Antitrust Law Daily Wrap Up, TOP STORY: Competition must be preserved in light of ACA’s care coordination efforts, (Sep 10, 2015)

By Patricia K. Ruiz, J.D.

Concerns that the Patient Protection and Affordable Care Act (ACA) is “antithetical to competition,” because it “put[s] in place a regulatory structure that stifle[s] competition and institute[s] incentives for increased market consolidation,” caused the House of Representatives Judiciary Committee to seek further review. Chairman Bob Goodlatte (R-Va) provided the opening statements as the Committee heard the testimony of representatives from the St. Louis University School of Law (SLU Law), the American Hospital Association (AHA), the American Medical Association (AMA), the American Enterprise Institute (AEI), and American Health Insurance Plans (AHIP) to further discuss the ACA’s impact on competition in the health care marketplace.

Competition over consolidation. A main concern of the Committee is that if markets are forced to consolidate under the ACA, reduced competition may result, contradicting the law’s related benefits. Congressman Hank Johnson (D-Ga) stated that, “rather than demonizing the law that has done so much for so many,” the Committee should remain focused on ensuring that anticompetitive actions aren’t jeopardizing progress.

Professor Thomas L. Greaney of SLU Law testified that the ACA actually depends on and promotes competition in both provider and payor markets, but excessive concentration in the hospital, physician, insurance, pharmaceutical, and medical device markets undermines the ACA’s pro-competitive policies. “It would be erroneous to claim that the [ACA] is somehow responsible for anticompetitive consolidation among providers and payers when in fact such mergers and joint ventures are efforts to avoid or frustrate the procompetitive aspects of the [ACA],” Greeney stated in his written testimony. Thus, recently announced mergers in the insurance industry that threaten competition should be closely scrutinized. Procompetitive laws that increase price transparency and entry opportunities should be adopted. Payment incentives artificially encouraging consolidation—such as policies that allow for higher reimbursements for the services of physician practices purchased by hospitals—should be eliminated.

Scott Gottlieb, M.D. of the AEI commented in his testimony that, because health care delivery is local, once an institution has monopolized most of the providers in its market, it renders market-based reforms hard to achieve and reduces the ability of competition to be used as a tool for quality improvement and cost containment. Daniel T. Durham, executive vice president of strategic initiatives at AHIP, noted that consolidation of companies in the health care sector can be pro-competitive, and the DOJ and FTC play an important role in ensuring only pro-competitive transactions area allowed.

Competition among insurers. Rick Pollack, president and CEO of the AHA, testified that while the consolidation of health care providers is undertaken with the goal of achieving high performance in a landscape of enormous capital and regulatory demands, recently announced commercial insurance deals are motivated by top-line profits. The consolidation of Anthem with Cigna and Aetna with Humana, in particular, would eliminate two of the largest national health insurance companies, which would reduce competition on a massive scale, presenting an unacceptable risk to consumers, who are unlikely to receive any of the benefits of the consolidation.

Barbara L. McAneny, M.D., a representative from the AMA Board of Trustees, also testified that the merger of health insurers in concentrated markets are not likely to generate benefits for consumers, as there is no incentive to pass cost savings along to consumers, considering the inelastic demand for health insurance combined with little if any competition.

Flexibility for physicians and small practices. McAneny further testified that the competitive effects of the ACA are still being revealed. While support of integrated delivery systems creates opportunities to improve the quality of care, it is not clear whether continuing barriers to market entry can be overcome to achieve the ACA’s underlying goals. One of the greatest barriers is the inflexibility of antitrust law and regulation, which prevents small and specialty practices from joining alternative payment models (APMs). Current law generally prohibits collaboration regarding payer negotiations among physicians unless they are financially or clinically integrated. Physicians should not have to become employed by or sell their practice to a hospital to participate in innovative delivery models, McAneny testified, as doing so may also lessen the practice options open to physicians.

Companies: St. Louis University School of Law; American Hospital Association; American Medical Association; American Enterprise Institute; American Health Insurance Plans

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