The AMA is worried that without enough competition in the space, health insurer monopsonists won't have any incentives to pass savings on to their consumers.
The American Medical Association is urging the Department of Justice and the Federal Trade Commission to take a hard look at the current federal guidelines that govern mergers, as the organization believes the current framework for analyzing M&A activity that could reduce competition in labor markets is insufficient.
"The AMA has long understood that competition in health insurance, not consolidation, is the right prescription for health insurer markets," the letter reads. … "Mergers of competing buyers in labor markets, such as the markets in which physicians sell services to health insurers, receive short shrift in the existing Merger Guidelines. Merely one page is devoted to monopsony, and there is no discussion of monopsony issues in labor markets."
The AMA is worried that without enough competition in the space, health insurer monopsonists won't have incentives to pass savings on to their consumers. The AMA says it can point to only one instance in which the government came close to successfully litigating monopsony concerns: the 2015 merger of Anthem and Cigna.
"The DOJ decided to make a monopsony claim that the merger of Anthem and Cigna would harm physician markets," the AMA letter states. "While Anthem was ultimately decided based on the merger's effects in the markets for the sale of health insurance, monopsony concerns in physician labor markets were heavily litigated. Lessons from that singular experience should make their way into the Guidelines and other statements of federal antitrust merger policy."
The AMA says more focused guidance on monopsony concerns will increase competition, resulting in lower premiums, and force insurers to improve customer service, pay bills in an accurate and timely manner, and provide the opportunity to develop new ways to improve quality and reduce costs.
"The evidence suggests that to the extent a health insurer merger would eliminate a potential competitor, the lost competition would be permanent, given high market entry and switching barriers," the letter states. "Consequently, a proposed health insurer acquisition of a potential competitor in a typically highly concentrated health insurance market should be met with extreme skepticism by antitrust enforcers. One good expression of this skepticism would be new merger guidelines making the burden of health insurer procompetitive rebuttal of lost competition very high."
The industry veteran discusses her new role at LCMC Health and how she plans to help the health system realize its strategic vision.
Building up a hospital system requires an expert who can navigate various challenges efficiently. That is why LCMC Health has named healthcare industry veteran JoAnn Kunkel as its new CFO.
Kunkel has spent the bulk of her nearly 30-year career with Sanford Health, where she was part of a team that built a system from a single hospital with about $250 million in total revenue, to a $6.5 billion fully integrated system with healthcare facilities in more than five states.
HealthLeaders recently connected with Kunkel to learn more about her goals for her new role, how she plans to help LCMC Health — a New Orleans-based, non-profit health system with $1.7 billion in annual revenue — realize its vision, and what the challenges facing healthcare CFOs are today.
HealthLeaders: Why did you decide to join LCMC Health?
JoAnn Kunkel: I enjoy healthcare and building a system, and it's just an amazing opportunity with LCMC Health. They are a new system in the New Orleans area, and they have a great culture and vision for where they want to be. We have six hospitals in the city of New Orleans, and we are on the edge of figuring out how to build shared service models and build on the efficiency and expertise that you gain by coming together and building a system. I felt like I could make a difference in their vision of being efficient and providing the best patient care.
HealthLeaders: How will your previous experience help LCMC grow?
Kunkel: I was in a position at Sanford Health where for almost 25 years, I got to sit at the executive table—not always as a top executive—but as a person that got to be part of the discussions and debates and making things happen. When I started, we did not have any physicians that were part of Sanford. When I left, there was nearly 1,500. We were hiring, acquiring, emerging, implementing systems, and creating a centralized shared finance service. I had such a great experience with Sanford that I know I can help with this team at LCMC Health. I can see what they want to do and bring a different view to the table of what might help them become a better system.
HealthLeaders: How can hospitals and healthcare systems cut costs without sacrificing their workforce?
Kunkel: It's about being more efficient and having people work to the top of their ability. It's about being able to focus on what's important and making sure that you're automating what you can and supplementing with resources to help people work at the top of their skill sets. We must look at things like that as we move forward and plan for the future. You must have the right number of people to be effective and efficient, but also be as nimble and lean as you can.
HealthLeaders: What should healthcare CFOs be focusing on in 2022, as the pandemic continues to be an issue?
Kunkel: The biggest thing we're all struggling with is, what is the new normal? 2019 was the last time things were normal, then 2020 it was a total pandemic, 2021 was up and down. In January and February of this year things were difficult for healthcare in the United States, emergency department volumes were changing and there were such labor shortages. So, how do we work more efficiently? How do we adjust to the new volumes? We were already looking at shifting from inpatient to outpatient and home-based care. And that's been exacerbated by the pandemic, and those trends are going to continue.
HealthLeaders: What would you say is the biggest challenge healthcare CFOs are facing today? What are some ways to solve it?
Kunkel: The payer/provider relationships, interdependencies and involvement with patients is always changing. Financing is important to everybody, so those relationships continue to evolve and they're taking on more risk. A lot of us started out taking just upside risk, and now we're taking on downside risk, and full risk when you're working with your payers—that's huge. Population health has a different definition for almost everyone who does it. So understanding what's important to you and your system is going to be important. Everyone is talking about supply chain disruptions, supply chain inflation, the bottlenecks, those things in healthcare have been an issue for the past two years. It's not an easy turnaround, so becoming more efficient in revenue cycle is going to take automation technology. Artificial Intelligence is big in that space, and if can you optimize your revenue cycle and automate it that will help with labor. Technology is the foundation of almost everything that we do today.
"We are extremely concerned with CMS' proposed payment update of only 3.2%, given the extraordinary inflationary environment and continued labor and supply cost pressures hospitals and health systems face," Stacey Hughes, executive vice president of the American Hospital Association, said in a statement. "Even worse, hospitals would actually see a net decrease in payments from 2022 to 2023 under this proposal because of proposed cuts to disproportionate share hospital (DSH) and other payments."
Hughes continued by calling the decision "unacceptable" given that hospitals and health systems are still dealing with the COVID-19 pandemic and the variety of challenges the crisis has placed on their ability to provide patients with essential services.
The Federation of American Hospitals (FAH) has also pushed back against the rate update, saying it won't provide enough support to hospitals and health systems facing hyper-inflation, staffing shortages, and the pandemic.
"From our initial read, we must conclude the CMS net 3.2% market basket update is woefully inadequate," FAH said in a statement. "To add insult to injury, the policies proposed, combined with certain payment policies set to expire, would, according to the proposed rule, result in an actual decrease in payments from FY 2022 to FY 2023."
However, both organizations did react positively to CMS' decision to eliminate the penalties facing organizations that haven't been reporting their data to CMS since the pandemic hit, which fell under the Hospital-Acquired Condition (HAC) Reduction and Value-Based Purchasing (VBP) programs.
"On the positive side, we commend CMS for extending its measure suppression policies under its value-based payment programs," FAH said. "It is particularly important that CMS finalize its proposal to eliminate penalties under both the VBP and HAC programs. Hopefully, these programs can get back on course when it is practicable." According to the proposed rule, CMS is increasing operating payment rates by a net 3.2% for FY 2023 for hospitals that are meaningful users of electronic health records and submit quality measure data.
The proposed increase in operating and capital IPPS payment rates, partially offset by decreases in outlier payments for extraordinarily costly cases, will generally increase hospital payments in FY 2023 by $1.6 billion, CMS said.
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