Antitrust Law Daily Wrap Up, ANTITRUST NEWS: NY bill granting immunity to health care providers passes Senate, despite AG’s objection, (Jun 2, 2015)

By Edward L. Puzzo, J.D.

A New York bill, shielding two major health care providers from antitrust enforcement when entering into agreements with other providers, passed the New York Senate yesterday, despite the objection of the New York Attorney General.

The bill, S2647-2015, would shield Erie County Medical Center Corporation (ECMCC) and Westchester Health Care Corporation (WHCC) from antitrust enforcement if they entered into agreements for the creation and operation of health care delivery system networks. The providers, as well as all entities with which they collaborate, would be affirmatively permitted to engage in collaborative activities and immunized from liability under both federal and state antitrust laws.

On May 15, the Attorney General’s office sent a letter to the bill’s sponsors, stating that the legislation was unnecessary and would allow the providers “virtually unlimited discretion to work together with their competitors to raise the prices of health care services.”

In the letter, Eric J. Stock, Chief of the Antitrust Bureau of the New York Office of the Attorney General, charged that the legislation would allow any collaboration by the named corporations with any type of health care organization to completely evade antitrust scrutiny in perpetuity.

The immunity was unnecessary because beneficial collaborations among health care providers are already lawful and need no exemption from the antitrust laws, Stock argued. State and federal antitrust laws create no barrier to health care collaborations that benefit patients, Stock wrote, citing as an example the fact that the Attorney General chose not to block on antitrust grounds any of the numerous hospital consolidations in New York State over the past ten years.

Antitrust laws are no obstacles to health care collaborations that benefit patients, Stock maintained. If the providers wanted to enter into collaborations that involve clinical integration to enhance quality, reduce cost, increase access, or otherwise make health care services more efficient, those would be considered pro-competitive benefits. And if joint negotiations on reimbursement rates between ECMCC or WHCC and payors were necessary to achieve those benefits, antitrust law would not interfere. Even if collaboration may result in less competition and/or higher prices, the collaboration will still be lawful if the anticompetitive effects (e.g., higher prices) do not outweigh the benefits of the collaboration (e.g., improved access to care or enhanced quality of care).

The proposed legislation is unnecessary for collaborations made in the best interests of patients, with the added disadvantage of allowing anticompetitive collaborations, whether or not they are in the best interests of patients, the letter observed.

Stock noted that efforts by New York health care providers to obtain special antitrust exceptions were not a new phenomenon, citing nearly identical 2013 legislation immunizing the Nassau Health Care Corporation that the Attorney General’s office also opposed. At that time, the Attorney General feared the legislation would create a dangerous precedent, replacing professional antitrust analysis by expert state and federal enforcement agencies with legislative exemptions.

The official pointed out that the FTC had recently objected to similar antitrust exemptions granted b the legislature to the New York State Department of Health. The FTC cautioned that "antitrust exemptions threaten broad consumer harm while benefitting only certain market participants" and noted that "[t]here is no reason to treat the health care industry differently with regard to the application of the antitrust laws."

Companies: Erie County Medical Center Corporation; Westchester Health Care Corporation

News: Antitrust NewYorkNews