The National Academy for State Health Policy’s (NASHP) Hospital Cost Tool uses information from annual Medicare cost reports that are completed by hospitals and submitted to the federal government to provide health care purchasers and regulators with critical information to better understand hospital costs – versus their charges.
- Added metrics to assist with hospital comparisons, including total compensation, overhead compensation, inpatient discharges, and home office and related party costs.
- Expanded capture of Medicare charges, payments, and costs for hospital-based or subcontractor inpatient rehabilitation facility, inpatient psychiatric facility, swing beds, and skilled nursing facility services in both inpatient and outpatient settings.
- Isolated revenue capture for Title V and Title XIX programs from Title XVIII revenues.
- Eliminated separate calculations for Medicare swing bed calculations, including them in general Medicare calculations.
- Simplified the tool’s calculation of a hospital’s “break-even levels” or the point at which hospitals are reimbursed by commercial plans at the rate that covers the hospitals’ cost of providing care without losing money, even when considering the hospital’s potential losses from public payers and the uninsured.
For assistance utilizing the hospital cost tool, please email firstname.lastname@example.org.
Rampant consolidation in nearly every state has created dominant health care systems that can use anticompetitive contracting practices to charge supracompetitive prices, especially to commercial insurance plans.
With COVID-19 expected to accelerate the consolidation of health care providers, state policymakers are searching for tools to curtail the abuse of market power by dominant health providers. To create a more level playing field for negotiations, the National Academy for State Health Policy has developed a new model law that bans anticompetitive contract terms using states’ consumer protection and antitrust laws. This report describes how the model act can give states essential tools to help them rein in rising health care costs.
Rising health care costs from provider consolidation represent a critical financial challenge for states. High health care costs present states with policy tradeoffs – leaving costs unchecked means fewer state resources to invest in other priorities, such as social determinants of health, health equity, and other, non-health areas such as education and infrastructure. Private-sector employers and individuals who purchase insurance reel under increased premiums driven in large part by rising hospital costs. Without effective tools to slow the growth of health care costs, health spending will continue to threaten public and private resources in every other area.
A primary driver of rising health care costs is the wave of health care consolidation that gives consolidated providers market leverage to raise prices unhampered by competitive forces. Nearly all major metropolitan hospital markets are highly concentrated. Nationwide, as of 2018, more than half of all physicians and 72 percent of hospitals were affiliated with a health system. Evidence suggests that provider consolidation leads to higher hospital and physician prices and higher total expenditures – all while having little to no impact on improving quality of care, reducing utilization, or improving efficiency.
Rampant consolidation has created dominant health systems that can use anticompetitive contracting practices to charge supracompetitive prices, especially to commercial insurance plans. As the COVID-19 pandemic will likely accelerate consolidation of health care providers with strained resources, policymakers are searching for ways to limit the impact of increased provider market power on health care costs. In many states, it is not enough to try to prevent consolidation from occurring through pre-merger review because most state and metropolitan markets are already highly concentrated. In these already consolidated markets, states need tools to curtail the abuse of market power by dominant health providers.
Although state attorneys general may be able to prosecute anticompetitive behavior — such as the use of anticompetitive contracting provisions by dominant systems — under current antitrust authority, legislation prohibiting these contract clauses is necessary to improve state enforcement authority and disrupt the distorted bargaining dynamic between health insurers and powerful providers. State officials have routinely heard that insurers lack proper leverage to negotiate contract terms to reduce hospital and physician costs. To address the harms from anticompetitive contract provisions and create a more level playing field for negotiations, the National Academy for State Health Policy (NASHP) has developed a model act, Prohibiting Anticompetitive Contract Terms in Health Care Contracts. The model act prohibits four common anticompetitive contract terms, making the use of these provisions presumptively unlawful under a state’s consumer protection and antitrust laws.
Anticompetitive Contracting Practices by Consolidated Entities
One of the primary ways that dominant providers raise prices is through anticompetitive health plan contracting, in which powerful provider groups and health systems exploit their market power to demand terms in their contracts with health insurance plans. When health care markets become consolidated, a dominant health system may control multiple hospitals, multi-specialty physician practices, clinics, and ancillary service providers. Due to network adequacy laws, some services or providers are considered “must-haves,” such as a hospital with a neonatal intensive care unit or trauma facility, for a health plan to offer a commercially viable provider network. Health plans must ensure their provider networks are robust enough for their members to have access to essential services.
Insurers typically have two options for containing costs in competitive contracting:
- Exclude high-cost, low-value providers from the network, or
- Give consumers an incentive to choose more cost-effective alternatives.
Consolidated health systems leverage their market power in negotiations with insurers because the insurer cannot afford to exclude must-have providers from its network. Dominant health systems can use all-or-nothing negotiations to raise prices for all of their affiliated providers by threatening to prevent any of their providers from participating in the insurer’s network unless the insurer accepts the prices and terms set by the health system. These types of distorted negotiations between providers and insurers directly contribute to higher costs for states, employers, and patients. The four contracting practices that have raised the most concern among antitrust enforcers and lawmakers, and those that are targeted in the NASHP model act, are: (1) all-or-nothing contracting; (2) anti-tiering or anti-steering clauses; (3) most-favored-nation clauses; and (4) gag clauses.
