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The Federal Trade Commission (FTC) can try to prevent consolidation in different industries and in different markets. For example, if two large healthcare systems are the only two large networks that serve a geographic area, the FTC might oppose their merger. KFF Health News reported that currently 19 states have laws that can exempt hospital systems from the FTC's decisions about mergers, but five states have already repealed those laws, and a sixth one is considering doing so.

The Federal Trade Commission (FTC) can try to prevent consolidation in different industries and in different markets. For example, if two large healthcare systems are the only two large networks that serve a geographic area, the FTC might oppose their merger. KFF Health News reported that currently 19 states have laws that can exempt hospital systems from the FTC's decisions about mergers, but five states have already repealed those laws, and a sixth one is considering doing so.

Industry consolidation through mergers leads to less competition and is therefore considered anti-competitive behavior. Some previous health networks have been able to convince regulators that a merger might save an ailing health system or that a merger might enable the combined entity to provide better service, potentially at less cost. What those networks claim before the merger might actually be very different from what actually happens after the merger. For example, without adequate competition, the new entity can command higher prices. Of course, once a merger has happened, reversing the merger is difficult. Hence, some states have found that even if hospital systems agree ahead of the merger to comply with certain requirements, such reassurances are not adequate. The FTC has commented that those exemptions "have failed to protect local communities from the harmful effects of anticompetitive hospital mergers." For that reason, some states have reversed their laws to allow those exemptions.

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Merry Christmas!

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Pharmacy benefit managers (PBMs) got a start by promising their customers huge savings when ordering medications on behalf of their customers. It appears that a focus on percentage discounts (rather than absolute costs) drove drug manufacturers to raise their list prices, so that PBMs can tout greater savings. Pricing models became more complex and in many cases, patients end up paying more for medications. KFF Health News profiled someone whose job was to educate others on the pitfalls of PBMs and who ended up bringing a lawsuit against her employer -- a drug manufacturer.

Pharmacy benefit managers (PBMs) got a start by promising their customers huge savings when ordering medications on behalf of their customers. It appears that a focus on percentage discounts (rather than absolute costs) drove drug manufacturers to raise their list prices, so that PBMs can tout greater savings. Pricing models became more complex and in many cases, patients end up paying more for medications. KFF Health News profiled someone whose job was to educate others on the pitfalls of PBMs and who ended up bringing a lawsuit against her employer -- a drug manufacturer.

In terms of good news, there is a new type of PBM on the market, which simply adds a processing fee. As highlighted in the article, those entrants appear to be gaining some traction, as evidenced by several large companies and the state of Connecticut switching over to these newer PBMs. It might still be a decade or more before incumbent PBMs vastly change their business model.

Despite recent legislation to prevent surprise billing in the form of out-of-network providers, KFF Health News described another way that some physicians can surprise their patients with bills. Apparently, some physicians have started classifying certain "procedures" as surgery, despite those procedures being as removing a splinter. Classifying procedures as such allows physicians to bill more, and if a patient has not met the deductible, the patient may be the one paying. It seems that in many cases, when doctors are about to perform a procedure that will add an additional charge -- especially an unexpected one -- they should inform patients about the extra charge. For example, when a customer is having his car serviced in a repair shop, the mechanic generally recommends procedures, and the customer can decide which of the recommendations to pay for -- before the mechanic performs the procedures.

Despite recent legislation to prevent surprise billing in the form of out-of-network providers, KFF Health News described another way that some physicians can surprise their patients with bills. Apparently, some physicians have started classifying certain "procedures" as surgery, despite those procedures being as removing a splinter. Classifying procedures as such allows physicians to bill more, and if a patient has not met the deductible, the patient may be the one paying. It seems that in many cases, when doctors are about to perform a procedure that will add an additional charge -- especially an unexpected one -- they should inform patients about the extra charge. For example, when a customer is having his car serviced in a repair shop, the mechanic generally recommends procedures, and the customer can decide which of the recommendations to pay for -- before the mechanic performs the procedures.

The article discussed some of the motivation behind this new practice. For a few decades now, physician compensation has been largely influenced by a committee that helps determine the relative value of different procedures (such as an office visit versus a wart removal), and the article explains that "Since surgeons are overrepresented on the committee, the valuation of anything defined as an operation has only increased, giving billers the incentive to classify even the most mundane interventions as surgery." It is not surprising that providers want to be paid more, but this method of classifying simple treatments as surgeries would likely be a surprise to many inside and outside the medical community.