Advisory opinion concerning the legality of the American Society of Internal Medicine's proposal to develop and disseminate relative value guides

505	ADVISORY OPINION
Proposed development of a r~l~tive va,l_ue guide_ for physician
services to be distributed to -member friternists wotrid--be
likely to have anticompetitive effects that probably would
not be outweighed by any countervailing efficiency justifi'."
cations. [American Society of Internal Medicine, P84 3532 ]
April 19, 1985
Dear Mr. Kopit:
This letter responds to your request for an advisory opinion con-
cerning the legality of the American Society of Internal Medicine's
("ASIM") proposal to develop and disseminate relative value guides
("RV Gs"). The Commission has determined, on the basis of the infor-
mation provided by ASIM and additional information gathered by
Commission staff, that there is substantial danger the proposed con-
duct would lead to a combination or conspiracy that unreasonably
restrains competition among physicians in violation of Section 5 of
the Federal Trade Commission Act. The Commission, therefore, can-
not give advance approval to ASIM's RVG proposal.
This advisory opinion begins with a brief summary of ASIM's
proposal. It then discusses two central questions-first, whether there
is substantial danger of an agreement in restraint of trade resulting
from the proposed conduct, and second, whether, were such an agree-
ment to result, it would restrain trade unreasonably. The letter then
indicates alternative actions, unlikely to raise antitrust problems,
that ASIM can pursue to redress the alleged reimbursement dispari-
ties about which it is concerned.
ASIM's Proposal
ASIM, a national professional society consisting of approximately
19,000 doctors of internal medicine, proposes to develop an RVG and
distribute it to its member physicians and to private and governmen-
tal third-party payors on an advisory basis. ASIM plans to request
that these parties consider using the RVG as a guide in developing
reimbursement programs consistent with the approach contained in
the RVG. The RVG would cover services that are provided by physi-
cians who specialize in internal medicine ("internists"). ASIM pro-
poses in the future to work with other physician organizations,
including surgical societies, to develop RVGs for other medical and
surgical services.
The proposed RVG would list medical services by descriptive codes.
ASIM intends to assign numeric values to each coded service, relative
to one another, determined on the basis of costs, time, complexity, and
the level of training required to perform each service. The RVG would
not in itselfbe a fee schedule, but could be converted to a fee schedule
by physicians or third-party payors simply by multiplying the relative
values by a dollar conversion factor. ASIM has indicated that it would

506 	FEDERAL TRADE COMMISSION-DECISI01'tS
not provide conversion factors with its RVG; that the RVG and the
other proposed aspects of ASIM's conduct would be voluntary and
"advisory" in nature; and that there would be no explicit or implicit
threats or coercion against physicians or third-party payors to induce
them to use the RVG.
ASIM has stated that it wants to develop the RVG to redress an
alleged disparity in reimbursement for "cognitive" and "procedural"
services provided by physicians. According to ASIM, a high level of
insurance reimbursement now encourages physicians to use and
sometimes overuse costly ''procedural" services such as surgery, elec-
trocardiograms, x-rays, and other technology-intensive services. At
the same time, ASIM submits, relatively low levels of reimbursement
discourage physicians from using more time-consuming "cognitive"
services such as the diagnosis of patient health care problems, preven-
tative education, and life style evaluation. ASIM's members are in-
ternists, most of whom· are chiefly engaged in primary care and the
delivery of cognitive services. ASIM proposes to increase the relative
value of cognitive services and decrease the relative value of proce-
dural services to encourage use of more cog:r;iitive services and discour-
age overuse of procedural services. ASIM states that its RVG, if
widely adopted, would reduce health care costs by creating incentives
to substitute low-cost care for high-cost care. It further states that an
increase in the relative amount at which cognitive services are reim-
bursed, as compared to procedural services, would encourage physi-
cians to spend more time in personalized aspects of care and would
provide new incentives for physicians to choose primary care special-
ties utilizing relatively large amounts of cognitive services.
ASIM plans to use the "Delphi technique" to reach consensus on
the relative values to be assigned to each of the services commonly
provided by internists. In separate mail surveys, representatives of
internal medicine subspecialtyl organizations and two ASIM state
affiliates would be asked anonymously to assign relative values to
medical services on the basis of time, complexity, costs, and training.
Median and average figures computed by ASIM based on the first
round of responses would then be submitted to the same physicians
to use in making a second round of responses. The process would
continue until· a consensus or as much uniformity as possible was
reached. ASIM's Resource Cost Committee would then review the
product of each of these survey determinations and determine rela-
tive values using the Delphi consensus-building technique. The result-
ing RVG would then be submitted to ASIM's Board of Trustees for
approval or disapproval without modification.
ASIM also plans to send a "white paper" to physicians and third-
1 Internal medicine subspecialties include cardiology, gastroenterology, allergy, endocrinolo!!V. hemat.olorrv.

