Physicians groups settle FTC's price-fixing charges

January 16, 2009

The Federal Trade Commission settled its charges against two group practices which carried out agreements among their members that amounted to unlawful price fixing.

This material originally appeared in the January 9, 2009, issue of Health Lawyers Weekly, a publication of the American Health Lawyers Association (www.healthlawyers.org).

The Federal Trade Commission announced December 24 proposed consent orders with two separate physicians groups settling charges they each carried out agreements among their members that amounted to unlawful price fixing. 

The proposed consent orders bar each group from engaging in future anticompetitive conduct, the release said. 

The first complaint involved Independent Practice Associates Medical Group Inc., doing business as AllCare IPA, which has approximately 500 physicians in the Modesto, California, area.

According to the FTC, between 2005 and 2006, AllCare acted to restrain competition on fee-for-service contracts by facilitating, entering into, and implementing agreements to fix the prices and other contract terms with preferred provider organization payers; to engage in collective negotiations over the terms and conditions of dealing with such payers; and to have members refrain from negotiating with such payers on terms other than those approved by the group. 

The second complaint involved Boulder Valley Independent Practice Association (BVIPA), which has roughly 365 physicians in the Boulder County, Colorado, area.  

According to the Commission's complaint, between 2001 and 2006, BVIPA, negotiated and signed agreements with approximately 17 payers and conducted periodic renegotiations of its contracts with large payers to increase rates.  

The FTC alleged BVIPA threatened payers facing rate increases with contract termination if they refused to negotiate with the group or to otherwise respond to BVIPA's demands and actively discouraged members from contracting directly with payers. 

According to the FTC's complaints, AllCare's and BVIPA's separate conduct constituted illegal price-fixing, and neither group engaged in any activity that might justify collective agreements on the prices its members would accept for their services.  

The proposed consent orders prohibit AllCare and BVIPA from entering into or facilitating agreements between or among physicians: (1) to negotiate on behalf of any physician with any payer; (2) to refuse to deal, or threaten to refuse to deal, with any payer; (3) to designate the terms, conditions, or requirements upon which any physician deals, or is willing to deal, with any payer, including, but not limited to price terms; and (4) not to deal individually with any payer, or not to deal with any payer through any arrangement other than one involving AllCare or BVIPA, respectively.