American Society of Internal Medicine

Williaa G, 	Kagit, 	Eeomine
Bpstein B w k e r 	Borsody & 	Green, 	P,C,
1140 19th Street, R,We
Nashington, D,C, 	20036
Bear Mr. 	Kopit:
This letter ~ e s p n d sto yourn 	request for an a d v i s s ~ yopinion
csncerning 	t h e 	l e g a l i t y 	of 	t h e h e x i c a n 	Society of Internal
Hdicbnegs (""JMIMm)	proposal to develop and 	disseminate relative
value gdides 	( ' W G s m ) , 	The Corranission bas determined, sa 	the
basis 	o f 	t h e 	information provided 	by A8XM 	and 	addi"siona% infor-
mation gathezed 	by 	C o m i s s i s n 	staffs t h a t 	there is substantial
danger the proposed 	conduct m u l d 	lead 	to a combination or con-
spiracy that unreasonably restrains competition 	ng 	physicians
in violation of Section 5 	of 	the Federal Trade Comissian Act,
The Comissisn, theregore, cannot g i v e 	advance approval to ASIM's
W G proposal,
This advisory opinion begins with 	a brief sumary af M X M @ s
8 proposal. 	Zt then discusses two central questions -- 	first,
whether 	there is substantial danger of an agreement i n 	restraint
of 	trade resulting from the proposed conductr and second,
whether, were 	such an agreement to result, it would 	restrain
trade unreasonably. 	The letter then indicates alternative
actions, unlikely 	to 	raise antitrust problems, that ASPM 	can
pursue 	to redress t h e 	alleged 	reircnbursement disparities about
which 	it 	is concerned, I
S I N I 	a natioml professional society 	consisting of
approximately 19,OQO doctors sf internal medicine, propsses ts
develop an RVG 	and distribute it ts 	its member physicians and 	to
private and governmental third-party 	payors an an advisory
basis, 	WIM plans 	to request that- these parties consider using
the RVG as a guide in developing 	reimbursement programs consist-
ent with 	the approach contained 	in the RVG, 	The RVG 	would 	cover
services that are provided 	by 	physicians who specialize in
internal medicine 	(minternists"), 	ASIM 	proposes in the future ts
work 	with other physician organizations, including surgical sscie-
ties, 	to develop W G s 	far ather medical and 	surgical services,
The proposed RVG 	would 	list medical services by 	descriptive
8 edes, 	ASIM 	intends to assign numeric values 	to each coded
service, relative to one a n s t h e r , 	determined on 	kbe basis of
costs, time, complexityr and 	the level of 	training required 	to
perform eaeb service. 	The RVG would 	not in itself be 	a 	fee
schedule, but could be converted 	to a 	fee schedule by 	physicians

ar 	third-parly 	payers 	s i ~ p l yby multiplying 	&be relative values
by 	a dollar conversion factor, 	S Z R has 	indicated 	t h a t 	it would
n o t 	pmovide eonversion factors with 	its W G ; 	%Bat 	t h e 	W G 	and 	the
s t h e r 	prowsed 	aspects of MXM's 	eonduct w u l d 	be voluntary and
'advisorym 	In nature3 	a& 	t h a t 	there would 	be no explicit or
implieit areats or coercion against physicians or third-party
payers to induce 	them 	to use the W G ,
MIM 	laas stated 	t h a t 	it wants 	te, develop t h e 	W G 	to reddcesa
an alleged dispasity in rei&ursement 	for "cognitivew and 	"pro-
c d u r a l m services provided 	by physicians, 	&ccsrding to MIM, 	a
h i g h 	level of inaurame 	r e i a u r s e m e n t 	now 	encourages 	physicians
to use and 	sometimes overuse c o s t l y 	"prwedural" 	services suck as
surgery, electnocardlo~rms~	x-rays, and other 	technology-
intensive serviees, 	At 	t h e 	s a e 	time, ASIM 	submits, 	r e l a t i v e l y
Isw Levels sf reirnburse~entdiscourage physicians from using 	sore
time-consuming 	"cognitive" services such as the diagnosis o f
patient 	health care problems, preventative education, and 	l i f e
style evaluation, 	MIMQ 	smernbers are internists, most sf whom
are chiefly engaged 	in primary care 	and 	the delivery aE 	cognitive
8 services, 	ZISIN 	proposes 	to increase the relative value of
eognitive services and deerease the relative value of procedural
services to encourage use of 	-re 	eognitive services and
discourage overuse of procedural services, 	MIM 	states that its
W G , 	if widely adopted, muld 	reduce health care 	costs by
creating 	incentives ta substitute low-cost care for high-cost
care, 	T t 	further states that an 	increase in t h e 	relative amount
at which eognitive serviees are 	reianlaursed, as compared 	to
proceduxal services, would encourage physicians 	to spend mse
time in personalized aspects of care and 	would provide new
iccentives Eor 	physicians to choose primary care specialties
utilizing relatively 	lamge amaunts of eognitive services,
S P M plans 	to use 	the "Delphi technique" 	to ~ e a c bconsensus
on the relative values to be assigned 	to each of 	t h e 	serviees
earnonly p r ~ v i d e dby 	internists, 	In separate mail surveys,
representatives of internal medicine 	subspecialtyl organizations
and 	t w o A S Z M 	state affiliates would 	be 	asked 	ananymusly 	to
assign relative values to medical services on 	the basis of 	time,
complexity, costs, 	and 	training. 	Median 	and 	average figures
computed by A S I M 	based 	on 	the first round of 	responses would 	t h e n
be 	submitted to the same physicians to use in making 	a second
round af 	responses, 	The process would 	continue until a consensus
Internal medicine subspecialties include cardiology,
gastroeneerolqy, allergy, endocrinology, hematology,
oncology, nephrology, rheumatology, infectisus disease, and
chest disease,
8

8 Wil%imG , 	gopit, Esquire
or as much 	uniformity 	as p s s i b l e 	was 	reached, 	W Z M ' s 	Resource
Cest CornitLee ksould 	then 	review a e 	p r d u e t 	of 	each cf 	these
suavey 	determinations and 	determine relative values u s i n g 	t h e
Delphi eansensus-building 	technique, 	The resulting RVC would
then be 	s u b m i t t d 	to MIM's Board 	0%Trustees 6sr approval o e
disapproval without m d i f i c a t i s n ,
MXM also plans ts send 	a 	mwhite paperm ts physicians and
third-party 	payars 	t b a l 	would 	explain t h e 	cwnitive/procedunal
reimbursement 	disparity 	and 	use of 	i t s WVG 	to r d u e e 	t h e
dispanlty, 	f t m u l d 	also i l l u s t r a t e 	Row 	to u s e 	the W 	G 	to
'change 	t h e 	reimhussement seructure 	from 	t h e c u r r e n t 	procedural
service 	basis 	to a eo8t 	of 	resources basisem The stated 	purpose
of 	the ewhite paperm would 	be 	to persuade and 	not 	to coerce,
The 	antitrust 	issue 	raised by 	ASZMQ 	proposal 	is whether 	it
presents 	a 	s u b s t 	ntial danger of an 	agreement 	that unreasonably
restrains 	trade.' 	The 	threshold 	question 	in 	resolving 	this 	issue
8 is whether 	there 	is danger 	of 	an 	agreement 	in 	restraint 06 	trade,
If there 	is a 	substantial danger 	of such 	an agreement 	occurring,
the 	second 	questisn 	is whether 	there 	i s 	a 	substantial 	danger 	that
it w u l d 	unreasonably 	restrain 	trade. 	The antitrust laws
prohibit, 	of 	gourse, 	only 	those agreements 	that 	restrain 	trade
unreasonably,
I
W I N " 	sddgipgion and 	dissemination 	06 am 	W G , as 	i"c:proposes,
could 	i n v o l v e sr 	facilitate 	two types of 	agreements 	in 	restraint
of 	trade:: 	(I) an 	agreement 	among X I M I 	its meIo$ers, and 	wssibly
other 	physicians 	to adhere to 	the RVG 	in determining 	charges 	for
their 	services; 	and 	( 2 ) 	an 	agreement 	between WIM, 	acting 	an
behalf 	sf 	its members, 	and 	one 	or 	more 	third-party 	payors, 	psssi-
bly 	r e s u l t i n g 	from eoencisn, t h a t 	t h e 	third-party 	paysr(s) 	w i l l .
adhere 	to 	t h e 	W 	G 	in 	reimbursing 	physicians 	for covered 	services,
The Comission 	caneludes 	there 	is a 	substantial danger 	t h a t 	t h e
first 	type sf agreement may 	o c c u ~ ;there does 	not 	appear 	$0 be 	a
substantial danger 	sf t h e 	second 	type 	of 	agreement,
The Comission discusses 	the 	antitrust 	risks of MXM8s
proposal 	in 	terms of 	"substantial danger" 	because 	this
advisory 	opinion 	seeks approval 	for 	proposed 	future c o n d u c t ,
the 	precise 	nature 	and 	specific 	effects 	sf 	which 	canno& now
be 	determined,
United 	States 	v . 	Standard 	O i l 	Co., 	221 U,S. 	1, 	54-60 	( b 9 1 L ) ,
8

