Mises Wire

A
A
Home | Blog | Refusal to Price Fix = Price Fixing

Refusal to Price Fix = Price Fixing

0 Views
02/03/2010

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.

Follow Mises Institute

Add Comment