Making competition work

 Antitrust Policy in Health Care Markets

After reviewing all these issues included in the book, do you still think that true competition could work in health care?

In US, the evidence is that remedies doesn't cure the disease (collusion, monopoly, dominant position abuse).

Contents:

1. Health Care Markets and Competition Policy 1

1.1 The Marketplace of Health Care Spending 1

1.2 Competitive Concerns 3

1.3 Antitrust Policy 4

1.4 Plan of the Book 5

1.5 Concluding Remarks 12

2 Antitrust Policy in the United States 14

2.1 Introduction 14

2.2 The Economic Rationale for Antitrust Policy 14

2.3 Political Foundation of Antitrust Policy 19

2.4 Antitrust Treatment of Monopoly and Cartels 23

2.5 The Clayton Act 26

2.6 Private Antitrust Suits 27

2.7 Class Action Suits 31

2.8 Concluding Remarks 33

PART I MONOPOLY 35

3 Patents and Monopoly Pricing of Pharmaceuticals 37

3.1 Introduction 37

3.2 The Patent System 39

3.3 Patents and Monopoly Pricing 42

3.4 Patent Licensing 47

3.5 Antitrust Remedies 51

3.6 Government Policy Proposals toward Prescription

Drug Pricing 52

3.7 Extensions: Medical Devices and Orphan Drugs 64

3.8 Concluding Remarks 68

4 Patents and Exclusionary Product Hopping 74

4.1 Introduction 74

4.2 Exclusionary Product Hopping 75

4.3 Legal Challenges to Product Hopping 78

4.4 Solutions, If Any 88

4.5 Concluding Remarks 92

5 Bundled Discounts and PeaceHealth 95

5.1 Introduction 95

5.2 Bundled Discounts 96

5.3 Bundled Discounts in Health Care Settings 99

5.4 Anomalies of the Discount Attribution Test 105

5.5 Antitrust Treatment of Bundled Discounts 109

5.6 Concluding Remarks 112

PART II SELLER CARTELS 113

6 Collusion in Health Care Markets 117

6.1 Introduction 117

6.2 A Basic Cartel Model 117

6.3 Collusion among Physicians and Surgeons 121

6.4 Collusion among Hospitals 126

6.5 Collusion among Pharmaceutical Manufacturers 128

6.6 Collusion among Medical Device Manufacturers 131

6.7 Collusion among Health Insurers 132

6.8 Concluding Remarks 134

7 Collusion in Generic Drug Markets 136

7.1 Introduction 136

7.2 The Competitive Promise of Generic Pharmaceuticals 137

7.3 The Incentive to Collude 140

7.4 The Alleged Conspiracies 142

7.5 Economic Consequences of Collusion 150

7.6 Deterring Price Fixing 152

7.7 Concluding Remarks 154

Appendix: Alleged Participants in Generic Pharmaceutical

Drug Conspiracy 154

8 The Hatch-Waxman Act, Patent Infringement Suits,

and Reverse Payments 168

8.1 Introduction 168

8.2 The Hatch-Waxman Act 169

8.3 Reverse Payment Settlements 172

8.4 The Actavis Decision 177

8.5 The Post-Actavis Experience 186

8.6 Legislative Remedies 192

8.7 Private Damage Actions 197

8.8 Concluding Remarks 200

Appendix: The Economics of Settlements 200

9 The Alleged Insulin Conspiracy 204

9.1 Introduction 204

9.2 Insulin: A Brief History 205

9.3 The US Insulin Market 207

9.4 Pharmacy Benefit Managers 215

9.5 Collusion in the Insulin Market 220

9.6 Concluding Remarks 225

10 Licensing of Health Care Professionals 230

10.1 Introduction 230

10.2 Economic Concerns with Professional Licensing 232

10.3 North Carolina Dental and the State Action Doctrine 236

10.4 Licensing to Exclude Competition 242

10.5 Economic Effects of Mandated Supervision 245

10.6 The Empirical Evidence 249

10.7 Concluding Remarks 250

PART III MONOPSONY 255

11 Monopsony, Dominant Buyers, and Oligopsony 257

11.1 Introduction 257

11.2 Basic Model 258

11.3 Dominant Buyer Model 267

11.4 Oligopsony 270

11.5 Monopsony in Health Insurance Markets 273

