Lawsuit Accuses Advocate Aurora Of Charging ‘eye-Watering’ Prices

An article from

Dive Brief:

• Advocate Aurora Health was hit with a class action lawsuit last week, with Wisconsin residents alleging that the health system sought to decrease competition in the state and drive up prices for consumers.
• The suit argues Advocate Aurora forced health plans to keep the system in-network, “aggressively” blocked plans from directing members to non-AAH facilities and went to lengths to block lower-cost insurance offerings.
• Advocate Aurora dismissed the suit, saying it had no merit. A spokesperson said in a statement that providers and health insurers had worked collaboratively to offer patients more choices and make care “more accessible and cost-effective.” 

Dive Insight:

Advocate Aurora formed from a merger between Illinois-based Advocate Health and Wisconsin-based Aurora Health, which joined 27 regional hospitals and more than 500 sites of care in 2018. 

Advocate Aurora merged with North Carolina-based Atrium Health in 2022 to create Advocate Health and Advocate Aurora retained its branding at the regional level.

Since the 2018 merger, plaintiffs argue that prices have gone up for consumers. Between 2016 and 2018, Advocate hospitals had average commercial prices of 231% of Medicare, according to RAND data cited in the complaint. By the end of 2018, after the merger was completed, AAH hospitals charged average commercial prices of 253% of Medicare, the complaint said.

The lawsuit, filed in the U.S. District Court for Eastern Wisconsin, alleges that prices have continued to rise, with Advocate Aurora using acquisitions, noncompetes and gag clauses to create a monopoly in the market and charge Wisconsin health plan members “eye-watering prices” for services.

Plaintiffs are seeking compensation for commercial health plan members who have been “directly harmed by AAH’s past illegal activity and to enjoin AAH from continuing unlawful practices that harm Wisconsin’s economy and healthcare system,” according to the lawsuit.

Health systems formed by mergers, like Advocate Aurora, have been under increased scrutiny for their impact on commercial pricing. Consistently, studies have found consolidation correlates with higher prices for consumers.

Regulators have shown interest in tightening criteria for future deals in response to stakeholder concerns.

Late last year, federal regulators revised merger guidelines, which experts say could have a chilling effect on healthcare deals. Last month, the HHS named its first chief competition officer, doubling down on the agency’s promise to address anticompetitive threats in the industry.