Announcement of Public Workshop, “Examining Health Care Competition” (“Health Care Workshop”) #00194

Submission Number:
00194
Commenter:
Randall Marks
Organization:
retired FTC attorney
State:
Maryland
Initiative Name:
Announcement of Public Workshop, “Examining Health Care Competition” (“Health Care Workshop”)
Matter Number:

P13-1207

I recommend the Commission initiate a rule-making to create a rule against provider price fixing in health care markets. I worked on a number of investigations involving such price fixing while working for the Bureau of Competition, some of which resulted in enforcement actions. It is outrageous that such enforcement actions are still necessary. The rule would declare agreements to restrict price or output in health care markets to be unfair methods of competition, allowing the Commission to obtain civil penalties. It would contain a safe harbor for agreements that the providers reasonably believed enhanced efficiency. This safe harbor would ensure that the Commission would not seek civil penalties in close cases. Such a rule would have three benefits: It would deter clearly unlawful conduct that injures consumers. It would have the potential of allowing for at least some restitution. It would likely have somewhat lower litigation costs and may encourage settlements. With regard to restitution, one of the most remarkable aspects of health care provider price fixing is that FTC actions rarely (if ever) lead to follow-on private litigation seeking damages, in contrast to other industries, where government actions often lead to private litigation. I believe that is because payers are dependent on the good will of providers to staff their provider networks and thereby serve their clients. The absence of private actions leaves the illegal profits of health care collusion with the providers. That has two unfortunate consequences. First, it leads to under-deference. Second, it leads to distortions in the economy, because payers pay higher prices. A trade regulation rule against health care price fixing would allow the Commission to obtain civil penalties, but not restitution for health care payers. But such a rule would have the potential obtain significant restitution. First, the civil penalties would flow the US Treasury, which is the source of payments for Medicare, Medicaid, and other federal health programs. Moreover, the threat of civil penalties could encourage providers to enter into consent agreements that provide for disgorgement/restitution under FTC Act Section 13(b). I believe that the Commission should have a policy that, where such an agreement obtains significant restitution, the Commission should accept reduced civil penalties. A trade regulation rule against clear cases of collusion in health care markets would enhance the Commission’s ability to ensure competition in such markets.