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Source link: http://archive.mises.org/11598/refusal-to-price-fix-price-fixing/

Refusal to Price Fix = Price Fixing

February 3, 2010 by

The Federal Trade Commission announced another gunpoint “settlement” today against a physician group. What distinguishes this case is the FTC now expressly states that refusal to accept federal Medicare price controls is itself a form of illegal price fixing.

Roaring Fork Valley Physicians, I.P.A., an 85-physician group in Colorado, faced the FTC’s wrath because of its members’ “concerted refusals to deal” with HMOs and other insurers that are protected like endangered species by federal antitrust officials. The FTC’s complaint specifically cited the group’s policy of not agreeing to rates based on the federal price controls set for Medicare:

In order to collectively maintain and increase rates, Respondent’s members agreed to refuse and refused to enter into individual contracts with payers. The payers with whom Respondent’s members refused to deal, included, but were not limited to, United Healthcare, CIGNA, Government Employee Hospital Association Inc., Humana Inc., and Anthem Blue Cross and Blue Shield. When approached by payers asking them to sign individual contracts, members often referred the payers to Respondent for contracting. For example, one member told Respondent that the payer’s “contract agreements are filed in the local landfill. We will wait for them to go back to the IPA.”

[ . . . ]

By adopting the ban on Medicare-based rates, Respondent and its members agreed to refuse to deal and refused to deal with any payer using Medicare-based rates in a proposed contract. In a 2004 newsletter, Respondent told its members that it banned Medicare-based rates because any physician who has Medicare-based rates in a payer contract would face “declining reimbursements.”

So it’s now illegal to simply refuse to sign a contract, because the buyer’s “need” for a service outweighs the seller’s right to control the disposition of their own labor. Remember, it’s not illegal for a federally-recognized labor union to coerce its members to work (or strike) under certain conditions, but it is illegal for a purely voluntary group to act out of shared self-interest.

But the main lesson here is that the FTC considers Medicare-based rates to be “market” prices — and any price level above such rates is presumptively anti-competitive. Just imagine what the FTC will do to physicians if some form of Obamacare passes.


Hard Rain February 3, 2010 at 2:17 pm

“You’re gouging on your prices if
You charge more than the rest.
But it’s unfair competition
If you think you can charge less.

“A second point that we would make
To help avoid confusion:
Don’t try to charge the same amount:
That would be collusion!”

From “Tom Smith and his Incredible Bread Machine” by R.W. Grant

vikingvista February 3, 2010 at 6:31 pm

The Medicare disaster had one release valve–people could choose not to use it, even if they could not choose to not pay for it. Increasingly, providers are making that choice. Now we see the beginnings of the state closing that valve.

Don’t want to provide government care? Better get your self a good lawyer.

nemo February 4, 2010 at 8:47 am

Only option left, unfortunately, is to become a union.

CCS June 19, 2010 at 11:57 pm

The only option is to leave the country.

Iatros February 4, 2010 at 9:30 am

Well it took 25 years longer, but ’1984′ is now here. If this is not Big Brother using Doublespeak, I don’t know what is!

But wait, there’s more! If a physician cannot refuse to sign Medicare contracts, how long before he cannot refuse to accept Medicare patients? How long next before he will be assigned hours and workplace locations? How long next until the young physician will be assigned specialties, with subspecialty slots severely limited and tightly controlled.

But wait, there’s more! When Medicare/Medicaid finally becomes unsustainable, when medical care is universal but physicians are in short supply, the political pressures will be enormous to make physicians ‘wards of the state’. At that point (soon, perhaps 15 years into boomer retirement), we will become captive prisoners of the state!

Hoo boy, am I glad to be one of the boomers set to retire, and leave the house of medicine.

Brian March 9, 2010 at 1:09 pm

Not sure, but I believe that Mass already requires acceptance of Medicare fees as condition of licensure. So, perhaps it took 45 years but the slide into single payer Government controlled practice is inexorable and nearly complete.The one thing they cannot do is throw 100,000 MDs in jail. Perhaps unionization is a solution, but they would likely bust such a union as infringing on a necessary vital service a la PATCO. We really do need good legal advice and some gonads for the next decade. Failing that we will all end up as Federalized workers with little control over our lives or our practices.

Johnny on the Spot February 4, 2010 at 10:22 am

Collectively refusing to deal with certain customers or vendors is anti-competitive behavior. So the FTC, has a leg to stand on there.

However, this group of physicians should point to the fact that the test of the legality of what they are doing is: does it promote or suppress competition?
(Chicago board of trade vs US 246 U.S. 231)

I believe they are promoting competition in the medical market.

vineyarder February 4, 2010 at 10:36 am

The big problem with this analysis is that Roaring Fork Valley Physicians is NOT a physician group practice, it is an IPA (Independant Practice Association); i.e. a collection of competing physicians. Since they are competitors, not partners, it is illegal of them to jointly set minimum rates.

The problem is that this IPA failed to comply with the rules for a messenger-model IPA; they agreed as a group to set a minimum floor for commercial contracts. The fact that the minimum that they set was Medicare rates in simply coincidental; they could have just as easily (and just as illegally) picked a specific dollar amount. The problem is that these were competing physicians, and they therefore cannot collectively agree on minimum rates that they will accept; in order to comply with the messenger model IPA regulations, they must each independently set their own rates and the IPA must not facilitate sharing of fee information among members of the IPA.

There is nothing in the ruling that prevents any individual physician, or any physician group practice, from refusing to accept Medicare rates from any commercial insurer; it simply enforces the laws that prevent competitors from working together to set prices.

J. K. Oates February 4, 2010 at 3:47 pm

I believe the actions of the FTC violate the word and spirit of the XIII amendment to the Constitution. The FTC has become the Master of Medicine and allows it’s minions to dictate to a class of citizens what their labor is worth and what they may charge. It is not unreasonable to believe that if they get by with this methodology others will follow but wonder if the legal profession might be included.
It further seems to me that this becomes a means to deny full access to care by citizens of this country.

mwalter February 4, 2010 at 5:49 pm

The anti-trust point is that the member physicians agreed to the IPA, in writing, not to negotiate individually with Medicare. They can agree to accept contracts through their IPA, but they have to still leave the door open for Medicare to try and contract with them as individual business entities, even if they never actually agree to or sign any of those individual contracts. If they had left that door open, they wouldn’t be in violation.

gebanks February 4, 2010 at 6:10 pm

Medicare based rates doesn’t mean the rates are less than those of Medicare, it just means they are a fraction of Medicare. The fraction could be 2.0 and thus twice what Medicare pays. They are right, though, that if they base rates on what Medicare pays, if Medicare gets cut, then they all get to cut.

We don’t have Medicare based rates here, but the rates are based on the RVU, which is a relative value (of work) unit. Medicare and Medicaid pay the lowest per RVU of anyone, but the insurance companies each have a rate per RVU not a fraction of what Medicare pays.

Elizabeth Holden February 5, 2010 at 4:56 pm

“The problem is that this IPA failed to comply with the rules for a messenger-model IPA; they agreed as a group to set a minimum floor for commercial contracts.”

Actually, if you read the FTC’s statement more carefully, it is clear that this IPA refused to use the Medicare payment methodology, but didn’t set any floor on the actual dollars to be paid.

V. Birds February 6, 2010 at 8:19 pm

We have had a non insurance billing –cashonly- practice for 15 years. We are very busy with patients who chose to pay their own way. Occ. their insurance may reimburse them. We have no contracts with HMO, PPO,Medicare, MediCal or other such organizations. We negotiate patient patients payments with other providers.

We do not know when “Big Brother” of 1984 will attack us, but we labor on. By the way, our collection ratio is over 98% if our charges.

All docs should become independent of power forces including the AMA.

Chuck B February 8, 2010 at 7:07 pm

I just wonder what reimbursement rates would be if we got rid of ALL insurance…maybe 10-20% of what they are now. Don’t get me wrong…y’all have to make a living, but NO insurance are market rates!!!

OkieDoc February 11, 2010 at 12:53 pm

Chuck B “I just wonder what reimbursement rates would be if we got rid of ALL insurance…maybe 10-20% of what they are now. Don’t get me wrong…y’all have to make a living, but NO insurance are market rates!!!”

Are you crazy? I would bet that “reimbursment rates” would be much higher than 20%…plus, your expenses would plummet.

Anonymous February 14, 2010 at 3:07 pm

To post a comment about the FTC ruling directly to the FTC –> Surf to…

Here is the blurb from the FTC site…

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:


Dr. Hans Conser DC April 3, 2010 at 4:52 pm

The medical billing world gets stranger and stranger… I predict more providers will stop offering billing services and just collect directly from the patient.

Clark Smith June 12, 2011 at 12:05 pm

I may suggest humana medicare part d, it helps pay your Medicare Part D plan costs. If you have a low income, few tangible resources and are Medicare eligible.

Matt Spitsbergen August 30, 2011 at 5:03 pm

LIS is a Social Security program that helps pay your Medicare Part D costs including premium and co-pays. It costs nothing, and is income and asset based!

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