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, AMNews staff. Aug. 4, 2003.

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.