11.6 Antitrust Treatment of Monopsony 275

11.7 Concluding Remarks 277

12 Countervailing Power: Physician

Collective Bargaining 279

12.1 Introduction 279

12.2 Bilateral Monopoly 280

12.3 Physician Cooperative Bargaining 286

12.4 Competitive Concerns 296

12.5 Concluding Remarks 298

13 Group Purchasing Organizations, Monopsony, and

Antitrust Policy 300

13.1 Introduction 300

13.2 What Do We Know about GPOs? 301

13.3 GPOs and the Exercise of Monopsony Power 302

13.4 Foreclosure of Suppliers 307

13.5 GPO Funding Mechanisms 312

13.6 Antitrust Enforcement Policy 315

13.7 Concluding Remarks 319

PART IV BUYER CARTELS 323

14 Collusion in the Nurse Labor Market 325

14.1 Introduction 325

14.2 The Shortage of Nurses 326

14.3 A Simple Analysis of an Employer Cartel 329

14.4 Recent Antitrust Litigation 333

14.5 Antitrust Damages 336

14.6 Antitrust Policy 341

14.7 Concluding Remarks 343

15 Collusion in the Oocyte Market 345

15.1 Introduction 345

15.2 Collusion in the Oocyte Market 346

15.3 Antitrust Standards 348

15.4 Economic Effects of Price Ceilings 351

15.5 Rule of Reason Analysis 352

15.6 Antitrust Injury and Damages 357

15.7 Disposition of Kamakahi 362

15.8 Concluding Remarks 365

16 No-Poaching Agreements and Antitrust Policy 368

16.1 Introduction 368

16.2 Background 370

16.3 No-Poaching Agreements in Health Care:

Seaman v. Duke University 373

16.4 Damage Theory 375

16.5 Government Regulation 381

16.6 Concluding Remarks 383

PART V MERGERS AND ACQUISITIONS 385

17 The Economics of Horizontal Mergers 389

17.1 Introduction 389

17.2 Mergers to Monopoly 390

17.3 Mergers of Producers to Realize Efficiencies 393

17.4 Mergers of Buyers to Realize Efficiencies 397

17.5 Merger Efficiencies Resulting in Increased Quality 401

17.6 Concluding Remarks 404

18 Horizontal Merger Policy 405

18.1 Introduction 405

18.2 Horizontal Merger Policy 406

18.3 Defining the Relevant Antitrust Market 410

18.4 Economic Evidence of Competitive Effects 412

18.5 Mergers and Their Anticompetitive Effects: Sutter

Health 415

18.6 Agency Analysis of Mergers in Health Care Markets 419

18.7 Concluding Remarks 431

19 The Economic Theory of Vertical Integration 434

19.1 Introduction 434

19.2 Vertical Integration 435

19.3 Vertical Integration and Competitive Distribution 439

19.4 Successive Monopolies in Production and Distribution 444

19.5 Competitive Concerns with Vertical Mergers 448

19.6 Empirical Evidence on Vertical Mergers 450

19.7 Mergers of Complementary Input Suppliers 451

19.8 Concluding Remarks 455

20 Vertical Merger Policy 457

20.1 Introduction 457

20.2 Legal Foundation 458

20.3 The 2020 Vertical Merger Guidelines 461

20.4 A Merger in Biotechnology: Illumina/GRAIL 465

20.5 The Merger of a Health Insurer and a Physician Group:

UnitedHealthcare/DaVita 469

20.6 The Merger of a Hospital System and a Physician Group:

St. Luke’s/Saltzer 472

20.7 Concluding Remarks 476

21 Concluding Remarks

Episode based payments (3)

 Medicare's Bundled Payment Initiatives for Hospital‐Initiated Episodes: Evidence and Evolution

The Impact of Medicare’s Alternative Payment Models on the Value of Care

Bundled payments have been promoted as an alternative to fee‐for‐service payments that can mitigate the incentives for service volume under the fee‐for‐service model. As Medicare has gained experience with bundled payments, it has widened their scope and increased their duration. However, there have been few reviews of the empirical literature on the impact of Medicare's bundled payment programs on cost, resource use, utilization, and quality.