8 William 	G, 	Kopik, 	E s q u i ~ e
With 	r e s p e t 	ts t h e 	f i r s t 	t p e 	of 	agreement, 	if 	a profes-
sional association expressly or 	implicitly 	suggests or advises
mrkekplace 	canduct sn the part 0% its membexs 	OK otbear 	competi-
$ors and 	t h e 	i n t e n t 	sr 	likely 	consequence of 	t h e 	comunieation 	is
t h a t 	association melabers 	or 	others will 	concertedly an 	inter-
dependently 	Pfy 	their 	behavior 	i n 	t h e 	marketplace 	ts restrain
trade, both 	the professional association and 	the individuals 	so
acting 	eould 	propex 	y 	be 	found 	$0 be parties 	ts a n 	agreement 	i n
restraint 	of 	trade. 	In contrast, 	when an association provides
i n f o r m t i a n 	or advice 	to its me&ers 	or others tbat eould 	be used
by 	its recipients unilaterally 	in the marketplace and 	it is
neither 	intended nor 	likely t h a t 	t h e 	e o m u n i e a l i s n 	will 	n e s u l t 	i n
concerted, 	interdependent action to restrain 	trade, 	t h e 	associa-
tion would probably 	not be 	found 	party 	to an agreement 	in
pestraine 	of 	tradee5 	Pn 	this mattegs 	$be 	substance and market
context o f 	M Z M e s eomualeations and physician 	actions in reswnse
to them 	m u l d 	be cnitieal 	in determining the existence sf an
agreeaent 	i n 	r e s t r a i n t 	af 	trade,
Although 	any 	action by W I N , 	an association of 	individual
8 practitioners m n y 	of whom compete with one another, 	ta develop
an RVG 	would 	reflect an agreement ts take that action, MXM8s
development sf 	an W G , 	standing alone, would 	n o t 	constitute an
4 	Znte~stateCircuit, I n c , 	v , 	United States, 306
U,S, 	2013, 226-27 	(1939) ("It was 	enough 	[for an unlawful
conspiracy] 	that, knowing 	tbat concerted 	action was
contemlated 	and 	invited, the[y] 	gave 	their adherence ta 	the
scheme and 	participated 	in 	it, 	Each 	. . 	. was advised 	that
the sthers were asked 	to participate; 	each 	knew that
cooperation waswessential to successful operation 0%:t h e
plan, 	They 	knew t b a t 	the plan, if carried 	out, would 	r e s u l t
in a 	restraint of csmerce, which 	. 	. was unreasonable
. 	. . , and 	knowing 	it, all participated 	in 	$be plan,"),
5 	Monsanto 	v , 	Spray-Rite Service Carp,,
104 S, 	Ct, 	1464, L4"7 	11984) 	(To find an agreement, "" [ t l h e r e
must 	be evidence that tends to exclude 	the p s s i b i l i t y 	t h a t
the manufacturer 	and 	the 	nonterminated 	distributors were
acting 	independently, 	. . . 	[Tlhe antitrust plaintiff should
present 	direct 	ar 	circumstantial evidence 	that reasonably
tends to prove 	that 	the manufacturer 	and others 	'bad 	a
conscious eoranaiment 	to a eomon scheme designed 	to achieve
an unlawful objective.@n 	(citation omitted)) ; First Sat' 1
Bank 	v. 	Cities Service Co., 	391 U,S, 	253, 	274-88 	(1962) ( t h e
inference of a conspiracy does not logically follow in 	t h e
absence of 	either direct conspiratorial evidence oz motive 	to
enter 	a tacit agreement).

.-
8
8
No one would 	be 	party 	to an
is contrnittecl 	to any. particular
course of 	eonduct 	i n 	the marketplace, 	However, antitrust
analysis of ASTM" 	ppraposal 	must 	be 	focused 	on 	the entire course
of 	eonduet 	planned 	by 	ASIM 	Lo determine whethem 	the p r o p s a l 	is
intended 	ta or esuld 	be expected to involve or 	f a c i a i t a t e 	an
agreement 	i n 	restraint 	of 	trade,
Several 	factors 	indieate t h e x e 	is substantial danger 	that
GXM's 	proposed 	conduct 	would 	be 	intended to or would 	tesult I n
ccdolcerted, 	interdependent aetian by 	physicians to aahere to the
in psieing 	theim 	services, 	Despite the di
make 	in its 	distribution of 	t h e 	RVG, 	ASIM 	appears to be proposing
implicitly t o . i n v i t e 	physicians to adhere to the RVG 	in datemmin-
iag their charges, 	A S f M 	plans 	to send 	members t h e 	W G on 	a m p u r e ~ y
a d v i s o r y m basis, l e a v i n g 	individual members 	"free ts make 	indepen-
deill: 	fee decisionsm, with a "white paper"" that would 	millustrate
%bow 	to' 	use 	t h e 	[RVG] to change the current reimbursement
structure*" 	The RVG 	would 	be 	prescriptive i n 	nature, describing a
set of pricing 	relationships that ASIM 	w 	supporting as what
be. 	The W 	G 	would 	be designed 	to 	future market
transactions with 	respect to physician charges and output, 	Such
pricing 	infarmatiow programs are more 	likely 	to 	result in agree-
ments 	in 	restraint of 	trade than are exchanges of descriptive data,
which 	merely 	eseribe or 	reflect historical or current market
transactions.' 	Indeed, 	there is a danger 	that use of 	the RVG
could 	Lead 	ta an 	agreement among physicians on 	a single conver-
sion factor 	to apply 	to each service on the W G , 	Thus, the RVG
could easily 	become 	the means 	far 	physi~ians in at 	Least some
earnunities to coordinate a collusive pricing 	scheme,
Further, for a number 	of reasons there appears 	to be 	a
substantial danger that concerted adherence to t h e 	RVG 	by
physicians 	in response to A S I M h 	invitation would 	be widespread,
The invitation to use 	the RVG 	would 	emanate from 	a leading
natisnal medical specialty association and 	would 	presumably 	have
the support of 	the other medical organizations t h a t 	would 	have
helped 	to build 	the 	"consensus" the RVG 	reflects, 	Csncehtea
adherence to an ASIM 	RVG 	would 	appear more 	likely 	than 	if an
independent outside 	organization were 	to 	formulate an 	RVG,
Moreover, A S P M k 	invitation to adhere to 	t h e 	RVG 	would 	be
attractive to the many 	primary care physicians whs would 	benefit
financially from increased reimbursement for cognitive services,
Also, the RVG 	would 	be circulated 	in a 	form easily 	used 	by
individual physicians in setting 	their prices, 	Xt 	would 	require
only 	that 	the physician identify the appropriate code 	for each
medical service rendered and 	apply 	a 	conversion factor he or 	she
See Goldfarb v. 	Virginia State Bar, 421 U,S. 	773, 781 	(1975);	P
Mapie Flooring M f r s q s s b 	w v , United 	States, 268 U.S, 	563,
585-86 	(1925)

