Financial Integration: A Means to Avoid Antitrust Risk

Epstein Becker & Green
Contact

Epstein Becker & Green

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.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Epstein Becker & Green | Attorney Advertising

Written by:

Epstein Becker & Green
Contact
more
less

Epstein Becker & Green on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide