Catalyst for Payment Reform Releases State-based Policy Resources to Help Rein in Health Care Prices

BERKELEY, CA – February 14, 2023 – As employers and other commercial health care purchasers brace for spikes in premium increases, it’s become apparent that the private sector’s market-based interventions are insufficient on their own to rein in costs. Over the past decade, strategies like network design, price transparency and alternative payment models were supposed to change the incentive structure of health care markets, driving consumers toward high-value providers, and rewarding providers for the quality instead of the quantity of care delivered. While these approaches may have worked on the margins, they have not bent the cost curve. In recognition that health care does not behave like a traditional marketplace that yields to the forces of supply and demand, the non-profit Catalyst for Payment Reform (CPR) has developed new resources that build the case for state government intervention and provide blueprints for reform.

CPR’s research finds state governments in a strong position to design health care policy interventions that cater to the unique needs of their economies and constituents. However, a single policy will not suffice: states must close loopholes and build infrastructure and oversight capabilities. To this end, CPR’s issue brief series outlines combinations of state-based policy options that offer a roadmap for policymakers and advocates to improve competition and affordability.

“It’s like taking a belt and suspenders approach to health care reform,” said Julianne McGarry, CPR’s Director of Projects and Research. “CPR continues to champion market-based innovation, but it’s clear that health care needs state policy intervention to create a level playing field.”

CPR’s policy menus represent “use cases” for states to help them determine which course of action best meets their needs. Each menu articulates prerequisite policies to build infrastructure and close loopholes, core policies to address the use case, and next step policies if the state wants to launch more intensive intervention. The use-case objectives include the following:

1. Prevent or punish bad behavior: prevent health systems and health plans from engaging in anticompetitive practices, and exact penalties for those that persist in abusing market power.
2. Shore up competition: create robust oversight to monitor or approve acquisitive health care activity and enforce bans on anticompetitive behavior.
3. Empower “market balancers: strengthen health plans’ negotiating leverage with providers and encourage purchasers to shift volume toward high-value providers and services.
4. Regulate provider prices: constrain commercial prices through a series of options that fall across a spectrum according to the degree of government oversight required.
5. Pick the low-hanging fruit: select from a curated array of policies that require relatively low resources to implement and administer and are less likely to draw political headwinds.

CPR translated these menus into issue briefs and will host a webinar series which includes reaction panels of renowned policymakers, economists and legal scholars. The series begins on March 14. Both resources are free and available to the public.

You can register for the series here: https://www.catalyze.org/events/.