The FTC alleged that both groups violated antitrust laws by illegally negotiating with health plans on behalf of members, who were otherwise competing physicians. The agency alleged that the two groups, AllCare IPA, a 500-physician independent practice association based in Modesto, Calif., and Boulder Valley Independent Practice Association, a 365-physician IPA serving Boulder County, Colo., separately set fees in violation of Section 5 of the FTC Act, which prohibits unfair methods of competition.
The IPAs also allegedly refused to deal with payers in fee for service contracts unless their doctor members received higher fees. AllCare allegedly restrained competition between 2005 and 2006 by refusing to allow payers to negotiate individually with physician members. Between 2001 and 2006 Boulder Valley IPA allegedly threatened health plans with termination if they refused the IPAs demands. The FTC said neither group justified its conduct either by clinical integration or financial risk-sharing.
In both cases, the FTC said the IPAs’ actions led to higher prices for physician services in those markets and reduced competition. The IPAs signed 20-year consent decrees prohibiting both IPAs from jointly contracting on behalf of physicians with payers or refusing to deal with payers. They are also forbidden to exchange contract information among physicians.
In a news release, Boulder Valley IPA said the “order is not going to have any impact on the ability of IPA physicians to treat patients in Boulder County” and said accepting the consent decree does not constitute an admission that the allegations are true … In fact, they are not,” the IPA explained, saying it settled to avoid litigation.
AllCare attorney Richard Feinstein, a former FTC official now with Boies, Schiller & Flexner, said AllCare settled to avoid the high cost of litigation.
“Ninety-nine point nine percent of their activity is capitated business,” Mr. Feinstein said, noting that the FTC was investigating fee for service, a small part of AllCare operations. “When the FTC expressed interest, it made far more sense to discontinue that part of their operation than to devote a lot of time and resources to litigating the issue.”
David Wales, acting director of the FTC’s Bureau of Competition, said consumers pay higher prices or forego treatments when providers fix healthcare prices.
Mr. Wales said the FTC actions “should send a strong message that we will not let this conduct stand.”
Since 2001 the FTC has settled price-fixing allegations with more than 30 IPAs.
Read the press release about the FTC price-fixing settlement.
Read the statement from Boulder Valley Individual Practice Association (pdf).
