Nov. 29, 2018
Issue SpotlightMajority of commercial health insurance markets are highly concentrated
The 2018 Update to Competition in Health Insurance: A Comprehensive Study of U.S. Markets presents 2017 data on the degree of competition in health insurance markets. It identifies areas where consolidation among health insurers may cause competitive harm to patients and physicians. It also addresses the following questions:
- Are health insurance markets competitive, or do health insurers exercise market power?
- Are proposed mergers between insurers likely to maintain, enhance or create such power?
The impetus for the study is a heightened interest in health insurer mergers and a need to identify markets where these mergers would cause competitive harm.
The study examines market share and concentration data for 50 states, the District of Columbia, and 380 metropolitan statistical areas (MSAs). It finds that the majority of U.S. commercial health insurance markets are highly concentrated and are ripe for the exercise of health insurer market power that harms patients and physicians.
"The AMA continues to urge that competition, not consolidation, is the right prescription for health insurance markets," said AMA President Barbara L. McAneny, MD. "The slide toward insurance monopolies has created a market imbalance that disadvantages patients and favors powerful health insurers. The prospect of future mergers involving health insurance companies should raise serious antitrust concerns. There is already too little competition among insurers, to the detriment of patients. Networks are already too narrow, and premiums are already too high."
The report's data are based on commercial enrollment in HMO, PPO, POS and public exchange plans, including participation in consumer-driven health plans.
To measure market concentration, the researchers used the Herfindahl-Hirschman Index (HHI), a measure used by the Justice Department and Federal Trade Commission as an indicator of market competition. Smaller numbers indicate greater competition. An HHI of 10,000 indicates a monopoly.
The study finds that in 91 percent of MSAs, at least one insurer had a commercial market share of 30 percent or greater. In 46 percent of MSAs, a single insurer's market share was at least 50 percent.
Other findings include:
- In 2016 and 2017, Anthem topped the list of insurers with the highest market share in more MSA-level markets than any other insurer.
- Seventy-three percent (276) of commercial markets are highly concentrated (HHI>2,500).
- The average HHI in commercial markets was 3464, and the median HHI was 3199.
- The 10 states with the largest decrease in competition levels between 2016 and 2017 include North Dakota, Alaska and Louisiana.
- The 10 states with the least competitive commercial health insurance markets include Alabama, Hawaii and Louisiana.
In general, although there were increases in the statistics reported in this 2018 Update from those in last year's (2017) Update, those increases were largely due to changes in MSA definitions. In particular, there are a number of "new" MSAs in the 2018 Update that were formerly micropolitan statistical areas, which tend to be less populous and have higher market concentration.
While mergers and acquisitions can have beneficial and harmful effects on consumers, only the latter has been observed. It appears that consolidation has resulted in the possession and exercise of health insurer monopoly power—the ability to raise and maintain premiums above competitive levels—instead of the passing of any benefits obtained through to consumers.
The AMA led a 17-state medical society coalition and marshaled nationally recognized economic and legal experts to block the proposed Anthem-Cigna megamerger that fell apart in 2017. Had the deal gone through, it is estimated that physicians would have lost around $500 million annually in reduced payments.
More recently, the AMA has worked to block the proposed CVS-Aetna merger. While the AMA welcomed the Justice Department's requirement that Aetna divest itself of its Medicare Part D drug plan business, the Association was disappointed that deal would be allowed to go forward.
The AMA will continue to monitor competition in health insurance markets to assess the competitive effects of proposed mergers among health insurers.
The Improving Medicare Post-Acute Care Transformation (IMPACT) Act of 2014 calls for the Health and Human Services Department secretary, acting through the Assistant Secretary for Planning and Evaluation (ASPE), to conduct a study evaluating the effect of individuals' socioeconomic status (SES) on quality measures and measures of resource use under the Medicare program.
The first component of the statute required a 2016 Report to Congress. For the second report, which will expand upon the first and will be released in late 2019, ASPE is looking at the interaction of medical and social risk Medicare datasets to quantify socioeconomic status. As a result, ASPE recently released a request for information to inform the second report.
