FTC weighs letting doctors do more to market together Antitrust rules would be relaxed to meet competition

April 08, 1996|By NEW YORK TIMES NEWS SERVICE

WASHINGTON -- With huge mergers changing the face of the health care industry, the Federal Trade Commission plans to make it easier for doctors to band together, coordinate prices and form networks to compete with insurance companies and health maintenance organizations.

The new policy comes as many members of Congress are pressing the trade commission and the Justice Department to relax their rules on such joint ventures.

The House Judiciary Committee recently approved a bill that would allow doctors to exchange information about their costs, fees and profits for the purpose of establishing a network to sell health care to patients or employers.

Acknowledging criticism that its policy toward doctors might have been too restrictive, the trade commission says it is now trying to identify factors that would justify "more lenient antitrust treatment" of physician networks.

Doctors contend that such networks, rather than restraining competition, may actually encourage it by providing alternatives to HMOs, which offer comprehensive medical services in return for fixed monthly premiums.

Enrollment in HMOs and other forms of managed care is soaring, in part because employers see them as a way to control costs.

Robert Pitofsky, chairman of the Federal Trade Commission, said in an interview that he and other commissioners agreed that the current guidelines for physician networks "ought to be eased some."

Under current policy, a group of doctors may legally agree on prices if they share financial risk, as in a clinic or a group practice. But Mr. Pitofsky said the government also ought to jTC consider the possibility that a doctors' network might improve the quality of care or help control costs, even if the doctors do not share the financial risk by accepting a flat payment for each subscriber.

"Doctors ought to be able to collaborate in their dealings with insurers and HMOs, which are themselves very strong in the marketplace," Mr. Pitofsky said. "HMOs are tough bargainers, and some of them have very substantial market power."

Physician networks can take many forms. Groups of doctors can jointly market their services to employers, patients, HMOs or other insurers. A network may charge a set monthly fee for each patient or a discounted fee for each service.

Doctors often want to collaborate and share information about prices without sharing financial risk or fully merging their office practices.

What the rules say now

The trade commission and the Justice Department, which share responsibility for enforcing antitrust laws, have previously laid out specific conditions that must be met by such physician groups to avoid being condemned as illegal price-fixing conspiracies.

To be legally safe, the guidelines say, doctors in physician networks "must share substantial financial risk," and one of the best ways for them to do that is by accepting a per capita payment, or premium, for each subscriber. Under this arrangement, known as capitation, the doctors or their joint venture must absorb any costs that exceed the premium payments.

For decades, the Supreme Court has held that price-fixing agreements are so harmful to competition that they should be automatically treated as antitrust violations.

The new policy does not mean that all doctor networks will be approved by the government, but it would give many doctors a fuller opportunity to make their case by showing that their networks would benefit consumers and buyers of health care.

Federal antitrust officials say they will issue the new policy by the end of August. Doctors and federal officials say the change will have immediate practical consequences.

Clark C. Havighurst, a law professor at Duke University long known as an advocate for aggressive enforcement of the antitrust laws against doctors, said he believed that the current federal policy was too rigid and did not serve the best interests of consumers.

"Federal agencies appear to be anticipating where they think the health care marketplace is or should be headed and attempting to steer physician-sponsored networks in that direction," he said. "They run the risk of substituting their own judgments and preferences for those of purchasers."

Increasingly, doctors want to band together and sell their services directly to employers, without using an insurance company or an HMO as an intermediary.

Doctors say they are forming their own health plans so they can regain control of medical decision-making and make patients' interests a priority, without having to earn profits for the shareholders of a big corporation.

Many HMOs use financial rewards and penalties to discourage doctors from ordering excessive tests and procedures or referring patients unnecessarily to specialists. Mr. Havighurst said consumers usually had no way to monitor the rationing of care, so they "may feel safer dealing with plans that do not put physicians at financial risk."

Pub Date: 4/08/96

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.