Attorney Articles | Why Does CAMFT Not Eradicate Managed Care?

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Why Does CAMFT Not Eradicate Managed Care?

Learn why CAMFT is prohibited from engaging in such activity and how the Sherman Antitrust Act is applicable.

Mary Riemersma, former Executive Director
The Therapist
March/April 2005

CAMFT is often chided by members asking, “why can’t CAMFT take care of/resolve/eliminate the problems providers experience when dealing with managed care entities? With all of CAMFT’s members and CAMFT’s clout, members should not be so disadvantaged by managed care, right? CAMFT should negotiate, on behalf of all members, for increased reimbursement rates, as well as other terms and conditions providers are expected to follow, with managed care companies. CAMFT needs to direct some of its resources to really helping members deal with the problems of managed care. Why doesn’t CAMFT allocate its resources in this area of concern? What is wrong with CAMFT, that it doesn’t. . . .”

I am sure you have heard your colleagues raise these concerns, or maybe you have even raised these concerns yourself. With regard to fees reimbursed by managed care companies, there are clear, legal reasons that CAMFT, and every other professional association, and even you when conspiring with your colleagues, is prohibited from engaging in such activities. The key law that is applicable, even though there are others at both the Federal and State level, is the Sherman Antitrust Act. This act was passed into law in 1890, and provides that “every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy declared to be illegal shall be deemed guilty of a felony, and upon conviction, shall be punished by a fine not exceeding $10,000,000 if a corporation, or, if a person, $350,000, or by imprisonment not exceeding three years, or by both punishments.” The stakes are potentially very great to CAMFT, to me as an individual, and likewise to members who might have been a party to what is deemed to be “price-fixing.” Typically, antitrust issues arise when groups of individuals (association members) aggregate and engage in discussions about or attempt to fix prices or set fees. This would be the case if CAMFT was to attempt to argue for increased fees with managed care companies.

To quote a well-qualified and well-respected attorney in the association community, Jerold A. Jacobs, “It is essential for association members, committee chairpersons, directors, officers, staff, and counsel to have a thorough understanding and serious respect for the implications of the subject of member’s prices and fees. This subject raises the highest imaginable danger from a legal point of view—the real consequences of not comprehending its dangers may include large fines or damages, extended jail sentences, or even forced disbanding of the association. The consequences, even of allegations of wrongdoing with respect to the subject, usually include major commitments of time and money in defending against the allegations as well as serious adverse publicity to the association and its industry, profession, or field that is claimed to be illegally involved. The cautious association has a simple approach to the subject of members’ prices and fees: It tolerates no activities or policies relating to prices or fees. It allows no communications, written or oral, about prices or fees. . .There are some limited areas of association endeavor where members’ price or fee matters can be involved, such as in surveys of past prices or fees, if adequate precautions are taken to avoid antitrust problems.” As you are aware, CAMFT does engage in research that involves member fees, and we supply that information to members in aggregated data of past activities, but not for purposes of using that information to raise fees charged or to establish any kind of a floor for what would be an acceptable reimbursement. 

Association involvement in the subject of members’ prices or fees, are considered per se violations of antitrust laws. This means that those accused of the violations are not allowed to attempt to explain the reasonableness and good intentions of their involvement. The incidence of antitrust enforcement for price-fixing or fee-setting prohibitions is particularly high in cases brought against associations and their members. Courts have condemned nearly any program or activity that tends to significantly diminish independent establishment of prices or fees by individual competitors as required by antitrust laws. Nearly any joint tampering with prices and fees, or price structures and fee structures, is simply unlawful.

Further, based upon case law and the rule of “apparent authority,” the court has determined that an association and its executive, is effectively strictly liable when it fails to prevent antitrust violations as a result of the misuse of the association’s reputation by its agents, including members, who are unpaid volunteers, or lower level employees. As indicated, the stakes are quite high for antitrust violations; and I, and our Board of Directors, is unwilling to engage in any activity that could place CAMFT at such an extreme risk, or quite frankly, that would place myself and/or our Board of Directors in such a vulnerable state.

California's Cartwright Act is the state's general antitrust law. The Cartwright Act generally prohibits combinations of two or more persons' capital, skill, or acts to restrict trade or commerce, reduce the production of merchandise, increase the price of a commodity, prevent competition, or control or fix at a standard or figure any commodity. The Act also specifically prohibits certain actions, such as fixing prices by contract, agreeing not to sell certain commodities, and agreeing not to deal in the goods or services of a competitor. As with the Sherman Act, unreasonable restraints are per se violations of the antitrust law.

Antitrust is an important legal issue to an association because associations are made up of business competitors who may (often inadvertently) use the association in furtherance of an action that violates antitrust laws. Many make the mistake of assuming that antitrust actions will never visit their associations because they are relatively small (like a CAMFT chapter). These associations fail to take into account that antitrust actions are not limited to those brought by the U.S. Attorney, the FTC, or the California Attorney General. Any individual, including a single, disgruntled member, or a managed care company, may make an antitrust claim and sue the association.

