Health Care and Competition Law and Policy

May Topics

The Antitrust Division and the Federal Trade Commission are cohosting hearings on health care and competition law and policy. This page provides details on topics for the May hearings.

For more information, consult the hearings information page or contact David Kelly, Litigation I Section (david.kelly@usdoj.gov or 202-616-9447).

May 7, 2003

Morning Session
9:15 a.m. to 12:15 p.m.
Health Insurance/Providers - Countervailing Market Power

Providers have argued that health plans routinely wield monopsony power, reducing provider reimbursement and quality. Solutions proposed by providers include legislation or doctrinal development that would permit providers to acquire countervailing market power. The providers argue that, if permitted to acquire countervailing market power, they can correct the problems caused by the health plans’ exercise of monopsony power.

Questions for consideration:

• Assuming the possession of significant monopsony power by health plans, would the aggregation of market power by providers have a net benefit or cost?
• Under what conditions, if any, would the aggregation of market power by providers reduce the monopsony power of purchasers?
• Are those conditions likely to be present in health care markets?
• Does the reverse also hold, that is, should health plans be permitted to acquire monopsony power in response to the possession of significant market power by providers?
• Should both physicians and hospitals be permitted to acquire countervailing market power, or is this an option that should only be available to certain providers?
• Leaving aside the economic justifications for acquiring countervailing market power, does existing legal precedent leave open the possibility of doctrinal developments that would permit providers to engage in what would otherwise be unlawful collective bargaining?

Donald H. Crane, California Association of Physician Organizations
Stephen Foreman, representing American Medical Association
Martin S. Gaynor, Carnegie Mellon University
James Langenfeld, LECG, Inc.
Robert Leibenluft, representing Antitrust Coalition for Consumer Choice in Health Care
Mark Tobey, Office of the Attorney General, Texas
Monica Noether, Charles River Associates
Additional panelists to be announced

Afternoon Session
2:00 p.m. to 5:00 p.m.
Most Favored Nation Clauses

A “most favored nation” (MFN) clause is a contractual agreement between a supplier and a customer that requires the supplier to sell to the customer on pricing terms at least as favorable as the pricing terms on which that supplier sells to other customers. These clauses are not infrequently found in contracts health insurers enter into with hospitals or physicians. They allow the insurer to be confident that the reimbursement rates it pays providers are no greater than those that its competitors have negotiated. MFNs, however, may raise competitive concerns because they can discourage providers from lowering the reimbursement rates they offer to some insurers. Consequently, the agencies continue to receive and evaluate complaints about MFNs to determine whether they merit more complete investigation and enforcement action.

Questions for consideration:

• What are the pro-competitive justifications for MFNs?
• What competitive concerns do they raise?
• What are the agencies’ prior enforcement activities with respect to MFNs, and what are the characteristics of the market and/or the contracts that lead to such action?

Jonathan B. Baker, Charles River Associates
William G. Kopit, Epstein, Becker and Green, P.C.
Thomas Overstreet, Charles River Associates
Robert M. McNair, Jr., Drinker, Biddle and Reath, LLC
Steven Snow, Partridge, Snow & Hahn, LLP
Additional participants to be announced

May 8, 2003

Morning Session
9:15 a.m. to 12:15 p.m.
Physician Hospital Organizations

A Physician Hospital Organization (PHO) is a vertical arrangement that combines physician and hospital services within one organization. In theory, PHOs may create incentives to lower prices and enhance quality. In practice, many PHOs have declared bankruptcy or dissolved. The agencies have taken several enforcement actions against PHOs in response to specific anti-competitive conduct.

Questions for consideration:

• What anti-competitive risks do PHOs create?
• For example, would doctors who are not members of the PHO be denied privileges at the hospital or given less favorable treatment?
• Under what circumstances might it be anti-competitive for a physician hospital organization to offer an insurance product?
• What factors have led the agencies to take action against PHOs?

Brad Buxton, Blue Cross Blue Shield of Illinois
Serdar Dalkir, Microeconomic Research Consulting Associates
Margaret E. Guerin-Calvert, Competition Policy Associates, Inc.
John P. Marren, Hogan, Marren & McCahill, Ltd.
John J. Miles, Ober, Kaler, Grimes and Shriver
Additional panelists to be announced

May 27, 2003

Afternoon Session
2:00 p.m. to 5:00 p.m.
Quality and Consumer Information: Overview

Quality of care has been extensively studied by health care providers and health services researchers.

Questions for consideration:

• What is known about the quality of care provided in the United States?
• What measures (whether structure, process, or outcome) correlate with the quality of care that is delivered and how predictive are these measures?
• What institutions help ensure the quality of care delivered in the United States, and how effective have they been?
• How do employers factor quality into the equation when designing benefits?
• How do payors (both private and public) factor quality into their coverage decisions and their design of delivery options?
• What information is available to employers and payors in making such decisions?
• What are the economics of information provision and use in health care?
• What is the significance of the widespread use of process-based measures of quality?

