Thomas L. Greaney

Regulators as Market-Makers: Accountable Care Organizations and Competition Policy

Of the many elements animating structural change under health reform, Accountable Care Organizations (ACOs) have drawn the greatest attention. The ACO strategy entails regulatory interventions that at once aim to reshape the health care delivery system, improve outcomes, promote adoption of evidence based medicine and supportive technology, and create a platform for controlling costs under payment system reform. Ambitious aims to be sure. Implementation, however, has proved a wrenching process. This article looks at the intersection of markets and regulation under the Affordable Care Act. Specifically, it analyzes regulatory interventions under the MSSP designed to foster commercial market competition. Assessing prospects for success, it advances several interrelated arguments. First, in fulfilling the regulatory task of implementing the MSSP, regulators needed to be vigilant to protect against the potential that ACOs may have adverse effects on private markets. It finds that because the Centers for Medicare and Medicaid Services (CMS) was overly preoccupied with Medicare program issues and hyper-sensitive to criticism from powerful hospitals, the agency missed an important opportunity in its implementing regulations to prevent exacerbation of provider market power. Because existing legal regimes, especially antitrust law, are severely constrained in their ability to deal with extant provider market power, regulation of ACOs requires a cross-platform regulatory approach that addresses market issues.

Coping With Concentration

Provider market power is a powerful driver of high health care costs in the United States. Despite decades of antitrust litigation and regulatory interventions, the problem has worsened and threatens to undermine the benefits of market-based policies. A critical but neglected challenge for all health care reform proposals relying on market competition to address costs is finding effective tools to address the extant market power of dominant hospitals, hospital systems, and many specialty physician practices. This article analyzes the principal market-oriented approaches that have been used in the past and proposed for the future. It argues that antitrust law has an important but constrained role to play and has proved to be especially inept in dealing with extant market power. It finds serious deficiencies in the conduct decrees imposed by some courts and in open-ended regulatory regimes such as those established by Certificate of Public Advantage laws. Although not without administrative complications, policies that target providers who possess market power by capping prices may be the most effective means to control costs and retain the benefits of a competitive delivery system.

Commentary - Competition Policy after Health Care Reform: Mending Holes in Antitrust Law's Protective Net.

Antitrust law has been characterized as godfather to competition in health care, as landmark cases removed professional restraints of trade and challenged anticompetitive joint ventures and networks that had inhibited market approaches. More recently, antitrust may seem more like an absentee father, as unchecked consolidation over the past fifteen years resulted in markets with dominant providers whose high prices became a major driver of health cost inflation. With health care reform encouraging much-needed integration, policy makers and commercial payers have begun to question whether the law provided tools adequate to blunt the adverse effects of extant market power and whether judicial and enforcement resources would be able to prevent a recurrence of anticompetitive consolidations. It is curious that antitrust law and competition policy remained in the shadows during the health reform debate. Only after its enactment did policy makers and commenters take notice of the fact that the Affordable Care Act’s strong reliance on competition (Greaney 2011) might be undermined by existing market structures and the incentives the law provides to consolidate further. In the foregoing article in this special issue, Robert F. Leibenluft (2015), one of the nation’s leading antitrust practitioners and a former Federal Trade Commission official, identifies many of the important challenges facing antitrust enforcers and tribunals going forward: for example, the need to take on both hard cases, including hospital-physician consolidations that foreclose competition or raise rivals’costs,andinnovativechallengesreflectiveofrapidlychangingindustry

Efficiencies in Merger Analysis: Alchemy in the Age of Empiricism?

One is hard-pressed to find in law an undertaking more fraught with uncertainty than the application of the efficiencies defense in merger analysis. Generalist fact finders (judges) and politically-attuned government officials (prosecutors and regulators) are charged with two Herculean tasks: (1) predicting the outcome of organic changes in business enterprises and (2) comparing the magnitude of those changes to the equally uncertain amount of harm to future competition that the transaction will cause. Given the enormous, perhaps intractable, uncertainty of this inquiry, it is therefore paradoxical that many of the strongest advocates for strengthening the role of efficiencies analysis in merger reviews are self-described proponents of bringing a ‘new empiricism’ to antitrust analysis. This chapter focuses on the tensions inherent in incorporating an efficiencies defense (or evaluating efficiencies as part of the appraisal of mergers) and maintaining the rigour and impartiality promised by proponents of the ‘empirical’ approach. This argument should not be misconstrued as a brief for abandoning the efficiencies inquiry altogether. Rather, it is, first, an appeal for candour (and humility) by those undertaking the inquiry; and second, it is a brief for constraining discretion by imposing more clearly delineated presumptive rules of law on judges and insisting on greater transparency by agencies in deciding whether to challenge mergers.

How Many Libertarians Does it Take to Fix the Health Care System

The libertarian prescription for health care reform is a admixture of deregulation and purportedly utilitarian calculation of social benefits and costs. In Mortal Peril: Our Inalienable Right to Health Care?, Richard Epsteins offers a stark roadmap that embraces an unfettered free market for health care services, indigent care left primarily to the charitable impulses of providers and no cross subsidies between classes, generations or other categories of citizens (including the sick and healthy). This review essay argues that the history, economics, and politics of health markets belie Epsteins abstract reasoning. Though much of the argument in Mortal Peril is written in the language of economics and cost-benefit analysis, Epsteins core faith is libertarianism. The essay contends that Epstein eschews careful analysis of the economic complexities of health care markets in favor of simple principles that focus almost entirely on autonomy. It should be understood, especially by policymakers, that the resulting harsh policy prescriptions are not compelled by economic reasoning but by a set of arbitrarily chosen first principles.