• FTC Attacks PHO Contracting Arrangement as Illegal Price Fixing
  • March 25, 2005 | Author: Stephen T. Moore
  • Law Firm: Hinshaw & Culbertson LLP - Rockford Office
  • The Federal Trade Commission (FTC) has proposed a Consent Order under which a South Carolina Physician Hospital Organization (PHO) would be prohibited from engaging in collective negotiations and from setting prices charged to payers on behalf of its physicians. The physicians comprise about 70% of the independent practicing physicians in the market. The FTC complaint refutes the PHO's assertion that it operates as a "messenger model" in arranging prices for its members. The FTC claims the PHO negotiated price agreements with payers using a physician fee schedule developed by the PHO Executive Director and approved by the PHO's Board of Directors and physicians. The physicians were obligated to contract using the Board approved fee schedules under their membership agreements with the PHO.

    The Consent Order would be effective for 20 years and would, among other things, prohibit the PHO from entering into any agreement with any physicians to negotiate with payers on behalf of a physician. The Consent Order would also prohibit the PHO, for a period of three years, from serving as an agent for any physician in connection with any health plan contracting.

    Physician Hospital Organizations, Independent Physician Associations and similar entities should study this consent order and their own pricing practices, policies and procedures to assure compliance with antitrust laws.