By now, the Federal Trade Commission’s (FTC) law enforcement efforts in the health care area are well known. We have successfully challenged several hospital and physician practice mergers in the last few years. We also continue to pursue anticompetitive pharmaceutical patent settlements, following a victory at the Supreme Court in the Actavis case. Speaking of the Court, it is currently reviewing a case we brought against the North Carolina Board of Dental Examiners, alleging that its members conspired to exclude non-dentists from providing teeth whitening services in North Carolina.
Perhaps less publicized are the FTC’s various non-enforcement efforts in health care. Arguably most significant among those is the advocacy that the agency conducts in favor of competition principles before state legislatures and other policymakers. I will discuss our advocacy efforts in the health care space in this post, and then turn to the subject of telemedicine, an area in which FTC competition policy may play a significant role.
The FTC’s Competition Advocacy Program
Advocating for competition is an important part of the FTC’s mission. Broadly speaking, competition advocacy at the FTC involves the use of our expertise in competition and economics to persuade other government actors to pursue policies that promote competition and consumer welfare. This advocacy takes a number of forms, including providing testimony or comments on proposed federal and state legislation and regulations, advising other federal agencies on competition issues, filing amicus briefs in federal and state courts, and advocating for competition principles in public fora.
Sometimes, this advocacy is conducted in support of a particular law or regulation that would benefit competition and consumers. All too often, however, advocacy addresses proposed laws or regulations that would limit choices and make consumers worse off — by, for example, restricting certain business practices or prohibiting some business models altogether, or even seeking to immunize certain anticompetitive conduct from the federal antitrust laws. Even if well-intentioned, these government-imposed restraints can inflict as much, if not more, harm on consumers than private anticompetitive conduct. And, as statutes or regulations enacted by the government, these restraints are, of course, more durable than any private conduct could be.
Not surprisingly, a significant portion of the FTC’s competition advocacy work is focused on the health care sector. Over the past decade, we have targeted, among other things, (1) proposed antitrust immunity for certain health care providers to bargain collectively with health insurers, (2) scope of practice regulations, and (3) restrictions on retail clinics.
Proposals for Antitrust Immunity
The FTC has long advocated against federal and state legislative proposals to create antitrust exemptions for collective negotiations by otherwise competing health care providers. Such exemptions tend to raise prices and harm consumers. A recent letter issued by FTC staff, prepared at the request of Connecticut policymakers with the support of the Connecticut Attorney General, addressed just such a proposed exemption in that state.
The Connecticut bill provided for the formation of so-called health care collaboratives comprising otherwise independent health care practitioners, such as physicians. It would have authorized these collaboratives to jointly negotiate prices and other terms with health plans, requiring the health plans to deal with the collaboratives only under particular terms and under the threat of substantial financial penalties, but not vice versa. It also attempted to immunize these joint negotiations from scrutiny under the antitrust laws.
The FTC staff letter made three primary arguments against the bill. First, the antitrust laws are not a barrier to the formation of efficient health care collaborations that benefit consumers. As explained in guidance issued by the FTC and the Justice Department, competitor collaborations—including health care provider collaborations—often are entirely consistent with the antitrust laws, particularly when they are likely to reduce costs and benefit consumers through increased efficiency and improved coordination of care.
We have produced detailed advisory opinion letters on specific integration proposals by various types of providers. In addition, the FTC and DOJ have provided joint guidance concerning both Medicare and commercial accountable care organizations (ACOs) to ensure that the prospect of antitrust liability would not impede the formation of beneficial ACOs. In fact, the FTC/DOJ policy statement on ACOs established a process for newly formed ACOs to seek an expedited agency review if they are concerned about potential antitrust exposure.
Second, the Connecticut advocacy letter observed that a central purpose of the proposed legislation appeared to be to permit physicians to extract higher reimbursement rates from health plans through joint negotiations, not to integrate their practices to reduce costs or better coordinate care for their patients.
Third, because procompetitive health care collaborations already are permissible under the antitrust laws, the bill’s main effect would be to foster precisely those types of collective negotiations that would not generate efficiencies and therefore would not pass muster under the antitrust laws. The joint negotiations contemplated by the bill were likely to lead to increased health care costs and decreased access to services for consumers. Given the substantial risk that the bill would encourage the formation of inefficient and anticompetitive collaborations among providers, FTC staff urged Connecticut legislators not to attempt to shield them from the antitrust laws. Thus far, at least, they have not done so.
Looking beyond the proposed Connecticut bill, health care providers repeatedly have sought antitrust immunity for various forms of joint conduct—including agreements on the prices they will accept from health insurers and other payers—asserting that immunity for joint bargaining is necessary to “level the playing field” so that providers can create and exercise countervailing market power. But reducing competition on one side of a market (that is, physicians or other providers) is not the answer to a perceived lack of competition on the other side of that market (that is, insurers and other third-party payers).
