The Justice Department has accused NewYork-Presbyterian, a New York City health system, of stifling competition through restrictive payer contracts that steered patients away from lower-cost care settings, including ASCs.
According to court documents, NewYork-Presbyterian leverages its market dominance to negotiate with payers on an “all-or-nothing basis,” allowing it to charge more for routine procedures without fear of losing patients to its two main competitors, NYU Langone and Mount Sinai.
In response to the lawsuit, the health system told Becker’s that payers “hold the market power and use it to restrict patient choice,” adding that NewYork-Presbyterian is in compliance with federal and state laws and regulations.
The lawsuit alleges NewYork-Presbyterian violated Section 1 of the Sherman Act by blocking payers from offering “budget-conscious” health plans, including narrow networks, tiered benefits, centers of excellence and site-of-service incentives that direct patients toward lower-cost providers. The complaint alleges site-of-service steering “saves patients money by incentivizing them to have procedures done in a lower-cost location (site of service) — such as an ambulatory surgery center — instead of a higher-cost site of service, such as a hospital.”
While the complaint centers on inpatient acute care services in Manhattan, it extends to outpatient care as well. In one 2023 example, NewYork-Presbyterian allegedly blocked a payer’s effort to shift outpatient colonoscopies away from its hospitals, preventing insurers from offering patients financial incentives to seek lower-cost alternatives.
The monthslong investigation was triggered by a 2024 complaint from Local 32BJ of the Service Employees International Union, which claimed NewYork-Presbyterian used restrictive insurance agreements to block patients from accessing lower-cost competitors. The DOJ is now seeking a court order prohibiting NYP from engaging in what it calls “unlawful and anticompetitive” contracting practices.
The case mirrors a separate civil antitrust lawsuit against Columbus-based OhioHealth, which faces similar accusations of using all-or-nothing contracting provisions to lock insurers into including all of its facilities in every commercial network, regardless of cost, effectively shutting out competition from lower-cost providers.
Read NewYork-Presbyterian’s full statement below:
“NewYork-Presbyterian is disappointed that the Department of Justice has filed this lawsuit, which we think is without merit. We have been cooperating with the department’s inquiries into our contracting practices and had begun what we thought were productive discussions with the department’s leadership. As we have explained to the department, NewYork-Presbyterian complies fully with all applicable federal and state laws and regulations. We stand behind our policies and processes, which we believe are pro-competitive.”
“We do not seek to exclude any other hospital from any insurer’s network. Nor do we require more favorable treatment than any other hospital. In our contract negotiations with insurers, we seek to maximize access to the highest quality of care. Insurance companies hold the market power and use it to restrict patient choice.”
“The obligation of insurance companies is to their shareholders, while ours is to our patients. We believe all New Yorkers should be able to choose their health care provider.”
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