Main messages:

•  Evidence suggests that bundled payment contracting can slow the growth of payer costs relative to fee‐for‐service contracting, although bundled payment models may not reduce absolute costs.
• Bundled payments may be more effective than fee‐for‐service payments in containing costs for certain medical conditions.
• For the most part, Medicare's bundled payment initiatives have not been associated with a worsening of quality in terms of readmissions, emergency department use, and mortality. Some evidence suggests a worsening of other quality measures for certain medical conditions.
• Bundled payment contracting involves trade‐offs: Expanding a bundle's scope and duration may better contain costs, but a more comprehensive bundle may be less attractive to providers, reducing their willingness to accept it as an alternative to fee‐for‐service payment.

Both articles reflect the current situation on payment systems in US. The effort to change fee-for-service is more difficult than expected. There is a lot of money at stake.

 

The Gossips by Norman Rockwell

Episode based payment systems (2)

The Impact Of Bundled Payment On Health Care Spending, Utilization, And Quality: A Systematic Review

THE CURRENT STATE OF EVIDENCE ON BUNDLED PAYMENTS

The topic has already been explained in this blog. Now you may find a systematic review of what is going on in US:

We performed a systematic review of the impact of three CMS bundled payment programs on spending, utilization, and quality outcomes. The three programs were the Acute Care Episode Demonstration, the voluntary Bundled Payments for Care Improvement initiative, and the mandatory Comprehensive Care for Joint Replacement model. Twenty studies that we identified through search and screening processes showed that bundled payment maintains or improves quality while lowering costs for lower extremity joint replacement, but not for other conditions or procedures.

 While bundled payment programs maintain or improve quality while lowering costs for Lower extremity joint replacement, our systematic review suggests that the effects of the payment model on health care spending and utilization varied considerably—particularly by clinical episode type.

So what?. The drivers for success still have to be found. But there is one that is mandatory: payment systems need to be holistic, any partial design will fail. 

Social distance

Episode based payment systems

Unraveling the Complexity in the Design and Implementation of Bundled Payments: A Scoping Review of Key Elements From a Payer’s Perspective

After per case based payment systems (DRGs) everybody was waiting for a comprehensive system to measure health services activities. And instead of focusing on episodes, what happened is that bundling was the new frame. Unfortunately, after all these years bundling has not provided the answer because the scope of measurement is related to several diseases and it is not holistic.
When everybody was asking for an alternative to fee-for service, the answer was in my opinion "patient focused episodes of care", but the US government decided otherwise and protected the interests of those that leverage fee-for-service.
Therefore, now it is the time to fix this mistake and take the right  road. In this article you'll find some issues to consider when you have to design a payment system. It still talks about bundling, forget it, substitute it by episodes and it will be fine.

Our framework provides a structured overview of the principal, literature‐based elements of the design and implementation of bundled payment contracts from a payer's perspective. We identified 53 elements that involve all procurement phases and relate to actors on all levels of the health care system. A better understanding of these elements can help payers and other actors devise a strategic approach and reduce the complexity of implementing these contracts. Compared with traditional FFS models, bundled payment contracts introduce an alternative set of financial incentives that affect the entire health care system, involve almost all aspects of governance within organizations, and demand a different type of collaboration among organizations. This is what makes the design and implementation of bundled payment contracts complex and is why they should not be strategically approached by payers as merely the adoption of a new contracting model but, rather, as part of a broader transformation to a more sustainable value‐based health care system, based less on short‐term transactional negotiations and more on long‐term collaborative relationships between payers and providers.

The outcomes of a bundled payment system

Evaluation of Medicare’s Bundled Payments Initiative for Medical Conditions

The measurement of episodes of care is a precondition for understanding the cost-effectiveness of health care. Unfortunately there are few experiences on this issue. The largest demonstration in US, The Medicare Budled Payment for Care Improvement Initiative started in 2013 and finished in 2017. The NEJM publishes an article that evaluates the outcomes of such experience.

In summary, hospital participation in five common medical bundles under BPCI, as compared with nonparticipation, was not associated with changes from baseline in total Medicare payments per episode, case complexity, length of stay, emergency department use, hospital readmission, or mortality.

