Atrium Health, NC attorney general settle antitrust lawsuit over health care costs

CHARLOTTE, N.C. — The Department of Justice announced Thursday morning that it has reached a settlement with Atrium Health (formerly known as Carolinas HealthCare System) over an anti-competition lawsuit.

It started in 2016 when the US DOJ, as well as North Carolina's Department of Justice, sued Carolinas Healthcare System -- which is now Atrium Health.

“As a result of this settlement, people will be able to purchase lower cost, high quality healthcare and gain transparency of healthcare pricing,” said North Carolina Attorney General Josh Stein. “We can’t allow Atrium to use its size and market dominance to the detriment of healthcare consumers.”

The settlement prohibits Atrium from using anticompetitive steering restrictions in contracts between commercial health insurers and its providers in the Charlotte area.

Atrium Health officials said there is no admission on their part of wrongdoing in the settlement agreement, and Atrium Health did not violate the law. Also, Atrium Health will not pay any penalties or fines.

If approved by the court, the settlement resolves over two years of civil antitrust litigation challenging Atrium’s use of steering restrictions that prevent health insurers from promoting innovative health benefit plans and more cost-effective healthcare services to consumers.

[ALSO READ: Atrium Health, Novant compete to expand services in Mecklenburg County]

“With healthcare costs rising, vigilant antitrust enforcement is an essential tool for protecting consumers,” said Assistant Attorney General Makan Delrahim. “By eliminating restrictions that curb comparison shopping and interfere with competition among healthcare providers, today’s resolution of our antitrust action allows consumers in the Charlotte area to benefit from competition when making critically important healthcare choices.”

In June 2016, the DOJ filed a civil antitrust lawsuit against Atrium challenging provisions that prohibit steering in the hospital system’s contracts with major health insurers.

[ALSO READ: Court order allows Atrium Health to bring on new anesthesia provider]

Steering is a method used by insurers to offer consumers options to reduce some of their healthcare expenses. As alleged in the complaint, insurers are increasingly designing health benefit plans that give patients financial incentives to choose more cost-effective hospitals and physicians.

Increased consumer access to these health benefit plans invigorates competition between providers to offer lower premiums and better overall healthcare services.

The DOJ alleged that Atrium used its market power to restrict health insurers from encouraging consumers to choose healthcare providers that offer better overall value. It said the restrictions also constrained insurers from providing consumers and employers with information regarding the cost and quality of alternative health benefit plans.

[ALSO READ: Doctors finalizing plans to leave Atrium Health]

“Competition encourages healthcare providers to reduce costs, lower prices, and increase quality,” said Delrahim. “Atrium’s steering restrictions interfered with the competitive process, resulting in fewer choices and higher costs for consumers.”

Atrium Health officials said they have always been a champion for patient choice, and believe Atrium's quality, value and services are the reason why more people continue to choose them over any other healthcare provider in the region.

“The resolution of this antitrust enforcement action gives Charlotte-area consumers what they did not have before: the ability to receive the appropriate, high-quality treatment they need, from a healthcare provider they choose, at a fair price,” said U.S. Attorney for the Western District of North Carolina, R. Andrew Murray. “Today’s enforcement action will restore competition in the Charlotte area, resulting in lower healthcare costs and increased healthcare access for consumers and their families.”

The proposed settlement also bars Atrium from seeking contract terms or taking actions that would prohibit, prevent, or penalize steering by insurers in the future.

Atrium is North Carolina’s largest healthcare system and one of the largest not-for-profit healthcare systems in the United States. Atrium’s flagship facility is Carolinas Medical Center, the largest hospital in North Carolina.

Atrium also operates eight other general acute-care hospitals in the Charlotte area and owns, manages, or has strategic affiliations with more than 40 hospitals in the Carolinas.

In 2017, Atrium’s owned, managed, and affiliated hospitals and other healthcare providers earned net operating revenue of close to $10 billion.

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