Category Archives: Competition

How Health Insurance Monopolies Affect Your Care

Posted on by • Posted in Competition, Competition on Price, Competitive Bidding, Health Insurance Denial, Health Insurance Industry, Health Insurance Pre Authorization, Market Consolidation, Market Failure, Market Power, Market Share, Monopoly, Monopoly Behavior, Profit, Profit Margin, Profit Model, Profit Motive • Tagged , , , , • Leave a comment
https://time.com/7302346/health-insurance-monopolies-patient-care/?utm_source=beehiiv&utm_medium=email&utm_campaign=newsletter-health-matters&_bhlid=b8ef51635479257a1d1d099c9581345a28c94b91

Not long ago, Dr. Richard Menger, a neurosurgeon, was ready to operate on a 16-year-old with complex scoliosis. A team of doctors had spent months preparing for the surgery, consulting orthopedists and cardiologists, even printing a 3D model of the teen’s spine.

The surgery was scheduled for a Friday when Menger got the news: the teen’s insurer, Blue Cross Blue Shield of Alabama, had denied coverage of the surgery. 

It wasn’t particularly surprising to Menger, who has been practicing in Alabama since 2019. Alabama essentially has one private insurer, Blue Cross Blue Shield of Alabama, which has a whopping 94% of the market of large-group insurance plans, according to the health policy nonprofit KFF. That dominance allows the insurer to consistently deny claims, many doctors say, charge people more for coverage, and pay lower rates to doctors and hospitals than they would in other states.

“It makes the natural problems for insurance that much more magnified because there’s no market competition or choice,” says Menger, who in 2023 wrote an op-ed in 1819 News, a local news site, arguing that ending Blue Cross Blue Shield of Alabama’s health insurance monopoly would make people in the state healthier.

Blue Cross Blue Shield of Alabama also has the largest share of individual insurance plans in the state, according to data from the Centers for Medicaid & Medicare Services. Perhaps not coincidentally, Alabama also had the highest denial rates for in-network claims by insurers on the individual marketplace in 2023, according to a KFF analysis: 34%. Neighboring Mississippi, where the majority insurer has less of the market share at 81%, has an average denial rate of 15%.

Alabama is an extreme case, but people in many other states face health insurance monopolies, too. One insurer, Premera Blue Cross Group, has a 94% share of the large-group market in Alaska, and Blue Cross Blue Shield of Wyoming has a 91% market share in that state. In 18 states, one insurer has 75% or more of the large-group health insurance marketplace, according to KFF data.

These monopolies drive up costs, says Leemore Dafny, a professor at Harvard Business School and Harvard Kennedy School who has long studied competition among health insurance companies and providers.

“More competitors tend to drive lower premiums and more generous benefits for consumers,” she says. “There’s a lot of concern from analysts like myself about concentration in a range of sectors, including health insurance.”

Bruce A. Scott, the immediate past president of the American Medical Association, has said that when the dominant insurer in his state of Kentucky was renegotiating its contract with his medical group, it offered lower rates than it had paid six years before. “This same type of financial squeeze play is found nationwide, and its frequency has been exacerbated by health insurance industry consolidation,” he wrote in The Hill in 2023.

What happened to competition? There used to be a lot more regional health insurers, Dafny says. But as costs started to rise, they didn’t have enough leverage to negotiate prices down with providers and stay profitable. As a result, many were happy to be acquired by larger companies. Then hospitals and doctor’s offices merged to get more leverage against the bigger insurers. Now, there’s a lot of concentration among both provider groups and insurers.

“None of this had anything to do with taking better care of patients,” she says. “It had to do with trying to get the upper hand.” 

In a statement to TIME, Blue Cross Blue Shield of Alabama said that it was working to make the prior authorization process more transparent and reverse the requirement of prior authorization for certain in-network medical services. It will attempt to answer at least 80% of requests for prior authorization in near real-time by 2027, it says. (A coalition of major health insurers recently vowed to fix their prior authorization processes under pressure from the federal government.)

The insurer also says it welcomes competition. “We know Alabamians have a choice when it comes to choosing their health insurance carrier and we don’t take that for granted,” a spokesperson said in the statement. In the commercial and underwritten market—which represents the bulk of its business—Blue Cross Blue Shield Alabama competes with four other companies that sell individual, family, and group plans, the company says, and it competes with 68 companies who sell Medicare plans in Alabama. Its success in the state is partly because it sells policies in every county in Alabama, the insurer says, while others do not. 

Other casualties of such a concentrated health-insurance marketplace are rural hospitals and providers. Small rural hospitals are often independent and have not merged with other systems like many of their large urban counterparts, so they have an even harder time negotiating with the one big insurer in the state, says Harold Miller, president and CEO of the Center for Healthcare Quality and Payment Reform, a national policy center that studies health-care costs. That means big insurers will often refuse to cover procedures or pay lower prices for services.

“I’ve had rural hospitals tell me they can’t even get the health plan on the phone,” Miller says.

In the past decade, the Department of Justice has stopped some mergers, but has not been very aggressive at stopping consolidation in the health-care industry, Dafny says. That may be in part because the courts require a high standard of evidence to block a transaction, and the government might have been worried it would have lost whatever cases it brought.

A few factors prevent insurers with a monopoly from driving costs too high, says Benjamin Handel, an economics professor at the University of California, Berkeley who studies health care. One is a regulation called minimum loss ratio that essentially requires insurers to spend a certain share of what they earn from premiums on medical care. Another is that an insurer with a monopoly that angers consumers might attract attention from regulators, he says.

Of course, there’s not a whole lot regulators can do to make a marketplace more competitive. A state could try to incentivize more insurers to enter their states with tax breaks or other sweeteners, but it’s very hard to enter a market and offer low rates right away. The establishment of the health-care marketplaces in the Affordable Care Act allowed new entrants, Dafny says, but many of them did not survive.

Menger, the Alabama doctor, says that he and his colleagues—and therefore their patients—are basically stuck. His staff has to spend 10-15 hours a week negotiating with the insurer to get prior authorizations that sometimes don’t come, even while patients pay higher premiums. 

The teenage boy eventually got approved for the scoliosis surgery, but not after the family went through a lot of stress with postponements and uncertainty. “I think it’s pretty clear that the more competition, the better things are,” Menger says. “This prior authorization nonsense is really hurting patients.”

