The Antitrust Coalition For Consumer Choice In Health Care

Questions and Answers about the Antitrust Laws and H.R. 3897

The prime objective of the antitrust laws is to promote consumer welfare by preserving and promoting competition. First enacted 100 years ago, the federal antitrust laws are based on sound economic principles. Increased competition is good for consumers because it results in more products and services produced at lower prices and better quality. The antitrust laws, therefore, are designed to preserve competition not competitors.

The federal antitrust laws include the Sherman Act, the Clayton Act and the Federal Trade Commission Act. These laws prohibit price fixing, boycotts and similar agreements among competitors that produce anticompetitive effects. They also prohibit mergers, acquisitions or joint ventures that would lessen competition or create monopolies. The Department of Justice (DOJ) and Federal Trade Commission (FTC) are responsible for enforcing the federal antitrust laws. These agencies work closely with state attorneys general in their efforts to enforce state antitrust laws.

Existing federal and state antitrust laws permit health care providers to communicate with each other, and with health plans and the public, about quality of care and patient care issues. They also have allowed integrated delivery systems to develop to provide consumers with choice, quality and cost-effective health care. Weakening the antitrust laws would deny consumers choice, quality, and affordability.

How does enforcement of existing antitrust laws benefit health care consumers? Antitrust enforcement increases consumer choice by (1) ensuring that providers do not collude to restrict the range of prices and available services; and (2) ensuring that providers compete for patients by offering a range of desirable services at reasonable prices.

How do antitrust laws encourage innovation in health care?

The antitrust laws promote innovation and flexibility by encouraging providers to distinguish themselves in ways that will attract consumers, for example, by providing the best services at reasonable prices. The antitrust laws prohibit collusion that would suppress the innovation needed for success in a competitive market. The antitrust laws do not allow providers to conspire to fix prices or decrease services, or to limit the options available to consumers.

Do the antitrust laws prevent physicians and other health care providers from communicating with each other, and with health plans and consumers, about patient and quality of care issues?

No. The antitrust laws permit health care providers to discuss, both among themselves and with health plans, patients and others, clinical issues or other concerns they may have regarding the impact of managed care on quality of care. Indeed, guidelines issued by the FTC and DOJ recognize that such activities (as long as they do not involve an effort to boycott or coerce others) may increase quality and efficiency. The antitrust agencies have never brought an enforcement action aimed at providers who were only attempting to communicate their views concerning patient care issues.

Do the antitrust laws prevent health care providers from gathering data about their own costs or presenting fee-related information to health plans?

No. In fact, the antitrust agencies have established a “safety zone” for the collective provision of fee-related information, such as historical fees or other aspects of reimbursement, so long as the data is submitted to a neutral third party, and is disseminated in aggregate (anonymous) form that does not reflect pricing or related information that is less than three months old. The agencies also state that the collective provision of information or views concerning prospective fee-related matters also may not raise antitrust concerns, as long as providers make independent decisions concerning their participation with health plans.

Do the antitrust laws prevent health care providers from sharing with each other information about how to interpret health plan contracts?

No. Thus, for example, providers can employ an agent who gives them objective information comparing the reimbursement rates and other terms offered by health plans in their community; such information can enable providers to make better-informed decisions concerning which plans they wish to participate in. Providers also can share information that will help them interpret health plan contracts. Many medical societies, including the American Medical Association, have provided their members with detailed information on reviewing health care contracts.

Some doctors feel that the antitrust laws prevent them from negotiating “fair fees” for their services with large health plans and insurance companies. Don’t the antitrust laws need to be changed in order to “level the playing field”?

No. The antitrust laws already allow physicians to form physician-controlled group practices or other joint ventures that can enable them to increase their bargaining power and offer their services more efficiently and effectively (non-physician providers have the same ability).

The real complaint of doctors is that the antitrust laws prevent them, as competitors, from jointly negotiating fees. The relevant issue is whether existing rules should be changed. H.R. 3897 would allow competing doctors to jointly negotiate fees and would essentially remove competition from the health care field altogether. This would be allowed in all markets, regardless of the number of health plans in the market or the market share of each plan. It would also apply to negotiations with self-insured employers. This can only result in higher prices to consumers and lower quality health care.

But wouldn’t special antitrust rules for doctors simply put them on the same footing as insurers who already have an exemption from the antitrust laws?

Certain aspects of the business of insurance that are regulated by the states are exempted from the antitrust laws under the McCarran-Ferguson Act. The exemption, however, does not apply to relationships between insurers and health care providers, nor does it shield attempts by insurers to boycott or fix the prices they pay providers. Similarly, mergers of insurance companies are subject to antitrust review, and several HMO mergers have been investigated by the antitrust agencies.

Why does the Antitrust Coalition include non-physician provider groups? Wouldn’t they gain the benefit of H.R. 3897’s special antitrust treatment?

Although they would be covered by the bill, many non-physician providers are concerned that physicians might use H.R. 3897’s special rules to coerce health plans to exclude from their panels non-physician providers who compete with physicians. The result would be fewer choices and higher costs for consumers.

Wouldn’t H.R. 3897 simply give health care professionals the same kind of exemption that workers in other industries have?

To the extent doctors and other health care providers are employees, they already are covered by existing “antitrust exemptions.” H.R. 3897 would go much further than the existing labor antitrust exemption because it covers all situations involving negotiations between providers and plans, regardless of the size or share of the plan, or the extent to which a plan controls the working conditions or has “leverage” over providers. Moreover, H.R. 3897 lacks the oversight exercised by the National Labor Relations Board and neither DOJ nor FTC would be able to exercise meaningful oversight over physician joint negotiations.

Won’t special antitrust treatment for doctors help consumers by making it easier for health care providers to collaborate?

No. Such special treatment will harm consumers. The antitrust laws already permit legitimate, procompetitive collaboration, such as joint ventures, that results in efficiencies and lower prices rather than increased prices or decreased competition. Those that seek special antitrust rules are simply seeking to avoid competition. Such rules would allow competing providers to collaborate to raise prices and to deny consumers the benefits of a competitive market in health care services. If providers can manipulate health care markets, fixing prices or collectively withholding or reducing services whenever it is to their economic advantage, consumers would be the big losers.

The antitrust laws are quite complex. Is anything being done to make the antitrust laws easier to understand?

The Department of Justice and the Federal Trade Commission have gone to extraordinary lengths to help the health care industry understand the antitrust laws and their enforcement. In 1993, in response to requests by providers for guidance, the agencies issued Health Care Policy Statements setting out safety zones for six types of transactions; transactions within the safety zones will not be prosecuted. Conduct outside the safety zone is not necessarily illegal. The agencies also explain the analysis they will use for those cases that do not fall within the safety zones. Transactions covered include hospital mergers, physician joint ventures, joint purchasing arrangements, hospital information exchanges, hospital joint ventures in high-technology equipment or services, and physicians’ joint provision of fee and non-fee related information to purchasers of services.
In 1994 and again in 1996, the agencies published revised antitrust enforcement policies relating to health care to address several concerns raised since the original policy statements were announced in 1993. The 1993 policy statements provide additional guidance and certainty to the health care industry, particularly rural providers. New statements were included on non-exclusive physician networks, hospital joint ventures to provide specialized or expensive services, and the collective provision of fee-related information by providers. The agencies also provided a description and examples of the analytical principles that they will employ in evaluating the competitive impact of multiprovider networks. The statements are available on the Web at www.ftc.gov/reports/hlth3s.htm.

The agencies routinely provide advisory opinions covering proposed activities, and have committed to respond to requests from the health care industry, in most cases, within 90 days. No other industry has such a commitment.

Are there any alternatives to special antitrust rules or exemptions that will address doctors’ concerns while meeting consumer needs?

One alternative is to support the use of the antitrust enforcement guidelines. Physicians, hospitals, health plans and consumers participated in the formulation of the antitrust guidelines by bringing their legitimate concerns to the attention of the enforcement agencies. Guidelines give health care providers greater certainty as they explore new ways of working together. A second alternative is to increase the information that is available to providers, employers and consumers so they can make more informed choices about health care arrangements. Unlike special antitrust rules for doctors, the use of the guidelines and better information makes the market work better, without exposing consumers to anticompetitive practices or higher prices.