The Department of Justice announced today that it has reached a settlement with Atrium Health, formerly known as Carolinas HealthCare System (“Atrium”). The settlement prohibits Atrium from using anticompetitive steering restrictions in contracts between commercial health insurers and its providers in the Charlotte, North Carolina metropolitan area. If approved by the Court, today’s settlement resolves over two years of civil antitrust litigation challenging Atrium’s use of steering restrictions that prevent health insurers from promoting innovative health benefit plans and more cost-effective healthcare services to consumers.
“With healthcare costs rising, vigilant antitrust enforcement is an essential tool for protecting consumers,” said Assistant Attorney General Makan Delrahim. “By eliminating restrictions that curb comparison shopping and interfere with competition among healthcare providers, today’s resolution of our antitrust action allows consumers in the Charlotte area to benefit from competition when making critically important healthcare choices.”
In June 2016, the Department filed a civil antitrust lawsuit against Atrium challenging provisions that prohibit steering in the hospital system’s contracts with major health insurers. Steering is a method used by insurers to offer consumers options to reduce some of their healthcare expenses. As alleged in the complaint, insurers are increasingly designing health benefit plans that give patients financial incentives to choose more cost-effective hospitals and physicians. Increased consumer access to these health benefit plans invigorates competition between providers to offer lower premiums and better overall healthcare services.
The Department alleged that Atrium, the dominant hospital system in the Charlotte area, used its market power to restrict health insurers from encouraging consumers to choose healthcare providers that offer better overall value. The restrictions also constrained insurers from providing consumers and employers with information regarding the cost and quality of alternative health benefit plans.
“Competition encourages healthcare providers to reduce costs, lower prices, and increase quality,” said Assistant Attorney General Makan Delrahim. “Atrium’s steering restrictions interfered with the competitive process, resulting in fewer choices and higher costs for consumers.”
“The resolution of this antitrust enforcement action gives Charlotte-area consumers what they did not have before: the ability to receive the appropriate, high-quality treatment they need, from a healthcare provider they choose, at a fair price,” said U.S. Attorney for the Western District of North Carolina, R. Andrew Murray. “Today’s enforcement action will restore competition in the Charlotte area, resulting in lower healthcare costs and increased healthcare access for consumers and their families.”
The proposed settlement, in which the U.S. Department of Justice was joined by the North Carolina Attorney General’s Office, was filed today in the U.S. District Court for the Western District of North Carolina. The proposed settlement prevents Atrium from enforcing steering restrictions in its contracts with health insurers. It also bars Atrium from seeking contract terms or taking actions that would prohibit, prevent, or penalize steering by insurers in the future.
Atrium is North Carolina’s largest healthcare system and one of the largest not-for-profit healthcare systems in the United States. Atrium’s flagship facility is Carolinas Medical Center, the largest hospital in North Carolina. Atrium also operates eight other general acute-care hospitals in the Charlotte area and owns, manages, or has strategic affiliations with more than 40 hospitals in the Carolinas. Atrium provides healthcare services throughout the Carolinas, including in freestanding emergency departments, urgent care centers, physician practices, outpatient surgery centers, imaging centers, nursing homes, and laboratories. In 2017, Atrium’s owned, managed, and affiliated hospitals and other healthcare providers earned net operating revenue of close to $10 billion.
As required by the Tunney Act, the proposed settlement and the Department’s competitive impact statement will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Peter J. Mucchetti, Chief, Healthcare and Consumer Products Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 4100, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the Western District of North Carolina may enter the proposed consent decree upon finding that it serves the public interest.