BIG INSURANCE 2022: Revenues reached $1.25 trillion thanks to sucking billions out of the pharmacy supply chain – and taxpayers’ pockets

Posted on by • Posted in ACA, Affordability, Antitrust, Competition, Health Insurance Coverage Adequacy, Health Insurance Denial, Health Insurance Industry, Health Policy, Healthcare Reform, Medicaid, Medicare, Medicare Advantage, Monopoly, Monopoly Behavior, Out of Pocket Expenses, Out-of-Network, Pharmaceutical Costs, Pharmaceutical Industry, Pharmacy Benefits Management, Prior Authorization, Privatization, Profit, Profit Motive • Leave a comment
https://healthcareuncovered.substack.com/p/big-insurance-2022-revenues-reached?utm_source=substack&utm_campaign=post_embed&utm_medium=web

HIGHLIGHTS

  • Big Insurance revenues and profits have increased by 300% and 287% respectively since 2012 due to explosive growth in the companies’ pharmacy benefit management (PBM) businesses and the Medicare replacement plans they call Medicare Advantage.
  • The for-profits now control more than 80% of the national PBM market and more than 70% of the Medicare Advantage market. 

In 2022, Big Insurance revenues reached $1.25 trillion and profits soared to $69.3 billion.

That’s a 300% increase in revenue and a 287% increase in profits from 2012, when revenue was $412.9 billion and profits were $24 billion.

Big insurers’ revenues have grown dramatically over the past decade, the result of consolidation in the PBM business and taxpayer-supported Medicare and Medicaid programs. 

Sucking billions out of the pharmacy supply chain – and taxpayers’ pockets

What has changed dramatically over the decade is that the big insurers are now getting far more of their revenues from the pharmaceutical supply chain and from taxpayers as they have moved aggressively into government programs. This is especially true of Humana, Centene, and Molina, which now get, respectively, 85%, 88%, and 94% of their health-plan revenues from government programs. 

The two biggest drivers are their fast-growing pharmacy benefit managers (PBMs), the relatively new and little-known middleman between patients and pharmaceutical drug manufacturers, and the privately owned and operated Medicare replacement plans they market as Medicare Advantage.

With the exception of Humana, Centene, and Molina, most of the companies that constitute Big Insurance continue to make substantial amounts of money selling policies and services in what they refer to as their commercial businesses – to individuals, families, and employers – but the seven companies’ commercial revenue grew just 260%, or $176 billion, over 10 years (from $110.4 billion to $287.1 billion). While that’s significant, profitable growth in the commercial sector has become a major challenge for big insurers – so much so that Humana just last week announced it is exiting the employer-sponsored health-insurance marketplace entirely. 

The insurers’ commercial businesses have stagnated because small businesses – which employ nearly half of the nation’s workers – are increasingly being priced out of the health insurance market. Most small businesses can no longer afford the premiums. The average premium for an employer-sponsored family plan – not including out-of-pocket requirements – was $22,463 in 2022, up 43% since 2012, which has contributed to the decades-long decline in the percentage of U.S. employers offering coverage to their workers.

The percentage of U.S. employers providing some level of health benefits to their workers dropped from 69% to 51% between 1999 and 2022 – including a dramatic 8% decrease last year alone. Growth in this category is largely the result of insurers “stealing market share” from each other or from smaller competitors.

As a consequence of this segment’s relative stagnation, PBMs and government programs have become the new cash cows for Big Insurance.

Spectacular PBM Growth

PBM HIGHLIGHTS

  • Cigna now gets far more revenue from its PBM than from its health plans. CVS gets more revenue from its PBM than from either Aetna’s health plans or its nearly 10,000 retail stores. 
  • UnitedHealth has the biggest share of both the PBM and Medicare markets and, through numerous acquisitions of physician practices, is now the largest U.S. employer of doctors.

PBMs are middlemen companies that manage prescription drug benefits for health insurers, Medicare Part D drug plans, employers, and, in some cases, unions. As the Commonwealth Fund has noted: 

PBMs have a significant behind-the-scenes impact in determining total drug costs for insurers, shaping patients’ access to medications, and determining how much pharmacies are paid. 

The Commonwealth Fund went on to say that PBMs have faced growing scrutiny about their role in rising prescription drug costs and spending. A big reason for the scrutiny – by Congress, state lawmakers and now also by the FTC – is that the biggest PBMs are now owned by Big Insurance.

Through mergers and acquisitions in recent years, three of the seven for-profit insurers – Cigna, CVS/Aetna, and UnitedHealth – now control 80% of the U.S. pharmacy benefits market.

They determine which drugs will be listed in each of their formularies (lists of drugs they will “cover” based on secret deals they negotiate with pharmaceutical companies) and how much patients will have to pay out of their own pockets at the pharmacy counter – in many cases hundreds or thousands of dollars – before their coverage kicks in. The PBMs also “steer” health-plan enrollees to their preferred or owned pharmacies (and, increasingly, away from independent pharmacists), thereby capturing even more of what we spend on our prescription medications.

Cigna, CVS/Aetna, and UnitedHealth now control 80% of the U.S. PBM market. Correction: this graph was initially published with inaccurate numbers. The source for this information can be found here.

Ten years ago, PBMs contributed relatively little to the three companies’ revenues and profits. But since then, the rapid growth of PBMs has transformed all of the companies. The combined revenues from their PBM business units increased 250% between 2012 and 2022, from $196.7 billion to $492.4 billion.

Changes in PBM revenues between 2012 and 2022 for UnitedHealth Group, Cigna, and CVS/Aetna (Editor’s note: Cigna acquired PBM Express Scripts in 2018. To reflect revenue growth, Express Scripts’ pre-acquisition 2012 revenues are included in the Cigna total for that year.)

PBM Profit Generation

The PBM profit growth at the three companies over the past decade was even more dramatic than revenue growth. Collectively, their PBM profits increased 438%, from $6.3 billion in 2012 to $27.6 billion in 2022.

As a result of this fast growth, more than half (52%) of three companies’ profits in 2022 came from their PBM business units: Cigna’s Evernorth, CVS/Aetna’s Caremark, and UnitedHealth’s Optum. Cigna now gets far more revenue and profits from its PBM than from its health plans. And CVS gets more revenue from its PBM than from either Aetna’s health plans or its nearly 10,000 retail stores. (The companies’ business units that include their PBMs have also moved aggressively in recent years into health-care delivery through acquisitions of physician practices, clinics, dialysis centers, and other facilities. Notably, UnitedHealth Group is now the largest U.S. employer of physicians.)

