DOJ’s OhioHealth antitrust settlement affects payer contracts

The U.S. Department of Justice and OhioHealth have settled antitrust litigation that hinged on allegations concerning the health system’s contracting practices.

A June 16 filing with the Southern District of Ohio federal court states that the parties, which also include the state of Ohio, reached a consent decree in which OhioHealth does not admit wrongdoing nor pays penalties or damages, but does agree to avoid engaging in the disputed actions. The idea is for insurers in and around the Columbus, Ohio, market to have increased ability to offer narrower and lower-cost health plans.

Per federal rules regarding consent decrees in antitrust cases, the proposed settlement and a competitive impact statement must be published in the Federal Register and subject to a 60-day public comment period.

A DOJ case bringing comparable allegations against NewYork Presbyterian remains pending, with a pretrial conference scheduled for June 25. The OhioHealth settlement is reminiscent of a 2016 settlement with Atrium Health (then called Carolinas HealthCare System) over similar legal claims.

The parties react to the settlement

By settling, OhioHealth avoids the costs and disruptions of potentially lengthy litigation and prevents the business uncertainty associated with a government challenge to its operations.

The litigation and proposed settlement “are part of the [DOJ] Antitrust Division’s ongoing enforcement efforts to promote competitive healthcare markets,” the department stated in a news release.

OhioHealth issued a statement saying the contracting practices “were and are lawful and appropriate.”

“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,” per the statement. “Since then, both the healthcare and insurance landscapes have changed. 

“OhioHealth periodically renegotiates these contracts with various payers in a highly competitive market. Payers have always retained flexibility in designing and offering healthcare plans to meet the needs of employers and consumers. Notably, no insurer had requested that OhioHealth remove any of the provisions that were the focus of the lawsuit.”

What the DOJ’s OhioHealth settlement would require

The DOJ alleged that OhioHealth used anticompetitive contract provisions to prevent patients from being steered toward potentially lower-cost or higher-quality health systems. Contract language also hampered insurers in designing narrow or tiered network plans that excluded OhioHealth or placed the health system on a less favorable tier. Insurers also allegedly were prohibited from sharing pricing information with purchasers and physicians.

Per the settlement, OhioHealth cannot implement anti-steering or anti-tiering clauses, nor use provisions that stymie price transparency. Forbidden approaches include demanding to be placed in an insurer’s most preferred tier and retaliating against insurers that design cost-conscious benefit plans. The settlement filing includes examples of contractual language that is barred going forward (e.g., language authorizing OhioHealth to obtain higher prices if an insurer excludes the health system from a network or places it in a lower-tier plan).

OhioHealth “welcomes the opportunity to promote transparency around how our patients and their insurance pay for healthcare,” the organization said in its statement.

The health system appeared to receive some accommodations in the settlement. For example, it still can negotiate participation in preferred tiers. Also allowed are steering restrictions within narrow networks where OhioHealth is the featured provider, and confidential pricing information does not have to be shared with competitors.

Compliance obligations under the proposed settlement

The settlement is set to span five to 10 years, with the DOJ having discretion on the length. The department can reopen the case over the next five years if violations continue.

Compliance requirements for OhioHealth include notifying all relevant insurers of the settlement within 15 business days and distributing the settlement to the organization’s directors, C-suite officers and contracting staff. The health system also must file compliance affidavits every 45 days until stipulations are met, and quarterly reports over a five-year period with respect to new or amended payer contracts.

OhioHealth also must pay for a court-appointed compliance monitor for five years, with the monitor allowed access to the health system’s staff, contracts and records. The monitor will report directly to the DOJ and the State of Ohio.

What hospitals should track

Health systems around the country should draw lessons from the OhioHealth and NYP cases, legal experts have said.

“Healthcare systems with significant regional market share may face increased antitrust risk where their payer agreements are viewed as limiting consumer choice or impeding the development of lower-cost insurance products,” healthcare attorneys with Manatt wrote in an analysis in March.

Another concern for hospitals that potentially face similar legal claims is the possibility of related litigation brought by insurers, attorneys with Morgan Lewis wrote in a prior analysis. In New York City, NYP recently has faced lawsuits by two labor unions over allegations that the health system uses its market power to levy anticompetitive contract terms on insurers and employers (although those lawsuits predate the DOJ’s case).

“Hospitals and health systems should be aware of the risk that government enforcement actions may prompt subsequent private antitrust suits based on the same conduct,” the Morgan Lewis analysis states.