All-or-nothing contracting: Health systems may use all-or-nothing provisions to leverage the status of their must-have providers or facilities in highly concentrated markets to demand higher payment rates for the entire system, including those providers in more competitive locations and specialties. An all-or-nothing provision requires the health plan to contract with all providers in that system or none of them. The insurer then faces a difficult choice – include all of the health systems’ facilities and providers in the network (even those of lower value or where there are other competitive choices) or lose all of them, which means the plan will not have a commercially viable provider network anywhere the health system has a must-have provider. By bargaining on behalf of all its affiliates, a powerful health system can thus raise the prices for its less desirable providers by tying them to must-have providers.
Anti-tiering or anti-steering clauses: Tiered networks and steering incentives are cost-saving strategies used by insurers to encourage patients to seek higher value care. When using tiered networks, insurers place providers into tiers based on price and quality and then offer patients financial incentives, typically through lower cost-sharing, to choose providers from a higher-value tier. When health systems use anti-tiering, they require a health plan to place that system’s facilities or providers in the most preferred tier, even if the health system’s providers do not meet the insurers’ cost or quality standards for the highest-value tier. In the case of anti-steering provisions, the health system may forbid the insurer from using cost-sharing incentives to steer patients to other providers, even if they offer better value. Dominant health systems use anti-tiering or anti-steering provisions to stop health plans from implementing these cost-control measures and thereby avoid competition.
Gag clauses: Gag clauses may prevent either party in a contract from disclosing terms of that agreement, including prices, to a third party. While many states have laws requiring insurers to disclose out-of-pocket costs to enrollees, only a few states have laws allowing patients, plan sponsors (such as an employer), or even state regulators to obtain negotiated price or quality information. As a result, patients and employers may be unable to access necessary information to make informed choices between providers, both for individual health care services and network inclusion. The lack of transparency from gag clauses and the mistaken notion that prices are trade secrets:
- Undermine price transparency tools for consumers;
- Decrease plan sponsors’ ability to push back on rising prices; and
- Make it more difficult for policymakers to understand how health care markets are operating in their state.
Gag clauses may be especially insidious when used in conjunction with other anticompetitive contract terms. For example, they may be used to hide the magnitude of variation in provider rates and therefore obscure the effects of an anti-steering clause.
Most-favored-nation (MFN) clauses: Unlike the other contract clauses included in the NASHP model, most-favored-nation clauses are typically used by a dominant insurer, sometimes in concert with a dominant health system. MFN clauses, sometimes called “pricing parity” or “price protection” clauses, are contractual agreements in which a provider or health system agrees not to offer lower prices to any other insurer. Dominant insurers thus ensure that they are getting the best prices. At first glance, these terms may appear to be pro-competitive because the health system is agreeing to lower their contracted prices with the insurer if the health system accepts a lower price from one of its competitors. Effectively, however, MFNs ensure that no rival insurer can negotiate with the health system to offer a novel insurance product (e.g., a narrow network) at lower rates. In addition, MFNs may allow insurers and providers to collude to raise prices. Insurers can accept an anticompetitive price increase from a dominant provider without competitive disadvantage because the insurer can pass the increase through to consumers in the form of higher premiums, as long as they know all competitors must also pay the same or higher rates.
State Antitrust Enforcement: A Resource-Intensive, Insufficient Solution
Recent lawsuits by state and federal antitrust enforcers and private plaintiffs have exposed how dominant health systems use contracting practices to increase prices and limit the ability of payers to control costs. High-profile cases by then-California Attorney General Xavier Becerra against Sutter Health and North Carolina Attorney General Josh Stein against Atrium Health targeted those dominant health systems’ use of anticompetitive terms in their health plan contracts, including all-or-nothing bargaining, anti-tiering, and anti-steering clauses that prevented private health plans from using financial incentives to encourage patients to choose lower-cost providers, and gag clauses that barred health plans from sharing price and quality information with patients.
While state attorneys general can use existing antitrust enforcement authority to address the anticompetitive contracting, bringing a case is resource-intensive, lengthy, and can be difficult to prove. Even if a settlement imposes conduct remedies and monetary penalties against the dominant health system, settlements avoid trial and do not establish legal precedent for future enforcement actions. As Emilio Varanini, deputy attorney general in the antitrust section of the California Department of Justice, has argued, “while litigation can blaze the way for addressing such anticompetitive conduct, ultimately legislation may be a far more effective tool for carrying out competition as a policy goal.” Beyond easing enforcement, in states that have passed legislation curtailing one or more of these contracting practices, one of the key benefits is that it alters the bargaining dynamic between powerful providers and health insurers by strengthening the ability of insurers’ to resist providers’ anticompetitive terms (and less-powerful providers’ ability to resist dominant insurers’ most-favored nation terms). NASHP’s model act builds on lessons learned from these recent, high-profile legal cases and gives states a tool to prohibit anticompetitive contract clauses through legislation.
