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Monday, October 7, 2013

Certificate of Public Advantage (COPA) Regulations

The Department of Health

Publishes Draft Certificate of Public Advantage (COPA) Regulations

As integration and collaboration among healthcare providers, payors and other healthcare entities increase due to state and federal healthcare reform initiatives, so too have significant concerns arisen among market participants relating to antitrust liability.   Examples of such collaborations could include: (1) the sharing, allocation or referral of patients, personnel, instructional programs, resources, facilities and equipment; (2) the implementation of clinical integration programs and payment mechanisms; (3) asset or stock acquisitions, mergers and joint ventures; and (4) joint negotiation efforts by providers against payors.  Depending on the facts, circumstances and relationship among the parties to such agreements, the participants may be susceptible to claims of anticompetitive conduct and/or violations of federal antitrust laws.

Federal antitrust case law provides for a “state action immunity” for certain transactions that potentially have an anticompetitive effect, provided that: (i) there is a clearly articulated state policy to immunize from federal antitrust laws transactions of the type being undertaken, and (ii) the state will engage in active supervision of the transaction.  In 2011, New York Public Health Law (“PHL”) §2999-aa codified New York’s clear state policy to immunize certain healthcare transactions from state and federal antitrust laws, and set forth a framework for government involvement in efforts by separate healthcare entities to work collaboratively in negotiations with payors without running afoul of the antitrust laws.

On September 18, 2013, the New York State Department of Health (“DOH”) took the next step by publishing proposed certificate of public advantage (“COPA”) regulations.  The proposed regulations would permit healthcare providers to apply to DOH for a COPA, in order to immunize a broad range of collaborative activities.  The DOH, along with the Attorney General and the Public Health and Health Planning Council, would then weigh the potential benefits of the proposed collaborative activity against the potential disadvantages.  In making such determination, the DOH may consider several factors, including: (1) the financial condition of the participants; (2) market conditions; (3) potential for the preservation of services, improved access and quality of care, improved efficiencies and reduced cost; (4) reduced competition and increased market power; and (5) whether alternatives could achieve similar benefits with less impact on competition.  If a COPA is issued to the applicant, it would include any conditions that the DOH deems appropriate to ensure compliance with PHL §2999-aa.  COPA recipients will remain under the active supervision of the DOH.  The proposed regulations are now in a 45-day public comment period.

Antitrust enforcement is quite active in the healthcare industry.  The attorneys at Weiss, Zarett, Brofman & Sonnenklar, P.C., are familiar with antitrust issues, having litigated several federal antitrust cases in the healthcare industry.  Please contact us with any questions regarding this development, or to discuss any healthcare antitrust issues.


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