Clinical Integration: The Legal Story Behind the Trend

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Clinical IntegrationThe Legal Story Behind the
Trend

• MSSNY Clinical Integration Task Force Meeting

Christi J. Braun, Esq. January 23, 2007
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The Conduct

• Physicians want to be able to contract with
  health plans, third-party administrators, and
  other payors through provider-controlled
  contracting entities (IPAs, PHOs, POs, etc.)
• Joint pricing of services
• Joint negotiation of contract terms
• Competing physicians/practice groups

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The Problem with the Conduct

• Sherman Act 1 (FTC Act 5)
• Prohibition on agreements (contracts,
  combinations, and conspiracies) among private,
  competing individuals (or businesses) that
  unreasonably restrain completion
• Price fixing
• Boycotts
• Concerted refusals to deal
• Market allocation

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The Legal Standards

• Naked price-fixing
• The per se rule
• No examination of justifications
• Ancillary agreements
• The rule of reason
• Balancing of efficiencies against harm
• Market power- ability to raise price above
  competitive levels in a defined market
• Product and geographic markets
• Participation percentage and exclusivity

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The Consequences

• More than 30 federal settlements
• Bad publicity
• Injunctive relief
• Forced contract termination
• Prior notice to proceed legally
• Dissolution

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Ways to Solve the Problem

• Independent, direct contracting
• Messenger model
• Financial integration
• Clinical integration
• Merging of practices

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Clinical Integration Definition

• An active and ongoing program to valuate and
  modify the clinical practice patterns of the
  physician participants so as to create a high
  degree of interdependence and collaboration among
  the physicians to control costs and ensure
  quality
• FTC/DOJ Statements of Antitrust Enforcement
  Policy in Health Care, Statement 8.B.1 (1996)

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Clinical Integration Questions

• What do the physicians plan to do together from a
  clinical standpoint?
• How do the physicians expect actually to
  accomplish these goals?
• What basis is there to think that the individual
  physicians will actually attempt to accomplish
  these goals?
• What results can reasonably be expected from
  undertaking these goals?
• How does joint contracting with payors contribute
  to accomplishing the programs clinical goals?
• To accomplish the groups goals, is it necessary
  for physicians to affiliate exclusively with one
  IPA or can they effectively participate in
  multiple entities and continue to contract
  outside the group?
• FTC/DOJ, Improving Health Care A Dose of
  Competition,Ch. 2, p.40-41 (July 2004).

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Clinical Integration Guidance

• The program may include (1) establishing
  mechanisms to monitor and control utilization of
  health care services that are designed to control
  costs and assure quality of care (2) selectively
  choosing network physicians who are likely to
  further these efficiency objectives and (3) the
  significant investment of capital, both monetary
  and human, in the necessary infrastructure and
  capability to realize the claimed efficiencies
• FTC/DOJ Statements of Antitrust Enforcement
  Policy in Health Care, Statement 8.B.1 (1996)

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Clinical Integration Indicia

• Commentators primarily focus on four indicia of
  clinical integration (1) the use of common
  information technology to ensure exchange of all
  relevant patient data (2) the development and
  adoption of clinical protocols (3) care review
  based on the implementation of protocols and (4)
  mechanisms to ensure adherence to protocols.
• FTC/DOJ, Improving Health Care A Dose of
  Competition,Ch. 2, p.37 (July 2004).

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Clinical Integration Features

• Infrastructure
• Medical Director
• Health information exchange (HIT)
• Credentialing
• Quality selection
• Clinical protocols
• Collaborative effort
• Cost, quality, and utilization benchmarks

• Performance monitoring
• Individual and group
• Formal feedback
• Corrective Action
• Carrot / stick
• Formal plans
• Monitoring
• Case/Disease management
• Patient education
• Payor involvement

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Example 1 MedSouth

• Background
• 2002 FTC Staff Advisory Opinion
• Features
• 101 PCP/331 physicians in 39 specialties
• 216 separate practice groups
• Geographic practice area limited to South
  Denver/Arapahoe County
• Non-exclusive, but more than 50 of the
  physicians in more than 20 specialties at 3 area
  hospitals

