Department of Justice challenging big insurers' "Most Favored Nation" clauses

The DOJ's latest actions suggest that MFNs in managed care contracts should be evaluated on a case-by-case basis, focusing on the actual or potential impact that the MFNs have on price competition among providers and payors in the relevant marketplace. For health care providers desiring to avoid MFNs, however, the DOJ's heightened activity in this area might furnish an appropriate reason to resist such clauses. To date, the DOJ's focus has been on the market power of payors with MFN status. However, the DOJ's reasoning applies equally to providers that wield buying power in contracting with others. Although the DOJ has yet to take up this latter issue, MFNs imposed by increasingly powerful provider organizations can expect to receive similar scrutiny from the DOJ, especially as their market influence grows.     

Extending due process protections in managed care credentialling to hospital privileges

The Article analyzes two recent state court decisions granting due process rights to physicians deselected from managed care networks. The author applauds these decisions and argues that managed care organizations wishing to deselect a physician should be required to demonstrate (1) that they have a legitimate reason for doing so relating to quality of care, economic factors, or administrative considerations, and (2) that the deselection will not unduly affect the quality of healthcare available in the network. In addition, the author contends that these same due process requirements may be applied to the closely analogous area of hospital staff privileges in situations in which the privileges of hospital-based practitioners are tied to employment, or the grant or termination of exclusive contracts.     

Antitrust, health care quality, and the courts

Antitrust law represents the principal legal tool that the United States employs to police private markets, yet it often relegates quality and nonprice considerations to a secondary position. While antitrust law espouses the belief that vigorous competition will enhance quality as well as price, little evidence exists of the practical ability of courts to deliver on that promise. In this Article, Professors Hammer and Sage examine American health care as a vehicle for advancing understanding of the nexus among competition, quality, and antitrust law. The Article reports results of a comprehensive empirical review of judicial opinions in health care antitrust litigation between 1985 and 1999, with specific attention to courts' handling of quality and other nonprice concerns. Professors Hammer and Sage conclude that, although antitrust law cannot be expected to serve as the sole oversight mechanism for industries as complex and quality dependent as health care, courts have been successful incorporating some nonprice factors into antitrust analysis.     

Playing fair: fairness beliefs and health policy preferences in the United States

Conventional wisdom suggests that the best way to persuade Americans to support changes in health care policy is to appeal to their self-interest - particularly to concerns about their economic and health security. An alternative strategy, framing problems in the health care system to emphasize inequalities, could also, however, mobilize public support for policy change by activating underlying attitudes about the unfairness or injustice of these inequalities. In this article, we draw on original data from a nationally representative survey to describe Americans' beliefs about fairness in the health domain, including their perceptions of the fairness of particular inequalities in health and health care. We then assess the influence of these fairness considerations on opinions about the appropriate role of private actors versus government in providing health insurance. Respondents believe inequalities in access to and quality of health care are more unfair than unequal health outcomes. Even after taking into account self-interest considerations and the other usual suspects driving policy opinions, perceptions of the unfairness of inequalities in health care strongly influence respondents' preferences for government provision of health insurance.     

Governmental liability for breach of contract

Government contracts are subject to a number of legal rulesthat have no private sector analogues and that have receivedvirtually no attention from law and economics scholar. Thisarticle explores these rules from an economic perspective, withspecial attention to the leading modern case on the subject,United States v. Winstar. The analysis emphasizes a number ofdifferences between governmental and private actors that haveimportant implications for the wisdom of applying conventionalbreach of contract remedies to the government. These differencesafford plausible efficiency justifications, in our view, formany of the most important doctrines governing government contracts.Some of these doctrines help to impede the use of long-termcontracts to insulate inefficient rent-seeking arrangementsagainst subsequent attack, some seem to prevent the governmentfrom inefficiently contracting away its ability to respond tonew information, and others seem to work a sensible allocationbetween the government and private contractors of the risk thatgovernment may change its policies. Not all doctrines and decisionscan be justified in this fashion, however, and we do not meanto claim that the existing body of law is in any sense optimal.Indeed, the Winstar decision itself seems quite mistaken froman economic standpoint. The considerations that we develop haveimplications for a number of related legal issues. Not all ofthese implications are developed here, but we do consider modernlitigation under the Contract Clause of the U.S. Constitutionas well as the recent academic debate about the wisdom of retroactivetaxation.     

