Healthy Competition Act draws payer support for increasing transparency on hospital consolidations

Lawmakers from both parties are making another push to pass legislation restricting anti-competitive practices and providing more transparency in the country’s health care system.

The Healthy Competition for Better Care Act originally was approved by a Senate committee in 2019 but failed to make more progress. On May 8, the legislation was introduced again by Sens. Mike Braun (R-IN) and Tammy Baldwin (D-WI). Rep. Michelle Steel (R-CA) is sponsoring the bill in the House.

The legislators said the bill would improve transparency, crack down on anti-competitive practices, and remove restrictions preventing competition in health care markets. The move comes after several studies have found that hospital mergers and acquisitions have contributed to higher health care costs.

“Competition is the key to creating a competitive market that increases options and transparency, while driving down costs which ultimately benefits consumers. The entire health care industry should be encouraging all types of natural, healthy competition to improve the quality of care received by Americans in every state,” said Braun.

Anti-merger movement supported by payers, carriers

Leading the charge against anti-competitive practices have been payers and insurance carriers, two legs of the triad that oversees providing health care to most consumers. Those two groups often say that the trend toward hospital and provider consolidation has led to higher costs and restrictive arrangements that work against consumers.

Business groups and insurance companies have joined together in a national coalition called “Better Solutions for Healthcare,” which is made up of the American Benefits Council, the Business Group of Health, the National Alliance of Healthcare Purchaser Coalitions, the Public Sector HealthCare Roundtable, insurance industry group AHIP, and the BlueCross BlueShield Association.

“We cannot solve the health care affordability crisis without addressing the leading role that hospitals and health systems are playing to artificially drive up prices,” said Alex Schriver, executive director of Better Solutions. “American families and employers are the ones who suffer from these anti-competitive practices, and we commend the Senators for making this challenge a bipartisan priority. It is critical that we take action to create a more honest and transparent system that will bring down costs for patients and businesses alike.”

Leveling the playing field

The groups supporting the legislation say that large health systems use their size to enforce anti-competitive contracts. The result has reduced operating costs for providers — but at the same time, the prices for hospital services have gone up by 6% to 18%, according to NCCI, a workers’ compensation industry group.

The Purchaser Business Group on Health (PBGH), which also supports the Healthy Competition Act, noted that the bill takes several steps to level the playing field between payers and providers. According to the group, the bill would:

• Allow discounts or incentives for enrollees who choose high-quality and low-cost providers;
• Allow insurers and employers to contract with the right hospitals and providers for their patients, without requirements to enter into additional contracts with other affiliated providers or hospitals;
• Allow health insurance issuers to negotiate their own rates with other providers who are not party to the contract of the provider involved; and
• Allow hospitals and issuers to freely negotiate prices, without requirements to pay higher amounts for items or services than other issuers have agreed to.

“Where markets have failed because of anti-competitive behavior, federal policymakers have a responsibility to prohibit these practices and restore healthy competition,” said Elizabeth Mitchell, president and CEO of PBGH. “Sen. Braun and Sen. Baldwin are taking necessary steps to protect employers and the millions of people who they purchase care for.”

Provider groups have generally opposed new legislation regulating mergers — a statement in March from the American Hospital Association to a House committee said that mergers and acquisitions are essential for preserving access to health care:

Read more: Consolidated health systems offer slightly better care, but significantly higher costs, study finds

“Mergers and acquisitions are one of the most important tools that some hospitals use to increase access, provide quality care and manage financial pressures and risk,” the statement said. “These partnerships enable hospitals to expand service offerings, broaden networks and access to specialists, improve quality and better serve patients where they live. They also provide scale to help reduce costs associated with obtaining medical services, supplies and prescription drugs, and enable health systems to reduce other operational costs.”