Multi-payor medical home initiatives have many benefits. They can bring Medicare, Medicaid, and private health plans together to promote care coordination, better health outcomes, and lower costs. But they have one potential flaw: Allowing payors to coordinate payment policies could trip federal (or state) anti-trust protections to prevent price-fixing and anti-competitive behavior in a marketplace. A recent Commonwealth Fund brief gives an interesting update on what some states have done to limit anti-trust risk for multi-payor medical homes.

Multi-Payor Medical Home Models:

Multi-payor medical homes have spread to states across the country in recent years, as a way to promote care coordination in state Medicaid programs and in Medicare. Patient-centered medical home (PCMH) models, sometimes called advanced primary care (APC) models, focus on sharing information among providers about a patient’s care, facilitating patient-provider communication and shared decision making, and adopting health information technology to track health care usage and promote coordination.

Per-member, per-month (PMPM) payments are almost always the centerpiece of medical home payment policies. In some cases payors give providers a single PMPM payment to cover all primary care services, and in other cases providers receive PMPM payments for care management activities, keeping a fee-for-service policy for all other services. Medical home payment policies might also include a value-based reimbursement component, to reward providers for reducing wasteful health spending and for improving health outcomes.

In multi-payor medical home programs, public and private health plans agree in advance on payment policies to medical homes. Providers tend to like multi-payor models because they create simpler reimbursement processes, reducing administrative costs. Payors like multi-payor models because they ensure all health plans who could enjoy the benefits of care coordination will also bear some of the cost for those services.

Multi-payor medical home initiatives began as partnerships between state Medicaid programs and private health plans. The concept got a big boost in November 2010, when the Center for Medicare and Medicaid Innovation (CMMI) announced eight states were selected to participate in a multi-payor medical home initiative that would coordinate payments from Medicare, Medicaid, and private health plans.

State Actions to Limit Anti-Trust Liability:

Ordinarily, when companies work in partnership to set prices they run the risk of violating Section 1 of the Sherman Anti-Trust Act. For example, a U.S. District Court recently ruled that Apple and five large book publishers were guilty of illegally fixing the prices of e-books.  As purchasers and payors collaborate to leverage buying power to improve the clinical and economic performance of providers that must be sure to avoid collusion in violation of anti-trust laws.  At the same time, government must adapt policies to promote multi-payor medical homes.

The Commonwealth Fund recently published an excellent brief describing what states have done to limit anti-trust risk for multi-payor medical home initiatives. Limiting anti-trust liability is vital because without agreement on payment policies, multi-payor medical homes wouldn’t exist.

To protect against anti-trust violations, states have relied on the state action anti-trust doctrine, which grants legal immunity to state-sanctioned behavior that could be construed as anti-competitive. The doctrine can apply to private entities – such as private health plans or clinics – when: (1) there is a clearly articulated public policy to displace competition and (2) there is active supervision by the state of the policy or activity.

The Commonwealth Fund brief has rich detail plus examples of how states met the two state action doctrine contitions. It is worth reading in full, but here is a quick overview:

  • Eight of 19 states with multi-payor initiatives have legislation or executive orders in place to guard against anti-trust violations.
  • Idaho and Pennsylvania’s governors issued executive orders to limit anti-trust risk, in 2010 and 2007 respectively.
  • Maryland, Massachusetts, Montana, New York, Vermont, and Washington passed legislation.
  • States without anti-trust protections in law or executive orders nonetheless took steps to make payment negotiations and decision-making potentially less offensive to federal trust-busters.
  • For example, in North Carolina payors set medical home payments individually and include those payment policies in their criteria for participation in the initiative.
  • In Minnesota, health plans negotiate payments directly with providers.
  • In Michigan a steering committee makes recommendations on non-financial decisions for the multi-payor medical home initiative to the Michigan Department of Community Health.

Read the full brief here.