OCR Text |
Show preferred because they are less likely to foreclose competing networks. Non-exclusive agreements allow members to contract outside the venture, either individually or through other networks. Thus, greater numbers of competitors are likely to develop in the market, and new entry is likely to be easier. The 1994 statement states the preference for non-exclusive agreements more strongly by adding a safety zone applicable to non-exclusive physician network joint ventures comprising 30 percent or less of the physicians in each specialty. Such agreements must be non-exclusive in fact, not just in name. Indicia of non-exclusivity include: (1) viable competing networks or plans currently exist; (2) providers in the network actually participate in other networks or contract individually with health benefits plans, or evidence a willingness to do so; (3) providers in the network earn substantial revenue outside the network; (4) no evidence of de-participation from other networks; and (5) no evidence of coordination among providers in the network regarding price in other networks. The safety zones covering physician network joint ventures are dependent on the sharing of substantial financial risk by participating physicians. Capitation systems and compensation withholds are examples of risk sharing included in the statement, but the agencies note other forms of economic integration may demonstrate risk sharing. Analytical Principles Relating to Multiprovider Networks New this year is a statement setting out the analytical principles the agencies will apply to multiprovider networks. A wide range of new relationships and affiliations is emerging in the health care market, referred to in the 1994 statements as "multiprovider networks." These networks provide health care services to the subscribers of health benefits plans. They may or may not assume insurance risk or be affiliated with an insurer and they may or may not require complete integration of the practices of their members. Although the agencies have had insufficient experience in analyzing these emerging types of health care delivery systems to issue a formal policy statement, they realize that it is of vital importance that some guidance to the health care community be provided. Thus, the statement describes the analytical principles the agencies will apply to such arrangements. The statement discusses antitrust issues commonly raised in connection with the formation and operation of multiprovider networks and articulates the principles important to the analysis of such networks, including integration, joint pricing and joint marketing, market definition, competitive effects, exclusivity, exclusion of providers, and efficiencies. The agencies have committed to issue business reviews or advisory opinions on proposed multi-provider networks within 120 days after all necessary information is submitted. As with other joint arrangements, multi-provider networks will be examined to determine their likely effect on competition. In multiprovider networks that include some direct competitors, a first step in the analysis is to determine whether the competitors participating in the network are sufficiently integrated through the network so that the agreements should be treated under a rule of reason. Even if such integration is found, competitors must make unilateral decisions on prices they will charge and markets they will serve, or they must assure that joint decisions are necessary to the economic integration among participants. With regard to joint pricing and joint marketing, any restrictions on competition among participants must be reasonably necessary to achieve the efficiencies sought by the venture. The statement encourages joint agreements that are accomplished using the "messenger model." Using this model, a third party conveys to purchasers information obtained individually from providers in the network about the prices participants are willing to accept and conveys to providers any contract offers made by purchasers. The safeguard is that each provider then makes an independent, unilateral decision to accept or reject each contract offer without knowing the decisions of the other participants. In defining the market for networks, the agencies will examine both the market for such networks themselves and the markets for individual service components of the network that are, or could be, sold separately outside the network. Multiple definitions of both the product and geographic markets are thus likely to be considered. Because multiprovider networks may link together competitors at the same level and participants at different levels within a channel of complementary services, the agencies will examine both the potential for horizontal and vertical competitive effects of the arrangements. In assessing the horizontal effects of arrangements, the market share of the network and the market concentration in the service components joined together within the network will be of concern. Agencies will be particularly interested in the Utah's Health: An Annual Review 1995 |