The United States Department of Justice (DOJ) recently withdrew three policy statements regarding health care antitrust enforcement, calling them “overly permissive on certain subjects, such as information sharing” and noting that they “no longer serve their intended purposes of providing encompassing guidance to the public on relevant healthcare competition in today’s environment.”
Background and Policy Statements
The policy statements were issued jointly by the DOJ and the Federal Trade Commission (FTC) in 1993, 1996, and 2011. The 1993 policies resolved “uncertainty that might deter beneficial mergers or joint ventures that promise to reduce healthcare costs” via “antitrust safety zones.” Within the antitrust safety zones, the DOJ and the FTC would not challenge certain: (1) hospital mergers; (2) hospital joint ventures involving high-technology or other expensive medical equipment; (3) physicians’ provision of information to purchasers of health care services; (4) hospital participation in exchanges of price and cost information; (5) health care providers’ joint purchasing arrangements; and (6) physician network joint ventures. The DOJ and FTC revised and expanded the health care antitrust enforcement policy statements in September 1994, adding new statements addressing hospital joint ventures involving specialized clinical or other expensive health care services, providers’ collective provision of fee-related information to purchasers of health care services, and analytical principles relating to a broad range of health care provider networks (termed “multiprovider networks”), and expanded the antitrust “safety zones” for several other statements.
In 1996, the statements were revised yet again, allowing for the consideration of “particular characteristics of health care markets and the rapid changes that are occurring in those markets.” Specifically, the 1996 policies focused on revising the statements on physician network joint ventures and multiprovider networks. The revised statement on physician network joint ventures provided an expanded discussion of the antitrust principles that applied to such ventures, with a focus on analyzing networks that fell outside the safety zones within the existing statement – especially networks that did not involve the sharing of substantial financial risk by their physician participants. The revised statement explained that where physicians’ integration through the network is likely to produce significant efficiencies, “any agreements on price reasonably necessary to accomplish the venture’s procompetitive benefits will be analyzed under the rule of reason.” The revised statement on multiprovider networks emphasized the intent to outline general principles connected to a wide range of health care provider networks.
The 2011 policy statement outlined the way the DOJ and FTC would consider health care providers that sought to form accountable care organizations (ACOs) under the Affordable Care Act and its Medicare Shared Savings Program. Under this statement, a new safety zone was established based on independent ACOs share of services in each ACO participant’s primary service area (PSA). The statement also noted that while a PSA does not “necessarily constitute a relevant antitrust geographic market,” it served as a “useful screen for evaluating potential competitive effects.” For an ACO to fall within the safety zone, independent ACO participants providing the same service must have had a combined share of 30% or less of each common service in each participant’s PSA, any time two or more ACO participants provided that service to patients from that PSA.
Policy Statements Withdrawn by the DOJ
In the press release announcing the withdrawals, the DOJ notes that instead of using these policy statements as guidance, recent enforcement actions and competition advocacy in healthcare can be looked to for guidance, and that the agency will use a case-by-case enforcement approach “to better evaluate mergers and conduct in healthcare markets that may harm competition.”
“The healthcare industry has changed a lot since 1993, and the withdrawal of that era’s out of date guidance is long overdue,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “The Antitrust Division will continue to work to ensure that its enforcement efforts reflect modern market realities.”
While guidance documents are non-binding and do not create any legal rights or obligations, by withdrawing these policy statements, the health care market should expect increased scrutiny from the DOJ on a case-by-case basis at all levels of competition.