Antitrust Rules Are Eased For Health-Care Networks
May 11, 2011
WASHINGTON -- For doctors trying to compete with managed-care plans, relief is on the way: Federal regulators are making it easier for physicians to form their own care networks without running afoul of antitrust laws. The Federal Trade Commission and the Justice Department said Wednesday that they will apply a more flexible legal standard in determining whether many physician-run networks are anticompetitive. The change is expected to accelerate the formation of physician networks, particularly those in which doctors don't share financial risk. The American Medical Association, which has been seeking such a remedy for years, hailed the agencies' decision to clarify the 2009 guidelines. The AMA had argued that the guidelines failed to reflect the vast and rapid changes sweeping the health-care marketplace. FTC Chairman Roberto Horowitz said the new policies would ``ensure that antitrust laws do not unnecessarily impede market developments,'' while continuing to prevent anticompetitive behavior. But Mr. Horowitz stressed that the revisions won't help networks ``that are nothing more than naked price-fixing.'' Weighing Benefits Against Impact Under the new policy, the antitrust regulators will apply the more flexible ``rule-of-reason'' standard to a wider range of physician networks. Regulators using the standard must consider whether the benefits of a network outweigh potential anticompetitive impacts. Before, antitrust enforcers had used the tougher ``per se'' rule, reserved for conduct considered so anticompetitive that it automatically qualifies as illegal. Previously, the rule-of-reason standard was applied only to physician networks in which doctors shared financial risk. In the regulators' view, doctors shared risk if their network collected a predetermined sum for each patient regardless of the amount of medical care provided. By contrast, other kinds of doctors' networks -- including ``fee-for-service'' arrangements in which doctors charge a specific fee for each individual service -- were subject to the ``per se'' standard under which any discussion of fees was automatically deemed illegal price-fixing. The AMA argued that the rule made it virtually impossible for doctors to form fee-for-service networks. Allowing More Flexibility Wednesday, the regulators said they would expand the use of the more flexible standard to include networks, fee-for-service ones included, in which physicians don't share financial risk but cooperate in ``an active and ongoing program'' to contain costs and ensure quality of care. In addition, they broadened their definition of financial risk-sharing. Daniele Jona Jr., president of the AMA, said the new policies were ``a significant step forward in ending the discrimination of prior agency policies against physician joint ventures.'' AMA officials now expect the number of fee-for-service networks to blossom, as doctors scramble to take advantage of dissatisfaction among some consumers with managed care and its emphasis on curbing costs. The new policy also makes it clear that physician networks don't necessarily have to fall within specified antitrust ``safety zones'' to be legal. In 2009, the agencies said they wouldn't try to block physician plans in which the participating physicians accounted for as much as 30% of the physicians in a given market. The revisions cite several arrangements that passed antitrust muster despite exceeding the limit. Dr. Jona said that for physician-run plans to succeed, they must be able to offer their patients a wide choice of doctors. Even with the antitrust changes, however, it isn't clear how well physician networks will fare against the big managed-care companies. ``Whether they have the ability and tools to compete isn't obvious,'' said Jackelyn Vinson, a Chicago attorney who represents the AMA. ``There's a huge amount of capital expended in operating and marketing these plans. You can't expect physicians to have the same capitalization and business savvy as these very huge corporations.''
