Regulation

The Petris center analyzes the capacity to provide high-quality care at competitive prices. Touching on solvency, consumer protection, anti-competitive pricing, and universal health coverage initiatives,  we provide information to regulators on the current management of health systems.

Covered California: The Impact of Provider and Health Plan Market Power on Premiums

By Richard M. Scheffler, Eric R. Kessell and Margareta Brandt | Published in October 2015 in the Journal of Health Politics, Policy, and Law Link to Full Article 

We explain the establishment of Covered California, California’s health insurance marketplace. We describe the market shares of health plans in California and in each of the nineteen rating regions. We examine the empirical relationships among measures of provider market concentration, health plans, and the variation in premiums across the rating regions. We found that the concentration of medical groups and hospitals was positively associated with the variation in Covered California premium rates in the rating regions while the concentration of health plans is not statistically significant. We estimate the impact of reducing hospital concentration to levels that would exist in moderately competitive markets. This produces a predicted overall premium reduction of more than 2 percent. However, in three of the nineteen rating regions, the predicted premium reduction was more than 10 percent. These results suggest the importance of provider market concentration on premiums.

State Actions to Promote and Restrain Commercial Accountable Care Organizations

By Ann Hollingshead, Jaime King, Brent D. Fulton, Joshua Rushakoff, Richard M. Scheffler | Published May 2015 by the Millbank Memorial Fund | Link to Full Report

Accountable Care Organizations (ACOs), originally developed as part of the Affordable Care Act (ACA), are growing—and serve both public and private sector payers. They have the potential to improve health care quality and patient outcomes while achieving cost savings. However, they may also present risks—including those related to solvency, consumer protection, and anti-competitive pricing—to providers, patients, and payers. This report draws on evidence from the literature and four case studies to outline tools that state governments can use to promote the potential benefits of ACOs while mitigating their potential risks.

CPAC Health Insurance Premium Rate Review Regulation: Case Studies to Inform California

by Brent D. Fulton, Richard M. Scheffler | Published April 2012 by the Petris Center and the California Program on Access to Care | Link to Full Report

The objective of this study is to examine health insurance rate review regulation in Minnesota and Massachusetts, to inform California policy-makers regarding evidence on prior approval authority. This evidence is intended to inform California’s proposed change from file-and-use to prior-approval authority, based on AB 52 “Health Care Coverage: Rate Approval.” The methods included reviewing the literature on rate review regulation, interviewing officials from state agencies that approve rates, and interviewing senior actuaries and executives from health insurance carriers. Three interviews were conducted on Minnesota, three interviews were conducted on Massachusetts, and two interviews were conducted on California. Minnesota was selected because it has exercised its prior approval authority for at least 15 years, which provides a long period of time to analyze. Massachusetts was selected because it only began exercising its prior approval authority—technically prior review and disapproval authority—in April 2010, providing an example of a state just starting prior approval rate review.

Accountable Care Organizations and Antitrust: Restructuring the Health Care Market

By Richard M. Scheffler, Stephen M. Shortell, and Gail R. Wilensky | Published April 2012 in JAMA | Link to Full Article

On October 20, 2011, The Centers for Medicare & Medicaid Services (CMS) released the final rules for accountable care organizations (ACOs), a highly publicized initiative of the Affordable Care Act. Accountable care organizations are part of the Medicare Shared Savings Program, which is charged with improving quality of care for Medicare patients. The CMS provided incentives for ACOs to deliver high-quality care at reduced rates of spending by providing a more coordinated team approach to health care delivery. On the same day, the Federal Trade Commission and Department of Justice provided guidelines addressing antitrust issues involving the formation of ACOs. The concern is that ACOs can result in a reduced number of competitors in health care markets, which could potentially increase prices and have negative consequences for consumers and purchasers of care. The CMS, the Federal Trade Commission, and the Department of Justice are seeking balance between integration efficiencies and market power in ACOs. This piece examines the 5 major issues physician leaders and policy makers will need to consider in the creation of ACOs. These include the following: market definition and power, efficiency and quality metrics, physician and hospital exclusivity, public-private cost shifting, and monitoring.

Accountable Care Organizations and Antitrust Conference Briefing Document

by Liora Bowers, Benjamin Handel, Emilio Varanini, Richard Scheffler | Published November 2011 by the Petris Center | Link to Full Briefing Document

This briefing paper serves as a background for the discussion that took place during the “Accountable Care Organizations and Antitrust Conference” held on November 11, 2011 at UC Berkeley. With the October 20, 2011 release of the final rule creating the Medicare Shared Savings Program (MSSP), the Center for Medicare & Medicaid Services has paved the way for a national move towards coordinated delivery systems known as Accountable Care Organizations (ACOs). This paper provides background on government policy towards an accountable care delivery system, the balance between integration efficiencies and market power, and the goals and methods of antitrust analysis within healthcare delivery. It provides context for the issues of market definition, anticompetitive effects, antitrust evaluations, and contracting practices among healthcare providers. The paper concludes with a brief discussion of the California ban on the corporate practice of medicine.