Coverage and Payment for Services: Antitrust Issues

The following information on antitrust issues was provided by legal counsel at Foley, Lardner, Weissburg and Aronson, Inc.


Q: Can the largest insurance company in the area say it won't pay for services provided by physician assistants (PAs)? What if lots of PAs would lose their jobs as a result?

A: As unfair as it may seem, such a scenario would not generally constitute an antitrust violation by the payer. As a general antitrust principle, a buyer of services has the right to choose from whom and on what terms it will purchase services. Absent some form of governmental requirement that a payer contract with any willing provider, a payer can decide that it will not contract with PAs. While such a decision on the part of the payer is shortsighted and perhaps economically foolish, such a decision by any single payer is not an antitrust violation.

However, if otherwise competing payers were to agree among themselves not to purchase services from PAs, such an agreement could constitute an antitrust violation. Claims from chiropractors that the American Medical Association orchestrated a boycott by its member physicians against chiropractors were the basis of several governmental and private antitrust lawsuits.

Antitrust issues are also implicated in a scenario where competitors of PAs -- perhaps disgruntled physicians or nurse practitioners -- agree among themselves to exert pressure upon a payer to exclude PAs from the payer's panel of participating providers. An agreement among professionals who compete with PAs, and who elicit collusion from a payer, could form the basis of an antitrust claim by the disadvantaged PAs. (It would be advisable to have substantial proof of this type of collusion before making an antitrust claim.)

 

Q: Can a Medicaid program, private payer, or employer compensate nurse practitioners at a higher reimbursement rate than compensation for PAs, even though the same services are provided?

A: Unfortunately, the prerogative of a given payer or employer which elects to pay different types of providers different amounts for comparable services generally does not constitute an antitrust violation by the payer or employer. As noted above, in the absence of an "any willing provider" or other governmental requirement, a payer can decide with whom it wants to contract. The payer has similar discretion with regard to the price and other terms in contracts it will enter. Employers have similar discretion. While claims have been made under laws prohibiting discrimination on the basis of gender for such conduct, such claims raise different issues outside the scope of antitrust analysis. As a general proposition, the merits of such gender-based claims depend upon the specific facts. Such claims have not frequently been successful.

 

Q: Can the PAs in an area agree among themselves not to accept less than a certain reimbursement amount from a payer?

A: Price-fixing, probably the most serious of all antitrust violations, is nothing more than an agreement among competitors with regard to the prices at which they will sell their services. It is per se (outright) unlawful, and a private litigant or government anti-trust enforcement agency need not prove there are any actual anti-competitive effects resulting from the agreement. Thus, even just two PAs -- if they are competitors -- are probably engaged in an antitrust violation if they agree with each other about their respective fees. The fact that the PAs, individually or collectively, may lack negotiating power vis-à-vis payers does not alter the conclusion. Price-fixing agreements are unlawful even if the otherwise competing PAs lack any ability to affect market prices.

Moreover, competing PAs agreeing to act in such a manner may also constitute another serious antitrust violation -- a concerted refusal to deal, also known as a "group boycott." Agreements by otherwise competing health care professionals to resist payer contracting proposals requesting fee discounts are a current focus of antitrust enforcement agencies.

It is important to keep in mind that these price-fixing and group boycott agreements are per se (outright) unlawful only if the agreements are between practitioners who would otherwise be competitors. Agreements among employees of the same employer, or among partners in a partnership or in a joint venture, do not generally involve competitor relationships. In such circumstances, the fellow employees or partners are instead considered to be a single competitor in the marketplace. Accordingly, agreements among fellow employees of the same employer or partners in a partnership do not, as a general principle, constitute unlawful conduct for anti-trust purposes.

 

Q: If it's illegal for PAs to agree on what to charge the payer, can PAs agree regarding what other terms should be in a payer contract?

A: It depends upon the competitive significance of the contract terms. Keep in mind that the antitrust laws are designed to promote competition and the essence of competition is the exercise of buyer (payer) choice. When competing professionals collaborate on contract terms vis-à-vis the buyer, there is a risk that such collaboration can result in lessened competition among the professionals by eliminating variations in the contracts. However, payers sometimes encourage, or even facilitate, collaboration among PAs on the non-price terms of their contracts. Contract uniformity on administrative and utilization issues is often desired by the payer. In such circumstances, it would be prudent for the PAs who intend to collaborate on such non-price contract terms to obtain, in advance, payer encouragement of such collaboration.

However, even such initial payer encouragement does not allow the PAs to threaten collective action against the payer. For example, competing PAs cannot agree that they will decline to contract with the payer or even threaten to do so. This would constitute a serious antitrust violation known as a concerted refusal to deal.

 

 

Last Revised: 8/1/03