Antitrust Q&A

Many physicians find themselves between the proverbial rock and a hard place when it comes to setting their fee schedules. It helps to know what your local market will bear, but asking other physicians is verboten, right? To help you find some answers, Physicians Practice spoke with Diane Carter, a health law attorney with the Austin, Texas-based law firm, Hilgers & Watkins, PC. Her areas of practice include advising clients on matters of self-referral, antitrust, and fraud and abuse.

Q: What are the basic legal guidelines related to physicians sharing information on fees?

CARTER: There are several federal statutes that prohibit physicians from agreeing among themselves to a minimum or maximum price to be charged for a service. However, physicians can make such agreements if they merge and fully integrate their practices into a single business, such as a professional corporation. In this case, they are no longer competitors. Physicians can also make such agreements if they share substantial financial risk, which includes agreements to provide services to a health plan for a capitated rate, or for a predetermined percentage of premiums.

Q: Are there any circumstances under which physicians can discuss fee schedules or payer contracts with other physicians?

CARTER: Physicians whose practices are sufficiently integrated and those who share substantial financial risk, as I just described, may share fee schedule information with one another.

Also, under the 1994 Enforcement Policies, physician-competitors can share factual information about their historical fees -- or any other historical aspect of reimbursement such as discounts or capitation arrangements -- if the data meets the following criteria: it is at least three months old; it is collected by a third party; it comes from at least five physicians (with no single physician accounting for more than 25 percent of the data); and it is aggregated so that recipients cannot identify any individual physician's prices.

Finally, if the physicians are not competitors with respect to any service they provide, then they may discuss fee schedules and payer contracts.

Q: How can a practice determine whether another practice legally is or is not considered a competitor?

CARTER: That's not always easy to determine from a legal standpoint, but the best approach is to analyze the service and the geographic market in question. If a primary-care physician and an OB/GYN offer similar services -- for example, well-woman exams -- those services would likely be treated as a single product from an antitrust perspective, and the physicians may be viewed as competitors.

The geographic market analysis is based on whether consumers in a given area believe that they have a choice of providers for a particular service -- not on a set mile radius or other more concrete measures.

Q: If a physician discovers that the fees a competitor is collecting are significantly higher than his own, what is his best course of action?

CARTER: If you discover that a competitor is collecting significantly higher fees, you can raise your fees. However, if you and your competitor are found to have entered into any kind of agreement or understanding with respect to fees, whether formal or informal, that is likely to be an antitrust violation.

Q: Can competing groups of physicians use consultants to obtain fee schedules and other information from payers without violating antitrust laws?

CARTER: There are some dos and don'ts in terms of how consultants can be used. For example, a consultant is permitted to disclose to physicians in a network or IPA all contract offers made by purchasers such as third-party payers, as long as each physician then makes an independent, unilateral decision to accept or reject the offer. The consultant may also help physicians understand the contract terms offered by a payer, perhaps by providing a comparison of the terms offered to other contracts the physician or network have already accepted.

A consultant should not disclose to a physician the fee schedule agreed to by a competitor under an agreement with a third-party payer. If the consultant coordinates competitors' or network physicians' responses to a particular proposal, disseminates the views or intentions regarding a proposal to competing physicians, expresses an opinion on the terms offered, collectively negotiates for physicians, or decides whether or not to convey an offer based on his own judgment about the attractiveness of the prices or price-related terms, then the consultant -- and the physicians -- may be found to have engaged in illegal price-fixing.

Q: Some states have passed antitrust exemption legislation that allows physicians to collectively negotiate fees under certain circumstances. What states allow collective negotiation? How does this exemption work, and what is the outlook for passage elsewhere?

CARTER: Texas currently has a statute that permits joint negotiation by physicians with health plans under certain circumstances. New Jersey and Washington also currently permit collective negotiation under certain circumstances.

Under the Texas statute, for example, competing physicians within a service area may meet and communicate for the purpose of jointly negotiating certain terms and conditions of contracts that deal with practices and procedures relating to the delivery of care. Physicians within the health plan's service area can jointly negotiate fees, conversion factors in a resource-based relative value scale (RBRVS), discount amounts, or capitation amounts -- but only when a health plan has substantial market power, and the terms and conditions it requires in its physician agreements adversely affect (or threaten to affect) the quality and availability of patient care.

There is a lengthy filing and approval process that must be completed before the physicians may engage in such joint negotiation, which is generally determined by the state's attorney general.

Joanne Tetrault is managing editor for Physicians Practice. She can be reached at jtetrault@physicianspractice.com.

This article originally appeared in the May/June 2002 issue of

Physicians Practice.