The Antitrust Division of the Department of Justice announced on April 26, 2010, that it would not challenge a proposal to establish an information exchange program designed to provide data on the relative costs and resource efficiency of more than 300 hospitals in California. According to its proponents, the proposal – dubbed the Hospital Value Initiative (HVI) – complements ongoing hospital quality measurement initiatives by improving transparency with respect to the cost and quality of hospital services and allowing consumers to make more informed decisions when purchasing hospital services.

Under the proposal, HVI – using a third party – will collect and aggregate claims data that five payors (collectively accounting for approximately 67 percent of all HMO and PPO health insurance enrollment in California) receive from the 330 participating hospitals (representing more than 70 percent of the hospitals in California). The collected claims data will include a hospital's "Allowed Amount" for a given service – the total amount the hospital receives from a payor and its insured for a service. Using this and other information, HVI will provide index scores that allow comparisons of the hospitals' costs and relative efficiency.

The key metrics that HVI will develop include a "Buyer Cost Index" (BCI), which compares a given hospital's charges for providing a specified service with the average charges for providing the same service at the participating hospitals, and a "Resource-Use Efficiency" (RUE) score, which identifies a hospital's resource utilization levels on a per "bed-day" basis for given types of procedures. Each participating hospital will receive its own BCI score and a Regional BCI score that is the average of the BCIs for all hospitals in their HVI Region. Additionally, payors will receive BCI scores for each participating hospital. Hospitals will not, however, be able to determine competitors' prices, nor will payors be able to obtain data about a competitor payor. Additionally, by the time the information is aggregated and reported, the data will be at least 10 months old.

The Department of Justice concluded that HVI's operation was not likely to facilitate express or tacit collusion or otherwise reduce competition among the recipients of the data. Instead, the government determined that by facilitating the collection and analysis of the relative costs and utilization rates of hospitals in California, payors and employers would be able to make more informed decisions when purchasing hospital services. In arriving at this conclusion, the government specifically acknowledged that the proposal was unlikely to fall within the zone of safety outlined in Statement 6 of the Health Care Statements. Nevertheless, the Department of Justice concluded that HVI's operation was permissible because:

  1. no participating hospital, payor or group purchaser will have access to the raw claims data submitted by any other participant or to any of the other disaggregated data collected;
  2. the reports provided by HVI will not disclose the prices that any participating hospital charges for its services;
  3. recipients of the HVI reports will not be able to reverse engineer the data that they receive to determine the rates paid by any particular payor or charged by any hospital; and
  4. the resource utilization scores are not based on the actual pricing data of any participating hospital and therefore there is no danger of disclosing hospital-specific service prices.

Discussion

Health care providers frequently are asked to participate in formal or informal surveys or other exchanges of data and information. Absent proper structuring, such activities can constitute an unlawful agreement to restrain competition, or can be construed as evidence that the participants are engaged in a broader arrangement to fix or stabilize prices or wage rates.

In 1996, the Department of Justice and the Federal Trade Commission published their Statements of Antitrust Enforcement Policy in Health Care, in which the agencies defined a safe harbor for exchanges of price and cost information by health care providers.1 In general, the agencies took the position that participation in surveys and data exchanges does not necessarily raise antitrust concerns and can have competitive benefits by increasing the information available to purchasers and providers. The agencies stated that, absent extraordinary circumstances, they would not challenge provider participation in written surveys if: (i) the survey is managed by a third party; (ii) the information provided through the survey is at least three months old; and (iii) there are at least five participants in the survey for each reported statistic and no individual participant's data represent more than 25 percent of any reported statistic and, in any event, the data are sufficiently aggregated to prevent the identification of any individual participant's data.

The HVI opinion is largely consistent with the concepts described in the Statements and reaffirms that any such activities must have proper control mechanisms in place. The opinion comes at a time when interest in large-scale information gathering and analysis is likely to increase in the wake of health reform. Because of the risks associated with these programs, providers should consult with counsel when contemplating participation in any formal or informal surveys or other exchanges of competitively-sensitive information.

Footnote

1. United States Department of Justice and Federal Trade Commission, Statements of Antitrust Enforcement Policy in Health Care (1996) (Statement No. 6: Enforcement Policy on Provider Participation in Exchanges of Price and Cost Information).

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