Managed Care
Disease
Management

When Physicians Jointly Discuss Fee Information With Purchasers

MANAGED CARE June 1996. © MediMedia USA
Legal Forum

When Physicians Jointly Discuss Fee Information With Purchasers

Neil Caesar, J.D.
MANAGED CARE June 1996. ©1996 Stezzi Communications

Neil Caesar, J.D.

For purposes of efficiency in the overall work model, physicians in alliances, physician-hospital organizations and other competitive organizations who wish to offer "value" in health care delivery must collaborate in an integrated, synergistic flow of services. Such collaboration is hard without effective, unimpeded information-sharing. Yet federal and state antitrust laws loom like a hungry hawk in the face of information- sharing: when competitors look as if they may seek to reduce competition among them, the hawk swoops in and eyes its prey.

Last month, we examined the sharing of fee-related information among physicians. I pointed out that present federal antitrust law prohibits fee collaboration unless physicians satisfy a number of requirements, including substantial assumption of financial risk. This time around, let's continue our analysis by checking out areas of information-sharing that have fewer legal restrictions.

A new 'safety zone'

When physicians seek to share fee-related information with purchasers (e.g., patients, employers, managed care organizations), federal antitrust law offers them far more flexibility than when physicians seek to collaborate in fee-setting or share fee information among themselves. In September, 1994, the Department of Justice and the Federal Trade Commission jointly announced a "safety zone" concerning the circumstances under which providers may share information with purchasers.

This safety zone acknowledges that present practical safeguards can minimize antitrust concerns when providers share with a purchaser factual information regarding current or past service fees. The DOJ and FTC also recognize that proper safeguards can minimize anticompetitive dangers when information about the amounts, levels, or methods of fees or reimbursement is shared. In fact, the government has recognized that this brand of information sharing can have pro-competitive benefits by encouraging fully informed decisions by purchasers evaluating multiple opportunities.

What is required of you

This safety zone has several requirements:

  1. The collection of this data must be managed by a third party, not by one of the providers. A purchaser, health care consultant or trade association, for example, are viewed as appropriate information collectors.
  2. Any information shared among network physicians, or between the physicians and other providers, must be at least three months old. More current fee-related information may not be shared. But current fee-related information may be made available to purchasers.
  3. Any information shared among physicians or with other providers must be a data compilation from at least five providers for each reported summary conclusion or statistic. If the data base has fewer than five contributors, the information may only be provided to purchasers.
  4. No individual provider's data may comprise more than 25 percent (on a weighted basis) of that particular statistic.
  5. Such information must be aggregated so that recipients can't utilize the information to identify prices charged by any individual provider.

Keep in mind that the safety zone doesn't expressly apply to all collective negotiations between unintegrated providers and purchasers. If these negotiations advance agreements among unintegrated providers on fees or other reimbursement-related terms, the fee-sharing safety zone discussed last month will apply. The present safety zone also doesn't apply to any agreement among unintegrated providers to deal with purchasers only on agreed terms.

Thus, if a network wants to obtain data from its physician members on the subject of contract negotiations, the contract must impose sufficient financial risk on the doctors, and the network must possess sufficient credentialing and information protocols, etc., to show that it's sufficiently integrated to become an additional market competitor. This effort is necessary to survive price-fixing (and market-power) scrutiny under the physician network safety zone.

Be aware as well that the safety zone doesn't cover the collective provision of information (or opinions) concerning prospective fee-related matters. A network, for example, would be outside the safety zone if it helped disseminate information among the physicians about what fees they would accept with future contract opportunities.

The government recognizes that this type of information may be helpful if it truly preserves independent decision-making by the individual physicians. But the government is wary when this type of information may evidence a price-fixing agreement among the doctors (i.e., "We all agree that none of us will accept a contract below X dollars,") or exert coercive influence by implicitly suggesting a collective refusal to deal (i.e., "... since all of us have communicated our willingness to refuse contracts below X dollars, you managed care organizations have to realize that we won't respond kindly to your attempts to get us to agree to a lower number individually").

Consequently, government representatives remain open to such prospective discussions, but they want to assess them on a case-by-case basis, taking into account the nature of the information provided, the context for the communications, the rationale and the nature of the market.

When data aren't financial

Another safety zone applies to information sharing other than reimbursement- or fee-related information. This safety zone protects physicians from challenge when they supply data that relate to the mode, quality or efficiency of treatment. Therefore, for example, a network could provide information about procedures that its physicians advocate without raising antitrust concerns. Or a network could suggest practice parameters without antitrust implications. The government feels (and so do I) that these standards for clinical decisions provide pro-competitive benefits by highlighting increased quality and enhancing efficiency. The risks of competition restraint that are thereby posed are slight.

On the other hand, the safety zone expressly excludes the collective provision of information by physicians if there is any coercive element to it. So a network could not suggest, for example, that it will only deal with managed care plans that embrace its clinical parameters.

Neil B. Caesar is president of The Health Law Center (Neil B. Caesar Law Associates, PA), a national health law/consulting practice in Greenville, S.C.