Don't Fear Integration; Just Get It Right
Independent practice associations (IPA) appear to be on the decline, but providers should give such alliances a second look, says Randi Kopf, RN, MS, JD, principal at Kopf HealthLaw, LLC, in Rockville, MD. The problem isn't with providers working cooperatively. Rather, problems arise when providers are too loosely connected but try to negotiate collectively. Substantial integration should be the goal, Kopf says.
A look at recent Federal Trade Commission (FTC) activity makes it clear that without substantial integration, collective negotiations can put an IPA at risk of FTC action.
In a June 2009 California case, the FTC found that a 600- physician IPA in California violated federal antitrust law by fixing prices charged to insurers. The IPA ultimately agreed to a consent order that barred it from collectively negotiating fee-for-service reimbursements "and engaging in related anticompetitive conduct."
The IPA did not engage in any activity that might justify collective agreements on the prices its members would accept from insurers, the FTC found. The IPA had not "clinically or financially integrated their practices to create efficiencies sufficient to justify the complained-of conduct."
In contrast, in a 2007 opinion, the FTC concluded that collective negotiation was not illegal price-fixing because the "substantial integration by its physician participants … has the potential to result in the achievement of significant efficiencies that may benefit consumers." Joint contracting was "subordinate to, reasonably related to, and may be reasonably necessary for, or to further" the IPA's ability to achieve the potential efficiencies.
The proposed joint pricing and collective negotiations were "ancillary" to the integration and achievement of efficiencies.
For participants in a clinically integrated venture to jointly negotiate price and price-related terms, the joint negotiation must be reasonably necessary to achieve the legitimate pro-competitive purposes of the joint venture. Much of this is outlined in the Department of Justice's and FTC's Statement 8, available at www.ftc.gov.
The message is much the same as it has been for years, says Kopf. The FTC has simply spelled it out. She cites some of the basics to emerge from the FTC statements, opinions, and actions. Integration, she points out, involves:
- Financial risk-sharing mechanisms
- Cooperative activities to achieve efficiencies in delivery of clinical services
- A high degree of interdependence and cooperation
- Reasonably necessary joint pricing and collective negotiation to the integration and achievement of efficiencies
This article was adapted from one that originally appeared in the March 2010 issue of The Doctor's Office, a HealthLeaders Media publication.
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