On February 13, 2013, the Federal Trade Commission (“FTC”) released an advisory opinion approving Norman PHO’s proposed “clinically integrated” network after a review process that took roughly a year and nine months (“Norman PHO Advisory Opinion”). This is the FTC’s latest advisory opinion discussing the merits of clinical integration programs from an antitrust perspective and the first since the TriState Health Partners, Inc. Advisory Opinion, published on April 13, 2009 (“TriState Advisory Opinion”). At only 21 pages, the Norman PHO Advisory Opinion is a little more than half the length of the 37-page TriState Advisory Opinion. Nonetheless, the Norman PHO Advisory Opinion provides helpful guidance for those looking to create a clinically integrated network to contract with third-party payers.
Background
Norman PHO is a multi-specialty physician-hospital organization formed in 1994 by Norman Physician Association and Norman Regional Health System located in Norman, Oklahoma. It includes 280 participating physicians representing roughly 38 specialties and Norman Regional Health System’s facilities, including four hospitals. Historically, it facilitated a “messenger model” program for contracting between its participating providers and third-party payers.
On May 26, 2011, Norman PHO sent the FTC a 36-page letter (with 23 additional pages of exhibits) requesting an advisory opinion to determine whether the FTC would challenge Norman PHO’s joint contracting with third-party payers upon the creation of Norman PHO’s clinical integration program. Over the next nearly two years, Norman PHO made supplemental submissions to the FTC, including correspondence and documents provided on six separate occasions and multiple telephone conferences.
Clinical Integration Program
Norman PHO will restructure its messenger model into a clinically integrated network with the following components:
- Physician Committees. Norman PHO will create the following physician committees:
- Specialty Advisory Groups. These committees will be responsible for developing and updating clinical practice guidelines.
- Mentor’s Committee. This committee will “oversee quality improvement planning,” including approval of the clinical practice guidelines, monitoring implementation and enforcement of the guidelines.
- Quality Assurance Committee. This committee will establish measures for individual and group performance benchmarking, monitor performance and administer corrective actions.
- Clinical Practice Guidelines. Through the physician committees, Norman PHO will develop evidence-based clinical practice guidelines for a projected 50 disease-specific conditions. Further, Norman PHO has already appointed a Medical Director, contracted with a Medical Informatics Officer, hired a registered nurse as Director of Quality Assurance and hired several full-time staff members for electronic records management and data extraction, all in order to support the clinical integration program.
- Electronic Platforms and Interface. Norman PHO has already invested substantial time, money and effort in developing an electronic platform that includes electronic decisions support, e-prescribing, an electronic medical records system and an electronic health interface system. All physicians must purchase the necessary hardware and software to connect to the electronic platform. Further, the electronic platform will allow Norman PHO to collect data and measure outcomes.
- Physician Involvement. Physicians are expected to invest time and money into Norman PHO, including the following:
- Credentialing. Each physician must satisfy credentialing and medical staff appointment requirements.
- Membership Fee and Annual Fee. Each physician must pay a $350 membership fee and $150 annual fee.
- Participating Provider Agreement. Each physician must enter into a Participating Provider Agreement with Norman PHO.
- Investment in Technology. Each physician must acquire computer hardware and software to connect to the electronic platform.
- Committee Service. Each physician must serve on a physician committee.
- Adherence to Clinical Guidelines. Each physician must follow the clinical guidelines and, if any concerns arise, must participate in peer education and face possible disciplinary action.
- Sharing of Data and Medical Records. Each physician must make all practice data available.
- Ongoing Financial Contributions. Each physician must make ongoing financial contributions through “withholds.”
- Non-Exclusivity. Non-exclusivity is one of the most important aspects of Norman PHO’s clinically integrated network. If a third-party payer does not want to contract with Norman PHO, then that third-party payer is free to negotiate and contract individually with Norman PHO’s participating providers. The FTC raised concerns that Norman PHO has the potential to exercise market power, subsequently leading to higher prices. But the FTC noted that such concerns are mitigated because third-party payers have the ability to bypass Norman PHO and contract directly with the individual participating providers. The FTC warned that if Norman PHO were to become a de facto exclusive network (i.e., Norman PHO does not make it clear the network is non-exclusive, or the participating providers refuse to deal with third-party payers), then the FTC would need to reevaluate its position.
- Protection Against “Spillover Effects.” To limit any anticompetitive “spillover effects” or other anticompetitive coordination, Norman PHO will provide antitrust training to its administrators and providers. It will also implement mechanisms and safeguards to ensure competitively sensitive information is not shared.
Practical Takeaways
From an antitrust perspective, the Norman PHO Advisory Opinion gives many practical guidelines for those wishing to create a clinically integrated network that will jointly contract with third-party payers, including the following:
- Physician involvement is critical. Physicians must invest time and money.
- A network should include primary care physicians and specialty physicians.
- An integrated electronic platform is a critical component.
- Clinical guidelines should be developed through physician committees.
- Clinical guidelines should be monitored and measured by dedicated personnel.
- For those providers not meeting the clinical guidelines, corrective actions should be taken, including expulsion from the network, if necessary.
- The network should be non-exclusive.
- The network must operate as proposed because the FTC will continually monitor.
- Continuous antitrust counseling and training should be provided to the network’s providers and administrators.
For a copy of the Norman PHO Advisory Opinion, click here. For a copy of the Norman PHO Submission Letter, click here.
If you have any questions or would like additional information about this topic, please contact Clifton E. Johnson at 317.977.1430 or cjohnson@hallrender.com, Michael R. Greer at 317.977.1493 or mgreer@hallrender.com or your regular Hall Render attorney.
