Health care affordability continues to be a priority across states. Throughout the 2023 state legislative session, NASHP tracked 200 bills ranging from omnibus bills that included provisions seeking to address multiple policy issues to those pursuing discrete changes. States enacted legislation on the following topics: facility fees; health care market oversight and certificate of need; competition; community benefits; transparency and oversight; surprise billing; and 340B transparency. While policy solutions varied across states, consolidation of hospitals and providers — specifically the impacts on price for consumers and employers created by increased market power — continues to be a bipartisan concern across legislatures.
Facility Fees
States continue to wrestle with the incentive that facility fees provide for vertical acquisition of physician practices and other entities, such as imaging centers, surgical centers, and other outpatient services. The acquired health entity essentially becomes a hospital out-patient department, even if it is not near the hospital, and begins billing similarly to the hospital. These additional fees raise prices even if the services don’t change, which increases costs for consumers and health plans. Further, it can be difficult to identify the cause of the increased costs because facility fees are typically embedded and not broken out on a billing statement. In the 2023 legislative session, Indiana, Colorado, Connecticut, and Maine adopted changes to constrain or understand facility fee revenues.
Market Oversight and Certificate of Need
State officials are increasingly voicing concerns about transactions within their health care markets that may not trigger a state antitrust suit or qualify for review at the federal level but that still affect price, access, and quality. Officials’ primary concerns include transactions that happen with no notice to the state and that include private equity (PE) funds that may be driven by profit margins. However, officials recognize that not all market transactions are problematic, and that in some cases, PE may provide necessary funding for some entities. Therefore, policymakers are tasked with increasing transparency and creating state capacity for review and authority to potentially set guardrails for these transactions. At state request and with state guidance, NASHP worked with legal experts to develop a model market oversight law. During this legislative session, several states acted on market oversight, ranging from reporting of transactions to modification of existing laws to evaluate transactions for impact on costs, prices, equity, access, and quality of care.
Minnesota, Illinois and New York enacted laws to give their states’ attorneys general and departments of health additional tools to improve market oversight. Minnesota and Illinois laws include transaction notice requirements and attorney general review/investigation authority. Minnesota’s law also allows the attorney general to unwind anti-competitive transactions, and large transactions require detailed financial submission to the commissioner of public health. New York’s law requires entities with $25 million or more in gross in-state revenue to provide a 30-day pre-closing notice to the department of health and the attorney general’s office so the transaction can be made public for input.
Connecticut modified its certificate of need (CON) program to require additional notice of transactions in the community, include support for resourcing experts to evaluate the impact of transactions, and more. In exchange, the state agreed to limit the time for reviewing applications, to exempt certain imaging equipment from CON review, and to issue determinations of CON within 30 days. Connecticut, North Carolina, Washington, and West Virginia repealed or exempted from CON certain services such as behavioral health, children’s services, certain capital expenditures, dialysis in an emergency situation, and birthing centers.
Maine repealed its certificate of public advantage law, while Mississippi SB 2323 allows private hospitals to obtain a certificate of public advantage.
Anti-Competitive Contracting
Recognizing that many markets are already very consolidated, state officials are seeking policy solutions to mitigate potential abuses of market power and to encourage competition. NASHP’s model bill to prohibit certain anti-competitive clauses is designed to prevent health insurers and providers from agreements that disproportionately benefit health systems or plans with market power. The language is meant to level the playing field for negotiations between carriers or health plan administrators and hospitals or health systems.
Connecticut’s law prohibits all-or-nothing clauses, anti-steering clauses, anti-tiering clauses, gag clauses, and most-favored nation health carrier or health plan administrator clauses in contracts between health carriers and providers. The law includes provisions requiring disclosure to providers on how health carriers select providers for and evaluate providers in tiering arrangements. Texas enacted a similar law that prohibits multiple anti-competitive contracting clauses thanks to a multi-faceted coalition of policy and employer partners. As part of its work, the coalition leveraged NASHP’s Hospital Cost Tool data to create the state-specific tool that informed the legislature’s policymaking.