The AMA's comments focus on rural and underserved patient populations. More specifically:
- The need for education on how to collect and document social risk factors and social determinants of health including access to resources to address such factors in a manner that respects a patient's autonomy and privacy and do not lead to increased physician administrative burden
- Legal restrictions that may limit a physician's ability to successfully implement these practices
- The ability for physicians to receive financial incentives or other reimbursement methods to offset these costs
- Standardization of social determinants of health data elements to enable reliable and consistent tracking of progress, integration into electronic health records and registries, and for aggregation of the information for secondary uses such as measurement
The AMA submitted comments on Nov. 26 to the Food and Drug Administration (FDA) in support of revised draft guidance the agency issued on drug compounding. The revised draft guidance "Insanitary Conditions in Compounding Facilities" updates previous guidance under the same name that would have regulated physician offices as compounding pharmacies if those offices were engaged in sterile drug preparation.
Under the previous guidance, physicians preparing drug products such as allergy injections, buffered lidocaine and others would have been subject to the same environmental and engineering control requirements as pharmacies compounding sterile drug products. As most physician offices would be unable to meet these requirements, the AMA worked closely with FDA to push for changes before the guidance was finalized. Earlier this summer, FDA re-released the guidance as a revised draft that no longer included physician offices in the definition of compounding facility. The revised draft also noted that the FDA does not intend to take enforcement action against physician offices who are preparing sterile drug products for administration to their patients within the office setting.
While the proposed FDA revisions would be a win for the physician community, physicians are still facing challenges with the work of the United States Pharmacopoeia (USP) to revise their Chapter 797 standards for sterile compounding. As many states adopt the requirements of USP Chapter 797 as official standards, it is critical that those standards do not subject physicians to overly burdensome environmental and engineering requirements.
The AMA continues to work closely with impacted physician specialty organizations and USP to ensure the final updated Chapter 797 accommodates physicians engaging in the appropriate preparation of sterile drug products for administration to patients.
Register now for the 2019 AMA State Advocacy Summit (formerly the State Legislative Strategy Conference) which will be held Jan. 10-12 in Scottsdale, Arizona. The program will focus on how to successfully advocate during turbulent times. Sessions will cover topics such as:
- Harnessing the power of the physician voice
- Protecting patients in a changing regulatory environment
- Restoring and improving access to care in the individual market
- Reversing the opioid epidemic
- Navigating a post-consolidation world
- Regulating pharmacy benefit managers
Join Jack Resneck Jr., MD, chair of the AMA Board of Trustees, and others who are ready to address the issues all physicians are facing at the state level. Register now for both the SAS and the National Advocacy Conference and save 20 percent.
The American Psychiatric Association (APA) has created state-specific legislation to help implement the Mental Health Parity and Addiction Equity Act (MHPAEA) for all 50 states. Provisions within the APA model legislation and AMA model legislation are closely aligned. Despite the fact that MHPAEA was enacted over a decade ago, many insurers are still not compliant with the law, particularly in regard to how they design and apply managed care practices such as prior authorization, step therapy, and payment rate setting, among others.
The APA and AMA model language requires insurers to submit analyses demonstrating their compliance with the law regarding the design and application of managed care practices. The legislation also requires state regulators to enforce MHPAEA and report on their implementation activities. APA staff has made the introduction of legislation easier by formatting 50 individual bills that amend the correct sections of state law, and uses the proper terminology used in that state to describe insurers, mental health conditions and substance-use disorders, and insurance regulators. Legislation similar to this model language has already been signed into law in states such as Delaware, Illinois, and Tennessee.
For more information about the APA model bill, please contact Tim Clement at email@example.com.
For more information about the AMA model bill, please contact Daniel Blaney-Koen at Daniel.firstname.lastname@example.org.
