Iowa Dental Association

WASHINGTON. D. C. 2 0 5 8 0
0 1 THC S E C R E T A R Y
Peter 	M. 	Sfikas, 	Esq. 	8 APf? IS82
2 0 0 	East 	~ a n d o l p h
S u i t e 	7300
P e t e r s o n , R o s s , 	Schloerb & 	Seidel
C h i c a g o , 	Illinois 	60601
Dear 	Xr. 	Sfikas: I:!
T h i s 	is 	in 	respoAse 	to 	your 	request 	for 	an 	advisory 	opinion
concerning 	a 	proposed 	program 	for 	peer 	review of 	dental 	f e e s 	by
the 	Iowa Dental 	Association 	("IDA"- or 	"Associationn-) a n d 	i ts
component 	district 	dental 	societies.
I t 	is 	t 	n l s understanding 	that 	IDA w i s h e s 	to
institute 	a 	p r o g r y 	to 	aid 	the 	cost 	c o n t a i n m e n t
efforts 	o f 	t 	ayors 	and 	assist 	patients 	in 	t h e
resolution 	of 	fee-related 	disputes with 	dentists. 	U n d e r 	the
proposed 	IDA peer 	review program, 	a 	patient, 	a 	third-party 	payor
or 	a 	dentist 	involved 	in 	a 	particular 	fee 	dispute may 	request 	a
determination 	by 	a 	peer 	review panel 	of 	an 	IDA component 	district
dental 	society 	as 	to 	the 	appropriateness 	of 	the 	fee 	c h a r g e d 	in
8 that 	particular 	case. 	Participation 	in 	the 	program 	will 	be
purely 	voluntary 	(with 	no 	proceed'ng 	held 	unless 	each 	of 	the
disputants 	agrees 	to 	participate) t, and 	all 	determinations 	will 	be
purely 	advisory 	in 	nature. 	Furthermore, 	the 	decision 	of 	each
beer 	r e v i e w 	panel 	will 	be 	based 	solely 	on 	the 	facts 	and
circumstances 	of 	the 	particular 	ease 	and 	will 	not 	be 	disseminated
beyond 	the 	patient, 	third-party 	payor, 	and 	dentist 	involved 	in
the 	ease. 	Similarly; 	distribution 	of 	decisions 	internally 	will
be 	limited 	to 	the 	dis'sernination 	required 	to 	?erfo,rm a p p e l l a t e 	and
administrative 	functions, and 	the Association 	will 	neither
collect 	information 	on 	dental 	fees 	nor 	conduct 	surve:ys 	relating
to 	such 	fees.
Based 	on 	its 	understanding 	of 	the 	fee 	peer 	review 	program 	as
i t 	is 	outlined 	above 	and 	further 	detailed 	in 	your 	submissions, 	i t
is 	the Comnission's 	opinion 	that 	operation 	of 	the 	program 	would
n o t , 	in 	and 	of 	itself, 	be 	violative 	of 	Section 	5 	of 	the 	Federal
T r a d e C o m i s s i o n 	Act.
' 	Third-party 	payors 	(also 	cai led 	*third-par ty 	providers" 	in
IDA'S 	submissions) 	are 	entities 	- - 	such 	as 	insurance
companies, 	service 	companiss, 	or 	employers 	-- 	w h o 	reimburse
oatients 	for 	all 	or 	part 	of 	the 	cost 	of 	dental 	c a r e , 	or m a k e
birect 	payments 	to 	dentists 	on 	behalf 	of 	~ a t i e n t s for 	such
services.
T h u s , when 	a 	dispute 	is 	between 	a 	third-party 	payor 	and 	a
dentist, 	both 	the 	third-party 	payor 	and 	the 	dentist 	must
agree 	to 	participate 	in 	the 	particular 	proceeding. 	Likewise,
when 	the 	dispute 	is 	between 	a 	patient 	and 	his 	or 	her 	dentist,
both 	the 	patient 	and 	dentist 	.nust agree 	to 	participate 	for
c L - 	--,-	- A , . ; = T . I 	- - n n o c c 	- n 	'-,P 	I , + ; 1 : y e ? -

