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

venture."96 Considerations include both physician and patient market size and definition, the relevant market power of the proposed venture, competitive effects at both a vertical and horizontal level, and efficiencies associated with the formations and operation of the joint venture.97 Participation is limited to thirty percent of the physician provider market.98 Until the 1996 revisions, however, there was no legal model for non-integrated, competing providers-those who do not share financial risks-to deal jointly with MCO's.

IV. THE MESSENGER MODEL

A. Definition

The messenger is allowed to aggregate the fee information for the MCO but cannot communicate any individual information to the participants in the network.104 The MCO can then determine how many doctors will participate in a Plan given the level of fees being offered in the contract. The higher the fee scale, the greater the number of providers who will be willing to participate.105 At some point, the MCO may find that its fee scale is so low that it must either raise reimbursement rates or be faced with a poor. selection of providers to offer its insured population.106

is below the minimum the provider has said he would accept. 107 This avoids any appearance that the messenger, rather than the individual provider, is making contract decisions. The messenger may offer only objective information on the contract offer, such as an explanation of terms or whether the fee scale is above or below market rates for the area.108

The messenger cannot leverage the collective bargaining power of the network as a whole to gain any kind of price or fee concessions from the MCO.109 Each individual must make his own pricing decisions, but the independent providers are free to collectively discuss and agree on all other terms of the contract and present these as a group to the payor.110 These include procedures for utilization reviews, precertification requirements, coverage of procedures and services by the payor, credentialing, and any other term or condition that is not price-related. The messenger is then simply the conduit for all information and communications between the providers and the payors.111

The messenger walks a finely-drawn line between fixing prices and relaying information to and from the contracting parties. A careless intermediary easily crosses this line. Even the most carefully crafted model is vulnerable to antitrust scrutiny if not implemented in strict conformity with the guidelines spelled out in the 1996 Statements. Illegal price-fixing can be found even in the absence of obvious collusion.

regarding price or if individual physicians have the right to opt in or out of any collective agreement negotiated by the agent.112

B. Forming a Messenger Model Network Under Federal Antitrust Guidelines

It is a question of fact whether an alliance of independent providers is properly operating as a messenger model. The DOJ and the FTC will "examine whether the agent facilitates collective decision-making by network providers, rather than independent, unilateral decisions."113 Any of the following findings would invalidate the messenger model and constitute per se illegal pricefixing: (1) the agent coordinates the providers' responses to a particular proposal from a payor; (2) the agent distributes to network providers the views or decisions of other network providers; (3) the agent expresses an opinion on the terms offered by the payor beyond providing objective or empirical information on the terms of the offer; (4) the agent collectively negotiates for the providers; or (5) the agent makes decisions on whether to convey a payor's offer to the network providers based on the agent's judgment about the attractiveness of the price-related terms.114