OhioHealth reached an agreement with the Department of Justice and the Ohio Attorney General to settle a lawsuit over antitrust allegations.
In a lawsuit filed in February, the DOJ and Ohio’s attorney general alleged that the 16-hospital nonprofit health system uses its market strength to force payers into noncompetitive contracts. The lawsuit alleged violations of federal and state competition laws.
Specifically, the federal and state regulators said the health system "forces" commercial plans to include or favor its facilities in their plan designs, precluding insurers from "offering budget-conscious plan designs that promote competition," such as narrow or tiered network plans.
Under the proposed settlement (PDF), filed Wednesday in the U.S. District Court for the Southern District of Ohio, OhioHealth will be prohibited from imposing terms in its contracts with commercial health insurers that deter budget-conscious healthcare plans, according to a DOJ press release.
The health system will also be prohibited from restricting insurers from encouraging patients to seek care from lower-cost providers, the Ohio AG's office said in a press release.
The lawsuit described OhioHealth as the dominant hospital system of the Columbus area, with the Ohio State University Wexner Medical Center and Mount Carmel Health System (owned by Trinity Health) also serving the area as competitors. OhioHealth charges payers “significantly higher” reimbursement rates than other providers, according to the suit, and its services “are not generally higher quality than those of its local rivals.”
It does so, the suit alleged, because of the competitive power it wields due to its high market share, which includes some rural hospitals that payers need to include in their plans to maintain network coverage. However, terms of the contracts the system signs “require[] a payor that wants any of these providers in its network to include all of them in its network,” the government wrote.
The DOJ and Ohio argued that those terms are a violation of the Sherman Act and the state’s Valentine Act, and asked the court to enjoin the system from enforcing them or replacing them with substitute means.
If approved by the court, the proposed consent judgment would void OhioHealth’s existing contract provisions that "prohibit or deter insurers from offering innovative and budget-conscious health-insurance plans or plan features" and prevent OhioHealth from seeking or obtaining such contract provisions in the future, the DOJ said.
The settlement also prevents OhioHealth from penalizing or threatening to penalize health insurers from offering innovative and budget-conscious health-insurance plans or plan features. OhioHealth also has to submit regular reports to the Antitrust Division for the next five years, ensuring compliance with these terms, the DOJ said.
“As I stated when we filed this lawsuit, healthcare competition is critical,” said Acting Assistant Attorney General Omeed A. Assefi of the Justice Department’s Antitrust Division in a statement. “This settlement will secure lower healthcare costs for Ohioans, and ending these anticompetitive contract terms will restore competition for patients in the Columbus area.”
In a statement, OhioHealth said it does not admit any wrongdoing in the agreement, and maintains that its contracting practices were and are lawful and appropriate. OhioHealth will not pay penalties, fines or damages.
"The contract provisions in question date back as far as two decades and were designed to provide protections to OhioHealth from specific insurance company practices common at the time. Since then, both the healthcare and insurance landscapes have changed," the health system said in its statement.
No insurer had requested that OhioHealth remove any of the provisions that were the focus of the lawsuit, OhioHealth said.
"As a not-for-profit, faith-based healthcare system, OhioHealth’s priority has always been and continues to be providing patients and their families with high-quality, accessible, affordable healthcare across the communities it serves. OhioHealth is choosing to resolve this lawsuit to avoid costly and time-consuming litigation," OhioHealth leadership said in the statement.
The government is making similar claims against NewYork-Presbyterian, alleging in an antitrust lawsuit filed in March that the health system's payer contracts impose anticompetitive restrictions on health insurers’ offerings.
Regulators and litigants have previously notched wins against major nonprofit systems alleged to employ restrictive, anticompetitive payer contracts. Key among these were a $575 million settlement between Sutter Health and California over alleged conduct that included “all-or-nothing” contract clauses, as well as a long-running class-action case against the organization that was settled last year for $228.5 million.