Prohibiting Anticompetitive Contracting through NASHP’s Model Act
The NASHP model act also prohibits health care providers, health insurers, and plan administrators from demanding, soliciting, or agreeing to any health care contract that contains anticompetitive contract terms. The model specifically prohibits all-or-nothing, anti-steering, or anti-tiering, MFNs, and gag clauses, however it gives a state’s insurance commissioner or attorney general the ability to add other clauses through regulation that may result in anticompetitive effects. This flexibility is important as dominant health care entities’ contracting strategies may evolve to protect their market share and raise prices in response to these prohibitions. The model renders these prohibited contract clauses null and void and presumptively unlawful.
Although there is growing evidence that these health care contract provisions are used anticompetitively and pose a serious threat to competition, there could be pro-competitive uses of these clauses and, in some specific cases in health care markets, they may be used to lower costs. To allow for potential pro-competitive uses of these contract provisions, the model act does include a waiver process where the attorney general or insurance commissioner could approve the use of these contract terms if the benefits outweigh the harms. The regulating state agency is authorized to promulgate rules on which arrangements may be eligible for waivers, such as accountable care organizations, value-based payment arrangements, or those involving rural or other safety-net providers.
The NASHP model is designed to give enforcement authority to both the attorney general and the insurance commissioner in order to ensure broad enforcement and oversight of health system behavior and health care contracts. The attorney general and the insurance commissioner would have the authority to investigate, audit, and review any documents to ensure compliance with the law and to impose penalties for violations under state Unfair and Deceptive Acts or Practices (UDAP) laws. Importantly, the model also includes a private right of action to allow parties injured by these contract clauses to recover damages.
In highly consolidated markets, dominant health systems use their market power to demand anticompetitive terms in their contracts with health insurers, thus increasing prices and thwarting health insurers’ cost-containment efforts. In the post-pandemic world, state policymakers face limited state resources and rising health care consolidation. The NASHP model act provides policymakers with a tool to prevent already consolidated entities from further exploiting their market power to raise prices and restrict competition. A legislative ban will ease antitrust enforcement and eliminate the resource-intensive, fact-specific determination of harm in litigation. Legislation prohibiting anticompetitive contract terms will level the playing field between health insurers and dominant health systems, giving insurers the bargaining leverage to resist price demands of dominant systems and to direct patients to higher-value options. The NASHP model is an important step in state efforts to mitigate the harms that result from the significant consolidation in provider and insurer markets over the past decades, while also preparing states for the expected rise in consolidation after the pandemic.
- Erin C. Fuse Brown, State Strategies to Address Rising Prices Caused by Health Care Consolidations, NASHP (Sept. 2017), https://www.nashp.org/wp-content/uploads/2017/09/Consolidation-Report.pdf; Erin C. Fuse Brown, State Policies to Address Vertical Consolidation in Health Care, NASHP (Aug. 7, 2020), https://www.nashp.org/state-policies-to-address-vertical-consolidation-in-health-care/.
- Brent Fulton, Health Care Market Concentration Trends In The United States: Evidence And Policy Responses, 36 Health Aff. 1530 (2017).
- Michael F. Furukawa et al., Consolidation of Providers Into Health Systems Increased Substantially, 2016–18, 39 Health Affairs 1321 (Aug. 2020).
- Vertical Integration: Hospital Ownership of Physician Practices Is Associated with Higher Prices and Spending, 33 Health Aff. 756, 760 (2014); The Effect of Hospital Acquisitions of Physician Practices on Prices and Spending, 59 J. Health Econ. 139 (2018); Total Expenditures per Patient in Hospital-Owned and Physician-Owned Physician Organizations in California, 312 JAMA 1663 (2014); Association of Financial Integration Between Physicians and Hospitals With Commercial Health Care Prices, 175 JAMA Internal Med. 1932, 1937 (2015)
- Zack Cooper et al., The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured, 134 Q. J. Econ. 51 (Feb. 2019); Cory Capps and David Dranove, Hospital Consolidation and Negotiated PPO Prices, 23 Health Affairs 175 (Mar 2004); MedPac. Congressional Request on Health Care Provider Consolidation. March 2020. http://www.medpac.gov/docs/default-source/reports/mar20_medpac_ch15_sec.pdf?sfvrsn=0.
- Laura Tollen and Elizabeth Keating, COVID-19, Market Consolidation, And Price Growth, Health Affairs Blog, August 3, 2020. DOI: 10.1377/hblog20200728.592180.
- Katherine L. Gudiksen, et al., Preventing Anticompetitive Contracting Practices in Healthcare Markets, The Source on Healthcare Price & Competition (Sept. 2020), https://sourceonhealthcare.org/profile/preventing-anticompetitive-contracting-practices-in-healthcare-markets/?portfolioCats=1165%2C1166%2C1167.
