The U.S. Department of Justice (DOJ) sued NewYork-Presbyterian Hospital on Thursday, alleging the health system used insurer contract terms to block lower-cost health plan designs that could steer patients to competing providers, including ambulatory surgery centers (ASCs).
The civil antitrust complaint, filed in the U.S. District Court for the Southern District of New York, claims that NewYork-Presbyterian violated Section 1 of the Sherman Act by restricting insurers from offering what the government described as “budget-conscious” plans.
Those plans can include narrow networks, tiered benefits, centers of excellence and site-of-service incentives that encourage patients to seek care from lower-cost providers.
For ASC operators, the new case is highly relevant. In its filing, DOJ specifically pointed to ASCs as an option patients should be guided to, when practical.
“Site of service steering is a plan feature that saves patients money by incentivizing them to have procedures done in a lower-cost location (site of service) – such as an ambulatory surgery center – instead of a higher-cost site of service, such as a hospital,” DOJ wrote in its complaint.
“Because these plan design tools allow members to save money by choosing cost-effective hospitals and other providers while still obtaining high-quality care, they create price and quality competition among providers,” DOJ continued.
In a statement shared with ASC News, a spokesperson for NewYork-Presbyterian said the health system is disappointed the DOJ filed this lawsuit, which the organization believes is without merit.
“We have been cooperating with the Department’s inquiries into our contracting practices and had begun what we thought were productive discussions with the Department’s leadership,” the statement read. “As we have explained to the Department, NewYork-Presbyterian complies fully with all applicable federal and state laws and regulations. We stand behind our policies and processes, which we believe are pro-competitive.”
According to the complaint, NewYork-Presbyterian used its market power in New York City to stop insurers from excluding the system from networks or offering patients more favorable cost-sharing when they chose rival providers. The government alleged those restrictions reduced competition, raised health care costs and limited consumer choice.
The complaint focuses primarily on inpatient general acute care hospital services in Manhattan and what it calls the four-borough market of the Bronx, Brooklyn, Manhattan and Queens. But it also alleges the same contract restrictions were used to limit competition in outpatient care.
DOJ said those provisions effectively prevented payers “from providing incentives to patients to select outpatient services outside of NYP at facilities or other hospitals that charge less and would thus save money for patients and employers.”
In one example, the government alleged NewYork-Presbyterian in 2022 stopped an insurer from lowering copays for certain outpatient radiology services performed at less expensive facilities.
In another, the complaint claimed the system in 2023 blocked a payer effort to shift outpatient colonoscopies away from its hospitals.
DOJ is asking the court to bar NewYork-Presbyterian from seeking or enforcing contract terms that restrict insurers from offering plans with financial incentives to use other providers. It is also seeking to prohibit retaliation against insurers that try to offer those products.
“Americans deserve the benefits of vigorous competition between health care Providers,” the complaint continued. “Robust competition that is unrestrained by NYP’s plan design restrictions would be a powerful mechanism to lower health care costs for consumers. But rather than compete on price to serve patients who seek health care in New York City, NYP has chosen to prevent competition from rival providers.”
NewYork-Presbyterian did not hold back on its views on the case – or on insurers – in its statement.
“We do not seek to exclude any other hospital from any insurer’s network,” the statement read. “Nor do we require more favorable treatment than any other hospital. 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 statement continued.
