Refusal of new Medicaid patients spurs antitrust suit

In a case that some experts say adds a new twist to physicians' antitrust fears, the Illinois attorney general is suing two private medical clinics for allegedly refusing to take new Medicaid patients in order to force an increase in reimbursement rates.

The antitrust lawsuit filed by Attorney General Lisa Madigan in June accuses the Carle Clinic Assn. and Christie Clinic, both in Champaign County, Ill., of collectively boycotting new Medicaid patients by adopting identical policies in 2003. The two groups employ more than 90% of physicians in the area.

According to the complaint, the clinics declined Medicaid enrollees who either were not already registered patients or who had not seen a clinic physician for at least three years. Both groups continued to accept patients referred by a nearby free health center for consultations but sent them back to the center for ongoing treatment.

Similarly, with hospital emergency department referrals, the Carle and Christie clinics treated Medicaid patients only for the condition for which they were referred, and did not provide follow-up care.

The restrictive policies "left many of the 20,000 Medicaid-eligible children and adults in Champaign County at risk by leaving them with fewer choices to obtain quality primary medical care -- if they could access primary care at all," Madigan said in a statement.

As a result, the lawsuit alleges, many of those patients were forced to get medical attention at area hospital EDs, at a higher cost to the state. Madigan is seeking to require the Carle and Christie clinics to open their doors to new Medicaid patients and to recover civil fines and damages for their anticompetitive conduct.

"Medical clinics, like other businesses, must adhere to the antitrust laws. These laws prevent competitors, in all fields, from agreeing with each other to act collectively to limit access to services in order to raise prices," she said.

The Carle Clinic Assn. and Christie Clinic deny the allegations. Officials from both medical groups said they made lawful, independent business decisions to curtail their services, as did many other Illinois physicians. The Medicaid policies were sparked by significant state cutbacks on Medicaid reimbursements in 2002.

At that time, Carle Clinic was already seeing a significant increase in its Medicaid patient load, President and CEO R. Bruce Wellman, MD, said. The state is going too far in its lawsuit, he said.

"If the government can force private businesses to accept below-cost rates, what sort of environment are you going to create?" he asked. "Do grocery stores give away 10% of their groceries?"

In 2006, the clinic saw more than 31,000 Medicaid patients from 84 counties, he said. Already working at capacity, the medical group cannot afford to take more new patients without displacing existing ones or charging private patients more.

To address problems with access to care caused by the Medicaid cuts, Dr. Wellman said, Carle, Christie and other local medical groups met in 2002 through the United Way of Champaign County to help expand resources at the Frances Nelson Health Center, the local federal health clinic.

Madigan, however, cites the encounter and other meetings between Carle and Christie as examples of conspiring to agree to change their policies to pressure the state to increase Medicaid funding after legislative efforts failed.

Dr. Wellman said the accusations, though untrue, highlight the larger need to fix the state's reimbursement shortfalls so that access to care is not further jeopardized -- a problem best solved through legislation, not the courts.

One major consequence of the suit is that it will discourage doctors from cooperating to find a solution to the access problems, he said.

"There are reasons for us to be talking," he said, for example, to find out if another practice has the capacity to take patients that one cannot. "Everybody wants us to cooperate. How can you do that now in this environment without the litigation risk?"

Christie Clinic CEO Alan Gleghorn in a statement also denied any antitrust violations and said the practice already serves nearly half of Champaign County's Medicaid population.

The group looks forward to defending the allegations and working with the state "to find efficient and effective ways to serve all patients throughout east-central Illinois," he said.

Scrutiny intensified

The lawsuit is the first antitrust case of its kind in the Medicaid context, according to antitrust experts Gregory R. Piche and Gregory S.C. Huffman. At a time when doctors already face antitrust scrutiny for trying to negotiate with health plans for reasonable reimbursements, the Illinois attorney general's approach raises concerns about the way the government views other physician practice decisions, they say.

Speaking about antitrust law in general, Piche, a partner with Holland & Hart in Denver, said the government cannot force private physicians to provide medical services at unreasonably low rates. However, he warned, state and federal governments can enforce antitrust laws designed to prevent illegal agreements.

"What [doctors] can't do is talk to their competitors to come up with a collective approach to dealing with the problem," he said. "No matter how compelling the social issue is, it's still illegal, and you can't use an economic boycott to reach socially desirable goals."

Huffman, a partner with Dallas-based Thompson & Knight, agrees that, in general, doctors have the right to decide whether to provide a service. Whether that draws suspicions of a conspiracy depends on whether the practice acted independently and whether the business decision makes sense from a business standpoint" for each of the parties involved, he said.

Piche added that the clinics' combined market power may have raised a flag with Madigan because they have the ability to influence prices.

"There's nothing illegal about having market power. But when you do, you have to work with more responsibility" than when you don't have that clout, he said.