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Perspectives on a selected key
topic
July / August 2021 |
 hat
are your current thoughts on healthcare price competition, and
President Biden's recent Executive Order in that regard which
included provisions addressing prescription drug Canadian
importation, further generic support, and drug pricing; OTC
hearing aids; hospital mergers, price transparency and surprise
billing; and health insurance marketplace standardization?”
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Mark Lutes
Chairman
Epstein Becker & Green
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There are certainly opportunities for price competition in
the delivery of a number of discrete episodes of care —
surgical and otherwise, However, there remains perhaps a
more significant opportunity for
price competition in maintaining “health” as public policy
set out to do with the advent of the federal “health
maintenance organization” act. Said otherwise, we should not
lose sight of the fact that many of the most significant
opportunities to introduce efficiencies in health care which
will not emanate from discounts to services provided but
through the avoidance of the need for the services in the
first instance through the provision of preventive care,
coaching diet and exercise and addressing factors often
labeled as “social determinants”.
For this
reason, there is danger in excessive focus on the pricing of
discrete services and, in doing so, “missing the forest for
the trees”. There may be more opportunity for societal
savings in avoiding the need for a service or in prescribing
less invasive alternatives than realized in bidding out
a surgical procedure. One has to hope that CMMI, and those others
assessing public policy opportunities, “think big” in
creating competitive opportunities for a range of
“conveners”, providers and plans to compete with fee for
service costs by undertaking to delay the onset of
conditions requiring acute interventions and managing
chronic conditions to avoid the costs of acute and
post-acute episodes.
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Dudley Morris
Senior Advisor
BDC Advisors
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President Biden’s recent Executive Order is a
“whole-of-government effort” to promote competition in the
marketplace. Healthcare is a major focus of the EO,
challenging the benefits of mergers, promoting comparative
shopping for health plans, and specifically instructing the
Secretary of Health and Human Services to support existing
price transparency initiatives for hospitals, other
providers, and insurers---and strengthening them where
necessary.
The new EO is a continuation of Biden’s
campaign pledge to “tackle market concentration across our
health care system… that’s driving up prices for consumers.”
The EO signals a more aggressive posture toward industry
consolidation, especially among hospitals.
Health
systems can expect that their accounting for promised
benefits of horizontal and vertical integration will be in
the FTC cross-hairs. And methodologies for calculating
market concentration will be refreshed given the expanding
role of digital health.
HHS Secretary Xavier Becerra
put it forcefully in terms of pricing transparency:
“Concealing the cost of services and procedures will not be
tolerated by this administration.” According to industry
surveys, currently approximately 30% of the nation’s acute
care hospitals have not posted their rates, and another 10%
have posted information that is not in useable form. Some
hospitals have even embedded special coding in their web
pages to prevent search engines such as Google from
displaying price pages in search results. Newly proposed CMS
Outpatient Prospective Payment System rules for 2022 include
tougher penalties for non-compliance raising the penalties
for large hospitals from $109,500 a year to slightly more
than $2 million.
Increased pricing visibility will
reveal substantial price variations among providers for
similar services-- even within the same hospital. This will
create the need for health systems to focus on defining and
communicating their consumer value proposition to justify
their pricing strategy. Managed Care contract negotiations
will intensify. There will be an increasing need to develop
product line pricing plans to maintain and strengthen market
position for specialty services, and to address issues of
pricing variability. Depending on their market position,
systems with charges below the market average may have the
ability to negotiate improvement in their rates, and to grow
market share if they are lower cost providers.
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