Antitrust regulators have asked six health insurers for claims data as they study the impact of physician consolidation.
The Federal Trade Commission's request late Thursday is part of the FTC's revamp of its merger retrospective program, given the lack of detailed information on how physician practice mergers and hospital acquisitions of physicians affect competition, the commission said. Regulators hope the analysis determines whether the agency's threshold for bringing an enforcement action in a merger case has been too permissive.
"The goal of this initiative is to encourage economists both inside and outside the agency to carry out more retrospective studies to test our analytical tools and strengthen our enforcement efforts," FTC Chairman Joseph Simons said in prepared remarks.
While the new mandate to disclose payer-negotiated rates is a step in the right direction, powerful health systems have historically obfuscated pricing data to pad profits, said Elizabeth Mitchell, CEO of the Pacific Business Group on Health, which was part of the team that brought the antitrust lawsuit against Sutter Health on behalf of employers.
"Requiring submissions of claims from health plans to get visibility into pricing is notable because you can't get it otherwise," she said. "It is no wonder that states and regulators have had so much trouble effectively regulating this when they have no visibility into it."
Health systems, insurers, large physician groups and private equity firms continue to vie for physicians.
Insurers often see owning physician practices as a way to control spending. Health systems seek physicians' referrals. Both look to expand access to their customers while closely managing patient care to improve quality and outcomes. Competition across the industry builds on itself, leading to more consolidation.
But when vertical transactions are proposed, regulators have less experience and tools at their disposal to challenge the deals. The FTC often challenges those deals using the horizontal merger guidelines.
The commission updated its vertical merger guidelines last year for the first time since 1984. But healthcare antitrust experts criticized the lack of detail on how the government will analyze deals between organizations across the delivery system, such as hospitals and physician groups.
"The potential of cumulative anticompetitive effects arising from sequential vertical mergers is particularly acute in healthcare given that physician practice consolidation has been driven by small acquisitions that make it difficult for agencies to intervene," a group of economists wrote in a public comment letter to the FTC regarding the vertical merger guidelines.
Richard Scheffler, a University of California at Berkeley professor and healthcare economist that co-authored that letter, found that premiums and outpatient prices spiked as California health systems have incrementally acquired physician groups.
In 41 highly concentrated California counties, the percentage of hospital-employed physicians increased from about 25% in 2010 to more than 40% in 2016, according to a 2018 Health Affairs study. Researchers estimated that the shift in ownership translated to a 12% increase in Affordable Care Act premiums, a 9% hike in specialist prices and 5% boost in primary care prices from 2013 to 2016.
"The pricing power providers get through consolidation is one of the key drivers of unaffordable care. All of the studies show that higher prices are not related to better quality or experience, it is just market leverage" Mitchell said.
Most studies have found similar increase in prices and a limited effect on quality measures as health systems acquire doctors. Health systems often target smaller transactions that fall below regulators' radar, building up their market power through physician acquisitions over time, economists found.
"We think there is an even bigger risk during COVID because primary care practices have become so vulnerable. Some are closing their doors when we need them most, leaving them vulnerable to acquisition," Mitchell said. "A strong primary care foundation is the key to a strong healthcare system and we are going in the wrong direction."
The FTC issued orders to Aetna, Anthem, Florida Blue, Cigna, Health Care Service Corp. and UnitedHealthcare to submit patient-level commercial claims data for inpatient, outpatient and physician services in 15 states from 2015 through 2020.