On May 9, 2024, the U.S. Department of Justice’s Antitrust Division (“DOJ”) announced a new task force to address “pressing antitrust problems in health care markets.” This new initiative, named the Task Force on Health Care Monopolies and Collusion (“HCMC”), will focus on DOJ’s view that there are “widespread competition concerns shared by patients, health care professionals, businesses and entrepreneurs, including issues regarding payer-provider consolidation, serial acquisitions, labor and quality of care, medical billing, health care IT services, access to and misuse of health care data and more.”

The HCMC is an interdisciplinary team, including civil and criminal prosecutors, economists, health care industry experts, technologists, data scientists, investigators, and policy advisors from across the Antitrust Division’s Civil, Criminal, and Litigation and Policy Programs, as well as its Expert Analysis Group. The HCMC is not an interagency working group and appears to be solely a DOJ Antitrust effort.

DOJ has a long history of launching task forces to target what it identifies as enforcement priorities. Some examples of this in the health care space include the COVID-19 Fraud Strike Force Teams, the New England Prescription Opioid (“NEPO”) Strike Force, and the long-standing and prolific Health Care Fraud Prevention and Enforcement Action Team (“HEAT”), just to name a few. However, not all task forces are created equal – some are more active and “successful” than others.

As industry experts and stakeholders know, the health care field routinely faces government scrutiny from different agencies. Coordination across various federal agencies illustrates this point.

In the last few years, HHS launched its Regulatory Sprint to Coordinated Care, a collaboration with the Office of the Inspector General (“OIG”) and the Centers for Medicare and Medicaid Services (“CMS”) with a goal of decreasing regulatory barriers and accelerating the transformation of the overall health care system into one that rewards “value” and promotes the coordination of care. Both OIG and CMS released new final rules that took effect in January 2021 and revised the regulatory health care landscape to support the push toward value-based care.

Additionally, CMS also has announced a new primary care model that it will launch on July 1, 2024. This 10 ½ year model will provide primary care clinicians with additional resources and data to help them better coordinate with specialists and support care integration.

The economic realities of the landscape, however, frequently require health care companies to pursue and undergo rapid growth in order to be able to take on the risk that accompanies serving the patient population in a value-based model. This is because such an approach focuses more heavily on health outcomes, as opposed to the provision of services (under a fee-for-service model). It remains to be seen how investment in and pursuit of value-based care models will impact the new HCMC task force’s work, or whether this new task force will even take these developments and market conditions into consideration. Also of note are coordinated efforts among different federal agencies. In late 2022, DOJ and the HHS OIG announced a partnership to work collaboratively to protect health care markets through stepped up monitoring, enforcement, and information sharing. And more recently in March 2024, DOJ partnered with the Federal Trade Commission and HHS to issue a joint Request for Information soliciting public comment on transactions in the health care industry. Overall, while the HCMC might be a DOJ task force, developments over the last few years portend considerable cooperation and coordination across a broad spectrum of the federal government. This likely only adds to the regulatory, compliance, and enforcement complexities that health care companies may face.

We note that government interest in alleged or perceived anticompetitive activity in the health care industry of late has not been limited to the federal government. In fact, some states are taking increasing interest in antitrust oversight, regulation, and enforcement. Recent developments in California perfectly illustrate this trend. In 2022, California authorized the creation of its Office of Health Care Affordability (“OHCA”), a new government entity that will monitor economic activity in the health care space to ensure Californians can access affordable health care services. One way that OHCA proposes to achieve this goal is by conducting a pre-closing review of market transactions. Under new OHCA regulations, California will conduct cost and market impact reviews on material transactions involving health care entities that occur on or after April 1, 2024. Using a comprehensive standard for what constitutes a “material transaction,” this new California regulatory framework empowers the state to scrutinize, and even prevent, transactions that it concludes will negatively impact competition or consumer choice in the health care markets. Those who engage in anticompetitive conduct or otherwise violate the pre-transaction review process may be subject to injunctive relief and could also be forced to pay for the cost of government enforcement.

Additionally, California is just one of the states to recently take this posture. Connecticut and Massachusetts each have expressed concern over alleged anticompetitive activities in the health care industry. In Connecticut, for example, the state enacted HB 6669 in 2023, which seeks to reduce costs for Connecticut residents by increasing competition, heightening pricing transparency, and regulating transactions between pharmacy benefits managers and 340B covered entities. This is in addition to that state’s own existing cost and market impact review processes, which scrutinize transactions by large hospitals and hospital groups or for-profit purchasers. Massachusetts similarly regulates market transactions through its Health Policy Commission, which conducts cost and market impact reviews in the event of provider changes that may impact competition in the market. Additionally, Massachusetts also has long relied on anti-steering and anti-tiering laws to prevent anticompetitive consolidation in the health care market. In short, both jurisdictions illustrate the potential breadth of oversight and enforcement at the state-level.

In short, those operating within the health care industry should consider the possibility of oversight and enforcement not just from the federal government, but from state governments as well. And in the case of OHCA specifically, California enjoys the fifth largest economy in the world and is home to over 11% of the U.S. population – consequently, any health care entity operating nationwide must be aware of the regulatory landscape in California as well as others that are seeking to regulate market transactions.

One final consideration is the upcoming 2024 Presidential election. Task forces such as the HCMC reflect the discretionary policy initiatives of the current administration. The potential for a change in the leadership of the federal executive branch means the longevity of this new task force might not be guaranteed, and indeed, such a change might result in a change of priorities within DOJ. Given this potentially dynamic landscape, EBG will continue to monitor this area and any new enforcement efforts. Companies operating in this space should consult with counsel about how any intended mergers should be described and supported, and how they might successfully be defended if they elect to proceed.