DOJ Will Not Challenge CA Hospital Information Exchange Program

John Commins, April 26, 2010

A proposal to compile, compare, and make available to the public the cost of healthcare services at more than 300 California hospitals cleared a major hurdle on Monday when the Department of Justice said it would not inhibit competition.

DOJ said the pricing exchange proposal from the Hospital Value Initiative might actually reduce healthcare costs by improving competition among hundreds of hospitals in California and facilitating more informed purchasing decisions by group purchasers of healthcare services.

"The Hospital Value Initiative will likely provide greater information about the relative costs and utilization rates of hospitals in California and lead payers and employers to make more informed decisions when purchasing hospital services," wrote Christine Varney, Assistant Attorney General in charge of the Department of Justice's Antitrust Division Varney, in a letter to HVI attorneys.

HVI wants to collect, analyze, and distribute comparative data on reimbursements, and the resources used by California hospitals to provide inpatient and outpatient services. HVI is a coalition of three organizations—the Pacific Business Group on Health, the California Public Employees' Retirement System, and the California Health Care Coalition—that represent group purchasers of healthcare services for more than 7 million people.

David Hopkins, director of quality measurement at Pacific Business Group on Health, said HVI was "gratified" by DOJ's decision. "The context for this is transparency and producing information that helps consumers and those who are paying for care know what they are paying for and what they are paying for it," Hopkins said.

DOJ said the proposal isn't anticompetitive because the HVI exchange would involve data that is at least 10 months old, and the program would not disclose disaggregated data or any hospitals' actual service fees. At the same time, DOJ said the data exchange program could benefit consumers by increasing the transparency of the costs and efficiencies of hundreds of California hospitals.

However, Jan Emerson, vice president of External Affairs for the California Hospital Association, said the DOJ's announcement "does not resolve the anti-competitive concerns California hospitals have about this initiative." She noted that DOJ reserves the right to challenge the proposal in the future if it proves to be anticompetitive.

Emerson said California hospitals object to the HVI proposal because it focuses too much on price and not enough on quality. "The initiative's methodology isn't meaningful because every hospital's cost structure is different," she said. "Hospital costs vary based on the amount of uninsured and underfunded Medicare/Medi-Cal patients, specialty services such as trauma care or burn units, unfunded governmental mandates and the need to regularly upgrade their physical plants to meet costly seismic standards and technological requirements."

Hopkins said the HVI members haven't set a date for when they'll launch the project. "We have cleared the antitrust piece and now the question is: 'Are we ready to collect the data and release the results?' We haven't discussed that with our partners yet," he said.

John Commins

John Commins is a senior editor at HealthLeaders Media.

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