Amid growing concern about rising health-care costs, the Justice Department is stepping up efforts against hospitals and insurers that it suspects are illegally blocking competitors.
Department officials are not talking, but a recent settlement the government reached with a Texas hospital system has antitrust experts buzzing.
In the first case of its kind since 1999, the department sued United Regional Health System in Wichita Falls for allegedly giving health insurers strong incentives not to do business with rival hospitals. That practice allowed United Regional to keep its monopoly, according to the lawsuit, while also becoming one of the most expensive hospitals in the state.
The hospital disputes some of the findings of the case but agreed late last month to a settlement requiring it to change how it contracts with private insurers.
Antitrust lawyer Matthew Cantor of the New York law firm Constantine Cannon, who was not connected with the case, said the court challenge shows that the Justice Department is “looking at ways in which dominant hospitals or conglomerations of medical practices are conspiring to increase medical costs.”
In the past two years, the department also has settled with a group of Idaho orthopedists over allegations that they conspired to drive up prices and stopped the two biggest Lansing, Mich., insurers from merging, citing “a likelihood of unilateral price increases.”
The Texas settlement comes on the heels of a department lawsuit filed in October against Blue Cross Blue Shield of Michigan over contracts that require hospitals to guarantee the lowest prices to the Blues plan. The department contends that the contracts improperly raise costs for other insurers and their customers. Blues plan administrators say the lawsuit is without merit and are fighting it.
The Wall Street Journal reported that the department has expanded its investigation of such contracts to other insurers, including CareFirst BlueCross BlueShield, which does business in Northern Virginia, Maryland and the District.
Even as they increase enforcement efforts, federal antitrust authorities are planning a more flexible response to select groups of doctors and hospitals that form accountable-care organizations, or ACOs, an experimental model of payment and care authorized by last year’s health law. But, at least initially, ACOs will compose only a tiny fraction of the health-care market; the type of actions that got the Texas hospital in trouble, for example, would remain illegal for ACOs.
Robert Leibenluft, former assistant director for health care in the Federal Trade Commission’s Bureau of Competition under President George W. Bush, sees a pattern in the lawsuits filed in Texas and Michigan: “Increased scrutiny by the DOJ of both health plans and providers who have market power.” He specializes in antitrust law at the D.C. firm Hogan Lovells.
The department’s actions coincide with increasing concern by policy experts over the impact of a decade of consolidation among hospitals, insurers and doctor groups. Some mergers have led to sharp increases in health-care costs, the FTC has found in a number of studies, although not all do.
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