On February 3, 2023, the Department of Justice Antitrust Division (DOJ) announced the withdrawal of three policy statements that have long guided the information exchanges as well as the related enforcement in the healthcare space.[1] The DOJ noted that these statements were “outdated,” “overly permissive,” and no longer demonstrated “modern market realities.” The DOJ indicated that the removal of the statements would best promote competition and transparency and claimed that enforcement on a case-by-case basis will enable better evaluation in the healthcare space. The DOJ has not announced whether updated or new guidance will be released.
The three withdrawn statements include: 1) DOJ and Federal Trade Commission (FTC) Antitrust Enforcement Policy Statements Issued for Healthcare Industry[2] discussing safe zones available for hospital mergers and healthcare joint ventures; 2) Statements of Antitrust Enforcement Policy in Health Care[3] related to healthcare provider networks; and 3) Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program[4] (collectively “the Statements"). The Statements established longstanding antitrust safe zones for the exchange or sharing of information amongst providers. While these statements fell into the category of sub-regulatory policy guidance, they provided direction to the healthcare industry similar to how advisory opinions help define compliant practices. Pursuant the Statements, the DOJ permitted competing healthcare organizations to participate in surveys for healthcare prices and employee compensation if certain conditions were met. Healthcare organizations relied on this protection when they shared backward-looking, anonymized, and aggregate pricing information in the structuring of many collaborative activities, such as: organizing and configuration of group purchasing organizations, clinically integrated networks, and accountable care organizations. The withdrawal of the Statements may have far-reaching implications well beyond the healthcare industry as these policy statements had established the parameters of sharing information amongst competitors. One of the statements was cited by Antitrust Guidance for Human Resource Professionals in explaining the design and implementation of antitrust-compliant information exchange and employee-benefit information in all sectors.[5]
The Ankura Insight
When this recent DOJ announcement is analyzed alongside other recent federal rulemaking such as the No Surprises Act and Centers for Medicare & Medicaid Services (CMS’s) Hospital Price Transparency mandate, it is apparent the government is encouraging both price shopping, as well as using legislative and rulemaking powers, to apply significant downward pressure to the cost of healthcare. Interestingly, it could be argued that if enforcement efforts surrounding the Hospital Price Transparency effort are enforced in a draconian manner, much of the information that was within the safe zones removed by the DOJ will be available to patients and competitors alike via the mandatory machine-readable posting requirements that are part of Price Transparency.
Perhaps, the biggest open question is how this guidance will affect the trend of consolidation of healthcare providers and suppliers across the United States. As the May 11, 2023 end date to Public Health Emergency (PHE) related to the Covid-19 virus approaches the end of relief funds as well as the unwinding of Medicaid coverage tied to the Families First Coronavirus Response Act (“FFCRA”) is also approaching. According to the Kaiser Family Foundation, as many as 14 million individuals may lose Medicaid coverage once FFCRA sunsets.[6] The loss of PHE dollars coupled with a bonus of newly uninsured individuals is likely to place additional financial pressures on already cash-strapped hospitals and healthcare systems. Historically, these types of financial pressures led to mergers, acquisitions, consolidations, or the alignment of disparate healthcare providers. Whether or not these business combinations will be blocked for anti-trust reasons remains to be seen. The potential effects on the market stemming from impending financial pressures coupled with the DOJ updates are certainly worth following in the coming months.
[1] https://www.justice.gov/opa/pr/justice-department-withdraws-outdated-enforcement-policy-statements
[2] https://www.justice.gov/archive/atr/public/press_releases/1993/211661.htm
[3] https://www.justice.gov/atr/page/file/1197731/download
[4] https://www.justice.gov/sites/default/files/atr/legacy/2011/10/20/276458.pdf
[5] https://www.justice.gov/atr/file/903511/download
[6] https://www.kff.org/medicaid/issue-brief/10-things-to-know-about-the-unwinding-of-the-medicaid-continuous-enrollment-provision/
© Copyright 2023. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.
