At a time when consolidation in the health care field is raising concerns about a lack of competition, the Federal Trade Commission (FTC) is taking a new look at a regulatory program that eases restrictions on some health system mergers.

At issue is a regulatory system called certificates of public advantage (COPAs), which shield some mergers—mostly in rural areas—from antitrust laws, while setting up state oversight of the organizations.

In an Oct. 21 announcement, FTC officials said they are seeking to study the effects of COPAs on prices, quality, access, and innovation of health care services. The FTC added that it would also study the impact of hospital consolidation on employee wages.

The agency ordered five insurers; Aetna, Anthem, BlueCross BlueShield of Tennessee, and Cigna Corporation to cooperate in the investigation. In addition, two health systems, Ballad Health in Tennessee and Cabell Huntington Hospital in West Virginia will also be part of the review. "These orders seek aggregated patient billing and discharge data; health system employee wage data; and other information relevant for analyzing the health systems' prices, quality, access, and innovation," the FTC said in its statement.

Protecting rural providers—but are players taking advantage?

The COPA systems were seen as way to help rural health providers combine efforts without running afoul of federal anti-trust laws. Since there was little competition in some areas, regulators allowed states to create COPAs and provide oversite at the state level.

However, it seems that FTC officials are questioning whether the arrangements have become too common or provided too many opportunities to stifle competition. Last June, the FTC held a conference workshop titled, "A Health Check on COPAs," part of a wider COPA assessment effort launched in 2017.

"States are increasingly using COPAs to allow certain hospital mergers to proceed despite clear antitrust concerns, with the assumption that state regulatory oversight will mitigate the effects resulting from the elimination of competition and allow the hospitals to achieve certain efficiencies," the FTC said in June. "The FTC is interested in developing a better understanding of the actual benefits and harms associated with COPAs."

Ballad Health merger under scrutiny

Ballad Health's merger has become controversial in Tennessee and Virginia, as residents protest the closing or downsizing of facilities that rural communities have depended on. Facing South, an online news and advocacy website, recently described how protesters have camped out at Holston Valley Medical Center in Kingsport, Tennessee, for more than 170 days. The protest is over the closing of a Neonatal Intensive Care Unit and the downgrading of the hospital's trauma center. The moves come after the Ballad merger, which combined the two largest health care systems in a rural region of northeastern Tennessee and southwestern Virginia.

Industry observers say the Ballad merger might end up similar to a COPA merger in North Carolina, which created Mission Health. After that system grew to a larger size, it successfully lobbied the state to end the COPA arrangement, leaving the system as the region's dominant provider—and allowing it to be acquired by a large for-profit health system, HCA Healthcare.

According to the Facing South report, health care prices went up across the region because Mission had no competition. "'All of the worst consequences of hospital monopoly immediately burst out in the open,' said Erin Fuse Brown, a legal scholar at Georgia State University who has studied the Mission and the Ballad mergers," the article said.

The FTC study may shed more light on such mergers, but not soon: the agency expects the review to take several years. "Once the study is complete, the FTC intends to report publicly the study's findings in a manner that is consistent with the FTC's confidentiality rules," the agency said. "This project will enhance the agency's knowledge of COPAs and inform future advocacy and enforcement. It will also serve as a resource for state governments and stakeholders who may be considering using COPAs."

Read more:

Instant Insights /

COPAs becoming too hot? FTC orders a review of insurers and systems

More From HR Executive

Related Stories

Recommended For You