Don't shoot the messenger: Independent physicians and joint payment contracting using the messenger model

University of Memphis Law Review, The, Summer 2002 by Clemons, Miriam L

related terms or conditions.178 Second, the price-related terms and conditions must "have already affected or threaten to adversely affect the quality and availability of patient care."179 Finally, if MCO market power is found, then the competing physicians can comprise "no more than [ten] percent of the physicians in a health benefit plan's defined geographic service area.181 No standards are included as to what constitutes market power, and in all cases the OAG has unfettered discretion to decide whether the benefits of the joint contract outweigh the antitrust concerns.181

The competing providers have an enormous burden of proof that must be met before they can exercise the joint negotiation exception to the Texas law. They must prove intangible factors such as the power of the MCO, the harm done to patient care, and the lack of harm to the public from these anti-competitive measures. All of these must be established without any standards to provide guidance. In fact, just the gathering of information from all providers to prove that pricing terms have affected the quality and availability of patient care (information required by the law) can make the independent providers susceptible to antitrust sanction. This irony was raised by several commentators prior to enactment.182 The OAG agreed that communication at this stage might pose a problem and suggested that the negotiating physicians avoid federal antitrust scrutiny by utilizing a messenger model.183

enactment of the law. Texas Representative Rene Oliveira solicited comments from the FTC Bureau of Competition while the law was still being debated in the legislature and the FTC responded by raising three concerns.184 First, it questioned whether an antitrust exemption such as this was in the public interest because it would protect a broad range of anti-competitive practices that might undermine efforts to create cost effective health care delivery systems and reduce choices to the consumer.185 Second, the FTC noted that the standards for determining the cost/benefit relationship of the transactions were ill-defined or absent.186 Finally, the law seemed to impose weighty responsibilities on the OAG to make fact-intensive determinations in relatively limited time frames with no guidance.187 The FTC, therefore, refused to give the law even a tentative approval. Then-Texas governor George W. Bush signed it into law anyway.

on their behalf.191 Non-integrated providers in Texas, therefore, have gained almost nothing from the creation of a state action exception to federal antitrust law.

In practice, the Texas law does little to level the playing field between independent providers and MCO's beyond making an official finding that a competitive imbalance does exist in the health care contracting environment. The burdens on the providers and the state are enormous, and the likelihood of meeting all the criteria for the pricing exception are slim. Other states, however, have jumped on the legislative bandwagon anyway and have attempted to develop their own joint negotiation laws under the state action doctrine. Only the State of Washington has actually passed a law allowing competing physicians to negotiate with MCO's and this law is even more limited in scope than the Texas law. Washington forbids negotiation under any circumstances on any terms and conditions related to price.192 Furthermore, it does not require any MCO to bargain with the members of the nonintegrated network, and in fact, all of the MCO's in the state have simply refused to do so.193 Thus, the Washington law has no teeth and provides less protection to independent providers than the federally sanctioned messenger model.