Huge strides in privatizing both Medicare and Medicaid

GOVERNMENT PROGRAMS HIGHLIGHTS

  • More than 90% of health-plan revenues at three of the companies come from government programs as they continue to privatize both Medicare and Medicaid, through Medicare Advantage in particular.
  • Enrollment in government-funded programs increased by 261% in 10 years; by contrast commercial enrollment increased by just 10% over the past decade.
  • Commercial enrollment actually declined at both UnitedHealth and Humana.
  • 85% of Humana’s health-plan members are in government-funded programs; at Centene, it is 88%, and at Molina, it is 94%. 

The big insurers now manage most states’ Medicaid programs – and make billions of dollars for shareholders doing so – but most of the insurers have found that selling their privately operated Medicare replacement plans is even more financially rewarding for their shareholders.

Revenue growth from government programs has been dramatic over the past 10 years. (Note the numbers do not include revenue from the Medicare Part D program, federal subsidy payments for many ACA marketplace plan enrollees, or Medicare supplement policies.)

This is especially apparent when you see that the Big Seven’s combined revenues from taxpayer-supported programs grew 500%, from $116.3 billion in 2012 to $577 billion in 2022.

These numbers should be of interest to the Biden administration and members of Congress, many of whom are calling for much greater scrutiny of the Medicare Advantage program. Numerous media and government reports have shown that the federal government is overpaying private insurers billions of dollars a year, largely because of loopholes in laws and regulations that enable them to get more taxpayer dollars by claiming their enrollees are sicker than they really are. The companies also make aggressive use of prior authorization, largely unknown in traditional Medicare, to avoid paying for doctor-ordered care and medications.

In addition to their focus on Medicare and Medicaid, the companies also profit from the generous subsidies the government pays insurers to reduce the premiums they charge individuals and families who do not qualify for either Medicare or Medicaid or who work for an employer that does not offer subsidized coverage. But many people enrolled in those types of plans – primarily through the health insurance “marketplaces” established by the Affordable Care Act – cannot afford the deductibles and other out-of-pocket requirements they must pay before their insurers will begin paying their medical claims. 

Dramatic Enrollment Shifts

Changes in health-plan enrollment over the past decade show how dramatic this shift has been. Between 2012 and 2022, enrollment in the companies’ private commercial plans increased by 10%, from 85.1 million in 2012 to 93.8 million in 2022. 

By comparison, growth in enrollment in taxpayer-supported government programs increased 261%, from 27 million in 2012 to 70.4 million in 2022. 

For-profit insurers dominate the Medicare Advantage market. Note that Anthem mentioned above is now known as Elevance. It owns 14 of the country’s Blue Cross Blue Shield plans. 

Within that category, Medicare Advantage enrollment among the Big Seven increased 252%, from 7.8 million in 2012 to 19.7 million in 2022. 

Nationwide, enrollment in Medicare Advantage plans increased to 28.4 million in 2022 (and to 30 million this year). That means that the Big Seven for-profit companies control more than 70% of the Medicare Advantage market. 

UnitedHealth, Humana, Elevance, and CVS/Aetna have captured most of the Medicare Advantage market since the Affordable Care Act was passed in 2010. 

The remaining growth in the government segment occurred in the Medicaid programs that a subset of the Big Seven (UnitedHealth, Elevance, Centene, and Molina in particular) manages for several states.

A few other facts and figures to keep in mind as Big Insurance thrives:

  • In 2023, U.S. families can be on the hook for up to $18,200 in out-of-pocket requirements before their coverage kicks in, up 43% since 2014 when it was $12,700.The Affordable Care Act allows the out-of-pocket maximum to increase annually – 43% since the maximum limit went into effect in 2014.
  • 44% of people in the United States who purchased coverage through the individual market and (ACA) marketplaces were underinsured or functionally uninsured.
  • 46% of those surveyed said they had skipped or delayed care because of the cost.
  • 42% said they had problems paying medical bills or were paying off medical debt.
  • Half (49%) said they would be unable to pay an unexpected medical bill within 30 days, including 68% of adults with low income, 69% of Black adults, and 63% of Latino/Hispanic adults. 
  • In 2021, about $650 million, or about one-third of all funds raised by GoFundMe, went to medical campaigns. That’s not surprising when you realize that in the United States, even people with insurance all too often feel they have no choice but to beg for money from strangers to get the care they or a loved one needs. 
  • 62% of bankruptcies are related to medical costs. 
  • Even as we spend about $4.5 trillion on health care a year, Americans are now dying younger than people in other wealthy countries. Life expectancy in the United States actually decreased by 2.8 years between 2014 and 2021, erasing all gains since 1996, according to the Centers for Disease Control and Prevention. 

BOTTOM LINE: 

The companies that comprise Big Insurance are vastly different from what they were just 10 years ago, but policymakers, regulators, employers, and the media have so far shown scant interest in putting their business practices under the microscope.

Changes in federal law, including the Medicare Modernization Act of 2003, which created the lucrative Medicare Advantage market, and the Affordable Care Act of 2010, which gave insurers the green light to increase out-of-pocket requirements annually and restrict access to care in other ways, opened the Treasury and Medicare Trust Fund to Big Insurance. In addition, regulators have allowed almost all of their proposed acquisitions to go forward, which has created the behemoths they are today.

CVS/Health is now the 4th largest company on the Fortune 500 list of American companies. UnitedHealth Group is now No. 5 – and all the others are climbing toward the top 10. 

The Presidential Debate will Frustrate Healthcare Voters

Posted on by • Posted in 2024 Election Issues, ACA, Antitrust, Competition, Health Insurance Industry, Health Policy, Healthcare Reform, High Deductible Health Plans, High Drug Prices, High Premiums, High Prices, Market Consolidation, Market Power, Monopoly, Monopoly Behavior, Pharmaceutical Industry, State of the Union • Leave a comment
The Presidential Debate will Frustrate Healthcare Voters

Tomorrow night, the Presidential candidates square off in Philadelphia. Per polling from last week by the New York Times-Siena, NBC News-Wall Street Journal, Ipsos-ABC News and CBS News, the two head into the debate neck and neck in what is being called the “chaos election.”

Polls also show the economy, abortion and immigration are the issues of most concern to voters. And large majorities express dissatisfaction with the direction the country is heading and concern about their household finances.

