Testimony of Christine H. Monahan, J.D., earlier than the U.S. House of Representatives Education & Workforce Health Subcommittee, June 21, 2023.
Good morning Chairman Good, Ranking Member DeSaulnier, and members of the Subcommittee on Health, Employment, Labor, and Pensions.
My identify is Christine H. Monahan and I’m an Assistant Research Professor on the Center on Health Insurance Reforms inside Georgetown University’s McCourt School of Public Policy. I’m honored to testify at this time relating to 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 vital horizontal and vertical consolidation over the previous decade contributing to rising costs for well being care.
The enlargement of huge well being techniques, with a number of hospitals, outpatient departments, and doctor practices below the identical possession, has been considerably rising what industrial insurers – and, finally customers and employers – pay for care. One egregious instance of that is the addition of outpatient facility charge prices to well being care providers that may be safely and successfully supplied outdoors of a hospital. These prices usually come as a shock to sufferers who go in for a routine physician’s go to and so they can result in considerably greater out-of-pocket prices than customers 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 a minimum of one state worker well being plan have additionally taken steps to restrict these prices and defend customers from these payments. One problem to focusing on and implementing these reforms, nevertheless, is an absence of transparency within the claims suppliers undergo insurers, which might obscure the place care was really supplied.
For instance, a state or insurer could wish to finish hospital facility charge 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. But all the claims from a well being system could seem like they’re coming from the principle 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 finally transfer in direction of website 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 singular 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 would give insurers, in addition to regulators and policymakers counting on claims knowledge, a a lot better sense of who’s charging outpatient facility charges and once they’re charging them and take acceptable motion. More broadly, it could additionally enable insurers to raised tailor different reimbursement choices primarily based on the situation of care, contemplating elements like high quality and price.
Let’s not be naïve about how far relying solely on non-public insurers to include prices will get us, nevertheless. They, too, have consolidated horizontally and vertically, and it’s usually of their curiosity to not pushback strongly in opposition to supplier costs. This could also be as a result of the suppliers charging the best charges are thought-about “must-have” suppliers for his or her networks, or these suppliers have demanded that the insurer embody anticompetitive clauses of their contracts. But the key insurers even have little incentive to make use of what negotiating energy they do have.
This is a selected downside within the employer-sponsored insurance coverage market, nearly all of which is insured via self-funded well being plans with the key insurers serving as third-party directors (or TPAs). In this position, the insurers have little incentive to barter aggressive supplier reimbursement charges because 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 huge commissions.
This is all taking place even though employers, as plan sponsors, have a authorized obligation below 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. Thankfully, the employer neighborhood is beginning to awaken to those issues, due largely to latest efforts by Congress and the Executive Branch to deliver extra transparency to our well being care system.
But extra nonetheless must be completed to offer employers the data they should change into 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 position and energy within the system, it is usually value exploring whether or not entities like TPAs and PBMs themselves ought to be handled as plan fiduciaries when performing capabilities the place it’s extra vital that they act in one of the best curiosity of plan members than their very own enterprise pursuits.
Thank you in your time. I welcome your questions.
You can learn Ms. Monahan’s full testimony right here. A webcast of her testimony is offered right here.