Class 10 – ANTITRUST

Antitrust Concerns

  • Providers should be aware of antitrust type of laws and make sure to not violate any of these type of laws.
  • United States has certain laws governing monopolies and other issues that fall under the antitrust area.
  • Providers are subject to such antitrust laws and have tried to create certain laws to allow providers to organize in a manner that would otherwise be considered in violation of antitrust type of laws.

Under federal antitrust laws competing physicians are not allowed to collectively negotiate prices for their services.  Such behavior is consideredillegal price fixing and a per se, (meaning automatic) violation of federal law. There are state and federal antitrust laws and regulators watch efforts by providers to unite. Providers should consider antitrust issues when they merge or consolidate. Physicians are barred by the Sherman Antitrust Act from fixing prices collectively. There are ways for an organization to be less likely to violate antitrust laws. For example, doctors unionizing.

According to the article by Elizabeth Thompson, “Docs Seek Antitrust Relief From States,“ with subtitle “While Federal Lawmakers Debate Antitrust Exemption, State Pass Laws Giving Docs Bargaining Clout, “Modern Healthcare (May 1, 2000), federal law does not apply under the “state action immunity doctrine” in that activities that are permitted by and supervised by a state are immune from federal antitrust scrutiny.  Accordingly, those states that pass state antitrust exemption laws are immunizing their physicians from federal antitrust laws.  There are about 22 states withhospital exemption laws (with such laws starting in the mid-1990’s with hospital merger and acquisitions) and there are about three states (Texas, Vermont and Washington) with antitrust exemption laws regarding competing physicians.  There are other states with pending legislation.  Insurers oppose such exemption laws and claim that they are anti-consumer because they are anti-competition.  Insurers claim that these type of exemption laws will raise insurance premiums and likely raise the number of uninsured in America.

The American Medical Association (AMA) has sought federal antitrust relief for physicians for almost five years primarily by lobbying the Federal Trade Commission and the U.S. Department of Justice.

According to Modern Healthcare, (July 17, 2000), two Florida hospital systems will pay fines totaling almost $500,000 for sharing sensitive pricing and managed-care information in violation of a 1994 antitrust settlement.  In this case, a lawsuit brought by the U.S. Justice Department and the state of Florida was filed in May, 1994 in U.S. District Court in Tampa, Florida.  This lawsuit claimed that a merger of the 258 bed Mease Hospital in Dunedin, Florida and 100 bed Mease Countryside Hospital, Safety Harbor, Florida would violate Section 7 of the Clayton Act, which bars deals that reduce competition.  According to data from the American Hospital Association, the two systems combined control 34% of the acute care beds in Pinellas County.

In this case, a consent decree was entered into which expires in 2004, that prevents the two systems from merging but allows them to partner on some clinical and administrative services including outpatient services, information systems, and other ancillary services.  The intent of the decree hailed as trend-setting by the U.S. Department of Justice was to allow the systems to consolidate some services while remaining competitors.  The hospitals admitted to violating some of the terms of the consent agreement.  According to settlement documents, the systems violated their consent decree by jointly selling outpatient services to managed-care plans, coordinating their managed-care contracting and sharing pricing information.  The court order prohibits the systems from even considering a full merger for 3 years.  The order requires the hospital systems to give some payers the opportunity to cancel contracts, and the hospitals will have to change the way they contract with health plans and discontinue joint ownership is some outpatient facilities.

The case involving the Wisconsin Marshfield Clinic is another example of how antitrust issues can effect providers. In this case, the Wisconsin Marshfield Clinic was sued by Blue Cross/Blue Shield to give Blue Cross/Blue Shield and other HMO’s access to its providers. Blue Cross/Blue Shield sued the 430 physician clinic in February, 1994 contending Marshfield’s exclusive contracts with physicians in parts of Wisconsin effectively kept the Blue Cross/Blue Shield and other HMO’s from competing in those counties. A jury awarded Blue Cross/Blue Shield $48 million antitrust damages award and the judge lowered this award to $15 million and ordered the Marshfield Clinic to give Blue Cross/Blue Shield access to its providers.

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