Lowering unaffordable costs: Legislative solutions to increase transparency and competition in health care

Chairman Guthrie, Ranking Member Eshoo, members of the Subcommittee, thank you for the opportunity to testify today on this crucial topic. My name is Loren Adler and I am a Fellow and Associate Director of the USC-Brookings Schaeffer Initiative for Health Policy. My research focuses on health care market competition, provider payments, and prescription drug policy. Prior to joining Brookings, I worked for the Committee for a Responsible Federal Budget and the Bipartisan Policy Center.

Relevant to today’s hearing, much of my current research aims to decipher the effects of private equity, payer, and hospital acquisitions of physician practices, as well as develop policy responses.

I have previously written on a broad array of policy options to reduce costs by increasing transparency and competition in health care – most recently in a policy brief with Benedic Ippolito at the American Enterprise Institute. This testimony focuses more narrowly on two main points:

• Medicare rates are intended to reflect the costs of providing services for an efficient provider. As such, Medicare should not pay more for the same service performed in a hospital outpatient department versus a physician’s office, provided that the physician’s office setting is safe and clinically effective for most patients. Implementing this policy change would result in substantial savings for beneficiaries and taxpayers, while fostering greater competition in physician markets by reducing incentives for hospitals to acquire physician practices.
• Increased transparency can both facilitate stronger research and oversight and, in certain circumstances, steer patient volume to lower-cost providers. Specifically, with systematic data about provider ownership arrangements and commercial market prices and volumes, researchers could better identify the effects of various forms of health care consolidation and elucidate solutions. The opacity of payment flows between specific actors in the drug supply chain similarly inhibits research. And evidence suggests that patients can make use of transparent pricing information for more “shoppable” services.

Read the full testimony here.

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