Closed Distribution Networks and E-commerce: Antitrust Issues

Closed distribution networks (ie exclusive or selective distribution networks) have to integrate the development of the internet, particularly in sectors such as fine fragrances or new cars sales. Producers (ie Chanel or Volkswagen) cannot ignore that their products are potentially available on the web. Considering the relationships between producers and their off-line dealers, the question is to know if these dealers could be authorized to resell the products on their own website. In each sector, producers have to adapt their distribution contracts for e-commerce. In a previous paper (published in the Journal of Information, Law and Technology , 2000, No 2) we conclude that electronic points of sales must respect criteria used for physical points of sales, but with some adaptations. The major issue for producers is to build legally secured contracts in order to manage both off-line and on-line distribution networks. But the adaptation of traditional distribution contracts cannot ignore the antitrust framework, especially in the European context, since the new Block Exemption Regulation No 2790/99 on Vertical Restraints has been published. Producers' strategies within the European Union must take into account potential competition restraints implied by their contract policy. When drafting their contracts for e-commerce opportunities, producers have to deal with the legal standing of their networks within the European antitrust law. In this paper, our purpose is to analyze implications of the on-line distribution strategy that could be drawn up by a producer from the European competition law viewpoint. We determine opportunities and constraints presented by the Guidelines from a producer's point of view, and we examine whether European competition law does offer any interesting 'room for manoeuvre' for producers who develop closed distribution networks. We also identify what kind of elements could lead to a withdrawal of the benefit of the Block Exemption Regulation No 2790/99; we show that this withdrawal could arise from a market share evaluation, or from the disproportion between competition restraints (stemming from the distribution contract clauses) and the necessity of an economic progress within the European Commission (EC).     

State-Owned Enterprises in Less Developed Countries: Privatization and Alternative Reform Strategies

State-owned enterprises (SOEs) have typically played a much larger role in the economies of developing countries than developed countries. However, empirical evidence on the economic performance of SOEs generally yields negative results and suggests that SOEs are a major tax on the economies of developing countries reflected in the large operating subsidies required to sustain them. These inefficiencies seem in part attributable to ownership effects and partly to lack of competition effects. Empirical evidence on the effect of privatization of state-owned enterprises in both developed and developing countries suggests that this is often likely to lead to major improvement in economic performance. However, where privatization is not politically feasible, SOE reform alternatives such as management contracts, performance contracts, and greater exposure to competition may, in some contexts, enhance SOE performance, although typically they are second-best policy options to privatization.     

Behavioral economics and health policy: understanding Medicaid's failure

This Article employs a behavioral economic analysis to understand why Medicaid has failed to improve the health outcomes of its beneficiaries. It begins with a formal economic model of health care consumption and then systematically incorporates a survey of psychosocial variables to formulate explanations for persistent health disparities. This methodology suggests that consulting the literature in health psychology and intertemporal decision theory--empirical sources generally excluded from orthodox economic analysis--provides valuable material to explain certain findings in health econometrics. More significantly, the lessons from this behavioral economic approach generate useful policy considerations for Medicaid policymakers, who largely have neglected psychosocial variables in implementing a health insurance program that rests chiefly on orthodox economic assumptions. The Article's chief contributions include an expansion of the behavioral economic approach to include a host of variables in health psychology, a behavioral refinement of empirical health economics, a behavioral critique of Medicaid policy, and a menu of suggested Medicaid reforms.     

The conundrum of charitability: reassessing tax exemption for hospitals

Tax exemption is an ancient, honorable and expensive tradition. Tax exemption for hospitals is all of these three, but it also places in sharp focus a fundamental problem with tax exemption in general. Organizations can retain their tax exemption while changing circumstances or expectations undermine the rationale that led to the exemption in the first place. Hospitals are perhaps the best example of this problem. The dramatic changes in the health care environment have eliminated most of the characteristics of a hospital that originally persuaded the citizenry to grant it an exemption. Hospitals have entered into competition with tax-paying businesses, and have increasingly behaved like competitive actors. Such conduct may well be beneficial, but it does not follow that tax exemption is appropriate. Rather than an undifferentiated subsidy, a shift to focused goals will provide charitable hospitals with the opportunity and incentive to "do the right thing."     

