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Lawmakers weigh ‘anti-competitive’ practices in health care

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CT Mirror

A bill aimed at rooting out anti-competitive practices in the health care sector will be heard by the General Assembly’s Insurance and Real Estate Committee Thursday, as lawmakers work to clamp down on rising health care costs.

S.B. 416 would outlaw certain clauses in contracts between health care providers and insurers that analysts say drive up health care prices and insurance premiums by limiting options for consumers. Advocates say such anti-competitive contract terms have become more common in recent years as the state’s health care sector has consolidated through mergers and acquisitions.

“It’s really just about fairness and giving smaller institutions a chance to compete over quality and price,” said Ellen Andrews, executive director of the Connecticut Health Policy Project. “I care about the small institutions, and I also care about getting better quality and lower prices. Every dollar a premium goes up is a dollar somebody somewhere can’t afford.”

The legislation comes as Gov. Ned Lamont has called on lawmakers to “address the underlying cost of health care” at the start of this year’s legislative session. Advocates say this would be a major step toward doing that.

Representatives for Hartford HealthCare and Yale New Haven Health, the state’s two largest health systems, referred comment to the Connecticut Hospital Association. In an emailed statement, an association spokesperson wrote: “Connecticut hospitals strive to provide patients with the care they need, when they need it, in a location that is both accessible and convenient to them. We assess the changes proposed by the bill through that lens, and we will seek to ensure that the bill doesn’t create more health insurance company hoops that patients have to jump through in order to get the care they need.”

The hospital association has said it will submit testimony for the public hearing.

The Insurance and Real Estate committee began looking into the issue last fall, holding an informational forum with lawyers and researchers in September. In January, Saint Francis Hospital and Medical Center sued Hartford HealthCare in federal court, alleging the health system engaged in some of the same anti-competitive practices. (Hartford HealthCare has filed a motion to dismiss the lawsuit.) Another lawsuit, a proposed class action filed by six plaintiffs in state court in February, made similar allegations against Hartford HealthCare, saying these practices led to higher costs for patients across the state.

‘All-or-nothing’ and ‘anti-steering’ clauses targeted

The Insurance and Real Estate committee raised S.B. 416 in its Feb. 24 meeting.

Modeled after legislation drafted by the National Academy for State Health Policy, the bill targets specific language commonly used by large health care providers in their contracts with insurance companies. For example, a powerful health system might include contract terms like so-called “all-or-nothing” clauses, in which the provider refuses to contract with an insurer if that insurer doesn’t also contract with all the system’s affiliated providers across all markets. That practice would be forbidden under the proposed law.

The bill would also prohibit what are known as “anti-tiering” or “anti-steering” clauses, which undo health plans’ attempts to encourage competition among providers.

Insurers have taken to offering incentives — like lower copays or deductibles — to patients who choose higher-quality, lower-cost providers, in other words “steering” them to these more efficient providers. Or they might place more efficient providers in a preferred “tier,” encouraging providers to compete to offer better care at lower prices in order to be included in that tier. But advocates and researchers say powerful health systems have interfered by requiring, in contracts, that insurers include their networks in preferred tiers — regardless of their performance or prices.

If the legislation passes, contracts that contain such clauses would be “null and void.”

Massachusetts, California and Nevada currently have laws that restrict these types of clauses. A handful of other states, including New York, are considering them. Attorneys general in California and North Carolina have taken legal action against hospital systems over anti-competitive practices.

Advocates say the bigger hospital systems get, the more power they wield in laying out favorable contract terms. “The state is woefully behind in its ability to exercise due diligence and oversight over these behemoth organizations,” said Lynne Ide, policy director with Universal Health Care Foundation of Connecticut.

The state’s health care field has consolidated significantly over the last decade, with Hartford HealthCare and Yale New Haven Health steadily gaining share in markets around the state. YNHH recently announced it had signed an agreement with Los Angeles-based Prospect Medical Holdings to acquire its three Connecticut-based hospitals, which would result in more than half the state’s 27 hospitals being owned by either YNHH or Hartford HealthCare. Trinity Health and Nuvance each own three hospitals, and the state’s remaining seven hospitals are independent.

Hospital consolidation is not just happening in Connecticut. Nationally, the trillion-dollar health care sector has seen an acceleration in health care mergers and acquisitions in recent years, which has driven up prices without improvements in quality, studies show. There have been more than 1,600 hospital mergers in the United States over the last two decades, and most local markets now have one dominant provider. That creates “considerable potential” for anti-competitive conduct, Carnegie Mellon University professor Martin Gaynor told the U.S. Senate last year.

In Connecticut, the Attorney General’s office has been tracking the mergers but has not taken legal action. The civil lawsuits filed against Hartford HealthCare could take months, if not years, to resolve — and could settle out of court.

A spokesperson for the state Attorney General declined to comment. A spokesperson for the state Office of Health Strategy said Tuesday the office’s executive director was unavailable to comment for this story. OHS has said it will submit testimony for Thursday’s hearing.

With the health care sector as concentrated as it already is in Connecticut, advocates say rules like those set out in S.B. 416 are now the best way to promote competition — and maintain patients’ access to affordable, high-quality care.

CT Mirror staff writer Katy Golvala contributed to this story.