The healthcare system per se is not a major concern to voters this year, but its affordability is. Out-of-pocket costs for prescription drugs, insurance premiums and co-pays and deductibles for hospitals and physician services are considered unreasonable and inexplicably high. They contribute to public anxiety about their financial security alongside housing and food costs. And majorities think the government should do more by imposing price controls and limiting corporate consolidation.

That’s where we are heading into this debate. And here’s what we know for sure about the 90-minute production as it relates to health issues and policies:

  • Each candidate will rail against healthcare prices, costs, and consolidation taking special aim at price gouging by drug companies and corporate monopolies that limit competition for consumers.
  • Each will promise protections for abortion services: Trump will defer to states to arbitrate those rights while Harris will assert federal protection is necessary.
  • Each will opine to the Affordable Care Act’s future: Trump will promise its repeal replacing it “with something better” and Harris will promise its protection and expansion.
  • Each will promise increased access to behavioral health services as memories of last week’s 26-minute shooting tirade at Apalachee High School fade and the circumstances of Colt Gray’s mental collapse are studied.
  • And each will promise adequate funding for their health priorities based on the effectiveness of their proposed economic plans for which specifics are unavailable.

That’s it in all likelihood. They’re unlikely to wade into root causes of declining life expectancy in the U.S. or the complicated supply-chain and workforce dynamics of the industry. And the moderators are unlikely to ask probative questions like these to discover the candidate’s forethought on matters of significant long-term gravity…

  • What are the most important features of health systems in the world that deliver better results at lower costs to their citizens that could be effectively implemented in the U.S. system?
  • How should the U.S. allocate its spending to improve the overall health and well-being of the entire population?
  • How should the system be funded?

My take:

I will be watching along with an audience likely to exceed 60 million. Invariably, I will be frustrated by well-rehearsed “gotcha” lines used by each candidate to spark reaction from the other. And I will hope for more attention to healthcare and likely be disappointed.

Misinformation, disinformation and AI derived social media messaging are standard fare in winner-take-all politics.

When used in addressing health issues and policies, they’re effective because the public’s basic level of understanding of the health system is embarrassingly low: studies show 4 in 5 American’s confess to confusion citing the system’s complexity and, regrettably, the inadequacy of efforts to mitigate their ignorance is widely acknowledged.

Thus, terms like affordability, value, quality, not-for-profit healthcare and many others can be used liberally by politicians, trade groups and journalists without fear of challenge since they’re defined differently by every user.

Given the significance of healthcare to the economy (17.6% of the GDP),

the total workforce (18.6 million of the 164 million) and individual consumers and households (41% have outstanding medical debt and all fear financial ruin from surprise medical bills or an expensive health issue), it’s incumbent that health policy for the long-term sustainability of the health system be developed before the system collapses. The impetus for that effort must come from trade groups and policymakers willing to invest in meaningful deliberation.

The dust from this election cycle will settle for healthcare later this year and in early 2025. States are certain to play a bigger role in policymaking: the likely partisan impasse in Congress coupled with uncertainty about federal agency authority due to SCOTUS; Chevron ruling will disable major policy changes and leave much in limbo for the near-term.

Long-term, the system will proceed incrementally. Bigger players will fare OK and others will fail. I remain hopeful thoughtful leaders will address the near and long-term future with equal energy and attention.

Regrettably, the tyranny of the urgent owns the U.S. health system’s attention these days: its long-term destination is out-of-sight, out-of-mind to most. And the complexity of its short-term issues lend to magnification of misinformation, disinformation and public ignorance.

That’s why this debate will frustrate healthcare voters.

PS: Congress returns this week to tackle the October 1 deadline for passing 12 FY2025 appropriations bills thus avoiding a shutdown. It’s election season, so a continuing resolution to fund the government into 2025 will pass at the last minute so politicians can play partisan brinksmanship and enjoy media coverage through September. In the same period, the Fed will announce its much anticipated interest rate cut decision on the heals of growing fear of an economic slowdown. It’s a serious time for healthcare!

University of California, UCSF reach agreement on purchase of Dignity hospitals

Posted on by • Posted in Academic Medical Center, Antitrust, Community Benefit, Competition, Health System, Hospital, Hospital Industry, Market Consolidation, Market Share, Mergers & Acquisitions • Leave a comment
https://www.healthcarefinancenews.com/news/university-california-ucsf-reach-agreement-purchase-dignity-hospitals?leadId=1234536&mkt_tok=NDIwLVlOQS0yOTIAAAGUNzfRvCK3PpifvX0crE6K7-EDaVSV0azoB2G1mb6mkYaePtwmTYw3nks1n5bZcNB43_ZIuJI6_bLFbVxzorF-ULOoLUWyWxTCLdhwtJ6snQg

The entities agreed to maintain services, provide capital investments and protect competition in the healthcare market.

California Attorney General Rob Bonta announced a settlement agreement this week reached by The Regents of the University of California and UCSF Health regarding their $100 million purchase of Dignity Health’s two San Francisco hospitals, St. Mary’s Medical Center (SMMC) and Saint Francis Memorial Hospital (SFMH).

Dignity Health is a nonprofit public benefit corporation that owns and operates SFMH, a 259-licensed-bed general acute care hospital, and SMMC, a 240-licensed-bed general acute care hospital. Both hospitals serve a diverse community, including a large number of elderly, unhoused and publicly insured patients who may rely on Medi-Cal, Medicare or charity care to access essential health services.

Under the settlement agreement approved by the San Francisco Superior Court, The Regents and UCSF Health commit to maintain services for the unhoused and Medi-Cal and Medicare beneficiaries, provide $430 million in capital investments, protect competition in the healthcare market and safeguard the affordability of and access to services for residents of San Francisco.

WHAT’S THE IMPACT

The Regents and UCSF Health agreed to a number of conditions over the next 10 years, including operating and maintaining SFMH and SMMC as licensed general acute care hospitals with the same types and levels of services, and associated staffing. They also agreed to continue participating in Medi-Cal and Medicare.

Also agreed upon was providing an annual amount of charity care at SFMH equal to or greater than $6.5 million and at SMMC equal to or greater than $3.5 million, with an annual increase of 2.4% at both hospitals.

The two entities agreed to provide an annual amount of community benefit spending for community healthcare needs at SFMH equal to or greater than $1.6 million and at SMMC equal to or greater than $10.7 million, to increase yearly by 2.4% at both hospitals.

UCSF Health and The Regents also pledged to invest at least $430 million, including at least $80 million for electronic medical record systems and related technologies, and at least $350 million in deferred maintenance and physical infrastructure improvements at both hospitals.

