Financial Integration: A Means to Avoid Antitrust RiskAntitrust Byte July 26, 2018
Health care networks strive to achieve a level of integration that will permit joint contracting without the risk of per se condemnation under the antitrust laws. Clinical integration will allow for such contracting, but attaining sufficient clinical integration can, at times, present an insurmountable challenge.
Another form of integration that will achieve the same end is financial integration. Statement 8 of the Statements of Antitrust Enforcement Policy in Health Care indicates that substantial financial risk sharing is “a clear and reliable indicator that a physician network involves sufficient integration by its physician participants to achieve significant efficiencies.” Statement 9 expands on this concept for multiprovider networks and adds that if the network integrates financially, “the setting of price would be integral to the network’s use of such an arrangement and, therefore, would warrant evaluation under the rule of reason.”
Statements 8 and 9 provide a non-exhaustive list of the types of arrangements through which substantial financial risk can be shared—such as arrangements involving:
- the acceptance of a “capitated” rate (defined as “a fixed, predetermined payment per covered life ... in exchange for the ... provision of a defined set of covered services ...”);
- agreements to provide designated services or classes of services for a predetermined percentage of premium or revenue;
- the implementation of significant financial incentives for provider participants to achieve, as a group, specified cost containment goals, such as:
- a substantial withhold and distribution based on group performance in meeting cost containment goals, or
- the establishment of cost and utilization targets and substantial financial rewards or penalties based on the group’s performance in meeting those goals; and
- the provision of a complex or extended course of treatment that requires the substantial coordination of care by different specialties for a fixed, predetermined payment.
The antitrust enforcement agencies will evaluate such arrangements on substance rather than form and, where joint contracting is necessary to “promote the venture’s achievement of efficiencies,” will analyze the arrangement under the “rule of reason” test.
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For additional information about the issues discussed above, or if you have any other antitrust concerns, please contact the Epstein Becker Green attorney who regularly handles your legal matters, or one of the authors of this Antitrust Byte: