Government

Doctor-hospital network gets rare FTC approval to integrate

Experts say the opinion is a good indicator of what the commission views as acceptable, but they still warn of heavy antitrust scrutiny.

By Amy Lynn Sorrel — Posted Oct. 15, 2007

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In only the second opinion of its kind, the Federal Trade Commission has opened the door for a physician and hospital network to contract jointly with health plans under a clinical integration program.

In a Sept. 17 advisory opinion, the Health Care Division of the FTC Bureau of Competition said Greater Rochester Independent Practice Assn.'s plan showed no signs of illegal price fixing. Instead, the bureau found that the program had the potential to provide low-cost, high-quality care to patients in the Rochester, N.Y., area.

In addition, group negotiation appears "reasonably necessary" to reach that goal, the FTC letter stated.

Antitrust laws generally prohibit individual doctors from getting together to negotiate collectively their contracts with insurers. But guidelines issued by the FTC and the Justice Dept. in 1996 and 2004 outlined two ways that physicians can form legitimate joint ventures: through financial integration with risk-sharing agreements, or through clinical integration designed to streamline practice standards and lower costs.

Until now, the first and only favorable review the FTC had given to a clinical integration program was in 2002, to Denver area-based MedSouth. The government reaffirmed that decision in June after conducting an intermediate review.

Experts say the recent 30-page opinion on the Greater Rochester IPA's plan is chock-full of clues as to what the government might view as acceptable.

"Obviously the FTC took this as an opportunity to not only approve GRIPA, but to send a message explaining what the law is, when there are problems and some of the things you need to do to have a successful program," said John J. Miles, an antitrust expert with Washington, D.C.-based Ober Kaler and a former Dept. of Justice lawyer.

Eric Nielsen, MD, chief medical officer for the Greater Rochester IPA, said the group is encouraged by the opinion and that other doctors should be, too.

"This is valuable not just to our physicians and to us, but to the country as a whole in showing that this model of clinical integration, which has been out there in the theoretical for the past 10 years, really can be implemented," Dr. Nielsen said.

Still, the opinion does not signal that GRIPA or groups like it won't still face heavy antitrust scrutiny, experts warn.

"It gives [Greater Rochester IPA] a green light that is slightly yellow," said Miles, who assisted the group in submitting its proposal for FTC review.

As far as the commission's Bureau of Competition could tell in its analysis, GRIPA's program was not likely to hurt competition in the area, said a staff attorney in that division. But "the letter is premised on [GRIPA] doing what they proposed to us," he said.

How it works

Greater Rochester IPA, a network of several hospitals and about 600 physicians across 41 specialties, plans to launch its clinical integration program by January 2008, Dr. Nielsen said.

Doctors will need to adhere to a set of clinical guidelines, such as disease management protocols, and refer within the network so that GRIPA can monitor treatment outcomes. Network physicians will participate in refining those guidelines using a Web-based information-sharing system. Doctors also will be involved in monitoring and evaluating their peers' performance.

Physicians who repeatedly fail to comply with GRIPA's standards will face disciplinary action and possible expulsion from the group.

In addition, the IPA will contract with health plans on behalf of its doctors, and physicians will be required to participate in all of its insurance contracts. GRIPA sees this as a way to track patients to achieve its quality goals.

But the network will operate on a nonexclusive basis, meaning that health plans still can contract separately with individual doctors without having to contract with the IPA.

The FTC said that feature was key.

Markus H. Meier, assistant director of the FTC Bureau of Competition Health Care Division, said GRIPA's joint contracting appeared "subordinate to" the network's primary purpose of improving the quality and efficiency of care.

"This view is reinforced by GRIPA's nonexclusive operation and apparent absence of market power," Meier wrote.

Miles said the recent opinion is one that doctors should consider carefully before embarking on the difficult path toward clinical integration. GRIPA's plan -- a sophisticated one -- took a few years to develop, he noted. A similar endeavor also might be too expensive for the average physician practice to afford.

Greater Rochester IPA, for example, estimated that its physicians would contribute approximately $10,000 each to help finance the electronic database, equip their offices, get trained and train their staff, FTC records show.

Miles also recommends seeking legal counsel and requesting an FTC review beforehand.

"You had better do it for the right reasons and make sure you have a program that is going to appeal to payers, because you can't force them to contract with you," he warned.

Dr. Nielsen said Greater Rochester expects to be scrutinized and already has received inquiries from doctors about the program.

"A group that wants to be clinically integrated has to be willing to step up and do the work," he said. It must also put patients first, he added.

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ADDITIONAL INFORMATION

Integration details

Highlights of Greater Rochester Independent Practice Assn.'s clinical integration program:

  • Clinical guidelines, such as disease-management protocols, using evidence-based research.
  • In-network referrals to help monitor treatment outcomes.
  • Participation in a Web-based information-sharing system that allows doctors to track and refine quality and cost guidelines.
  • Performance evaluation and compliance mechanisms to ensure that doctors adhere to established standards.
  • Participation in all GRIPA insurance contracts by network physicians.
  • Joint contracting, which lets GRIPA negotiate with health plans on behalf of doctors.
  • Nonexclusive contracting, which lets health plans negotiate with individual doctors, and not GRIPA as a whole.

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External links

Federal Trade Commission advisory opinion on Greater Rochester Independent Practice Assn.'s clinical integration program, in pdf (link)

Greater Rochester Independent Practice Assn. clinical integration program (link)

FTC follow-up advisory opinion on MedSouth, in pdf (link)

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