Hilliam G , 	Eopit, 	Esquire 	-6-
selects 	Lo each listed relative value ts determine his sr her
charge 	for every 	service,
Hidespread adherence 	to t h e W G by physicians 	in local
cornunities wou9d 	likely be 	inte~dependentbecause it would
probably n o t 	be 	I n t h e 	eesnemie self-interest og 	idividual
physicians 	a:o charge on \"=he	basis of 	the rmVG unless 	they believe
=st 	cospeging physicians would 	be Baing 	likewise, 	Physicians
choosing 	to price in confsrmance with 	the W G w ~ u l dlikely 	do so
to effect 	incneases i n 	t h e 	absolute 	level oL 	their 	charges 	for
cognitive ~ervices.~If 	only a 	few physicians were 	to increase
their 	charges fan 	c q n i t i v e 	services, insumers might 	refuse to
pay 	t h e 	increased 	amounts on t h e 	gsound 	that for each such
physician, 	it reflected 	a f e e 	exceeding 	the "usual and eustsmary"
charge of 	internists, 	In fight sf increasing competition at the
primary care level, individual physicians considering adherence
to the RVG 	would 	know that patients who were n o t 	f u l l y 	scihursed
by 	insurance and who 	incurred 	h i g h e r 	out-of-pseket 	costs for
cognitive services could over 	time go elsewhere for 	t h e i r 	medical
caxe 	t c 9 sther private practice 	physicians or 	to health
maintenance organizations), 	If most 	primary 	came physicians in
8 an area adhered to 	the W G , 	in conerast, insurers8 "customary"
screen levels.would 	svex: time 	increase, Likely resulting i n
highee 	reimbursement allowances, 	Patients weuld 	then have less
incentive to seek, and could less easily find, a lower-cost
provider, 	Tbus, 	concerted or 	interdependent eonduct 	by 	a very
substantial number 	of physicians eould 	succeed, and would
probably 	be 	necessary 	to succeed, in raising the relative price
level of cognitive services, 	If ~sncer~ted	conduct 	were not
necessary, physicians concerned 	about the disparity 	identified 	by
M T M 	eould 	address 	it unilaterally, and presuably 	already 	would
have in their own practices, 	by 	increasing charges for cognitive
services, 	A S I N % 	laikew knowledge 	that individual physicians
probably eould 	o n l y 	effectively use 	t h e 	RVG 	interdependently, or
concertedly, would 	help 	support a 	finding 	that A S I M 	contemplated
a concerted 	respnse by 	physicians 	ta 	its p m s m u l g a t i ~ nof 	t h e
RVG
Adherence to 	the RVG 	would 	Likely 	require physicians ta
depart from 	their current fee schedules, 	It would 	be
unlikely 	t h a t 	physicians would 	voluntarily elect 	to conform
to 	the RVG 	and 	choose conversion factors that would 	keep
their prices 	for cognitive services at 	roughly 	their 	current
Levels and 	would 	result 	in 	reduction of 	their charges 	for
procedural services,

William 	G I Kspit, Esquire
8 Finally, to the 	extent third-panty 	payor 	coverage
"desensitizes' 	insured patients to price 	increases, cancested
conformnee 	to the W G 	in an eSfost to raise cbarges for
c q n i t i v e 	services would 	be 	=re 	Likely eontemp%ated, 	attempted,
and 	successful in the medical marketplace than restraints sf
trade in other s a a n k e t 	contexts in whiek 	consumers are more 	"price
sensitiveem 	11 the W G 	were adbered 	to by 	a substahtian n
of physicians, t h e n 	'discounting* 	might 	not be as advantageous
for physician competitors as it ewically 	is Ear 	other competitors
seeking 	to undercut h i g h e r 	charges 	resulting from collusion, 	As
noted 	above, general 	adherence 	to t h e W G would 	likely ereate 	a
new range of 	"custo=rym 	charges, 	so t h a t 	third-party 	payons
would, 	as time passes, 	likely r ~ o g a i z eand 	pay h i g k e s 	cbarges
fox eagnitive services, 	fn t h i s 	event, even if 	sme physicians
d l & n o t 	adopt t h e RVG 	and chamged 	lowem prices for cognitive
services, they might 	n a t 	be able to undercut 	effectively those
adhering 	to t h e W G 	because fees belaw 	tbsse 	recognized as
custamry 	by 	i n s u e e r s 	might 	n o t 	a t t r a c t nany 	i n s u ~ e dpatients
away 	from other physicians. 	Patients with paid-in-full 	insurance
coveeage or o n l y 	smll 	eo-payaent obligations, who are treated by
physicians whose fees are witbin the "customary" 	range, could
8 have 	litkle, if any, mnetary 	incentive to switch physicians,
The eonunissisn 	recognizes, 'notwithstanding the foregoing
discussion, that substantial arguments can be nrade 	against the
likelihoocl that concerted adherence to the RVG 	would 	result from
S I M ' s 	proposed 	conduct, 	For example, physiciana-ifferent 	cost
structures and 	diversity across the e a u n t r y 	in practice patterns
and pricing 	relationships amang 	various medical subspecialties
may 	make 	it unlikely 	that physicians wobld 	reach a camon
understanding 	to utilize any 	single RVG, 	Also, the cost;--
containment practices of third-party paysrs would pose a major
obstacle, 	Nonetheleesspa l t h o u g h 	t h e 	Commission cannot, in this
advisory opinion context, predict that widespread concerted
conformance to the W 	G 	would 	necessarily result from 	its
dissemination by S I M , 	the available information on 	this specific
W G proposal indicates "cat 	this type 	sf agreement in restraint
of 	trade 	is a substantial danger,
AS%% 	also proposes 	to disseminate 	its RVG 	to insurers and
other third-party payors and encourage them 	to adopt the W G as a
basis 	for their reimbursement structures, 	This conduct raises
the question of whether A S I M " 	proposal may 	lead 	to the second
type of possible agreement 	in 	restraint of 	trade discussed above
-- 	an agreement between S I N , 	on behalf 	of 	its members, and
third-party payors 	that suck 	third-party payors will adhere to
the RVG 	in their reimbursement systems, 	Such an agreement
beLween ASIM 	and 	a 	third-party payor could lessen competition
among A S I N " 	members over 	the terms of their dealings with 	the
third-party payor. 	The Comission does not find a substantial

William G, kS:c=)pi$,Esquire 	-8%-
danger 	t h a t 	this 	h e of an 	agreement 	would 	result from t h e
p r ~ w s e deonduct,& -
lo agreement i n 	restraint 	of 	trade 	involving M X M 	mcuns 	if
a 	third-party 	payor 	decides 	ts adopt an W G as the basis for its
reidursement system, even L f 	its deeisisn results 	6xsm diseussioas
w i t h S I M , 	so 	long 	as 	t h e 	third-party payor" 	dedsisn 6s a
un 	is m t 	the result of coercion by UIb%or of
an 	or voluntary, between MIM and 	t h e 	t h i r d -
Pa
f n 	t h i s 	regard, 	S I M a s request l e t t e r 	states that 	its
discussions w i t h 	third-party payors would 	be advisory and 	n o t
coercive i n 	natuae, 	- S I M 	also 	states 	t h a t 	it would 	n o t 	be acting
as 	a comon 	agent or 	in a representative 	capacity for 	its members
in its dealing with 	third-party paysrs; 	rather 	it would 	simply
seek 	to persuade thizd-party 	payors of 	the efficacy 	o f 	rei&umse-
men& systems based 	on 	t h e 	RVG, 	Based 	on tbcse representations
and 	t h e 	absence of 	factsrs 	indicating 	serious risk 	in t h i s
regard, the C o m i s s i s n 	does not believe 	there 	is a substantial
8 danger 	t h a t 	mIM will 	negotiate an agreement 	w i t h , 	or coerce,
third-party payors 	to use 	tfg RVG, 	so 	as to constitute an agree-
ment 	in restraint 	of 	trade*
Because of 	ehe conclusion reached 	in this advisory opinion.
it is not necessary 	to reach the question of whether 	an
agreement to adopt 	and promulgate ap RVG 	by 	a medical 	society
eould 	result in an unreasonable restraint sf trade, even
absent a finding 	of concerted 	adherence to 	it by 	physicians
or an agreement between 	the medical 	society 	and 	any 	thisd-
party payoms,
See Virginia Academy of Clinical Psychologists v. 	Blue Shield
a., 	624 	F e 2 d 476, 	483 	(4th C ~ E ,	19801,
456 	U I S , 	916 	(1981); Michigan State Medica 	. T - C ,
191, 286 	(1983) ( A 	""1; 	104 S, 	Ct, 	at 	1471,
ASIN'S 	development of an RVG 	for dissemination to t h i r d - p a r t y
payors, although 	n o t 	raising an 	apparent substantial danger
af 	agreement in r e s t r a i n t 	of 	trade between ASIM 	and 	third-
party payors, e o u l d 	nonetheless result i n 	an agreement
between ASPM 	and 	its members 	to adhere ts the RVG, 	If ASIM
were 	to develop 	an W 	G 	and 	support it 	in discussions with
third-party paysrs, 	its members' 	knowledge 	of 	t h i s 	action and
the specifics of 	the W 	G 	could 	result in concerted adherence
to it 	for many 	sf 	the 	same 	reasons stated above. 	A l t h o u g h
the evidentiary situation would 	be 	different, this c o n d u e t
could 	raise antitrust risks like 	those resulting 	from direct
(Continued)