Transparency of Health Care Prices and Costs
As highlighted in NASHP’s enacted laws tracker, several states enacted laws to increase hospital transparency — both from a pricing perspective, which includes codifying federal rules, and to better understand overall hospital and health system finances. For instance, Colorado expanded hospital transparency reporting to include transfers of cash, equity, investments, and assets to and from related parties; cash flow statements; changes to certain specific major service lines; and more. The new law includes enforcement mechanisms for failure to provide required information and requires the department to report on the hospital transparency report at an annual hearing. Finally, the legislation modifies the required content of patient bills from hospitals.
Increasingly, state legislatures also want to better understand hospitals’ investments in the community. The Texas legislature included a provision in its budget for the Health and Human Services Commission to evaluate “hospital revenue and expenses, as well as public debt and the value of tax-exemptions, and the value of any charity care provided, as applicable by hospital and system.” Similarly, Minnesota and Maine enacted 340B transparency laws to understand the scope of hospitals’ (and other 340B entities) revenue from the program, with an interest in understanding if and how those funds are used to stretch limited federal funding.
A Snapshot of Two States’ Multifaceted Laws
Minnesota
In the 2023 legislative session, the Minnesota legislature enacted multiple policies aimed at increasing overall health care affordability. As part of these efforts, the state established a Center for Health Care Affordability within the Department of Health charged with analyzing the drivers of health care spending growth and increasing transparency. Further, the legislation requires the Department of Health to analyze total public and private health care spending for a potential universal health care financing system. The commissioner must conduct the analysis of a proposal and issue a final report by January 15, 2026, for such a system that would be designed to ensure all Minnesotans have health care coverage, cover all necessary care, and allow patients to choose their doctors, hospitals, and other providers.
This new law also requires the Minnesota commissioner of human services to certify actuarial and economic analyses that include analyses of affordability of premiums and costs sharing tied to a specific definition of “affordability”, and state-specific impacts on enrollment, the individual market, and risk rating for MinnesotaCare public option models in anticipation of an Affordable Care Act 1332 waiver.The commissioner of human services must consult with the commissioners of health and commerce and the board of directors of MNSure before reporting to the legislature by February 1, 2024, on the recommendation for a public option, and factors affecting a 1332 waiver targeted to be implemented by January 1, 2027.
Finally, the new law establishes screening requirements for hospitals to determine eligibility for charity care and creates new debt collection requirements. It prohibits hospitals from certain practices without first screening patients for charity care, including enrolling a patient in a payment plan, offering a line of credit, referring the patient to a debt collection, denying health care services because of medical debt regardless of whether the services are necessary or might be available from another provider, or accepting a credit card payment of over $500 for medical debt owed to the hospital. Among other protections, the law also limits the charges by the hospital to an uninsured patient.
Indiana
Indiana’s omnibus law creates a health care cost oversight task force, which is charged with review of multiple health market areas and tasked with making recommendations on reducing health care costs. Importantly, the task force is to review the concentration of health care providers and insurers, as well as data from several state departments. The law requires the secretary of Indiana’s Department of Family and Social Services to research and compile data related to Medicaid reimbursement rates for Indiana and all other states and to identify the national reimbursement rate average to understand how Indiana’s Medicaid payment to hospitals compares to certain other state Medicaid programs, as well as nationally.
The law also sets a commercial reimbursement ceiling at 285 percent of the Medicare rate for certain nonprofit hospital systems doing business in Indiana. To assess compliance, the Department of Insurance is required to contract with a third party to calculate Indiana nonprofit hospital systems’ prices by commercial payer type — self-funded, fully insured, individual market, and the combined prices of those categories as a percentage of the Medicare rates for calendar years 2021, 2022, and 2023. Nonprofit hospital systems are required to report that same information each subsequent year, along with the charge information required by the Centers for Medicare and Medicaid Services. The Insurance Department’s third-party contractor will compare the data to assess if the aggregate commercial payment to nonprofit hospital systems’ facility meets the law’s payment cap of 285 percent of Medicare’s rate. A coalition of Indiana’s employers and non-partisan policy analysts leveraged data from the Sage Transparency and NASHP hospital cost tools to inform this policy.
Conclusion
States continue to lead efforts to address rising health care costs for state residents and employers. NASHP will continue to support states in addressing health care costs and affordability challenges while improving access, equity, and quality of care.
