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Subject: qotd: Health Affairs promotes "regulatory neutrality" for AHIP
Date: Wed, 7 Aug 2013 07:37:28 -0700
From: Don McCanne <email@example.com>
To: Quote-of-the-Day <firstname.lastname@example.org>
Regulatory Neutrality Is Essential To Establishing A Level Playing Field
For Accountable Care Organizations
By Gary E. Bacher, Michael E. Chernew, Daniel P. Kessler and Stephen M.
A recent drive for payment reform in both the public and private sectors
is creating powerful incentives for integration in health care finance
and delivery. One of the best-publicized models for encouraging a
movement away from the fee-for-service payment arrangements that
dominate the nation's current health care delivery system is the
accountable care organization (ACO).
Regulating accountable care organizations poses unique challenges. In
particular, regulation should strive to create a level playing field
both among the various providers and organizations seeking to form an
ACO and between ACOs and health plans. This level playing field is known
as regulatory neutrality. Regulatory neutrality refers to the concept
that similar products or models for financing or delivering care should
be regulated in similar ways to try to prevent regulation from favoring
any particular approach or product.
Our analysis recognizes that policy interventions that might be viewed
as "nonneutral" in the short term may be necessary to promote policy
goals, such as maintaining a competitive marketplace, that facilitate
regulatory neutrality over the longer term.
Accountable care organizations are affected by a number of different
regulatory regimes—including antitrust, solvency regulation, Medicare's
Shared Savings Program governance regulations, and Medicare payment
rules. An uncoordinated approach to policy among these regimes creates a
heightened risk that ACOs will be inadvertently favored or disfavored
relative to other entities that accept financial responsibility and
arrange for the delivery of care, such as Medicare Advantage plans
(private managed care plans operated under the auspices of Medicare).
For example, seemingly small, technical differences—such as reserve
requirements—for ACOs versus Medicare Advantage plans can place ACOs at
an advantage (or disadvantage) relative to organizations participating
in the Medicare Advantage program. Even if each regulatory regime were
functioning perfectly in terms of its own objectives, the interaction
among regimes can have unintended consequences that affect the
neutrality of the system as a whole.
Although it has received little attention from health policy
researchers, the concept of regulatory neutrality has been studied
extensively in other contexts. This literature offers three key lessons
also applicable in the health care setting.
First, in general, neutrality favors less over more prescriptive
regulation. Simply put, more-prescriptive regimes affect a greater
number of decisions, and thus they entail a greater risk of
inadvertently favoring one organizational form over another.
Second, neutrality favors "functional" over traditional "institutional"
regulation. That is, when different types of institutions are serving
the same function, they should be supervised by the same regulator
according to the same set of rules, regardless of the labels that may
have been applied to them in the past.
Third, the first two rules are not absolute. As we show in our
discussion of antitrust policy, the pursuit of neutrality can support a
more activist approach and special rules directed at the health care
sector, even if that might be viewed as nonneutral in the short term.
Medicare Payment Rules:
Accountable care organizations operating under the Medicare Shared
Savings Program compete with Medicare Advantage plans for both
beneficiaries and providers. A beneficiary enrolled in Medicare
Advantage cannot be enrolled in an accountable care organization, and
vice versa. Providers participating in an accountable care organization
are also potential members of provider networks for Medicare Advantage
As a result, neutrality between Medicare Advantage and accountable care
organizations is important. Although the Medicare Shared Savings Program
regulations attempt to address this point, they also show how even
small, technical differences can have an effect on the attractiveness of
the different models to beneficiaries and providers.
The effect of these differences could be to favor one model over another
in different parts of the country and, in so doing, encourage unwanted
behavior among providers and Medicare Advantage sponsors that is aimed
at handicapping one of the models in comparison to the other.
Regulating accountable care organizations poses unique challenges.
Because of their nature, they are affected by at least four different
regulatory regimes. The complexity inherent in this situation requires
that policy makers pay special attention to coordination to avoid
unintended consequences. To address this concern, the government should
seek to maintain a level playing field (what we call regulatory
neutrality), so that different models of care and those seeking to offer
them are permitted to stand or fall on the cost and quality of care each
provides. We conclude that neutrality generally favors less, rather than
more, prescriptive regulation. Nonetheless there are exceptions to this
rule, with antitrust policy as the most prominent example.