Why doesn’t CAMFT, like unions, negotiate on behalf of its members against these managed care companies? In fact, why can’t CAMFT be a union? My rate of reimbursement from most managed care companies has not increased in ten years.
CAMFT is not a union and cannot act like a union. CAMFT is granted tax-exempt status by the Internal Revenue Service pursuant to Section 501(c)(6) of the Internal Revenue Code. Pursuant to CAMFT’s Tax Exempt Status, CAMFT can engage in certain kinds of activities that are within the bounds of the tax-exempt status as granted. For example, CAMFT can engage in representation and legislative advocacy on behalf of the profession, education and training, setting and maintaining standards for professionals within the profession (like ethical standards), amongst other lawful activities. However, CAMFT cannot engage in activities that look like the activities of a union, and CAMFT cannot engage in activities that are expressly prohibited by law. A union is granted tax-exempt status as a 501(c)(5) organization. If CAMFT were to become a union, it would have to seek separate status as a 501(c)(5)organization, and that organization would have to be separate and distinct from CAMFT, as it is currently known. Further, unions can and do engage in collective bargaining, which is what many members believe CAMFT should be doing with managed care entities—bargaining collectively on behalf of members to increase reimbursement rates. However, in the state of California, unions may only be organized to represent the interests of employees against their employers. Unions lawfully collectively bargain with employers on behalf of employees to improve wages, hours, and working conditions. In fact, in California, marriage and family therapists and other mental health professionals may be union members if employed, and may have the benefit of collective bargaining on their behalf—that is, for wages, hours, and working conditions. However, in this state, selfemployed MFTs and other self-employed health care professionals, may not unionize for the purpose of collective bargaining. Thus, even if CAMFT were to create a union for MFT professionals, those who are self-employed could not avail themselves of the union’s services—at least not for the purpose of attempting to negotiate reimbursement rates with managed care companies.

A Brief Summarization of Unionization Efforts of Healthcare Professionals in Other States 

Several years ago, the New York State Psychological Association, upset over their treatment by managed care organizations, affiliated with the American Federation of Teachers and its state chapter, the New York State United Teachers Organization. The purpose of this affiliation was not for collective bargaining rights for self-employed persons, as that is illegal in New York just like it is in California. Their desire was, instead, to increase their lobbying and negotiating power based upon the shear number of teachers in New York State. And, in fact, they have been able to take advantage of the union’s concentrated political power and ability to get things done in the legislature. The NYSPA pays a fee to the union, somewhat based upon the number of members, for the services provided to them by the union. Their membership remains relatively static at about 3,200 members. They believe the affiliation has reaped rewards in that, psychologists were successful in getting a licensing law passed in 2002 (they were previously certified), clarifying their ability to diagnose, and clarifying that they are permitted to advertise the services that they provide. They were hopeful with regard to what they could do with third party payers, however, that has not and cannot materialize. They were also hopeful of being able to take advantage of insurance benefits for members, however, “that is becoming difficult even for unions at this time.” According to the NYSPA, the physicians in New York have attempted to get legislation passed to allow for collectively bargaining in that state, but their many attempts have been unsuccessful. Underlying this effort, however, is not the ability to confront managed care, but to have a stronger voice in negotiating with hospitals on behalf of physicians.

The American Medical Association voted in June of 1999 to unionize salaried physicians to gain leverage against managed care companies, amongst other reasons. They vowed that such a unionized body is not to strike, as that would seriously compromise medical ethics. The AMA formed Physicians for Responsible Negotiation (PRN), to help physicians form bargaining units in order to resolve issues of “patient care.” Until the formation of PRN, only about 42,000 of the nation’s 620,000 physicians were unionized— and all who were unionized were employed/salaried physicians. At the time of the formation of PRN, it was anticipated that approximately seventy percent of doctors in practice for five or fewer years were salaried. Since the inception of PRN, it appears to have had financial woes, and has largely relied upon large infusions of cash from the AMA. Just last year, PRN affiliated with the Service Employees International Union (SEIU), America’s largest health care union. The affiliation unites more than 20,000 physicians represented by PRN and SEIU’s two other affiliated doctors’ unions, the Committee of Interns and Residents (CIR) and the Doctors Council. Under the terms of the affiliation agreement, the National Doctors Alliance (NDA) will reach out to groups of non-salaried and private practice physicians to address issues like quality of care, compensation, insurance and due process. CIR represents resident physicians and the Doctors Council represents salaried physicians. SEIU’s NDA is the largest gathering of unionized physicians in America. SEIU, as a whole, has 1.6 million members, with over 800,000 members working in health care. These doctors can be represented by a union because they are all employed physicians.