If this is so, it is necessary to understand the reasons behind such failure. The article provides some of them. My guess is that the episodes were not holistic in the scope of services (not including post-acute care i.e.) and were constrained to several episodes. Unless a holistic approach is taken into account (all episodes and all services), incentives will not be working in the appropriate way, the cost-effective one. Excellent article and research effort that explains an unexpected and unfavourable result, no bias of publication. Good example.

Maya Fadeeva

The building blocks of healthcare payment systems

The Building Blocks of Successful Payment Reform: Designing Payment Systems that Support Higher–Value Health Care

The implementation of healthcare payment systems is a complex task for any insurer, either public or private. Any option for reform is path-dependant and uncertain. The context and the inertia are the sources of lack of support for a change, unless a larger amount of Money -a big carrot- is put on the table.
A new report highlights the building blocks of a payment system. This is the instruction manual, and it refers to 4 issues:

Building Block 1: Services Covered by a Single Payment
Option 1–A: Adding new service–based fees or increasing existing fees.
Option 1–B: Creating a treatment–based bundled payment for a single provider
Option 1–C: Creating a multi–provider treatment–based bundle.
Option 1–D: Creating a condition–based payment.
Option 1–E: Creating a population–based payment.

Building Block 2: Mechanism for Controlling Utilization and Spending
Option 2–A: Adjustments in payment (pay for performance)based on utilization.
Option 2–B: Adjustments in payment (pay for performance)based on spending or savings.
Option 2–C: Bundled payment.

Building Block 3: Mechanism for Assuring Adequate Quality and Outcomes
Option 3–A: Establishing minimum performance standards.
Option 3–B: Payment adjustments (pay for performance) based on quality.
Option 3–C: Warrantied payment

Building Block 4: Mechanisms for Assuring Adequacy of Payment
Option 4–A: Risk adjustment or risk stratification.
Option 4–B: Outlier payments.
Option 4–C: Risk corridors.
Option 4–D: Volume–based adjustments to payment.
Option 4–E: Setting and periodically updating payment amounts to match costs.

A must read, keep it for your files.

 Halley meets Hortal, at Galeria Senda

 

PS. The revolving door of those that claim against revolving doors

Improving physician compensation

A Guide to Physician-Focused Alternative Payment Models

A fixed flat monthly payment to  physicians is a vulgar method to compensate a professional effort. At some initial stages of the career, it may work. As far as experience and knowledge improves results, than some adjustments are needed. In general the publicly funded health system is not able to change the initial stage and remains with more or less the same approach of low-powered incentives. This may work for some individuals, but not for all of them.
Paying on a fee-for service it creates strong incentives to boost volume, and paves the way to overdiagnosis and overtreatment. Privately funded health care is still using mostly this high-powered approach and it is also not able to reform.
Alternative methods of compensating physicians have been described recently in an interesting report. Forget for a while that it is based on the US health system. These are the seven options:

APM #1: Payment for a High-Value Service 
APM #2: Condition-Based Payment for a Physician’s Services

APM #3: Multi-Physician Bundled Payment

APM #4: Physician-Facility Procedure Bundle

APM #5: Warrantied Payment for Physician Services

APM #6: Episode Payment for a Procedure

APM #7: Condition-Based Payment

Food for thought. Something should done to go beyond fee-for service. And do not forget it, changing incentives without any organizational alignment or reform may drive to surprises and poor performance.

PS. Just the opposite to us, NHS expands private care . A controversial trend.

Quo vaditis?

Resource allocation in health care is a nightmare for any regulator. Since competitive prices are unavailable, payment systems have to be designed in order to achieve a greater efficiency, better quality and access. Two decades ago a chapter in a book on that topic summarized the knowledge and potential applications. The title was: Hospital Groups and Case-Mix Measurement for Resource Allocation and Payment, and the authors: Pere Ibern, James C. Vertrees, Kenneth G. Manton,Max A. Woodbury. This was the result of my stay as a visiting researcher at Duke University, Center for Demographic Studies. I had the unique opportunity to share knowledge with extraordinarily talented people.
For many years, things moved smoothly. A summary of the state of the art in 2007 is provided in a chapter of this book (p.259).
After twenty years, things have changed, quo vaditis payment systems?. Right now we focus on incentives for integrated care, and accordingly payment systems have to follow a different path. Bundled care and episode of care, these are the crucial topics right now.
However, regulator's inertia and risk avoidance are the greatest constraints for change. It is difficult to leave the confort zone. Although we know that current payment systems require a new design, decisions are being delayed. The latest words of Seamus Heaney, recently passed away, fit perfectly as a key message: Noli timere, don't fear.

