Advisory Opinion to Binford (02-06-03)

February 6, 2003

Gregory G. Binford
Benesch Friedlander Coplan & Aronoff LLP
2300 BP Tower
200 Public Square
Cleveland, Ohio 44114-2378

Dear Mr. Binford:

This letter responds to your request for an advisory opinion concerning the proposed formation and operation of a "healthcare advocacy group" composed of practicing physicians in the Dayton, Ohio, area. For the reasons discussed below, the Commission staff has no present intention to recommend law enforcement action against the group's collection and public dissemination of information about Dayton health care market conditions, including information about insurer payments to physicians, in the manner you describe. Informing patients, employers, health plans, and physicians about the health care market, as the organization proposes, has the potential to enhance competition. Should the physicians use the information exchange as a basis upon which to coordinate fee demands, negotiate collectively with health plans, coerce health plans into accepting particular contract terms, or otherwise unreasonably limit physician competition, however, then they will be acting anticompetitively, and the staff will recommend to the Commission that it take an appropriate law enforcement action.

Description of Proposed Conduct

You have represented to us that PriMed Physicians - a physician group practice with 55 physician employees - intends to create with other Dayton-area physicians an advocacy group to undertake "a campaign to inform and educate the general public" about, in the physicians' opinion, the "ill effects and other consequences of the policies and procedures, including depressed reimbursement, by third party payers in Dayton." The organization will be open to all Dayton physicians and thus may contain a majority of the area's practicing physicians.

You informed us that two health plans in Dayton - each having at least 250,000 enrollees - cover a majority of the city's insured population. Some Dayton physicians believe that these health plans have market power in Dayton that enables them to under-compensate Dayton physicians relative to physicians in comparable cities where the plans also do business. You assert that this alleged discrepancy in payments for services rendered to insureds, as well as other health plan policies and practices, disadvantages Dayton physicians and their patients. Among other things, you contend that health plan payments in Dayton are such that recruitment and retention of physicians is particularly difficult.

The proposed advocacy group intends to publicize information that it believes relates to the quality and cost of health care services in Dayton by undertaking the following actions, among others:

  • Obtain from individual physicians the amounts that specific, named private health plans pay for particular physician services in Dayton, publish the amounts for a limited number of high-volume services, and compare those amounts to what those plans pay in other cities within 200 miles and to other health plan payments in other regions of the country.(1)
  • Explain the group's belief that a disparity in payments relative to other cities hampers retention and recruitment of physicians in Dayton. 
  • Document any physician shortages that exist or are developing in the Dayton area. 
  • Compare communications from health plans to patients and to physicians concerning what services are covered by the health plans. 
  • Educate the public about the process that physicians must undertake to gain health plan approval to use particular medical technologies or modes of treatment. 
  • Educate patients and employers about instances in which a health plan's provider panel does not contain specialists in certain fields within 40 miles of Dayton, or where the group believes the number of specialists is inadequate to meet patient needs. 
  • Publish the amount that health plans pay for a flu shot, and physicians' actual cost for the flu serum.

These informational activities will include sponsoring talks in the community, communicating directly to employers, and communicating through the media to the general public, and will involve discussion of specific information relating to individual health plans.

Legal Analysis

The collection and public dissemination of accurate information and expressions of opinion on matters of public interest usually do not raise concerns under the antitrust laws, even when physicians or other groups composed of competitors do so collectively. Increasing the amount of information available to patients, employers, physicians, and other interested parties can improve the functioning of markets and foster, rather than hinder, competition and consumer welfare. In most instances, physicians' collection and publication of such information, and their advocacy of a point of view on issues affecting the organization, delivery, and financing of health care services, would not likely impair competition or violate the antitrust laws.

The antitrust laws forbid concerted action among competitors to set prices or fix quality or output levels of the products or services available to consumers. As the Supreme Court has noted, the antitrust laws reflect a fundamental judgment that consumer choice, rather than the collective judgment of sellers, should determine the range and prices of goods and services that are available.(2)Consumers need timely and accurate information to make informed choices. Rivals can help markets to function more efficiently by publishing such information - so long as they do so in a manner that does not facilitate unreasonable restraints to the competitive process in which they participate.

The physicians' desire to focus public attention on their concerns, therefore, is entirely consistent with antitrust principles, and many of the planned activities appear to pose no substantial antitrust risk. But one aspect of the proposal warrants more extended discussion: the collection and publication (to physicians as well as to other members of the public) of the fees paid by named health plans for specific medical services. While you state that the organization's activities are intended to increase the quality of care available to Dayton area patients (by, for example, calling attention to the alleged attrition among physicians due to low compensation), the principal data that the doctors intend to collect from one another and publish do not relate directly to measuring or assessing the quality of physician services in Dayton. Rather, the information pertains specifically to how much the physicians get paid. A survey on indicators of quality likely would not raise any antitrust concerns. The proposed survey, however, carries some potential for facilitating anticompetitive agreements among physicians, because it involves insurer payments to doctors and the prices that the doctors charge to those insurers.(3) We address this issue below.

