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Anti Trust Concerns Greatly Affect Healthcare Reform – Part 3 of 3

by admin on May 2, 2011 No comments

A Good Trend

Healthcare reform is causing the Department of Justice and other regulators to do two nearly unprecedented things in the history of anti-trust law:  innovate and cooperate.  I’m exaggerating, but the truth is that healthcare reform has lit a huge fire under the…ummm…butt of government regulators to find ways to facilitate competing healthcare providers to “come together” for the sake of reducing cost and improving quality. 

 Several years ago, the Department of Justice has lightened its almost unworkable antitrust restrictions by: (1) expanding the Arule of reason@ analysis for determining whether the antitrust laws have been breached, (2) expanding the notion of shared financial risk beyond mere capitation; and (3) expanding the role of the Amessenger.@  Though the role of so called Messenger Model organizations (e.g. IPAs) provide to be a failure, the fact that the DOJ would consider other ways of creating “substantial economic risk” was shocking.  And now, what is even more shocking is that the DOJ recently:  (1) promised to view all ACO proposals essentially more leniently, and (2) agreed in a joint statement with the HHS Office of Inspector General (which has primary enforcement authority on such things as Stark and Anti Kickback violations) to cooperate with eachother to facilitate the development and roll out of ACOs.

 Rule of Reason

For those who appreciate a little more depth, possible antitrust violations are analyzed by governmental authorities using either Aper se@ or Arule of reason@ analysis.  Violations considered to be Aper se@ violations are indefensible, regardless of possible good intent or even positive market effects.  Examples include: (1) two or more physicians agreeing to charge specific fees for certain procedures in their respective, independent practices, and (2) two or more physicians agreeing not to do business with a particular HMO. 

In contrast, rule of reason analysis requires enforcement authorities to probe deeper into the investigated arrangement to see if the arrangement furthers or conflicts with the principles underlying the antitrust laws.  This type of analysis gives the investigated parties an opportunity to justify their arrangement; per se analysis does not.

The revised Statements of Antitrust Enforcement Policy in Health Care, issued several years ago by the DOJ, expanded application of the rule of reason analysis to situations previously viewed as per se violations.  For instance, a provider network has traditionally had to be financially integrated through capitation or withholds to receive rule of reason analysis, and discounted fee for service arrangements with the network sent many physicians to antitrust defense attorneys during enforcement actions based on the network=s negotiations of other payment arrangements.  And now, with healthcare reform, they want to go further.

Shared Financial Risk

The Statements also expanded the notion of Ashared financial risk,@ traditionally the cornerstone of compliance.  The original guidelines identified only two examples that met the requirement: (1) capitation and (2) significant withholds.  The revised guidelines expand the shared financial risk concept by looking at other things to satisfy the requirement.  Now, risk sharing may include (1) the use of substantial financial penalties or rewards based on overall costs or utilization, and (2) the use of global or per case fees.  Even more impressive is the fact that, instead of substantial financial risk, a network may pass muster if it demonstrates Asubstantial clinical integration.@ 

Substantial clinical integration can be established by demonstrating that the network is Alikely to produce significant efficiencies@ via an Aactive, ongoing program to evaluate and modify practice patterns by the physicians and create a high degree of [physician] interdependence and cooperation.@  Examples provided include utilization review, physician credentialing, investing significant financial and human capital, and clinical integration. 

Additionally, if the network has risk and non-risk contracts, the new guidelines will permit joint pricing if the efficiencies from the risk business spill over into the non-risk business.  This is a boon to most networks, since they often have both risk and non-risk contracting opportunities. Though the changes are not an antitrust Ahome free@ pass, they do free physicians from strict Acapitation only@ arrangements, which have been elusive in many practice areas.

                                                                     Conclusion

Over the years, anti-trust law has been on a mudslide slow rate of change.  The recent healthcare reform debate and innovations have accelerated at least the outspoken willingness of officials to ease up restrictions.  But the proof is in the pudding, since officials continue to challenge proposed combinations which purport to reduce costs and improve quality.  In their defense, officials said they would be more open-minded.  They didn’t say they’d be stupid.


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