8 William 6. Kopit, Esquire
Because 	a e Comission 	has concluded there is a substantial
danger 	that MIM" 	pprop~sedeonduet 	would 	involve an 	agreement i n
restraint 	of 	trade 	ng A S I N 	and physicians 	to eoneertedly
adhere to 	the 	i n g 	issue is whetkes such 	an
agreeaenl woul 	restrain trade and 	therefore 	be
i l l e g a l , 	The C s m i s s i o n eancludes t h a t 	s u c k 	an agreement would
be 	inherently suspect, 	i n 	l i g h t 	of 	its 	purposes and 	likely
anticsapetitioe effects. 	The C o m i s s i o n 	further concludes that
the likely 	anticompetitive effects sf 	s u c k 	an 	agreement probably
would 	n o t 	be outweighed by any 	caunte~vaP;5kingefficiency 	j u s e i f i -
cations t h a t 	m y 	flaw from ASIM's 	propclsed 	conduct, 	As a 	r e s u l t ,
as is 	discussed below, 	an 	agreement among 	physicians to adhere 	to
t h e M X M W G would 	be 	likely 	ts restrain trade unreasonably, 	The
C ~ r r m t i s s i a n ~	therefore, cannol 	approve M X M b 	ppropased 	actions,
Naked 	horizsntaX agreements to restrict o u t p u t 	or 	tampeg
with 	price axe 	illegala 	No elaborate inquiry 	into market
8 pawer 	or 	actual effects is required 	fan eondemation sf 	such
agreements under 	the antitrust 	lawss and 	insistence on the "need"
in 	the 	rketplaee 	far 	s u c h 	arrangements cannot provide a
defense.yl 	An 	agreemen: 	on precise 	fees is not 	required 	for a
finding 	of 	illegality.l 	@Anycombination which 	tampers with
dissemination sf t h e 	RVG 	ta ASIM" 	members w i t h 	encouragement
to use 	it. I
" United 	States v. 	Socony-Vacuum Oil Co., 	310 U.S. 	150, 	218
v , 	Board 	sf 	Regents of University af Ok%akoma,
948, 2960, 	2965 	( 1 9 8 4 ) .
12 	condemnation 	has been deemed 	appropriate 	even when
ested prices 	were 	used 	by 	a 	trade associationss
members 	only 	as a 	"starting p i n t " 	for 	individual
negotiations and price compekitisn 	continued, Plymouth
Dealers ASS" 	ROE 	N - Cdl, 	V , 	United States, 249 	F.2d 	128, 132
(9th Cir, 	1960), and 	2 ) 	there were 	no 	sanctions a g a i n s t
members 	not adhering 	to 	the suggested prices 	and 	suggested
prices 	in 	fact were 	not strictly adhered 	to by 	members,
United 	States v , 	Nati 	tal Sys., 	Tnc-, 	156 F a
Supp, 	800, 	(D. Ran,) 	3 5 5 	U . S , 	10 	( 1 9 % 7 ) ,
In regard 	to "advisor 	possibly supporting a
f i n d i n g 	of 	agreement 	in restraint of 	trade 	dictum 	in
I 	421 U , S , 	a t 	7 8 1 	(1975) ( n [ a ] 	pur 	o r y 	f e e
schedule issued 	to provide 	guidelines 	. 	, 	. without 	a 	showing
of an 	actual restraint on 	trade, would 	present 	us with 	a
different question") 	United States v . 	National Ass" 	nof
Real Estate Bds,, 	339 U - S , 	485, 488-89 	(19501 	( 	in regard 	to
(Continued)

Wflliara 	G. 	Kepit, Esquire 	--10-
8 price 	s t r u c t u r e s 	is angaged 	in unlawful a e t i v i t y 	. . . . 	[T]a
t h e 	e x l e n t 	thae 	t h e y 	raised, lowered, sz stabilized prices they
would 	be 	i n e e t l y 	i n t e r f e r i n g 	w i t h 	t h e 	free play of market
fsrces, 	As 	t h e Supreme C o u r t 	has 	recognized, 	'An 	agreement 	to
pay 	or 	charge 	r i g i d , 	uniform prices would 	be an 	illegal agzeement
undea: 	t h e Sherman Act, 	But so would 	agreements
priees whatever 	machinery 	for price-fixing 	was
agreement to 	use a particular 	form 	, like an RVG, 	esuld 	support
a 	f i n d i n g 	of 	illegal 	pzice-f i r i n g , Yfabecause 	"tampering 	w i t h 	t h e
means 	o f 	s e t t . g 	prices 	is tarrtmoannt 	ts tampering 	with 	rainr;iauarse-
ment 	levels.m Ig 	S i m i l a r l y , 	t h e Supreme Court has condemned 	a s
unlawful a horizontal 	greement 	to fix only one 	element of
price, such as credit 	terms,14
f f 	an agreeaent encompassing promulgation and 	adherence 	ts
t h e S I M W 	C 	is 	fauna, 	the agreement would 	have purposes and
likely 	effects t h a t 	under 	t h e 	foregoing 	precedent 	would 	condemn
t h e 	agreement 	as 	unlawful absent plausible efficiency
justifications, 	T h e 	agreement would 	tamper 	w i t h 	market pricing
structures, 	and 	pose 	a 	serious danger 	af 	h i g h e r 	prices, at 	least
with 	respect 	to same medical 	services, and 	other 	anticompetitive	-
8 effects,
F i r s t , 	t h e 	agreement 	would 	tamper 	w i t h 	t h e 	m r k e t b 	p r i c i n g
structures by 	Lacking 	competing physicians 	into use of 	a particu-
lar 	pricing 	formula, 	if 	n a t 	uniform prices, 	It would 	fix 	t h e
relationships 	among 	each 	physician" 	prices 	for 	different 	ser-
vices, 	so 	t h a t 	ratio 	would 	not 	depend 	upon 	t h e 	p r d u e t i o n 	casts
or: quality 	of 	each 	physician's 	s e r v i e e , , n o n 	on t h e 	degree of
demand 	he 	om 	s h e 	faces 	for various services,
a 	*now-mandatorym 	rate s c h e d u l e , 	" [ s l u b t l e 	i n f l u e n c e s 	may 	be
just as effective as t h e 	threat or 	use 	sf 	formal 	sanctions to
h o l d 	people 	i n 	line*),
l3 	Arizona 	v. 	Maricopa County 	Med. 	S o c ' y , 	457 	O.S. 	332. 	346
(1982) (quoting 	1 s 	101 F,T,C, at
291,
14 	310 U . S , 	at 222 	(emphasis added),
l5 	Cf. 	Morrison 	v, 	Nissan Motor 	C s , , 	601 F,2d 	139 	(4th Cir.
9) 	(regarding an 	autsmobile 	repair 	Elat 	rate m a n u a l ) ,
, 101 F,T,C, 	at 	291.
Catalano, 	I n c . 	v. 	Target 	Sales. 	I n c . , 	446 O.S. 	6 4 3 	(1980).
8

