Color me a little surprised, the DOJ is getting serious about addressing some of the gross misconduct by some health organizations.
In this article, there is some discussion about the various efforts of the DOJ to address bad, or anti competitive business practices in the medical arena. One such example is the Texas case listed below.
The Texas case revolved around contracts United Regional offered to insurers starting in 1998, according to the complaint and settlement agreement filed in U.S. District Court on Feb. 25 by the Justice Department and Texas attorney general’s office. The contracts offered insurers steep discounts, but only if they agreed not to contract with other hospitals or outpatient facilities in the area.
At the time, 369-bed United Regional was the only hospital in Wichita Falls, population 100,000. But a group of doctors was working to build a far smaller rival facility, said surgeon Jerry Myers, who led the effort and is now chief executive of the 41-bed Kell West Regional Hospital.
If insurers signed with a rival medical center, the discounts would be dropped and they would have to pay close to full charges.
Such pricing practices aren’t “just about charging higher prices generally, it’s strategically charging prices in a way specifically designed to keep out competition,” said Tim L. Greaney, an antitrust expert and director of the Center for Health Law Studies at St. Louis University.
Within three months of Kell’s opening, United Regional had signed the now-disputed contracts with five health insurers and by 2010 had eight insurers, according to the federal lawsuit. The only insurer in the region that didn’t sign was the largest, Blue Cross Blue Shield of Texas.
Even with the discounts offered to insurers, United Regional became expensive, the complaint alleges. An analysis by a major insurer cited in court documents concluded that payments from insurers for hospital care at United Regional were at least 50 percent higher than average amounts paid in seven other comparable Texas cities. For services offered at both United and Kell, the big hospital’s average per-day rate for care was 70 percent higher.
The hospital disagrees with the way the Justice Department applied the law. “We believe then and now that these contracts were appropriate and legal,” United Regional chief executive Phyllis Cowling said.
Cowling also disputes the department’s cost findings. “We are paid a little bit more by insurers, but I know it’s not 70 percent,” she said. “It’s probably some 10 percent or 15 percent more, based on our numbers.”
The hospital is under orders to remove the exclusionary contract provisions. It will continue to honor the deeper discounts offered to its insurers, even if they sign deals with Kell, Cowling said.
Now, what will be really interesting is to see how the DOJ adapts when the newer ACO constructs begin to become operational. One quite serious concern among many healthcare executives centers around the joining of practices into giant ACO organizations, and whether or not this will be considered anti-competitive practice. The DOJ is apparently under instructions to be more lenient with ACO's, but how lenient may remain a mystery at the moment.