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by Richard D. Weber, J.D.
MDA Legal Counsel
Published in the September 1996 issue of the Journal

Question: Some years ago, I signed a participation agreement with an insurance company. The insurance company agreed to reimburse participation dentists on a certain basis and the participation dentists agreed to accept the fee as payment in full. The company has now unilaterally changed the reimbursement method which will result in future fee reductions to me. How can one party to a contract change it without the consent of the other party? Isn't this a breach of contract? If not, what can I do?

Answer: Whether one party to a contract can unilaterally change it depends upon the terms of the contract. Generally, health or dental insurance companies retain the option to modify or amend the terms of participation contracts with health professionals. This right typically extends to reimbursement mechanisms which can result in decreases on reimbursement. Whether there is a breach of contract depends upon whether the contract authorizes such unilateral changes. In making this determination, the entire participation agreement must be examined. This includes more than the simple one-page form that is signed. The one-page form typically incorporates other documents which may be much more extensive and provide for the unilateral right of the insurance company to make changes.

Whether a dentist participates in an insurance program is voluntary on the part of the dentist. All participation agreements authorize dentists to individually terminate the agreement by providing notice a specified number of days prior to the termination date. Such termination or departicipation from the insurance program is the primary option available to any dentist who is dissatisfied with the insurance program or participation agreement. This decision must be made by each individual dentist or dental practice such as a professional corporation, partnership or limited liability company.

The agreement between two or more independent dentists or dental practices to either not participate in an insurance or managed care program or to terminate participation could be deemed to be joint action in violation of the antitrust laws. This agreement would be subject to the per se rule, as opposed to the rule of reason. Under the per se rule, the court would presume that an unreasonable restraint of trade occurred and the plaintiff would only have to prove the existence of the agreement, not that the agreement restrained competition. It does not matter that the dentists either did not understand or know about the antitrust laws or did not intend to violate the law. The understanding does not need to be a written or formal agreement. It can be a tacit understanding. Informal conversations with other dentists about an insurance participation agreement which results in departicipation by the dentists could be the basis for an illegal agreement under the antitrust laws. for a more detailed analysis of the antitrust laws applicable to managed care contracting, please refer to an article published by MDA legal counsel in the February 1995 edition of the Journal.

Question: What can the Michigan Dental Association do to assist in opposing such unilateral actions by insurance companies?

Answer: Any professional organization representing independent practitioners is constrained by the antitrust laws just as the members themselves are. Therefore, MDA is precluded from entering into or attempting to enter into any agreement or understanding, either express or implied, with any member to attempt to affect insurance reimbursement or termination of participation agreements. MDA is also precluded from entering into or attempting to enter into any agreement or understanding, either on its own behalf or as a representative of its members, with any third-party payor concerning reimbursement issues or the decision of any of its members to accept or reject a participation agreement. The antitrust laws further preclude MDA from making any express or implied threats or acts for the purpose of inducing a third-party payor to accept a position taken by MDA or any of its members concerning reimbursement or the terms and conditions of any participation agreement. Finally, MDA must avoid advocating, suggesting, urging, advising, inducing or recommending that MDA members departicipate with any insurer or managed care entity. These antitrust restrictions are not only applicable to MDA, but any other professional organization, association or even a union representing independent practicing dentists or other professionals.

Notwithstanding these antitrust barriers imposed upon MDA or other professional organizations, MDA still retains its First Amendment right to provide information or express views, on its own behalf or on behalf of its members, to third-party payors concerning any issue, including reimbursement. MDA also has the right and duty to inform its members on issues affecting the practice of dentistry, including changes in insurance participation agreements, so that members may make their own individual informed decisions.

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