Medical Society of the County of Erie

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Bureau of ~ o m ~ e t i / i o n
FEDERAL TRAOE COMMISSION
WASHINGTON, D.G.
March 	12, 1984
James Fa 	Phillips, M,D, 	p
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p r e s f d e n t
l~~iedieal	Society of the County 	of 	EnXe
1514 	Main-Seneca 	Building I
2 3 4 	H a i n 	St, !
~ u f f a l a ,New Pork 	14203 	I
Dear Dr, Phillips:
T h i s 	letter 	is i n 	rcsponse to your 	recent request concerning
t h e 	legality OE discussions with 	third-party 	payers on 	the s u b j e c t
fee allowances, 	A l t h o u g h 	your 	inquiry did 	not contain enough
facts for a 	formal 	advisory 	spinion, we can provide 	you 	witk 	t h e
following general guidance, 	You 	should 	understand 	t h a t 	this
advice 	does not 	bind 	the Comissiow,
Some 	of 	the legal parameters Of permitted comunieations,
iscussions and 	negotiations betweon 	medical societies and 	third-
a r t y 	pavers 	are detailed 	in 	the enclosed, recent F e d e ~ a lTrade
omission opinion 	101 P , T , C , 	191
( 1 9 8 3 1 	("" 	or 	conspiracy
among members 	of 	t 	y 	to dictate,
attempt to 	set, through collectlve action, 	the 	amount, manner
of 	calculation, and 	terms of Blue Cross 	and 	B l u e 	Shield 	reimburse-
ments. 	T h e 	Commission enjoined 	the conspiracy and 	the Society8s
activities 	in 	furtherance sf 	the 	conspiracy, 	T h u s 	a medical
society would 	probably 	be 	acting 	u n i a w f u i l y 	if 	i t 	not only 	had 	an
informational discussion w i t h 	a 	third-party payer, but 	also
negotiated or 	reached 	an 	agreement ,vita7 a 	third--partypayer 	on
reimbursement levels or 	criteria,
T h e 	MSMS 	order 	prohibits 	the Mi:ekigan State Medical Society
f eom:
I) 	threatening 	third-party 	payers 	with 	departicipation
by member 	physicians 	from 	their 	insurance plans;
2 ) 	organizing membersQconcerted 	cancellation of, or
refusal to enter 	into, participation agreements
with 	third-party payers;
3) 	acting as an 	agent 	for 	any 	of 	its members 	in
dealings witk 	third-party 	payers;
4 ) 	organizing any 	concerted 	refusal to 	file claim 	forms;

mis 	F, 	Phillips, 	M e D W rPresident
Page
5 ) 	making 	any 	collective attempt 	to extract 	a 	f e e
agreement 	t h r o u g h 	coercion or otherwise; and
6) 	advocating 	t h a t 	S o c i e t y members 	engage 	i n 	t h e
g r s h i b i ted 	actions 	described above,
In contrast 	to t h e 	c o n d u c t 	a t 	issue i n 	that 	ease, 	t h e 	MSMS
d e c i s i o n 	indicates 	t h a t 	i t 	is g e n e r a l l y 	lawful for a medie
s o c i e t y 	to provide 	information or 	views 	60 	third-party 	payers
c o n c e r n i n g 	reimbursement issues, 	A l t h o u g h 	does 	n o t 	directly
a d d r e s s 	y o u r 	question concerning 	t h e 	Pega%i Qy of 	a ssciety 	s	@
r e q u e a t 	Ear 	information on reimbursement criteria 	from B l u e 	Cross
and 	B I u e 	S h i e l d , 	it would 	generally be permissible f o r 	a 	society
to 	i n q u i r e , 	and 	t o 	be 	informed 	s f , 	how 	third-party 	payers 	arrive
a t 	f e e 	allowances and 	w h a t 	e r i k e r i a 	t h e y 	use 	i n 	t h e i r 	f e e
determinations, 	as 	long 	as 	the 	inquiry does not e v o l v e 	into a
prohibited 	agreement 	in 	r e s t r a i n t 	of 	t r a d e .
Sincerely,
A r t h u r 	N,. L e r n e e
Assistant 	Director