The Department of Justice has sued NewYork-Presbyterian over payer contracts that allegedly impose anticompetitive restrictions on health insurers’ offerings.
The civil antitrust lawsuit against the eight-hospital nonprofit was filed Thursday along with the U.S. Attorney’s Office for the Southern District of New York in its home district. Its claims echo those made by the government last month in similar litigation against 16-hospital nonprofit OhioHealth.
“Healthcare is a vital sector of our nation’s economy that touches the life of every single American,” Acting Assistant Attorney General Omeed A. Assefi, of the Justice Department’s Antitrust Division, said in a release announcing Thursday’s filing.
“New York-Presbyterian has known for years that the American consumer wants budget-conscious health plans that reduce healthcare costs. But rather than offer consumers choice, New York-Presbyterian uses its market power to protect its margins, impede competition from rival hospitals, and prevent employers and unions from creating these plans. The Antitrust Division will continue to hold hospitals violating the antitrust laws accountable,” Assefi said.
NewYork-Presbyterian, in a statement given to Fierce Healthcare, said it believes the lawsuit is without merit.
The government’s lawsuit describes NewYork-Presbyterian, which disclosed about $10.7 billion of operating revenue in its most recently reported fiscal year, as “the largest and most powerful hospital system in Manhattan and throughout New York City.” The DOJ lists NYU Langone, Mount Sinai and Northwell as rivals, but notes that NewYork-Presbyterian “has substantially higher prices … even though its major competitors offer similarly high-quality healthcare.”
It secures those prices from payers through substantial market power “built on the scale, breadth, and configuration of its providers, including, among other things, its large size, many locations, and strong brand and reputation,” according to the lawsuit. In particular, the DOJ alleges that the system uses that power “to effectively force” commercial payers into “all-or-nothing” contracts, or those in which an insurer must include all of a provider’s sites and services in their network.
Doing so prevents insurers from pursuing more narrow or tiered networks that can be offered to consumers at a lower cost, the DOJ said. The lawsuit alleges that New York-Presbyterian’s contracts also restrict payers from offering lower copays to those seeking care from other competing in-network systems.
The DOJ’s complaint asks the court to recognize these practices as a violation of Section 1 of the Sherman Act and for the court to enjoin them and any other anticompetitive substitutes the system may attempt in their stead.
New York-Presbyterian, in its statement, said the organization “complies fully with all applicable federal and state laws and regulations.” The system had been cooperating with inquiries from the DOJ on the subject, it said, and “had begun what we thought were productive discussions with [DOJ’s] leadership.”
“We do not seek to exclude any other hospital from any insurer’s network. Nor do we require more favorable treatment than any other hospital,” the statement reads. “In our contract negotiations with insurers, we seek to maximize access to the highest quality of care. Insurance companies hold the market power and use it to restrict patient choice. The obligation of insurance companies is to their shareholders, while ours is to our patients.”
The DOJ’s antitrust lawsuit comes just over a month after it filed a near-identical claim against OhioHealth. In that lawsuit, the government also described the system as the top player in its local hospital market, willing to wield that market power for “significantly higher” rates and the inclusion of all its providers in a contract. OhioHealth has said it is “confident” in its practices and is committed to full compliance with applicable laws and regulations.
The DOJ’s Thursday statement referenced that litigation, and said both cases were brought in accordance with the administration’s focus on healthcare market competition and consumers’ affordable access.
“Millions of New Yorkers pay more for healthcare because of these anticompetitive practices,” Attorney General Pamela Bondi said in a release. “At the direction of President Trump, this Justice Department will fight relentlessly to ensure that Americans get the healthcare they need without facing exorbitant costs.”