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Policy PointsLooking for a way to curtail market power abuses in health care and rein in prices, 20 states have restricted most‐favored‐nation (MFN) clauses in some health care contracts.Little is known as to whether restrictions on MFN clauses slow health care price growth.Banning MFN clauses between insurers and hospitals in highly concentrated insurer markets seems to improve competition and lead to lower hospital prices. Context: Most‐favored‐nation (MFN) contract clauses have recently garnered attention from both Congress and state legislatures looking for ways to curtail market power abuses in health care and rein in prices. In health care, a typical MFN contract clause is stipulated by the insurer and requires a health care provider to grant the insurer the lowest (i.e., the most‐favored) price among the insurers it contracts with. As of August 2020, 20 states restrict the use of MFN clauses in health care contracts (19 states ban their use in at least some health care contracts), with 8 states prohibiting their use between 2010 and 2016. Methods: Using event study and difference‐in‐differences research designs, we compared prices for a standardized hospital admission in states that banned MFN clauses between 2010 and 2016 with standardized hospital admission prices in states without MFN bans. Findings: Our results show that bans on MFN clauses reduced hospital price growth in metropolitan statistical areas (MSAs) with highly concentrated insurer markets. Specifically, we found that mean hospital prices in MSAs with highly concentrated insurer markets would have been $472 (2.8%) lower in 2016 had the MSAs been in states that banned MFN clauses in 2010. In 2016, the population in our sample that resided in MSAs with highly concentrated insurer markets was just under 75 million (23% of the US population). Hence, banning MFN clauses in all MSAs in our sample with highly concentrated insurer markets in 2010 would have generated savings on hospital expenditures in the range of $2.4 billion per year. Conclusions: Our empirical findings suggest banning MFN clauses between insurers and providers in highly concentrated insurer markets would improve competition and lead to lower prices and expenditures. [ABSTRACT FROM AUTHOR]

Objective Data Sources Study Design Data Extraction Methods Principal Findings Conclusions To examine the impact of “cross‐market” hospital mergers on prices and quality and the extent to which serial acquisitions contribute to any measured effects.2009–2017 commercial claims from the Health Care Cost Institute (HCCI) and quality measures from Hospital Compare.Event study models in which the treated group consisted of hospitals that acquired hospitals further than 50 miles, and the control group was hospitals that were not part of any merger activity (as a target or acquirer) during the study period.We extracted data for 214 treated hospitals and 955 control hospitals.Six years after acquisition, cross‐market hospital mergers had increased acquirer prices by 12.9% (CI: 0.6%–26.6%) relative to control hospitals, but had no discernible impact on mortality and readmission rates for heart failure, heart attacks and pneumonia.For serial acquirers, the price effect increased to 16.3% (CI: 4.8%–29.1%). For all acquisitions, the price effect was 21.8% (CI: 4.6%–41.7%) when the target's market share was greater than the acquirer's market share versus 9.7% (CI: −0.5% to 20.9%) when the opposite was true. The magnitude of the price effect was similar for out‐of‐state and in‐state cross‐market mergers.Additional evidence on the price and quality effects of cross‐market mergers is needed at a time when over half of recent hospital mergers have been cross‐market. To date, no hospital mergers have been challenged by the Federal Trade Commission on cross‐market grounds. Our study is the third to find a positive price effect associated with cross‐market mergers and the first to show no quality effect and how serial acquisitions contribute to the price effect. More research is needed to identify the mechanism behind the price effects we observe and analyze price effect heterogeneity. [ABSTRACT FROM AUTHOR]