Several positive developments have recently converged that are likely to encourage physicians and hospitals to adopt health information technology (HIT) and develop "clinically integrated" networks. Early adopters of these practices are likely to stand in an enhanced position to participate in new payment systems that reward service quality and value. For providers, an indirect but important corollary of this may be better compliance with antitrust laws as care and operations are integrated in a more organized and accountable way.

The following discussion summarizes key current developments in this emerging area, and suggests an overall perspective on new hospital/physician integration activities.

Competitive Imbalance Between Providers and Managed Care Organizations

Over a period of years, physicians and their hospital partners have dueled with the Federal Trade Commission (FTC) over efforts to negotiate third-party reimbursement involving health plans and other managed care organizations (MCOs).

A frequent result of these sometimes imperfect efforts has been the condemnation of provider network activities as unlawful price fixing and/or a concerted refusal to deal in violation of federal antitrust laws. Consequently, many partially integrated provider networks (e.g., PHOs, IPAs) have been prevented by antitrust limitations from collectively engaging in cooperative activity that might ultimately benefit payers and consumers, in addition to the providers themselves.

In some communities, the resulting competitive imbalance in bargaining power between providers and MCOs has chronically impeded desirable improvements in the health care delivery and reimbursement system.

Clinical Integration: An Evolving Compliance Strategy

The accepted criteria for an antitrust‑compliant "clinical integration" program (CIP) are becoming more clear. Although bright lines can be elusive, recent Federal Trade Commission pronouncements, including those regarding TriState Health Partners, Inc. (2009), Greater Rochester Independent Practice Association (2007), Suburban Health Organization (2002), and MedSouth, Inc. (2002 and 2006) have better communicated what a provider network must do to become clinically integrated for antitrust compliance purposes.

Specifically, the network participants must implement an active, ongoing program to evaluate and modify practice patterns and create an interdependent and cooperative vehicle to control costs and promote quality. This process may involve use of participant selection criteria, in conjunction with active oversight and management of services on quality grounds.

Typical CIP activities also include data collection and analysis, practice protocol development, and oversight of practice patterns in relation to those criteria. Needless to say, implementing this kind of integrated program requires genuine physician and hospital commitment, including a significant investment in human resources and financial capital.

If the CIP's clinical protocols and related rules are not followed by contracted practitioners, the government requires that consequences must follow. That is, there must be specific attempts at remediation, followed, if necessary, by potential provider termination from network participation.

Clinical Integration and Antitrust Compliance Strategies

While development of a CIP must fundamentally focus on creating value for consumers and payers from a provider viewpoint, it is clearly helpful that a valid CIP may collectively negotiate MCO contracts and pursue higher reimbursement without summary antitrust condemnation as unlawful price fixing by (otherwise) independent competitors. Without CIP implementation or use of another valid compliance strategy, collective contract negotiations by otherwise independent providers may be viewed as illicit behavior that constitutes a per se antitrust violation.

On the other hand, if a business arrangement provides countervailing efficiencies so that providers' collective behavior is viewed as pro‑competitive under the antitrust law "rule of reason" balancing test, the relationship may well be valid and sustainable. Under emerging legal rules, by becoming clinically integrated, providers may behave collectively and lawfully if their conduct is deemed reasonably necessary to accomplish the goals of an efficiency-enhancing CIP.

Role of Information Technology in an Effective Clinical Integration Program

Recent FTC pronouncements including the Tristate Health Partners and Greater Rochester IPA advisory opinion and a 2008 consent decree governing the Boulder Valley IPA, have clarified the criteria distinguishing valid CIPs from failed messenger model and other insufficiently integrated networks.

At least in the integrated delivery system (IDS) context, legitimate clinically integrated networks should reflect an interdependent physician/hospital relationship involving primary care and specialist doctors treating a broad range of medical problems. For legal compliance purposes, a CIP should emphasize overall network efficiencies and ongoing quality oversight in a demonstrable manner. Toward these ends most CIP providers will utilize information technology to access and exchange patient health information as needed to promote optimal care, facilitate the gathering and analysis of utilization and outcomes data, and benchmark results against accepted standards of patient care.