- James C. Robinson, Hospital Tiers in Health Insurance: Balancing Consumer Choice with Financial Motives, 22 Health Aff. W3-135 (2003); Dennis P. Scanlon, Richard C. Lindrooth & Jon B. Christianson, Steering Patients to Safer Hospitals? The Effect of a Tiered Hospital Network on Hospital Admissions. 43 Health Serv. Research 1849 (2008); Matthew B. Frank, John Hsu, Mary Beth Landrum & Michael E. Chernew, The Impact of a Tiered Network on Hospital Choice, 50 Health Serv. Research 1628 (2015).
- Robert A. Berenson, Paul B. Ginsburg, Jon B. Christianson & Tracy Yee, The Growing Power of Some Provider to Win Steep Payment Increases from Insurers Suggests Policy Remedies May Be Needed, 31 HEALTH AFF. 973 (2012).
- Cal. Health & Safety Code §§ 1367.49, 1367.50; Conn Gen. Stat. § 38a-477f(a), (b); Ind. Code § 27-1-37-7; Mass. Gen. Laws ch. 176O, § 9A(d), (e); Minn. Stat. § 62J.81.
- Robin Feldman and Charles Graves, Naked Price and Pharmaceutical Trade Secret Overreach, 22 Yale J. L. & Tech. 61 (2020); Katherine Gudiksen, Samuel L. Chang & Jaime S. King, The Secret of Health Care Prices: Why Transparency is in the Public Interest, Cal. Health Care Found. (July 16, 2019), https://www.chcf.org/publication/secret-health-care-prices/.
- Scott Allen & Marcella Bombardieri, A Handshake That Made Healthcare History, Boston Globe (December 28, 2008), https://www.bostonglobe.com/specials/2008/12/28/handshake-that-made-healthcare- history/QiWbywqb8olJsA3IZ11o1H/story.html.
- United States v. Charlotte-Mecklenburg Hosp. Auth., 248 F. Supp. 3d 720 (W.D.N.C. 2017), UFCW & Employers Benefit Trust, et al. v. Sutter Health, et al., No. CGC 14-538451 (Cal. Super. Ct. S.F. City and Cnty. 2019), People of the State of California ex rel Xaviar Becerra v. Sutter Health., CGC 18-565398 (Cal. Super. Ct. S.F. City and Cnty. 2019), and Sidibe v. Sutter Health, 4 F.Supp 3d 1160 (N.D. Cal. 2013) (No. C 12–04854 LB).
- Becerra Complaint, People of the State of California ex rel Xavier Becerra v. Sutter Health., CGC 18-565398 (Cal. Super. Ct. S.F. City and Cnty. 2019).
- United States v. Charlotte-Mecklenburg Hosp. Auth., 248 F. Supp. 3d 720 (W.D.N.C. 2017).
- Robert Berenson, Jaime S. King, Katherine L. Gudiksen, Roslyn Murray, Adele Shartzer, Urban Institute Research Report: Addressing Health Care Market Consolidation and High Prices 37-39 (Jan. 2020), https://www.urban.org/research/publication/addressing-health-care-market-consolidation-and-high-prices.
- Emilio Varanini, Competition as Policy Reform: The Use of Vigorous Antitrust Enforcement, Market Governance Rules, and Incentives in Health Care, 11 St. Louis U. J. Health L. & Pol’Y 69, 86 (2018).
- Proposed Final Judgment, United States v. Charlotte-Mecklenburg Hosp. Auth., 248 F. Supp. 3d 720, 724 (W.D.N.C. 2017).
Katherine L. Gudiksen, MS, PhD is a senior health policy researcher at The Source for Healthcare Price and Competition. Erin C. Fuse Brown, JD, MPH, is the Cathy C. Henson Associate Professor of Law and director of the Center for Law, Health & Society at Georgia State University College of Law. Both Gudiksen and Fuse Brown produced this policy brief as consultants to the National Academy for State Health Policy (NASHP). Johanna Butler, BA, is a policy associate at NASHP.
This policy brief and the accompanying model legislation were produced with support from Arnold Ventures.
Drug makers claim high prices are necessary to support new drug development and innovation, but research shows that public investment in drug research and development combined with large industry profits leaves manufacturers room to lower prices while continuing to innovate.
Public funding is not unique to vaccines though. The drug industry relies heavily on public funding for all forms of drug development. Taxpayer-funded research for each of the 356 drugs approved by the US Food and Drug Administration in the last decade totals $230 billion. Despite this level of public investment in drug development, manufacturers face few restrictions on what they can charge for their drugs in the United States despite taxpayers’ investments.
As a result, drug prices are on average 2.5-times higher in the United States than comparable countries, even though those countries also contribute considerably to research and development (R&D) costs. High drug prices in the US market have generated substantial profits for the pharmaceutical industry. Between 2008 and 2018, the profitability of pharmaceutical companies was almost double that of other large, public companies.
