DOJ Will Not Contest Greater New York Hospital Association Gainsharing Program

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On  January 16, 2013, the Department of Justice, Antitrust Division (DOJ) announced that it will not challenge a gainsharing program that the Greater New York Hospital Association (GNYHA) proposed in its August 13, 2012 business review letter request to the DOJ.  The GNYHA is a trade association consisting of 250 hospitals and continuing care facilities in New York and other nearby states.  GNYHA proposed a gainsharing program that it plans to make available to its New York members, which are approximately 100 hospitals.  Specifically, hospitals that participate in the program will submit publicly available historical cost data and patient discharge statistics to GNYHA.  GNYHA will share this information with a third party software company.  The software company will use the compiled cost data to measure individual physician performance relative to the “Best Practice Norms” from which each physician’s performance will be measured.  Moreover, the information will be released to each physician’s particular hospital, but the hospitals will not be allowed to exchange data with each other.  Each hospital will independently and unilaterally make and cap incentive payments for physicians whose costs decrease while maintaining or improving quality of care.

According to the DOJ, GNYHA asserted that its proposal is based upon gainsharing demonstration programs that Medicare has created, and the proposal incorporates the same system of safeguards employed in those programs.  Importantly, GNYHA also represented to the DOJ that its proposed gainsharing program “requires significant programmatic support and infrastructure that hospitals generally can not afford to provide on their own.”

The DOJ stated that the gainsharing program raised two potential antitrust issues: (1) the program may constitute a horizontal agreement among competing hospitals about compensation levels for physicians; and (2) the program may create an information exchange among hospitals that would facilitate anticompetitive coordination among hospitals to limit physician compensation.  According to the DOJ, however, the limits and constraints on the program would make it difficult to “develop, or maintain, an agreement among hospitals” and “the data that GNYHA proposes to make available under its gainsharing program will not allow providers to determine what other providers are receiving, paying, or charging.”  

The DOJ’s business review letter is available by clicking here.

Reporter, John Carroll, Washington, D.C., +1 202 626 2993, jdcarroll@kslaw.com.

Topics:  DOJ, Hospital Associations, Hospitals, Physicians

Published In: Antitrust & Trade Regulation Updates, General Business Updates, Health Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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