Enhanced Linkage Between EHRs and CIP Implementation

Several contemporary marketplace and regulatory developments are now reinforcing the relationship between EHR implementation and CIP development.

Specifically, economic stimulus funds have been made available under the recently enacted American Recovery and Reinvestment Act (ARRA) to encourage electronic health record (EHR) adoption.

Moreover, the current national discussions on cost management and health care reform may encourage hospitals and otherwise independent physicians to better coordinate their clinical and business operations through a well‑defined clinical integration program. The public policy imperative to improve quality while restraining costs is highly consistent with FTC‑approved requirements for a successful CIP.

Ultimately, the essence of a successful CIP is not merely that otherwise independent providers can collectively negotiate with MCOs without violating antitrust law (although that is a possible and desirable outcome), but rather that practitioners become committed to the coordinated delivery of good quality care in an efficient manner more for an overall patient population over time. This overriding theme is, in turn, an underlying tenet of the movement toward adaptation of EHRs and better information technology in the health care arena.

EHRs Now: Economic Stimulus and Regulatory Encouragement

The ARRA offers significant opportunities for individual and institutional health care providers to implement and/or accelerate EHR initiatives. Under the stimulus bill, hospitals may be entitled to some $2 million in incentives, plus enhanced Medicare reimbursement rates, for timely EHR adaptation, while eligible professionals (i.e., physicians) may also be entitled to a maximum of $44,000 each. These "carrots" are apart from the law's "sticks," which specify reimbursement penalties in later years if the new technology is not properly adopted.

Even recognizing that the implementation process can be disruptive and time consuming for many practitioners, the economic incentives to adopt EHRs are now substantial. In this context, it is important to emphasize that ARRA's economic stimulus funds must also be used in a manner consistent with an applicable Stark Law exception, Anti‑Kickback Statute safe harbor, and, for 501(c)(3) tax exempt facilities, in a manner consistent with parallel guidance published by the IRS in 2007 relating to permitted hospital subsidies of EHR procurement and deployment by affiliated physicians.

All of these authorities must be addressed in framing a legally compliant, IDS‑supported EHR system that takes advantage of the available economic incentives and regulatory encouragement.

EHRs and Clinical Integration: The Current Legal Connectivity

For integrated systems and other provider networks willing to jump through the legal and operational hoops, now is a time of great opportunity. Implementation of an EHR system linking hospitals and physicians offers an ideal platform upon which to develop a clinical integration program.

The ability to provide coordinated patient care, access clinical information across different sites of service, review costs and outcomes on a global basis, and to benchmark and report provider performance may well form the nexus that effectively integrates health system participants for all stakeholders' ultimate benefit.

From a compliance perspective, the deployment of HIT that facilitates coordinated patient care in inpatient and outpatient settings—both for chronic treatment of disease and for acute care episodes—should be very helpful in meeting the antitrust standards heretofore prescribed by the FTC. Moreover, the historic hesitancy of some providers to move forward on the integration and/or technology/adoption fronts may now be offset by the financial incentives provided under the ARRA economic stimulus for EHR implementation.

Success In a Changing Environment

As the winds of health care reform swirl, various government and private initiatives further linking EHRs and integration are likely to emerge.

For example, CMS' current acute care episode demonstration project for hospitals will be closely monitored by observers in the field assessing (among other things) the efficacy of bundled physician and hospital payments. Parallel efforts to designate and incentivize primary care physicians to serve as the medical home for chronically ill patients are also frequently discussed and may soon reach fruition in the marketplace, in addition to efforts to develop a more robust and widespread pay‑for‑performance methodology.

All of these activities are congruent with the successful development of integrated delivery systems supported by effective EHR infrastructure—and provide tangible compliance benefits under the antitrust laws, making the case for action even more compelling at this time. These converging circumstances are likely to make 2009 and beyond a time of real challenge and opportunity for IDS participants and others within the overall health care environment.