Health care law encourages collaboration, but anti-trust worries arise

Electronic medical records
Dr. John Butler jokes with his patient, Willie Martin, during a visit at the Arden Hills Clinic in Arden Hills, Minn. Wednesday, May 24, 2011. Dr. Butler uses an electronic medical records system with his patients, which is part of a broader effort to share information in the health care sector.
MPR File Photo/Jeffrey Thompson

One of the hassles about getting sick is having to repeat your story of medical woe over and over again to different health care providers. That's because there can be a lot of individuals involved in a patient's care — a family doctor at one clinic, a specialist at another, a surgeon in the hospital to name a few.

Backers of the health care overhaul say too often, providers don't compare notes about a patient. The Obama Administration says lack of coordination leads to costly mistakes ranging from repeating the same X-rays to complications that require more hospital time or even death.

The health care overhaul is designed to prod hospitals, physicians and clinics to come together through cooperation or even combining to form so-called Accountable Care Organizations (ACOs). But interest groups are currently fighting over rules designed to keep these groups from getting too big and powerful.

"What the health care law is trying to encourage through the ACO program is for doctors and hospitals and other care providers to work together to provide a continuum of care," said Melinda Hatton, the American Hospital Association's general counsel.

She said even as the health law encourages medical groups to combine efforts, government policy is discouraging cooperation. Providers are already upset that the government has proposed more than 400 pages of technical requirements. On top of those, the Federal Trade Commission and the Department of Justice proposed a strict set of rules designed to prevent ACOs from becoming monopolies. Under the proposal, an ACO with more than 50 percent of market share of a particular service has to submit to a mandatory federal anti-trust review. Hatton says that's having a chilling effect on collaboration.

The rules set up three ranges based on a group's market share:

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• Less than 30 percent, no anti-trust review necessary;

• More than 30 percent but less than 50 percent can proceed, but no assurances;

• More than 50 percent, an ACO must seek review by antitrust agencies.

"When we looked whether hospitals were likely to have more than 50 percent, we found that many hospitals exceed this threshold even by a little bit and therefore have to go ask permission to participate," Hatton said. "That seems wrong to us."

Minneapolis attorney Tom Pursell said doctors and hospitals should be concerned about violating so-called antitrust laws — laws that lay out what's fair and unfair competition in a free-market economy. He said penalties for violating them can be severe.

"In extreme cases, people can go to jail, be charged criminally for things like price-fixing. Private people can sue for damages and get three times actual damages, there are injunctions, attorneys fees," he said. "In complicated business deals, there can also be the expense of unwinding a business deal."

The antitrust laws are important to prevent price-gouging, said Duke law professor Barak Richman.

"Market power in the health care sector is actually even more dangerous than market power elsewhere," he said. "However much we want to avoid having only cement factory in town, we really want to avoid the health care monopolists because the only hospital system in town will be able to charge whatever they want and everyone will still have to purchase health care services that are provided by the hospital."

A 2010 study by the Massachussetts Attorney General found a "strong correlation" between prices and a health care systems' leverage in a market.

Others say strong market regulation is especially important as the health overhaul takes effect.

"Let's recall here that health reform has triggered a sea change in the structure of health care markets," said Tim Greaney, co-director of the Center for Health Law Studies at Saint Louis University. "We really have a new world beginning whereby there will be lots of integration and that's a good thing.

"It's only appropriate that there by more scrutiny as the new era starts."

Greaney said the Federal Trade Commission and the Justice Department have tried to find that regulatory sweet spot where groups can link up to save costs and increase patient safety but were stiff rules prevent one or two groups from dominating.