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

The most strenuous objection to the structural limits placed on AHN came from the AMA, which found the structural limitations "unnecessary and antithetical to the stated goals of restoring balance to the health care market place."155 It was not the market concentration of physicians that should be seen as an anticompetitive threat, they argued, rather, it was the increasing dominance of the mighty few MCO's that should be the focus of FTC regulation.

embraced by the managed care industry.156

The AMA felt that the structural limits were particularly inappropriate in a rural environment, where any impediments to practicing in the area would have detrimental effects on both the patient/public, by limiting the number of available physicians, and on the physicians, by creating a stressful, over-worked environment.157

The AMA pointed out that the imposition of structural limits on AHN's use of the messenger model was inconsistent with other antitrust consent decrees, did not facilitate oversight of the network's negotiating plan and procedures, and created a dangerous precedent that was unnecessary to a prudently operating messenger model.158 They noted two similar antitrust investigations that also arose in relatively rural settings, in which the FTC issued consent decrees against non-integrated networks that were jointly negotiating with payors.159 In both cases, a messenger model was expressly allowed for future communications with MCO's, without restriction as to the number of physicians who could participate.160 The FTC responded to the AMA's objections, noting that the facts of the case indicated a "significant danger that, without some form of structural relief, AHN members could successfully perpetuate the effects of AHN's unlawful conduct by colluding on a tacit basis with respect to their dealings with health plans."161

Health Systems,162 a final judgment on a consent order was entered in 1994 allowing two hospitals in Florida to form a partnership to jointly market various outpatient and inpatient services to thirdparty payors. This non-integrated alliance would be allowed only if adequate protections were in place to keep separate information on pricing, managed care contracts, and negotiations on future contracts. This data was to be maintained in such a way that one hospital would not receive information on the other hospital, either directly or indirectly, and a messenger would transmit the information to MCO's.163 In 1999, the FTC determined that the two entities were misusing the messenger by jointly negotiating contracts with third-party payors, rather than making independent decisions. Therefore, the FTC imposed costs and penalties of $500,000 on the partnership and completely forbade the "network of two" to use any form of a messenger model for contracting with payors.164

Each case that arises will differ as to the cause of the antitrust violation and these differences will determine the elements of the settlement agreement. No boilerplate network can be implemented simply because a consent order allows the future use of a messenger model. The Statements merely delineate what must be present for a messenger model to be considered valid. They are not intended to encompass all aspects of that model in every situation. This point was clearly enunciated by an FTC Commissioner who stated that "this negotiated order is not, and should not be viewed as, a guide for what a [Physician Health Organization] can and cannot do."165