If we start to prop up certain parts of the playing field, consumers might find themselves in an ever-deepening pit in the middle, as other stakeholder positions get one boost after another. The U.S. antitrust agencies have consistently opposed these exemptions, and will likely continue to do so, because they are likely to harm consumers by increasing costs without improving quality of care.
Scope of Practice Regulations
A second area of focus for our competition advocacy has been scope of practice regulations, which often seek to limit competition from newer providers that are able to supply comparable (or even superior) services, often at lower cost. In many states, there has been an interest in allowing basic medical services to be provided not just by physicians, but by advanced practice registered nurses, or APRNs, who are nurses with graduate nursing degrees in addition to undergraduate nursing education and practice experience. APRNs include both general nurse practitioners and specialists, such as nurse-midwives or certified registered nurse anesthetists. This expanded licensing of APRNs could increase affordable access to quality care in rural and poorer areas of the country — that is, where there are fewer physicians.
The FTC’s Office of Policy Planning, which I had the honor of heading from 2004 to 2008, has been actively advocating to state legislatures to allow APRNs to provide certain treatments and to prescribe certain medications — subject, of course, to responsible measures to control for quality and safety. In short, our advocacies, consistent with the Institute of Medicine’s policy position, have suggested that any limits on APRNs’ ability to provide medical services should be no stricter than necessary to protect patient safety.
Limited Service Clinics
A third, related set of advocacies have addressed so-called retail clinics or limited service clinics — the types of small, limited, primary care service clinics you have probably seen at some chain drug stores, supermarkets, or malls. Retail clinics tend to be staffed by APRNs, and they offer consumers a convenient way to obtain basic medical care at transparent and competitive prices. Evidence indicates that retail clinic care tends to be of high quality. That may be partly due to the fact that APRNs generally get high marks for quality of care and, in retail clinics, only provide a very basic and limited set of the health care services that they are trained to provide. It may be partly due, as well, to the clinics’ use of electronic health records, electronic prescribing, and up-to-date practice guidelines, as well as remote oversight and consultation — basic forms of telehealth that can deliver expertise where and when it is needed, but may run afoul of particular state supervision requirements for APRNs.
One of the major competition issues with retail clinics has been separating bona fide attempts to provide basic health and safety quality assurances from attempts to suppress innovative models of health care delivery. For example, in 2007, we reviewed proposed clinic rules in Massachusetts. In that case, the Department of Public Health seemed to recognize the pro-competitive and pro-consumer potential of the clinics. Most of the proposed rule seemed to try to make room for the clinics within the larger body of the state’s health care clinic regulations.
Certain stakeholders had, however, lobbied for very restrictive pre-screening requirements for all clinic advertising—including things like changes to web site listings of hours of operation and the availability of flu shots—that were not imposed on other types of health care facilities and seemed potentially very burdensome for operators of small, low-cost, flexible clinics. I am glad to report that the Department of Public Health took our economic and legal concerns seriously and eliminated the troubling provisions from its final rule.
You can find retail clinics operating across Massachusetts today. Whether these clinics offer what you or your family need or want is for you, not competitor-crafted regulations, to decide. To be clear, trying to formulate some sort of competitively ideal clinic regulations has never been our concern, and we are in no position to value a state’s own health and safety priorities. We have been concerned, however, where heightened restrictions seem to be aimed at particular businesses or business models, rather than particular and well-founded consumer risks, both because the restrictions might discriminate against an innovative model of delivery and because they can work as de facto scope of practice restrictions on those professionals employed under the model.
Telemedicine: Policy Measures for the Future of Health Care
Telemedicine is a developing and intriguing area at the intersection of health care and technology. Telemedicine allows us to monitor, diagnose, and in some cases even treat patients who are in different locations than their doctors or other medical professionals, whether they are separated by a hospital floor, a state line, or even an ocean.
As a policymaker, I believe we need to be far seeing and far reaching in our policies to allow the potential of telemedicine to become a reality for patients in the U.S. Although this will necessarily involve a wide array of government and private actors, as an FTC Commissioner, there are policies that I can encourage my agency to pursue to help facilitate the successful proliferation of telemedicine.
Telemedicine—sometimes called telehealth—might sound like science fiction, but it is important to keep in mind that many of its most interesting applications involve tried and true technologies, applied in novel ways. For example, Dr. Sanjiv Arora at the University of New Mexico struggled for years with Hepatitis C referrals from rural parts of the state, where patients faced real shortages of primary care doctors, not to mention specialists. People with chronic diseases like Hepatitis C can sometimes travel to larger cities and seek access to tertiary care centers, but it is often difficult for them to do so, even once they have a correct diagnosis.
To deal with this problem, Dr. Arora did not establish a network of clinics staffed with multidisciplinary specialists across the far-flung regions of New Mexico. Instead, he established what is called the ECHO Program – the Extension for Community Health Outcomes. The ECHO program uses telehealth technology and best practices protocols to connect rural primary care practices with multi-disciplinary specialist resources at the University’s academic medical center in Albuquerque.