In addition to those agreements, they also agreed to a number of conditions over a seven-year period meant to maintain competition in the healthcare market, in part by maintaining contracts with the City and County of San Francisco for services at SFMH and SMMC unless terminated for cause.

The Regents and UCSF Health agreed to not condition medical staff privileges or contracts on the employment, contracting, affiliation, or appointment status of a physician with UCSF Health or any affiliate; not impose any requirement on any member of the hospitals’ medical staff, as a condition of either their medical staff membership or privileges that restricts them from contracting with providers other than UC Health; and negotiate all payer contracts for the hospitals separately and independently from payer contracts for UCSF Health, and maintain an information firewall between the two negotiating teams.

Finally, the two entities agreed to require, for five years, a price growth cap that limits the maximum that the hospitals may charge a payer from year to year upon renegotiation of contracts.

THE LARGER TREND

Mergers and acquisitions are expected to rebound this year after M&A activity fell to its lowest level in 10 years globally in 2023, according to Reuters.

Deal making last year was weighed down by high interest rates, economic uncertainty and a regulatory scrutiny, with all but the last factor slowly abating for renewed confidence.

Many states now scrutinizing healthcare consolidation 

Posted on by • Posted in Antitrust, Competition, Health System, Hospital, Hospital Industry, Market Consolidation, Market Power, Mergers & Acquisitions, Public Interest • Leave a comment

https://www.kaufmanhall.com/healthcare-consulting/gist-resources-kaufman-hall/kaufman-hall-blogs/gist-weekly

This week’s graphic looks at the plethora of state-level mergers and acquisitions (M&A) oversight laws that are now in place, part of a recent trend that adds further scrutiny to healthcare consolidation. 

Thirty-five states currently have laws that require not-for-profit healthcare entities that meet certain requirements, usually based on revenue size, to report M&A activity to state regulators. Fourteen of these states extend these requirements to for-profit healthcare entities as well. 

These state laws vary in scope but generally target healthcare deals that fall below the federal reporting threshold for transaction size, updated to $119.5M in 2024.

Two states with particularly strong healthcare M&A oversight laws are Oregon and Minnesota. The Oregon Health Authority must pre-approve any healthcare transaction of at least $35M in size.

Passed in 2023, Minnesota’s healthcare antitrust law sets the deal size reporting requirements at $10M, 

but the state commissioner of health and the attorney general do not have to pre-approve all healthcare mergers. Minnesota also requires merging parties to disclose extensive details on the transaction agreement, market impact, service cuts, and more to state regulators, who have broad authority to block mergers on public interest grounds. 

Although some believe that these state laws will help preserve healthcare competition and access, they will increase the complexity, cost, and timeline for healthcare entities seeking to merge and could make survival for smaller providers even more difficult. 

OHSU and Legacy sign definitive merger agreement

Posted on by • Posted in Academic Medical Center, Antitrust, Competition, Definitive Agreement, Health System, Market Consolidation, Market Power, Mergers & Acquisitions • Leave a comment

https://www.kaufmanhall.com/healthcare-consulting/gist-resources-kaufman-hall/kaufman-hall-blogs/gist-weekly

Late last week, Oregon Health & Science University (OHSU) and Legacy Health, both not-for-profit health systems based in Portland, OR, shared that they had signed a definitive agreement to merge after first announcing their intent to combine last August.

The combined system would be the largest in the Portland region, with 12 hospitals and a total annual revenue of about $6.6B. As part of the deal, OHSU has promised to invest about $1B over ten years to upgrade Legacy’s facilities.

The systems are expected to apply this summer for review by Oregon’s Health Care Market Oversight Program, which was established in 2022 and has the authority to deny or attach conditions to healthcare mergers in the state. 
The Gist: If finalized, this merger would connect OHSU’s academic medical center to Legacy’s network of community hospitals and clinics, as well as secure Legacy a needed capital infusion. 

Next steps include review by both federal regulatory agencies and Oregon, which is among a growing number of states to implement M&A oversight laws.

Healthcare winners and losers after FTC bans non-compete clauses

Posted on by • Posted in Competition, Federal Trade Commission (FTC), Health System, Hospital, Hospital Industry, Non-Compete Agreements, Operating Margin Drivers, Outpatient Care, Outpatient Clinic Model, Outpatient Revenue, Physician, Physician Compensation, Physician Contracts, Physician Employment, Primary Care • Leave a comment

https://www.linkedin.com/pulse/copy-healthcare-winners-losers-after-ftc-bans-clauses-pearl-m-d–lidic/

With a single ruling, the Federal Trade Commission removed the nation’s occupational handcuffs, freeing almost all U.S. workers from non-compete clauses. The medical profession will never be the same.

On April 23, the FTC issued a final rule, affecting not only new hires but also the 30 million Americans currently tethered to non-compete agreements. Scheduled to take effect in September—subject to the outcome of legal challenges by the U.S. Chamber of Commerce and other business groups—the ruling will dismantle longstanding barriers that have kept healthcare professionals from changing jobs.

The FTC projects that eliminating these clauses will boost medical wages, foster greater competition, stimulate job creation and reduce health expenditures by $74 billion to $194 billion over the next decade. This comes at a crucial moment for American healthcare, an industry in which 60% of physicians report burnout and 100 million people (41% of U.S. adults) are saddled with medical bills they cannot afford.

Like all major rulings, this one creates clear winners and losers—outcomes that will reshape careers and, potentially, alter the very structure of U.S. healthcare.

Winners: Newly Trained Clinicians

Undoubtedly, the FTC’s ruling is a win for younger doctors and nurses, many of whom join hospitals and health systems with the promise of future salary increases and more autonomy. However, by agreeing to stringent non-compete clauses, these newly trained clinicians have little choice but to place their trust in employers that, shielded by air-tight agreements, have no fear of breaking their promises.

Most newly trained clinicians enter the medical job market in their late 20s and early 30s, carrying significant student-loan debt—nearly $200,000 for the average doctor. Eager for stable, well-paying positions, these young professionals quickly settle into their careers and communities, forming strong relationships with friends and patients. Many start families.

But when these clinicians realize their jobs are falling short of the promises made early on, they face a tough decision: either endure subpar working conditions or uproot their lives. Taking a new job 25 or 50 miles away or moving to a different state are often are only options to avoid breaching a non-compete clause.

