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Joint Contracting/Collective Bargaining

Physicians are often uncertain about the circumstances under which they can engage in collective negotiations. Knowing when it is permissible to jointly negotiate price terms with health plans, or to collectively refuse to deal with health plans, is as important as it ever has been. Many independent physicians are feeling ever-increasing pressure to integrate with one another.

Chapter 12: Joint contracting/Collective bargaining

Federal and state antitrust laws dictate the extent to which physicians may collectively negotiate contract price terms or refuse to deal (engage in group boycotts). The antitrust laws that prohibit independent competing physicians from engaging in collective price negotiations or group boycotts do not apply to those activities when undertaken by physicians who have formally merged, or otherwise fully integrated their practices into a single organization, such as a medical group practice. The integration is so complete that prior independent practices are now considered to be part of a single physician organization.

Aside from practice merger, there are two types of partial integration which allow physicians to engage in collective price negotiations or group boycotts without violating antitrust laws: clinical integration and financial integration. If physicians achieve either status, as defined by the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC), any alleged antitrust violations relating to collective price negotiations or group boycotts will be evaluated under the "rule of reason" test.

Under a rule of reason analysis, collective price negotiations and boycotts will often survive antitrust scrutiny. But physicians who have not satisfied the legal requirements for either clinical or financial integration, and who engage in collective negotiations or group boycotts, will be evaluated by the DOJ or FTC under the "per se" test. Conduct evaluated under the "per se" test almost always violates federal antitrust laws.

Physicians participating in some new payment models currently being discussed as alternatives to fee-for-service reimbursement—such as capitation, shared savings and bundled payment arrangements—will likely satisfy the DOJ’s and FTC’s financial integration requirements. The AMA has developed a resource entitled "Evaluating & Negotiating Emerging Payment Options" to offer practical, easy-to-understand information regarding emerging payment arrangements that may also satisfy the DOJ’s and FTC’s financial integration requirements. Other topics covered will include risk adjustment and selecting an actuary. Access the AMA resource, "Competing in the Marketplace: How physicians can improve quality and increase their value in the health care market through medical practice integration, second edition" for more in-depth information regarding federal antitrust laws, current DOJ and FTC antitrust enforcement perspectives, and how physicians may implement various physician practice integration strategies.

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