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Understanding Medical Practice Anti-Trust Risks

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Medical Risk Management

By Dr. Charles F. Fenton III JD

fenton* Monopolistic risks are reduced when more than a few networks or contracts are available in the local area for excluded medical providers to join.

  • * Fee schedule MCO contracts, per se, are not generally considered price fixing, provided the doctor providers have not conspired with one another to set those prices. Moreover, network pricing schedule should not spill over into the non-network patients.

Some Issues:

  • Individual providers may be excluded from a network if there is a rational reason to do so. It is much more difficult to exclude a class of providers, than it is to exclude an individual provider.
  • A safety zone can be created if networks or other contractual plans require a substantial amount of financial risk-sharing among plan participants, since Stark II laws have been relaxed. Such zones have been created by the Department of Justice (DOJ) and Federal Trade Commission (FTC), in recent policy statements.
  • The FTC and DOJ are not likely to challenge an exclusive provider IPA that includes no more than 20-25% of the doctors within the panel, who share financial risk. Such panels are likely to fall within a Safe Harbor.
  • Tying arrangements (e.g.: the requirement to buy one item/service in order to buy another item/service) are suspect if not reasonably justified. For example, a patient should not be required to obtain a brace prescription from a specific provider, in order to purchase the device from a laboratory that the doctor owns.
  • Non-exclusive provider panels will not usually be challenged if no more than 30% of the providers are included (another Safe Harbor provision). Physician networks are often analyzed according to four criteria: (1) anti-competitive effects, (2) relevant local markets, (3) pro-competitive effects, and (4) collateral agreements.Further anti-trust considerations consist of analyzing
  • Market Power. This consists of two factors: (1) Geographic Power and (2) Product Power.

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Flag MOney

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  • Geographic Power is difficult to define in today’s environment. In the past, the geography that was analyzed when medical practices merged was the immediate neighborhood. Currently, the geographical area could consist of an entire metropolitan area. In the past, individual patients would often seek a physician whose office was close to work or home. Now they seek a physician based on inclusion in a health plan. Now, health plans choose physicians based on needs within an entire metropolitan area.
  • Product Power relates to the specific service being performed. There are two products in today’s environment: (1) Primary Care and (2) Specialty Care. Since there are so many primary care physicians in practice, it would be difficult for all but the largest group to acquire product power.

Assessment

It is easier for medical specialists to develop product power. However, certain specialists may never be able to obtain product power.

For example, foot care is provider by many types of physicians. Primary care physicians, emergency physicians, chiropractors, physical therapists, orthopedic surgeons, nurse practitioners, and podiatrists all provide foot care. Therefore, it would be difficult, even for a large group of podiatrists to obtain significant product power.

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