An antitrust verdict against a New York-based specialty benefits management company, which could amount to almost $40 million, serves as a cautionary tale for specialists seeking a role in accountable care organizations, according to an attorney for the plaintiff.
Axel Bernabe, a partner in the New York office of Constantine Cannon, says Stand-Up MRI of the Bronx v. CareCore National, decided Nov. 30, demonstrates the potential dangers of specialists contracting with insurance companies to serve as exclusive gatekeepers for their networks by making the decision on which competing specialists are allowed to participate in those networks.
Because ACOs will try to rein in costs, "there will be increased incentives for dominant insurance companies to enter into vertical exclusive deals" with hospitals, primary care physicians and specialists to limit networks and manage medical benefits, Mr. Bernabe says. "If such agreements are not properly structured, they will serve as lightening rods for antitrust challenges.”
Background of the case
CareCore National, owned and managed by several groups of competing radiologists, obtained the exclusive right to operate as the gatekeeper for radiology services provided to subscribers of several large insurers in New York, such as Oxford, HIP, Aetna and Health Net. A number of radiology practices involved in Stand-Up applied to CareCore several times for the company's upright MRI device to become part of these networks, but the Stand-Up they were turned down each time.
A jury from the U.S. District Court for the Eastern District of New York found that CareCore and its radiologist-owners conspired to unreasonably restrain trade for commercially insured outpatient radiology procedures. The jury awarded more than $11 million in damages to the plaintiffs, which are to be trebled by law. Adding attorneys' fees and costs, the total judgment could be close to $40 million.
CareCore's unusual role of simultaneously being a medical provider and a gatekeeper for its competitors could become an attractive model as providers and insurers struggle to create ACOs, Mr. Bernabe says. To contain costs and achieve clinical integration, ACOs may seek to contract with groups of specialists who assume insurance risk to manage specialty care.
"The new ACOs will attempt to create incentives for specialists or large 'must have' health systems or providers groups that will be justified as providing the volume-price tradeoff of a limited network," Mr. Bernabe says. He warns that specialists and other large providers will need to be very careful in how they structure such agreements with insurers.
"At the very least, the insurance company, not the radiologists, should have the final say on who gets into the network," Mr. Bernabe said. "The insurance company shouldn't hand over that responsibility. You can't give away the keys to the kingdom."
Read Constantine Cannon's press release on the decision.
Read more about specialists and ACOs:
- 6 Best Practices on Bringing Independent Physicians Into Hospital-Run ACOs
- 7 Thoughts on How Antitrust Laws Could be Changed to Accommodate ACOs
Axel Bernabe, a partner in the New York office of Constantine Cannon, says Stand-Up MRI of the Bronx v. CareCore National, decided Nov. 30, demonstrates the potential dangers of specialists contracting with insurance companies to serve as exclusive gatekeepers for their networks by making the decision on which competing specialists are allowed to participate in those networks.
Because ACOs will try to rein in costs, "there will be increased incentives for dominant insurance companies to enter into vertical exclusive deals" with hospitals, primary care physicians and specialists to limit networks and manage medical benefits, Mr. Bernabe says. "If such agreements are not properly structured, they will serve as lightening rods for antitrust challenges.”
Background of the case
CareCore National, owned and managed by several groups of competing radiologists, obtained the exclusive right to operate as the gatekeeper for radiology services provided to subscribers of several large insurers in New York, such as Oxford, HIP, Aetna and Health Net. A number of radiology practices involved in Stand-Up applied to CareCore several times for the company's upright MRI device to become part of these networks, but the Stand-Up they were turned down each time.
A jury from the U.S. District Court for the Eastern District of New York found that CareCore and its radiologist-owners conspired to unreasonably restrain trade for commercially insured outpatient radiology procedures. The jury awarded more than $11 million in damages to the plaintiffs, which are to be trebled by law. Adding attorneys' fees and costs, the total judgment could be close to $40 million.
CareCore's unusual role of simultaneously being a medical provider and a gatekeeper for its competitors could become an attractive model as providers and insurers struggle to create ACOs, Mr. Bernabe says. To contain costs and achieve clinical integration, ACOs may seek to contract with groups of specialists who assume insurance risk to manage specialty care.
"The new ACOs will attempt to create incentives for specialists or large 'must have' health systems or providers groups that will be justified as providing the volume-price tradeoff of a limited network," Mr. Bernabe says. He warns that specialists and other large providers will need to be very careful in how they structure such agreements with insurers.
"At the very least, the insurance company, not the radiologists, should have the final say on who gets into the network," Mr. Bernabe said. "The insurance company shouldn't hand over that responsibility. You can't give away the keys to the kingdom."
Read Constantine Cannon's press release on the decision.
Read more about specialists and ACOs:
- 6 Best Practices on Bringing Independent Physicians Into Hospital-Run ACOs
- 7 Thoughts on How Antitrust Laws Could be Changed to Accommodate ACOs