and uniformity among the datasets that have plagued researchers for decades. Perhaps this initiative will amplify efforts among researchers to create greater uniformity among the datasets once they are accessible.

The executive order also directs the secretary of HHS to report to the president within 180 days on additional steps the administration may take to implement the principles on surprise medical billing announced on May 9. How the secretary’s analysis incorporates the proposals currently moving on Capitol Hill will be of interest.

Finally, the executive order directs the secretary of the Treasury Department, within 120 days, to propose regulations that would treat expenses related to insurance-type products like direct primary care arrangements and healthcare sharing ministries as eligible medical expenses for purposes of an HSA.

The issue of healthcare pricing has taken center stage and Congress, in a bipartisan way, has taken up the importance of addressing the issue for consumers. One way or another, providers and insurers will be impacted by these efforts. If current proposals come to fruition, the issue of narrow networks or surprise billing will no longer be the consumers’ problem. However, providers could be left holding the bag if their ability to negotiate is undermined by disclosing rates to managed care entities, or if a median out-of-network payment rate is adopted as a matter of law. The need to contract could conceivably be impacted and the foundational concept of managed care could break down.

 

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