Health systems on the receiving end of the Federal Trade Commission's demands for information on certificates of public advantage this week aren't going to have much luck if they attempt to contest the orders, legal experts say.
Federal regulators are requesting a considerable amount of information from two health systems and five health insurers to inform its study into COPAs' effects on price, quality, access and healthcare innovation. One of those systems, Ballad Health, seemed to indicate it might challenge the demand, citing the state immunity afforded under its COPA, a maneuver that allows states to approve mergers that may otherwise have been blocked in federal antitrust action.
Section 6(b) of the Federal Trade Commission Act, which the FTC cited in its information demands, gives the agency broad investigative authority to demand information from companies for research purposes.
"Courts have upheld a broad ability for the FTC to demand this kind of information," said Erin Fuse Brown, associate professor in Georgia State University's College of Law.
That section is separate from the FTC's enforcement authority, which it uses to challenge deals it determines are anticompetitive. The state action immunity afforded to health systems under COPAs helps them dodge the FTC's enforcement authority, but does not apply to its investigative authority, Fuse Brown said.
It's no secret the FTC is no fan of COPAs. The agency publicly opposed both Ballad's COPA and that of Cabell Huntington Hospital in Huntington, W.Va., which also received a demand letter.
"Even if the FTC might not have the authority to block the transactions which they're investigating, they still have the authority to investigate the effects of those transactions," said Jonathan Grossman, an antitrust attorney with Cozen O'Conner.
In a statement, Johnson City, Tenn.-based Ballad said it was reviewing the FTC's request "within the context of the actions of two legislatures and two governors of two different parties that passed legislation specifically asserting state action immunity." A spokeswoman declined to say how Ballad plans to respond, as did a spokeswoman for Cabell Huntington.
The health insurers aren't likely to contest the demand letters, Grossman said. If anything, they're glad the FTC is investigating the issue, he said.
"In the big picture, the FTC is potentially looking out for buyers," Grossman said. "In this case, the insurers are the buyers. It's the health systems that, if the FTC concludes that COPAs are bad for consumers, it would be the hospitals that would stand to lose."
Aetna, Anthem, Blue Cross and Blue Shield of Tennessee, Cigna Corp. and UnitedHealthcare received the letters.
"We are definitely going to comply with the request," Alison Sexter, a spokeswoman for Blue Cross and Blue Shield of Tennessee, wrote in an email. Hers was the only company that responded to a request for comment.
The scope of the information the FTC is demanding is extensive, dating as far back as Jan. 1, 2011. From providers, it wants records related to all inpatient admissions from Jan. 1, 2011, to the present, separated by payer and including total charges and amounts paid, among other details.
The agency also wants providers to send pricing changes dating back to Jan. 1, 2011, as well as quality of care and population health initiatives. Other information sought are health plan contracts and salary information since Jan. 1, 2011, and lists of healthcare facilities open, closed or expanded since Jan. 1, 2011.
From insurers, the FTC is demanding a long list of patient records in the COPA coverage areas dating back to Jan. 1, 2011, including billed charges, diagnosis codes and insurance coverage
An FTC spokesperson wrote in an email that some of the demands date back to 2011 to capture information for the time before the mergers were announced in 2014 and the COPAs were implemented in 2018, to allow the FTC to compare pre-merger and pre-COPA environments with the COPA environment.
The deadline to send the information is Jan. 21, 2020. The FTC's letters say noncompliance penalties may be imposed. If a company opposes the demand, a court would ultimately determine whether it has to provide the information.
Bill Horton, a partner with Jones Walker and co-chair of its healthcare industry team, said he thinks data going that far back would introduce a certain amount of noise from other changes, like implementing Affordable Care Act requirements. He wondered whether the burdensome requests are in part an effort to make an example of these providers.
"The timing does make it look like a little bit of a slap at the deal rather than a spontaneously occurring research interest," he said.
But Fuse Brown said that the FTC would need to go back that far in time in order to draw conclusions about the COPAs' effects.
"We need it going back quite a ways and going forward quite a ways to draw any conclusions about COPAs," she said, "and see whether they affect price, quality and access and how a market functions before and after a COPA."
The health systems may try to negotiate narrower information requirements with the FTC, and the agency said in a statement it "fully expects to work collaboratively with special order recipients to minimize their burdens consistent with the commission's need to obtain information for this study."
The FTC indicated it planned to study COPAs at a June workshop where some panelists aired concerns about the Ballad merger. Richard Cowart, an attorney representing Ballad, said at the event that a federal government study on the subject "is bordering on irresponsible, frankly."
Ballad has found itself at odds with community members ever since its inception through the 2018 merger of Mountain States Health Alliance and Wellmont Health System. The health system swiftly rolled out changes to consolidate high-level trauma and neonatal intensive-care services at its Johnson City hospital, and critics say the changes have prompted unsafe conditions, staff shortages, long waits and heftier bills.
Ballad CEO Alan Levine took to Twitter after the FTC issued its demand letter to champion state's rights. But his posts stopped short of saying he planned to contest the demand.
"We plan to help but won't bend on states (sic) rights," he said.