Lawsuit alleges Advocate Aurora price gouging of Wisconsin employers

A federal class action lawsuit has been filed against Advocate Aurora Health alleging it used its status as the largest health care system in Wisconsin to raise prices for employers.

The 75-page complaint was filed Tuesday in United States District Court for the Eastern District of Wisconsin by East Troy-based Uriel Pharmacy, Inc.

Uriel is a self-funded health plan that negotiates rates for its employees through its vendor, Cigna.

The lawsuit alleges Advocate Aurora’s prices are higher than New York City and 44% above the national average.

According to the complaint, Advocate Aurora’s negotiated price for a knee replacement is $62,538 — more than $21,000 higher than the price at a competitor hospital.

A colonoscopy with biopsy will cost an employer health plan more than $10,700 at Advocate Aurora compared to $4,700 at Froedtert & the Medical College of Wisconsin, according to the complaint.

“Advocate Aurora’s actions in recent years look more like that of a ruthless Wall Street institution that happens to own Wisconsin hospitals instead of a non-profit charity focused on the delivery of healthcare,” said Jamie Crooks, managing partner of Fairmark Partners, LLP, which represents the plaintiffs.

In a statement to the Journal Sentinel, Advocate Aurora Health said the system had just been made aware of the complaint, but was mounting what will be a “vigorous defense.”

“All of our decisions are guided by a relentless pursuit to provide the highest quality, affordable care for our patients,” the statement says. “Our data continues to demonstrate the added value we provide for our patients, communities and team members by growing as a system. Through our population health model, we drive efficiency and quality improvements, enhance health outcomes and bend the cost curve.”

Lawsuit comes after Advocate Aurora announced merger with Atrium Health

The antitrust lawsuit was filed two weeks after Advocate Aurora announced plans to merge with Atrium Health, creating the fifth-largest health system in the nation.

If approved by regulators, the merger will mean the combined systems will have more than 150,000 employees and combined revenue of more than $27 billion.

An analysis by the Kaiser Family Foundation found consolidation of health systems often leads to higher prices for patients.

That’s because health plans offered to employers must include the largest health systems, which in turn give the system more leverage on pricing.

For example, in Burlington, Advocate Aurora owns the only inpatient hospital. The next nearest inpatient facility is Aurora Lakeland Medical Center, which is 20 minutes away.

To get to a non-Advocate Aurora facility, a Burlington resident would need to drive more than 25 minutes to Mercyhealth Hospital in Lake Geneva and even if they did, the Lake Geneva hospital does not offer a PET scanner, cardiac catheterization

laboratory, cardiac rehabilitation, or an Extracorporeal ShockWave Lithotripter (the most common way to treat kidney stones). All of those things are available at the Burlington hospital.

That means employers in Burlington and surrounding areas must have Advocate Aurora in their insurance plans.

The complaint also cites a monopoly on inpatient care in the Marinette, Two Rivers, Sheboygan, Plymouth and Port Washington areas.

The suit asks for Advocate Aurora to refund the amounts it has allegedly overcharged businesses, unions, and local governments and seeks to ban Advocate Aurora from engaging in specific kinds of anti-competitive conduct.

Corrinne Hess can be reached at [email protected]. Follow her @corrihess

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