The state of Washington passed a law in 1997 allowing doctors to bargain collectively over everything except fees. A few years ago Texas passed a law legalizing bargaining for independent physicians. The Texas bill was really an antitrust bill. In Texas, sole practitioners may jointly negotiate with managed care entities, but they are prohibited from striking. The California Society for Clinical Social Work and the American Federation of Societies of Clinical Social Work have investigated union affiliation with a number of entities and for a variety of purposes. The Federation actually affiliated in 1998, by establishing a Guild Committee with the Office and Professional Employees International Union (OPEIU) of the AFL-CIO. The Federation and eleven member states, including California, became the representatives of Clinical social work in the National Guild structure. While these prospects looked promising at the time, both organizations have concluded that such an affiliation is not in the best interests of their members.

In about 1999 or 2000, the Philadelphia office of the National Labor Relations Board (NLRB), the independent federal agency created in 1935 to enforce labor laws, turned down a bid by 500 New Jersey physicians working for an HMO to join the United Food and Commercial Workers Union. The reason the NLRB rejected the bid was the physicians were not employees of the HMO.

There was a spate of activity across the country in 1999 through early 2000 to unionize to address managed care concerns by health care professionals. However, most of those efforts have evaporated, most likely because such organizing does not and cannot accomplish the desired end—to have a collective effect upon managed care policies and reimbursement rates.

Why doesn’t CAMFT work to change laws like Antitrust Laws or Laws Prohibiting Self-Employed Persons from Organizing?
Antitrust laws are much bigger than CAMFT, and should we decide to combat them, it would result in an insurmountable and expensive battle, possible loss of credibility, with little likelihood of success. We could easily spend millions of dollars and end up with nothing changed. It has been the experience of CAMFT’s leadership that we should use our limited resources wisely, both staff and financial, and pursue those things that are within the realm of being achievable and that can have the greatest benefit to the profession—such as pursuing Medicare inclusion, getting recognized by the Department of Transportation so that MFTs can be utilized as substance abuse professionals, and the list goes on.

Think about it—if the American and California Medical Associations have not been successful in bringing about change in this area, equipped with their vast resources; CAMFT would certainly fare no better and would expend substantial resources for naught.

There are obviously numerous battles that could be waged on many different fronts. The CAMFT Board of Directors charts the course and chooses to pursue those that it believes to be most necessary and most accomplishable at any given time. It is then the responsibility of CAMFT’s staff and consultants to effectuate the course as the Board directs. The defined priorities result from surveying the CAMFT membership and incorporating the defined expectations into the Strategic Plan. Engaging in an attack on managed care or attempting to change antitrust laws have generally not been targets on the CAMFT Board’s radar screen.

These antitrust laws can be applicable to marriage and family therapists, aren’t they really directed at the multimillion-dollar giants?
This belief is an often misunderstood perception about antitrust. Antitrust cases have been brought against those in the more modest earning range, and have likewise been successful against those who have attempted to set prices that are low to the benefit of consumers.

What can CAMFT do?
CAMFT can address other concerns that members are experiencing with managed care companies, if such concerns are brought to CAMFT’s attention. Such concerns include, but are not limited to, varying protocols established by managed care companies with regard to the submissions of claims, managed care companies’ reluctance to verify coverage, difficulties in getting commitments for authorizations of treatment, refusals to pay for what has been authorized, excessive intrusions into the types of treatment provided, untimely payment of completed claims, attempts to deny claims for unjustifiable reasons, amongst others. Therapists who are faced with these or similar situations should make reasonable attempts to rectify the concerns on their own, including the use of the managed care entities’ appeal process, and then if not resolved satisfactorily, the matters should be brought to CAMFT’s attention, with complete documentation as to what has been done to resolve the situation.

What can CAMFT members do on an individual basis?
MFTs can also use other mechanisms to assist with difficulties by individually filing complaints with the Department of Managed Health Care, who is now willingly accepting complaints from health care providers. MFTs can also avail themselves of the Independent Medical Review (see article from The Therapist, by Dave Jensen, CAMFT Staff Attorney, July/August 2004, pg. 37) process where they believe patients are in need of ongoing care and such care has been denied by the managed care entity. This process is also available through the Department of Managed Health Care. MFTs can also individually negotiate with managed care entities to improve contractual terms and/or reimbursement rates. Sometimes these efforts are effective, and sometimes they are not. How effective one can be in negotiation depends, among other things, upon one’s tenacity, ability in promoting oneself, how desired the services or skills of the therapist are to the MCO, whether one is multi-lingual, whether one is in an area of highly concentrated therapists or an area where there is a shortage of therapists, etc. MFTs can individually choose to not affiliate with managed care companies because the costs are greater than the benefits. MFTs can converse with patients who wish to use managed care about the pros and cons of so doing—addressing issues such as compromised confidentiality, some other entity having control over the therapy rendered, etc. In fact, CAMFT has a brochure designed to help therapists communicate with their patients so that patients can make informed choices about whether to use their managed care plans or not—the brochure is called, Understanding Your Mental Health Coverage Under Managed Care. It is available by calling (888) 892-2638. Twenty-five can be purchased for $13.08+tax, which includes shipping and handling. A single sample copy is free, call to receive one.