In a 570-page supplement to its ruling, the FTC published testimonials from dozens of healthcare professionals whose lives and careers were harmed by these clauses.

“Healthcare providers feel trapped in their current employment situation, leading to significant burnout that can shorten their career longevity,” said one physician working in rural Appalachia.

By banning non-competes, the FTC’s rule will boost career mobility for all clinicians within their own communities. This change will likely spur competition among employers—leading to improved pay and benefits to attract and, equally important, retain top talent. And with the reassurance that they can easily switch jobs if their current employer falls short of expectations, clinicians will enjoy greater professional satisfaction and less burnout.

Winners: Patients In Competitive Markets

Benefits that accrue to doctors and nurses from the FTC’s ban will translate directly to improved outcomes for patients. For example, we know that physicians who report symptoms of burnout are twice as likely to commit a serious medical error. Studies have shown the inverse is true, as well: healthcare providers who are satisfied with their jobs tend to have lower burnout rates, which is positively correlated with improved patient outcomes.

Once freed from restrictive non-compete clauses, many clinicians will practice elsewhere within the community. To attract patients, they will have to offer greater access, lower prices and more personalized service. Others with the freedom to choose will join outpatient centers that offer convenient and efficient alternatives for diagnostic tests, surgery and urgent medical care, often at a fraction of the cost of traditional hospital services. In both cases, increased competition will give patients improved medical care and added value.

Losers: Large Health Systems

Large health systems, which encompass several hospitals in a geographic area, have traditionally relied on non-compete agreements to maintain their market dominance. By barring high-demand medical professionals such as radiologists and anesthesiologists from joining competitors or starting independent practices, these systems have been able to suppress competition and force insurers to pay more for services.

Currently, these systems can demand high reimbursement rates from insurers while also maintaining relatively low wages for staff, creating a highly profitable model. Yale economist Zack Cooper’s research shows the consequence of the status quo: prices go up and quality declines in highly concentrated hospital markets.

The FTC’s ruling challenges those conditions, potentially dismantling monopolistic market controls. As a result, insurers will no longer be forced to contend with a single, dominant provider. And with health systems pushed to offer better wages and benefits to retain their top talent, bottom lines will shrink.

While nonprofit hospitals and health systems are not currently under the FTC’s jurisdiction, the agency has pointed out that these facilities might be at “a self-inflicted disadvantage in their ability to recruit workers.” Moreover, as Congress intensifies scrutiny on the nonprofit status of U.S. health systems, hospitals that do not voluntarily align with the FTC’s guidelines may find themselves compelled to do so through legislative actions.

Losers: Hospital Administrators

Individual hospitals have faced a unique challenge over the past decade. Across the country, inpatient numbers are falling, which makes it harder for hospital administrators to fill beds overnight. This trend has been driven by advancements in medical technology and new practices that enable more outpatient procedures, along with changes in insurance reimbursements favoring less costly outpatient care. As a result, hospital administrators have been compelled to adapt their financial strategies.

Nowadays, outpatient services account for about half of all hospital revenue. These range from physician consultations to specialized procedures like radiological and cardiac diagnostics, chemotherapy and surgeries.

Medicare and other insurers typically pay hospitals more for these outpatient services than they pay local doctors and other facilities. Knowing this, hospitals are hiring community doctors and acquiring diagnostic and procedural facilities, then boosting profitability by charging the higher hospital rates for the same services.

Hospital administrators know that this strategy only works if the newly hired clinicians are prohibited from quitting and returning to practice within the same community. If they do, their patients are likely to go with them. This is why the non-compete clauses are so essential to a hospital’s financial success.

As expected, the American Hospital Association opposes the FTC’s rule, arguing that non-compete clauses protect proprietary information. In practice, most of the doctors affected by the ban are providing standard medical care and have no proprietary knowledge that requires protection.

Looking Ahead

Today’s hospital systems are starkly divided between haves and have-nots. Facilities in affluent areas often enjoy high reimbursement rates from private insurers, boosting financial success and administrator salaries. In contrast, rural hospitals grapple with low patient volumes while facilities in economically disadvantaged, high-population areas face greater financial difficulties.

The current model is not working. The old ways of doing things—enforcing non-competes, charging higher fees for identical services and promoting market consolidation to hike prices—are not sustainable solutions.

The abolition of non-compete agreements will produce both winners and losers. In the healthcare sector, the ultimate measure of a policy’s impact should be its effect on patients—and the overwhelming evidence suggests that eliminating these clauses will benefit them greatly.

Here are the Five Areas the New DOJ Task Force on Monopolies in Health Care Should Focus On

Posted on by • Posted in Antitrust, Competition, Denial, Denial Rates, Dept of Justice (DOJ), Health Insurance Denial, Health Insurance Industry, High Deductible Health Plans, Market Consolidation, Market Power, Market Share, Mergers & Acquisitions, Monopoly, Monopoly Behavior, Out of Pocket Expenses, Out-of-Network, Pharmacy Benefits Management, Prior Authorization, Surprise Bills, Underinsured, Vertical Consolidation, Vertical Integration, Vertical Merger, Vertical Mergers • Leave a comment
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Abuses by payers are myriad, but these five areas could bear the most fruit for federal antitrust investigators.

Earlier this month, the U.S. Department of Justice announced it has haunched an investigation into “issues regarding payer-provider consolidation” along with other problems associated with mergers and acquisitions in health care. This is significant. For years Washington has trained its oversight authority on pharmaceutical manufacturers, private equity investments in health care and, more recently, pharmacy benefits managers controlled by big insurers. This has held bad actors like Martin Skhreli and Steward Healthcare accountable. But, it has also let insurers grow ever larger, under the radar. 

No longer. 

This task force will specifically evaluate the following, as an example: “A health insurance company buys several medical practices that compete with each other. It also prohibits its medical practices from contracting with rival health insurance companies.” The government will also dig into “anticompetitive uses of health care data,” “preventing transparency,” “price fixing,” and other areas that could drag nefarious activities of insurers into the spotlight. 

I applaud the Department of Justice’s continued focus on these issues, building on the Department’s action announced in February to begin an antitrust investigation into UnitedHealth Group. (If you haven’t read the piece we published in February on UnitedHealth’s self-dealing that helped lead DOJ to open that antitrust inquiry, you can do so here.) The following are a few areas of low-hanging fruit that I hope the task force will focus on as they consider the impact insurers’ ongoing vertical integration has had on the overall health care system.

