The House Republican leadership's Medicare reform plan loosens antitrust rules in a way physicians say will level the competitive playing field.
But health insurers, managed-care companies, other providers and antitrust enforcement agencies say the plan will tilt the healthcare market in doctors' favor by allowing physicians to engage in a variety of anti-competitive practices and dangerously expand their marketplace power.
Physician groups, led by the American Medical Association, contend that antitrust relief will help them organize networks in the new managed-care-oriented Medicare program.
AMA spokesman James Stacey said doctors "have got to figure out how they're going to organize, how they're going to cover costs and how they're going to reimburse themselves."
But opponents argue that House Republicans won't accomplish the goal of promoting marketplace alternatives to Medicare's antiquated fee-for-service structure if they exempt anti-competitive activities from government enforcement.
"To the extent that they hurt managed care, they hurt their own policy objectives," said a lobbyist for a coalition of managed-care companies, employers, group practices and other providers. The lobbyist asked not to be identified.
Opponents say two provisions pose dangers. One would exempt medical self-regulatory bodies from antitrust laws. The other would allow nonintegrated, non-risk-sharing physician networks to negotiate and set fee schedules with new provider-sponsored organizations that could be created under proposed Medicare reform legislation. PSOs, similar to HMOs, offer a managed-care product to the Medicare population.
Medical self-regulatory bodies are national and local medical societies, specialty certification boards and hospital medical staff peer-review units that set and enforce healthcare quality standards.
Some of those organizations have been sued successfully under antitrust law for using such quality standards for financial gain or to exclude managed-care companies and group practices from markets.
Under the House GOP Medicare antitrust exemption, which would apply in non-Medicare cases as well, neither private citizens nor government agencies could sue such entities. But the exemption would not apply in cases in which self-regulatory groups used quality standards for financial gain.
The Justice Department and the Federal Trade Commission, in a letter to Rep. Fortney "Pete" Stark (D-Calif.), warn that although the two agencies successfully have blocked some anti-competitive activities, the frequency of recent enforcement actions indicates physician self-regulatory groups still are trying to "obstruct cost-effective delivery of healthcare services."
Self-regulatory entities often act in the name of healthcare quality, meaning the exemption could insulate them from lawsuits even in cases in which they are seeking financial gain, such as excluding or boycotting competing providers, the agencies said.
The AMA's Stacey argues, however, that self-regulatory groups need such protection to gain latitude in selecting doctors for their own physician networks without running afoul of antitrust rules, much as HMOs are able to do.
The provision allowing fee schedule agreements among physicians in nonintegrated networks also could boost doctors' marketplace muscle, opponents say.
Under current law, unless physicians or other providers are part of fully integrated, shared-risk networks, they are barred from fixing prices. Fee agreements among nonintegrated providers are considered per se antitrust violations, meaning law-enforcement agencies assume they lead to price fixing and always hurt consumers, and therefore are illegal.
The House plan, however, would allow fee schedule agreements among physicians and other providers in nonintegrated networks serving Medicare PSOs and other health benefit plans. It judges the anti-competitive nature of those talks on whether they are "reasonable."
The FTC and the Justice Department contend that providers can organize networks under existing antitrust rules.
Furthermore, permitting doctors and other providers to organize in a nonintegrated way and collectively bargain with PSOs could allow them to boycott PSOs that do not agree to their terms, the agencies said.
It also could put hospitals at a competitive disadvantage, an FTC official said.
"I wouldn't be surprised if hospitals start catching on that this provision is going to hurt them," said the official, who asked not to be named.
Even though such anti-competitive actions are clear and produce no other market efficiencies, the agencies said they might not be able to block them. Proving that such an arrangement would unreasonably hurt competition will be more difficult than simply proving that physicians fixed prices, they said.
Antitrust provisions in the House GOP Medicare bill
Would exempt physician self-regulatory entities from antitrust laws, except
when they take actions for purposes of financial gain.
Would allow qualified, nonintegrated physician networks to negotiate and set fee schedules with Medicare provider-sponsored organizations.