8 Peter 	34. 	S f i k a s , Zsq.
T h e Comnission 	is 	of 	the 	view, 	however, 	that 	great 	c a r e must
continually 	be 	taken 	in 	carrying out 	the 	program 	to 	a s s u r e 	that
its 	purpose 	remains 	legitimate. and 	that 	i t 	does 	not 	produce
significant 	anticompetitive 	eqfects 	and 	thereby 	run 	afoul 	of 	the
antitrust 	Proffered 	guidance 	given 	under 	the 	auspices 	of
a major 	professional 	society 	{an 	readily 	become 	coercive 	if 	the
voluntary 	and 	advisory 	n a t u r e , o f the 	program 	is 	not 	perceived 	and
sustained 	by 	all 	participants. 	Likewise, 	joint 	action 	relating
to 	f e e s c a n 	readily 	threaten 	independent 	pricing, 	if
determinations 	about 	particular 	past 	prices 	become 	generalized 	in
future 	f e e 	or 	reimbursement 	decisions. 	IDA should 	avoid
antitrust 	risk, 	therefore, 	by 	vigilantly 	safeguarding 	the
voluntary 	and 	advisory 	nature 	of 	the 	fee 	?eer 	review process, 	and
the 	limited 	scope 	of 	each 	proceeding, 	to 	prevent 	a 	lessening 	of
price 	competition 	or 	innovation 	and 	to 	avoid 	unlawful 	coercion.
Compet i t ion 	wi 1 1 	be 'best 2rotected 	if 	a1 1 	concerned 	par ties
view 	fee 	peer 	review as 	a means 	of mediating 	specific 	fee
disputes, 	rather 	than 	a 	process 	for 	the 	collective 	sanctioning 	of
fee 	levels 	or 	particular 	practices. 	T h e Comnission 	believes 	that
8 limited 	dissemination 	of 	fee 	decisions 	by 	the 	peer 	review panels
is 	crucial 	i f 	the 	prograv 	is 	to 	serve 	as 	a mediation 	service,
rather 	than 	a 	means 	to 	facilitate 	price 	fixing 	or 	coercion.
Serious 	antitrust 	concerns 	would 	therefore 	arise 	i f 	IDA, 	district
societies, Association 	members, 	or 	the 	disputants 	involved 	in
particular 	peer 	review 	proceedings 	allowed 	panel 	decisions 	to
become 	widely 	known.
O f 	equal 	importance, 	the 	iifliculty 	and 	complexi ty 	of 	a
procedure 	should 	b e 	evaluated 	3ased 	o n 	the 	individual 	expertise
and 	judgment 	of 	the 	panel 	memk-5rs. 	T o 	the 	extent 	that 	any
reference 	is m a d e 	to 	external 	!actors 	or 	benchmarks, 	such 	as
relative 	value 	sca!es, 	consideration 	should 	be 	limited 	to 	fee
information 	not 	sponsored 	or 	~ a n c t i o n e d by 	the .Association 	or 	a
component 	dental 	society. 	Likewise, 	?eer 	review 	of 	fees 	would 	be
subject 	to 	antitrust 	challenge' i f 	i t 	were 	used 	either 	to
discipline 	dentists 	who 	engage 	in 	advertising 	or 	other 	forms 	of
competition 	or 	to 	discourage 	innovetive 	practices 	not 	officially
approved 	or 	widely 	used 	within 	the 	professional 	comnunity. 	T h e
T h e s u p r e m e c o u r t 	will 	clarify 	in 	a 	jending 	case 	the 	extent
to which 	peer 	review 	is 	w.:hin 	the 	antitrust 	sxemption 	for
the 	"business 	of 	insuranc : " under 	the !,lcCarran-Ferguson 	Act,
lj U.S.C. 	51011 - A 	*?.reno v. 	N e w York 	Siate	et 	sea.
Chiropractic 	rlssociation, 	;50 T.2d 	387 	( 2 d Cir. 	1981), 	cert.
,oranted, - U.S. 	-(SU:~. 	Ct. Nos. 	81-389, 5 1 - 3 9 0 	Nov. 	16,
1981). 	I t 	therefore 	does 	not 	s e e n warranted 	for 	the
Comnission 	to 	offer 	its 	own 	advice 	to 	IDA on 	this 	issue 	at
this 	time.

Peter 	M. 	Sfikas, Esq.
8 	-
Association 	should 	take n o 	steps 	to 	discipline 	either 	panelists
w h o 	do 	not 	follow IDA'S 	policies 	or member 	dentists 	who 	decline
to 	utilize 	the 	peer 	review process 	or 	accept 	its 	guidance.
T o 	prevent 	unlawful 	coercion 	of 	third-party 	payors, 	IDA
should m a k e 	i t 	clear 	that 	the Association 	is 	neither 	conferring
preferred 	status 	on 	insurers 	and 	other 	companies 	that 	participate
in 	the 	program 	and 	accept 	panel 	recomnendations, 	nor 	urging
member 	dentists 	to 	avoid 	or 	pressure 	companies 	that 	fail 	to
participate 	in 	the 	program 	and 	acquiesce 	in 	panel 	recomnen-
dat ions. 	Furthermore, 	anti trust 	concern 	would 	be 	triggered 	i f
the 	program 	w e r e 	used 	to 	determine whether 	a 	third-party 	payor's
f e e 	schedule 	or 	reimbursement 	program 	is 	sufficient 	or 	reasonable
-- 	the 	likelihood 	that 	the 	program would 	have 	anticompetitive
effects would 	be minimized 	if 	i t 	only 	determines 	the
appropriateness 	of 	a 	particular 	dental 	f e e charged 	in 	a
particular 	case. 	Likewise, 	the 	fee 	review program may 	not 	be
used 	to 	pressure 	third-party 	payors 	into 	accepting 	or
standardizing particular 	definitions 	of 	what 	is 	R 	"usual" 	or
"customary" 	fee. 	When 	a 	dispute 	involves 	one 	of 	those 	terms,
8 anti trust- risk 	would 	be 	reduced 	i f 	the 	panel 	takes 	the 	third-
party 	payor's 	definition 	as 	given.
