This week, a New York City-based startup decided to wage its own David vs. Goliath-style battle in the healthcare technology world.
Following a months-long dispute, data platform Particle Health sued EHR behemoth Epic. The startup filed an antitrust lawsuit against Epic in the Southern District of New York on Monday, alleging that the EHR vendor is using its dominance in the market to prevent competition in the payer platform space.
The payer platform space refers to the emerging market for digital platforms that allow payers to access and analyze patient data at scale for a variety of purposes, including improving care coordination, designing population health programs or streamlining claims processing. Particle’s complaint alleges that Epic is preventing the startup from competing in this space by cutting off Particle customers from accessing Epic’s EHR data.
Particle believes the lawsuit is an “unprecedented challenge” to Epic’s market power. Epic thinks the startup’s claims are without merit.
The payer platform market
Particle, founded in 2018, seeks to help its customers, including providers and health plans, access and understand patient data held by Epic and other EHR systems.
Essentially, Particle acts as a middleman, using an API to enable health data access between Epic and its own customers. The startup participates in several nationwide health data exchanges, such as Carequality, CommonWell, and eHealth Exchange.
Particle put itself on “a meteoric growth path” when it began offering its services to payers last year, the complaint read.
The startup made its move into the payer market because it noticed that an increasing number of payers were becoming “payviders,” meaning they provide healthcare services to their members. For instance, UnitedHealth Group, the nation’s largest healthcare insurer, is the largest employer of physicians in the country through its Optum subsidiary, and Humana, also a payer, has a senior care unit called CenterWell Primary Care.
“Particle was the first to realize that payers offering these services legitimately needed records to assist physicians with providing treatment, and could therefore, under certain circumstances, utilize the centralized exchange networks to obtain medical records through the most efficient means currently available,” the complaint read.
Under the rules of HIPAA and health information networks, those same payers are allowed to use the records for “secondary” purposes, such as population health analytics or processing claims, the complaint stated.
By giving payers access to this information, Particle entered into competition with Epic, said Adam Wolfson, one of the lawyers representing Particle.
Epic launched its payer platform in 2021, allowing insurers to request, receive, store and analyze health records at scale. When Particle decided to compete in 2023, Epic had firm control of the emerging market, including contracts with the seven largest health plans in the nation, according to the complaint.
“In the payer platform market, [Epic] was the only game in town for several years,” Wolfson remarked.
While Epic may be dominant in the space, other companies like Zus Health, Clarify Health and Health Gorilla also aim to satisfy payers’ appetites for patient data. Zus Health and Health Gorilla, like Particle Health and Epic, are also part of Carequality’s exchange network.
When did the dispute begin?
In March, Epic filed a formal complaint with Carequality, a health information exchange that supports the exchange of 400 million clinical records per month. The complaint alleged that Particle was sharing patient data with payers that weren’t using the data for treatment — and therefore violating HIPAA.
Epic also sent its customers a notice informing them that the company was cutting off data access for Particle Health.
“This poses potential security and privacy risks, including the potential for HIPAA Privacy Rule violations in the event disclosures of protected health information were made under the Treatment Permitted Purpose when the requesting entities did not have treatment relationships with the patients to whom the records related,” Epic said in a notice to its customers, which was obtained by CNBC.
Particle released a blog post on April 12 stating that Epic had stopped responding to data requests from a “subset” of Particle’s payer customers “without a clearly stated reason or explanation.” Particle also said that it “began addressing this issue immediately” and wanted to work with Epic to restore access for these customers.
Additionally, Troy Bannister, Particle’s founder, released a statement refuting Epic’s claim that the startup’s customers were requesting patient data for purposes other than treatment.
“To our knowledge, all of the affected partners directly support treatment. They pull data for providers at the point of care and subsequently share data back with the Carequality network. These partners were all reviewed by Carequality prior to onboarding and they are entitled to fair and transparent treatment by the network and other implementers,” Bannister’s statement read.
The disagreement underscored the need for greater transparency in health data exchange networks, noted Brendan Keeler — who has held leadership positions at healthcare data companies like Zus Health and Redox — in an article he wrote at the time of the initial dispute.
In his view, the conversation shouldn’t center on whether or not Particle’s customers are using data solely for treatment purposes — because there are a lot of other legitimate reasons for which healthcare organizations would seek data.
For instance, health navigators and insurance brokers require data to help patients select the best providers and plans, and pharma companies need data to maximize the success of their clinical trials, Keeler pointed out.
At present, EHR companies like Epic get to arbitrate which requests are appropriate and which requests should be denied. But Keeler thinks health information exchanges and regulators need to come together and build a more transparent system that allows stakeholders to see the exact use cases for which payers are requesting data.
