Grassley calls for Federal Trade Commission to examine hospital, insurer contracting

NewYork Presbyterian
NewYork-Presbyterian Hospital has been cited as an example of a health system that had a contract with an insurer that blocked the sale of plans that didn't include it. (NewYork-Presbyterian Hospital)

Senate Judiciary Committee Chairman Chuck Grassley is calling for the Federal Trade Commission to examine "potentially anticompetitive contracting practices between insurers and hospital systems" that could be driving up costs for consumers. 

Chuck Grassley (U.S. Senate)

In the letter sent to FTC Chairman Joseph Simons on Wednesday, Grassley, R-Iowa, pointed to a Wall Street Journal report from September.

That piece highlighted restrictive contracts between insurers and dominant health systems that effectively mask prices from consumers, limit audits of claims, add extra fees and block efforts to exclude healthcare providers based on quality or cost.

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“If true, these practices undermine Congress’s efforts to lower the cost of, and increase access to, health care for millions across the country," Grassley said in the letter. "The last thing American patients and consumers need at this time is a health care system that permits or encourages anticompetitive agreements that hinder access to lower cost care."

RELATED: Grassley urges 'careful analysis' of healthcare mergers, citing drug supply chain consolidation

He also raised concerns that consolidation in the marketplace is magnifying the impact of such contracts. In the spring, Grassley called on the Justice Department to closely scrutinize major healthcare mergers between CVS-Aetna and Cigna-Express Scripts, citing anticompetitive concerns.

In his letter, Grassley pointed to the Department of Justice litigation against Charlotte, North Carolina-based Atrium Health, a nonprofit health system formerly known as Carolinas HealthCare System. That suit challenged CHS’s practice of imposing steering restrictions in its contracts with commercial health insurers.

RELATED: Atrium Health agrees to part ways with Mecklenburg Medical Group after physicians sue for independence

"It is critical for Congress to understand the FTC’s perspective on these issues, including whether contractual provisions—like those highlighted in recent reports—impact the cost of health care in the United States," Grassley said.

The American Hospital Association said it is carefully reviewing Grassley's letter, but raised concerns with its premise.

"This letter is based on an article that fails to understand the balance of power between commercial insurers and hospitals and the role of consolidation on prices,"  the AHA said in a statement. "Research published recently in Health Affairs, for example, found that it was insurer consolidation that was positively correlated with higher premium prices, which has implications for the level of influence insurers have in contract negotiations with providers,"

 

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