1. Insurers purchasing physician practices

Once a low-profile issue, Congress and the Biden administration alike have increasingly turned their focus to insurance companies – often referred to as payers – that now own and operate physician practices and clinics – those being paid. Even for someone without a law degree, it is easy to see the conflict this creates, particularly at scale. 

There is the oft-cited statistic that UnitedHealth has said that through its Optum division, the company employs or otherwise controls about 10 percent of doctors in the U.S. – around 130,000 physicians and other practitioners in 16 states. This prompted me to take a closer look at publicly available information on the number of doctors employed by other insurers to get a better handle on how much control of physician practices payers now have. 

It is difficult to put a percentage on physicians employed by each insurer, but it is clear that the others are following UnitedHealth’s lead. CVS/Aetna purchased Signify Health in 2023, adding 10,000 clinicians to its portfolio. The company says it supports “more than 40,000 physicians, pharmacists, nurses and nurse practitioners.” 

Clearly taking a page out of UnitedHealth’s playbook, Elevance (formerly Anthem), which owns Blue Cross Blue Shield plans in 14 states announced last month a “strategic partnership” with 900 providers across several states. Elevance did not disclose the terms of the deal except to say it, “will primarily be through a combination of cash and our equity interest in certain care delivery and enablement assets of Carelon Health.” 

As insurers have acquired physician practices, they also have created a rinse-and-repeat strategy associated with kicking physicians they don’t own out of network, and in some cases targeting those same practices for acquisition. Aetna and Humana recently told investors they will be reviewing their networks of physicians, signaling they’ll soon be further narrowing their networks. A good question for this task force: when insurers review those contracts with doctors, do they ever kick the doctors they employ out of network? (Doubtful.) This could specifically draw attention from the task force’s focus on “health care contract language and other practices that restrict competition,” such as contract provisions that require or encourage patients to seek care from doctors directly employed or closely controlled by patients’ insurers.

Additionally, UnitedHealth CEO Andrew Witty recently told analysts, “As I think you see some of the funding changes play out across the — across the next few years, I suspect that may also create new opportunities for us as different companies assess their positions.” My translation: UnitedHealth’s burdensome business practices and the way it shortchanges doctors (those “funding changes” he referenced) contribute to the financial distress that is forcing many health care providers to “assess their positions.”

As the task force continues to consider the impact of private equity in health care monopolies, transactions like this one should receive equal consideration for their lack of transparency and overall impact on market consolidation.

2. Co-mingling of middlemen

I have watched with interest for over the past year as both Democrats and Republicans in Washington increasingly trained their fire on pharmacy benefit managers. The natural next area of focus in that space, which this new task force could advance, should be around how the

three PBMs that control 80 percent of market share are all combined with health insurance companies – namely CVS/Aetna (Caremark), UnitedHealth (Optum Rx), and Cigna (Express Scripts). 

An important, and politically popular, area where this consolidation has played out is in the squeeze placed on small, independent pharmacists across the country. More than 300 community pharmacies have closed in the past year alone, out of an inability to operate or push back on unfair margins pushed by these PBM-insurer monopolies. As we have written here, the fees these PBMs charge have increased more than 100,000 percent over the past decade, and are quietly contributing significantly to the profits of the largest health insurers. 

We still have little insight into how these business lines interact with each other, and the ultimate impact that has on patients. Given the enormous influence just three insurance companies have over what prescriptions Americans can receive, and how much should be paid for each prescription, the task force would do well to focus on what insurers and PBMs are doing behind the scenes to maximize profits and limit patient access to prescription drugs. It’s already gaining traction on Capitol Hill, with one Congressman recently saying, “I’ll continue to bust this up … this vertical integration in health care.”

3. Prior authorization requests

CVS/Aetna shares were hammered after the company reported a significant increase in payment of Medicare Advantage claims during the first three month is of this year. Expect all insurers to notice. And as they have seen their forecasts fall short of Wall Street’s expectations – particularly because of increasing scrutiny in Washington of Medicare Advantage – these corporations will look to increase their already aggressive use of prior authorization to limit claims payments.

It is not as though insurers make seeking the care you need easy. Far from it. Prior authorization has become “medical injustice disguised as paperwork,” as the New York Times said in a recent, excellent video detailing the widespread nature of this profiteering practice. 

While not a stated direct focus of this task force, the increased impact of prior authorization in care delivery is a direct outgrowth of a few large health insurers effectively controlling the marketplace. As insurers directly employ more doctors and enroll more Americans in their plans, they can use prior authorization to increasingly determine whether a patient can get care, period. 

Scrutiny in this space could add momentum to increasing activity in state legislatures and Washington to rein in excessive prior authorization. As of early March, nine states and the District of Columbia had passed bills to limit how far insurers could go with prior authorization. And earlier this year, the Centers for Medicare and Medicaid released a final rule that is expected to save physicians $15 billion over the next decade by putting limits on insurer prior authorization tactics. 

4. Rising out-of-pocket costs

Regular readers of this newsletter know one of my crusades is to ensure folks who pay good money for health insurance – out of their paychecks or through their tax dollars – can use it when they need it. It was a big win earlier this year for the Lower Out of Pockets Now coalition (which I lead) when President Biden called for a cap on prescription drug out-of-pocket costs of $2,000 annually for everybody, not just Medicare beneficiaries. 

If there was true competition and real consumer choice in health insurance, payers wouldn’t be able to get away with increasingly shifting patients into high-deductible plans. But the fact that a few big players control the health insurance market has allowed the oligopoly of payers to do just that, with ever-rising deductibles alongside ever-rising premiums. 

The task force’s focus on price fixing, collusion, and transparency in health care costs will, I hope, include some focus on how insurers use their size and clout to drive up out-of-pocket costs and premiums simultaneously – with little recourse to employers or their employees.

5. Implementing crystal clear laws and rules in health care

You know you’re a monopoly or close to it when you can pretty much do whatever you want and get away with it. Look no further than America’s health insurance companies and implementation of the No Surprises Act. 

As I wrote earlier this year, Congress and CMS have been clear about how out-of-network hospital bills should be negotiated between insurers and physicians. Yet in case after case, including many that have become the basis of lawsuits, insurers are clearly flouting the Act passed by Congress and the rules promulgated by CMS. Payers are doing this, doctors have said, simply because of their size and ability to weather criticism from physicians, regulators, and the courts – while doctors struggle to pay their bills with significant payments still owed pending out-of-network negotiations with insurers. 