“The best possible action is to act with increasing unfettered transparency — publish your customers’ use cases, make their directory entries granular and clear, and communicate the intended purposes of use,” Keeler argued.
What does the lawsuit allege?
Particle’s antitrust lawsuit alleges that Epic “is engaged in a scheme to stamp out competition in an important new market by misusing power that it has due to its control over electronic health records,” stated Wolfson, one of Particle’s lawyers.
The complaint claims that Epic has been blocking Particle customers from data — and therefore stifling Particle’s entry into the payer platform market — for the past six months that have continued following the initial dispute in the spring.
“Between 80-94% of people in the country have at least one Epic electronic health record in their file. So if Epic is refusing to provide those records for treatment requests, then you’re not getting someone’s full medical health history. We allege that gives Epic a ton of power over those who need to get those full medical histories,” Wolfson explained.
Particle CEO Jason Prestinario released a statement and video testimonial on LinkedIn this week declaring that the lawsuit is not just a business dispute, but rather also a move to protect patients’ rights to their health data.
In the six months following Particle’s initial dispute with Epic, the EHR vendor “caused real patient harm” and damaged Particle’s reputation with its “false allegations” of HIPAA violations, he said in the video.
“We’re concerned about what’s to stop them from doing that to more patients, to us, or to any other competitor that emerges,” Prestinario remarked.
By filing the lawsuit, Particle seeks monetary damages, injunctive relief and to put an end to Epic’s alleged information blocking practices. The startup also filed a formal information blocking complaint with the ONC, which has now been referred to HHS’ Office of the Inspector General, Prestinario noted.
The lawsuit also aims to create more room for competition in the payer data platform market, he added.
“We need to ensure a level playing field where companies like Particle — but not just Particle — can continue to innovate, where providers and payers have choices, and where patients ultimately benefit from better, more efficient care,” Prestinario declared.
An Epic spokesperson called the lawsuit’s claims “baseless” in a statement sent to MedCity News.
“This lawsuit attempts to divert attention from the real issue: Particle’s unlawful actions on the Carequality health information exchange network violated HIPAA privacy regulations. Particle’s complaint mischaracterizes Carequality’s decision, which in fact proposes banning Particle customers that were accessing patient data for impermissible purposes,” the statement read.
Carequality told MedCity News that it “would not be appropriate” to comment on the ongoing litigation between Particle and Epic because it is not a named party in the lawsuit.
“What we can say is that Carequality is committed to the integrity and transparency of our interoperability framework. We feel confident in our independent and non-biased dispute resolution process, which considers all the information in meticulous detail to reach an outcome that preserves trust, improves our network, and reaches the best outcome for our community. That process resulted in a resolution that is still being considered by the parties and therefore we will not comment on the specifics,” the emailed statement read.
What does this mean for the future?
In the comments section of Prestinario’s LinkedIn post, Lisa Bari — CEO of Civitas Networks for Health, a national organization representing regional health information exchanges — echoed Keeler’s comments from earlier this year about the need for greater transparency.
“Just reading the complaint, it seems like there is a bit of a misunderstanding (to say the least) about the treatment use case under Carequality as it relates to payers and plans (and TEFCA, although this is not, at present, directly about TEFCA). From my perspective, I’m looking forward to discovery, to bring more of these complaints into the public domain. Transparency is key to trust,” she wrote.
The Trusted Exchange Framework and Common Agreement (TEFCA) is a federal initiative designed to create a standardized, nationwide framework for the exchange of healthcare data between various systems and organizations.
The lawsuit also draws attention to the fact that patients often bear the brunt of the harm when it comes to the industry’s messy data exchange practices.
Unrestricted access to healthcare data is crucial for improving the quality of patient care, pointed out Mitesh Rao, CEO of OMNY Health, a national data ecosystem that facilitates biotech and medical research.
“Healthcare is increasingly a data-driven industry. Access to the wealth of insights buried in the troves of data we generate can help rapidly improve both quality and safety in clinical care. Data can also serve as a foundation for providers to collaborate in improving patient outcomes,” he remarked.
The free flow of data helps physicians better identify and address patients’ health complexities, deliver appropriate medications and care plans, and shape the future of medical research, Rao added.
It’s uncertain whether Particle’s lawsuit will make it to trial. Whether or not the underdog triumphs or fails, this legal battle underscores a larger struggle for patient data access, as well as the right to compete in an EHR market dominated by giants.
Photo: AndreyPopov, Getty Images
Editor’s note: This story was updated to include commentary from Carequality.