What you don’t know about these state laws can hurt you!
March 13, 2018
A certain health care reform may succeed or fail based entirely on what state it’s implemented in. Why? Because many state laws and regulations either enable or create barriers to health care reform. For example, a self insured company may be interested in implementing a shared-risk accountable care organization (ACO) directly with a health system. This company may face barriers depending on the state in which it is developing the strategy.
In some states, self-insured companies cannot contract directly with a risk-bearing entity. Instead, only a licensed insurer or health maintenance organization may do so. Alternatively, network adequacy laws could prevent the company from creating an ACO if there are not enough providers in the market. IN addition, as is often the case under ACO arrangements, consumers are prompted to choose ACO providers based on their out-of-pocket costs or the provider’s quality performance. Therefore, they need access to price and quality information to make these distinctions. Some states have adopted laws protecting price information as a “trade secret,” thereby, restricting consumers’ ability to differentiate between ACO and non-ACO providers.
A state with any of these laws will force the company to look for another strategy to improve the cost and quality of care for its population—after it has already invested the time and resources to develop it.
In 2019, CPR and the UCSF/UC Hastings Consortium on Law, Science and Health Policy released a database of state laws and regulations governing price transparency, provider market power, provider payment, provider networks, and health insurance benefit designs. This database will host information on state-specific laws and regulations and describe the relative strengths and weaknesses of certain laws. The main goal is to help state-based organizations select the innovations most suitable to their environments and identify which laws and regulations could support their efforts to create a higher-value health care system. Once launched, purchasers and states will have an easy way to assess their state legal and regulatory environments before investing time and energy in a particular health care reform.
The same self-insured company will now be able to use the database to search for its state’s laws and regulations to identify if any of the laws discussed above are enacted. If so, the company will know ahead of time that a shared-risk ACO directly with a health system is not a worthy investment and will be able to identify another strategy that is more suited to its environment.
We are grateful to receive support from the Robert Wood Johnson Foundation.