Aclarint els nous sistemes de pagament

El mes passat va tenir lloc als USA un seminari sobre "bundled payment".Convé aclarir entre tal com s'entén el "bundled payment for care improvement (BPCI)" - pagar per DRG + les activitats/prestacions abans i després de l'ingrés hospitalari, i "episode of care payment"-pagar per episodis de malaltia. En aquest darrer cas, pot haver-hi ingrés però majoritàriament no n'hi haurà.
En general hi ha gent que té tendència a confondre-ho i ens trobem en un moment que cal aclarir les idees. Aquest ppt ajuda a entendre l'estat de la qüestió del "bundled payment".

 Avui se subhasta aquest Modigliani a Bonhams, a les 2

La caixa d'eines

ACO Toolkit
Si una característica assistencial destaca per sobre de totes les altres en l'assistència sanitària privada és la fragmentació. És cert que al sector públic també hi és, però l'impacte del pagament per acte mèdic amplifica
l'efecte. Això fa molts anys que ho van veure als USA que els costa molt de canviar l'organització fragmentada que tenen i per això a la nova llei es van incloure qüestions com les Accountable Care Organizations.
El dubte sobre si aquestes organitzacions funcionaran persisteix. I ara al WSJ se'n fan ressò amb entrevistes a Berwick i altres. Segurament l'article recent de Fischer et al al NEJM ha estimulat el debat. En la mesura que es manté la capacitat d'elecció dels usuaris, i que la coordinació  assistencial no es fa sobre una població fixa sino sobre proveïdors concrets, a hores d'ara no es pot preveure amb precisió què passarà. És allò que en Jamie Robinson va dir-ne integració virtual, ja fa quinze anys a HA. Ara el "Shared Savings Program" de Medicare pretén impulsar-ho i caldrà veure si se'n surten. Aquí en trobareu un resum. Mentrestant em quedo amb els 33 indicadors de la p.88 de la regulació de les ACOs i m'ho miro amb calma. I també deixo per més endavant fer una ullada a ACO learning network, una iniciativa per a promoure el canvi organitzatiu a la sanitat, i a MITRE on hi trobo aportacions recents sobre bundled payment.

PS. He vist al COMB TV la conferència que vaig fer al Fórum de la Professió Mèdica amb diferents links. A la part de la dreta i cap al final els trobareu.

PS. Berwick al NEJM sobre el mateix tema.

PS. Sobre el fracàs regulatori britànic dels implants mamaris (PIP) al Lancet. Per aquí aprop com si no passés res, mirem cap una altra banda.

PS. En un altre ordre de coses us pot interessar el manifest per a la navegació tranquil.la, que ahir vaig aplicar plenament. El trobareu aquí.

 Joaquín Torres García
Structure in 5 tones with rhythms, 1948

Embolicar els doblers (2)

Medicare’s Bundled Payment Pilot For Acute And Postacute Care: Analysis And Recommendations On Where To Begin

El pagament per episodi de malaltia és una tendència imparable, del moment i del futur. Si volem més coordinació, ho necessitem. Ara bé, mentrestant sorgeixen els "bundled payments", que no arriben a ser episodis però volen acostar-s'hi. L'article de HA esdevé una referència clau per entendre el moment als USA. Destaco:

Payment bundling has the potential to reduce costs without compromising outcomes. The entity receiving the bundled payment earns a higher margin if a patient is discharged to the community earlier, but it also bears the financial risk of both a readmission and the cost of all postacute care. This arrangement produces a strong incentive for the recipient of the bundled payment to coordinate care across settings and not to discharge patients too early.

Els autors suggereixen que alhora caldria combinar "bundled payment" amb "pay for performance", i això ja és per nota. Mentrestant per aquí som a les antípodes.