Despite the significant amount of taxpayer funding, pharmaceutical industry officials argue that high drug prices reflect the cost of R&D and the risk associated with developing a new drug. However, high US drug prices exceed what is necessary to fund R&D. For example, drug manufacturers Amgen, Biogen, Pfizer, and Teva generated more than double their global R&D budgets from excessive US prices, and three companies covered or nearly covered all of their research spending through high US prices on their top-selling products alone:
- AbbVie’s Humira (an immunosuppressant);
- Biogen’s Tecfidera (treats multiple sclerosis); and
- Teva’s Copaxone (an immunomodulator that treats multiple sclerosis).
Two of these drugs – Humira and Tecfidera – appear on the Institute for Clinical and Economic Review’s 2020 list of drugs that have prices increases unsupported by new clinical evidence.
With little action on drug prices from the federal government, states are considering new ways to control drug spending, and lawmakers have filed more than 200 bills this session, including bills with the potential for real impact on prices. Five states have introduced the National Academy for State Health Policy’s (NASHP) model legislation to establish international reference rates to bring prices in line with Canadian rates, which could result in savings ranging from 60 to 85 percent. Three states have introduced NASHP’s model legislation that fines pharmaceutical manufacturers whose drug price increases are unsupported by new clinical evidence – including Humira and Tecfidera cited above – based on the Institute for Clinical and Economic Review’s research.
As states ramp up their efforts to address excessive drug prices, the industry continues to argue that lower prices would harm innovation. Trail-blazing states can be reassured, however, that there is room for manufacturers to lower prices while still maintaining their profit margins and preserving their capacity for innovation.
The National Academy for State Health Policy (NASHP), a non-profit, nonpartisan forum of policymakers, is issuing this request for proposal (RFP) to identify future contractor(s) to create an online searchable database that shares data from a tool we developed. Proposals are due by 5 p.m. (ET) Tuesday, March 30, 2021.
Through its Center for State Health Care System Costs (the Center), NASHP has developed a hospital cost tool to analyze a hospital’s costs versus its prices. The tool is an Excel workbook that requires manual data entry from a hospital’s annual Medicare Cost Report (MCR) to identify its costs for providing hospital services, the largest portion of health care spending. Formulas are embedded in the tool to calculate several hospital financial metrics. Entering the data can be very time consuming and prone to data-input errors when used by individuals who are unfamiliar with the MCR.
In September 2020, NASHP began working with Vivian Ho, director of the Center for Health and Biosciences at the Baker Institute at Rice University, to auto-populate the MCR data from the national Healthcare Cost Report Information System (HCRIS) using the tool’s formulas. Ho and her team have successfully used Strata software to link NASHP’s tool with HCRIS, creating a data set of about 40 key points from the tool’s calculations. The data set resides in an Excel format, with 10 tabs (each representing a year of data from 2011 – 2020) each containing the 40 data points for each of the approximately 6,500 hospitals nationwide that submit an MCR. The data points include:
- Net income
- Profit margin
- Cost-to-charge ratio
- Uncompensated care costs
- Payer mix and profit/loss from Medicare, Medicaid, and commercial payers
- Break-even financial points
- Comparison to Rand 3.0, and
- Hospital pricing as a multiple of Medicare
NASHP has used the data set to prepare reports, Microsoft PowerPoint presentations, and deeper analyses for states and employer health plans that allow for benchmarking hospitals by bed size, state, national, and other measures. The work is intensive and requires a level of data expertise that not all state policymakers either have access to or the resources for. As a result, to date only a few people are working with the data. However, NASHP intends to make analysis from this data available to all state policymakers who want it.
Next Steps: Share an Online National Database of Hospital Costs
NASHP is interested in sharing (and regularly updating) the data set it created with Rice University on NASHP’s website to make it is accessible to states. To ensure the online database is useful to states and other health care purchasers, it should be searchable and include interactive features that allow users to create customized comparison charts, etc. Further, using the most recent data available (by a certain month, to be determined, in 2021), NASHP wants to create standardized reports for each state and Washington, DC that provide information through charts and graphs on hospital cost trends in their states that include national benchmarks.
While NASHP will continue to work with Rice University to update the data set using its evolving tool and the strata code already developed, the online data set needs to easily allow such updates. NASHP is seeking to contract with one or more entities that can advise NASHP on the best way to present this large data set online and make it as useful as possible to its core audience of state policymakers. NASHP is seeking expertise in organizing and presenting complex data sets online that can be manipulated by users with differing needs without making changes to the original data set. Please consider that NASHP wants flexibility built into the online data set to allow for quarterly updates, which is the frequency that the HCRIS data base is updated. Also, over time NASHP will likely expand the tool with additional data points as states need more information and/or as the MCR evolves. It also anticipates adding information from future resources, e.g., Rand 4.0. NASHP is also seeking help to develop and create easy-to-understand state reports with graphs, charts, and other visual representations of the data to offer a snapshot of hospital costs for each state. NASHP recognizes that the skills needed for this project may require contracting with two different entities – one with expertise in creating large online data sets and another with the graphics knowledge to create informative, visual reports. We are open to contracting with one or multiple parties to complete the work.
