FTC: Antitrust bill would lead to higher costs

A proposal in the Texas state legislature that would exempt state-certified healthcare collaboratives--those organizations composed of hospitals, physicians, and other healthcare providers--from state and federal antitrust laws would likely harm consumers and lead to higher costs, Federal Trade Commission (FTC) staff wrote last week in response to a request a state representative. The collaboratives are being modeled after accountable care organizations.

The bill (Texas Senate Bill 8) proposes that the collaboratives have immunity extending to their negotiations with all contracts with payers--both public and private. According to the bill's preamble, the antitrust exemption is considered necessary to "explore innovative healthcare delivery and payment models" to improve the quality and efficiency of healthcare.

The staff noted in its letter, though, that antitrust laws already permit "procompetitive collaborations" among competitors. Therefore, they said, an antitrust exemption is not necessary to achieve cost savings or promote improved quality and access to healthcare: they are "unnecessary and will allow private health care collaboratives to engage in unsupervised anticompetitive conduct," the letter said.

Exempting the coordinated activities of healthcare providers--especially when the collaboration of these organizations involves negotiating reimbursement contracts with insurance companies--would eliminate price competition, they added. This likely would lead to higher costs and decreased access to healthcare that may not be prevented by the review provisions in the bill.

Tom Banning, the CEO of the Texas Academy of Family Physicians, said the situation was ironic because of some parts of the state Senate bill are similar to what the federal government is trying to do with the Affordable Care Act, reported the The [Austin] Statesman.

"It is counterintuitive for the FTC to deem Senate Bill 8 as anti-competitive, as the underlining goal for the legislation is to improve clinical integration and coordination of care to lower cost and improve quality--which is a major focus of federal health care reform," Banning told The Statesman.

The full Commission voted to approve the staff comment in 5-0 vote.

For more information:
- see the FTC announcement
- view the FTC staff letter (.pdf)
- see The Stateman blog on the FTC comments

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