Long-awaited federal guidelines that relax antitrust reviews for a wider variety of health networks drew cheers from providers, which said the new rules will spur integration.
"This clearly gives institutions greater flexibility in creating networks," said Mark Horoschak, a partner with the law firm of Womble Carlyle Sandridge & Rice in Charlotte, N.C.
The new guidelines, released last week, will give a boost to provider-sponsored networks, according to Frederic Entin, American Hospital Association general counsel. The guidelines take effect immediately.
"This helps any provider that wants to form a network to compete with insurance companies that are forming panels of providers," Entin said.
The new guidelines, which were released jointly by the U.S. Justice Department and the Federal Trade Commission, specifically targeted physician networks. However, federal officials said the new review process would apply equally to any type of health network.
"This really opens the doors not only for physician networks but hospitals and any other combination of providers," said Charles Weller, a partner with Baker & Hostetler in Cleveland.
Under previous guidelines, health networks were required to share financial risk to ensure the network would not be considered a per se violation of federal law. Those networks that were based on financial risk were instead subject to the so-called "rule of reason," which requires federal officials to review each network individually to determine if the transaction is anti-competitive.
The new guidelines will allow networks that are not financially integrated but share clinical and quality information to be reviewed under the rule of reason.
Providers seeking to form networks in rural areas also stand to gain from the new guidelines.
In the past, providers have been hesitant to form networks in rural areas because they often needed to engage a significant percentage of the providers in a market to make the network viable. Now rural physician-hospital organizations that involve "a large percentage of physicians...would receive favorable treatment under the antitrust laws," the guidelines said.
"There was a perception that it wasn't possible to form a network outside major metropolitan areas," Entin said. "This should ease the concern."
The new rules do not change the current federal "safe zones." In these zones, if an exclusive network contains less than 20% of physicians in a market or 30% of the doctors not under exclusive contracts, it is considered acceptable under federal antitrust law.
But while the new guidelines leave the safe zones intact, they make it clear that networks that exceed the safe zones may still be found to be lawful.
"Many such physician networks have received favorable (treatment)," the guidelines state.
Not everyone gave the new rules an unqualified positive review.
The national Blue Cross and Blue Shield Association questioned whether the new clinical integration test would be sufficient to weed out sham networks.
"Financial integration is the only reliable indication of true integration," a Blues spokeswoman said. "The agencies should approach other forms of integration cautiously."
The American Medical Association gave the new guidelines a positive review but added, "we still have a way to go before we reach a level playing field."
The AMA has supported an antitrust law sponsored by Rep. Henry Hyde (R-Ill.) that would make even more physician networks subject to rule-of-reason treatment. In a statement, the AMA said it would continue to push for the passage of the Hyde measure.
Other provider groups, including the AHA, have opposed the Hyde bill. Clinton administration officials are also against the measure. Both FTC Chairman Robert Pitofsky and Assistant Attorney General Anne Bingaman said they believed the new guidelines eliminated the need for the Hyde bill.
"I believe we have arrived at the same place the Hyde bill would have taken us," Pitofsky said.