State's largest health care system slapped with antitrust suit

The U.S. Department of Justice is suing North Carolina’s largest health care system, saying it illegally imposes contract requirements on insurers that reduce competition.

Carolinas HealthCare System places restrictions in its contracts with insurers that bar them from offering tiered networks that include competing hospitals in its top tiers, the Justice Department and the state of North Carolina allege in a complaint filed Thursday. The system also forbids the insurers from offering narrow networks that include only its competitors in violation of antitrust law, according to the Justice Department.

Carolinas HealthCare System said in a statement Thursday that such arrangements with insurers are similar to others between insurers and health care systems across the country.

“We have neither violated any law nor deviated from accepted healthcare industry practices for contracting and negotiation,” the system said. “In fact, we have been applauded by the U.S. government for the quality care and cost reduction programs we’ve implemented, programs it hopes to model in other parts of the country.”

According to the complaint, the restrictions “impede insurers from providing financial incentives to patients to encourage them to consider utilizing lower-cost but comparable or higher-quality alternative healthcare providers.”

“Pushing medical costs artificially higher and limiting choices harms North Carolina families,” North Carolina Attorney General Roy Cooper said in a statement Thursday. “Consumers who need health care deserve accurate information and access to quality, affordable options.”

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.

Lisa Schencker writes for Modern Healthcare, a sister publication of Business Insurance.