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Department of Justice withdraws long-standing health care policy statements

Authors

Courtney Bedell Averbach, William J. Sheridan, Edward B. Schwartz, Michelle A. Mantine, Leah E. Hungerman, Christopher R. Brennan
On February 3, 2023, the Antitrust Division (the Division) of the Department of Justice (DOJ) withdrew three antitrust policy statements related to enforcement in the health care industry, which it called “outdated”: Department of Justice and FTC Antitrust Enforcement Policy Statements in the Health Care Area (Sept. 15, 1993); Statements of Antitrust Enforcement Policy in Health Care (Aug. 1, 1996); and Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program (Oct. 20, 2011). These now withdrawn statements provided antitrust “safety zones” for certain conduct by health care companies, including the exchange of certain price and cost information. The policy statements similarly provided “safety zones” from federal challenge covering certain hospital mergers, joint ventures, the joint purchasing of medical equipment through a joint venture, collaborations between health care providers and physician networks, certain exchanges of information between health care companies, group purchasing organizations, and the conduct of accountable care organizations participating in the Medicare Shared Savings Program. The Division provided no indication that it will replace the now withdrawn guidance.

The Division said that the policy statements, dating back to 1993, were “overly permissive” on subjects such as information sharing. The statements included safe harbors for the sharing of “non-price information” between physicians and insurers, as well as for the sharing between hospitals of aggregated price and cost information about services, wages, salaries, or benefits for personnel. At the time of the statements, enforcers believed the “safety zones” were consistent with promoting the procompetitive benefits of collaboration.

The Federal Trade Commission (FTC), which jointly issued the statements with the Division, has not yet formally withdrawn these statements. Given the FTC’s expansive policy goals, which include improving compliance with the Hart-Scott-Rodino Premerger Notification Act in conjunction with the Division and enhancing collaboration with domestic agencies to check unfair methods of competition, it will come as no surprise if that agency ultimately withdraws its support for the policy statements.

Notably, the Division did not replace these policy statements, pointing companies instead toward recent enforcement actions to provide guidance. Further, the Division stated that a “case-by-case approach” will now lead its evaluation of mergers and conduct in health care markets in an effort to better “reflect modern market realities.” Facing newfound uncertainty, health care companies now must evaluate antitrust risk using previous enforcement actions and cases, while carefully considering future mergers and conduct in terms of the procompetitive benefits and potential anticompetitive effects. Companies may also need to reconsider current operations or ventures that may have been developed in reliance on the Division’s policy statements.

The withdrawal of these statements is expected to have an impact beyond the health care sector. The DOJ and FTC’s Antitrust Guidelines for Collaborations Among Competitors and Antitrust Guidance for Human Resource Professionals are examples of agency guidance that relies on the now withdrawn health care policy statements.

Reed Smith will continue to monitor the antitrust agencies’ health care policy through our substantive antitrust, merger control, and compliance initiatives. For more details on our global antitrust practice, visit the Reed Smith website.

Client Alert 2023-037

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