That connection enabled Dr. Arora to do two things: deliver expertise to primary care providers and patients far from his academic medical center and — maybe more radically — use that consultation and delivery of care to help train a far-flung network of primary care doctors with significant expertise in the diagnosis and treatment of Hepatitis C. The program has provided more than 57,000 hours of continuing medical education to more than 300 clinical care teams in 74 New Mexico communities; it has expanded to other disease indications, including hypertension, diabetes care, chronic pain, and HIV care. ECHO centers have now been established in 22 states and five foreign countries.
I want to note a couple of additional features of the ECHO program. First, recalling our nursing competition advocacies, ECHO now employs and is expanding the use of APRNs to improve its network of primary care professionals in rural and underserved areas. In some states, this is simply harder to do than in others because of state-by-state regulatory differences, not differences in APRN training or quality of care.
Second, although Dr. Arora’s ECHO program generally serves New Mexico patients, many newer implementations of the ECHO model work across state lines. Some states permit that and some do not. Telemedicine can reduce the costs and extend the reach of many health care services, but the advantages of remote and networked expertise do not always fit professional licensing schemes that were developed to regulate local medical practices — practices historically dominated by face-to-face encounters between a physician and her patient. What counts as telemedicine, telehealth, or “the practice of medicine,” and when telemedicine requires a local state license, is generally a matter of state law and sometimes left to determinations of independent state boards.
Link experts across three or four jurisdictions and things start to get pretty complicated and, for providers, unpredictable, since generally the practice of medicine without such licensure is prohibited and subject to criminal sanction by statute. The variation in requirements persists despite the fact that the core entry requirements for physicians are essentially uniform across the U.S.
Some provider services have responded to the state regulatory patchwork by buying dozens of licenses for their practitioners — doable for some, but probably a barrier for many would-be entrants, and efficient for nobody. My point is not anti-licensure and it is not that we need some particular model of state or federal regulation. It is that our legacy statutes and regulations can erect barriers to the efficient flow of health care information and expertise and, indeed, specialized labor — barriers that can be costly to public and private payers and, in the end, individual patients, and barriers that do not always offer countervailing consumer protection benefits. As lawyers and policymakers, we need to think creatively about ways to lower these barriers without sacrificing what works in our regulations.
In what I view as a positive development, a bipartisan group of sixteen U.S. Senators recently commended state medical boards and the Federation of State Medical Boards (FSMB) for their development of the Interstate Medical Licensure Compact (Compact), under which qualified physicians seeking to practice in multiple states would be eligible for expedited licensure in all states participating in the Compact. The FSMB recently finalized the model legislation that states can use to establish the Compact, if they so choose. This Compact would appear to greatly facilitate the use of telemedicine while still allowing states to regulate medicine within their borders.
There are of course other applications of established technology beyond telemedicine. One example is electronic prescribing, a well-established technology in most pharmacies, if in a smaller percentage of physician offices. Another example: Google has been testing a means of monitoring blood glucose levels for diabetics, not through a pinprick, but through a contact lens.
We might have all sorts of questions about new devices like this: How well do they work? What will they cost? From a competition perspective, what, if any, barriers to entry are there in these types of industries? And, from a consumer protection standpoint, what are the provisions for the security of our personal health information? This is a particularly interesting area for me as an FTC Commissioner because it draws together several hot issues my agency has been addressing and will continue to address for the foreseeable future, including data security and mobile privacy in the consumer protection space, as well as competition issues such as net neutrality and broadband data prioritization.
On a more philosophical level, these developments also raise the question of what is the best approach for a government agency like the FTC to take with regard to technological and business innovation. The success of the Internet and the tech sector have in large part been driven by the freedom to experiment with different business models, the best of which have survived and thrived, even in the face of initial unfamiliarity and unease about the impact on consumers and competitors.
If health care needs anything, it needs this type of innovation, too. It is thus vital that policymakers, like myself, approach new technologies with a dose of regulatory humility, by working hard to educate ourselves and others about the innovation, understand its effects on consumers and the marketplace, identify benefits and likely harms, and, if harms do arise, consider whether existing laws and regulations are sufficient to address them before assuming that new rules are required.
For the FTC, I believe we can help ensure that the promise of innovations in health care technology is realized by using our unique set of policy and law enforcement tools. First and foremost, in a new technology or industry that is rapidly innovating, we should use our policy research and development function to get a better understanding of: the technology itself; the new business models it may enable; any existing regulatory structures, including any industry self-regulation; relevant market dynamics; and the nature and extent of likely consumer and competitive benefits and risks.
We should also use our policy tools to educate other policymakers, as well as ourselves, about undue impediments to innovation and competition. Of course, the FTC is also an enforcement agency and it can and should use its traditional deception and unfairness authority to stop consumer harms that may arise from particular health information technology devices.
Finally, the FTC should use its flexible and fact-intensive approach to antitrust enforcement to investigate and, where appropriate, challenge competitive harms occurring in health care, technology, and even health care technology. There is much that we can do here, and we have a variety of tools with which to do it. To take a cue from the doctors, however: first, we should do no harm.