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The provisions of the payment agreement regarding the volume rate should be

Posted on by darion

LATEST: The provisions of the “volume rate” payment agreement should be analyzed in light of the principle of reason

District Judge Walter H. Rice of the Southern District of Ohio granted three pretrial motions filed by the defendants on the eve of the trial in Medical Center at Elizabeth Place, LLC v. Premier Health Partners et al.Case No. 3:12-cv-26, 2017 WL 3433131 (S.D. Ohio Aug. 9, 2017), and dismissed as moot the eleven remaining pretrial motions. Judge Rice dismissed the entire case with prejudice because he held that the agreements that plaintiff, a competing hospital, challenged should have been reviewed under the rule of reason, but plaintiff had failed to plead the rule of reason. Plaintiff’s decision not to do so doomed the case.

WHAT HAPPENED:

  • Defendants include four hospital systems in the Dayton, Ohio, area that formed a joint venture, Premier. The hospitals “are independently owned, controlled, and operated,” but “their revenue streams are consolidated, and Premier manages many of their business functions, including negotiating each hospital’s managed care contracts with insurers.” 2017 WL 3433131, at *13.

  • The plaintiffs challenged two types of agreements that Premier negotiated on behalf of the hospitals: (1) agreements with insurance companies (payers) that included a “volume rate clause” – that is, a provision in which the payers agreed to give Premier the option to terminate the agreement or renegotiate rates if the payers added other hospitals to their network; and (2) non-compete agreements with physicians in which the physicians agreed to refer patients internally.

WHAT DOES IT MEAN:

  • The opinion supports the principles that “generally speaking, no court has found that volume pricing is as such illegal,” and such clauses in payer contracts are “common in managed care contracts in the Dayton area and elsewhere in the United States.” at para *14. The court’s ruling in this case follows a nationwide trend of dismissing antitrust challenges to “short-term” exclusive or volume-based arrangements between hospitals and payers. ID. at 16 o’clock.