Antitrust Law Daily Wrap Up, ANTITRUST NEWS: FTC Staff Opposes Antitrust Exemption in Connecticut Cooperative Health Care Bill, (Jun 6, 2013)

By Tobias J. Gillett, J.D., LL.M.

In response to a request for comment, the staffs of the FTC’s Office of Policy Planning, Bureau of Competition, and Bureau of Economics have sent a letter to the Co-Chairs of the Labor and Public Employees Committee of the Connecticut General Assembly conveying their opposition to a Connecticut House bill that would exempt from antitrust scrutiny health care collaboratives formed by otherwise independent health care practitioners and their joint negotiations with health plans.

Connecticut House Bill 6431, “An Act Concerning Cooperative Health Care Arrangements,” would permit independent health care practitioners to form collaboratives that would negotiate with health plans, and the health plans would be required to negotiate with them in good faith, subject to mandatory mediation if negotiation proved unsuccessful. These collaboratives and negotiations would be exempted from the antitrust laws.

The letter contends that a “fundamental premise” of the bill—that the antitrust laws prohibit procompetitive collaborations among otherwise independent health care practitioners, including the negotiations necessary to form Accountable Care Organizations (ACOs) under the Patient Protection and Affordable Care Act—“is simply and categorically wrong.” The letter notes that the FTC and the Department of Justice have issued “considerable guidance” regarding the distinctions between lawful and unlawful competitor collaborations, including in the health care industry.

Moreover, “ACOs neither need, nor deserve, special treatment under the antitrust laws,” according to the FTC staffs. The letter argues that antitrust analysis is “entirely consistent with the goals of the ACO program.” The letter refers to evidence from the Centers for Medicare and Medicaid Services (CMS) that “more than 250 ACOs had already been established under its own programs,” and states that CMS, the FTC, and the Department of Justice had worked together “to ensure that the prospect of antitrust liability does not impede the formation of beneficial ACOs.”

In addition, the letter expresses the FTC staffs’ concern “that the Bill will only serve to encourage conduct that likely would not pass muster under the antitrust laws because it would reduce competition, raise prices, and provide relatively small or no benefits to consumers.” The letter notes the “widely recognized” general proposition that antitrust exemptions typically provide economic benefits to interest groups while the costs are passed on to a large population of consumers. The letter also cites a Congressional Budget office estimate that “proposed federal legislation to exempt physicians from antitrust scrutiny would increase expenditures on private health insurance by 2.6 percent and increase direct federal spending on health care programs such as Medicaid by $11.3 billion.”

“Given the substantial risk that the Bill will encourage the formation of inefficient and anticompetitive collaborations among health care providers, we urge Connecticut legislators not to attempt to shield them from the antitrust laws by attempting to invoke the state action doctrine,” the letter concludes. “Our analysis of H.B. 6431, as amended, suggests that its passage would pose a significant risk of harm to Connecticut consumers. The Bill’s attempt to confer antitrust immunity is unnecessary for legitimate collaborations and, if effective, would encourage groups of private health care providers to engage in blatantly anticompetitive conduct.”

News: Antitrust FederalTradeCommissionNews