1. Potential Physician Market Effects

The Commission evaluates competitor exchanges of price and other competitively sensitive information to determine whether they have, or are likely to have, an anticompetitive effect that outweighs any procompetitive justification. In the context of this advisory opinion, the fundamental question is whether the information exchange is intended or likely to result in physicians concertedly or interdependently modifying their pricing or contracting behavior relative to health plans.

Injury to competition and consumers would result if the proposed exchange of information facilitated an agreement among Dayton area physicians on prices to demand of health plans or an agreement to refuse to deal with health plans except on agreed terms. Comparison of payments in Dayton to insurer payments to physicians in other cities, moreover, could facilitate an agreement among Dayton physicians to use those payment levels as a starting point for negotiations with health plans for higher compensation, and to refuse to deal with plans that offer payment terms below those yardsticks. Publication of data indicating how many or what percentage of physicians receive different, specified prices for particular services, or publication of data showing how prices paid by identified payers differ, could facilitate coordinated efforts to reduce or eliminate price differences as a way of increasing average price levels.

Because your group's major premise is that insurer payments to Dayton physicians are unreasonably low, there is ground for concern that Dayton physicians might interpret the group's actions as a call for collective action of this sort. Such agreements would not have to be express to violate the antitrust laws. Further, they would be unlawful per se, absent efficiency-enhancing integration among the physicians that is sufficient to justify their joint pricing or contracting with health plans. Because the proposed conduct does not involve integration, any agreement of this type would be legally unjustified.

The likelihood that the survey actually would foster anticompetitive effects - through either express or tacit collusion - is reduced by Dayton's market structure for physician services, which we understand to be highly unconcentrated. According to information that you supplied, approximately 1,600 doctors practice medicine in Dayton, and most do so in solo practices or small groups. PriMed, with 55 doctors, is the area's largest physician group (except for the physicians employed - or whose practices are owned - by the local hospital). In such a market, an exchange of price-related information is less likely to have anticompetitive effects by facilitating cartel behavior, because the unconcentrated structure usually is not conducive to effective tacit price coordination.(4)

The likelihood of anticompetitive effects from the proposed activities is further reduced to the extent that physicians already have information about health plan payments. You state that Dayton's two largest payers have told PriMed physicians that they have regional fee schedules that apply uniformly to all physicians in a particular area. Accordingly, Dayton physicians may already know what particular health plans pay to other physicians for the same services. You have told us that a principal purpose of the survey is to verify this information and inform the public accurately about the health plans' alleged practice of offering comparatively low payment terms to Dayton physicians for services rendered to their respective insureds. You have not suggested that the group intends to repeat the survey at regular intervals, which we presume would not be necessary to accomplish this stated purpose.

The advocacy group intends to apply certain rules to prevent the development of anticompetitive physician conduct. It will not negotiate with health plans on behalf of member physicians. It also will not publish or share information that would be "conclusory or suggestive as to how an individual physician or physician group should deal with a third party issue or suggest how any physician will deal with any individual issues," and will prohibit members from sharing among themselves information about their negotiations with any health plan. The occurrence of any of these activities, of course, would present very serious antitrust concern.(5)

According to your letter, the advocacy group also plans to implement procedures corresponding to the criteria of the safety zone for health care provider participation in price information exchanges found in Statement 6 of the Statements of Antitrust Enforcement Policy in Health Care jointly issued by the Commission and Department of Justice in August, 1996.(6) These criteria are intended to reduce the possibility that competing providers will use the exchange of price information to coordinate their prices in the future. The safety zone does not apply to physicians' exchanges of information about specific health plans' payments. As noted above, however, that payment information can also reflect physician prices,(7) and that aspect of the proposed survey warrants analysis as well. 

According to the information you have given us, a third party who is not a physician and who does not advise Dayton physicians with respect to pricing or contract negotiations will collect the payment information from participating physicians. Furthermore, the group will not make disaggregated survey responses available to physicians, will not release compensation information by physician name, and will collect only payment data that are at least three months old. The group also will not collect fee information relating to procedures that only a few physicians perform and will not publish any statistics for which fewer than five physicians report data. Your proposed survey by its nature appears to involve past or present compensation rather than prices that the physicians intend to charge in the future. These safeguards appear to offer substantial assurance that the price-exchange aspect of the survey will not involve significant antitrust risk.

The potential procompetitive effects of the proposed publication of insurer payments warrant consideration. As noted earlier, publication of information helpful to patients and employers in making their purchasing decisions would be expected to facilitate competition. Thus, the conduct you propose has the potential to have procompetitive effects, by providing information to consumers about conditions in the Dayton health care market that the physicians believe are detrimental to patients and to the quality and accessibility of health care services. These effects depend, of course, on the accuracy of the information disseminated and the validity of the comparisons that the group makes.

