AMERICAN LITHOTRIPSY SOCIETY
ALS MEMBER UPDATE: Monday, July 9, 2001:
RESPONDING TO REQUESTS FOR LITHOTRIPSY
PRICES, COSTS OR TERMS OF SERVICE
ALS and its members have been receiving requests for lithotripsy price, cost and terms of service information from hospitals and third parties. These requests result from the new Stark II regulations. As you are aware, the regulations state that lithotripsy is subject to the prohibitions of Stark II. To meet any of the exceptions to these prohibitions, the compensation paid to physician-owned lithotripsy facilities must not exceed fair market value. HCFA (now CMS) has indicated that the price negotiated between hospitals and lithotripsy centers is not necessarily fair market value. HCFA has indicated it will consider a variety of factors, including the costs incurred by the lithotripsy centers in providing lithotripsy and the prices charged by other providers, in making its own assessment of fair market value.
Some hospitals are responding to the regulations by requesting information on terms of service and costs incurred by lithotripsy centers. Others are conducting pricing surveys. The ostensible purpose of these requests and surveys is to determine a fair market range should HCFA challenge compliance with Stark II.
While the requests may appear reasonable, asking or answering questions concerning costs, prices or terms of service may violate the antitrust laws. The government traditionally has viewed exchanges of price and/or cost information by competitors as evidence of a conspiracy to fix prices. Even in the absence of a price fixing agreement, information exchanges among competitors in highly concentrated industries may, in and of themselves, have anticompetitive effects and be condemned by the government as unreasonable restraints of trade.
The government is sensitive about the sharing of price or cost information even with the advent of managed care. While it recognizes the utility of some information sharing, it has stated, Without appropriate safeguards, however, information exchanges among competing providers may facilitate collusion or otherwise reduce competition on prices or compensation, resulting in increased prices, or reduced quality and availability of health care services. See Statement of Department of Justice and Federal Trade Commission Enforcement Policy on Provider-Participation in Exchanges of Price and Cost Information, available at http://www.ftc.gov/reports/hlth3s.htm#5.
In trying to balance these competing considerations, the Federal Trade Commission and the Department of Justice have established a safety zone for price surveys:
- The survey must be in writing;
- The collection of information should be managed by a third party;
- The information provided by anyone who responds to the information request should be based on data more than 3 months old; and
- There are at least five providers reporting data upon which each disseminated statistic is based, no individual provider's data represents more than 25 percent on a weighted basis of that statistic, and any information disseminated is sufficiently aggregated such that it would not allow recipients to identify the prices charged or compensation paid by any particular provider.
The FTC also has stated the following: If an exchange among competing providers of price or cost information results in an agreement among competitors as to the prices for health care services or the wages to be paid to health care employees, that agreement will be considered unlawful per se. In other words, the safety zone outlined above offers no protection from criminal prosecution or civil liability if a court were to find that a physician has entered into an illegal agreement to fix prices.
Because of this uncertainty in the law, ALS is declining to provide any price or cost information to hospitals or third parties. ALS further recommends that its members do not disclose to anyone conducting a pricing survey how much they charge for their services unless they are sure the survey falls well within the FTC/DOJ safety zone. As always, we urge our members to consult competent legal counsel for further advice on this topic.
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Visit us again to receive up-to-the-minute reports on major issues such as the Health Care Finance Administration's (HCFA) proposed implementation of the Stark II (Physician Ownership) regulations and HCFA's proposed rates for lithotripsy performed in/out patient and ambulatory surgical center settings.
For additional information contact, Wesley E. Harrington, CAE, Executive Director of ALS at American Lithotripsy Society, 305 Second Avenue, Suite 200
Waltham, Massachusetts 02451
Telephone: (781) 895-9098
Fax: (781) 895-9088