The Federal Trade Commission has resolved physician price-fixing allegations with a New Mexico independent practice association, the 23rd time it has settled similar civil charges with IPAs and physician-hospital associations in the past four years.
The FTC announced yesterday it signed a consent decree with the San Juan IPA, a 120-physician organization that comprises about 80% of the doctors in the Farmington, N.M., market. In a six-page complaint, the FTC alleged that the IPA set prices it would accept for its member physicians, who were otherwise competing doctors, and also refused to deal with health plans except on those collectively resolved terms. The price-fixing agreements illegally restrained trade, hindered competition in northwestern New Mexico and raised prices of physician services, according to the FTC.
The FTC said the IPA at first acted through a two-year joint venture health plan partnership with the only hospital in Farmington, 151-bed San Juan Regional Medical Center, but that ended in 2001. Catherine Zaharko, vice president of marketing for San Juan Regional, said the hospital had no comment on the settlement. While Zaharko said the hospital received investigative subpoenas from the FTC relating to the case, she said it was not a defendant or target of the investigation.
The FTC said the San Juan IPA, which was founded in 1986, did not operate as a legal "messenger model" in conveying contract information to its members and "is not reasonably related to any efficiency-enhancing integration," such as financial risk-sharing or clinical integration. The IPA is prohibited from negotiating contract terms on behalf of physicians and may not refuse to deal with payers.
The consent decree allows joint contracting if IPAs undertake clinical or financial integration. The consent decree expires in 20 years. San Juan IPA Chief Executive Officer Dawn Brooks said the organization settled to "finally put this issue to rest. We don't agree with the allegations made in the settlement," Brooks said, noting that the IPA paid no penalties or fines. She said the issues at stake were minor but costly to defend in court, and said the IPA did use the messenger model and acted legally.