More broadly, the pursuit of neutrality may need to be tempered by a
recognition of competing goals. Like so many areas in health care
policy, accountable care organizations present both potential
opportunities and new challenges. Considerations of regulatory
neutrality can add depth and clarity to considerations of how to strike
the balance in determining how to regulate these new entities.
(Gary E. Bacher is the director of the Institute for Health Systems
Solutions at the AHIP Foundation, in Washington, D.C. Michael E. Chernew
is a professor of health care policy in the Department of Health Care
Policy at Harvard Medical School. Stephen M. Weiner is the national
chair of the health care practice at the law firm Mintz Levin Cohn
Ferris Glovksy and Popeo. Daniel P. Kessler is a professor in the
business and law schools and a senior fellow at the Hoover Institution
at Stanford University. Daniel Kessler acknowledges and thanks the
Institute for Health Systems Solutions at the AHIP Foundation for
support in conjunction with this article.)
Institute for Health Systems Solutions
June 11, 2013
AHIP Foundation Launches Health Systems Change
The AHIP Foundation ("Foundation"), a 501(c)(3) organization, today
announced the launch of the Institute for Health Systems Solutions
(IHSS), which has been established to create a hub for new research, new
analysis, and a new opportunity for the exchange of views around changes
in the organization and structure of the health care system.
IHSS builds on the Foundation's focus on exploring ways to better
contribute to the health care research and policy enterprise and to
advance forward-looking ideas for improving the quality and availability
"Collaboration among stakeholders involved in the health care sector is
critical to the country's ability to address the complex challenges in
front of us," said AHIP Foundation President Karen Ignagni. "That's why
IHSS is launching new partnerships, engaging researchers, and hosting
forums to bring together individuals with different points of view to
expand the dialogue and educate the public."
"By working together, we will be better able to recognize the connection
points between access, innovation, and smart regulation, and begin to
find structural solutions to improve quality and access and reduce costs
while addressing the substantial challenges facing our health care
system," said IHSS Director Gary Bacher.
Comment: This one is pretty ugly.
The new issue of Health Affairs released this week includes an article
on "regulatory neutrality" as a means of "establishing a level playing
field for accountable care organizations" (ACOs). What? What level
playing field, and what is this about making regulations neutral?
Reading quickly through the article, something didn't smell right.
Studying the article in more detail caused me to come to the conclusion
that there was only one reason for the article. It was to introduce the
concept of regulatory neutrality as a way of ensuring that private
Medicare Advantage plans did not lose footing to the new ACOs
established by Obamacare.
The authors conclude that regulatory neutrality "favors less, rather
than more, prescriptive regulation," except "the pursuit of neutrality
can support a more activist approach and special rules directed at the
health care sector, even if that might be viewed as nonneutral." That's
it! Medicare Advantage plans should be able to compete with ACOs in
relatively unregulated markets, except when they need the government to
provide them with "special nonneutral rules."
Who is behind this? The lead author, Gary Bacher, is director of the
Institute for Health Systems Solutions (IHSS) at the AHIP Foundation,
and co-author, Stanford Professor Daniel Kessler, "acknowledges and
thanks the Institute for Health Systems Solutions at the AHIP Foundation
for support in conjunction with this article."
So what is IHSS? It is a new "research and analysis" entity established
by AHIP Foundation, a 501(c)(3) organization, headed by Karen Ignagni…
yes, the same Karen Ignagni who heads the insurance lobby organization
AHIP - perhaps the most influential lobby organization in the nation.
Obamacare was created under the guidance of AHIP.
Health Affairs is one of the most prestigious health policy journals in
the world. What is their role in this? It was only June 11 that AHIP
Foundation announced the launch of IHSS, and yet less than two months
later - much shorter than the usual lead time for a journal article -
Health Affairs has published this article that informs politicians and
the policy community that we have a new double standard for regulating
private Medicare Advantage plans and their ACO competitors - "regulatory
It is shameful that leaders in our public and private institutions
should be conspiring in this blatant abuse of the processes through
which legitimate policy science is advanced. I mean, IHSS/AHIP actually
purchased Daniel Kessler's opinion! But Health Affairs? As I said, this
one is pretty ugly.