Massachusetts doctors using ACOs as an excuse to violate the Sherman Antitrust Act

Independent physicians cannot jointly negotiate prices and contracts with health plans. But someone in Massachusetts wants to overturn state and federal antitrust laws so doctors can wring more money out of Blue Cross. Here’s the bill, H00279. Adding insult to injury, the bill purports to be:

An Act to enable the formation of accountable care organizations

Remember – ACOs don’t need relaxed antitrust rules (TIE)

Organized medicine has tried to violate the Sherman Act for years: in the 1990s, the AMA tried to create special physician unions to stand up to health plans. Dozens of physician organizations have been sanctioned by the government for illegally fixing prices without proper financial or clinical integration.  One Supreme Court case example is Arizona v. Maricopa County Medical Society, 457 US 332 (1982). See my recent health care antitrust update for more examples.

The Massachusetts bill asserts that health plan concentration has damaged competition. Just opening the most recent issue of Health Affairs brings this assertion into question.  Melnick GA, Shen YC, Wu VY. The Increased Concentration of Health Plan Markets Can Benefit Consumers Through Lower Hospital Prices; Laugesen MJ, Glied SA.  Higher Fees Paid To US Physicians Drive Higher Spending For Physician Services Compared To Other Countries.  (Both studies received grant support from RWJF).

The specific legal tool is the “state action exemption” from antitrust laws. State monopolies in toll roads and sewage services are legal, so long as the State does it directly or supervises it closely.

In H00279, the goal is to let independent physicians jointly negotiate with health plans under the supervision of the Attorney General:

“It is the intention of the General Court [MA legislature] to authorize health care professionals to jointly negotiate with carriers and other purchasers of health care services, and to qualify such joint negotiations and related joint activities for the State-action exemption to the Federal antitrust laws through the articulated State policy and active supervision provided in this act…”  (at §2(14)).

The FTC is currently fighting Georgia’s attempt to borrow the state-action exemption without adequate supervision in the Phoebe Putney case at the 11th Circuit.  In the proposed MA legislation, the AG is given oversight, but not much discretion to act in the public interest.  The deck is stacked against the AG in the bill, giving the physicians an easy litigation route to challenge state supervision.

h/t to my student, Michael Rugnetta, who spotted the bill

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