Is health care different? Popular support of federal health and social policies

Over the past several years there has been a striking increase in policy-makers' attention to health care reform. This paper explores whether there has been a corresponding shift in popular attitudes and identifies factors that may have changed these attitudes. The first part of the analysis relies on survey data collected between 1975 and 1989 to estimate a set of regression models, relating support for federal involvement in health care, antipoverty programs, and general domestic policies to a set of sociodemographic characteristics.... The second part of this study explores motivations that might account for these patterns. We identify a half dozen ways in which health care may be viewed as "different," that is, more or less appropriate for federal action. Analysis of survey data from 1987 suggests that there are relatively small differences in the attitudes and perceptions that motivate support for federal health initiatives, relative to federal domestic policies in general. However, there are more striking differences between health programs and more overtly redistributive policies.... We suggest that the growing support for federal intervention in health care, relative to other social policies, is in part an inadvertent by-product of ideological positions popularized during the Reagan and Bush administrations. We draw from these results some predictions about the course of the ongoing debate over federal health policies.     

Private regulation in mental health

General hospitals are increasingly important sources of care for chronic and acute mental patients. Joint Commission on Accreditation of Hospitals (JCAH) standards for staffing in general hospitals require the same degree of physician supervision and control for all services, including mental health. This paper considers the economic impact of JCAH standards on the practice of psychologists in hospitals. The “voluntariness” of the standards is assessed and the evidence that these standards foster economic protectionism is considered. We conclude that in light of the demonstrated capability of nonphysician professionals, methods of quality control appropriate for physician health care in general hospitals should be reconsidered as these instutions diversify into mental health services.     

联合创新的经济分析及反垄断法规制

联合创新已经成为当今各国广泛运用的技术创新模式。在高科技领域,这种广泛联合的背后具有其经济合理性。联合创新可以提高研发投资的效率、产生较高的社会福利,尽管联合创新也会提高合同执行成本、监督成本并导致信息不对称。同时,从竞争法角度看,联合创新可能限制竞争,但它带来的经济利益可能超过限制竞争的影响。因此,许多国家和地区对联合创新采取宽容甚至激励的态度。我国的高科技企业规模偏小、技术创新能力偏弱,立法应当借鉴其他国家和地区的经验,对联合研发实行广泛的豁免,从而给联合创新提供一个宽松的法律环境。     

The Delta Dental case: "Fair procedure" comes to managed care. Delta Dental Plan of California v. Banasky

All providers contemplating managed care contracts, both individual and institutional, should carefully review the health plans' internal administrative review and dispute resolution procedures before making their decisions, especially if the contracts will represent significant income for the provider. While there may be judicial recourse in California and in other states that adopt the holding in Delta Dental, in other states providers may well be held to the health plans' internal administrative decisions as a matter of contractual agreement. Health plans should also review their own policies and procedures for adequacy under applicable state law. The health care community will not know the full extent of Delta Dental's implications until later cases area decided, but for now it seems certain that another wave of change in this area is just beginning.     

经济损失规则的边界功能

经济损失规则的概念和适用范围仍是争议的主题,这一规则本身的混乱伴随着该规则产生原因的更大的不确定性.区分侵权法和合同法的边界功能是经济损失规则令人信服的理论基础,但是一些重要的原则限制了边界功能的适用范围.在涉及合同关系的案件中解释及适用经济损失规则,只有关注诉讼当事人的实际行动才能恰当地实现该规则的边界功能.首先,如果原告不是某个协议的当事人,那么就没有任何理由限制原告依据侵权法享有的任何权利.其次,不能基于一个不是真实存在的合同提供的假想救济以及合同对纯粹经济损失的补偿具有假想的优先权限制原告的权利.再次,如果被告违反了一项独立于合同责任的侵权法义务,当事人之间的合同没有明确地或足够充分地暗示取代侵权法的救济,当事人则有权获得侵权法的救济.     

Financing Services of General Interest in the EU: How do Public Procurement and State Aids Interact to Demarcate between Market Forces and Protection?

Abstract:  The present article reveals the interplay between public procurement and state financing of public services within the regulatory régime of state aids. The symbiotic flexibility embedded in the regime of regulating the award of public contracts which permits the introduction of public policy considerations in dispersing public services is established. This finding removes the often-misunderstood justification of public procurement as an economic exercise, and places its regulation in the centre of an ordo-liberal interpretation of the European integration process. The significance of public procurement for the financing of services of general interest is verified through an asymmetric geometry analysis. The article concludes that the public procurement framework will be relied upon for two main purposes: first to insert competitiveness within the public sector and market forces in the provision of services of general interest and secondly, to be used by the European judiciary and the European Commission as a system to verify conceptual links, create compatibility safeguards and authenticate established principles applicable in state aid regulation.     

Competition and quality as dynamic processes in the Balkans of American health care

The American health care system embodies a complex amalgamation of fractured and conflicting parts. As such, any call to enhance quality or competition necessarily presupposes some ability to introduce greater harmony and coordination. But how does one make a complicated system work well? Dynamic theories of economics stress the significance of section mechanisms, learning, and adaptive modes of behavior in directing markets toward more efficient outcomes under conditions of uncertainty. Unfortunately, the American health care sector suffers from intense factional divisions. Policy makers need a more self-conscious understanding of the interactive and often conflicting effects of regulation if the health care system is to be reshaped in a manner that will generate more desired social outcomes. Evolutionary theories of economics can provide the conceptual framework in which such a restructuring could take place. This article examines how health care quality and competition can be improved through a better understanding of dynamic economic processes and evaluates the Federal Trade Commission and Department of Justice 2004 report Improving Health Care: A Dose of Competition in light of these perspectives.     

Strategies to enhance price and quality competition in health care: lessons learned from tracking local markets

Drawing on observations from tracking changes in local health care markets over the past ten years, this article critiques two Federal Trade Commission and Department of Justice recommendations to enhance price and quality competition. First, we take issue with the notion that consumers, acting independently, will drive greater competition in health care markets. Rather we suggest an important role remains for trusted agents who can analyze inherently complex price and quality information and negotiate on consumers' behalf. With aggregated information identifying providers who deliver cost-effective care, consumers would be better positioned to respond to financial incentives about where to seek care and thereby drive more meaningful competition among providers to reduce costs and improve quality. Second, we take issue with the FTC/DOJ recommendation to provide more direct subsidies to prevent distortions in competition. In the current political environment, it is not practical to provide direct subsidies for all of the unfunded care that exists in health care markets today; instead, some interference with competition may be necessary to protect cross subsidies. Barriers can be reduced, though, by revising pricing policies that have resulted in marked disparities in the relative profitability of different services.     

Explaining health care system change: problem pressure and the emergence of "hybrid" health care systems

In this article, we will further the explanation of the state's changing role in health care systems belonging to the Organisation for Economic Cooperation and Development (OECD). We build on our analysis of twenty-three OECD countries, which reveals broad trends regarding governments' role in financing, service provision, and regulation. In particular, we identified increasing similarities between the three system types we delineate as National Health Service (NHS), social health insurance, and private health insurance systems. We argue that the specific health care system type is an essential contributor to these changes. We highlight that health care systems tend to feature specific, type-related deficiencies, which cannot be solved by routine mechanisms. As a consequence, non-system-specific elements and innovative policies are implemented, which leads to the emergence of "hybrid" systems and indicates a trend toward convergence, or increasing similarities. We elaborate this hypothesis in two steps. First, we describe system-specific deficits of each health care system type and provide an overview of major adaptive responses to these deficits. The adaptive responses can be considered as non-system-specific interventions that broaden the portfolio of regulatory policies. Second, we examine diagnosis-related groups (DRGs) as a common approach for financing hospitals efficiently, which are nevertheless shaped by type-specific deficiencies and reform requirements. In the United States' private insurance system, DRGs are mainly used as a means of hierarchical cost control, while their implementation in the English NHS system is to increase productivity of hospital services. In the German social health insurance system, DRGs support competition as a means to control self-regulated providers. Thus, DRGs contribute to the hybridization of health care systems because they tend to strengthen coordination mechanisms that were less developed in the existing health care systems.