AMARILLO, Texas – Attorney Jeff Baird, chairman of the Health Care Group at the law firm Brown & Fortunato, says the Department of Justice’s new Task Force on Health Care Monopolies and Collusion is “completely justified.”
In May, the Department of Justice announced the establishment of the Healthcare Monopolies and Collusion Task Force (HCMC) within the Antitrust Division to guide enforcement strategy and policy approach, including advocacy efforts in the healthcare market, investigations, and facilitating civil and criminal enforcement where warranted.
Baird talks about how this type of activity is impacting the HME industry today, and how it could have an even bigger impact in the future if left unchecked.
HMENews: How big a deal is it that the Department of Justice has created this task force?
Geoff Baird: The Department of Justice sets up task forces when it believes there is a potential problem looming that the government needs to address before the problem gets out of hand. Many in the medical community are concerned about the proliferation of vertical integration. It appears the government is taking notice and is considering ways to address it before the negative effects of vertical integration become more pronounced.
HME: Why is this focus necessary?
Baird: This focus is absolutely necessary. In the pharmacy industry, the “Big 5” pharmacy benefit management companies (PBMs) control most of the industry. All or most of the Big 5 own mail-order pharmacies (MOPs) that compete with independent MOPs. The PBMs limit the number of independent MOPs on the PBMs’ mail-order panels and steer patients to their own MOPs. DME suppliers do not have to do business with PBMs, but they do have to do business with Medicare Advantage plans and Medicaid managed care plans. And if insurance companies (which own the plans) decide to get into the DME space (i.e., own DME practices), independent DME suppliers will find themselves in the same predicament as independent pharmacies. So far, I’ve been talking about a small part of the overall healthcare industry. Let’s look at the bigger picture. If a hospital system owns physician offices, infusion centers, SNFs, etc., the system manages the patient’s healthcare from A to Z.
HME: The task force seems to be fairly action-oriented. Part of its goal is civil and criminal enforcement. Does the task force have powers?
Baird: Criminal charges would only be filed in extreme circumstances. Civil lawsuits would proliferate. The Task Force would provide the Department of Justice and the FTC with a roadmap for scrutinizing mergers/acquisitions and would have the “power” to take enforcement action against the transaction if the facts warrant it.
HME: What does this mean for HME providers?
Baird: On the other hand, acquisitions in the DME space are unlikely to create monopoly issues. Certainly, national DME suppliers could acquire independents. But national suppliers are unlikely to have enough market share to negatively impact services or reimbursement, which is controlled by Medicare, Medicaid, and insurance companies anyway. Similarly, there is a lot of private equity activity in the DME space, but it is unlikely that this activity will approach monopoly levels. Vertical integration would affect DME suppliers if large insurers were to acquire DME suppliers or start their own DME businesses. That would put independent DME suppliers in the same predicament as independent pharmacies who have to deal with PBMs.
