Impacts of a Healthplan’s Refusal to Create and Sign Contract Collaboration Agreements

A Discussion Paper

Introduction

A health plan’s unwillingness to sign collaboration agreements significantly increases the risk of antitrust violations, particularly given health plans’ responsibility to use taxpayer dollars efficiently and transparently. Such refusals exacerbate restrictive practices, maintain information asymmetry, and constitute an abuse of market power, all of which undermine fair competition and harm providers. Providers should seek legal counsel, document their interactions with health plans, engage regulatory bodies and public employee unions, advocate for legislative change, and leverage public opinion to address potential antitrust concerns.

Such situations become most significant when health plans’ services to public employees, including teachers are funded by taxpayers’ dollars. Public funding adds a layer of public accountability and fiduciary duty to health plan operations.

1. Public Accountability and Fiduciary Duty

Issue:

• A health plan using taxpayer dollars is responsible to efficiently and effectively provide high-quality care for public employees.

Antitrust Concern:

• Breach of Fiduciary Duty: A refusal to collaborate and share necessary information may be seen as a breach of fiduciary duty, since such refusal prevents providers from delivering the best possible care, potentially wasting taxpayer funds.

• Public Trust: Lack of transparency and refusal to engage in good faith collaborations can erode public trust in how taxpayer money is managed and spent.

2. Increased Restrictive Practices

Issue:

• By unwillingness to sign collaboration agreements, a health plan can prevent providers from entering structured partnerships that could facilitate shared decision-making, risk management, and care-quality improvement.

Antitrust Concern:

• Market Foreclosure: Payer’s unwillingness to collaborate can exclude providers from effectively participating in the market, thus foreclosing competition.

• Unfair Competitive Advantage: When a health plan maintains control over critical information and decision-making processes, it has a potentially unfair advantage over providers who must without means to coordinate and optimize their care delivery.

3. Exacerbation of Information Asymmetry

Issue:

• Without collaboration agreements, providers lack the necessary information to accurately assess and manage risk, evaluate the viability of VBP contracts, and make informed business decisions.

Antitrust Concern:

• Deceptive Practices: Any ongoing lack of transparency and information asymmetry may be seen as deceptive, misrepresenting the terms and potential outcomes of the VBP contracts to providers.

• Restriction of Trade: Unwillingness to share essential information restricts trade by discouraging provider participation and hindering competition based on merit and performance.

4. Abuse of Market Power

Issue:

• If a health plan holds significant market power, its refusal to enter collaboration agreements could be viewed as an abuse of that power, with the aim to maintain the plan’s dominant position and limit providers’ ability to compete effectively.

Antitrust Concern:

• Monopoly Power: Such health plan actions can be interpreted as attempts to leverage their market position to control the terms of competition and exclude or disadvantage smaller or independent providers.

Relevant Case Law and Principles

1. FTC v. Indiana Federation of Dentists (1986):

   • The U.S. Supreme Court held that agreements among competitors to withhold information from insurers were anticompetitive. This principle supports the view that refusing to sign collaboration agreements, thereby withholding critical information from providers, could be anticompetitive.

2. United States v. Microsoft Corp. (2001):

   • Microsoft’s use of its monopoly power to restrict competitors underscores how dominant firms can violate antitrust laws by refusing to engage in fair and open competition. A health plan’s refusal to collaborate could similarly be seen as leveraging monopoly power to restrict competition.

3. Eastman Kodak Co. v. Image Technical Services, Inc. (1992):

   • The Supreme Court held that Kodak’s control over parts and service could constitute an antitrust violation if it effectively restricted competition. This case illustrates a way that exercising control over critical elements of market participation (like collaboration agreements and information) can be seen as anticompetitive.

4. California Dental Association v. FTC (1999):

   • The Supreme Court held that the FTC could challenge restrictive advertising rules by a dental association under antitrust laws. This case highlights that professional conduct rules that limit competition can be subject to antitrust scrutiny.

Recommendations for Providers

1. Seek Legal Counsel:

   • Providers should consult with legal experts in antitrust to explore implications of a health plan’s refusal to collaborate and should assess the potential for legal action.

2. Document Attempts to Collaborate:

   • Keep detailed records of all attempts to engage a health plan in collaboration agreements, including requests for information and a health plan’s responses. Such documentation can be crucial in any legal or regulatory inquiry.

3. Engage Regulatory Bodies:

   • File complaints with the Federal Trade Commission (FTC) or the Department of Justice (DOJ) Antitrust Division. Highlight ways a health plan’s refusal to collaborate restricts competition and may involve misuses of taxpayer funds.

4. Engage Public Employee Unions and Regulatory Agencies:

   • Collaborate with public employee unions and state health regulators to advocate for transparency and fairness in VBP contracts. Unions, which represent the interests of public employees, can add significant pressure on a health plan to comply with fair practices.

5. Advocate for Legislative Change:

   • Work with lawmakers to draft and support laws that mandate transparency and collaboration in VBP contracts, especially those funded by taxpayer dollars. Proposed legislation could require health plans to disclose information necessary for effective risk-sharing and collaboration.

6. Leverage Public Opinion:

   • Use public forums, media, and advocacy groups to raise awareness about a health plan’s anticompetitive practices and misuse of taxpayer funds. Public pressure can often lead to regulatory or legislative action.

DISCLAIMER and PURPOSE: This discussion document is intended for training, education, and research purposes only. The information contained herein is based on the data and perspectives available at the time of writing. It is subject to revision as new information and viewpoints emerge.

For more information see: https://www.mentorresearch.org/disclaimer-and-purpose