ProMedica Accused of Anti-Trust Actions, 50% Market Domination

November 11, 2020 - McLaren St. Luke’s has filed an anti-trust lawsuit against ProMedica Health System to prevent it from retracting Paramount commercial and Medicare Advantage health plan coverage.

According to McLaren St. Luke’s press release on the subject, the lawsuit cites ProMedica’s “monopolistic and anticompetitive behavior.”

When McLaren acquired St. Luke’s, the health system’s market share increased significantly.

As a result, the press release alleged, ProMedica terminated its health plan’s commercial and Medicare Advantage coverage for McLaren St. Luke’s patients, starting January 1, 2021. ProMedica also allegedly placed pressure on providers not to work at McLaren St. Luke’s and terminated eight other contracts with St. Luke’s.

These actions are part of ProMedica’s 13-year attempt to reduce competition from St. Luke’s, according to the plaintiff hospital system.

READ MORE: Neither Anthem, Cigna to Receive Damages in Merger Disputes

ProMedica already has between 50 and 70 percent of the hospital market share, depending on the service line, the press release explained.

McLaren St. Luke’s stated that ProMedica’s actions would have negative implications for consumers.

“By terminating McLaren St. Luke's in-network provider status, ProMedica is penalizing their own members by limiting choice and causing significant damage to our hospital,” said Jennifer Montgomery, president and chief executive officer of McLaren St. Luke’s.

“Restricting patients' access to receiving care locally and preventing the introduction of important new services harms everyone – including Paramount's own members,” added Bill Carroll, McLaren St. Luke's board chairman. “With more than $100 million in planned investments to McLaren St. Luke's facilities and services at stake, the community will pay a significant price if ProMedica's strong-arm tactics are allowed to stand.”

ProMedica has not yet released a robust account of its decision.

READ MORE: BCBSA Settles Anti-Trust Litigation for $2.7B, Anthem Pays 22%

“As part of our standard policy, ProMedica does not comment on the details of pending litigation,” a ProMedica spokesperson told HealthPayerIntelligence in an emailed statement.

Still, ProMedica seems to dismiss the claim that they are engaging in anti-trust activities.

“ProMedica looks forward to demonstrating that this frivolous lawsuit from an out-of-state health care system lacks any merit and was filed solely to tarnish ProMedica’s reputation,” the ProMedica spokesperson continued.

The dispute underscores a common tension between providers and payers regarding anti-trust behavior and the accusations fly in both directions.

The payer industry has become 56 percent more consolidated over the course of the past few years, according to the American Medical Association’s recent study.

READ MORE: House Amendment Imperils Payer Anti-Trust Exemption

“We find that the majority of health insurance markets in the United States are highly concentrated and that, on average, markets are more concentrated in 2019 than they were in 2014,” the study stated.

“Coupled with evidence on their anticompetitive behavior, this strongly suggests that health insurers are exercising market power in many parts of the country and, in turn, causing competitive harm to consumers and providers of care.”

But payers have retorted that provider consolidation is raising costs for consumers.

“All consolidation, whether vertical or horizontal, must be assessed individually based on its own impact on competition,” America's Health Insurance Plans (AHIP) argued in a testimony given to Congress.

“Some vertical consolidation benefits consumers by making possible new products, more efficient approaches, and other benefits. Unfortunately, much vertical provider consolidation, at this point, has a demonstrated record of leading to higher prices and not leading to benefits for consumers.”

ProMedica is not the only payer to come under scrutiny for anti-trust allegations in recent months. In fact, in 2020 a couple of major payers have had to pay a high price for anti-trust lawsuits.

In September, Anthem and Cigna learned that neither will receive damages from the other due to their failed merger. The deal fell apart for multiple reasons, not the least of which being that both a district court and a circuit court found the merger violated anticompetitive regulation.

Years after first announcing the merger, both payers must accept that they will not recoup the billions of dollars that they demanded in damages.

Then in early November, Blue Cross Blue Shield Association (BCBSA) announced that it had settled its anti-trust litigation and that Anthem would help cover the $2.7 billion bill.

Like ProMedica, the major payer denied any anti-trust activity but, nonetheless, BCBSA decided to settle the eight-year-long lawsuit.

“Settling now is the right action at the right time because it allows us to remain focused on the goal we’ve had for more than 90 years: improving access to quality healthcare for all Americans and the health of our local communities,” the payer explained.