Un­der a watch­ful eye

In­sur­ers put on no­tice re­gard­ing an­titrust con­cerns

Modern Healthcare - - The Week In Healthcare - Gregg Blesch

The U.S. Jus­tice Depart­ment’s top an­titrust of­fi­cial put health in­surance com­pa­nies on no­tice that their con­duct and merg­ers will be scru­ti­nized, say­ing that the suc­cess of her boss’ sig­na­ture do­mes­tic pol­icy achieve­ment de­pends on ro­bust com­pe­ti­tion among health plans.

“The goals of health­care re­form can­not be achieved if merg­ers be­tween sig­nif­i­cant in­sur­ers in a par­tic­u­lar mar­ket sub­stan­tially re­duce com­pe­ti­tion; nor can those goals be re­al­ized if dom­i­nant in­sur­ers use ex­clu­sion­ary prac­tices to block­ade en­try or ex­pan­sion by al­ter­na­tive in­sur­ers,” said As­sis­tant At­tor­ney Gen­eral Chris­tine Var­ney, ac­cord­ing to a pre­pared text of re­marks de­liv­ered last week in Ar­ling­ton, Va., to a com­bined au­di­ence of the Amer­i­can Bar As­so­ci­a­tion and the Amer­i­can Health Lawyers As­so­ci­a­tion.

A spokesman for the trade group Amer­ica’s Health In­surance Plans said the in­dus­try has noth­ing to worry about. “We sup­port hav­ing ap­pro­pri­ate over­sight by the Depart­ment of Jus­tice and the Fed­eral Trade Com­mis­sion,” AHIP spokesman Robert Zirkel­bach said. “The fact is there are a va­ri­ety of choices for peo­ple to choose from in ev­ery state,” Zirkel­bach said, dis­put­ing long­stand­ing com­plaints from doc­tors and hos­pi­tals. “Hos­pi­tal con­sol­i­da­tion has re­sulted in higher hos­pi­tal prices,” he added.

The Amer­i­can Hos­pi­tal As­so­ci­a­tion, mean­while, wel­comed Var­ney’s mes­sage that the Jus­tice Depart­ment ap­pears quite in­ter­ested in ex­plor­ing for it­self how health in­surance mar­kets are func­tion­ing, or mal­func­tion­ing.

Var­ney said the depart­ment is par­tic­u­larly in­ter­ested in un­der­stand­ing why new com­peti­tors don’t come knock­ing when one or two big play­ers are pil­ing up prof­its in a par­tic­u­lar mar­ket. She re­vealed that the Jus­tice Depart­ment over the past few months con­ducted a re­view of its in­ves­ti­ga­tions in­volv­ing health in­surance merg­ers and ac­qui­si­tions since 1996, look­ing closely at how con­sol­i­da­tion af­fects the abil­ity of com­peti­tors to en­ter or ex­pand in the mar­ket.

One con­clu­sion was that up­starts have trou­ble en­rolling small and mid­size em­ploy­ers with­out sig­nif­i­cant provider dis­counts, and they’re un­likely to get com­pet­i­tive provider dis­counts with­out a siz­able mem­ber base. New com­peti­tors are least likely to make a run at mar­kets in which one or two dom­i­nant play­ers de­mand and re­ceive larger dis­counts than providers ex­tend to smaller com­peti­tors.

There­fore, Var­ney said, the Jus­tice Depart­ment will be care­ful to “pre­serve the choices al­ready avail­able” by chal­leng­ing merg­ers that will re­duce com­pe­ti­tion, and that merg­ing com­pa­nies will have a hard time ar­gu­ing the dom­i­nance of their com­bined or­ga­ni­za­tion would be vul­ner­a­ble to hy­po­thet­i­cal new com­peti­tors.

Var­ney also said the Jus­tice Depart­ment will “care­fully scru­ti­nize and con­tinue to chal­lenge” the tools that dom­i­nant in­sur­ers em­ploy to make sure they stay dom­i­nant. As ex­am­ples, she cited so-called most-fa­vored­na­tion clauses, in which an in­surer will de­mand that a provider ex­tend rates at least as good as those given to any com­peti­tor.

An­titrust lawyer Fiona Scha­ef­fer, a part­ner in the law firm Weil Got­shal, said the govern­ment’s ef­forts to po­lice ex­clu­sion­ary con­duct could be more im­por­tant than ef­forts to block con­sol­i­da­tion. “They should be look­ing at the causes of the im­ped­i­ments to en­try,” Scha­ef­fer said. “They’re not go­ing to break those log­jams through merger re­view alone.”

Var­ney said the Jus­tice Depart­ment re­viewed past in­surer deals.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.