Kansas City-area Physician Groups Settle Price-fixing Complaint

Two suburban Kansas City physician groups have agreed to settle a price-fixing complaint filed against them by the Federal Trade Commission.

The commission had accused New Century Health Quality Alliance Inc. and Prime Care of Northeast Kansas LLC, both based in Mission, Kan., of “anticompetitive conduct” by preventing 18 of their member medical practices from negotiating individually with insurance companies for services.

Under the settlement announced Thursday, the groups agreed not to engage in further anticompetitive behavior.

Employees at the offices of Dr. Thomas Allen, New Century’s chairman, and Dr. G. Robert Powers, Prime Care’s chairman, said the two men had gone home for the day and couldn’t be reached. Neither could be reached at their home phone numbers.

Documents filed with the agreement, however, stressed that the groups were not admitting any wrongdoing.

According to the complaint, New Century and Prime Care oversee 127 physicians in independent practices in the Kansas City area. Physicians join such groups to gain a better negotiating position when working out agreements with health plans and insurance companies.

The independent physician associations aren’t allowed to collectively set prices and can’t deal with insurance and health plans as a group.

Humana Health Plan Inc. said that’s exactly what happened in 2004 and 2005 when it chose to end its agreements with New Century and Prime Care and, instead, negotiate for services directly with the individual doctors’ offices.

According to the commission, the two groups persuaded their members to refuse to deal with Humana outside of the joint associations and only be paid prices “collectively agreed upon” by the associations’ practice members. The groups also wanted a 30 percent increase in fees.

When Humana refused, the commission said, the member physician offices began sending letters to the company’s customers, threatening to drop them from service and encouraging them to tell Humana to negotiate with New Century and Prime Care.

In a lawsuit, Humana accused the two physician groups of price-fixing, which led to the FTC getting involved.

Under the settlement, New Century and Prime Care agreed not to negotiate on behalf of physicians or set the conditions for negotiating with any insurance company or health plan.

The settlement still must go through a 30-day public comment period before being finalized by the commission, FTC attorney David Narrow said.