Colorado Physicians Group Agrees to Stop Alleged Price-Fixing Tactics

A Colorado physicians’ group has settled Federal Trade Commission charges of price-fixing by agreeing to halt its use of allegedly anticompetitive negotiating tactics against health insurers.
The FTC charged Roaring Fork Valley Physicians I.P.A., Inc., which represents about 80 percent of the doctors in Garfield County, Colorado, with violating the FTC Act by orchestrating agreements among its members to set higher prices for medical services and to refuse to deal with insurers that did not meet its demands for higher rates.

The FTC charged that Roaring Fork entered into these anticompetitive agreements between 2003 and 2006. According to the agency, the group’s doctors used the agreements to demand that contracts with insurers include a cost of living adjustment that automatically raised reimbursement rates every year. The group’s doctors also used the agreements to ban a cost-lowering provision commonly used by insurers that links reimbursement rates to Medicare rates. The group also discouraged its members from entering into individual contracts directly with insurers, the FTC charged, in order to enhance the bargaining power of the IPA. At the same time, Roaring Fork would accept contracts only if at least 80 percent of its primary care physicians and 50 percent of its specialty doctors accepted the proposed contracts.

According to the agency, the agreements raised the cost of physician services in Garfield County, without making the doctors’ practices more efficient in any way or improving the quality of care that patients received.

The FTC settlement bars Roaring Fork doctors group from engaging in collective price negotiations and collectively refusing to deal with insurers. In addition, the group must:

• Terminate any contracts with insurers that were reached using price-fixing tactics.

• Notify the FTC before acting as an agent communicating contract offers and counter-offers between doctors and insurers.

• Notify the FTC before participating in any collaborative arrangement with doctors and allow the agency to review and approve the details before implementing any such arrangement.

The Commission vote to issue the administrative complaint and to place the consent order on the public record for comment and publish a copy in the Federal Register was 4-0. The Commission is accepting comments on the order for 30 days, until March 2, after which it will decide whether to make it final. Comments should be sent to: FTC Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC, 20580. Comments also can be submitted electronically at: https://public.commentworks.com/ftc/roaringforkconsent.

NOTE: The Commission issues a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of a complaint is not a finding or ruling that the respondent has violated the law. A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.

(FTC File No. 061-0172)
(RoaringFork)