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Sutter Health, the large hospital system in Northern California, said Friday that it had agreed to pay $575 million to settle claims of anti-competitive behavior brought by the California state attorney general as well as unions and employers. In addition to the settlement amount — which will go to compensate employers, unions and the state and federal governments — Sutter will also be prohibited from engaging in several practices that the state attorney general and others said the hospital system used to ensure its dominance. (Thomas, 12/20)

Becerra called it “one of the largest actions against anti-competitive conduct in the health care marketplace across the country, with unprecedented levels of injunctive relief to restore competition in the market.” It is larger than recent similar settlements with other providers in North Carolina and Washington state, his office said. The settlement immediately set off a debate between hospitals and consumer advocates over whether it will limit or increase health care costs. (Thompson, 12/20)

Under terms of the agreement, Sutter will continue to operate as an integrated system. But it has agreed to end a host of practices that Becerra alleged unfairly stifled competition, including all-or-nothing contracting deals demanding that an insurer that wanted to include any one of the Sutter hospitals or clinics in its network must include all of them — even if some of those facilities were more expensive than a competitor. The agreement includes the appointment of a jointly approved special monitor who will be charged with ensuring that Sutter is following the terms of the agreement for at least the next 10 years. (Gold, 12/20)

Becerra selected Jesse Caplan, managing director of corporate oversight with Affiliated Monitors in Boston, as the monitor. Caplan will investigate Sutter's compliance with the injunctive relief for 10 years, with the possibility of a one-time renewal for another three years, according to the agreement. He did not return a request for comment. (Bannow, 12/20)

Sacramento-based Sutter’s legal counsel said the company was happy to resolve the matter in a way that allowed it to maintain its integrated network and quality care. “Together with the Attorney General, the parties selected an experienced monitor who will oversee the agreement, which specifies parameters for contracting between Sutter Health and insurance companies going forward,” said Flo Di Benedetto, a Sutter senior vice president and general counsel. “There were no claims that Sutter’s contracting practices with insurance companies affected patient care or quality.” (Anderson, 12/20)

Becerra sued Sutter in 2018, alleging that the system — which operates 24 hospitals and 35 outpatient clinics in Northern California — abused its market power to raise prices, harming its subscribers. The case was combined with a similar lawsuit filed in 2014 by the United Food and Commercial Workers and Employers Benefit Trust, a union trust that pays for its workers’ insurance. That was classified as a class-action suit on behalf of 1,500 self-insured employers and trusts in California. The two cases were combined for purposes of a trial, which had been scheduled to begin in San Francisco Superior Court in October. (Li and Ho, 12/20)

Northern California health system Sutter Health has developed a free tool for patients to receive cost estimates on outpatient services. Health care providers will contact patients’ insurance companies to determine estimates for more than 200 ambulatory services, or services outside of hospital procedures. These estimates factor in patients’ benefits and annual health care plan. (Ingalls, 12/23)