FTC Announces Antitrust Settlement with Doc Groups

January 4, 2009

In yet another example of how IPAs can get in to trouble, two physician groups separately have settled charges that they violated federal antitrust law by engaging in price-fixing conspiracies to extract higher payments from certain health insurers, the Federal Trade Commission announced.

Under the proposed settlements, which are subject to final approval from the FTC, neither group admits to any wrongdoing. But, they each agreed not to engage in joint negotiating tactics on behalf of their physician members. The independent practice associations are the 500-physician AllCare IPA based in Modesto, Calif., and the 365-physician Boulder (Colo.) Valley Individual Practice Association.

According to civil antitrust complaints filed simultaneously with the proposed settlements, each group allegedly orchestrated a price-fixing conspiracy among its respective physician members by jointly negotiating service contracts with certain insurers. In some cases, according to the FTC, the groups threatened to terminate their physicians’ contract with an insurer unless the insurer met the groups’ price demands.

The FTC said the groups’ actions restrained trade and artificially raised prices for the physicians’ services. The proposed agreements order the groups to cease and desist for a period of 20 years from directly negotiating prices for physician services with payers or indirectly assisting their physicians to jointly do the same.

Richard Feinstein, AllCare’s antitrust attorney, said the FTC’s allegations were aimed at a small number of preferred provider organization contracts entered into by the group. He said the group decided that it made sense to settle the case without admitting any wrongdoing and put the matter behind it. Feinstein said the settlement restrictions would have no financial effect on the group moving forward.

In a statement issued by Boulder Valley, the group denied the FTC’s charges but said, “Because it cannot afford to fight the federal government, the Boulder Valley IPA has decided to settle these charges by agreeing to the consent order.” The public comment period on the proposed settlements ends Jan. 22, 2009, after which the FTC will make them final.

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