The Federal Trade Commission today issued an administrative complaint against California Pacific Medical Group, Inc., doing business as Brown & Toland, a San Francisco, California physicians' organization, for allegedly fixing the prices and terms under which its doctors would contract with payors to provide services for Preferred Provider Organization (PPO) enrollees. In filing the complaint, the FTC is seeking to prohibit Brown & Toland from unlawfully negotiating PPO contracts with health plans on behalf of its member physicians and to nullify the allegedly anticompetitive existing contracts the group has already negotiated with health plans. Brown & Toland also has organized a network of physicians to contract with Health Maintenance Organizations (HMOs), but the FTC's complaint focuses solely on allegations of price-fixing in connection with PPO contracts.This is classic FTC thinking: Physicians chose a financial model that best enables them to reap the fruits of their labors, and the FTC's non-physician staff lawyers decide that's just not acceptable. There is no law that prohibits what the physicians are doing, only the irrational opinions of some piss-ant lawyers holed up at the FTC's headquarters in Washington.
"The FTC's complaint charges Brown & Toland with orchestrating naked price fixing among its physician members to the detriment of San Francisco consumers," said Joe Simons, Director of the FTC's Bureau of Competition. "While, under certain circumstances, collective price negotiation may be necessary to achieve actual clinical or financial integration among providers, which in turn can benefit consumers, in this case Brown & Toland did not achieve such integration. Simply put, Brown & Toland fixed prices without providing any offsetting consumer benefit, a classic violation of the antitrust laws and the Federal Trade Commission Act."
Brown & Toland is a for-profit multi-specialty independent physicians' association (IPA) with more than 1,500 members providing services in San Francisco. Historically, it has provided physician services to HMO members under capitated agreements with health plans, under which the plans pay a set rate each month for each enrollee for certain services provided by the group's doctors. In 2001, with a subset of its physician members, Brown & Toland formed a PPO network and began negotiating fee-for-service reimbursement rates on behalf of its PPO network members.
The positive news, if there is any, is that the FTC announced the filing of an administrative complaint, not a settlement. This likely means Brown & Toland declined to surrender immediately, and will for now fight the FTC's false and legally baseless accusations.