A rural Colorado physicians' group last week became the first to be sued by the Federal Trade Commission under more relaxed antitrust guidelines released last year.
The FTC accused Mesa County Physicians IPA of engaging in anti-competitive tactics, which included price fixing for some third-party payers and refusing to deal with other payers.
The 192-doctor independent practice association includes at least 85% of the doctors in private practice and at least 90% of the primary-care physicians in Mesa County. Headquartered in Grand Junction, the IPA is in a remote part of western Colorado near the Utah border and serves an area within a 200-mile radius.
The IPA has denied it violated antitrust laws. "We really will want to fight that," said Richard Arnold, an attorney for the IPA.
The investigation into the IPA began last year. The group has submitted more than 11,000 pages of documents to the FTC, said Nancy McCarroll, the IPA's executive director. So far, it has spent more than $100,000 on legal bills, she said.
According to the complaint, the IPA used its newsletters and other documents to encourage its physicians not to deal with new health plans or to work with them only under terms approved by the IPA.
The IPA has a multiyear contract with Grand Junction-based Rocky Mountain HMO, whose enrollees make up at least 50% of total patient volume of the IPA's members, according to the complaint. The FTC said the alliance between the IPA and Rocky Mountain HMO created a "substantial obstacle" for other payers to work with Mesa County doctors.
Three IPA doctors serve on the HMO's 11-member governing board, said Deborah Dawes, a spokeswoman for the HMO, which has about 98,000 enrollees and works with almost 3,400 doctors throughout the state. She said the contract between the HMO and the IPA hasn't hindered other payers.
Thomas McMahon, a Denver antitrust attorney for the IPA, said Mesa County physicians and the HMO have a long history together. The local medical community was instrumental in starting the HMO more than 20 years ago.
According to the complaint against the IPA, its board of directors approved guidelines and a fee schedule to be used when reviewing offers from prospective payers. The FTC said that fee schedule resulted in "significantly higher prices" and excluded a wide range of third-party payers from doing business in Mesa County.
But Arnold said the IPA has contracts with at least 10 other groups, including the Colorado Child Health Plan, which provides care to medically indigent children. The IPA also works with other insurance companies and employers.
Among the things the FTC wants is for the IPA to reduce its share of primary-care physicians. A specific number for the reduction isn't included in the complaint. McMahon said the FTC wants that number to be 30%. He said there is a philosophical difference between the IPA and the FTC about the appropriate number of primary-care doctors needed.
McMahon said the IPA is willing to settle with the FTC on other issues, but it doesn't want to gut the ranks of its primary-care doctors, which would affect the efficiencies of the organization.
But in its complaint, the FTC said the IPA's doctors hadn't integrated their practices to create the efficiencies to justify their actions.
In August 1996 the FTC and Justice Department jointly issued their new antitrust guidelines on physician networks (Sept. 2, 1996, p. 4). The new terms came in response to complaints from organized medicine that antitrust policies hindered the development of physician networks.
With David Burda