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MedSouths Proposed Program

• Clinical protocols covering 80-90 of the
  prevalent diagnoses
• 48 under development 100-150 contemplated
• Development/revision by affected MD annually
• Utilization and quality measured against
  protocols
• Monitoring through clinical information system
  and medical chart reviews
• Web-based clinical data record system
• Access to lab and radiological reports,
  transcribed patient records and office visit
  information, treatment plans and Rx information
• Online Rx orders
• Performance bonus/risk payments

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Example 2 Brown Toland

• Background
• Sued by FTC in 2003 consent in 2004
• Submission of plan pursuant to consent order
• Features
• 687 physicians covering every specialty
• San Francisco Bay area
• Non-exclusive and no concerns about market power

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Brown Tolands Program

• Clinical practice guidelines and benchmarks
• 96 guidelines established and 8 in development
• Utilization review
• Performance comparison against protocols,
  benchmarks, and peers
• Analysis based on copies of claims
• Case management / Disease management
• High cost/use, diabetes, Asthma, CHF and HIV

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Brown Tolands Program

• Credentialing
• EMR (50-75 of physicians within 1 year)
• Clinical lab and diagnostic imaging results,
  electronic prescriptions, Rx support (allergies,
  interactions, formulary), standardized clinical
  notes, CPOE, clinical guideline support
• Quality incentive bonus based on of physician
  payments

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Example 3 Suburban Health Org.

• Background
• 2006 NEGATIVE FTC Advisory Opinion
• Features
• 192 PCPs employed by 8 hospitals
• Indianapolis and 6 surrounding counties
• Exclusive
• Very little overlap in hospital service areas,
  but some physician offices compete

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SHOs Proposed Program

• Practice guidelines/medical management protocols
• Asthma, CAD, CHF, and diabetes
• Quality management programs
• Measure guidelines compliance and assess quality
  outcomes
• Disease management
• Asthma, CAD, CHF, and diabetes
• Patient Education
• Smoking cessation, diet control weight loss,
  and immunizations

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SHOs Proposed Program

• Credentialing
• Technology platforms (rolled out in 18-24 months)
• Interactive learning system, patient satisfaction
  surveys, and data collection
• Physician incentive plan (5 of last years
  compensation)
• Half for group performance and half for
  individual performance

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Whats So Bad About SHO?

• Employed physicians
• Integration undertaken by employers
• Each hospital could develop a program and require
  compliance
• No SHO authority to discipline MD or enforce the
  protocols / No peer review
• Reliance on hospitals to motivate performance,
  which hospitals could do without the joint price
  agreement
• Program does not fundamentally alter nature of
  patient services

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Whats So Bad About SHO?

• Primary care only
• No collaborative provision of services across
  hospitals / referrals
• Little interaction among 8 hospitals PCPs
• Limited set of medical conditions
• No justification for negotiation of entire fee
  schedule
• Exclusive contracting is likely to restrain
  competition

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Other Examples

• Advocate Health Partners
• December 29, 2006 settlement with FTC
• nothing in this Order shall be construed as a
  determinationthat the Program is, or was at any
  time, a qualified clinically-integrated
  arrangement
• Waukesha Elmbrook Health Care
• Long Island Health Network

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Other Examples

• DOJ/FTC Statements of Antitrust Enforcement
  Policy in Health Care Statements 8 9
• http//www.ftc.gov/reports/hlth3s.htm
• Improving Health Care A Dose of Competition,
  pp. 35-41
• http//www.ftc.gov/reports/healthcare/040723health
  carerpt.pdf
• MedSouth, Inc. Advisory Opinion Letter
• http//www.ftc.gov/bc/adops/medsouth.htm

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Other Examples

• California Pacific Medical Group, Inc. d/b/a
  Brown Toland
• http//www.ftc.gov/os/adjpro/d9306/index.htm
• (See PPO Submission, Follow-up, Second Follow-up,
  Transmittal Letter, Response)
• Suburban Health Organization Advisory Opinion
  Letter
• http//www.ftc.gov/os/2006/03/SuburbanHealthOrgani
  zationStaffAdvisoryOpinion03282006.pdf
• Advocate Health Partners Settlement
• http//www.ftc.gov/os/caselist/0310021/0310021.htm