FTC continues crackdown on physician anti-trust
Last month’s anti-trust settlement between a Nevada physicians’ group and the Federal Trade Commission (FTC) underscores the need for physicians to better understand how they are — and aren’t — allowed to communicate with one another under federal law, experts say. (For more information on the Nevada case, see Physician’s Compliance Hotline, April 12, 1999, page 1.)
"The federal government doesn’t like doctors grouping together in a shell in order to jack up health care costs," says Reed Tinsley, CPA, an accountant with Horne CPA Group in Houston. "If physicians get angry and try to deal with managed care as a group, the government will preclude them from collectively discussing contract issues. That means you have to disseminate information to each physician individually."
Tinsley says there are many cases — settled and pending — in which an independent practice association-appointed "messenger" tells payers that failure to adhere to his physicians’ terms will result in all physicians terminating their agreement with the payer. "That means they could damage the payer significantly," says Tinsley. "Through market power and size, the IPA can get what it wants."
While that may seem to be the purpose of banding together in an IPA, the government doesn’t like it, Tinsley says. The upshot is that physicians in messenger-model IPAs can’t discuss pricing jointly. They can’t collude to terminate or damage a provider network. They can’t have a meeting and vote to terminate a contract, and they can’t correspond together or post messages that all members can read on an electronic bulletin board that espouse ideas like, "We won’t accept this contract unless we get X amount." Each person has to make a decision individually, he adds.
In looking at messenger-model IPAs — and Tinsley says the FTC will look at virtually all such agreements — the commission will determine whether the messenger facilitates collective decision making by network providers, rather than independent unilateral decisions. Specifically, it will look at whether the agent:
coordinates the providers’ responses to a particular proposal;disseminates to network providers the views or intentions of other network providers as to the proposal;
expresses an opinion on the terms offered;
collectively negotiates for the providers;
decides whether to convey an offer based on the agent’s judgment about the attractiveness of the prices or price-related terms.
If the agent engages in such activities, the arrangement may amount to an illegal price-fixing agreement, like the one alleged in Nevada.
Tinsley, says all the anti-trust activity and scrutiny by the FTC shouldn’t discourage physicians from forming such groups. Along with the cost benefits that can accrue to members, he says, payers prefer working with groups rather than individuals. And there shouldn’t be any reason to fear the FTC looking at your IPA as long as there are firewalls created to separate each participating practice, and each participating practice makes contracting decisions on its own.
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