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Revised Policy Statements on Health Care Antitrust Enforcement Signal Green Light for Physician and Multi-Provider Network Development

The Department of Justice ("DOJ") and Federal Trade Commission's ("FTC") revised statements of antitrust enforcement policy for health care do not change the principles of antitrust law, but make clear that their application will further facilitate the formation of physician and multi-provider networks without the corresponding risk that these networks will be accused of engaging in activity that could be considered "illegal per se," such as price fixing. The revised statements clearly provide greater latitude for competing providers to form networks without full integration, especially if they are formed with the goal of containing costs and ensuring quality of care. The revised statements are actually more consistent with what has actually been happening in the marketplace for health care services in a managed care environment and reflect additional experience on the part of the DOJ and FTC in applying the antitrust laws to different consolidations and concerted activity between providers and suppliers in response to the competitive forces in the managed care marketplace.

The changes reflected in the revised statements are designed to introduce greater flexibility to the analysis of the activities of physician and multi-provider networks under the antitrust laws. First, the DOJ and FTC specifically recognize "non-financial integration" in the guidelines. Furthermore, the agencies have elaborated on the types of risk sharing arrangements which will qualify as financial integration and correspondingly fit into the already existing safety zones from antitrust enforcement.

The additional types of risk sharing arrangements recognized by he revised statements expand the form of risk sharing previously recognized in the antitrust guidelines. These forms included only networks which engaged in capitated contracting and those that establish substantial withholds to be distributed only if the network met established cost containment goals. The revised policy statements add three more contracting mechanisms to the risk sharing list. The first is provider reimbursement based on a percentage of plan premiums or revenues where care is rendered for a set payment, regardless of the actual care giver. Furthermore, as another variation of withholds, a network may establish overall cost utilization goals and impose subsequent substantial financial rewards or penalties on providers based on network performance in meeting those goals. Finally, the revised statements recognize global or all inclusive case rates as a form of financial risk sharing, which involves an agreement by the network to provide a complex or extended course of treatment that requires the substantial coordination of care by different types of providers for a fixed fee, even though the cost of providing care in any specific case may vary.

The revised statements also provide additional guidance on the application of the "messenger model" method for establishing price arrangements between providers and payors. The text of the revised statements on multi-provider networks makes it clear that the messenger may be authorized to accept contract offers on behalf of network participants. The messenger may also help providers understand contract offers by providing objective or empirical information about the offer. There is also additional guidance on networks in rural areas and the promise to further elaborate on multi-provider networks in the future as the agencies gain more experience with their formation and operation.

The revised statements clearly introduce more flexibility into the analysis of multi-provider networks in the managed care environment. The expansion of the types of financial integration that will be accepted and the flexibility introduced into the "messenger model" method for establishing joint pricing between providers are significant areas of improvement from prior statements on antitrust enforcement policy. Additionally, the revised statements attempt to specifically emphasize that the safety zones and examples of the application of the antitrust laws contained in the statements do not mark the limit of what the agencies will consider legal. It will remain to be seen how these principles are applied in future cases. The bottom line is that the revised statements are a strong positive signal to physician and multi-provider networks and clearly attempt to level the playing field between payors and providers in the health care marketplace.

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