The cost of confusion: Trying to decipher FTC's rules on negotiation

More than two dozen physician organizations have settled antitrust cases with the commission in the past four years. Doctors say guidelines on joint arrangements are unclear.

By Amy Lynn Sorrel, AMNews staff. Nov. 6, 2006.

Family physician Elizabeth Gallup, MD, thought she had followed all the government rules when in 2002 she joined her Kansas City-area independent practice association's forces with those of another local IPA to negotiate jointly with health plans.

The physician organizations established a medical management committee, which reviewed doctors' practice habits and issued report cards. The IPAs thought this effort would show that they were integrated -- a Federal Trade Commission requirement.

But the FTC disagreed and in August issued an antitrust complaint accusing them of price-fixing. The physician organizations didn't have the finances to fight the challenge, and ultimately both disbanded.

"It's always a risk when physicians negotiate as a group," said Dr. Gallup, former president of one of the IPAs, New Century Health Quality Alliance Inc. "You think you've done everything right, and you haven't."

Dr. Gallup's case is one of about 28 actions against physician entities for anticompetitive conduct that the FTC has brought since 2002. All but one resulted in a settlement. That group has appealed the FTC's charges -- the first appeal in more than 20 years.

Many doctors argue that the government's guidelines are hazy on how to integrate without running afoul of antitrust laws. They say the FTC road map gives them little direction, while leaving them at risk for a lot of legal trouble.

The government standards "help shape some of the parameters" for joint negotiation, said Markus H. Meier, assistant director in the health care services and products division of the FTC Bureau of Competition. "But I'll admit it's a high standard, because allowing people to jointly set prices is not pro-competitive to begin with."