Commission Staff Files Comments with Puerto Ricos Treasury and Financial Affairs Commission on Health Care Collective Bargaining Bill

For Your Information

Commission approval of staff comments: The FTC’s Office of Policy Planning, Bureau of Competition, and Bureau of Economics have submitted comments to Antonio Silva Delgado of the Treasury and Financial Affairs Commission of the Puerto Rico House of Representatives regarding Senate Bill (S.B.) 2190, which would permit collective bargaining on fees and other matters for diverse individuals and corporate health care providers in Puerto Rico. Delgado, president of the House Commission, has asked the staff to provide its opinion on the implications of the bill, as it would authorize “collectively negotiated fees by health care providers.”

S.B. 2190 seeks to amend the Puerto Rican Insurance Code to authorize collective bargaining on the part of diverse health care providers or their representatives regarding fees, reimbursement methods, and other matters. Under the bill, “providers” are defined as individuals and corporate providers of health care services, including “all doctors, hospitals, primary care facilities, diagnostic and treatment centers, dentists, laboratories, pharmacies, emergency medical services, pre-hospital services, or any other person authorized in Puerto Rico to provide health care services, whether to groups or individuals, which under contract with a health services organization provide health care services to subscribers or beneficiaries of a health care plan.”

As explained in the comments, the FTC staff is concerned that the bill, if enacted, is likely to foster certain anticompetitive conduct that is inconsistent with federal antitrust law and policy, and that such conduct would be detrimental to Puerto Rican health care consumers. Specifically, the bill would permit competing providers to agree on the prices they would accept for their services, which constitutes per se illegal price fixing – such collusion risks raising the prices charged for services – but does not provide any incentive for improved quality of care. The FTC has, for those reasons, brought enforcement actions against private collusion similar to that contemplated in the bill. Accordingly, the staff suggests that the Puerto Rican legislature not adopt a collective bargaining scheme such as that in S.B. 2190.

The Commission vote approving issuance of the staff comments was 5-0. They were transmitted to Puerto Rico’s Treasury and Financial Affairs Commission on January 31, 2008. Copies of the comments can be found on the FTC’s Web site and as a link to this press release. (FTC File No. V080003; the staff contact is Daniel J. Gilman, Office of Policy Planning, 202-326-3136.)

Copies of the documents mentioned in this release are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

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