FTC Proposed Rule on Banning Noncompete Clauses Draws 27,000 Comments, Final Action Likely in April 2024
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The proposed rule was announced on January 5 (FTC release, here, “Fact Sheet” here) and published in the Federal Register January 19 (here). The proposal would have extensive impact on physician, nurse practitioner and other health field recruiting.
The Associated Press reported at the time of the announcement that “The Federal Trade Commission proposed a rule Thursday that would ban U.S. employers from imposing noncompete clauses on workers, a sweeping measure that could make it easier for people to switch jobs and deepen competition for labor across a wide range of industries. The proposed rule would prevent employers from imposing contract clauses that prohibit their employees from joining a competitor, typically for a period of time, after they leave the company.”
The AP added, “Advocates of the new rule argue that noncompete agreements contribute to wage stagnation because one of the most effective ways to secure higher pay is switching companies. They argue that the clauses have become so commonplace that they have swept up even low-wage workers. Opponents argue that by facilitating retention, noncompete clauses have encouraged companies to promote workers and invest in training, especially in a tight labor market. The public has 60 days to submit commentary on the rule before it takes effect.”
The AP reported that “During a Cabinet meeting, President Joe Biden called the FTC action ‘a huge step forward in banning non-compete agreements that are designed simply to lower people’s wages.’”
Now Bloomberg reports (here) that “The Federal Trade Commission is expected to vote next April on the final version of its proposal to ban noncompete agreements in employment contracts . . . The agency received nearly 27,000 comments on the draft rule proposed in January. Banning most noncompetes would impact about 30 million Americans and boost wages by nearly $300 billion per year, the FTC estimated.”
The American Medical Association House of Delegates has voted (here) to oppose noncompete contracts for physicians employed by for-profit or nonprofit hospitals, hospital systems and staffing company employers.
The AMA statement noted that “Physicians who are employers and owners of physician practices may favor the use of reasonable noncompetes, while employed physicians may believe that noncompetes need to be banned outright,” and that “The use of noncompete agreements has been extensive in the health care system, affecting up to 45 percent of primary care physicians. Trends show more physicians are working directly for a hospital or for a practice that is at least partially owned by a hospital or health system rather than in a private practice.”
The AMA noted, “Recently graduating trainees entering the workforce may be especially vulnerable to the negative effects of noncompete contracts, which can limit their opportunities for career advancement and restrict their ability to provide care in underserved areas.”
“Covenants not-to-compete are already prohibited outright in several states, including California, North Dakota and Oklahoma. Additional states such as New Hampshire, Delaware, Massachusetts and Rhode Island ban noncompete covenants specifically for physicians.”
One Indiana medical group (here) has decided to pre-empt the FTC and do away with noncompete agreements among its 100 physician members. According to Becker’s, “Indiana Hospital Association's Brian Tabor told Fox 59 removing noncompetes adds risk for hospitals spending significant resources to recruit and retain physicians. The burden is especially stark for rural hospitals, which already have steep financial challenges and likely won't be able to win ‘bidding wars’ over physicians.”
HOSPITALS, NURSING HOMES AND OTHER HEALTH CARE FACILITIES
U.S. Hospital Billing and Debt Collection Practices Attract Human Rights Attention
Human Rights Watch reports (here) that “More legislative action is needed in the U.S. to prevent Americans from being pushed into medical debt from nonprofit hospitals' ‘aggressive practices.’”
Says Becker’s (here), “The group . . . has brought attention to war crimes, political corruption and more. Their latest report on the U.S. healthcare system, titled ‘In Sheep's Clothing: United States' Poorly Regulated Nonprofit Hospitals Undermine Healthcare Access,’ takes aim at the national model of subsidizing privately operated hospitals through tax exemptions in exchange for providing charity care. . . The US heavily relies on these privately operated nonprofit hospitals' charity care to increase access to healthcare for patients who cannot pay for hospital services . . . But given the high prevalence of hospital-related medical debt in the U.S., this system is clearly not working."
Adds Becker’s, “The report draws on a national survey from Kaiser Family Foundation that found 41 percent of adults in the U.S. had some kind of outstanding medical or dental debt in 2022, and 24 percent were either past due or unable to pay healthcare pills at the time they were surveyed. Hospital services are a significant contributor to the country’s medical debt crisis, largely due to the wide discretion nonprofit hospitals have over how much they allot to charity care and determining who qualifies for assistance.”
AHA and CHA protest (here), noting “The report released today from Human Rights Watch — based in part on research funded by an organization with a track record for bias—conspicuously focuses on tax-exempt hospitals, largely in the absence of other sectors of health care, such as commercial insurers, drug, or device companies that contribute to hospital expenses as well as consumer debt. It all but ignores that the root cause of medical debt is inadequate commercial health care coverage.”
MEDICARE, MEDICAID, AND COMMERCIAL HEALTH INSURANCE
Unhappiness With Commercial Health Insurance
Commercial health insurance coverage draws attention from STAT+ (here), in reporting that “Unions are suing Elevance Health, a Blue Cross Blue Shield insurer, over allegedly overcharging and blocking access to medical claims. Companies, unions, and workers are at a breaking point over how much they pay for health coverage. And some are so exasperated that they’re fighting their own health insurance carriers in court.”
“A string of new lawsuits and judge orders highlights employers’ frustration with health insurers, who they believe are allowing hospitals, doctors, and other entities to charge flagrantly high prices with little to no pushback —knowing that employers and workers will ultimately pick up the tab. Employers also allege that carriers routinely block access to their own claims data, making it difficult or even impossible to know the full extent of what they’re being charged.”
The New York Times (here) reports on a new Kaiser Family Foundation report finding “A majority of Americans with health insurance said they had encountered obstacles to coverage, including denied medical care, higher bills and a dearth of doctors in their plans . . . As a result, some people delayed or skipped treatment.”
DRUGS & DEVICES
Medicare Drug Price Controls Spark Threats by Drug Firms to Withdraw From the Program
Biospace reports (here) that “Biopharma execs suggested that companies may choose to opt out of Medicare coverage for their drugs to avoid having to negotiate pricing.”
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Notes to Fred Hyde, MD, JD, MBA, news@dcmedicalnews.org
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