Ballad Health one of two systems participating in federal study of COPAs

David Floyd • Oct 22, 2019 at 10:00 PM

Ballad Health will be one of two health systems that will participate in a years-long study by the Federal Trade Commission on the impact of certificates of public advantage, also called COPAs, on the quality, access, price and innovation of healthcare services.

The federal agency said in a news release Monday that it also intends to study the impact of hospital consolidation on employee wages and will be gathering patient-level commercial claims data from five health insurers: Aetna, Anthem, BlueCross BlueShield of Tennessee, Cigna Corporation and United Healthcare.

Stephanie Wilkinson in the FTC’s Office of Policy Planning said the study is relevant to Ballad Health because the hospital system is one of two recent recipients of COPAs in the U.S. The other health system included in this study is Cabell Huntington Hospital in West Virginia.

The FTC will gather aggregated patient billing and discharge data, health system employee wage data and other relevant information from the hospital systems.

“It is our hope that the study will inform future FTC advocacy and enforcement efforts,” Wilkinson said. “We also hope it will be a resource to other state legislators or stakeholders considering whether to enact COPAs.”

The Tennessee Department of Health granted a COPA to Mountain States Health Alliance and Wellmont Health System on Jan. 31, 2018, allowing the two systems to merge into Ballad Health.

“Ballad Health appreciates the important role the FTC plays in matters subject to federal law, which includes the important Supreme Court and constitutional doctrine of the states’ rights to regulate economic activity within the states,” Ballad Health said in a statement to the Johnson City Press on Tuesday. “We are reviewing the request by the FTC within the context of the actions of two legislatures and two governors of two different parties that passed legislation specifically asserting state action immunity.”

A COPA is a written approval from the state that governs the merger of two or more hospitals. According to the Tennessee Department of Health, COPAs grant hospital systems “state action immunity” to state and federal anti-trust laws by replacing competition with regulation and active supervision. COPAs are intended to allow mergers between health systems to occur while also protecting consumers from potential negative effects.

The FTC said it will conduct the study over the next several years and intends to publicly report its findings in a manner consistent with its confidentiality rules.

During a hearing in June about the impact of COPAs, FTC Chairman Joseph Simons said COPAs have in the past prevented the agency from challenging problematic deals. For example, Simons said Virginia and Tennessee granted COPAs to Mountain States Health Alliance and Wellmont Health System during a pending FTC investigation. He said the FTC ultimately declined to challenge the merger.

As of June, he said there are four active COPAs, and almost two dozen states have COPA statutes, which he said creates the possibility that more health care providers will seek COPAs. State governments across the country, he said, have also expressed increased interest in COPA legislation.

“The commission has been skeptical of the use of COPAs to protect consumers from competitive harm,” he said during the June meeting. “We continue to believe that competition is the best way to reduce prices and improve service quality for healthcare consumers, just as in other markets. While we understand and are sensitive to the challenges faced by providers in today’s complex healthcare ecosystem, we generally think antitrust law is flexible enough to let pro-competitive deals proceed, while targeting only those transactions that would truly harm consumers.”

Because the agency’s enforcement and policy decisions need to be “grounded in sound economics and rigorous empirical analysis,” Simons said it’s important for the agency to test the tangible impacts of COPAs on healthcare markets and consumers.

“There has been little research into the actual harms and benefits associated with COPAs,” Simons said in June, “and for that matter, we don’t know enough about what happens to markets when COPAs go away — as they almost surely do.”

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