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Clinical Integration: The Legal Story Behind the Trend


San Francisco Bay area. Non-exclusive and no concerns about market power ... DOJ/FTC Statements of Antitrust Enforcement Policy in Health Care Statements 8 & 9 ... – PowerPoint PPT presentation

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Title: Clinical Integration: The Legal Story Behind the Trend

Clinical IntegrationThe Legal Story Behind the
  • MSSNY Clinical Integration Task Force Meeting

Christi J. Braun, Esq. January 23, 2007
The Conduct
  • Physicians want to be able to contract with
    health plans, third-party administrators, and
    other payors through provider-controlled
    contracting entities (IPAs, PHOs, POs, etc.)
  • Joint pricing of services
  • Joint negotiation of contract terms
  • Competing physicians/practice groups

The Problem with the Conduct
  • Sherman Act 1 (FTC Act 5)
  • Prohibition on agreements (contracts,
    combinations, and conspiracies) among private,
    competing individuals (or businesses) that
    unreasonably restrain completion
  • Price fixing
  • Boycotts
  • Concerted refusals to deal
  • Market allocation

The Legal Standards
  • Naked price-fixing
  • The per se rule
  • No examination of justifications
  • Ancillary agreements
  • The rule of reason
  • Balancing of efficiencies against harm
  • Market power- ability to raise price above
    competitive levels in a defined market
  • Product and geographic markets
  • Participation percentage and exclusivity

The Consequences
  • More than 30 federal settlements
  • Bad publicity
  • Injunctive relief
  • Forced contract termination
  • Prior notice to proceed legally
  • Dissolution

Ways to Solve the Problem
  • Independent, direct contracting
  • Messenger model
  • Financial integration
  • Clinical integration
  • Merging of practices

Clinical Integration Definition
  • An active and ongoing program to valuate and
    modify the clinical practice patterns of the
    physician participants so as to create a high
    degree of interdependence and collaboration among
    the physicians to control costs and ensure
  • FTC/DOJ Statements of Antitrust Enforcement
    Policy in Health Care, Statement 8.B.1 (1996)

Clinical Integration Questions
  • What do the physicians plan to do together from a
    clinical standpoint?
  • How do the physicians expect actually to
    accomplish these goals?
  • What basis is there to think that the individual
    physicians will actually attempt to accomplish
    these goals?
  • What results can reasonably be expected from
    undertaking these goals?
  • How does joint contracting with payors contribute
    to accomplishing the programs clinical goals?
  • To accomplish the groups goals, is it necessary
    for physicians to affiliate exclusively with one
    IPA or can they effectively participate in
    multiple entities and continue to contract
    outside the group?
  • FTC/DOJ, Improving Health Care A Dose of
    Competition,Ch. 2, p.40-41 (July 2004).

Clinical Integration Guidance
  • The program may include (1) establishing
    mechanisms to monitor and control utilization of
    health care services that are designed to control
    costs and assure quality of care (2) selectively
    choosing network physicians who are likely to
    further these efficiency objectives and (3) the
    significant investment of capital, both monetary
    and human, in the necessary infrastructure and
    capability to realize the claimed efficiencies
  • FTC/DOJ Statements of Antitrust Enforcement
    Policy in Health Care, Statement 8.B.1 (1996)

Clinical Integration Indicia
  • Commentators primarily focus on four indicia of
    clinical integration (1) the use of common
    information technology to ensure exchange of all
    relevant patient data (2) the development and
    adoption of clinical protocols (3) care review
    based on the implementation of protocols and (4)
    mechanisms to ensure adherence to protocols.
  • FTC/DOJ, Improving Health Care A Dose of
    Competition,Ch. 2, p.37 (July 2004).

Clinical Integration Features
  • Infrastructure
  • Medical Director
  • Health information exchange (HIT)
  • Credentialing
  • Quality selection
  • Clinical protocols
  • Collaborative effort
  • Cost, quality, and utilization benchmarks
  • Performance monitoring
  • Individual and group
  • Formal feedback
  • Corrective Action
  • Carrot / stick
  • Formal plans
  • Monitoring
  • Case/Disease management
  • Patient education
  • Payor involvement

Example 1 MedSouth
  • Background
  • 2002 FTC Staff Advisory Opinion
  • Features
  • 101 PCP/331 physicians in 39 specialties
  • 216 separate practice groups
  • Geographic practice area limited to South
    Denver/Arapahoe County
  • Non-exclusive, but more than 50 of the
    physicians in more than 20 specialties at 3 area

MedSouths Proposed Program
  • Clinical protocols covering 80-90 of the
    prevalent diagnoses
  • 48 under development 100-150 contemplated
  • Development/revision by affected MD annually
  • Utilization and quality measured against
  • Monitoring through clinical information system
    and medical chart reviews
  • Web-based clinical data record system
  • Access to lab and radiological reports,
    transcribed patient records and office visit
    information, treatment plans and Rx information
  • Online Rx orders
  • Performance bonus/risk payments

Example 2 Brown Toland
  • Background
  • Sued by FTC in 2003 consent in 2004
  • Submission of plan pursuant to consent order
  • Features
  • 687 physicians covering every specialty
  • San Francisco Bay area
  • Non-exclusive and no concerns about market power

Brown Tolands Program
  • Clinical practice guidelines and benchmarks
  • 96 guidelines established and 8 in development
  • Utilization review
  • Performance comparison against protocols,
    benchmarks, and peers
  • Analysis based on copies of claims
  • Case management / Disease management
  • High cost/use, diabetes, Asthma, CHF and HIV

Brown Tolands Program
  • Credentialing
  • EMR (50-75 of physicians within 1 year)
  • Clinical lab and diagnostic imaging results,
    electronic prescriptions, Rx support (allergies,
    interactions, formulary), standardized clinical
    notes, CPOE, clinical guideline support
  • Quality incentive bonus based on of physician

Example 3 Suburban Health Org.
  • Background
  • 2006 NEGATIVE FTC Advisory Opinion
  • Features
  • 192 PCPs employed by 8 hospitals
  • Indianapolis and 6 surrounding counties
  • Exclusive
  • Very little overlap in hospital service areas,
    but some physician offices compete

SHOs Proposed Program
  • Practice guidelines/medical management protocols
  • Asthma, CAD, CHF, and diabetes
  • Quality management programs
  • Measure guidelines compliance and assess quality
  • Disease management
  • Asthma, CAD, CHF, and diabetes
  • Patient Education
  • Smoking cessation, diet control weight loss,
    and immunizations

SHOs Proposed Program
  • Credentialing
  • Technology platforms (rolled out in 18-24 months)
  • Interactive learning system, patient satisfaction
    surveys, and data collection
  • Physician incentive plan (5 of last years
  • Half for group performance and half for
    individual performance

Whats So Bad About SHO?
  • Employed physicians
  • Integration undertaken by employers
  • Each hospital could develop a program and require
  • No SHO authority to discipline MD or enforce the
    protocols / No peer review
  • Reliance on hospitals to motivate performance,
    which hospitals could do without the joint price
  • Program does not fundamentally alter nature of
    patient services

Whats So Bad About SHO?
  • Primary care only
  • No collaborative provision of services across
    hospitals / referrals
  • Little interaction among 8 hospitals PCPs
  • Limited set of medical conditions
  • No justification for negotiation of entire fee
  • Exclusive contracting is likely to restrain

Other Examples
  • Advocate Health Partners
  • December 29, 2006 settlement with FTC
  • nothing in this Order shall be construed as a
    determinationthat the Program is, or was at any
    time, a qualified clinically-integrated
  • Waukesha Elmbrook Health Care
  • Long Island Health Network

Other Examples
  • DOJ/FTC Statements of Antitrust Enforcement
    Policy in Health Care Statements 8 9
  • http//
  • Improving Health Care A Dose of Competition,
    pp. 35-41
  • http//
  • MedSouth, Inc. Advisory Opinion Letter
  • http//

Other Examples
  • California Pacific Medical Group, Inc. d/b/a
    Brown Toland
  • http//
  • (See PPO Submission, Follow-up, Second Follow-up,
    Transmittal Letter, Response)
  • Suburban Health Organization Advisory Opinion
  • http//
  • Advocate Health Partners Settlement
  • http//
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