In a proposed settlement with the Federal Trade Commission, the Wisconsin Chiropractic Association and its executive director have agreed to refrain from activities that allegedly encouraged a conspiracy among WCA members to increase prices for chiropractic services and to boycott third-party payers for higher reimbursement rates.
The proposed settlement, approved by the FTC and made available for public comment, states that the WCA and its executive director do not admit to any violations of antitrust law. After the public comment period, the FTC will decide whether to make the agreement final. In almost all cases of this type, there usually is very little public comment, and thus the FTC accepts the terms of the settlement.
The agency, however, could withdraw its acceptance of the agreement, in which case it would issue a complaint against the WCA and its executive director. Once the agreement is finalized, the FTC may publicly issue its complaint as well as a cease-and-desist order in the case.
The FTC’s proposed complaint alleges that the WCA and its director, Russell A. Leonard, restrained competition by encouraging WCA members to fix or increase fees for chiropractic services, and to boycott third-party payers for higher reimbursements.
In its proposed complaint, the FTC charged that the WCA and Mr. Leonard conducted seminars on setting fees under new chiropractic manipulative treatment, or CMT, codes. The agency also alleged that WCA and Mr. Leonard urged chiropractors not to make any decisions on their fees before attending one of the seminars.
According to the proposed complaint, before Jan. 1, 1997, chiropractors generally billed for their services using a single code. After that date, however, the Health Care Financing Administration and many private insurers started accepting four new CMT codes, which reflected more detailed or precise descriptions of chiropractic manipulation services.
The proposed complaint alleges that during the seminars, Mr. Leonard discussed the value of the new CMT codes and presented data on current average charges for chiropractic and osteopathic manipulations. The proposed FTC complaint charges that Mr. Leonard told chiropractors that, with the introduction of the new CMT codes, chiropractors could increase their fees without any risk that third-party payers would refuse to pay the new fees, since there was no current database from which to calculate usual, customary and reasonable, or UCR, fees.
The complaint also asserts that Mr. Leonard told chiropractors to increase their fees because their new fees would determine the new UCRs. The FTC’s proposed complaint also alleges that Mr. Leonard encouraged third-party payers to agree to pay certain amounts, or to calculate UCRs in a manner suggested by WCA, and threatened to take legal action against third-party payers who did not agree with his proposals.
The complaint further alleges that WCA and Mr. Leonard frequently collected, analyzed and provided to WCA members and others current charge data for the new CMT codes.
Additionally, the proposed complaint charges that Mr. Leonard reviewed individual contract offers to WCA members by third-party payers, circulated memoranda to members containing adverse comments about the payer’s proposed fee schedules for the new CMT codes, encouraged chiropractors to negotiate higher fees, and advised them to exchange information they received with other chiropractors in their area to improve their bargaining position with third-party payers.
The complaint also claims that the WCA and Mr. Leonard encouraged and assisted in the boycott of managed care plans by WCA members and others in order to obtain higher reimbursement for chiropractic services. For example, the complaint alleges that during some of the CMT codes seminars, Mr. Leonard recommended that members reject certain provisions of a particular contract. He allegedly suggested that if enough chiropractors rejected the contract, the plan would be forced to renegotiate it. He also reportedly encouraged chiropractors to discuss the contract at issue with colleagues in their area. After the plan revised its fee schedule, according to the complaint, Mr. Leonard communicated to chiropractors that the revised fee schedule reflected fair-market prices for chiropractic services.
The proposed complaint goes on to allege that the purpose or results of the above actions included restraint of competition among chiropractors, a reduction in competition among chiropractors, fixed or increased prices for chiropractic services, and fixed terms and conditions under which chiropractors would deal with third-party payers.
Taking note of this recent FTC action, dentists would be advised to avoid any communications with colleagues that could be construed as relating to fees.
Within 30 days of signing the proposed settlement agreement, the WCA and Mr. Leonard are required to submit a report showing how they have complied with key portions of the settlement agreement, including steps taken to implement an antitrust compliance program.
The proposed agreement, which contains a cease-and-desist order, prohibits the following actions by WCA:
- – suggesting or advocating for any person to fix, maintain, change or otherwise tamper with any fee or terms related to fees to be charged for chiropractic goods or services;
- – creating, suggesting or authorizing any list or schedule of fees for any health care goods or services;
- – becoming involved in or facilitating any agreement or understanding to negotiate on behalf of any chiropractor regarding any term or condition of dealing with a payer or provider, or to deal or refuse to deal with any payer or provider;
- – requesting or advocating for any chiropractor to accept or reject any term of any participation agreement, including price for services;
- – soliciting from or communicating to any chiropractor regarding another chiropractor’s intention or decision on entering, rejecting or withdrawing from a participation agreement;
- – organizing, facilitating or participating in any discussion that WCA expects or reasonably should expect will facilitate communications regarding one or more chiropractors’ intentions with respect to a participation agreement;
- – continuing a discussion in which WCA knows or reasonably should know that communications are being made regarding one or more chiropractors’ intentions toward a participation agreement;
- – developing, publishing or circulating any portion of a fee survey for any health care goods or services for two years after the final date of the cease-and-desist order, or until Dec. 31, 2001, whichever is earlier.
Under the terms of the proposed cease-and-desist order, the WCA also must adhere to certain restrictions on the development or circulation of fee surveys for five years after the close of the two-year period described above. The cease-and-desist order would terminate 20 years after it became final.
The proposed cease-and-desist order also would impose similar restrictions on Mr. Leonard. However, the proposed order provides that he may offer comments or advice, or negotiate agreement terms, if Mr. Leonard is acting as an agent, employee or representative exclusively for a single provider or payer.
Taking note of this recent FTC action, dentists would be advised to avoid any communications with colleagues that could be construed as relating to fees for dental treatment.
The efforts of chiropractors to use their code of procedures in an attempt to increase their prices were not prudent. If there is one area that is palpably clear under the antitrust laws, it is that price-fixing is a per-se violation of the antitrust laws.
There is no defense to a per-se violation of the antitrust laws, and that is the reason why the chiropractors entered into this cease-and-desist order with the FTC.
