The Federal Trade Commission has settled an antitrust case against a group of Texas surgeons accused of fixing prices that the government said cost insurers and patients more than $1 million.
In the proposed consent agreement, Texas Surgeons P.A. doesn't admit any wrongdoing. The IPA was not fined and agreed to several conditions, including refraining from any collective bargaining unless permitted by law. The IPA has about 25 physicians and includes most of the general surgeons in the Austin area. Texas Surgeons comprises six competing general surgery practice groups.
Neither the IPA president nor his attorney returned phone calls seeking comment.
The complaint and subsequent consent agreement aren't surprising, says Kevin Grady, a healthcare antitrust attorney with Alston & Bird in Atlanta. "(The government has) prosecuted these activities consistently. They have taken the view that competing physicians can't agree on prices."
The alleged activity occurred before the 1999 Texas law allowing physicians to collectively negotiate with health plans. Congress and 17 state legislatures are considering bills that would exempt physicians from antitrust regulations and allow collective negotiations with health plans (see story on page 93).
The FTC's complaint charged that the IPA orchestrated agreements among its physician members to force health plans to raise surgical reimbursement rates.
The government says those negotiations cost consumers and health plans more than $1 million in higher premiums and healthcare costs during 1998 and 1999.
Blue Cross Blue Shield of Texas in April 1997 reduced reimbursement to specialists, including general surgeons. The IPA then began collectively negotiating higher rates. The government complaint alleged that Blue Cross unsuccessfully tried to negotiate individually with the six practice groups.
The six groups in turn sent Blue Cross identically worded termination notices citing "unacceptable" rate reductions. After Blue Cross had a difficult time getting services for one of its enrollees, it decided to negotiate with the IPA. As a result, reimbursement increased by 30%.
The complaint also alleged that in November 1997, the IPA terminated contracts with UnitedHealthcare of Texas because of proposed fee reductions for 1998. At the same time, the IPA required United to sign a waiver of rights to bring antitrust action against the group, the complaint alleged.
Under the proposed settlement--which will be published in the Federal Register and is subject to a comment period--the IPA is prohibited from discussing or facilitating discussions among Austin physicians about reimbursement terms or other dealings with health plans. The settlement also would prohibit the IPA from negotiating on behalf of physicians with any health plan.
While the Justice Department has sought criminal charges in some cases against physicians, the FTC generally has pursued only civil penalties, Grady says. "The reason for it is somewhat political," he says. "It still may be a double standard . . . (However) the medical community needs to understand what goes on in terms of prices or dividing up the market can potentially be criminal.
"The doctors should be thanking their lucky stars that they got a pass, that the government is not trying to enforce anything criminally."