Health Care: Antitrust Issues Relating to Physicians and Third-Party Payers

HRD-91-120: Jul 10, 1991

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Pursuant to a legislative requirement, GAO reviewed physician antitrust issues, focusing on: (1) the effect of antitrust laws on physicians' ability to act in groups to educate and discipline peers to reduce and eliminate ineffective practices and inappropriate utilization; and (2) how such issues relate to third-party payers' adoption of practice guidelines.

GAO found that: (1) the Supreme Court did not decide whether the medical profession constituted trade or commerce until 1975, when it ruled that the Sherman Antitrust Act applied to professionals; (2) the Court found that maximum fee schedules setting the maximum fee physicians could claim in full payment for services provided to policyholders of certain insurance plans violated the act; (3) hospital peer review is subject to antitrust scrutiny and is likely to violate the law only when physicians abuse the process; (4) if physician groups produce guidelines solely for informational purposes, there is little chance of an antitrust violation; (5) under recent legislation, physicians serving Medicare patients will receive payment for medical services based on the lesser of actual charges or a statutory fee schedule; (6) a monetary conversion factor may provide physicians an incentive to limit current Medicare expenditures to maintain the rate of reimbursement in subsequent years; (7) a judicial doctrine protects physicians from antitrust liability efforts by private entities to obtain or influence government legislation or regulations; (8) it was difficult to determine whether third-party payers adopting practice guidelines to determine which claims they would reimburse would qualify under a law exempting state-regulated business of insurance from the Sherman Act, but insurers could independently adopt guidelines; and (9) at present, there appears to be no need for legislation providing antitrust immunity to physicians or payers to facilitate peer review activities.