Provider Relationships

• Pages: 123-144

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CHAPTER VIII

PROVIDER RELATIONSHIPS

This chapter addresses the application of federal antitrust law to the

interaction between insurers and providers from which insurers (or their

insureds) obtain goods and services. The main focus is on insurer conduct,

although the chapter will also address insurer-provider collaborations

encouraged by health care reform legislation.

As has been true for ten years or more, antitrust disputes arising out of

the vertical relationships between insurers and providers have occurred

most frequently in the health care space. Many of the cases discussed in

this chapter involve relationships in health care. The core legal and

economic principles discussed in these cases are generally applicable to

the relationship between any type of insurer and provider, with two

caveats. The rapidly changing market realities, regulatory framework, case

law, and antitrust enforcement priorities in health care mandate that

research be updated before providing antitrust advice on health insurer-

provider relationships.

535

Further, it is essential to evaluate whether and to

what degree precedents from health care cases properly inform antitrust

535. Antitrust issues relating to health care are also discussed in the follo wing

publications authored by the Health Care Committee of the Section of

Antitrust Law of the American Bar Association: ABA SECTION OF

ANTITRUST LAW, THE ANTITRUST HEALTH CARE HANDBOOK (4th. ed.

2010); ABA SECTION OF ANTITRUST LAW, MESSENGER MODEL

HANDBOOK (2008); and ABA SECTION OF ANTITRUST LAW, ANTITRUST

AND HEALTH CARE: NEW APPROACHES AND CHALLENGES (1998). The

Department of Justice and Federal Trade Commission Statements of

Enforcement Policy in Health Care (August 1996), available at

http://www.justice.gov/atr/public/guidelines/000 0.htm, [hereinafter

ENFORCEMENT POLICY] should also be consulted for insight into the

primary principles of health care antitrust enforcement policy. Fo r specific

enforcement policy concerning Accountable Care Organizations created

under the Patient Protection and Affordable Care Act, please refer to

FEDERAL TRADE COMMISSION AND DEPARTMENT OF JUSTIC E STATEMENT

OF ANTITRUS T ENFORCEMENT POLICY RE GARDING ACOS PARTICIPATING

IN THE MEDICARE SHARED SAVINGS PROGRAM (2011), available at

http://www.gpo.gov/fdsys/pkg/FR-2011-10-28/pdf/2011-27944.pdf

[hereinafter ACO POLICY STATEMENT].

124 Insurance Antitrust Handbook, 3d Ed.

analysis in other insurance lines, which requires a careful assessment of all

material differences in regulation, market structure, conduct, and

performance.

A. Vertical Relationships Between Insurers and Providers Absent

McCarran-Ferguson Immunity

When an insurer contracts for goods and services to settle claims or

provide insureds with policy benefits, the insurer is treated as a purchaser.

Accordingly, vertical agreements between insurers and providers, like

contracts between other buyers and sellers, are judged under the rule of

reason.

536

1. Agreements on Provider Reimbursement Levels

Contracts that specify the manner in which insurers reimburse health

care providers, automobile repair shops, and other providers of goods and

services have grown increasingly complex and are frequent sources of

antitrust litigation.537 Historically, the most common determinants of

reimbursement amounts were fee schedules, under which all providers in

536. See, e.g., In re Insurance Broke rage Antitrust Litig., 618 F.3d 300, 3 18-19

(3d Cir. 2010); Ball Mem’l Hosp. v. Mutual Hosp. Ins., 784 F.2d 1325,

1334 (7th Cir. 1986); Kartell v. Blue Shield of Mass., 749 F.2d 922, 924-

26 (1st Cir. 1984); Brillhart v. Mut. Med. Ins., 786 F.2d 196, 199 (7th Cir.

1985); Proctor v. State Farm Mut. Autom. Ins. Co., 675 F.2d 308, 337-38

(D.C. Cir. 1982); Quality Auto Body, Inc. v. Allstate Ins. Co., 660 F.2d

1195, 1203 (7th Cir. 1981); Travelers Ins. Co. v. Blue Cross, 481 F.2d 80,

84 (3d Cir. 1973); Marion Healthcare LLC v. Southern Ill. Healthcare, No.

12-cv-871-SMY-PMF, 2015 WL 3466585 (S.D. Ill. May 29, 2015); Tri

State Advanced Surgery Ctr. v. Health Choice LLC, No. 314CV143-JM,

2015 WL 1737410, at *3 (E.D. Ark. April 16, 2015); Stop & Shop

Supermarket Co. v. Blue Cross & Blue Shield of RI, 239 F. Supp. 2d 180,

189-191 (D.R.I. 2003), aff'd, 373 F.3d. 57 (1st Cir. 2004).

537. In re Ins. Brokerage Antitrust Litig., 618 F.3d 300 (litigation involving

commercial and employee benefit insurance); Gilchrist v. State Farm Mut.

Auto. Ins. Co., 390 F.3d 1327 (11th Cir. 2004) (lawsuit involving insurance

of automobile repairs); Slagle v. ITT Hartford, 102 F.3d 494 (11th Cir.

1996) (litigation involving windstorm insurance); United States v. Delta

Dental of R.I., 943 F. Supp. 172 (D.R.I. 1996) (litigation involving most

favored nations cla use in health care provider contract).