Share this e-Alert:

Polsinelli - Antitrust Polsinelli - Antitrust Polsinelli - Antitrust Polsinelli - Antitrust Polsinelli - Antitrust Polsinelli - Antitrust Polsinelli - Antitrust
         

  

August 2016

  

Mega-Mergers Highlight Risk to Health Care Providers

  

 
 

  

     

  

 
 

For more information about this e-Alert, please contact:

  

Herbert F. Allen

202.626.8307

Email | Bio

  

Mitchell D. Raup

202.626.8352

Email | Bio

  

To learn more about our Antitrust practice, to contact one of our attorneys, or for more Antitrust Intelligence, click here.

  

  


Polsinelli - Antitrust Polsinelli - Antitrust Polsinelli - Antitrust Polsinelli - Antitrust View Polsinelli documents on JD Supra  

SUBSCRIBE

LinkedIn Twitter Facebook Polsinelli Podcast
   

Consolidation in health insurance markets can injure hospitals and doctors by creating buyer-side market power that can force providers to accept below-market prices, limit patients' access to care, and reduce innovation in health care financing and delivery. In two recent lawsuits challenging the proposed Anthem/Cigna and Aetna/Humana mergers, the Antitrust Division of the US Department of Justice ("DOJ") reaffirmed that antitrust law needs to protect providers from monopsony, not just protect insurance buyers from monopoly.

The suits will allow the DOJ and the courts to further develop the legal and factual basis for challenging insurance company mergers on a monopsony theory, which may help protect providers in these and future cases.

Monopsony is the power of a large buyer to pay less than the competitive price for the services that it buys. Health insurer monopsony can harm health care providers. It can also harm patients by reducing the quality or availability of health care services, as providers provide fewer services or exit the market in response to below-market prices. The DOJ has challenged health insurer mergers on a monopsony theory in two previous cases: Aetna/Prudential (1999) and United/PacifiCare (2005), both of which resulted in consent decrees requiring the insurers to divest health insurance businesses to reduce their market shares below monopsony levels. A pending multidistrict litigation, In Re: Blue Cross Blue Shield Antitrust Litigation, No. 2:13-CV-20000-RDP (N.D. Ala.), asserts claims for damages caused by monopsony on behalf of an alleged class of providers nationwide.

On July 21, the DOJ and several state attorneys general filed two lawsuits, challenging the Anthem/Cigna and Aetna/Humana mergers as violations of 7 of the Clayton Act, which prohibits mergers that may substantially reduce competition. The cases are similar, but have important differences that are relevant to the monopsony theory.

Both complaints describe the proposed mergers as consolidation of the "big five" insurers to the "big three, each of which would have almost twice the revenue of the next largest insurer." Both complaints say the mergers will harm competition by "eliminating two innovative competitors Humana and Cigna at a time when the industry is experimenting with new ways to lower healthcare costs."

The cases are different in that they focus on different product markets. The Anthem/Cigna complaint alleges that that merger will restrain competition in the "purchase of healthcare services by commercial health insurers," as well as the sale of commercial health insurance to national accounts and large-group employers, and the sale of individual policies on the public insurance exchanges. The Aetna/Humana complaint alleges anticompetitive effects only in the sale of Medicare Advantage policies to individual seniors, and the sale of individual policies on the public insurance exchanges. The Aetna complaint does not charge a violation in the market for the purchase of healthcare services, and therefore does not rely on a monopsony theory.

To view the key allegations in support of the DOJ's monopsony theory in the Anthem/Cigna complaint, please click here.

What Providers Need to Know:

To veiw the full content of What Providers Need to Know, please click here.

To view or download the full alert, please click here.

For More Information

For questions regarding this information, please contact one of the authors, a member of Polsinelli’s Antitrust practice, or your Polsinelli attorney.

  


  

 
             

 

  

     

  

 
 

Atlanta  Boston  Chattanooga  Chicago  Dallas  Denver  Houston  Kansas City  Los Angeles  Nashville  New York
Overland Park  Phoenix  Raleigh  St. Joseph  St. Louis  San Francisco  Washington, D.C.  Wilmington
polsinelli.com

 
 

  

     

  

 
 

  

ABOUT POLSINELLI

real challenges. real answers.SM  
Polsinelli is an Am Law 100 firm with more than 800 attorneys in 19 offices, serving corporations, institutions, and entrepreneurs nationally. Ranked in the top five percent of law firms for client service*, the firm has risen more than 50 spots over the past five years in the Am Law 100 annual law firm ranking. Polsinelli attorneys provide practical legal counsel infused with business insight, and focus on Antitrust, financial services, real estate, intellectual property, mid-market corporate, and business litigation. Polsinelli attorneys have depth of experience in 100 service areas and 70 industries. The firm can be found online at www.polsinelli.com. Polsinelli PC. In California, Polsinelli LLP.

* 2016 BTI Client Service A-Team Report

  

 
 

  

     

  

 
 

Polsinelli provides this material for informational purposes only. The material provided herein is general and is not intended to be legal advice. Polsinelli is very proud of the results we obtain for our clients, but you should know that past results do not guarantee future results; that every case is different and must be judged on its own merits; and that the choice of a lawyer is an important decision and should not be based solely upon advertisements.

Copyright © 2016 Polsinelli PC.

 
             
Connect with us on LinkedIn. Connection with us on Twitter. Connect with us on Facebook. Polsinelli Antitrust Antitrust