Carolinas HealthCare System, North Carolina's largest hospital chain, has filed a motion asking a federal court to dismiss a U.S. Justice Department lawsuit alleging the system illegally imposes contract requirements on insurers to hinder competition.
The health system also filed a 15-page brief along with the motion. In the brief, the health system denied the DOJ's claims that contracts with insurers prevent them from entering into agreements with other systems or that it uses its market power to stop insurance companies from entering into other agreements.
The health system argues in the motion that its competitors “actively, regularly and intensely compete with (Carolinas) for patients on a range of matters including price, services, location and quality.”
The 10-hospital system did admit, however, that it has tiered networks with insurers that “control the vast majority of the commercial insurance market.” The system also admits that the narrow networks “generally constrict health plan members' options by including fewer choices of providers historically in exchange for lower premiums.”
Carolinas includes narrow network agreements with four insurers that make up more than 85% of commercially insured residents in the Charlotte area, according to the Justice Department. The insurers are Aetna Health of the Carolinas, Blue Cross and Blue Shield of North Carolina, Cigna Healthcare of North Carolina and United Healthcare of North Carolina.
In a complaint filed in June, the Justice Department alleges that Carolinas places restrictions in its contracts with insurers that bar them from offering tiered networks that include competing hospitals.
The Justice Department claims the alleged contract restrictions violate antitrust law and will lead to higher costs for patients.
In a prepared statement, the system said, “We disagree with the government's claims that Carolinas 'imposed' any contractual terms on these sophisticated insurance companies in agreements that, in some cases, have existed for over a decade.”
Carolinas, a not-for-profit system based in Charlotte, is the dominant system in the area with about a 50% share of the relevant market and 2014 revenue of about $8.7 billion, according to the complaint.
