Lab leaders may recall similar requests for data from other government agencies and wonder if FTC will take steps to investigate pricing and competition among clinical laboratories as well

It appears that the Federal Trade Commission (FTC) is ready to look into hospital consolidation, as evidenced by the extent of data—including pricing and managed care contracts—it requested from healthcare providers and health insurers last fall. This may not seem unusual to clinical laboratory leaders who remember having to respond to similar requests for information back in 2011. 

In October of 2019, the federal agency took the unusual action of ordering two healthcare provider systems in Tennessee and West Virginia, as well as five health insurers, to share vast amounts of data “to study the effects of Certificates of Public Advantage (COPAs) on prices, quality, access, and innovation of healthcare services. The FTC also intends to study the impact of hospital consolidation on employee wages,” stated a news release.

Tale of Two COPAs

On its website, the Tennessee Department of Health describes a COPA as a “written approval by the Tennessee Department of Health (TDH) that governs a Cooperative Agreement (a merger) among two or more hospitals. A COPA provides state action immunity to the hospitals from state and federal antitrust laws by replacing competition with state regulation and Active Supervision. The goal of the COPA process is to protect the interests of the public in the region affected and the State.”

However, in its news release, the FTC described COPAs as “regulatory regimes adopted by state governments intended to displace competition among healthcare providers,” and said that, “COPAs purport to immunize mergers and collaborations from antitrust scrutiny under the state action doctrine. FTC staff are engaged in an ongoing policy project to assess the effects of COPAs, which includes the study of COPAs recently approved for Ballad Health in Tennessee and Virginia, and Cabell Huntington Hospital in West Virginia.”

In its 32-page “Order to File Special Report,” the FTC required the two healthcare organizations to provide “aggregated patient billing and discharge data; health system employee wage data; and other information relevant for analyzing the health systems’ prices, quality, access, and innovation,” the news release states.

The five health insurers required to respond to the FTC’s order included:

  • Aetna, Inc.
  • Anthem, Inc.
  • BlueCross BlueShield of Tennessee
  • Cigna Corporation
  • United Healthcare

From these insurers, the FTC required “patient-level commercial claims data,” states the news release.

Is the FTC conducting a study to determine if mergers and acquisitions are giving pricing power to hospitals at the expense of health insurers and patients? The FTC said that it plans to report the study’s findings, as appropriate, and use information to better understand COPAs, inform advocacy, and guide states involved in COPAs, the news release states.

“In the big picture, the FTC is potentially looking out for buyers. In this case, the insurers are the buyers. It’s the health systems that, if the FTC concludes that COPAs are bad for consumers, it would be the hospitals that would stand to lose,” Jonathan Grossman, antitrust attorney and partner at international law firm Cozen O’Conner, told Modern Healthcare. (Photo copyright: Cozen O’Connor.)

What Are COPAs and Do They Circumvent Antitrust Laws?

In a statement, the American Hospital Association (AHA) said COPA laws allow merging providers to make agreements that “might otherwise be subject to antitrust scrutiny.” COPA laws are coming about, AHA added, due to the FTC’s “overly harsh treatment of efficiencies claims made by merging hospitals.”

Big Data Order from FTC

In its order, the FTC required the health systems, providers, and insurer to provide massive amounts of information by January 1, 2020, including:

  • Patient records related to admissions, outpatient visits, skilled nursing visits, hospice, and other care in the COPA market since Jan 1, 2011;
  • Billed charges, diagnosis codes, and insurance coverage for the records;
  • Inpatient admissions, Jan. 1, 2011 to the present, aggregated on a monthly basis;
  • Data computed separately for Medicaid, Medicare, commercial, and other patients;
  • Patient totals, their billed charges, and payment by insurers and patients;
  • Changes in prices since Jan 1, 2011, which Modern Healthcare said is an effort to find “efficiencies, cost savings, and benefits as a result of COPAs”;
  • Facilities the provider opened, closed, or expanded since Jan. 1, 2011;
  • Changes in ownership and select capital investments;
  • Copies of health plan contracts effective since Jan. 1, 2011;
  • Salary, hours, and benefits of each person employed since Jan. 1, 2011;
  • And more.

Should Clinical Laboratory Leaders Be Concerned?

Medical lab leaders within hospital multi-lab systems will want to take note of the FTC’s interest in so much information. It was just a few years ago when US Senators Chuck Grassley and Max Baucus asked medical laboratory testing companies and health insurers for similar information, notes a 2011 news release from the office of Iowa Senator Chuck Grassley. Dark Daily reported on this in a November 2011 e-briefing.

The lab testing companies were:

  • Quest Diagnostics Incorporated (NYSE:DGX)
  • Laboratory Corporation of America (NYSE:LH)
  • UnitedHealth Group, Inc. (NYSE:UNH)
  • Aetna, Inc. (NYSE:AET)
  • Cigna Corp. (NYSE:CI)

According to the news release, Senators Baucus and Grassley requested “information about a practice where insurers receive discounted pricing from labs in exchange for referrals, including testing for Medicare beneficiaries.” In the letters to the lab companies, the senators described this pricing practice as “pull-through.”

Lab leaders also may recall the federal Department of Health and Human Services (HHS) collecting payment data in 2011 from 50 state Medicaid programs as part of a report on Competitive Bidding for Medicare Part B clinical laboratory services. 

Could the FTC’s data request lead to other agencies taking steps that limit how providers set prices and reach out to markets, including clinical laboratories?

Put Prices Out There, President Says

Perhaps all this data collection is about price transparency in healthcare. The Trump Administration took action on healthcare price and quality transparency through the Improving Price and Quality Transparency in American Healthcare executive order. Under the order, the CMS has released two rules requiring hospital pricing information to be publicly available, noted a statement by the HHS.

So, there is a lot of data being shared. It is likely the FTC will share data it collects with other federal healthcare regulatory bodies as well. Therefore, medical laboratory managers would be well advised to stay abreast of mergers and acquisitions in their markets and be ready for future information requests from federal authorities.   

—Donna Marie Pocius

Related Information:

FTC to Study the Impact of COPAs: The Commission Issues Seven Orders for Provision of Information

Health Systems Unlikely to Prevail If They Challenge FTC’s COPA Demands

FTC Orders Health Systems, Insurers to Provide Data for COPA Study

FTC Likely to Prevail in Demands That Health Systems Report Information on Certificates of Public Advantage

AHA Comments for FTC Workshop on Certificates of Public Advantage

A Health Check on COPAs: Assessing the Impact of Certificates of Public Advantage in Healthcare Markets

FTC Issues Sweeping Demands for Information on Providers, Insurers

Grassley, Baucus Scrutinize Practice by Health Insurers and Testing Labs

Congressional Request on Healthcare Provider Consolidation

Hospital Merger Benefits: Views from Hospital Leaders and Econometric Analysis—An Update Report  

Executive Order on Improving Price and Quality Transparency in American Healthcare

Trump Administration Announces Historic Price Transparency and Lower Healthcare Costs for All Americans

Comparing Lab Test Payment Rates: Medicare Could Achieve Substantial Savings