One would hope, at a minimum, this task force, focused on rooting out the ills of monopolies, would document how insurers are well aware of how they are supposed to implement legislation like the No Surprises Act, but flout it anyway.

Judge dismisses FTC’s antitrust suit against Welsh Carson

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Regulators sued the PE firm last year for consolidating anesthesiology services in Texas with its portfolio company, U.S. Anesthesia Partners. Now, a judge is holding Welsh Carson blameless.

A Texas federal judge has dismissed the Federal Trade Commission’s antitrust lawsuit against Welsh, Carson, Anderson and Stowe in a big win for the private equity firm. However, the government’s suit against Welsh Carson’s portfolio company U.S. Anesthesia Partners was allowed to continue.

Last year, the FTC sued Welsh Carson and USAP, alleging they pursued a buying spree of anethesiology practices in Texas to create a dominant provider that used its market power to suppress competition and increase the cost of anesthesiology services.

Welsh Carson, which formed USAP in 2012, has since whittled down its ownership of the provider from more than 50% to 23%, and argued that precludes it from being included in the suit. The FTC argued the firm effectively remains in control of USAP.

However, U.S. District Judge Kenneth Hoyt granted Welsh Carson’s motion to dismiss the suit on Tuesday, essentially finding that private equity firms are not liable for the actions of their portfolio companies.

The FTC was unable to prove “any authority for the proposition that receiving profits from an entity that may be violating antitrust laws is itself a violation of antitrust laws,” Hoyt wrote in his opinion.

Hoyt found that Welsh Carson holding a minority share in USAP does not reduce competition, despite USAP’s acquisitions potentially being anticompetitive themselves. In addition, comments from Welsh Carson executives expressing a desire to consolidate other healthcare markets don’t show that the PE firm plans to violate antitrust laws.

If Welsh Carson signals “beyond mere speculation and conjecture” that it’s actually about to violate the law, the FTC can lodge a new lawsuit, the judge wrote.

A spokesperson for Welsh Carson said the firm is “gratified” that the court dismissed the case.

”As we have said from the beginning, this case was without factual or legal basis,” the spokesperson said.

However, Hoyt denied USAP’s motion to dismiss.

The FTC is arguing that USAP — which is the largest anesthesia practice in Texas — leveraged its size to raise prices in the state, resulting in patients, employers and insurers paying tens of millions of dollars more each year for anesthesia services. In addition, USAP allegedly paid a competitor, Envision Healthcare, $9 million to stay out of the Dallas market for five years.

USAP has been criticized for using similar practices to grow in other states, including Colorado.

USAP argued the FTC was overreaching its authority, and regulators’ allegations of anticompetitive conduct were meritless. Hoyt disagreed, pointing out that USAP continues to own the acquired anesthesia groups and continues to charge high prices, including under price-setting agreements. Overall, USAP’s “monopolization scheme remains intact,” according to the opinion.

“The FTC has plausibly alleged acquisitions resulting in higher prices for consumers, along with a market allocation and price-setting scheme. It would be premature to dismiss these claims at this stage,” Hoyt said.

Either way, the dismissal against Welsh Carson is a setback for the FTC, which has taken a more aggressive stance against anticompetitive behaviors in the healthcare industry under the Biden administration.

In December, the FTC and the Department of Justice finalized new guidelines for merger reviews taking aim at previously overlooked practices. Those include private equity roll-ups, when firms acquire and merge multiple small businesses into one larger company — like Welsh Carson’s strategy to grow USAP.

PE firms have acquired hundreds of physician practices across the U.S. in recent years, despite controversy over negative effects on medical quality and cost. One study from 2022 found when private equity took over physician practices, they raised prices by 20% on average.

The FTC declined to comment for this story.

DOJ unveils task force on healthcare monopolies

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The U.S. Department of Justice has announced the formation of the Antitrust Division’s Task Force on Health Care Monopolies and Collusion (HCMC), which will guide the division’s enforcement strategy and policy approach in healthcare.

This will include facilitating policy advocacy, investigations and, where warranted, civil and criminal enforcement in healthcare markets.

“Every year, Americans spend trillions of dollars on healthcare, money that is increasingly being gobbled up by a small number of payers, providers and dominant intermediaries that have consolidated their way to power in communities across the country,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division.

The task force is intended to identify and root out monopolies, as well as any collusive practices that increase costs and decrease quality, according to the DOJ.

WHAT’S THE IMPACT

The HCMC will consider widespread competition concerns shared by patients, healthcare professionals, businesses and entrepreneurs, including issues regarding payer-provider consolidation, serial acquisitions, labor and quality of care, medical billing, healthcare IT services, and access to and misuse of healthcare data.

The task force will also bring together civil and criminal prosecutors, economists, healthcare industry experts, technologists, data scientists, investigators and policy advisors from across the division’s Civil, Criminal, Litigation and Policy Programs, and the Expert Analysis Group to identify and address pressing antitrust problems in healthcare markets.

The HCMC will be directed by Katrina Rouse, a long-serving antitrust prosecutor who joined the Antitrust Division in 2011. She previously served as chief of the division’s Defense, Industrials and Aerospace Section, assistant chief of the division’s San Francisco office, and a special assistant U.S. attorney and a trial attorney in the division’s Healthcare and Consumer Products Section.

Rouse holds degrees from Columbia University and Stanford Law School, and has clerked for federal judges in the U.S. District Court for the District of Maryland and the U.S. Court of Appeals for the Fifth Circuit. She will also serve as the division’s deputy director of civil enforcement and special counsel for healthcare.

The Antitrust Division said it welcomes input from the public, including from practitioners, patients, researchers, business owners and others who have direct insight into competition concerns in the healthcare industry.

Where appropriate, the division will refer matters to other federal and state law enforcers, the DOJ said.

Members of the public can share their experiences with the task force by visiting HealthyCompetition.gov.

THE LARGER TREND

Healthcare monopolies, which can be spurred by hospital consolidation, could have a detrimental effect on consumers’ premiums and out-of-pocket spending due to the resulting outpatient facility fees, a 2023 report found.

Consumer advocates, payers and state regulators flagged a range of issues related to outpatient facility fees. Both consumer advocates and regulators expressed concerns about the financial exposure facility fees created for consumers via increased out-of-pocket spending – driven by plans with high deductibles and other benefit design features that increase patients’ exposure to cost-sharing – and higher premiums resulting from increased spending on ambulatory services.