More States Passing Laws to Preserve Provider Competition

Catalyst for Payment Reform (CPR) published this week an update to its 2014 report on state policies on provider market power published in conjunction with the National Academy of Social Insurance.

Using the Database of State Laws Impacting Healthcare Cost and Quality, jointly developed by CPR and the Source on Healthcare Price and Competition at the UC Hastings College of the Law, the new report showed how state laws have evolved in the past four years to address market power imbalances that enable anti-competitive practices and rising healthcare costs.

For example, 20 states have passed laws implementing mandatory all-payer claims databases, which aggregate claims data from Medicare, state Medicaid agencies, state employee and retiree agencies, and private payers, the report stated. These databases are designed to preservice provider competition and reduce costs by “exposing high priced providers for public policy purposes,” and in some states, inform consumer-facing websites that allow consumers to shop for providers and healthcare services.

The report also showed that 20 states – up from 18 in 2014 – have attempted to encourage competitive behavior in health plan contracting by banning “most favored nation” clauses. According to CPR, the clause “prevents a provider from charging a health plan a rate higher than the lowest reimbursement rate the provider agrees to with any other insurer.” This practice can impede other health plans from entering local markets, which can result in higher healthcare costs.