The U.S. Department of Justice and the Missouri attorney general's office have started to investigate potential antitrust violations in the Cape Girardeau, Mo., healthcare market, MODERN HEALTHCARE*has learned.
"We were notified this week that they (the Justice Department) are going to proceed with it, and it's the highest priority," said Gary Kraus, Missouri assistant attorney general.
A spokeswoman for the Justice Department declined to confirm or comment on the investigation.
Scott Holste of the state attorney general's office said the investigation concerns managed care, specifically Med America Health Network. That's a super-physician-hospital organization comprising five local hospitals and their medical staffs.
The PHO formed a partnership with Blue Cross and Blue Shield of Missouri to market a point-of-service HMO product called HealthNet Blue. It now has 23,000 covered lives.
Cape Girardeau, population 34,000, is served by two hospitals, 258-bed Southeast Missouri Hospital and 264-bed Saint Francis Medical Center. The three other hospitals in the super-PHO are 148-bed Missouri Delta Medical Center in Sikeston, 55-bed Perry County Memorial Hospital in Perryville and 50-bed Dexter (Mo.) Memorial Hospital.
The local business community and public employers contend they are paying high prices for health services and insurance premiums in a region where the cost of living is substantially below the national average, sources said. They want to have managed-care options for their employees.
John Fidler, president of Saint Francis, said he was unaware of any state or federal investigation of the Cape Girardeau market.
He said the hospitals contract with outside managed-care companies through the super-PHO. They also are willing to contract separately with managed-care companies that don't wish to rent the entire network.
Healthcare costs in the area, Fidler added, aren't high compared with the rest of Missouri.
HealthNet Blue is a product of RightChoice Managed Care in St. Louis, which is the for-profit, publicly traded subsidiary of Blue Cross and Blue Shield of Missouri.
"We develop the product, do the marketing and the claims and customer service operations," said Jim Floyd, RightChoice spokesman. "The PHO is the network."
Floyd said RightChoice has no knowledge of any investigation.
Mary Dunn, executive director of the Southeast Missouri Business Group on Health, said: "We are cooperating with the attorney general and with the Justice Department any way we can. They contacted us and asked us to cooperate based on some complaints they had received."
Dunn declined to say who the complainants were but added, "My understanding is those complaints came from a variety of sources outside and inside the community."
Kraus said investigators have just begun collecting information relating to both federal and state statutes. "We just don't know which laws have been violated yet," he said. "We're in fact-finding. We have to see what happened first."
Richard Raskin, an antitrust lawyer with Sidley & Austin, a Chicago firm not involved in the matter, said: "Regional PHOs are becoming increasingly widespread. I'm sure this case will be closely watched by everyone in the industry."