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Peter J. Mandell, MD

AAOS Now

Published 11/1/2009
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Mary Ann Porucznik

Dr. Mandell addresses House Committee

Testimony focuses on antitrust enforcement

On Oct. 8, Peter J. Mandell, MD, chair of the AAOS Council on Advocacy, testified before the House Judiciary Committee Subcommittee on Courts and Competition Policy. Addressing HR 3596, Health Insurance Industry Antitrust Enforcement Act of 2009, and testifying on behalf of the California Orthopaedic Association (COA), Dr. Mandell raised several concerns regarding current provisions of the bill, which would remove antitrust protections of health insurance issuers and medical liability carriers under the McCarran-Ferguson Act.

Dr. Mandell pointed out that antitrust experts have failed to find any cases where the commercial health insurers have been charged with price-fixing or collusion in sharing price information. Consolidation and market control have eliminated the need for insurers to collude on pricing.

Noting that more than 400 mergers have occurred over the past 10 years, Dr. Mandell said, “As a result, the payor market has become more concentrated, less diverse, and payors have enjoyed substantial negotiating leverage over patients and providers in most markets.”

Additionally, large health insurers continue to pursue aggressive acquisition strategies. As a result, said Dr. Mandel, the top two insurers in 2007 controlled 36 percent of the national market for commercial health insurers.

“Instead of price fixing,” he testified, “we believe the larger problem is the virtual monopolies that the commercial health insurers have been able to form. Many areas of the country have only one or two carriers. There is no effective competition. Physicians are told to take or leave contracts and accept below-market reimbursement rates. Patients’ coverages are rescinded when they become ill and in most need of their insurance.”

These large insurance companies have become so powerful that even when Congress demanded that they cease inappropriate rescission activities, some companies refused.

“The power garnered by health insurers has not been used to the advantage of consumers or providers,” continued Dr. Mandell. As the companies have increased premiums, many employers stop providing coverage, limit the scope of benefits provided, and/or require employees to pay more.

Noting that the premium increases are not used to pay physicians more, but to provide profits for health plan executives and shareholders, Dr. Mandell urged the Subcommittee to take a different action.

“To have a meaningful impact on the anticompetitive activities of commercial health insurers, we would urge members of the Subcommittee to relax the antitrust restrictions on healthcare providers instead of removing the antitrust protection on carriers. This would allow providers to collectively share electronic medical records to improve patient care, to monitor data relating to utilization and medical outcomes, to form accountable care organizations that add value to healthcare delivery, and to come together to work with commercial health insurers in their communities to ensure that patients receive appropriate medical care,” he said.

The impact on healthcare reform
Dr. Mandell also urged the Subcommittee to consider real enforcement of the merger laws and a break-up of the commercial health insurers who have virtual monopolies.

He noted that a repeal of the antitrust protections afforded to commercial insurance carriers could have a negative impact on healthcare cooperatives that may be formed under the healthcare reforms being considered by Congress.

“New companies would likely benefit from antitrust protections under the Act. Repealing the carriers’ protections will make it more difficult for these small companies to gain market share,” he testified.

Subsequent to Dr. Mandell’s testimony, the Sudiciary Committee voted to approve HR 3596. The bill now moves to the full house for consideration.

Mary Ann Porucznik is managing editor of AAOS Now. She can be reached at porucznik@aaos.org

Dr. Mandell wishes to thank Diane Przepiorski, executive director of the California Orthopaedic Association, for her assistance in preparing his testimony.

Review Dr. Mandell's testimony