Antitrust Oversight of Health-Care Networks Will Be Shared

The U.S. Federal Trade Commission and the Justice Department will conduct antitrust reviews of proposals to form networks under the new health-care law, ending for now a debate over which agency would take the lead.

The FTC and Justice Department will decide on a case-by- case basis which agency will investigate, much like they now determine merger reviews, Christine Varney, who heads the Justice Department’s antitrust division, said in an interview today.

“I don’t anticipate there will be any problem in dividing this up,” she said.

The U.S. Department of Health and Human Services issued rules today for so-called accountable care organizations, or ACOs, to be formed by hospitals, insurers and doctors. ACOs are a centerpiece of the health-care law backed by President Barack Obama and may save the government as much as $960 million in the next three years after any performance incentives are paid to providers.

On a conference call with reporters, FTC Chairman Jon Leibowitz said agencies cooperated in developing the guidance. “The coordination among our agencies here was unprecedented,” he said.

Earlier this month, FTC Commissioner Thomas Rosch, a Republican, said the Obama administration would risk “sub- optimal enforcement” and a “turf war” if it didn’t clarify which agency had authority to do the reviews.

‘Wholly Inadequate’

If “the agencies will simply divide review and enforcement responsibilities equally, I think it is will be wholly inadequate,” Rosch said in an e-mailed statement today.

If experience in health-care mergers determines who is in charge, he said, “That will result in the antitrust division undertaking very little, if any, review and enforcement.”

The FTC in the past 20 years has conducted 88 “substantial investigations” of hospitals, physicians and health-insurance plans, said Cecelia Prewett, an FTC spokeswoman, in an e-mail.

Over the last decade alone, the FTC has investigated 44 cases involving health-care providers, who “are expected to lead the way in the creation of the ACOs,” she said.

The Justice Department said in a statement today it has conducted 60 “substantial investigations” into health insurance plans, hospitals and physicians over the past 20 years. In that period, the department said, it issued 62 letters in response to health-industry requests for guidance on antitrust matters.

Any physicians’ group that has less than 30 percent market share in its local area and is approved as an ACO by Medicare will be presumed legal, the agencies said in a joint statement. Any group with 50 percent of market share or more will need preapproval from antitrust regulators for an ACO.

For those that have between 30 percent to 50 percent market share, the review is voluntary, although the agencies have the option to conduct an investigation later if they think it’s necessary.

“You’re talking about a very small, in my view, potential universe” of reviews, Varney said.

To contact the reporter on this story: Jeff Bliss in Washington at jbliss@bloomberg.net

To contact the editor responsible for this story: Mark Silva in Washington at msilva34@bloomberg.net

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