Furthermore, dentist-patient 	disputes 	need 	to 	be 	handled
with 	special 	care when 	no 	third-party 	payor 	is 	involved. 	X
third-party 	payor 	independently 	establishes 	its 	own 	general
contractual 	criteria 	and 	standards 	for 	reimbursement 	and 	is 	often
able 	to make 	an 	independent 	appraisal 	of 	the 	overall 	fairness 	o f
the 	f e e peer 	review process 	and 	of 	i n d i v ~ d u a l peer 	review
decisions. 	.A 	patient 	bringing 	a 	claim 	to 	the 	?cogram 	w i l l 	have
no 	previously 	established 	criteria 	or 	payment 	formula and 	will
usually 	b e 	unable 	to make 	such 	appraisals. 	A n d , 	unlike 	the
third-party 	payors, 	the 	patient 	may 	not 	have 	the 	financial
ability 	or 	incentive 	to 	defend 	his 	or 	her 	?osition 	in 	court 	i f
dissatisfied 	with 	the 	peer 	review determination. 	Where 	n o
insiirance contract 	or 	prior 	fee 	agreement 	between 	dentist 	and
patient 	exists, 	IDA 	should 	be 	p ~ r t i c u l a r l y careful 	not 	to 	let 	the
peer 	review 	process 	Se 	used 	to 	se. 	'3r sanction 	?articular
"reasonable!' or 	'Icus iomar!~:' f e e 	leveis 	for 	generai 	use 	b y
members. 	Also. 	i : 	is most 	important 	that 	the 	patient 	b e m a d e
aware 	o f 	the 	voluntary 	and 	advisory 	nature 	oi 	the 	process 	and, 	i f
he 	or 	she 	chooses 	to 	participate, 	be 	given 	a 	fair 	hearing. 	IDA
might 	specifically advise 	patients 	that 	?eer 	review
determinations 	are 	based 	on 	the 	experience 	and 	judgment 	of 	the
individual 	panel 	members 	and 	d o 	not 	represent 	formal
8 adjudications, 	based 	on 	a 	formula, 	that 	the 	patient 	is 	Sound 	to
accept. 	IDA might 	also 	consider 	adding 	safeguards 	that 	will 	h e l ~
assure 	that 	dentist-patient 	disputes 	are 	resolved 	in 	an 	even-
handed 	manner. 	Though 	not 	required. 	having 	local 	consumer

M. 	Sfikas, Esq.
8 . organizations 	help 	select-rconsurner representatives" 	to 	be 	added
to 	panels 	hearing 	such 	disputes might 	be 	one 	such 	safeguard.
Alternatively, 	local 	government 	representatives 	or 	consumer
organizations 	might 	supply 	IDA or 	their 	district 	dental 	society
with 	a 	list 	of 	knowledgeable 	"consumer 	advisors" 	to 	assist 	a
7atient 	who 	chooses 	to 	participate 	in 	fee 	peer 	review.
Lastly, 	the Comnission maintains 	the 	right 	to 	recohsider 	the
questions 	involved 	or 	to 	rescind 	or 	revoke 	its 	opinion 	in
accordance with 	Section 	1.3(b) 	of 	the Rules 	of 	Practice 	in 	the
event 	that 	i m p l m e n t a t i o n 	of 	the 	peer 	review 	program 	results 	in
anticompetitive 	effects, 	should 	the 	purposes 	of 	the 	program 	n o
l o n g 	remain 	legitimate, 	or 	should 	the 	public 	interest 	otherwise
s o 	;equi re. 4
By 	direction 	of 	the Comnission.
I
Ca'rol 	hl. 	Thomas
Secretary
This .Advisory Opinion, 	like 	all 	those 	issued 	by 	the
C o m i s s i o n , 	is 	limited 	to 	the 	proposed 	conduct 	described 	in
the 	petition 	being 	considered. 	I t 	does 	not, 	of 	course,
constitute 	approval 	for 	the 	sgecific operations 	of 	any
particular 	peer 	review 	progrsm 	that 	may 	be 	or 	become 	the
subject 	o f 	litigation 	before 	:he 	C o m i s s i o n 	or 	any 	court.