Texas surgeons settle price-fixing case

The settlement with the Federal Trade Commission prohibits an independent practice association and its six competing general surgery practices from collectively refusing to deal with any health plans or exchanging information about fees.

By Sarah A. Klein, amednews staff. May 8, 2000.

An independent practice association of 26 general surgeons in the Austin, Texas, area and their six competing general surgery practices agreed to settle charges that they conspired to fix prices for services they provided to two health plans.

The settlement with the Federal Trade Commission, announced last month, prohibits the IPA and the surgery practices from collectively refusing to deal with any health plans or exchanging information about fees.

The settlement is careful to note, however, that it addresses conduct that occurred before the passage of the 1999 Texas statute permitting joint negotiations between health plans and competing physicians that occur under the supervision of the state attorney general and meet conditions set forth in the statute.

"Because the statute places various limitations on the collective negotiation of fees, it is unclear whether conduct of the type described in the complaint would meet the conditions for approval," FTC officials noted.

The FTC's complaint specifically alleged that the group, Texas Surgeons IPA, improperly used a messenger to force two local health plans to raise their rates.

Federal antitrust guidelines allow independent physicians to designate a representative messenger to communicate with payers about fees and contract terms, provided that the messenger conveys only objective information about proposed terms and offers. The messenger cannot represent the competing physicians collectively.

According to the complaint, in late 1997 the group sent Blue Cross and Blue Shield of Texas identically worded termination notices for each general surgeon in Texas Surgeons IPA, along with a cover letter stating that the termination notices were due to Blue Cross' unacceptable rate reductions. Soon after, Blue Cross negotiated a new contract, offering the physicians nearly 30% more than their April 1997 rates.

The complaint also charged that the IPA used a similar approach to prevent UnitedHealthcare of Texas from implementing a fee reduction and forced the company to sign a waiver of its right to bring a private antitrust action against the group.

According to the FTC, the IPA's actions cost plans, patients and employers more than $1 million in 1998 and 1999.

A spokesman for the IPA said the physicians felt they did nothing wrong and settled with the government to avoid the cost of litigation.