On June 4, 2009, Alta Bates Medical Group, Inc. (“Alta Bates”), a 600-physician independent practice association serving the Berkeley and Oakland, California, area, agreed to settle Federal Trade Commission charges that it violated the antitrust laws by fixing prices charged to health care insurers. The proposed consent order agreed to by the doctor group and the FTC prohibits Alta Bates from collectively negotiating fee-for-service reimbursements and engaging in related anticompetitive conduct.
The FTC’s complaint focuses on Alta Bates’s contracts with health plans to provide fee-for-service medical care. Under these arrangements, the payor compensates physicians for services pursuant to agreed-upon fee schedules. According to the complaint, since at least 2001, Alta Bates has led collective negotiations for fee-for-service contracts. Alta Bates proposed, rejected, and countered offers to insurers without consulting with its individual physician members regarding the prices each independently would accept and transmitted the insurers’ offers to its individual physician members only after the group approved the negotiated prices.
The complaint states that Alta Bates did not engage in any activity that would justify collective agreements on the prices its members would accept for their services from insurers under fee-for-service arrangements. For example, collective agreements would be legal if the individual physicians in Alta Bates clinically or financially integrated their practices to create efficiencies. This type of activity would be sufficient to justify collective negotiations and agreements. Because the doctors are not financially integrated, their collective action restrains prices and other forms of competition among physicians in the Berkeley and Oakland, California area and harmed consumers by increasing the prices for physician services.
The agreed upon settlement is designed to prevent the continuance and recurrence of the illegal conduct alleged in the complaint while allowing Alta Bates to engage in legitimate joint conduct. The proposed order, which would not affect Alta Bates’s activities in contracting with insurers on a capitated basis, otherwise would prohibit Alta Bates from entering into or facilitating any price-fixing or concerted refusals to deal.