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Testimony of Christine H. Monahan, J.D., earlier than the U.S. Home of Representatives Schooling & Workforce Well being Subcommittee, June 21, 2023.
Good morning Chairman Good, Rating Member DeSaulnier, and members of the Subcommittee on Well being, Employment, Labor, and Pensions.
My title is Christine H. Monahan and I’m an Assistant Analysis Professor on the Middle on Well being Insurance coverage Reforms inside Georgetown College’s McCourt Faculty of Public Coverage. I’m honored to testify right this moment concerning competitors and transparency in our well being care markets.
Consolidation within the U.S. well being care system is rising, to the detriment of everybody who makes use of and pays for well being care. In each the supplier and insurer markets, we now have seen important horizontal and vertical consolidation over the previous decade contributing to rising costs for well being care.
The growth of huge well being techniques, with a number of hospitals, outpatient departments, and doctor practices underneath the identical possession, has been considerably growing what industrial insurers – and, in the end shoppers and employers – pay for care. One egregious instance of that is the addition of outpatient facility payment prices to well being care providers that may be safely and successfully supplied exterior of a hospital. These prices typically come as a shock to sufferers who go in for a routine physician’s go to they usually can result in considerably increased out-of-pocket prices than shoppers have historically paid for such care.
Some states, from Connecticut, to Maine, to Indiana, have began to sort out this concern by prohibiting these prices in sure circumstances, and a handful of personal insurers and no less than one state worker well being plan have additionally taken steps to restrict these prices and defend shoppers from these payments. One problem to concentrating on and implementing these reforms, nonetheless, is an absence of transparency within the claims suppliers undergo insurers, which may obscure the place care was truly supplied.
For instance, a state or insurer might wish to finish hospital facility payment prices for care supplied in off-campus departments or doctor places of work, since this care inherently doesn’t have to be supplied in a hospital-setting. However the entire claims from a well being system might seem like they’re coming from the primary campus of the hospital.
There are easy reforms the federal authorities can take to handle this concern, and set the stage for added motion to restrict what industrial insurers pay for care in these circumstances and in the end transfer in direction of web site impartial funds, as we’re seeing in Medicare. These reforms embody requiring that every separate facility or workplace the place care is supplied, like a hospital off-campus division, purchase a novel nationwide supplier identifier or NPI and that each the hospital and all well being care practitioners embody this NPI on their claims for any care they supply there. This may give insurers, in addition to regulators and policymakers counting on claims knowledge, a significantly better sense of who’s charging outpatient facility charges and after they’re charging them and take applicable motion. Extra broadly, it could additionally enable insurers to higher tailor different reimbursement selections primarily based on the placement of care, contemplating components like high quality and value.
Let’s not be naïve about how far relying solely on non-public insurers to include prices will get us, nonetheless. They, too, have consolidated horizontally and vertically, and it’s typically of their curiosity to not pushback strongly towards supplier costs. This can be as a result of the suppliers charging the best charges are thought of “must-have” suppliers for his or her networks, or these suppliers have demanded that the insurer embody anticompetitive clauses of their contracts. However the main insurers even have little incentive to make use of what negotiating energy they do have.
It is a specific drawback within the employer-sponsored insurance coverage market, nearly all of which is insured by self-funded well being plans with the most important insurers serving as third-party directors (or TPAs). On this function, the insurers have little incentive to barter aggressive supplier reimbursement charges as a result of their relative market energy and data monopoly vis-à-vis employers. What’s extra, employer contracts with TPAs and pharmacy profit managers (or PBMs) are sometimes rife with hidden charges and overpayments, whereas the consultants and brokers employers rent to assist prepare their contracts are taking in large commissions.
That is all taking place even supposing employers, as plan sponsors, have a authorized responsibility underneath ERISA to behave solely within the curiosity of plan members and to make sure they’re paying affordable compensation to service suppliers, and no extra. Fortunately, the employer group is beginning to awaken to those issues, due largely to latest efforts by Congress and the Government Department to carry extra transparency to our well being care system.
However extra nonetheless must be performed to offer employers the data they should grow to be extra prudent purchasers on this system. This consists of codifying and strengthening federal worth transparency guidelines; revisiting the Consolidated Appropriation Act’s ban on gag clauses; and clarifying and increasing service supplier disclosure necessities. Given their crucial function and energy within the system, it’s also value exploring whether or not entities like TPAs and PBMs themselves must be handled as plan fiduciaries when performing features the place it’s extra vital that they act in the very best curiosity of plan members than their very own enterprise pursuits.
Thanks on your time. I welcome your questions.
You’ll be able to learn Ms. Monahan’s full testimony here. A webcast of her testimony is obtainable here.
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