8 William G I Kopit, 	E s q i r e
-
Seeand, 	u s e 	by 	physicians sf 	t h e 	proposed 	W G would
apparently be designed 	ts achieve, and 	would 	likely result 	in,
p a p e n t 	and 	ral&urseaent 	for 	cognitive services 	at h i g h e r 	abso-
lute 	levels 	than 	prevail 	currently, 	ft can be 	inferred 	from
S I M Q 	sm statements 	t h a t S I M ' s 	purpose 	in developing 	&he RVG
i n c l u d e s 	raising 	prices 	far c q n i t i v e 	services on 	an absolute
basis 	as well 	as an a 	relative basis, 	Example
tion in 1983 s l a t i n g : 	'Resolved, 	t h a t 	in MIM" 	s@ampaign
ts reduce 	t h e 	discrepancy 	i n 	r e i d u ~ s e m e n tbetween 	esgnitive 	and
pnwedural 	services, 	t h e Boagd 	sf Trustees continues 	ts active
promote 	for 	cognitive services , . . ,m kg
epasbent 	of Health and 	Human
Services 	adopt 	an W G d e m n s t r a t i s n 	pr
s c h e d u l e a$ allowance providing 	for 	"
internist" 	cognitive 	services woul
MIM 	very 	likely 	knows 	that 	its me&ers 	would 	have 	every 	incentive
to use 	t h e 	W G 	ta increase 	t h e 	absolute level of 	their 	prices 	for
cognitive semviees, 	As noted above, 	physicians who voluntarily
convert their current fee 	s c h e d u l e s 	ta 	t h e 	new ASIM RVG would 	be
unlikely 	to adopt 	a conversion 	factor 	that would 	result 	in 	lower
8 prices 	60r 	procedural 	services and 	no 	increase in 	their cognitive
services charges, 	The effect 	of 	widespread 	use 	of 	the ASTM 	RVG
by 	physicians 	to bill 	higher 	fees 	for cognitive 	services, even
without 	the RfdG" 	explicit 	adoption by 	third-party 	payors, 	w u l d
likely be 	i n c o r ~ r a t e dinto 	third-party 	payonsB physician 	fee
profile 	data 	for computing 	usual, 	customary, and 	reasonable
charges and 	raise 	third-party 	paysrs' 	reirabursement 	levels 	for
cognitive 	services, I
T h i r d , 	a 	"fragmentation" 	phenomenon 	of new 	b i l l i n g
categories 	being 	created 	h a s 	apparently 	a r i s e n 	w i t h 	use of same
other 	RVGs 	and 	could 	in 	the 	instant 	case 	result 	in 	increases 	in
overall billing 	cha'rges, 	Far 	example, 	a 	s t u d y 	sf 	the California
Medical Association 	W G 	caneluded 	that 	mre 	detailed 	and 	frae-
tionalized RggG 	deseript 	e 	codes 	resulted 	i n 	o v e r a l l 	increases 	in
payments 	ta physicians,iS 	Bere. 	there 	is some danger, 	for
l8 	A S I M .
(emphasis added) ,
A S I M , 	3 	( B c t , 	1982)
(emphasis added) ,
(Continued1

Willim G I Kopit, 	Esquire 	-12-
- exwple, 	of ASXM" 	RVG providing 	fox 	new charges by 	procedure-
oriented p h y s i c i a n s 	for cognitive aspects 	of 	sebviees, 	when
patients were previously charged 	only for 	a procedure, 	Such a
tendency 	i n 	the S I M RVG 	could 	arise in the evsLution of the
'consensusm 	needed arnsng 	b t h 	cognmtiveand procedure-oriented
p h y s i c i a n s 	fsm 	t h e 	RVG" 	contents,$1
Fourth, widespread 	adherence to the RVG 	c o u l d 	also tend 	to
s t a b i l i z e 	prices artificially, 	Such 	a phenoneaon 	could be 	in
contrast to 	t h e 	stability of 	price one might 	expect in a eampeti-
tive market 	in which homogeneous, fungible goods are sold, 	The
price 	relations?$ps 	of different services, and possibly absolute
prices as w e l l , 	would 	be 	stabilized to a 	degree n o t 	already
effected 	by 	third-party 	payment and without 	regard 	to differences
in the quality 	of each physician's 	services or 	his or her 	efficiency,
F i f t h , 	t h e 	RVG 	may 	also facilitate direct price fixing, 	In
the absence sf an RVG 	t h e 	difficulties i n 	forming 	a consensus
among physicians sn a fee schedule would 	involve deciding 	w h i c h
services Lo 	include in a price-fixing 	agreement and 	agreeing on
what value each 	service should have 	in relation to another,
8 Agneement an a full-blown fee schedule would 	be 	facilitated by
adherenee to t h e 	RVG 	and 	would 	involve additional agreement o n l y
on a conversion factor, 	Although A S I M 	has disclaimed any 	intent
to encourage such conduet, agreements among physicians ts use 	a
21 	See m. 	Med, 	N e w s , 	Nov, 	2 3 / 3 0 , 	1984, at 	36, col. 	3 	(surgical
s~cietyofficial quoted 	as stating 	there 	is "cognition in 	the
OR 	[operating rbom] 	too") ; 	Am, 	Med, 	News, Qct, 	14,
1983, 	at 	14, c o b , 	I 	(surgical society official quoted as stating
"surgeons use cognition before, during 	and after surgery";
physician quoted 	as 	stating 	that Aresistance'8 sf surgeons to
concept of 	reducing cognitive 	and 	procedural 	services disparity
began 	to "disappear" in s t a t g medical 	soeiew 	when 	internists
explained 	to surgeons thatPambecauseof 	the 	reimbursement bias,"
"surgeons do a 	lot of cognitive consultations that they 	have 	to
consider 	throwaways" or 	"time lostm),
22 	An 	empirical study suggests that RVG 	use 	is associated with
less fee dispersion, although not 	necessarily higher 	fees,
not sufficient to indicate whether 	the reduction in
dis~ersionreflected more 	efficient market performance, or 	a
poskibly 	unwarranted 	trend 	toward 	standardized prices by
physicians offering differing quality 	service. 	The stuay 	d r a
find a positive association between WVG 	use 	and 	higher
prices, but 	the association was 	not statistically
S ;
8

8William G , 	Ropit, 	Esqui~e
particular convession factor w i t h 	an RVG 	can arise, 	Agreement 	an
convension factoms 	does 	n o t 	appear 	to be 	a part 	of A S G M b 	plan
nor 	an 	inevitable ~ e s u l kof 	it, b u t 	it 	is a pssible 	result of
ASIM- 	seonduct, 	paatieularly 	i n 	subspecialties at local 	levels,
Finally, 	i n 	addition 	to affecting 	price, 	concerted 	adherence
to ASIM" 	RVG 	would akso appeax 	to fix or 	restrict s u e p u t 	of
certain 	qgrvices, 	also a type of agreement that can 	be
i l l e g a l . 	U % M 6 s stated 	intent 	is ts change 	t h e 	nilix of
cegnitivc and 	procedural 	services 	delivered by 	i n t e r n i s t s , 	if 	n o t
a11 physicians, t h r g u g h 	change 	in reimbursement B e v e l s , 	ASXW's
prsposal apparently contemplates a 	reduction i n 	t h e 	o u t p u t 	of
procedural 	services, and 	c c u l d , 	depending 	on t h e 	impact on demand
of 	any 	significant price 	inceeases for cognitive services, reduce
output og 	cognitive semviees,
Because 	of 	its 	apparent 	purpose 	t o 	r a i s e 	price 	levels for
some services 	and 	the s u b s t a n t i a l danger of anticsmpetitive
effects on 	price and o u t p u t , 	the agreement t o 	adhere 	to t h e 	RVG
that 	could 	result frorn ASIM's 	proposal would 	be 	inherently suspect
anticonpetitive, 	Such 	an agreement would 	not be
ight under 	the 	rule as 	a 	naked 	restraint of
trade if 	a plausible procompetitive 	efficiency 	rationale existed
for 	it, But 	the 	burden 	would ,be on A S I N 	to establish justif ications	-
legitimizing 	t h e 	agreement. 	If A S l M 	established procompetitive
efficiency justifications, t h e y 	would 	then be 	weighed 	against 	the
anticompetitive effects of 	the conduct to determine 	net competi-
tive effects, 	If 	suck justifications were 	n o t 	shown to be 	v a l i d ,
the 	* 	anticompetitive or 	inherently suspect conduct i n
question woul 	be 	condemned without further proof 	of 	a6t icompeti-
tive effects, 	This method 	of analysis 	can be deemed 	a
2 3 	104 S, 	Ct. 	at 	2948; 	Mfrs, 	v,	National 	M a ~ a r ~ n i 	FTC,
.T,C, 	583 	(19641 , 	345 P , 2 d 	421 	( 7 t h Cir, 	19651,
2 5 	United 	States 	v, American Soe' y 	o f 	Anesthesiologists, Xne, ,
473 F, 	Supp. 	1 4 7 	(S.D.N.Y. 	1 9 7 9 ) 	("ASA"" 	cited by A S Z M ,
warrants discussion, 	In 	that 	case, 	t h e 	court rejected 	the
Department of Justice" 	ccsntention 	that ASA 	cornittea a
-	se violation of 	the Sherman Act 	t h r o u g h 	its 	dissemination of
an RVG 	for 	anesthesia servrees and 	found no violation under
(Continued)

