Look for signs of price-fixing potholes

Contract Language. By Steven M. Harris, AMNews contributor. Jan. 5, 2004.

CONTRACT LANGUAGE

A column examining the ins and outs of contract issues

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The start of a new year often triggers a review of existing payer contracts and causes physicians to prepare and strategize for pending contract negotiations. As you negotiate your contracts with payers, you should be aware of a recent consent agreement that the Federal Trade Commission entered into with a Houston physician practice group accused of price-fixing.

The FTC charged the Texas-based independent physician practice group with violating federal antitrust laws by fixing prices during contract negotiations -- that the physician group regularly polled its members asking for the minimum fees they would accept and refused to consider any payer offer that did not meet the minimum fee requirement. In some cases, payers allegedly revised their proposed fee schedules, resulting in higher fees than those that would have been offered without negotiation.

The FTC's complaint also alleged that the group told payers that did not meet the minimum requirements to resubmit their proposals with the higher fees, and discouraged its members from directly contracting with payers. The agency further alleged that the group represented itself as a "messenger model" IPA and misused the messenger model by refusing to submit payer offers that did not meet the group's minimum fees to its members to permit them to decide unilaterally to accept or reject the offers.

As a result, the FTC charged that the group hindered competition by unreasonably restraining price and other forms of competition, increasing prices for physician services, and depriving health plans, employers and individual consumers of the benefit of competition among physicians.