FAQs on antitrust issues for alternative practice models

The bottom line is: Integrate before you negotiate.

Health care reform has sparked an interest in alternative practice models that would allow both greater integration of care and more efficient delivery of services.

There is a particular interest in two collaboration models that may offer the best of both worlds: the independent practice association (IPA) and the larger management services organization (MSO) (PDF, 646KB). These collaboration models offer the economy of scale and pooled resources of a larger group of psychologists, but with each practice retaining its own business autonomy — unlike a merger into a single large corporation or partnership.

If these collaborations are going to negotiate reimbursement with Accountable Care Organizations (ACOs), patient centered medical homes, health insurers or other entities purchasing psychological or behavioral health services, they need to be very mindful of guidance from the federal antitrust regulators, the Federal Trade Commission (FTC) and the Department of Justice. A collaborative practice model can conduct reimbursement negotiations with limited antitrust risks if it has the necessary elements of clinical integration and can demonstrate the need for and benefits of joint negotiation as described below.

The following FAQs explain antitrust concerns and how clinical integration works.

What does Antitrust Law prohibit?

Generally, the antitrust laws prohibit competitors from jointly negotiating reimbursement rates. Psychologists are competitors if: 

  1. They are not part of the same business entity (like the same partnership, LLC or corporation).
  2. They do or could provide the same services in the same geographic area. 

There is a narrow exception to that general prohibition if the competitors are clinically or financially integrated. Financial integration generally means a substantial sharing of risk, for example through capitated agreements, or pooling of financial assets. Most psychologists prefer clinical integration, which is explained in this FAQ.

Absent clinical or financial integration, joint reimbursement negotiation by competitor likely would be presumed illegal under the antitrust laws (without the antitrust agencies having to prove that the negotiation harmed competition in the health care marketplace).

What is clinical integration?

Clinical integration is a formal collaboration among health care professionals (HCPs) — with specific policies and procedures — to enhance the quality of care for patients and to ensure that care is efficiently provided. Clinical integration is designed to ensure that patients are receiving the right care at the right time, and holds HCPs to meeting certain standards for the quality of care being provided. 

What are the keys to successful clinical integration?

Successful clinical integration occurs when HCPs want to fundamentally change and improve the way that they provide care. If the provider’s only goal is to raise reimbursement rates or to get “leverage” with managed care companies or other payors, the clinical integration program is likely to fail. In other words, you are starting off on the wrong foot if your main question is: What is the bare minimum of integration needed to avoid antitrust scrutiny? 

In a successful clinical integration collaboration, HCPs focus on treating patients over a continuum of care. In other words, the clinical integration involves practitioners at different sites of care and levels of care (for example, health psychologists embedded in primary care and other medical settings, clinical psychologists and social workers providing psychotherapy for patients with mental health diagnoses, and psychiatrists or advanced practice nurses managing medication). In addition, it allows HCPs to communicate about even minor changes, which in the aggregate, may have a significant impact on the patient’s well-being and care. 

How do HCPs demonstrate that they are clinically integrated?

The antitrust enforcement authorities expect that a clinical integration collaboration has most or all of some of the following 11 elements. The more elements that a clinical integration model includes, the more likely it is to escape scrutiny by antitrust enforcement agencies. 

But the agencies have also made it clear that they don’t want to discourage innovation. So you should not feel locked into these elements. Psychologists considering innovative ideas for clinical integration that depart from these “tried and true” elements should consider obtaining an Advisory Opinion from the FTC (the federal agency that most commonly reviews clinical integration models). Even if your model has all 11 elements, we strongly recommend consulting with antitrust counsel familiar with clinical integration issues. 

11 integration elements

Goal related:

  1. Measurable goals to monitor quality of treatment provided and utilization.
  2. Procedures to actively educate, review and assist HCPs in meeting the goals of quality and appropriate utilization. (In other words, goals are not meaningful if the collaboration does not have a system in place to make sure participants understand them and have help meeting them, and to review their progress toward those goals).
  3. A process to remove and/or discipline of HCPs who cannot or will not meet the goals established. (The organization must be able to take action if participants refuse to or are unable to work constructively and collaboratively within the clinical integration module).

Protocols and coordination: 

  1. Clinical protocols applicable for the majority of the collaboration’s patient population and which reflect current developments in treatment.
  2. Specific case and disease management programs, for example, a unified program to manage depression.
  3. Cooperative interaction and collaboration between HCPs to ensure that the right care is provided at the right time (for example, a system for scheduling and tracking appointments and referrals to make sure that patients are seen and referred in a timely manner, and are receiving appropriate treatment for their diagnosis/condition).
  4. An integrated computer system to disseminate practice standards and communications and to allow HCPs caring for the same patients to communicate and share clinical information more easily. 

HCP selection and choice: 

  1. Credentialing procedures to be sure HCPs with appropriate skills and training are being brought in to meet the organization’s goals. 
  2. A nonexclusive network, meaning insurance companies and other payors have the ability to contract with HCPs separately (and not just through the collaboration). This is particularly important if the collaboration has a large market share.

Burden and investment factors: 

  1. The practice protocols, standards and performance monitoring are only feasible with joint negotiation in order to ensure participation of sufficient numbers of HCPs. In other words, the benefit of joint fee negotiation is necessary in order to have a critical mass of HCPs participating in your model and putting up with the burdensome procedures, monitoring and goals. 
  2. Investment of significant capital, both human (for example, time) and monetary, by the HCPs in the collaboration to implement the integration program. This final element should be easily met because implementing most or all of the elements above would require substantial funding and effort. 

If our collaboration has all of the elements above, will we be able to jointly negotiate agreements with managed care?

Maybe. In order for the clinical integration collaboration to assert the right to jointly negotiate contracts, the collaboration will have to be able to demonstrate that: 

  • Joint negotiation of price is necessary as discussed in element 10 above.
  • The proposed clinical integration permits quality clinical benefits not otherwise possible in the absence of joint pricing (such as communication among the HCPs, and adherence to integration protocols and standards of care will improve the quality of care provided to patients). In other words, the collaboration must be able to show any enforcement agency (if the model is scrutinized) that the clinical integration will improve the quality of care provided and benefit patients — and is only possible if joint negotiation occurs. 

Who enforces the antitrust laws?

The antitrust laws can be enforced by the federal antitrust authorities (the Federal Trade Commission and the United States Department of Justice) and by the state attorney general. In addition, private parties (such as insurance companies) have the ability to bring a private action alleging violation of the antitrust laws.

If you have further questions, contact our Office of Legal and Regulatory Affairs via email or call (202) 336-5886.

Please note: Legal issues are complex and highly fact specific and require legal expertise that cannot be provided by any single article. In addition, laws change over time and vary by jurisdiction. The information in this article does not constitute legal advice and should not be used as a substitute for obtaining personal legal advice and consultation prior to making decisions regarding individual circumstances.

This article was developed in collaboration with the Epstein, Becker & Green law firm.