To achieve these goals, NASHP is seeking proposals from entities with expertise in creating online searchable online databases that can be routinely updated and/or entities with expertise in developing graphics from complex data. It is NASHP’s intention to begin this work in the late spring or early summer of 2021 so that the online database and individual reports will be available early in 2022 (or before, if possible.) NASHP welcomes interested entities to submit proposals related to the following anticipated deliverables and questions noted below.
- Develop an online, searchable database from the data set that NASHP now has from the HCRIS database using the strata code developed in partnership with Rice University. It must include:
- Accessible display of large data set that includes approximately 40 data points for about 6,500 hospitals over a 10-year-plus period of time (2011 and beyond);
- A search tool that allows users to query the database to access specific data points and to customize analytic reports based on their needs, which may include:
- Access to a single hospital’s cost information across all 40 data points throughout multiple years to understand a specific hospital’s cost trends;
- Access to multiple hospitals in a specific location (city, state, multiple state region, and/or national) to compare single or multiple cost data points; and
- A search that allows users to have options for viewing the data.
- Provide an overview of the data set that includes:
- A brief, written introduction of the resource that includes examples of how it can be used;
- A clear, concise instructions for using the resource; and
- A brief recorded training for users to view.
- Design informative charts, graphs, and other visuals to share critical data points and trends from the NASHP database to be used in state reports and presentations.
- Create standard reports using the data set – both national reports and individualized state reports –with graphics. NASHP will collaborate on the commonly requested information that should be included in the reports.
Request for Proposal
NASHP is seeking proposals from potential contractors with expertise, capabilities, and availability to do the work of presenting our data set online. In reviewing responses to this RFP, NASHP hopes to understand respondents’ experience with large data sets, their ability to create accessible graphics, and learn about their successful work with states. NASHP is also looking for information that will assist it in balancing respondents’ relevant experience with proposed budgets and timelines to complete the type of work we contemplate undertaking.
Please note if your proposal is responding to both areas or work/sets of deliverables (creating the online database and developing graphic reports) or if it is just focused on one of the areas of work and identify which one. Proposals responding to this this RFP will be accepted through 5 p.m. (ET), Tuesday, March 30, 2021.
All proposals should include the following:
- Organization and/or individual name and location(s);
- Description of the organization/company and explanation of the type of services provided, please note your audiences/recipients of your services;
- Please describe the experience you/your organization has with the work NASHP is seeking to do, including:
- Creating searchable, online databases that can be used by individuals with various backgrounds, including those with limited statistical experience (up to two pages), and
- Designing graphic-based reports that share critical information in a digestible manner (up to two pages)
- Describe your/your organization’s approach to the work by briefly explaining how either or both sets of the deliverables will be accomplished, as well as the proposed communication plan with NASHP. Please note the strengths and weaknesses of your approach and how you will assure quality work. (Up to three pages per set of deliverables – the online database and/or the graphical reports).
- Describe the people who would work on this project and a summary of their experience.
- Please provide the timeline you/your organization would need to accomplish the work and finish all deliverables and note how soon you/your organization would be available to do the work (up to two pages).
- Please provide the proposed detailed budget for the work and note if you/your organization would be the sole contractor or if there would be a subcontractor used as well.
- Please disclose any possible conflicts of interest.
- Please provide disclosure of complaints, current or pending actions, legal or otherwise.
*Examples of similar work can be included as an appendix to the proposal.
Proposals will be evaluated based on the respondent’s demonstrated experience with this type of work, the organization’s capacity to take on this assignment, the proposed workplan, and proposed cost. Note that the final award of this contract is contingent upon NASHP securing adequate funding for this initiative.
Point of Contact
Respondents can send questions and responses to this RFP to Maureen Hensley-Quinn at email@example.com.
Q&As about NASHP’s RFP
Will this new online database will be a stand-alone, cloud-based web solution?
The database will most likely need to be housed on a stand-alone, cloud-based solution separate from the NASHP website. However, the user-friendly interface should align with the look and feel of our website.
How many general users will be accessing the system – just searching the database? How many will be administrators – with permission to update/edit the data?
We are seeking a contractor that can take our database content and create a user-friendly interface so that the public can access the information as needed. We expect a small number of NASHP staff will need permissions to update and edit the data on a fairly regular base, e.g., quarterly or annually.
Will general users need to log in to use the database or will it be open for anyone to use?
It will be open.
Will the reports need to be downloaded? If so, what format(s) are needed (ex. PDF, JPEG, etc.)? Will the data for each report also need to be downloaded? If so, what format(s) (ex. CSV, Excel, etc.)?
NASHP is seeking one or two contractors to develop:
1) The user-friendly interface for the large excel database we have created so that the public can access the information from that database. It would be ideal to have an option to download the data accessed from this online database in excel format.
2) Point in time individual state reports with charts and graphs to highlight key data elements for that state.
NASHP is open for contracting with one organization to do both parts of this work, but we are also open to separating the work into two different components and contracting with two different entities.
Is there an existing developer that you work with who will also be bidding?
We know the deadline to submit our proposal is March 30, 2021. After that, when do you anticipate making a decision? When do you estimate that work will begin? When do you want the project to be completed/go live?
NASHP will begin considering all proposals after the submission deadline and will notify the successful bidder as soon as possible, likely by the end of April/early May. As noted in the RFP, we hope to launch the work in “late spring or early summer of 2021 so that the online database and individual reports will be available early in 2022 (or before, if possible.)”
What type of hosting/on-going maintenance will you be needing post-launch?
Ideally, NASHP will host the online interface and database as it does our website, but we are open to advice and input from the successful bidder on the best way to do so. We don’t expect ongoing maintenance will be needed, but we are open to advice and feedback from bidders on that as well.
What is the budget for the initial project development? Budget for long-term support?
NASHP has not specified an established dollar-value range for this contract and will consider price as well as a respondent’s ability to complete quality work within our preferred timeline of spring 2021 until winter 2021.
Would the contractor need to ingest the data NASHP and Rice University has prepared (the Excel tool data), or would the contractor ingest that data directly from HCRIS and merge with additional data produced by Rice University?
The contractor will use the large excel file that NASHP put together with Rice University as the calculations from HCRIS database have already been made.
Would the contractor need to interface or make use of the NASHP/Rice Stata code or would the contractor be building a separate system not linked to this existing code?
It is our expectation that the contractor will be creating an online, user-friendly interface so that users can easily access the critical cost data points within NASHP’s existing large, excel file.
Would we expect to make all deliverables accessible to the public or provide differential access to certain users?
The goal is to make all deliverables accessible to the public.
Are there any constraints on the platform and programming language used by the contractor? For example, are there any constraints on whether the contractor can use cloud computing to work with and host the data and reports?
Ideally this online database will be housed on NASHP’s website. However, we are open to input and feedback about how best to make that happen – whether it live our website’s server or be stored via a cloud-based solution.
The RFP states that “Also, over time NASHP will likely expand the tool with additional datapoints as states need more information and/or as the MCR evolves. It also anticipates adding information from future resources, e.g., Rand4.0.” How does NASHP plan to implement future changes after go-live. Although most tools would provide flexibility to update the input data and refresh existing reports, some changes may require an operations and maintenance support. Should we assume additional support after go-live date or would the continued updates of the evolving Rice University’s tool be scoped under a different maintenance and support contract if needed?
At this point, NASHP seeking a contractor that use flexible tools that our staff would be able to maintain. However, if the database needs significant updates, we would seek assistance through a different contract.
In late December, a US District Court judge in the Eastern District of California upheld that state’s drug price transparency law. The ruling represents the latest legal victory for states working to curb drug prices following the December Supreme Court decision that upheld an Arkansas law regulating pharmacy benefit managers (PBMs).
California’s drug price transparency law, SB17, requires manufacturers to report and provide information about certain drug price increases. They must give a 60-day advance notice of drug price increases if the wholesale acquisition cost (WAC), or list price, is more than $40 and if the price increased more than 16 percent over the past two years.
The industry trade group, Pharmaceutical Researchers and Manufacturers of America (PhRMA), which challenged the California law in federal court, claimed the law violated the federal dormant Commerce Clause by regulating out-of-state commerce and also the First Amendment by compelling speech. The judge rejected both of the constitutional challenges, denying PhRMA’s request for a summary judgement. The judge’s order establishes that:
- SB17 does not regulate out-of-state drug prices simply by requiring reporting on a drug’s WAC, and dormant
- The state has sufficient interest to require manufacturers to provide notice of and justification for drug price increases.
Ten states have enacted drug price transparency laws, including Oregon. Oregon’s law is very similar to California’s and currently faces a challenge from PhRMA on the same grounds the trade group used to challenge California’s law.
Low-income individuals and communities of color, already besieged by poor access to health care, limited insurance coverage, and other health inequities exposed by COVID-19, also suffer another health disparity – they are among the hardest hit by continually rising prescription drug prices.
Since 2017, states across the nation have taken action to lower rising drug costs, enacting 163 laws that include regulating pharmacy benefit managers, increasing drug cost transparency, importing drugs from Canada, and limiting cost-sharing by consumers. Many of these laws are most likely to combat rising drug costs for individuals covered by public and private insurance plans.
Because high drug prices disproportionately affect low-income, uninsured, and people of color, state laws that work to lower drug costs for these communities are important. Recent examples include a Minnesota law that extends insulin affordability measures to uninsured individuals, and states laws that target a discriminatory practice within insurance benefit design known as adverse tiering. Adverse tiering occurs when insurers place drugs – including those used to treat HIV/AIDS and hepatitis B and C that predominantly affect communities of color – in a drug formulary’s highest cost-sharing tier, forcing patients to pay more even when the drug is a generic.
People of color are disproportionately impacted by chronic illnesses and certain health conditions, such as diabetes, HIV/AIDs, hepatitis B and C, hypertension, cardiovascular diseases, obesity, and asthma. Today’s increased rate of chronic conditions found in communities of color can be traced back to numerous discriminatory policies, including employment, education, and the practice of redlining, which placed loans and insurance out of the reach of residents of certain areas based on race or ethnicity. Systemic discriminatory practices have resulted in poorer households and neighborhoods, higher incidences of adverse childhood experiences, and limited access to quality health care, healthy food, parks, and public transportation. The combination of poor environmental quality, food scarcity, and limited access to health care increases the risk of asthma, obesity, and diabetes.
Not only are people of color more likely to suffer from chronic illness, they are also more likely to be uninsured and are therefore disproportionately hit hardest by ongoing rises in the list prices for prescription drugs. While insured individuals benefit from drug rebates negotiated for plans and drug coverage, the uninsured face higher prices for the same drugs – though they may be eligible for manufacturer coupons to help subsidize high costs. Other programs that help low-income patients obtain lower cost medications, such as MedAccess, require time-consuming applications, income verification, the cooperation of their providers, and computer access. The lack of ability to afford medication can result in under-usage of needed medications and overall poorer health outcomes.
In one study of Medicare beneficiaries without drug coverage, Black and Latinx individuals used 10 to 40 percent fewer medications than their White counterparts did for the same illnesses. Disparities are also seen in the under-use of insulin for the treatment of diabetes, a disease that is 60 percent more likely to impact Black adults than non-Latinx White adults.
Insulin Spending Caps
To make insulin more affordable and accessible, 11 states* have adopted legislation to impose spending caps on insulin for consumers. In most states, insulin spending caps affect only those covered by state-regulated drug plans. However, Minnesota’s recently enacted legislation also extends assistance to uninsured patients who cannot afford treatment for their diabetes.
Signed into law in April 2020, Minnesota’s Alec Smith Insulin Affordability Act caps insulin costs both in the commercial market and for the uninsured or under-insured. The legislation establishes two plans:
- An emergency plan that allows for a once-per-year, 30-day supply of insulin with a payment cap of $35; and
- A long-term plan that provides insulin supplies in 90-day increments for a capped payment of $50.
Both the urgent-need plan and the continuing safety net program are targeted towards uninsured populations, with the latter program requiring a household income less than 400 percent of federal poverty guidelines. Manufacturers who fail to comply with this bill face an administrative penalty of $200,000 per month for noncompliance, with the penalty increasing over time. Since passage of the Minnesota law, the Pharmaceutical Research and Manufacturers of America (PhRMA) has filed suit, claiming the act confiscates private property for public use without proper compensation to manufacturers.**
People of color requiring expensive drugs to treat chronic illness also face a discriminatory practice within insurance markets known as adverse tiering. Adverse tiering occurs when insurance plans structure their drug formularies to require substantial out-of-pocket cost-sharing for drugs in a certain class, particularly for expensive-to-treat conditions such as HIV/AIDS. This discourages patients needing those drugs from selecting an insurance plan with adverse tiering, and forces those who do buy into the plan to pay hefty out-of-pocket co-pays for expensive, life-saving medications. Adverse tiering can cost HIV-positive individuals (of whom 87 percent were Latinx, Black, or of multiple races in 2018) enrolled in such a plan an additional $3,000 each year.
Adverse tiering became more prevalent between 2014 and 2015 for conditions such as HIV/AIDs, hepatitis B and C, and multiple sclerosis. In 2016, the US Department of Health and Human Services (HHS) released a regulation extending consumer protections from discriminatory practices found in the Affordable Care Act (ACA) to:
- All health entities receiving HHS funding;
- HHS-administered health programs; and
- Insurers participating in health insurance marketplaces.
The final rule also affirms the broad definition of “disability,” allowing for the inclusion of persons with chronic conditions that affect major life activities and bodily functions. In the final rule’s preamble, HHS lays out factors that the Office of Civil Rights (OCR) will consider when assessing potential discriminatory practices in plan benefit design on a case-by-case basis. One notable consideration is whether or not the covered entity utilized a nondiscriminatory rule or principle when adopting a certain plan design feature.
Insurers have taken advantage of this language by justifying their placement of all drugs in a given class on specialty tiers as resulting from high drug costs. While this approach avoids the regulation’s definition of discrimination, it none-the-less has the effect of deterring low-income patients needing high-cost drugs for chronic conditions from enrolling in their plans.
Because the chronically ill population is disproportionately made up by people of color, this practice is most likely to impact minority populations. Some states have taken direct action to combat adverse tiering:
- Delaware implemented legislation that prohibits insurers from placing all drugs in a given class on a specialty tier; and
- Both California and Colorado prohibit formulary designs that discourage enrollment by individuals with certain health conditions.
These laws, in addition to Minnesota’s insulin affordability law, provide first steps for policymakers who want to address drug affordability through a lens of racial justice by ensuring that affordability is extended to individuals beyond the commercially-insured market, and that benefit designs within commercial insurance markets do not have discriminatory impacts.
*States with insulin caps include New Hampshire, Colorado, Delaware, Illinois, Maine, Minnesota, New Mexico, Utah, Virginia, Washington, and West Virginia
**Track the status of this case and others on NASHP’s Rx Legal Resources page.