Chapter 8

TRUST AND ANTITRUST

Physicians consider their relationship with their patients as a key issue in their success as professionals. Many patients go to a medical office and not to another because they trust the physician they will see.

Managed Care companies have used their "panels" to destroy the doctor-patient relationship. The employer sets the contract with the managed care company, and the company establishes the "panel". If Mrs. Jones wants to continue to see Dr. Jefferson, her physician of 20 years, she may be informed he is not on the panel. If she insists, she may have to pay more, or the whole cost of the visit, as if she had no coverage at all. This becomes a source of bitterness that has led to a number of proposals to allow a patient to see the physician of her choice.

"Any willing provider" is a proposal that would permit the patient to see a physician who is not on the panel but is willing to accept the rules of the company. The managed care companies have opposed this arrangement because, they claim, they would lose control (shouldn't the control be in the hands of the patient?).

In most initiatives in which the physicians have joined their patients in fighting impositions by managed care, "trust" has been a central issue. This "trust" is usually defined as a firm belief or confidence in the honesty, integrity, reliability and justice of the other person. Unfortunately, the same word is used for quite a different "trust".

"Trust" is also a combination of corporations in the same or similar industries, usually the largest producers, in which the shareholders work together to reduce costs of production, control prices, and eliminate competition. This would lead to the emergence of monopolies."Trust" is also a combination of corporations in the same or similar industries, usually the largest producers, in which the shareholders work together to reduce costs of production, control prices, and eliminate competition. This would lead to the emergence of monopolies.

The Sherman Act, the anti-trust legislation in existence since 1890, supposedly has the purpose of avoiding monopolies. As applied by the courts for many years, some commercial combinations have been considered illegal "per se". Typical among these combinations are price fixing, boycotts, horizontal division of markets, and requiring the purchase of a product as a condition of purchasing another.

In Goldfarb v. Virginia State Bar (1975), the Supreme Court held for the first time that the learned professions were subjected to the Sherman Act. In Arizona v. Maricopa County Medical Society (1982) the Court ruled that a foundation's maximum fee schedule was price fixing. After Maricopa, sharing of resources and risk became the litmus test as to whether a medical group violated the anti-trust regulations. This left many medical groups unprotected in their fights against for-profit HMOs.

At face value, the Sherman act should be applied to emergent managed-care monopolies. Unfortunately, the opposite is true: the managed care companies are allowed to consult, associate, share information, and coalesce, while the anti-trust legislation is enforced so that physicians can not form a united front.

Up to l996, the US Department of Justice (DOJ) and the Federal Trade Commission (FTC) applied the "per se" rule, which held that any two groups of physicians sharing information such as costs, or fees in negotiating with a payer, but not resources and risk, violated the Sherman Act.

In August of 1996, DOJ and FTC issued new guidelines for physician joint ventures and physician service organizations. The agencies agreed to review proposals for physician-operated networks case by case on the bases of their effects on competition.

The new guidelines require that the agencies use "the rule of reason test". This test asks whether the new networks are pro-competitive, even if they do not call for substantial sharing of assets or risks, provided there is "substantial clinical integration".

The new guidelines remove the barrier to physician joint ventures by applying a more consistent interpretation of the laws, as occurs in the business sector. The hope is that the guidelines permit physician service organizations to better compete with business groups that have been better protected by the law.

Enforcement of strict anti-trust rules removed control of care from the hands of physicians, supposedly to give it to the patients. The real beneficiaries were the insurance and managed care companies, while patients actually suffered. It has been argued that "there is no other industry in which the purported agent of the consumer supposedly maximizes the consumer's satisfaction by withholding the product the consumer desires".(16)

Both congress and the state legislatures have taken on the issue of anti-trust regulation of health care.

In 1999, HR1304, Congressman Tom Campbell's federal anti-trust relief bill, would allow physicians to form their own professional associations and bargain with insurers to develop the best terms for their contracts without fear of reprisal. By leveling the playing field between health care insurers and health care professionals, this legislation permits physicians to advocate for quality care for their patients.

While bills in congress support collective bargaining, this is now permitted in Texas and will probably be so in other states.

On June 20, 1999, Texas Governor George Bush signed a bill giving self-employed physicians the right to negotiate collectively with insurance companies. The state attorney general has the power to authorize joint negotiations. The requirements for implementation include that the health benefit plan "have substantial market power". No more than 10% of the physicians in a health benefit plan's defined geographic area are allowed to bargain as a unit.

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©2000 Munoz and Eist, The People v. Managed Care