truncaked, 	quick-look, or -limit& 	rule of season analysis,26
Showing adequate justification for concerted promulgation
and 	adherenee 	to m X M 1 s W C would 	be particularly cmitieal given
the mwer 	of WIM 	and 	those 	physicians, both 	M % H me&ers 	and
oelaers, 	wbo might 	concertedly 	use the RVG 	to effect -significant
ekanges in t h e 	mmketp%aeee 	MIM me&ership 	includes 19,000
physicians, a 	significant p r t i o n 	of 	the nation" 	663,000
internists, 	The Comissisn understands that MIM 	also has 	t h e
suppsmt of at least 12 sther 	physician organizations in Its
effsmt 	ts mke e q n f t i v e 	services reimbursement nrarsre 	"equitable,"
C a n c e s t d 	action 	by physicians who are meders 	of 	these 	snganiza-
t i o n s 	$0 adhere to the W G would 	likely have a 	substantial effect
on 	the marketplace, 	In addition, primary care physicians who are
n o t 	members of 	these organizations might 	also Be attracted 	to t h e
t h e 	mule of 	reason, 	The 	case was 	tried 	solely 	on 	a
theory so there was n 	% 	exposition of possible a
competitive effects, 	The court, in fact, 	found no agreement ts
adhere ta 	the W G 	with 	the purpose ar effecl of 	r a i s i n g 	or
8 stabilizing price, 	at 159, 	and 	instead 	found 	that ASA 	had
not mencouragedm anyone to use 	its RVG, 	No evidence was cited
showing any 	intent on the part of ASA 	to achieve an 	increase in
fee levels, 	M 	A 	at 159-60, 	The court also emphasized t k a &
delivery sf 	thesia 	semviees is somewhat unique 	in medical
practice -- 	little or no contact with patients prior 	to surgery
and 	vistually 	POO 	percent insurance coverage of 	fees, 	The
present matter 	differs significant18 in these respects,
26 	General Leaseways v, 	National T r u c k 	Leasing A s s " #
88, 595-96 	(7th Cir, 1984) 	(preliminary irajune.-
t i o n ) ; Brief 	fok 	t h e 	Un 	States as 	in.
Support of Affirmance, 	a t 	9-12, 	to 	the
q u i c k - l w k 	rule of 	reason, " [s]easoned 	antitrust lawyers
recognize t h a t 	the threshold 	facial examination is not 	that
n s v e l 	and 	is entirely consistent with older landmark eases,
United States v , 	Addyston Pipe and Steel Co, evidences the
historical foundation underlying 	the wick 	look methodem
Brunet, 	note 24, 	at 22, 	Even if a full-blown rule of
reason 	is were the appropriate raode 	oE 	analysis for an
agreeraent encompassing concerted adherence to ASZM" 	W G , 	the
apparently anticometitiye purposes and 	ptential effects
discuss4 above, and 	t h e 	likelihood that A S I M members and
other physicians collectively using 	the RVG 	could 	exercise
8 market power as discussed below, 	would 	very likely make out a
facie case, once established 	in an evidentiary record,
S I M 	would 	then, as 	in a truncated rule of 	reason analysis,
have 	to proffer 	evidence showing procometitive effects of
greater or 	at least equivalent weight.

8 William G I 	K e a p i t , 	Esquire
MIM W G 	because 	uc3e 	sf 	i& 	would 	be 	i n 	their 	eiraancial 	interest,
P i n a l l y , 	f u t u r e proposed A S I M 	RVG a c t i v i t y 	encompassing a l l
physician 	services could 	command widespread, 	across-the-board
adhebenee 	by 	physicians 	in all specialties,
MIMBss t a t e d justification is essentially 	t h a t 	imperfections
i n 	t h e 	insurance 	payment 	system 	for 	reimbursing 	physicians have
created 	' w r ~ n g incentives," 	a h i g h 	l e v e l 	of r e i m b u ~ s e m e n e
for costly 	tecRneLwical 	a d pr~ceduralsexvices, 	wkieh encour-
ages overuse 	and aote expensive ~fledicalcare, and 	a 	Isw level a f
seimbumserrrent 	for 	c q w i t i v e 	services, 	which discsu~agestheir
u s e , 	mIM 	f u r t h e r 	claims 	t h a t 	g e d ~ e s s l n gthe 	rei&urscment 	dis-
parity between 	procedural 	and 	cognitive 	services 	through 	its pro-
posed 	RYC 	would 	encourage 	greater 	use of more 	personalized 	cogni-
tive 	services 	and 	provide 	new 	incentives for 	=re 	physicians 	to
choose psimafy 	care 	specialties, 	MIM 	claims 	that 	i6s proposed
W G , besides 	i n f l u e n c i n g 	physicians 	to better meet 	t h e 	public's
overall health 	needs, would 	be 	designed 	to 	reduce 	h e a l t h 	care
costs,
8 M P M " 	purported 	objective 	-- 	a lowex-cost 	medical 	services
marketpiace, 	with 	concomitant 	health 	benefits 	to patients 	-- 	is
laudable, 	However, 	that 	objective 	would 	not 	provide 	a 	ccrgnizabie
justification or 	defense 	under 	the antitrust 	laws 	for 	an 	agree-
ment 	to supplant determination 	of 	p~icesby 	mrket 	Eorces 	ow 	the
ground 	that prevailing 	prices 	were 	not 	at 	a 	level 	the p 	t i e s 	to
the agreement 	believed 	was 	sptimgb 	fss 	them 0 s 	society. 45 	1x1
the Supreme Court 	canf irmed 	that 	activities
of professional 	societies are 	subject 	to the 	tradi tional
antitrust 	test of 	reasonableness -- 	"whether 	the challenged
agreement 	is one 	that promotes 	competition or 	one 	that 	suppresses
competition" 	-- 	and' may 	not 	be 	defended 	on 	the ground 	t h a t 	t h e
special characteristics of 	professional 	services markets 	make
competitively 	determined 	prices 	undesirable,
The 	difficulties 	in 	recognizing 	the 	availability 	of 	such 	a
defense 	for 	an 	agreeaent 	ta adhere 	to 	the AS%M RVG 	are
i l l u s t r a t e d 	by 	the 	issues 	t h a t 	would 	kave ts be 	resolved 	to
determine 	its validity- 	A 	principal 	f a c t u a l 	issue would 	be
deteemining 	the accuracy sf MIMh 	claim that pricing 	Bevels 	and
output 	in 	the medical 	services marketplace 	are 	not 	at 	a p p r o p ~ i a t e
levels, 	If 	such 	nsnoptimal 	perfarmanee 	is praven, 	one 	would 	then
kave to determine 	whether 	the 	results 	of 	the conduct 	in question
wauld 	be 	improvement 	sr 	worsening 	of 	the mrket, 	A 	court might
National 	Soc'y 	of 	Prof- Eng'rs 	v , 	United 	States, 	435 U I S .
6 7 9 , 	688, 692 	(1978).

- 	-
Willim @, 	Kspik, Esquire 	-16-
a well have 	to assess t h e 	likely r e s u l t 	sf physicians forming 	and
acting 	u p i i ~a subjective consensus jrrdgmenL 	bbaaad 	an c o s h a d
other 	factors, of what 	p r i c i q 	relationships would 	prevail 	in the
mrket 	were 	the mrket 	working proparlye 	This inquiry would 	be
akin 	to t h e 	regulatory 	determination 	of 	a public 	utility
csnadaission 	and 	w u l d 	go 	beyond 	any 	inquiry undertaken 	i n 	prior
antitrust 	cases, 	Hndeed, 	to attempt 	eo resolve empirically
whether competition and consumers m u l d 	ultimately be served or
h a r m 4 	by 	eoncemtd 	agreement ow a p e i c i n g 	farmula would 	require
an 	inquiry U a % courts have 	long 	eschewed 	i n 	a n t i t r u s t 	cases --
i,e,, 	ts m s e t sail on a 	sea of doubt" 	seeking ts decide 	w h o ~	much
restraint 	of competition i s 	i n 	t h e 	public 	interest, 	and 	haw much
is 	not,' 	w i t h 	the c 	mt 	t r y i n g 	to assess t h e 	seasonableness of
t h e 	prices c h a r g d , " 	A l s o , 	even 	if 	it were 	demonstrated t h a t
t h e 	mrket 	changes MlM proposes would 	in fact 	produce 	priees and
output 	at a mre.optirnal, l e v e l 	Ln 	"te 	i m e d i a b sbsrt 	term, 	they
could 	over 	time p ~ s d u c eunreasonable priees and 	output, with 	it
being 	virtuanly 	impossible 	to p l i e e 	the 	ngoing 	effects sf s u c h
eoficerted 	use of MIM" 	pricing 	formula, 28
Even 	if 	a defense by M I M premised 	on the appropriateness o$
8 agreed-upon changes of 	industry pricing structures and o u t p u t
bevels were legally cognizable as an efficiency-enhancing d e v i c e ,
it 	is doubtful 	that MIM could 	sueeessfully establish, 	on the
faats, 	that market 	performance 	would 	imgrove 	througb 	its proposed
conduct ta a closer approximation of optimal market pricing. 	Far
example, A S f M 9 	proposal may 	drive up 	those 	prices 	t h a t 	are now
close 	to o o 	at a competitive level, while 	leaving largely
undisturbed priees 	fox 	procedural serviqes that m y 	be 	reimbursed
excessively, 	It 	is possible 	that market 	forces may 	be permitting
above-optimal prices 	for procedural services, while keeping 	t
priees of eogniti~e~services	at approximately optimal 	levels,98
28 	United States v. 	Addyston 	Pipe 	P 	Steel Co., 85 F. 	271, 283-
84, 	291 	(6th C i r , 	18981, 	175 U,S, 	211
(1899) e 	I
30 	Market 	forces that may 	be 	restraining 	the price o f 	cognitive
services to a greater degree than 	procedural semviees could
include better consumer 	knowledge of what a 	m f a i r m price 	is
8 for 	cognitive 	services; more 	active ar 	effective consumer
involvement in determining 	whether 	and 	when 	to seek primary
care services; a greater proportion of out-of-pocket costs
for patients receiving cqnitive services because sf the
terms of 	insurance coverage; the growth of 	ambulatory care
(Continued)

I)William 	C, 	Knpit, 	Esquire
f f 	80, 	AsIMDs efforts could 	raise cognitive sesviee pgfces above
campetitive 	Ievels, 	Thus, 	if 	it enhanced 	rei;salsurseaent fog c q -
nitive services, 	c o n e e ~ t e dadherence 	to MIMOs 	proposed W G could
distort 	kbe m n k e t 	to a p i n t 	even 	f u r t h e r 	from optimml competitive
perfoemnnce thaa now 	exists,
T h e ~ eis c e r t a i n l y 	no 	assurance 	that 	the price 	06 	psmeduraf
sesvices will be 	reducd 	by 	t h e MIM W G 	i n 	t h e 	long 	run, 	M X M s s
egforts 	tca 	r d u c s 	t h e 	raimburse~enkdisparity 	between 	pmmcdurab
and 	cognitive services 	have reportedby m e t 	w i t h 	concern from
representatives sf soae 	internal medicine s u b s p e c i a l t y g~oups
whose m e d e n s 	engage more heavily 	in procedural 	services, 	T h e s e
groups r e p r t e d l y 	do not object 	to increasing r e i a u r s e m e n t 	for
cognitive services. 	Q y t question a decrease 	in reimburselnent 	for
procedural 	s e a v i c e s , 	It is very 	p s s i b P e 	t h a t , 	once consensus
on 	t h e 	RVG 	is reached, 	use i n 	the m%ketof 	t h e 	~ e l a t i v ev a l u e s
accorded 	different services 	would 	r e s u l t 	i n 	increases 	i n
reimbursement 	fan 	e q n i l i v e 	serviees 	w i t h 	little or 	no decrease
in 	reimbursement 	for procedural 	services, 	MoreoverI $0 reach
consensus amng 	physician 	representatives w i t h 	divergent
8 interests, 	empramises might 	result 	i n 	identification 	of new
cognitive 	serviees, 	mt 	previously 	billed 	for, 	that procedural
service oriented 	physicians 	can bill 	t o 	i n s u r e r s 	and 	patients, 32
In additiaa, 	W f M b 	implicit prediction 	that physicians
would 	s w i t c h 	to p r s v i d i n g 	mre 	c q n i t i v e 	inskead 	of prmedural
serviees 	and 	t h e r e b y 	contain h e a l t h 	care 	e s s t s 	is speculative,
Even 	if 	same switching 	d i d 	occur, 	would 	it 	be 	enough 	to o f f s e t
any 	increase i n 	t h e 	price 	sf cognitive 	sprvices ss as 	to lo we^
overall health care eests? 	Hould 	t h e 	resulting 	output 	be 	more
beneficial to consumers 	thaa 	t h e 	current 	sne? 	These 	questions
dem~nsttate t h e 	r i s k 	inherent 	i n 	permitting 	price 	and 	output mix
to be 	aetermined 	or' redirected 	by private 	agjgement 	among
competitors who 	Rave 	a 	stake 	i n 	t h e 	outcome,
centens 	t h a t 	h a v e 	extended 	hours; and 	growing 	competition

Finally, the weans MIM plans to u s e 	to develop 	its W G
highPights soma sf t h e 	dangexse 	MIM proposes 	to derive a G p r ~
p ~ i a t erelative v a l u e s 	through 	a 	'csnsensusm 	building 	prgseess 	--piling physicians by 	means of t h e Delphi 	eechnique, 	A 	recent
s t u d y 	on t h e 	pros 	and 	cons af 	various relative value 	g u i d e 	alter-
n a t i v e s 	prepared 	for the Depar-ent 	of H e a l t h 	and 	Bumqn Services,
wotd 	t h a t 	if 	%he DePghi 	technique is used, 	t b e 	rep 	sentations1
aatuse sf &e 	-%led 	gnoup is cnitically 	i a p r t s n t , 58 	Physicians
Bwould have a 	financial stake 	i n 	t h e 	autcme o f 	t h e 	m S 	determi-
nations and 	*ereby 	have s 	s u b s t 	6ial conflict of 	interest 	if
empanebled,to deeenmine an W S , ' 	45 	The study explains:
To 	t h e 	e x t e n t 	t h a t 	vaaious goals of 	an RVS
would 	be encouraged 	as part 	sf a group
decision prwess, 	eag., 	lthe goal 	sf] more
adequately 	reward 	ingl 	c q n i tive services 	t b e
pracess 	becomes 	less t h a t 	of 	f i n d i n g 	a
solution and 	maze 	t h a t 	of achieving 	the most
politically 	acceptable ckaiee, 	The 	f i n d i n g s
of 	research 	on 	formal, group decision-making
for problem 	solving 	tasks 	[showing t h e
p t e n t i a l 	efficacy 	of 	s u c h 	efforts] are
unlikely 	ts be 	valid 	for group choice 	tasks in
which 	participants 	have a 	stake 	i n 	the outcome
and 	rscr sbjectively eocrect soluti~nexists, 	P d ,
For 	t h i s 	and 	t h e 	other 	foregoing seasons it 	is not 	at a l l 	elear
that 	concerted 	use sf 	the ASIM W G would 	achieve 	t h e 	cost
seductions and 	beneficial publie h e a l t h ~ o l i e yr e s u l t s U X F 3 h a s
projected,
O t h e ~p s a i b l e - justifications are 	also 	unlikely 	to provide
an adequate 	ground 	of defen%e, 	Widespread 	adherence to a 	single
W 	G 	could 	pzovide 	a aesmon benebmrk 	for 	physician p r i c i n g ,
Arguably, 	this 	could 	facilitate enhanced 	price 	competition and
cornpasisan shopping 	mong 	physicians 	by 	consumers and h e a l t h
pbans 	on 	t h e 	basis of 	t h e 	different 	conversion factobs 	used 	by
p h y s i c i a n s , 	Saae procompetitive 	beneeits 	of 	t h i s 	s o r t 	could
conceivably 	result 	f r ~ n	standard 	adherence 	ta a 	s i n g l e RVG, 	but
it 	is entirely 	speculative 	how 	substantial 	those benefits would
be 	and 	they 	would 	likely 	not 	outweigh 	the 	anticompetitive 	impact
of 	concerted 	u s e 	sf 	t h e 	W G , 	A l t h o u g h 	insurexs c o u l d 	wssibly
have 	benefitted 	significantly 	ssane years 	aqs 	Ersm 	s u c h 	p r i c i n g 	by

