American College of Physicians: Internal Medicine — Doctors for Adults ®

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New antitrust guidelines to aid physicians forming health plans, networks

From the September 1996 ACP Observer, copyright 1996 by the American College of Physicians.

By Michael J. Werner, JD

New federal guidelines are expected to give physicians who want to form networks and health plans greater leeway under existing antitrust laws.

The Federal Trade Commission (FTC) and Department of Justice (DOJ) will be releasing the third set of policy guidelines to clarify antitrust laws for physicians and others planning to form networks or health plans or engage in other types of integration activities. How far the enforcement agencies will go with these new guidelines is still unknown.

Previously, the agencies have required groups of physicians forming health plans or networks to share financial risk. The rationale for this policy has been that having groups share risk provides incentives for the physicians to practice in a competitive and cost-effective manner. If physician groups do not share financial risk, the reasoning goes, those doctors are merely a group of competitors with the incentive to engage in price-fixing, which is a violation of the antitrust laws.

Under the new guidelines, however, the two agencies are expected to recognize that physicians can practice competitively and efficiently without necessarily sharing risk. Additionally, the agencies are expected to broaden their definition of risk-sharing to include more than capitation and withholds.

Since last winter, the agencies have met with various groups, including ACP, to learn more about the health care market and whether the laws—or their enforcement—have stifled innovative approaches. The agencies have been under fire from some physician groups that have argued that antitrust enforcement has deterred new physician ventures.

In a meeting with the FTC, ACP representatives urged officials to be more flexible. The College argued that existing enforcement policies overemphasize financial risk-sharing and that many groups of physicians are practicing high-quality, cost-effective medicine without sharing financial risk and should consequently not be subject to sanction.

An analysis of antitrust issues published in the July 1, 1996 issue of Annals of Internal Medicine noted that under existing antitrust law, physicians already have the authority to form their own health plans and networks, and that federal agencies have rarely challenged physician ventures. The paper also pointed out that federal agencies already provide physicians with some guidance on integration efforts through advisory opinions and policy guidelines. The new guidelines will aid physicians by further clarifying antitrust law and helping ensure that its enforcement coincides with marketplace activities.

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