Is the Messenger Model Dead?

The movement toward value-based purchasing by Medicare and private payors has created a question as to the continued viability of physician organizations that rely on the messenger model to negotiate contracts.  The messenger model has been a staple of many groups of competing physicians who have come together to in IPAs, PHOs and other contracting organizations to jointly negotiate price with 3rd party payors.  The FTC has investigated several of these types of groups and found that they did not possess the requisite financial or clinical integration necessary to allow these competing physicians to jointly price their products.  There is a long list of Consent Decrees between the FTC and non-compliant physician organizations.  Insurance companies have triggered many of the investigations where physician organizations have attempted to block managed care or illegally controlled prices.  The messenger model is cumbersome to operate and results in limited efficiency.  The real reason that the messenger model may be a passing phase is not the FTC enforcement, but the change from utilization motivated payment programs to quality and outcomes driven reimbursement models.  The transition may be painful for many physician organizations.  Costs associated with the development of a value-based purchasing program are substantial.  Colloboration with hospitals is on way physicians groups may be able to reduce their costs.  The limitiations of the Stark law and Fraud and Abuse statutes have been reduced somewhat through safe harbors that allow for some hospital assistance in EHR development.  Those exceptions are discussed in a post under the Anti-kickback, Stark and other regulatory impediments category.