• Health reform
• EMRs
• Medicare
• Liability
• AMA House
• » More

• Contract Language
• Ethics Forum
• In the Courts
• Practice Management
• Technically Speaking
• » More

• Issue dates
• Regions
• Health plans
• Sections
• News briefs
• Columns
• Editorials
• Letters
• Series
• Writers
• Other years

• Search tips
• Email alert
• RSS
• Mobile
• Subscribe
• Institutions
• Staff directory
• Advertising
• Permissions
• Reprints
• News media
• Site guide
• Useful links
• About
• Premium
• Contact

• AMA Wire
• CPT
• DMPHP
• JAMA
• JAMA&Archives
• news@JAMA
• Virtual Mentor
• Physician jobs

FTC cracks down on price-fixing in physician contracts

Doctors from Maine to California are the targets of investigations by the Federal Trade Commission.

By Tanya Albert, amednews staff. Aug. 4, 2003.

• PRINT|
• E-MAIL|
• RESPOND|
• REPRINTS|
• SHARE
•  

Federal Trade Commission officials said they were going to take a closer look at how physicians negotiate contracts, and it appears they haven't liked what they have seen.

In less than two weeks in July, the FTC charged four medical groups with price-fixing and a fifth group with conspiring to fix prices.

"Health care competition in general is a very high priority," said Jeff Brennan, assistant director of the FTC's Bureau of Competition. "Physician conduct is an important part of that, but there are other areas we are looking at as well."

The FTC also has focused on competition among health plans and pharmaceuticals, but last month was highlighted by cases against doctors. Federal antitrust laws allow employed physicians to bargain collectively but do not allow independent physicians to negotiate contracts jointly.

The first FTC action came July 9, when the commission filed a complaint against the California Pacific Medical Group Inc., a physician organization in San Francisco that does business as Brown & Toland. The FTC said it is trying to stop the group from what the commission says is unlawful negotiation of PPO contracts on behalf of physician members. The FTC also wants to nullify contracts the group has already negotiated with health plans.

The commission alleges that Brown & Toland organized an arrangement in which its competing member physicians collectively agreed on price and other competitive terms that they required from health plans and other third-party payers before they would sign a contract. The FTC also claims that the group directed its doctors to end existing contracts and to charge a specified price in all PPO contracts.

"While under certain circumstances collective price negotiation may benefit consumers, in this case Brown & Toland did not achieve such integration," FTC Bureau of Competition Director Joe Simons said in a statement. "Simply put, Brown & Toland fixed prices without providing any offsetting consumer benefit, a classic violation of the antitrust laws and the Federal Trade Commission Act."

Brown & Toland, whose HMO business is not a part of the complaint, disagrees with the allegations. The company developed the guidelines as part of its PPO business model in 2001, and company executives say that the model provides patients with better quality care, provides significant administrative efficiencies and helps keep health care affordable.

"Brown & Toland developed a PPO model knowing that HMO and PPO patients would benefit from the portability and stability provided by the Brown & Toland physician network," the group said in a statement. "Brown & Toland believes that its model follows the FTC's guidelines and will continue to operate its PPO business while litigating the matter with the FTC."

Negotiations between the FTC and the group reached an impasse, and the matter is headed to court.

Settlements in Missouri, San Diego

In the San Diego and St. Louis areas, physician groups each reached settlement agreements with the FTC on charges that they fixed prices.

In the St. Louis case, the FTC accused the Washington University Physician Network, a nonprofit corporation that includes about 1,500 faculty and independent community physicians, of collectively negotiating contracts between members and third-party payers.

The FTC alleged that the group "coerced" health plans into increasing the amount they paid physicians who were part of the group. The commission also charged that the network facilitated agreements among member physicians to deal only with insurers on collectively determined terms and that the group either refused or threatened to refuse to negotiate with plans that wouldn't meet the terms.

The settlement, which is not an admission of guilt, includes a proposed consent order that would, among other things, prohibit the physician network from negotiating with payers on any doctor's behalf and from dealing, refusing to deal or threatening not to deal with third-party payers.

A spokeswoman for the network said the group would not comment on the proposed settlement, announced July 11, until a final decision, expected in August, is made.

Two anesthesiologist groups in San Diego County, Calif., also agreed to settle FTC charges. Their settlement agreements became final July 15. The FTC alleged that the Anesthesia Service Medical Group Inc. and Grossmont Anesthesia Services Medical Group Inc. discussed a strategy to secure stipends from a hospital for taking obstetric call and for providing services to uninsured emergency department patients. The settlement is not an admission of guilt.

The groups did not return phone calls for comment.

Physician-hospital network agreement

On July 18, the FTC reached a settlement in what it calls a first-of-a-kind case: Charges that an organization engaged in price-fixing and other anticompetitive conduct in the hospital services area.

The FTC accused the Maine Health Alliance, a nonprofit organization that represents more than 300 doctors in northern Maine, of negotiating contracts collectively, including price terms. The commission also alleged that the alliance refused to contract individually with third-party payers that didn't meet its collective terms.

"The Maine Health Alliance fixed prices not in just one health care sector, but two: hospital services and physician service," FTC's Simons said.

The proposed agreement, which is not an admission of wrongdoing, is similar to those reached in other cases. Among other things, it requires that the health alliance not negotiate with payers on behalf of its members.

"The health care industry is undergoing tremendous change and challenges, particularly for providers in sparsely populated rural areas like ours," Maine Health Alliance Executive Director William Diggins said in a statement. "This agreement helps to clarify what our members can do to improve their practices."

Back to top

 ADDITIONAL INFORMATION: