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Atrium Settlement Ends Steering Restrictions in Payer Contracts

Settlements brings an end to allegations that the health system enforced contract terms with commercial payers that limited patient choice.

Atrium contracts with commericial payers

Source: Thinkstock

By Kyle Murphy, PhD

- The Department of Justice reached a settlement agreement with Atrium Health (formerly Carolinas HealthCare System) over alleged anti-competition in the form of steering restrictions in commercial payer contracts.

“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,” said Assistant Attorney General Makan Delrahim.

The settlement brings to an end two years of litigation, following DoJ’s filing of a civil antitrust lawsuit against Atrium accusing the health system of including contract terms with commercial payers that prevented consumers from choosing hospitals and physicians based on cost and quality.

“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,” the federal agency stated. “Increased consumer access to these health benefit plans invigorates competition between providers to offer lower premiums and better overall healthcare services.”

According to the announcement, DoJ alleged that Atrium’s position as the dominant health system in the Charlotte area enabled the organization to restrict health insurers from giving beneficiaries the freedom to choose their providers as well as information to make informed decisions.

“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.

Per the settlement, Atrium is prevented from demanding steering restrictions from commercial payers in the Charlotte metropolitan area and imposing similar restrictions on future contracts. The Charlotte area refers to Cabarrus, Cleveland, Gaston, Iredell, Lincoln, Mecklenburg, Rowan, Stanly, and Union counties in North Carolina and Chester, Lancaster, and York counties in South Carolina.

For its part, the health system has admitted no wrongdoing nor violation of the law and will not be on the hook for fines or penalties:

The language in question is from contracts created as long ago as 2001 and was originally added to ensure Atrium Health was provided an equal opportunity to compete for patients. As the healthcare landscape continues to rapidly evolve, Atrium Health’s contracting language has also evolved to reflect current healthcare practices. Throughout the litigation, Atrium Health has shared its perspective and position with the DOJ and the North Carolina Office of Attorney General, and is pleased to be able to reach a mutually acceptable settlement agreement.

In its announcement, Atrium detailed its commitment to patient choice in a handful of key points:

  • There is no admission of wrongdoing on the part of Atrium Health, and Atrium Health is not required to pay any penalties or fines.
  • The language in question is from contracts created as long ago as 2001 and was originally added to contracts to ensure Atrium Health was provided an equal opportunity to compete for patients.
  • Atrium Health has always been a champion for patient choice. Atrium Health’s proposition of quality, value and world-class services is unparalleled in the region and differentiates Atrium Health as the best choice for care.
  • Atrium Health believes in and welcomes competition based on value. Competition drives improvements in healthcare quality and services – ultimately benefitting every patient.
  • The settlement will be submitted to the court for approval and a final judgment will be available to the public.

Per the settlement, Atrium has 60 days to develop and implement procedures that demonstrate its compliance with the final judgment.


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