The proposed group also plans additional activities, including "sharing analyses or data relating to payers and various contract terms and sharing of objective analytical information generated as a part of this campaign." For example, the group may illustrate the aggregate effect that a ten dollar reduction in the payment for a routine office visit would have on physician revenues, by multiplying that ten dollars by 30 visits per day over a long term. Standing alone, such activities are not likely to be anticompetitive. Should the physicians use them to facilitate coordinated action to eliminate or reduce price competition, however, then the staff would recommend law enforcement action for the reasons expressed above.

On balance, therefore, we conclude that the proposed activity would not be likely to unreasonably restrict competition among Dayton physicians, so long as it is carried out as described above.

2. Potential Insurer Market Effects

The proposed publication of insurer-specific payments could also affect competition among health insurers in the Dayton area. Public dissemination of this information necessarily will inform all the health plans operating in Dayton about their rivals' payments to physicians, and thus could adversely affect competition among those health plans. This issue is particularly significant in Dayton. According to your letter, two health plans cover a majority of the population having private health insurance. If the health insurance market encompassing Dayton is as highly concentrated as you suggest, then publication of health plan payment terms could prompt coordinated interaction among the plans.

In response to this concern, you asserted that, through their processing of claims involve both primary and secondary payers, health plans already have access to detailed information about what other insurers are paying in Dayton for physician services. To the extent that health plans already know, or can readily determine, the amounts that their competitors pay for physician services, the group's collection and dissemination of that information is not likely to have a significant effect on competition among health plans. Indeed, your assertion finds support in the Ohio law governing insurers' coordination of benefits. The statute, O.R.C. § 3902.12, provides that the secondary payer will determine the benefits it will pay by taking into consideration the payment made (or to be made) by the primary payer. Moreover, the law further provides that to avoid duplicate payment, a third-party payer may request information from another payer about the amount of benefits paid on a particular claim, and that such information shall be provided. O.R.C. § 3902.13 (C), (F), (I)(1).

The staff is not typically confronted with proposed activity that raises the theoretical, albeit unintended, risk of imposing competitive harm on the actors themselves. We conclude that, because physicians would be likely victims of any anticompetitive uses to which health plans could deploy the publicized data, and thus are in perhaps the best position to assess this risk, the physicians' participation in the survey presumably would corroborate your assertion that such an anticompetitive outcome is not likely.


If the advocacy group undertakes the proposed activities in the manner you have described and consistent with the antitrust principles discussed above, then its operation does not appear likely to have anticompetitive effects and to violate the antitrust laws. Indeed, if the venture helps inform patients, employers, and payers, as well as physicians, about the operation of the Dayton health care market, while avoiding anticompetitive conduct, then its effect may be procompetitive. Accordingly, the Commission staff has no present intention to recommend enforcement action. If the physicians use the organization or its activities as a vehicle for collective action that unreasonably limits physician competition, however, then both the group and its members may be subject to such action.

This letter sets out the views of the staff of the Bureau of Competition, as authorized by the Commission's Rules of Practice. Under Commission Rule § 1.3(c), 16 C.F.R. § 1.3(c), the Commission is not bound by this staff opinion and reserves the right to rescind it at a later time. In addition, this office retains the right to reconsider the questions involved and, with notice to the requesting party, to rescind or revoke the opinion if implementation of the proposed program results in substantial anticompetitive effects, if the program is used for improper purposes, if facts change significantly, or if it otherwise would be in the public interest to do so.

Sincerely yours,

Jeffrey W. Brennan
Assistant Director


1. Information about what health plans pay in other markets would be obtained from public sources or from physicians practicing in those areas.

2. See National Society of Professional Engineers v. United States, 435 U.S. 679 (1978).

3. Health plan payment levels are also the prices that physicians charge to health plans. When a physician enters into a contract with a health plan, pursuant to which the physician agrees to accept - typically at a discount off list prices - a certain payment from the plan as compensation-in-full for services rendered to the plan's insureds (subject to applicable coinsurance), that contract-payment level becomes the physician's price for those patients. In this respect, therefore, your group's proposed publication of health plan payments would constitute a physician price information exchange - albeit one that does not include prices charged to uninsured or non-network patients.

4. See Richard A. Posner, Antitrust Law 86-87 (2d ed. 2001); see also id. at 159-71.

5. The advocacy group might further reduce the risk of anticompetitive effects by publishing the fee information in a way that limits physicians' ability to use it as focal points for collusive anticompetitive behavior. For example, the group could refrain from identifying health plans by name; report dollar ranges or average or most common-payments for particular services (instead of a distribution of prices paid for particular services); or report health plan payment information only as a ratio of payments in Dayton to payments in other areas (rather than actual payment levels).

6. To come within the safety zone, the survey must meet three conditions:

  • the survey is managed by a third-party;
  • the information provided by survey participants is based on data more than three months old; and
  • there are at least five providers reporting data upon which each disseminated statistic is based, no individual's data represents more than 25 percent on a weighted basis of any statistic, and the information disseminated is sufficiently aggregated that the prices charged by any particular health care provider cannot be identified.

7. See supra n.3.