Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Ohlhausen discusses FTC’s efforts in protecting competition, consumer welfare in health care and technology sectors, (Feb 28, 2014)

By Linda O’Brien, J.D., LL.M.

FTC Commissioner Maureen Ohlhausen discussed the FTC’s efforts to protect competition and consumer welfare in the over-lapping sectors of health care and technology in a February 26 speech before the Connecticut Bar Association’s Antitrust & Trade Regulation and Consumer Law Sections in Hartford.

Ohlhausen began her address, entitled “Health Care, Technology, and Health Care Technology: Promoting Competition and Protecting Innovation, “ by pointing out that the health care and technology sectors represent a significant portion of the U.S. economy and comprise many key areas of innovation and change for private commerce. Currently, the U.S. health care sector is undergoing changes with the passage of the Patient Protection and Affordable Care Act and has seen a significant amount of consolidation among hospital systems and physician groups. On the technology side, the Centers for Medicare and Medicaid Services (CMS) has spent over $19 billion on electronic health records (e-HRs), including incentives to encourage health care providers to implement e-HR systems. This spending and regulation affect the shape of tech markets and health care practice, and implicate payment, privacy, and data security issues in the health and health technology sectors.

Due to the importance of health care competition to the economy and consumer welfare, anticompetitive conduct and regulation in health care markets has long been a key focus of FTC law enforcement, research, and advocacy. The FTC has investigated and litigated antitrust cases in markets across the country involving hospitals, physicians, pharmaceuticals, and other health care goods and services. The agency has issued informal advisory opinions on the application of the antitrust laws to health care markets. The FTC also has conducted hearings, undertaken research, and issued reports and policy statements on various issues in health care competition, often in conjunction with the U.S. Department of Justice, Ohlhausen noted.

The hearings, research, reports, and other competition policy efforts are a distinctive part of the FTC’s statutory mission under the FTC Act and a crucial complement to the agency’s law enforcement mission. These types of research and education projects play an especially important role in dynamic industries, where it is important for the Commission to be apprised of facts on the ground in a changing landscape and to spot competition and consumer protection issues as they arise. The Commission wants a law enforcement and regulatory environment that protects consumers against substantial market failure and fraud, but permits and fosters innovation, in Ohlhausen’s view.

Competition advocacy. Ohlhausen noted that advocating for competition is an important part of the FTC’s mission, which involves the use of its expertise in competition and economics to persuade other government actors to pursue policies that promote competition and consumer welfare. A significant portion of the FTC’s competition advocacy work is focused on the health care sector. Over the past decade, the Commission has targeted (1) proposed antitrust immunity for certain health care providers to bargain collectively with health insurers, (2) scope of practice regulations, and (3) restrictions on retail clinics.

First are federal and state legislative proposals to create antitrust exemptions for collective negotiations by otherwise competing health care providers. The FTC has long advocated against such exemptions for the reason that they tend to raise prices and harm consumers. Health care providers repeatedly have sought antitrust immunity for various forms of joint conduct, including agreements on the prices they will accept from health insurers and other payers. The Commission’s response has come down to the following point: reducing competition on one side of a market (physicians or other providers) is not the answer to a perceived lack of competition on the other side of that market (insurers and other third-party payers). The U.S. antitrust agencies have consistently opposed these exemptions because they are likely to harm consumers by increasing costs without improving quality of care and will continue to oppose these attempts to authorize departures from competition, according to Ohlhausen.

Ohlhausen next addressed that the second area of focus for FTC competition advocacy has been scope of practice regulations, which often seek to limit competition from newer providers that are able to supply comparable services—often at lower cost. In many states, there has been an interest in allowing basic medical services to be provided, not just by physicians, but by advanced practice registered nurses (APRNs). A third, related, set of advocacies have addressed retail clinics or limited service clinics - the types of small, limited, primary care service clinics at some chain drug stores, supermarkets, or malls. Retail clinics tend to be staffed by Advanced Practice Registered Nurses and offer consumers a convenient way to obtain basic medical care at transparent and competitive prices. One of the major competition issues with retail clinics has been separating bona fide attempts to provide basic health and safety quality assurances from attempts to suppress innovative models of health care delivery.

Telemedicine. Ohlhausen observed that telemedicine is a developing and intriguing area at the intersection of health care and technology. Telemedicine combines many of these capabilities to monitor, diagnose, and in some cases even treat patients who are in different locations than their medical professionals. In Ohlhausen’s view, the Commission needs to be far seeing and far reaching in policies to allow the potential of telemedicine to become a reality for patients in the U.S. Telemedicine can reduce the costs and extend the reach of many health care services, but the advantages of remote and networked expertise do not always fit professional licensing schemes that were developed to regulate local medical practices that were historically dominated by face-to-face encounters between a physician and the patient.

Recently, a bipartisan group of U.S. Senators commended state medical boards and the Federation of State Medical Boards (FSMB) for their efforts to streamline the licensing process for physicians who wish to practice in multiple states. The board’s development of the Interstate Medical Licensure Compact (Compact) would appear to greatly facilitate the use of telemedicine while still allowing states to regulate medicine within their borders, Ohlhausen stated.

The Commissioner noted that there are other applications of established technology beyond telemedicine. Technological developments also raise the question of what is the best approach for the FTC to take with regard to technological and business innovation. The successes of the Internet and the technology sector have in large part been driven by the freedom to experiment with different business models.

Ohlhausen believes that FTC can help ensure that the promise of innovations in health care technology, like telemedicine, is realized by using its unique set of policy and law enforcement tools. First, in a new technology or industry that is rapidly innovating, the Commission should use its policy research and development function to get a better understanding of: the technology itself; the new business models it may enable; any existing regulatory structures; relevant market dynamics; and the nature and extent of likely consumer and competitive benefits and risks. Finally, the FTC should use its flexible and fact-intensive approach to antitrust enforcement to investigate and, where appropriate, challenge competitive harms occurring in health care, technology, and even health care technology, Ohlhausen concluded.

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