New Mexico Physicians' Group Agrees to Settle FTC Price-Fixing Charges

A Roswell, New Mexico-based physicians' association and two of its employees have agreed to settle Federal Trade Commission charges that they orchestrated agreements among Southeastern New Mexico Physicians IPA (SENM) members to fix prices and to refuse to deal with payors except on collectively agreed-upon terms, and thereby increased the price of health care in the area. The proposed consent order bars the association and its employees from engaging in similar action in the future.

SENM is a nonprofit independent practice association (IPA) with 68 physician members. Its members represent 73 percent of all physicians independently practicing in and around Roswell. The FTC's complaint states that SENM members refuse to deal individually with payors - instead, two SENM employees, Barbara Gomez and Lonnie Ray, negotiate price and other contract terms with health plans that wish to contract with SENM physician members.

According to the FTC's complaint, contracts that Gomez and Ray negotiate with health plans are presented to SENM's Managed Care Contract Committee and Board of Directors for approval. If the contract is approved, the general membership votes on whether or not SENM should accept it. The FTC's complaint states that the respondents have orchestrated collective agreements among physician members on fees and other terms and have refused to deal with health plans that resisted their terms.

The FTC charges that SENM's anticompetitive conduct has raised the cost of health care in the Roswell area and violated the FTC Act. The proposed consent order prohibits the respondents from entering into any agreement between physicians: (1) to negotiate with payors on any physician's behalf; (2) to deal or not deal with payors; (3) regarding the terms upon which any physician deals with any payor; or (4) not to deal individually with any payor, or to deal with any payor only through an arrangement in which the respondents are involved. The proposed order further bars Gomez and Ray from negotiating with any payor on behalf of SENM or any SENM member, and from advising any SENM member to accept or reject any term of dealing with any payor, for a period of three years. The order also requires the respondents to notify the Commission for three years before entering into any arrangement to act as a messenger or agent on behalf of any physicians with payors regarding contracts. Finally, the proposed order requires SENM to distribute the complaint and order to all physicians who have participated in SENM and all payors that negotiated, or indicated an interest in contracting, with SENM.

The Commission vote to accept the proposed consent agreement was 5-0. The FTC will publish an announcement regarding the agreement in the Federal Register shortly. The agreement will be subject to public comment for 30 days, until July 6, 2004, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, Room H-159, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.

(FTC File No. 031-0134)