The FTC's case against AllCare for price-fixing violations

AllCare

The FTC and Public Policy Considerations against Anti-Competitive Behavior

The objective of this work is to discuss the role of the FTC and the public policy considerations against anti-competitive behavior and explain why the conduct of the IPAMG was deemed as anti-competitive behavior by the Federal Trade Commission. Finally, this work will identify the penalty, discuss whether that penalty was fair, and state why it is held to be either fair or unfair.

AllCare is described as a "multi-specialty independent practice association consisting of multiple, independent medical practices" and is stated to be comprised of 500 physician members with 200 of those physicians devoted to primary care in the area of Modesto, California. AllCare is reported to contract with Preferred Provider Organizations (PPOs) to provide fee-for-service medical care. It was alleged in a complaint to the FTC that AllCare had "acted to restrain competition on fee-for-service contracts." (Federal Register / Vol. 74, No. 2 / Monday, January 5, 2009)

I. Role of the FTC and Public Policy Considerations

AllCare was accused to acting to "…restrain competition on fee-for-service contracts by, among other things, facilitating, entering into, and implementing agreements, express or implied, to fix the prices and other terms at which they would contract with payors to engage in collective negotiations over terms and conditions of dealing with payors; and to have AllCare members refrain from negotiating individually with payors or contracting on terms other than those approved by AllCare." (Federal Register / Vol. 74, No. 2 / Monday, January 5, 2009) The Complaint stated that AllCare had:

(1) Unreasonably restrained pricing and other forms of competition among physicians who are members of AllCare;

(2) increased prices for physician services;

(3) Depriving payors, including insurers and employers, and individual consumers, of the benefits of competition among physicians; and (4) Deprived consumers of the benefits of competition among payors. (Federal Register / Vol. 74, No. 2 / Monday, January 5, 2009)

It was held that the "combination, conspiracy, acts and practices" described in the complaint "constitute unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act, as amended 15 U.S.C. Section 45." (Federal Register / Vol. 74, No. 2 / Monday, January 5, 2009)

III. Penalty and Fairness of Penalty

The penalty in this specific case is inherently designed for prevention of the "continuance and recurrence of the unlawful conduct alleged in the Compliant while allowing AllCare to engage in Legitimate, joint conduct. The proposed Consent Order does not affect the activities of contracting of AllCare with the payors on a capitated basis. AllCare is prohibited as well from "…entering into or facilitating agreements between or among any health care providers and from dealing individually with payors." (Federal Register / Vol. 74, No. 2 / Monday, January 5, 2009)

AllCare is further prohibited from engaging in discussions concerning the terms of contract with a payor. AllCare is further required to send a copy of the Complaint to all its physician members, management and staff as well as any payors with whom AllCare communicates. AllCare is additionally required to terminate preexisting payor contracts, which are held by physicians who were AllCare participants since the first day of January 2005.

A copy of payor's request for termination must also been sent by AllCare to each physician who is a participant in each group. According to the FTC, the consent agreement in this case "…settles alleged violations of federal law prohibiting unfair or deceptive acts or practices or unfair methods of competition." (Federal Register / Vol. 74, No. 2 / Monday, January 5, 2009)

Summary and Conclusion

The decision in this case and the accompanying order contains provisions by which AllCare is required to abide. The penalty in this case is appropriate in relation to the violations committed by AllCare and are of the nature that fit the behavior of AllCare, which was the basis of the complaint of the FTC.