November 3, 2021

PBGH Statement on New Legislation to Ban Anti-Competitive Practices in Health Care Contracting

The Purchaser Business Group on Health (PBGH) commends Sen. Mike Braun (R-IN) and Sen. Tammy Baldwin (D-WI) for introducing the Healthy Competition for Better Care Act. The legislation would ban a set of anti-competitive contracting practices used by dominant hospital systems, like Sutter Health, which settled a class action lawsuit earlier this year. This will help ensure that contracts do not include terms that restrict healthy competition, allowing working families to access the best care at affordable prices.

In 2018, hospital prices in commercial plans across the U.S. averaged 247% of Medicare payments and the gap has been increasing. This means higher costs for employers and the working families they purchase health care for. The increase in prices is largely the result of industry consolidation and the use of anti-competitive contracting practices to gain market power, which enables hospitals, health systems and provider groups to raise prices. Large health systems use their size to force purchasers to agree to anti-competitive clauses in contracts, making it harder to people to get access to high quality, affordable health care.

Previously passed on a bipartisan basis by the Senate HELP Committee as Sec. 302 of the Lower Health Care Costs Act in 2019, the Healthy Competition for Better Care Act would crack down on these anti-competitive practices and make health care better for patients by ensuring that contracts between health insurance issuers and health systems:

  • Allow discounts or incentives for enrollees who choose high-quality and low-cost providers;
  • Allow insurers and employers to contract with the right hospitals and providers for their patients, without requirements to enter into additional contracts with other affiliated providers or hospitals;
  • Allow health insurance issuers to negotiate their own rates with other providers who are not party to the contract of the provider involved; and
  • Allow hospitals and issuers to freely negotiate prices, without requirements to pay higher amounts for items or services than other issuers have agreed to.

“Where markets have failed because of anti-competitive behavior, federal policymakers have a responsibility to prohibit these practices and restore healthy competition,” said Elizabeth Mitchell, president and CEO of PBGH. “Sen. Braun and Sen. Baldwin are taking necessary steps to protect employers and the millions of people who they purchase care for.”