FTC Staff Says Proposed Connecticut Legislation Would Likely Increase Health Care Costs and Decrease Access to Care

Federal Trade Commission staff, in response to a request from Connecticut state legislators Eric D. Coleman, John A. Kissel, Gerald Fox III and John W. Hetherington, stated that the state’s health care consumers are likely to be harmed by a state legislative proposal that would exempt health care providers in state-certified “cooperative arrangements” from state and federal antitrust laws. The FTC staff comment letter expressed concern that Connecticut House Bill 6343, if enacted, would very likely lead to dramatically increased health care costs and decreased access to care for Connecticut consumers.

H.B. 6343 would allow health care providers to establish cooperative arrangements that will immunize the cooperative’s activities from state and federal antitrust laws. That immunity would extend to “sharing, allocating or referring patients, personnel, instructional programs, support services or facilities or medical, diagnostic or laboratory facilities or procedures, or negotiating fees, prices or rates with managed care organizations, and includes, but is not limited to, a merger, acquisition or joint venture.” The measure also would prohibit managed care organizations from refusing to negotiate “in good faith” with parties in a certified cooperative arrangement, and provides a penalty of up to $25,000 per day per violation. To qualify as a cooperative under the Bill, the health care providers must apply for and receive a “certificate of public advantage” from the Connecticut Attorney General.

The FTC staff letter stated that the proposed legislation is unnecessary because antitrust law already permits collaborations by health care providers that benefit consumers. The staff concluded that the antitrust immunity provisions in the proposal would allow groups of private health care providers to engage in anticompetitive conduct. Several provisions of the Bill as they relate to the review by the Attorney General will be insufficient to protect Connecticut’s consumers from the Bill’s likely anticompetitive effects, according to the FTC staff. The staff also stated that it is not clear that the Attorney General has sufficient funds or available resources to conduct the kind of market analysis needed to evaluate the competitive effects of a health care cooperative during the certification process.

The Commission vote approving the staff comment was 5-0. It was sent to the state legislators on June 7, 2011. A copy of the letter can be found on the FTC’s website and as a link to this press release. (FTC File No. V110012; the staff contact is Jessica Hoke, Office of Policy Planning, 202-326-2409.)

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(Connecticut Health Care)