In the latest settlements from what healthcare antitrust lawyers said is the most aggressive antitrust enforcement effort in nearly 20 years, the Federal Trade Commission last week resolved price-fixing allegations with independent physician practice organizations and physician groups in Denver and the Dallas-Fort Worth area.
The FTC announced the two consent decrees Aug. 20, the most recent of five physician contracting settlements in the last five months. And sources said the FTC has at least another 10 cases in the pipeline.
"They're going after some major physician practice groups in major metropolitan areas," said former FTC official David Balto, a healthcare antitrust lawyer with the Washington office of White & Case. "The commission is going after situations that have a significant impact on commerce. They don't seem to be shying away from that challenge."
The largest independent practice association in the Dallas-Fort Worth area, the 1,300-member Genesis Physicians Group, and its management services organization, System Health Providers, allegedly restrained trade and hindered competition by negotiating fees collectively and refusing to deal with insurers.
In its six-page complaint, the FTC charged that SHP bargained with payers collectively and advised members of Genesis to refuse to negotiate with certain payers. It is legal to designate an agent who is allowed to relay information between payers and individual doctors or integrated groups, but the agent is prohibited from negotiating for the doctors or sharing individual fee information with other IPA members.
SHP President and Chief Executive Officer Ron Lutz said, "We view this as a positive outcome," and said the organization would transform itself into a clinically integrated model.
The FTC also announced the settlement of allegations that eight group practices representing about 80 obstetricians/gynecologists in the Denver area and their agent, R.T. Welter & Associates, agreed to fix fees and refused to negotiate with payers except on collectively agreed-upon terms.
The groups included Cohen and Womack, M.D.; Consultants in Obstetrics and Gynecology; Mid Town Obstetrics & Gynecology; Mile High OB/GYN Associates; the OB-GYN Associates Professional Corp.; Rocky Mountain OB-GYN; the Women's Health Group; and Westside Women's Care.
In its 11-page complaint, the FTC charged that the groups illegally advised doctors to terminate or threaten to terminate contracts with payers. Other than fixing prices, the groups did not engage in joint activity or integration that would have justified their collective contracting, the FTC said.
Without admitting guilt, the companies signed a three-year "cease and desist" consent decree requiring them to end anticompetitive practices and prohibiting them from negotiating on behalf of any physician with any payer. However, the agreement allows the formation of "qualified risk-sharing joint arrangements" that include clinical integration and don't require dissolution or the payment of fines. Under the settlement, managed-care companies allegedly forced to deal with the physicians can terminate and renegotiate those contracts.
The alleged conduct of the physician groups in both cases and the consent decrees resolving those allegations were nearly identical, said Richard Feinstein, a lawyer with the Washington office of Boies, Schiller & Flexner who formerly headed the healthcare section of the FTC's Bureau of Competition. With FTC Chairman Timothy Muris, who headed the bureau in the mid-1980s, and because of rising healthcare costs, the FTC is listening more closely to managed-care companies alleging that some large doctors' groups are illegally boycotting health plans that refuse to meet their fee demands, Feinstein said.
"I don't think there's any question that Tim Muris is interested in bringing these kinds of cases," Feinstein said. "He's always been interested in competition issues among professionals and in healthcare in particular. This is what's going on out in the market."
Feinstein said he's unaware of any pending investigations into anticompetitive behavior by hospitals, but he said there is an FTC effort to identify anticompetitive effects of consummated hospital mergers. Feinstein's successor as assistant director of the bureau of competition, Jeffrey Brennan, would not confirm the number of other physician contracting cases under investigation but said, "We are continuing to investigate other potential anticompetitive activities involving the healthcare industry."