A Louisiana physician group has agreed to settle charges that it illegally fixed prices for healthcare services to stunt the growth of managed care in its market.
The Federal Trade Commission, in its complaint against Lake Charles-based M.D. Physicians of Southwest Louisiana, alleges the group was a shell organization designed to allow competing physicians to fix prices to managed-care companies in the area.
The FTC charged that area doctors formed M.D. Physicians in 1987 as a collective bargaining unit. The group would represent all its doctors, as many as 165 at one time, in negotiations with managed-care companies to set universally high prices for services.
With prices high, insurers would find it hard to offer discounts to their patients, the FTC claimed, thus depriving patients of the benefits of physician competition.
"The members of (M.D. Physicians) all refused to meet individually with, and listen to presentations by, representatives of some third-party payers," the FTC's complaint said. "(The group) facilitated the collective refusal of its members to deal directly with third-party payers when it repeatedly collected from, and disseminated to, its members information concerning the members' refusal to deal with third-party payers directly."
The FTC also said in its complaint that the group was not integrated in any economically significant way, making it hard to justify any kind of collective bargaining.
Under federal antitrust laws, parties that are economically integrated are no longer competitors but are a single economic unit incapable of conspiring with itself.
Several insurers-including Blue Cross and Blue Shield of Louisiana, the Louisiana State Employees Group Benefits Program, Aetna Insurance Co. and Healthcare Advantage-complained to the agency about the alleged activity.
The FTC began investigating the group in 1994. Sometime after that, the group ceased operation, but it remains incorporated, said Frank Massengale, the attorney representing M.D. Physicians in the FTC case. "We settled to avoid the expense of any litigation," Massengale said. "The group denies any (FTC) allegations."
The group did not admit any wrongdoing in the settlement.
The consent order settling the charges prohibits the group from engaging in collective negotiations for its members but does not impose any monetary penalties.
The group must mail a copy of the FTC's complaint and the consent order to each payer or provider that has expressed interest in contracting with M.D. Physicians since 1993.
The proposed consent order is open to public comment for 60 days before the FTC will make it final.