Ciutats bessones

Exploring Alternative Approaches to Valuing Physician Services

Minneapolis-St Paul a Minessota són conegudes com Twin cities. Avui m'interessa referir-m'hi perquè la revisió publicada sobre les formes de pagament als metges privats d'allà és il.lustrativa de que això es pot canviar. En Christianson et al. Han documentat les diferents opcions en detall. En un quadre a l'annex final il.lustren de la qüestió i s'observa la gran creativitat al respecte. Sobre els resultats no hi ha massa detalls, però tot plegat confirma que hi ha vida intel.ligent més enllà del pagament per acte mèdic.
Coincideix en el temps amb l'anunci d'ahir d'en Berwick d'impulsar el "bundled payment" a Medicare amb 4 models. Observo pressa en la seva adopció perquè per una banda demanen que els hospitals sol.licitin ja la participació a l'esquema i per l'altra encara no hi ha un agrupador d'episodis i faran servir el MS-DRG. Des de la distància, no ho entenc gaire. Crec que estan cremant etapes, potser massa ràpid i quan hi hagi el nou agrupador d'episodis potser ja s'hauran socarrimat.

PS. Pel cap de setmana, 3 suggeriments contrastats. Recomanació 1. Exposició al Museu Picasso a Barcelona. Recomanació 2. Josep Pla, al Palau Robert. Recomanació 3. Català-Roca a La Pedrera.

Embolicar els doblers

Integrating Care through Bundled Payments — Lessons from the Netherlands

L'assistència sanitària a Holanda sempre ha estat objecte d'atenció pels experts. Com tot país té les seves particularitats però l'èmfasi en l'atenció primària ha estat un element destacat així com la capacitat d'elecció. Ara podem afegir-hi el sistema de pagament de l'activitat. Esdevé interessant que en un país on hi ha diversitat d'asseguradores en competència en un entorn d'assegurança obligatòria, hi hagi una forma comuna de compensar per les malalties cròniques. Això no vol dir pas al mateix preu, però si de la mateixa forma. El NEJM ens n'explica els detalls i les dificultats.

In 2010, the bundled-payment concept was approved for nationwide implementation
for diabetes, chronic obstructive pulmonary disease (COPD), and vascular risk management. Under this system, insurers pay a single fee to a principal contracting entity — the “care group” — to cover a full range of chronic disease (diabetes, COPD, or vascular disease) care services for a fixed period. A care group is a newly created actor in the health care system, consisting of a legal entity formed by multiple health care providers, who are often exclusively general practitioners (GPs). The care group assumes both clinical and financial responsibility for all assigned patients in the diabetes care program.

Els detalls són importants, i els problemes de mesura cal resoldre'ls. En qualsevol cas ens convé seguir atents a l'experiment.

PD. L'informe sencer sobre com retribuir l'atenció als diabètics a Holanda el trobareu aquí

PD. Text de la conferència: Residuals o independents

En Cutler i la reforma sanitària

The Simple Economics of Health Reform

Tot aquell que vulgui un resum ordenat del que significa la nova regulació sanitària als Estats Units hauria de llegir l'article d'en Cutler així com els altres articles de Economist Voice. A mi m'interessa la part relativa a canvis en l'organització sanitària. I sobre això diu:

First, the lack of good information inhibits better care. Patient information is generally not electronic, and care is based on too little evidence. A common guess is that only 10 to 20 percent of what is done in medicine is founded on a good evidence base.
Second, the lack of good information is compounded by perverse financial incentives. Providers paid on a fee-for-service or piece-rate basis do many more tests and procedures than those paid on a global basis, without any improvement in outcomes.For example, the ACA proposes to take all payments related to an acute event (such as a hip fracture or stroke) and group them into a single total. Providers that receive the bundled payment would then be responsible for the hospital costs, post-hospital rehabilitation, and subsequent follow-up care for those patients. Providers that limit unnecessary care (for example, reducing re-admission) and seek out more efficient suppliers would make money; more wasteful ones would lose money.

Aquests aspectes són d'aplicació per altres entorns més enllà del nordamericà. Aquí el sector privat també paga per acte mèdic, idèntic problema. I el sector públic compensa sobre base històrica als proveïdors. Aprendre a incorporar pagaments per episodi pot ajustar millor els incentius a l'eficiència. Ara bé el que en Cutler i tants altres no diuen és com es fa això. Els de la Rand han publicat una guia. Seguirem atents als esdeveniments.