Hospital lobby steers DOJ, FTC's regulatory review toward payers' vertical integration

By Dave Muoio / May 27, 2025

Federal policymakers interested in opening up competition within healthcare should turn their attention toward the statues and regulations incentivizing insurers’ consolidation and vertical integration.

That’s the advice the American Hospital Association (AHA) gave the Trump administration in public comments submitted late last week to the Department of Justice (DOJ) and the Federal Trade Commission (FTC). Those agencies and others, including the Department of Health and Human Services (HHS), have solicited recommendations in recent months as part of the presidents 10:1 deregulation initiative.

Though its near-identical letters to the agencies did outline a wish list of repealable regulations more directly related to hospitals and health systems—including kickback protections and administrative requirements—the hospital lobby spilled more ink making a case against commercial insurers and the “uneven playing field” created by current laws and regulations.

Massive insurers such as UnitedHealth Group, the AHA wrote, are responsible for “the single greatest competition problems in the healthcare markets today.” Four companies control half of the health insurance market, and six insurers are the source of 30% of all U.S. healthcare spending, with market concentration becoming “increasingly concentrated” over time. Payer market share greatly outstrips that of the largest health systems, which the AHA said has led to higher premiums and limited choices for care.

Contributing to the issue and worthy of review are requirements that incentivize vertical integration such as the Affordable Care Act’s medical loss ratio (MLR) requirements, the AHA wrote.

Though intended to limit how much premiums revenue a company may keep, they’ve inadvertently encouraged insurers to acquire other types of entities, such as medical practices, to keep required medical care spending from leaving their organization.

“As the administration reviews its regulatory reform agenda, preventing MLR abuse should be a top priority,” the hospital lobby wrote.

The incentive to “facilitate intercompany eliminations and circumvent MLR requirements” is strong enough to drive insurers to pay “far more than hospitals and health systems can” to acquire for-sale medical practices and still turn a profit, the AHA wrote. What’s more, hospitals pursuing such acquisitions or running an acquired practice are placed under heavy regulatory scrutiny in line with the Stark Law—yet insurers enjoy numerous exceptions and exclusions from the regulations under current statute, giving them “ample runway” compared to hospitals.

“This removes a significant barrier for health insurers otherwise faced by other types of providers of designated health services, shifting the playing field in favor of health plans, which have proceeded to purchase providers of many of these services and, in fact, direct their beneficiaries to those service providers,” the AHA wrote.

The hospital lobby also noted that antitrust enforcement of insurers has typically been handled by the DOJ, whereas hospital merger enforcement has landed with the FTC. Particularly as insurers’ acquisitions step into healthcare delivery, both camps’ antitrust reviews should be handled by a single agency for greater consistency.

The AHA’s insurer-focused recommendations for regulatory review weren’t limited to dealmaking.

Again citing “their anticompetitive impact,” the hospital lobby called on the agencies to ensure payers’ “prior authorization processes and other utilization management practices” be streamlined. Such an effort is set to go into effect with the Interoperability and Prior Authorization Final Rule, which the AHA characterized as a starting point to limit “unduly burdensome” requirements on providers.

The AHA also made a play for federal agencies to formally shift cost-sharing collection responsibilities away from hospital billing and collections departments to the insurers “who set patients’ copays, deductibles and coinsurance amounts in the first instances"; require prompt pay from insurers for “all forms of healthcare coverage, including Medicare Advantage"; and remove a requirement that payers and plans maintain separate credentialing processes, instead allowing them to recognize hospital credentialing “as sufficient.” 

The DOJ and the FTC are among several federal bodies, including the HHS, to have solicited public input in recent months as part of the president’s 10:1 deregulation initiative. The White House and various agencies have said that cutting red tape will improve care by relieving day-to-day burdens on practitioners as well as increase market competition by unwinding an environment of “regulatory capture” that unfairly restricts less resourced companies.

Outside of the calls for payer-focused reviews, the AHA urged the FTC to reconsider a November 2024 update to the premerger notification process requiring “substantial additional information” as well as its prohibition on noncompete clauses, which was temporarily paused due to private sector litigation and is likely to be pulled by the new administration.

Further, the AHA’s letter called for revisions to various Stark Law exemptions, removal of telehealth restrictions, the repeal of the nursing home staffing rule, supporting more permissive licensure for clinicians, removing various administrative burdens contributing to clinician burnous and the repeal of “onerous and now outdated” disease reporting requirements.

The AHA had already responded to an earlier information request from the Office of Management and Budget on the subject. That submission was less combative toward the insurance industry and largely focused on the same suggestions in Friday’s submissions surrounding quality reporting and administrative burdens—though the latter did touch on prior authorization standardization.

Earlier this month, HHS Secretary Robert F. Kennedy Jr. outlined clear support for the administration’s deregulation agenda by launching yet another request for information at the HHS and the Food and Drug Administration related to “outdated or unnecessary” healthcare regulations. He also emphasized the point by immediately rescinded four informal guidance documents.