Feds expand safe harbor regulations

From the January 1995 ACP Observer, copyright © 1995 by the American College of Physicians.

By Deborah Gesensway

Federal antitrust regulators, attempting to keep up with a health care industry that continues to reconfigure itself at a fast clip, have issued a new set of guidelines for physicians and hospitals considering mergers and joint ventures.

The new guidelines allow physicians to jointly collect and provide information to insurance companies and other third-party payers, in most cases, and describe permissible ways of forming physician-run networks.

The policy statements issued last fall augment and clarify a first set of guidelines issued by the Justice Department and the Federal Trade Commission in September 1993. In a written statement, FTC Chairwoman Janet T. Steiger stated that the government would continue to challenge mergers and other business dealings it considers anti-competitive. The new statements simply outline several additional "safety zones" or "safe harbors" for collaborative actions that the agencies generally will not challenge as illegal except under extraordinary circumstances.

"Health care providers seeking to improve efficiency, reduce costs or otherwise benefit consumers and competition through joint activities, need not be concerned about antitrust enforcement," Ms. Steiger stated.

Antitrust enforcers, therefore, will not challenge health care providers when they collectively provide "current or historical, but not prospective" information about fees to health care purchasers, so long as that is not being done to set fees. According to the new guidelines, doctors who collect this kind of information must do so through a trade association, consultant, academic institution or government agency. The data must come from at least five providers and be at least three months old.

Any provider has always been permitted to provide information about his fees on his own or through a legitimate joint venture, and that will continue.

This safe harbor stresses, however, that federal enforcers will not permit any type of collective fee-information gathering if it is used in any way to fix prices or "engage in a boycott or similar conduct ... to coerce any purchaser to accept collectively determined fees."

Physicians and other health care providers also will not attract the scrutiny of antitrust enforcers for conducting surveys of prices or salaries, so long as the survey is managed by a third party, more than five providers participate and the data is more than three months old.

Non-fee-related information (for example, that relating to outcomes) collected jointly by physicians is also OK so long as it is not accompanied by any provider attempt to threaten a boycott or otherwise coerce a purchaser who does not use the information provided in a particular way.

The guidelines state that physician-controlled joint ventures, in which the member doctors collectively agree on prices and jointly market their services, "promise significant pro-competitive benefits for consumers of health care services." As a result, several of the new statements describe types of physician networks that will not be challenged on antitrust grounds.

"Exclusive" networks--which restrict doctors' ability to contract independently with other plans--will not raise antitrust concerns if they compose less than 20% of the physicians in any specialty practicing in the relevant geographic market and share substantial financial risk. "Non-exclusive" networks can account for 30% of each physician specialty in a market. In rural areas, the guidelines state, physician networks may include greater proportions of the practicing doctors.

The AMA says the guidelines do not go far enough to level the playing field in the new health care environment. Even with these safety zones, the association says, physicians remain at a disadvantage when trying to form networks that can compete with systems run by hospitals and other non-providers.

ACP's Director of Public Policy, Howard B. Shapiro, PhD, says that while additional legislation may be necessary, the new regulations provide clarity in what has been a confusing area. "Under the new rule, as long as physicians are willing to bear risk, they are allowed to form their own plans," Dr. Shapiro said.

The two federal agencies releasing the guidelines have stressed that many cooperative business arrangements falling outside these safety zones are nonetheless "lawful and permissible."

Additional statements issued this fall spell out rules for hospital mergers, joint purchasing arrangements among providers, joint ventures among hospitals to buy or operate high-tech equipment, and hospital joint ventures to provide specialized clinical or other expensive health care services.

Copies of the joint "Statements of Enforcement Policy and Analytical Principles Relating to Health Care and Antitrust" are available from the FTC's public reference branch, Room 130, Sixth Street and Pennsylvania Avenue N.W., Washington, D.C. 20580; 202-326-2222.

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