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

overemphasized, and even the suggestion of noncompliance with any of the criteria will raise antitrust ire. An advance determination from the DOJ or FTC would be prudent. To date, no group that has been issued either a business review letter or advisory opinion has been subject to sanctions under the antitrust law, but the potential exists. Even the presence of a presumptively valid messenger model and the absence of an antitrust investigation is not a guarantee of a free ride through the federal regulatory minefield.

D. Joint Negotiation Under State Laws-The End of the Messenger Model?

As illustrated, the messenger model operates under federal law, allowing non-integrated independent providers to jointly deal with MCO's on all aspects of contracts except price without fear of antitrust reprisal. Providers, however, may be able to fully negotiate all terms of a contract under state regulatory programs that, in certain circumstances, can supersede federal antitrust laws.166 If a valid state scheme exists, non-integrated providers could avoid the limitations of the messenger model as defined in the Statements. Outright joint negotiation would be allowed on all contract issues, including price, without regard to horizontal pricefixing, under a state action exemption. Few states are regulating in this area yet, since the implementation requirements for such programs are onerous. Also, states that have introduced legislation have placed narrow guidelines on which networks and MCO's can qualify under state regulation. These limitations will prevent state regulation in the area of health care antitrust from becoming widespread. The need for messenger models will remain.

requirements and adequately controls the price-fixing it has sanctioned.168 This places a heavy burden on the State Attorney General to develop detailed procedures for approving contract negotiations by non-integrated networks, as well as strict oversight plans to ensure compliance.

Texas was the first state to establish a law that allows independent physicians to negotiate jointly with MCO's under the supervision of the Texas Office of the Attorney General (OAG).169 The law, entitled Joint Negotiation by Physicians with Health Benefit Plans,170 was sponsored by the Texas Medical Association (TMA), and "reflects the legislature's determination that it is appropriate and necessary as a matter of state policy to authorize joint negotiation to address imbalances in the market relationship between physicians and health benefit plans."171

messenger model is an artifice and does not work."174 They applauded the state for concluding that the market power was too concentrated in the hands of the MCO's and stated, for the record, that eliminating the negotiating imbalance was more important to the general public than the anti-competitive actions of the competing physicians.175 Specifically, the law states:

Although the legislature finds that joint negotiation over fee-related terms may in some circumstances yield anticompetitive effects, it also recognizes that there are instances in which the health plans dominate the market to such a degree that fair negotiations between physicians and the plan are unobtainable absent any joint action on behalf of physicians. In these instances, health plans have the ability to virtually dictate the terms of the contracts they offer physicians. Consequently, the legislature finds it appropriate and necessary to authorize joint negotiations on fee related and other issues where it determines that such imbalances exist.176