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Health Care Antitrust

Why Employers Care

Some consolidation in the very fragmented market for health care in the US is necessary to increase care coordination and integration of health care and drive efficiencies. However, as in any market, excessive consolidation by providersor manufacturerscan lead to consumers paying higher prices than in markets with sufficient competition. It can also lead to fewer improvements in quality and less innovation. While the heath care market does have distinct differences with other markets, employees, employers and other purchasers of health care can be adversely impacted in markets where provider consolidation stifles quality improvement and innovation and leads to unjustified price increases. In recent years, because of many factors including a slowdown in the economy, reduced government payments, technological innovation and higher capital requirements, as well as the requirements of the 2010 health care law, consolidation in health care has accelerated, with health systems purchasing other hospitals and health systems purchasing physician groups, oncology centers, post-acute and other health care services.

As far back as 1890, the United States government began passing antitrust laws with the Sherman Act. Other laws include the Clayton Act 1914 and the Federal Trade Commission Act 1914. The Federal Trade Commission (FTC) enforces these laws and has authority to assure sufficient competition and challenge mergers on antitrust grounds. In health care, the FTC, along with the Department of Justice, has responsibility to assure competition in health care markets. For more information on the FTC and health care, please visit the FTC site.

Historically, the FTC has had a difficult time winning health care antitrust cases and an even harder time preventing health system mergers before they happen. However, with accelerating consolidation in the health care industry, both vertically and horizontally, and growing concerns about the nation’s ability to sustain our current level of health care spending or fund the high, annual cost increases, the FTC may have more success in the future. Recently, the U.S. District Court found in favor of the Federal Trade Commission’s (FTC) argument that a hospital health system’s acquisition of a large physician group violated antitrust laws because the new entity: would increase market power in order to charge higher inpatient fees and could achieve integrated care through means other than consolidation.

On March 23, 2010 President Obama signed into law the Patient Protection and Affordable Care Act (Affordable Care Act). The law includes provisions for providers to join together, called Accountable Care Organizations (ACOs), to deliver care more efficiently and effectively. The ACO program awards bonus payments (shared savings) to organizations of Medicare providers (hospitals and doctors) that share joint responsibility forcoordinating health care services for specific patients and reduce costs and improve quality. The Business Group believes that if CMS implements ACOs correctly, the Centers for Medicare and Medicaid Services (CMS) has the potential to truly reform health care by incentivizing and rewarding networks of providers (hospitals, primary care physicians, specialists and other health care professionals) who succeed in truly coordinating patients’ care, controlling costs and improving quality to move us all toward an effective and efficient health care delivery system. However, entities that merely come together without improving care delivery may have increased leverage to negotiate higher prices.

However, under the finalACO rule CMS scaled back itsproposed antitrust provisions, performance measures that ACOs must meet and financial risk they must bear. The Business Group commented in November 2011 with its members’ concerns regarding the final ACO rule. For more information on ACOs, please see CMS website.

What Can Employers Do?

As members of the National Business Group on Health, employers can contact the Business Group's public policy team with concerns and to receive more information on health care antitrust.

Page last updated: February 5, 2014

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