Thursday, February 21, 2013

FTC allows Organization Proposal to Negotiate Rates with Payors to Go Forward


On February 13th, the Federal Trade Commission (“FTC”) issued an Advisory Opinion in which they indicated that they would not challenge a decision by an Oklahoma physician hospital organization (“PHO”) to negotiate rates jointly with payors as a horizontal price fixing agreement.  As explained in the Opinion, the PHO was successful in persuading the FTC that the entity would be sufficiently “clinically integrated” to justify that determination, in terms of better patient outcomes, greater use of electronic records, etc.

Few PHOs have successfully made this argument to the FTC.  Extremely important to the FTC’s analysis was the fact that the PHO will be non-exclusive, both in form and practice, and the assurances made by the PHO that a significant amount of “antitrust counseling” would be provided to members to ensure that anticompetitive “spillover” effects were not created.

This FTC opinion along with the proposed structure serves as important guidance to organizations contemplating such negotiations.