Xavier Becerra was confirmed as U.S. Secretary for Health and Human Services (“HHS”) on March 18, 2021. While the parameters of the Biden administration’s antitrust policy priorities and objectives are not yet clear, a groundbreaking lawsuit brought by Xavier Becerra while Attorney General of California offers important insight and warrants a close reexamination of managed care contracts by health systems.
In 2018, while serving as Attorney General, Xavier Becerra filed a lawsuit against Sutter Health System (“the System”), the largest hospital system in Northern California, alleging the System had required anticompetitive clauses in its contracts to increase its market share and the ultimate result was higher healthcare costs for consumers.
More specifically, the case focused on incorporating contracting clauses such as “all-or-nothing” clauses, which require an insurer wishing to include one of the System’s hospitals or clinics to include all of them, even where those facilities are more expensive than their competitors. The case arose following a 2018 Study from the University of California-Berkeley that found healthcare costs in Northern California were 20-30 percent higher than in Southern California.
While the Biden administration has not yet taken a formal position, Xavier Becerra promised “robust enforcement” of price transparency during his February 23, 2021 testimony before the Senate Health, Labor & Pensions Committee. He specifically referenced when his office “went after the largest healthcare provider in Northern California.” The new administrations healthcare and antitrust priorities will soon reveal themselves through enforcement actions. In this White Paper, we’ve discussed the case brought against the System by then Attorney General Becerra along with considerations for health systems as he takes the helm at HHS.