Consider Antitrust Laws Prior to Entering Healthcare Collaborations

July 11, 2013
Rachel V. Rose, JD, MBA
Rachel V. Rose, JD, MBA

Rachel V. Rose, JD, MBA, advises clients on compliance and transactions in healthcare, cybersecurity, corporate and securities law, while representing plaintiffs in False Claims Act and Dodd-Frank whistleblower cases. She also teaches bioethics at Baylor College of Medicine in Houston. Rachel can be reached through her website, www.rvrose.com.

Collaborations between physicians and other healthcare entities can be beneficial …but they can also violate federal and state antitrust laws.

"The heart of our national economic policy long has been faith in the value of competition."
(Standard Oil Co. v. FTC, 340 U.S. 231, 248)

Collaborations between physicians and other entities can be beneficial with the caveat that they do not harm competition. In healthcare, an antitrust situation can arise in a multitude of transactions. One common scenario that has been closely scrutinized by courts, legislatures and agencies is joint pricing negotiations with health plans.

The Federal Trade Commission (FTC) is one of the federal government agencies that both assesses and enforces antitrust laws, such as the Sherman Act and the Clayton Act. Recently, Connecticut legislators sent a "Request for Comment on H.B. 6431." The proposed legislation would have enabled, "the formation of 'healthcare collaboratives' comprising otherwise independent healthcare practitioners." In turn these collaboratives would be able to "jointly negotiate prices and other terms with health plans" while attempting to insulate these types of negotiations from antitrust law scrutiny.

These are the types of arrangements that have raised red flags and garnered enforcement in the past. In evaluating the ability of these particular "healthcare collaboratives" to jointly negotiate prices with health plans, the FTC indicated that it would inhibit competition among physicians.

The FTC, however, provided the following guidance:

• Even in the context of healthcare provider collaborations, there are several instances where the arrangement was complied with antitrust laws;

• CT H.B. 6431 failed to clear the antitrust hurdle because of the appearance of joint negotiations "extract[ing] higher reimbursement rates from health plans" rather than practice integration for cost reduction or improved care coordination; and

• Because precompetitive options exist that comply with antitrust laws, the main purpose would "not generate efficiencies."

Healthcare comprises a significant portion of the United States gross domestic product (GDP). Because of the federal legal and policy position on antitrust laws, the FTC concluded that these particular arrangements would stifle competition. Therefore, physicians should pay particular attention to the types of arrangements and activities that are permissible under federal and state antitrust laws.