Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Justice Department, FTC encourage innovation, preserve competition in health care industry: Baer, (Feb 26, 2015)

By Greg Hammond, J.D.

Assistant Attorney General William J. Baer presented opening remarks yesterday in Washington, D.C., at the FTC and U.S. Department of Justice Antitrust Division’s joint Workshop on Examining Health Care Competition. In his remarks, Baer noted that the health care industry is undergoing extensive change, and through antitrust guidance and competition advocacy, the Department of Justice, FTC, and state Attorneys General offices can help stakeholders direct creativity towards pro-competitive innovations that benefit patients, while preserving competition.

Baer began his remarks by discussing the importance of the health care industry to consumers, noting that, in 2013, U.S. health care spending reached $2.9 trillion, or 17.4 percent of the nation’s Gross Domestic Product. Because the rising cost of health care affects all Americans, “we share an interest in maintaining and fostering competitive markets that will keep prices in check, improve quality and spur innovation,” Baer said.

There are promising developments in the insurance market, including new entrants, expanded choices, and increased competition in some markets, according to Baer. For instance, innovative insurance plan designs, including narrow and tiered networks, will encourage providers to compete on price and quality to be included in plan networks at the most favorable level. While this has the potential to drive competition and benefit patients, the Department of Justice will continue to “pay close attention to abuse of market power,” Baer stated.

The Justice Department and FTC also support efforts to improve health care quality and reduce costs through better information and management of patient care. Specifically, Baer noted support for reimbursement models designed to align incentives for efficient care across provider groups, such as accountable care organizations (ACOs). “That’s why the DOJ and FTC issued a joint statement in 2011 explaining our antitrust enforcement policy regarding ACOs participating in the Medicare Shared Savings Program,” Baer said. The joint statement provides guidance to make sure ACOs can innovate in the Medicare and commercial markets, while complying with antitrust law.

However, Baer also stated that the Department of Justice and FTC will challenge provider conduct that enhances market power, stifles pro-consumer innovations, and leads to lower quality, higher cost health care. “Perhaps most importantly, when the government does challenge anticompetitive activity in the health care arena, consumers are entitled to meaningful relief,” Baer said. “Our strong preference, when challenging horizontal mergers in health care, as in any other industry, is for structural remedies that maintain competitive markets and remove restraints to competition.”

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