A bipartisan effort has emerged that sponsors say would give insurers and hospitals more ability to negotiate prices.
Editor’s Note: Today, Chief Healthcare Executive® is launching a new series examining legislation that could affect hospitals and health systems.
Lawmakers say a bipartisan bill will reduce healthcare costs and curb some anti-competitive practices from larger health systems.
U.S. Sen. Tammy Baldwin, a Democrat from Wisconsin; U.S. Sen. Michael Braun, an Indiana Republican.; and U.S. Rep. Michelle Steel, a Republican from California.
The sponsors of the bill say the legislation, dubbed the “Healthy Competition for Better Care Act,” will reduce anti-competitive practices in healthcare.
The lawmakers backing the bill say it would allow insurers and employers more freedom to contract with the right hospitals for their patients, without entering into contracts with other affiliated hospitals or providers.
Hospitals and health insurers would be able to more freely negotiate prices, without requirements to pay higher amounts for services or products from other insurers, the lawmakers say. The bill allows for exceptions for health maintenance organizations (HMOs) and value-based networks.
Lawmakers have tried to introduce similar measures in 2019 and 2021, and while the measures had some support, they didn’t get through Congress.
What they say
Steel says the bill would prevent some hospitals from hindering competition.
“Health care costs have steadily risen for decades, leaving millions of Californians in crippling medical debt,” Steel said in a statement. “This legislation addresses the root cause of the issue by ensuring the free market is empowered to naturally bring down prices. No longer will hospitals be allowed to box out competitors and hide prices from patients.”
Baldwin touted the benefits for providing more competition and change practices of larger health systems.
“No American should go broke to afford the health care they need. For too long, we have seen a lack of competition in our health insurance marketplace drive up costs for patients and limit their affordable options,” Baldwin said in a statement. “Our legislation will crack down on big health system’s anti-competitive practices to increase transparency, cut costs, and connect more Wisconsinites with the quality care they need.”
Continuing with the theme, Braun also cited the merit of creating more competition.
“Competition is the key to creating a competitive market that increases options and transparency, while driving down costs which ultimately benefits consumers. The entire healthcare industry should be encouraging all types of natural, healthy competition to improve the quality of care received by Americans in every state,” Braun said in a statement.
The American Benefits Council has strongly endorsed the bill. Ilyse Schuman, the council’s senior vice president, health policy, says it will lower costs. “The only way to lower health care costs effectively is by addressing the root causes of rising prices – including anti-competitive contracting that stifles choice and competition,” Schuman said in a statement.
The ERISA Industry Committee, also known as ERIC, is backing the legislation. “This bill promotes competition and reduces consolidation within the health care system – core tenets to achieving health care affordability for employers, workers, and their families,” James Gelfand, president and CEO of ERIC, said in a statement.
Families USA and the Small Business Majority are also endorsing the bill.
Congress seems to be taking more interest in measures to promote competition in healthcare, and those efforts are drawing support among Democrats and Republicans.
Some lawmakers and advocates are pushing “site-neutral” policies, which would mean hospital outpatient departments and physicians offices would be reimbursed by Medicare at the same rate. Hospitals contend that reducing reimbursement rates to their outpatient facilities could hurt patient access to quality care. They argue that those clinics treat more patients from underserved communities and patients with more complex medical conditions.
President Biden’s administration has also focused on promoting competition, including applying more scrutiny to hospital mergers involving systems in the same region. The Federal Trade Commission is also trying to end non-compete agreements, which hospitals have opposed. Hospitals say ending those agreements would upend the market, particularly for senior hospital executives and physicians.