Carolyn Clancy, Agency for Healthcare Research and Quality
Elliot Fisher, Dartmouth Medical School
Martin Gaynor, Carnegie Mellon University
Regina Herzlinger, Harvard Business School
Karen Ignani, American Association of Health Plans
Michael Millenson, Kellogg School of Management, Northwestern University

May 29, 2003

Two Sessions
9:15 a.m. to 12:15 p.m. and 2:00 p.m. to 5:00 p.m.
Quality and Consumer Information: Hospitals

Information is an important component of a well-functioning market.

Questions for consideration:

• What information do hospitals provide to consumers concerning the quality of the goods and services they offer?
• Is the type and amount of the information that hospitals provide concerning quality adequate to allow consumers to make well-informed purchasing decisions among hospitals?
• If not, what additional information do consumers need or want to make such decisions and why are hospitals not already providing it in the marketplace?
• Does the quantity and quality of the information that consumers would find helpful depend on the nature of the underlying condition (acute v. chronic) and treatment (surgical v. medical; curative v. palliative; elective v. medically necessary)?
• What is the state of the art with regard to measures of hospital quality, whether structure, process, or outcome?
• In particular, would the disclosure by hospitals of their nosocomial infection rate, or the type of physician who will be providing care (for example, does the hospital use hospitalists and intensivists), or of medical professional staffing levels (for example, nurses) assist consumers in making well-informed purchasing decisions?
• What are the risks of relying on (and disclosing) process-based measures of hospital quality?
• How would competition on quality measures affect costs, prices, and decisions by payors and customers?
• How does compensation affect quality?
• Can compensation be harnessed to enhance the performance of hospitals?

Gloria Bazzoli, Virginia Commonwealth University
Paul Conlon, Trinity Health
Suzanne Delbanco, The Leapfrog Group
Nancy Foster, American Hospital Association
Irene Fraser, Agency for Healthcare Research and Quality
Judith Hibbard, University of Oregon
Charles (Chip) Kahn, Federation of American Hospitals
Daniel Kessler, Stanford Business School
Arnold Milstein, Pacific Business Group on Health
Louise Probst, Gateway Purchasers for Health and the St. Louis Area Business Health Coalition
Patrick Romano, University of California, Davis
William Sage, Columbia University School of Law
Anthony Tirone, JCAHO
Additional witnesses to be announced

May 30, 2003

Two Sessions
9:15 a.m. to 12:15 p.m. and 2:00 p.m. to 5:00 p.m.
Quality and Consumer Information: Physicians

Health services research has documented enhanced outcomes for certain procedures when physicians perform a high volume of such procedures (volume-quality relationships). Other research has demonstrated considerable geographic variation in physician practice patterns, without demonstrable effects on outcome. When care is provided at academic medical centers, treatment is routinely provided by physicians at all levels of training, but some have argued that patients do not realize that treatment is provided by less experienced practitioners. Other research has demonstrated that many patients do not receive the care they desire in the last few months of life, even after they have executed a living will or a durable power of attorney.

Questions for consideration:

• What are the consumer information implications of these results?
• Should physicians disclose to potential patients the existence of volume-quality relationships and the number of such procedures they have performed?
• Should physicians disclose the existence of geographic variation in practice patterns to potential customers?
• What is the nature of disclosure to patients who receive care in academic medical centers about who will be providing their treatment?
• What is the nature of disclosure to patients about end-of-life care, living wills, and durable powers of attorney?
• How effective has the Patient Self-Determination Act been in enhancing disclosure to patients about end-of-life care, living wills, and durable powers of attorney?
• Does the failure to adequately disclose any of this information or to adhere to patient preferences in the delivery of health care goods and services raise consumer protection issues?
• How would competition on such measures affect costs, prices, and decisions by payors and consumers?
• Are there other measures that consumers would find helpful in determining which physicians to patronize?
• Does the quantity and quality of the information that consumers would find helpful depend on the nature of the underlying condition (acute v. chronic) and treatment (surgical v. medical; curative v. palliative; elective v. necessary)?
• What is the state of the art with regard to measures of physician quality, whether structure, process, or outcome?
• How does compensation affect quality?
• Can compensation be harnessed to enhance the performance of physicians?

Robert Berenson, Academy Health
Clark Cowan, representing American Medical Association
Christine Crofton, Agency for Healthcare Research and Quality
Charles Darby, Agency for Healthcare Research and Quality
Drew Kumpuris, Washington & Lee University
Wendy Levinson, University of Toronto
Glenn Mays, representing the Center for Studying Health System Change
Arnold Milstein, Pacific Business Group on Health
Nancy Nielson, representing American Medical Association
Peggy O’Kane, NCQA
Additional witnesses to be announced

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