lue Cross and Blue Shield (BC/BS) of Montana recently failed in its attempt to force a group of radiologists in Missoula to accept a contract through a federal antitrust lawsuit. In March 2005, the parties settled and dropped the lawsuit, and the court entered a consent decree.

Missoula Radiology still does not participate with the Blues, although it offers Blues patients varying discounts. The group, which includes all 11 radiologists in Missoula, has agreed not to enter into exclusive contracts with any hospitals in western Montana, including the two in Missoula. This concession appears not to be of great importance to the group, which continues to be the only provider of radiology services in the city. The group also has agreed not to prevent its members from leaving to set up their own independent practices locally through noncompetition agreements. For its part, BC/BS abandoned its request for treble damages and to break up the group into two separate entities.

Between 1999 and 2003, when Missoula Radiology dropped its contract with the Blues, two radiologists retired, and the demand for services in and out of the main hospital grew by 30 percent. As in anesthesiology, workforce shortages made it very difficult to attract new members to the group. The Blues’ payment rates had not increased in several years. In June 2003, the group left the BC/BS network when they were unable to negotiate acceptable rates. The Blues filed suit in September 2004, alleging that Montana Radiology was engaging in anticompetitive activities, abusing its monopoly power, depriving patients of choice and driving up the costs of health care in the state.

Why Did the Blues’ Strategy Fail?
The irony of a third-party payer with 50 percent of the state’s commercially insured population, all of its Medicare business and 93 percent of practicing physicians accusing an 11-member physician group of harming competition was not lost on the many individuals who wrote letters and took other action in support of the radiologists. The largest group of neurosurgeons in Missoula and a prominent general surgery group both canceled their contracts with the Blues in a show of pure solidarity.

The facts that the BC/BS CEO’s 2004 salary was $525,000 and that premiums kept increasing while the Blues paid no taxes as a nonprofit corporation placed many citizens firmly in the physicians’ camp. BC/BS of Montana, like many other Blues licensees, had been seeking to change its nonprofit status.

This would have facilitated the award of stock options and other enhanced executive compensation. Missoula anesthesiologist Greg H. Lind, M.D., who was elected to the Montana state senate with ASA’s help, sponsored legislation that provides for regulatory oversight and disclosure should a nonprofit health insurer attempt to convert to for-profit status.

During the fray, there were various letters to the editor of the Missoulian to the effect: “I hope the Missoula radiologists and anesthesiologists stick to their guns. [The anesthesiologists were not named in the lawsuit.] They are providing quality care, at the same price, to all patients. That is far nobler than what is happening at Blue Cross.” A very public controversy over BC/BS leadership continued to grow. The Blues’ CEO resigned without explanation on January 7, 2005.

Public anger at the Blues did not in itself win the day, of course. BC/BS did not have a strong case that Missoula Radiology had violated federal antitrust laws, although it claimed that the group was a “predatory monopolist” with a “stranglehold” on radiology services. To support its allegation that Missoula Radiology was a monopolist, BC/BS relied on three principal factors: the group employed all the radiologists in Missoula, and it maintained its monopoly through exclusive contracts with all four general radiology facilities in the area as well as through noncompetition clauses in its employment contracts.

The radiologists did not have exclusive contracts with the hospitals at the time the lawsuit was filed, however, although they had at times in the past. The group also agreed, as part of the settlement, not to use noncompetition clauses. Missoula Radiology did not, through these or other means, restrict patient’s choices as alleged in the suit.

Had there been exclusive contracts in place or in the works, or if the radiologists had used noncompetes aggressively, there would still not necessarily have been any violation of the federal antitrust laws. It is axiomatic that to have a monopoly or a quasi-monopoly is not unlawful unless the monopolists use improper means to shut out competitors. This was clearly not the case in Missoula. Moreover exclusive contracts with hospitals and other facilities may be justified if there are procompetitive reasons for them. Noncompete agreements are generally permissible if they are reasonable in geographic scope and duration.

If the market remains open to other potential competitors, it will be difficult to prove a restraint of trade. As Michael D. Sterbis, M.D., a member of Missoula Anesthesiology (and of ASA) commented, “The radiologists do not have exclusive contracts at either hospital, so technically a radiologist could come to town and practice. In fact our radiologists have contracted with a group of American-trained radiologists in Australia to cover night work. So I don’t see why Blue Cross couldn’t contract with a group of radiologists in California (or India for that matter) to read films on their patients. The big orthopedic group in town contracts with a group of radiologists elsewhere in the country to read films done at their facility. So it seems like an open market to me.”

The Downside of Canceling a Payer Contract
One unintended consequence of de-participating with a commercial payer is the likelihood that the payer will reimburse the patient directly rather than send the check to the physician or group. United Health Care in three southeastern states as well as BC/BS plans in the majority of states not requiring insurers to honor assignment-of-benefit notices (see box) will mail reimbursement checks to the patient, with the patient as payee. If the group is able to obtain payment from the patient at all, there may still be significant delays and cash flow disruption.

In Virginia, anesthesiologist Barry M. Rose, D.O., helped organize a physician lobbying group called Virginians for Fairness in Healthcare. The group now has 180 members and has as a primary objective the passage of a state law that would require insurers to pay out-of-network physicians directly when a patient has authorized assignment. The first attempt at passage failed because of intense counter-lobbying by Wellpoint and its Virginia affiliate, Anthem Blue Cross and Blue Shield.

Conclusion
On the one hand, physicians have scored an important victory in defanging the antitrust litigation threat from third-party payers, at least in a situation where there is no anticompetitive behavior. On the other hand, payers still hold the money and have many means to prevent it from reaching providers. Anesthesiologists, like other hospital-based physicians, tend not to have ongoing relationships with their patients and may find it particularly hard to collect from the latter. Joining in local medical society efforts to obtain state assignment-of-benefit legislation is one possible way to regain some control.

Last Chance to Complete MGMA/ASA Cost Survey:
Final Deadline is June 27, 2005

he final deadline to participate in the 2005 Medical Group Management Association (MGMA)/ASA Cost Survey for Anesthesia and Pain Management Practices is Monday, June 27. This survey provides unique and extensive revenue, cost and production data for our specialty and will be as valuable as the number of anesthesiology practices that return the questionnaire. Please ask your administrator or billing company to complete the form now if they have not already done so.

Complete the questionnaire and receive a valuable ASA Member Benefit:

Additionally, as explained in the April “Practice Management” column, ASA members may purchase the 2004 Cost Survey for Anesthesia Practices Report at the special discount rate of $305 instead of $465. To order, contact MGMA at (877) 275-6462 or download the order form at <www.ASAhq.org/publicationsAndServices/MGMAorderform.pdf>.

To participate:  You may download a booklet to complete the survey on paper from <www.ASAhq.org/Washington/AAAsurvey.pdf>.  Please ask your practice administrator to fill in the form and mail it directly to MGMA.  Alternatively you or your administrator may complete the form online at <www.mgma.com/surveys/esurveys.cfm>. (Be sure to select the 2005 Cost Survey and to look for the anesthesia addendum after you finish the all-physician questions.)  You have the option of saving the file to your own computer either before entering the information or saving it after you enter the data online.  Either way, please e-mail the completed survey as an attachment to <surveys@mgma.com>. All submitted data will be kept confidential.

Your participation truly matters. Your fellow anesthesiologists will thank you.