AAOS members testify on antitrust issues

By Jamie A. Gregorian, Esq.

Rep. Conyers keeps pledge made at BOC/BOS Fall Meeting

“The fact that health insurers possess monopsony power—the ability to present physicians with ‘take-it-or-leave-it’ contracts—and that physicians are powerless in their negotiations with health plans should not be news to anyone,” said Peter J. Mandell, MD, chair of the Council on Advocacy, in his testimony before the House Judiciary Subcommittee on the Courts and Competition Policy on Dec. 1, 2010.

“As practicing physicians, my colleagues and I can see the inequities of the current antitrust laws played out on an almost daily basis around the country,” continued Dr. Mandell. “Particularly for solo practitioners like me, attempts to negotiate with insurance monopolies seem truly impossible.”

Peter J. Mandell, MD

Dr. Mandell presented his testimony during a hearing on antitrust laws and their effects on healthcare providers, insurers, and patients, held Dec. 1, 2010. Weeks earlier, Rep. John Conyers (D-Mich.) had promised the members of the AAOS Board of Councilors and Board of Specialty Societies during their Fall Meeting that he would hold just such a hearing.

According to Rep. Conyers, “The critical thing about the healthcare reform bill is that it depends very heavily on free market competition. … And this, in turn, requires a level playing field for all participants in the market and even-handed enforcement of our antitrust fair competition laws.”

Impact on providers
The purpose of the hearing was to assess the situation facing doctors as they try to navigate antitrust regulations in negotiating rates with insurance carriers under the Patient Protection and Affordable Care Act (PPACA). Proposed accountable care organizations, or “ACOs” have been a source of confusion because these systems, which bring together various providers and attempt to cut costs by coordinating care, can arguably raise antitrust concerns.

The issue is critical for physicians, because PPACA is not clear on what is acceptable for doctors who participate in ACOs in terms of bargaining with insurance companies. Moreover, insurance companies are exempt from many antitrust regulations under the McCarran-Ferguson Act, adding to the difficulties doctors face in trying to manage the economics of their practice.

“The current interpretation of antitrust laws, which were enacted to protect the smaller competitor from the larger and stronger one, is now having the opposite effect,” noted Dr. Mandell, “ultimately negatively impacting patient care.”

In articulating the position of the American Association of Orthopaedic Surgeons (AAOS), Dr. Mandell outlined two major issues.

“The antitrust laws should be changed to allow physicians to collectively negotiate with health plans and insurers without necessarily joining a labor union; and the McCarran-Ferguson Act must be amended to change the anticompetitive practices of insurance companies and establish negotiating equity among health plans, insurers, and physicians. … AAOS also supports the American Medical Association’s position on ACOs and the enactment and promulgation of regulations to ensure physician’s continued ability to provide quality patient care.”

The third-party messenger
Although the Department of Justice (DOJ) and the Federal Trade Commission (FTC) currently allow a restricted form of bargaining called the third-party messenger model, this model is labor-intensive, cumbersome, and costly to implement, pointed out Dr. Mandell. It has also failed to protect doctors from the negotiating power imbalance enjoyed by insurers. In fact, when Delaware physicians tried to use the third-party messenger model to negotiate with an insurer, the DOJ subsequently issued 80 subpoenas. The resulting consent decree banned the use of the model in Delaware and by the Federation of Physicians and Dentists (FPD) for a period of 5 years.

Testifying on behalf of the FPD, Michael P. Connair, MD, made it clear that he shared many of Dr. Mandell’s concerns. “The unprecedented use of antitrust enforcement has augmented insurer bargaining power and ability to intimidate physicians into accepting low fees or even ceasing to practice medicine,” he said.

Dr. Connair went on to point out the ramifications of legal cases against physicians for perceived antitrust violations, noting that “The legal costs for physicians to defend themselves against a DOJ or FTC investigation or prosecution are so punitive that physicians sign humiliating consent decrees simply to avoid a trial.”

Support for reform
Concluding his remarks, Dr. Mandell said that the AAOS “supports efforts to address the issue of equal enforcement of antitrust laws and their application to physician negotiations with health insurance plans.” He pointed to legislation that would extend the right to collectively negotiate with health insurance companies to all healthcare professionals and noted that “maintaining quality patient care while ensuring fair competition in today’s marketplace must be the ultimate goal.”

In addition to Drs. Mandell and Connair, other witnesses included Sharis Pozen, chief of staff to the DOJ Antitrust Division; Richard Feinstein, director of the FTC’s Bureau of Competition; Melinda Hatton, senior vice president and general counsel for the American Hospital Association; Arthur Lerner, a partner at Crowell & Moring LLP, appearing on behalf of America’s Health Insurance Plans; and David Balto, a senior fellow at the Center for American Progress.

Jamie A. Gregorian, Esq., is senior manager, specialty society affairs and research advocacy, in the AAOS Washington Office.

Additional Links:
Statement by Rep. Conyers
Statement by Dr. Mandell
Statement by Dr. Connair
Video of the hearing

AAOS Now
January 2011 Issue
http://www.aaos.org/news/aaosnow/jan11/advocacy1.asp