FTC Commissioner Criticizes Proposed Legislation That Would Permit Health Providers to Negotiate Jointly with Health Insurers


In a February 26 speech before the Connecticut Bar Association, Federal Trade Commissioner Maureen Olhausen expressed strong opposition to proposed legislation that would create an antitrust exemption for collective negotiations with health insurers by otherwise competing health care providers. Describing such proposals, which have been introduced at both the federal and state levels, as “particularly troublesome,” Commissioner Olhausen noted that the FTC has “long advocated against such exemptions for the simple reason that they tend to raise prices and harm consumers.”

In further explaining the basis for her concern about such proposals, Commissioner Olhausen stated that while collaborations among physicians and other health care professionals can benefit consumers, her opposition is rooted in the following three principles: (1) the antitrust laws, as currently constructed, do not stand in the way of health care providers forming collaborative arrangements that are likely to reduce costs and benefit consumers through increased efficiency and improved coordination of care. She noted that the FTC has authorized guidance on this very issue, explaining how an accountable care organization can ensure that the prospect of antitrust liability does not impede the formation of beneficial ACOs; (2) that, in Commissioner Olhausen’s view, the central purpose of such legislation often appears to be to permit physicians to extract higher reimbursement rates from health plans, not to integrate their practices to reduce costs or better coordinate care for their patients; and (3) that because procompetitive health care collaborations are already permissible under the antitrust laws, the proposed legislation’s main effect would be to foster precisely efficiencies and thus otherwise pass muster under the antitrust laws, an unwelcome result.

Turning her attention to the oft-heard contention that such legislation is needed to “level the playing field” between providers and payors, Commissioner Olhausen responded that “reducing competition on one side of a market is not the answer to a perceived lack of competition on the other side of the market.” For this reason, Commissioner Olhausen closed with a prediction that she “expects [the FTC] will continue to oppose these attempts to authorize departures from competition.”

In the last twelve months, there have been several state bills that would permit providers to collectively bargain with payors (including Connecticut H.B. 6431, which was the principal focus of Commissioner Olhausen’s remarks). At the federal level, Congressman John Conyers of Michigan introduced legislation of this nature on February 25 as the “Quality Health Care Coalition Act of 2014.” Stay tuned.

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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