William 	G , 	Kopit, Eswire 	-19-
physicians, mst 	i n s u r e r s 	now 	have o n 	can obtain coquter 	profiles
on physicia 	fees t h a t 	provide 	data 	on pricing 	differentials 	arrrong
physicians,9s .
RVGs 	i n 	some c o n t e x t s 	can 	serve 	t h e 	legitimate, unilateral
business needs af 	third-party 	payors, 	promoting 	eoapetitbon and
egfieiency, 	A n 	W G 	adopted 	for use by 	an 	i n s u r e r , 	&elf-insured
employer, 	h e a l t h 	maintenance organization, or 	the goverment for
its own 	use 	as 	a 	third-party 	payor 	could well be v a l u a l e * 	Bere,
when a horizontal agreement 	mong 	physicians to adhere to the
MIM W G 	is a realistic ~ s s f b i l l t y ,it is also p s s i b l e 	t h a t
same pnoeoraapetitive efficiency benefits could 	be achieved 	from
its 	unilateral use by 	individual third-party payoss, 	It is,
however, unclear 	how 	substantial s u c h 	benefits would 	be, 	More
important, if 	third-pa~ty payors have bad 	a cmitieal need 	for an
RVG, 	it 	is n o t 	clear why private 	entrepreneurs, research centers,
or 	the payors 	themselves would 	n s t 	have already satisfied t k a t
need, w i t h 	whatever 	physician 	consultation was 	necessary, 	s h o r t
of medical 	sociefr promulgation 	of 	t h e 	proposed RVG 	with 	its
attendant r i s k s ,
Finally, informatianal benefits could 	flow from 	the
availability of 	the G Z M W G 	fsm 	unilateral use by 	physicians 	in
the mnketplace, 	Such 	benefits, 	however, would 	n o t 	be present
when physicians 	eonspire 	to adhere 	to t h e 	RVG, 	and 	do 	not merely
use 	it 	as an 	informational tool. 	Such efficiencies would 	nat,
therefore, 	appear 	to constitute 	a v a l i d 	justification 	far the
unreasonable p r i c i n g 	agreement t h a t 	is a 	risk 	sf I I S I M f s proposal,
The Comission 	concludes, an balande, t h a t 	any procampee
t i t i v e 	eEficiency benefits flawing 	from ASINas proposed 	c~wduet
would 	not 	be 	likely 	ta outweigh the anticompetitive dangers of
the agreement to adhere ts W I N ' S 	RVG 	t k a t 	is a serious r i s k 	sf
its 	proposal 	to develop 	an RVG 	raising 	the 	r e l a t i v e 	prices of
cognitive services
36 	This 	informtian is based 	uQQn staff 	interviews wigh
~epsesentativesof large and 	small insurers and 	t h i r d - p a r t y
gayor 	administrators,	* 	-
37 Comission 	s t a f f 	interviews 	of 	representatives of insurers
generally 	indicated a 	lack of 	enthusiasm for a medical
society developed 	W G ,
8

Wflllam G , 	Ksgit, E s q u i r e 	-21)-
There 	are 	actions M Z M can take t o 	f u r t h e r 	i t s goal of
reducing 	t h e 	alleged 	nei&ursement 	disparity 	between cognitive
and 	procedural 	services 	t h a t 	weuld 	n o t 	appear 	to 	raise a n t i t a u s t
problems 	and 	that may 	be 	helpful to publie 	and 	private 	third-
panty 	paysrs, 	To aid 	third-party 	payors 	in developing 	sound
reinbursemant 	programs and 	criteria, S I M has 	available 	a 	range
of 	actions sat do n o t 	require 	its 	incurring antitrust 	r i s k
through develspment sf 	a comprehensive RVG 	and 	its dissemination
to b t h 	aimd-panty 	payoss and 	a l l 	its member 	physicians. For
example, MIM can 	seek 	to persuade 	third-party 	payoms 	to change
their 	reimbursement 	methods 	om 	amounts without 	running afoul of
t h e 	antitrust laws 	so long 	as 	there 	is no coercive conduct
engaged 	in on 	threatened, nor 	any 	price 	agreement 	entered 	i n t o
between M I M 	and 	any 	t h i r d - p a r t y 	payor 	Lessening 	competition
malag S f M " 	sembers, 	S I M can lobby 	Congress or 	t h e 	Deparbent
sf 	H e a l t h 	and 	Human Services 	for changes 	it desires i n 	physician
reimbursement, 	Expressisws 0 6 	spinion on 	the policy 	question of
reducing 	the 	rei&ursement 	disparity 	between 	c o g n i t i v e 	and
procedural 	services as would be contained 	in an ASfM 	mwhite
8 paper' 	do n o t 	constitute a 	restraint of 	trade and 	also 	fall
within 	the =bit 	of protected 	free 	speeeb, 	Finally, 	ASfM 	can
eonduet 	research 	and 	analyses 	that could 	be 	used 	with 	other
informtion 	by 	the Depattment of Bealtk 	and 	Human Services or
other 	third-party 	payors 	in constructing 	an EVG, 	ASIM 	e a u l d , 	for
exampler study, analyze 	and 	report on t h e 	time, 	complexity, or
costs of 	specific services performed 	by 	internists without
developing 	a 	fosml RVG 	mechanism 	and 	disseminating 	it 	to A S I E s s
member 	physicians,
Conclusion
The C a m i s s i a n 	has 	determined 	that 	the danger 	af 	an
anticompetitive 	agreement 	in 	restraint 	of 	trade 	is 	sufficiently
great 	that 	it eannot give 	approval 	6s A S I M b 	pprsposed 	course 	of
ccnduct, 	MIM can, 	t h o u g h , 	legitimately 	engage 	in 	alternative
actions 	to 	redress 	t h e 	reimbursement 	inequities 	t h a t 	it 	per-
c e i v e s , 	T h i s 	advisory 	o p i n i o n 	does 	n o t 	refleet 	a determination
by 	t h e 	C o m i s s i o n 	t h a t I I I % T M g s proposed 	conduct 	would 	necessarily
vialate 	the antitrust 	Paws 	if 	undertaken, 	Nor 	does 	it 	denigrate
S I N " 	concerns about 	the public 	health 	and 	cost 	implications of
current 	third-party 	paysr 	rei&ursement 	patterns, 	R a t h e r , 	the
Coaunissiow 	has 	determined 	only 	t h a t 	advance 	approval eannot 	be

BWilliam G , 	Kopit, 	Esquire
g i v e n 	for t h e 	specific actions ASIH 	h a s 	proposed. 	T h i s 	advisory
opinion, like 	a l l 	those 	t h e 	Commission issues, is limited 	to 	t h e
proposed 	conduct 	about which 	advice 	h a s 	been 	requested,
By 	di~ectionof 	t h e 	C o m i s s i s n ,