Will the Big, Bad Antitrust Wolf Blow Your IPA Down?

By Pretzer, Michael | Medical Economics, April 7, 1997 | Go to article overview

Will the Big, Bad Antitrust Wolf Blow Your IPA Down?


Pretzer, Michael, Medical Economics


Not if the new federal rules are as kind and gentle as they appear For the first time, "clinical integration" is a defense.

The Big Bad Wolf-the one that doctors fear will huff and puff and blow physician networks down-isn't so bad after all.

That's the consensus among legal experts and health-care consultants who've studied the federal government's latest explanation of how antitrust law applies to doctors. Though the Federal Trade Commission and the U.S. Department of Justice haven't quite become sheep in wolves' clothing, they now appear friendlier toward provider networks, and they're garnering praise for the antitrust guidelines that they issued last August. "The agencies' statements show that they're open-minded," says Douglas C. Ross, a health-care attorney with Davis Wright Tremaine in Seattle.

Opinion on how the Feds' newfound mellowness will actually affect the development of provider networks, however, is divided. Some observers predict that there will be a proliferation of IPAs, PHOs, and group practices without walls. Others argue that the market-not government antitrust policy-will determine the shape and growth of networks.

No one really knows yet what the impact will be. "It's too early to see concrete results," says John "Jeff" Miles, an attorney in the Washington, D.C., office of Ober, Kaler, Grimes & Shriver. "Typically, it takes at least nine months before we see some type of action."

The law is designed

to weed out collusive networks

Antitrust law was created to protect consumers by keeping competitors from conspiring to fix prices, or from growing so large that they can raise prices with impunity. Consequently, it's illegal for doctors who compete with one another to collude on fees in order to ward off managed-care organizations-or to make more money from them.

The law makes allowances, however, for networks that increase competition, save resources, and improve the quality of health care in a market. But until August, these exceptions seemed very limited, and they weren't particularly well defined or understood.

It was generally believed, for example, that the only way a network could pass muster with the federal agencies was for the physicians to share financial risk through capitation or substantial withholds. Savvy antitrust lawyers, however, were telling physicians that there was also another way: Certain forms of "clinical integration," they said, might be sufficient to ward off antitrust action. Physicians in clinically integrated networks weren't tied together financially, but they did engage in such things as utilization review, quality assurance, or profiling network members. However, it was hard to assure doctors that they'd be protected, notes Jeff Miles, because the government guidelines didn't specifically mention clinical integration.

If the enforcers intended to protect clinically integrated networks, they were inconsistent. For instance, in a 1982 Supreme Court case (Arizona vs. Maricopa County Medical Society), the justices ruled that a physician network had broken the antitrust law by setting fees, even though it did utilization review. By the late '80s, however, the Justice Department and the FTC loosened up their approach, allowing networks in the Maricopa mold, recalls Miles. Then, a few years later, the enforcers reversed course again.

The agencies' joint August missive, "Statements of Antitrust Enforcement Policy in Health Care," has removed some of this uncertainty-though the law itself wasn't changed one iota. "The rules that were implicit before are explicit now," explains Miles.

Still, abiding by the rules doesn't guarantee you won't be investigated; it just means that, if you are investigated, Justice or the FTC will be more open-minded. They'll look at the particulars of your situation, using the so-called "rule of reason,"rather than automatically assuming that your network is in per-se violation.

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