DOJ withdraws three long-standing antitrust policy statements, leaving health care organizations in limbo

On February 3, 2023, the Antitrust Division of the U.S. Department of Justice (DOJ) withdrew three health care policy statements, which have provided antitrust enforcement guidance to various segments of the health care industry for the past few decades. In particular, the DOJ withdrew the (1) Department of Justice and FTC Antitrust Enforcement Policy Statements in the Health Care Area (September 15, 1993), (2) Statements of Antitrust Enforcement Policy in Health Care (August 1, 1996), and (3) Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in Medicare Shared Savings Program (October 20, 2011).

The 1993 and 1996 statements provided antitrust guidance for merging health care providers and hospitals in an effort to alleviate antitrust uncertainty in the industry. Those statements in part offered antitrust “safety zones” and guidance for certain health care operations, including 

1. merging hospitals, 
2. hospital joint ventures for high cost care or high cost equipment,
3. physicians’ provision of information to purchasers of health care services,
4. hospital participation in exchanges of price and cost information,
5. health care providers’ joint purchasing arrangements,
6. physician network joint ventures, and
7. multi-provider networks.

In short, if a merger, joint venture, or other activity qualified for a “safety zone,” then the DOJ and FTC were very unlikely to challenge it, “absent extraordinary circumstances.” And for joint ventures, mergers, or other activity outside of a safety zone, the statements provided steps and factors for additional analysis. Likewise, the 2011 statement provided similar safety zone and non-qualifying guidance for the formation and operation of Accountable Care Organizations under the Affordable Care Act. 

Simply put, the DOJ’s withdrawal terminates the “safety zones” for qualifying activity, without any replacement guidance now, or even indicated for the future, leaving joint venture operators and health care providers in limbo. Formerly “safe” mergers and joint ventures could now be subject to antitrust scrutiny. And without any formal guidance to replace the statements, it is unclear if the statements’ non-qualifying guidance still applies, as the DOJ may find that the provided steps of analysis are outdated.

Indeed, in their February 3 announcement, the DOJ stated that the three statements are “overly permissive on certain subjects, such as information sharing, and no longer serve their intended purposes of providing encompassing guidance to the public on relevant health care competition issues in today’s environment.” The DOJ reasoned that “[w]ithdrawal therefore best serves the interest of transparency with respect to the Antitrust Division’s enforcement policy,” and by returning to an across the board case-by-case approach, the DOJ believes it will be able to “better evaluate mergers and conduct in health care markets that may harm competition.”

In a contemporaneous February 2, 2023, speech, Deputy Principal Deputy Assistant Attorney General of the DOJ Antitrust Division, Doha Mekki, provided some additional insight. She attributed the withdrawal of the health care policy statements to (1) an “evolved” understanding of health care economics, largely as a result of the “data intensive industry that relies on the power of machine learning, artificial intelligence, and other advanced tools,” and (2) vertical integration, for example “insurance companies now own providers, PBMs [pharmacy benefit managers], health data analytics companies, and acute care clinics.” Deputy AAG Mekki also confirmed that although “[t]he Division is undertaking a review of our policy and guidance documents,” DOJ has “no immediate plans to replace” the withdrawn guidance.  

Because DOJ has substituted defined categories with ambiguity, health care providers need to be wary as they proceed with certain activities, including mergers, ongoing joint ventures, and information sharing. Although the DOJ’s brief February 3 announcement was unclear as to whether it had singled out information sharing as a specific focus for its efforts, Deputy AAG Mekki’s February 2 speech placed special emphasis on the “exchange of competitively-sensitive information.” 

She noted that “the structure of the industry involved,” was not limited to concentrated markets (“having five or more participants … is no guarantee that the exchange will not harm competition”), and “the nature of the information exchanged” remains a concern, particularly with “forward-looking, competitively-sensitive information.” Although data aggregation was once helpful in avoiding anticompetitive sharing, “[t]he safety zones were written at a time when information was shared in manila envelopes and through fax machines,” whereas the modern environment shares, analyzes, and uses data “in ways that would be unrecognizable decades ago.” 

Consequently, those in the health care industry will want to revisit their policies, practices, and antitrust compliance activities to ensure that their operations would not offend recent antitrust decisions or policy indications, regardless of an activity’s prior “safety” status. And health care providers should perform a similar analysis for any future or pending activities, such as mergers and joint ventures, particularly if the transacting parties are highly data driven (e.g., use pricing algorithms) or are vertically integrated. 

The withdrawal of the health care policy statements also may have implications beyond the health care industry, particularly as to the information sharing guidance and “safe harbor,” which has been applied broadly to information sharing in other industries. For example, the Antitrust Guidance for Human Resource Professionals, issued jointly by the DOJ and FTC in October 2016, specifically references the health care policy statements information exchange guidance as reference to “when written surveys of wages, salaries, or benefits are less likely to raise antitrust concerns.” The DOJ has not withdrawn or commented further on this policy.

The Federal Trade Commission has not yet announced a similar withdrawal; however, given the FTC’s and DOJ’s previous joint support of the three policy statements, it would not be surprising if the FTC issues a comparable statement.