In a new opinion that may pave the way for greater provider integration, the Federal Trade Commission approved an arrangement that would allow a physician independent practice association to contract with health plans on behalf of its competing physicians, the first time the FTC has approved such an arrangement.
The 10-page advisory letter to an attorney representing MedSouth, a Denver-based physician IPA, stated the FTC would not challenge the arrangement now but reserved the right to review it later because of the potential for anticompetitive effects. Jeffrey Brennan, assistant director of the healthcare services and products division of the FTC's bureau of competition, signed the letter.
MedSouth's proposal to partially integrate clinically and share data could improve quality and reduce cost, and joint contracting will help achieve those potential benefits, Brennan wrote. However, "there is evidence that MedSouth's current physician members may collectively possess the ability to exercise significant market power," the letter acknowledged.
In 1996, the FTC released guidelines allowing clinically integrated IPAs to contract with health plans, but this is the first to pass muster. The FTC previously has issued opinions allowing financially integrated IPAs to contract with health plans.
For-profit MedSouth, which is not financially integrated, includes 432 physicians from 216 practices in the South Denver/Arapahoe County area. Its members are still free to contract with payers individually as well as through the IPA. The proposal calls for the clinical integration of primary and specialty services, including sharing of patient clinical information; development of practice protocols; and reporting of physician performance relative to established benchmarks.
"As long as MedSouth's physician members actually are available and willing to contract individually with payers who prefer not to contract with the network, at prices that do not reflect the aggregate power of the group, or its membership is at a level where the network physicians are unable to exercise significant market power, implementation of the arrangement is not likely to endanger competition unreasonably," the FTC opinion said.