Antitrust Case Before Supreme Court May Limit Physician Referrals

June 12, 2018 - An antitrust case involving credit card companies could potentially impact healthcare by allowing payers and hospital systems to limit physician referrals.

Ohio v. American Express Co. is a pending case before the Supreme Court that involves the nature of antitrust laws in two-sided markets. Specifically, the case pertains to policies set by some credit card companies that prevent merchants from steering their customers from using other cards with lower transaction fees. The practice forces merchants to incur higher transaction fees imposed by the credit card companies.

Visa and Mastercard settled their cases with the Justice Department in 2010, but American Express continues to stand behind its anti-steering policies, claiming higher transaction fees help the company maintain member services.

A district court sided with the Justice Department in 2015, finding harm to the merchants. But an appeals court reversed the decision a year later, arguing that the Justice Department did not demonstrate harm to both sides of the market, the credit card company and merchants.

The Justice Department and several states dropped the case, but Ohio is leading the eleven-state charge to reverse the appellate court’s decision.

READ MORE: Hospitals Seek Independent Docs for Referrals, Healthcare Revenue

While the anti-steering practices of credit card companies may not seem like they would impact healthcare, the new antitrust test involving two-sided markets could impact physician referrals, according to a friend of the court brief authored by the American Medical Association (AMA) and the Ohio State Medical Association.

Healthcare could qualify as a two-sided market, making it susceptible to the novel antitrust test put forth by the appeals court.

“Physicians often contract with health insurers that operate two-sided platforms,” AMA and the Ohio State Medical Association explained. “Physicians contract with health insurers to supply medical services to the health-insurer members as part of healthcare provider networks that health insurers assemble.”

“Health insurance plans, in turn, contract with physicians and other healthcare providers to form provider networks that will assure that the health insurers’ members can access necessary and quality medical services at certain negotiated rates.”

If the Supreme Court upholds the new two-sided market antitrust test, payers may implement greater anti-physician referral rules that will impact care quality.

READ MORE: Maximizing Provider Revenue with Payer Contract Management

“Such dominant health insurance networks (or their agent benefit managers) have imposed and could further impose rules or effectively erect barriers that prohibit physicians from referring patients to certain specialists, particularly out-of-network specialists, for innovative and even necessary medical tests,” the brief stated.

The upheld ruling would particularly harm independent practices because dominant hospital systems would be able to create contracts with payers that include restrictive physician referral rules, President of the Large Urology Group Practice Association (LUGPA) Neal Shore, MD, FACS, recently explained to RevCycleIntelligence.com.

“If allowed, independent physicians like myself would be wary of making referrals to specialists in hospital-based systems for fear of losing access to the patient, which would disrupt their continuum of care,” he explained. “Such restrictions have the potential to affect the quality of care and the choices my patients have, which is in direct defiance of the industry’s transition towards value-based care.”

Ruling in favor of the new antitrust test would also negatively impact the doctor-patient relationship and deny patients access to high-quality specialists, Shore added.

“Traditionally, antitrust laws have been necessary to protect patients and prevent negative outcomes when it comes to quality care,” he said. “Yet, this seems to run counter to these long-held objectives.”

READ MORE: Preparing the Healthcare Revenue Cycle for Value-Based Care

Not only would upholding the two-sided market antitrust test threaten physician judgment, leading to potentially worse health outcomes, but the ruling would make it nearly impossible for physicians to fight anti-referral policies, the AMA and the Ohio State Medical Association contended.

“Notwithstanding such restraints’ material interference with physician judgment and harm to patient care, under the Second Circuit’s ruling below, governmental, patient, or physician plaintiffs could not make a prima facie case that the restraint was anticompetitive unless they were able to demonstrate that the restraint caused a ‘net’ harm to both the medical services and commercial insurance markets,” the groups argued.

“Under the Second Circuit’s decision, an antitrust plaintiff challenging those restraints would face the exceedingly difficult, if not impossible, burden of quantifying both the harm to patient care and harm to commercial insurance subscribers—and then netting out the latter from the former.”

The Ohio State Medical Association, AMA, and LUGPA all hope the Supreme Court will not vote in favor of the two-sided market antitrust test.

The Supreme Court anticipates reaching a decision by the end of the current term in June 2018.