Jack Resneck Jr., MD, chair of the AMA Board of Trustees, presented before the National Association of Insurance Commissioners (NAIC) on Nov. 16 and encouraged the nation's insurance regulators to enforce and support states laws that ensure patient access to covered benefits. For example. Dr. Resneck identified prior-authorization requirements as a major reason why covered care may be delayed or denied and an area where greater enforcement of state laws is needed.
Not only will better regulation of utilization-management programs improve individual patient outcomes, but such regulation may prevent spending on eventual costly care when patients are initially denied a prescription, an ultrasound, an MRI, physical therapy, a biopsy, specialty care or other services.
Dr. Resneck also discussed the need for improved regulation of provider networks, including meaningfully evaluating networks for hospital-based providers, to again ensure access to covered benefits and value for premiums paid.
The AMA is working to stop prior authorization and other administrative barriers from standing in the way of patients' access to covered care. Visit fixpriorauth.org for resources and tools for patient and physician advocates, and to share your story about how utilization management has stood in the way of patient care.
A group of national medical associations is calling on a federal court to block the expansion of short-term insurance policies that put buyers and the individual health care coverage market at risk.
The AMA and other organizations representing nearly a million physicians and other health professionals submitted an amicus brief supporting a preliminary injunction against the Trump administration's 2018 final rule on short-term, limited-duration insurance (STLDI). Critics charge the rule creates an unlawful permanent alternative to individual coverage compliant with the original provisions of the Patient Protection and Affordable Care Act (ACA).
The strongly worded brief argues that the rule "sabotages" the ACA and endangers the broad-based risk pools that make coverage affordable.
"The rule will be devastating to the health, well-being and pocketbooks of millions of Americans—and disproportionally so for women, children and the chronically ill," the brief says. The rule would, further, threaten "to undo the ACA's vital patient reforms, moving the health insurance market back to the days where Americans had no or inadequate insurance."
The brief was filed on behalf of the plaintiffs in Association for Community Health Plans v. U.S. Department of the Treasury. They are seeking a preliminary injunction and a permanent end to the rule in the U.S. District Court for the District of Columbia.
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The Playbook's contributions from over 80 physicians, care team members, health administrators, patients, and digital health thought leaders, aggregate best practices, tips, tools/resources, and practice success stories to support the implementation and use of these innovative solutions. The first use case is focused on remote patient monitoring.
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As the end of the year approaches, physicians can look to the AMA Ed Hub for many continuing medical education (CME) activities, including:
- Watch the AMA's three-part video series on electronic prior authorization (ePA), entitled Electronic Prior Authorization: A Better Way, and earn 0.25 AMA PRA Category 1 Credit™. This video series shows how ePA technology integrates with practices' electronic prescribing workflow and can speed up the prior-authorization process and accelerate treatment.
- For 1 AMA PRA Category 1 Credit™ listen to an audio podcast and download written materials on Health Insurance Portability and Accountability Act (HIPAA) privacy, security and breach-notification rules. This toolkit will help explain what is included in the three core compliance areas of HIPAA. It also helps physicians determine next steps to be done to review and update HIPAA-compliance plans.
Accreditation Statement: The American Medical Association is accredited by the Accreditation Council for Continuing Medical Education to provide continuing medical education for physicians.
Designation Statement: The AMA designates each activity for AMA PRA Category 1 Credit(s)™. Please see the specific activity for more information.
Alternative payment models (APMs) are increasingly being used by practices across the map. But what are the effects of APMs on physician practices, and do these impacts tell us whether the road to value-based care is on the right track? A new study surveying practices around the country may shed some light on this question. Listen to a new podcast about a joint AMA-RAND Corporation study of APMs and their effect on physician practices in six markets, featuring the report's lead researcher Mark Friedberg, MD.Back to Top
Registration is now open for the 2019 AMA State Advocacy Summit (formerly the State Legislative Strategy Conference) and the National Advocacy Conference. Register for both events today and get 20 percent off. SAS will be held Jan. 10-12 in Scottsdale, Arizona, and NAC will be held Feb. 11-13 at the Grand Hyatt in Washington, D.C.Back to Top