Anti Trust Concerns Greatly Affect Healthcare Reform – Part 2: Illustrations

Case #1:  A payer approaches you and several of your colleagues, who are competitors.  The payer gives you a contract and fee schedule, which you review with your colleagues.  Though the payer recognizes that you are not a physician group practice, it would like to deal with just one of you for contracting purposes.  You choose one of you to Arepresent@ the group of you, and seek changes in the contract, including the fee schedule.

Impression: The Sherman Act has been violated.  Since you and your colleagues are competitors and are not members of a single professional corporation through which you conduct all or substantially all of your professional practices, you may not discuss fees among yourselves, and you may not appoint someone to act as the voice of the Agroup.@  In addition to the price fixing described above, if you decided together not to contract with the payer, you would have engaged in a group boycott.

The violations can be avoided by properly structuring a formal group and adhering to certain rules in negotiating with payers.  In scrutinizing activities of a physician organization, one of the key things antitrust enforcement authorities will examine is the degree of the organization=s Aeconomic integration,@ the degree to which economic risk is shared among the shareholders.  The level of integration is key in determining whether the organization is a single economic unit or whether it is comprised of two or more economic units.

Determining whether a physician organization is sufficiently integrated is often, however, an extremely difficult task.  The law changes and is very fact-specific.  The FTC looks to such things as: 1) whether the organization is capitated; 2) the extent services are centralized in the organization; and 3) accountability of the shareholders to the organization through such things as utilization management, quality assurance and peer review.

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