ADVISORY OPINION
partypayors that would explain the cognitive/proced1.1ral reimburs.e-
ment disparity and use ofits RVG to reduce the -disparity. lt:would
a1so illustrate how to use the RVG to. "change the reim~ursement
structure from the current procedural service basis to acost of re-
sources basis.'' The stated purpose of the "white paper" would be to
persuade and not to coerce.
Legal Analysis
The antitrust issue raised by ASIM's proposal is whether it presents
a substantial danger of an agreement that unreasonably restrains
trade.2 The threshold question in resolving this issue is wl1etherthere
is danger of an agreement in restraint of trade. If there is a substan-
tial danger of such an agreement occurring, the second question is
whether there is a substantial danger that .it would unreasonably
restrain· tra.de. The antitrust laws prohibit, of course, only those
agreements that restrain trade unreasonably.3
Danger of Agreement in Restraint of Trade
ASIM's adoption and dissemination ofan RVG, as it proposes, could
involve or facilitate two types of agreements in restraint of trade: (1)
an agreement among ASIM, its members, and possibly other physi-
cians to adhere to the RVG in determining charges for their services;
and (2) an agreement between ASIM, acting on behalf of its members,
and one or more third-party payors, possibly resulting from coercion,
that the third-party payor(s) will adhere to the RVG in reimbursing
physicians for covered services. The Commission concludes there is a
substantial danger that the first type of agreement may occur; there
does not appear to be a substantial danger of the second type of
agreement.
With respect to the first type of agreement, if a professional associa-
tion expressly or implicitly suggests or advises marketplace conduct
on the. part of its members or other competitors and the intent or
likely consequence of the communication is that association members
or others will concertedly or interdependently modify their behavior
in the marketplace to restrain trade, both the professional association
and the individuals so acting could properly be found to be parties to
an agreement in restraint oftrade.4 In contrast, when an association
provides information or advice to its members or others that could be
2 The Commission discusses the antitrust risks of ASIM's proposal in terms of"substantial danger" because thi
advisory opinion seeks approval for proposed future conduct, the precise nature and specific effec~ of which canno
now be determined.
3 UnitedStates v. Standard Oil Co., 221 U.S. 1, 59-60 (1911).
4 See generally Interstate Circuit, Inc. v. United States, 306 U.S. 208, 226-27 (1939) ("It was enough [for a
unlawful conspiracy] that, knowing that concerted action was contemplated and invited, the[y] gave their adhe
ence to the scheme and participated. in it. Each ... was advised that the others were asked to participate; ea,
knew that cooperation was essential to successful operation of the plan. They knew that the plan, if carried 01
would result in a restraint of commerce, which ... was unreasonable ... , and knowing it, all participated in t
plan.").

508 	FEDERAL TRADE COMMISSION DECISIONS.
used by its recipients unilaterally in the marketplace and it is neither
intended nor likely that the communication will result in concerted,
interdependent action to restrain trade, the association would proba-
bly not be found party to an agreement in restraint oftrade.5 In this
matter, the substance and market context of ASIM's communications
and physician actions in response to them would be critical in deter-
mining the existence of an agreement in restraint of trade.
Although any action by ASIM, an association of individual ,practi-
tioners many of whom compete with one another, to develop an RVG
would ref_lect an agreement to take that action, ASIM's development
of an RVG, standing alone, would not constitute an agreement in
restraint of trade. No one would be party· to an understanding by
which he or she is committed to any particular course of conduct in
the marketplace. However, antitrust analysis of ASIM's proposal
must be focused on the entire course of conduct planned by ASIM to
determine whether the proposal is intended to or could be expected
to involve or facilitate an agreement in restraint of trade.
Several factors indicate there is substantial danger that ASIM's
proposed conduct would be intended to or would result in concerted,
interdependent action by physicians to adhere to the R VG in pricing
their services. Despite the disclaimers it would make in its distribu-
tion of the RVG, ASIM appears to be proposing implicitly to·· invite
physicians to adhere to the RVG in determining their charges. ASIM
plans to send members the RVG on a ''purely advisory" basis, leaving
individual members "free to make independent fee decisions", with a
''white paper" that would ''illustrate 'how to' use the [RVG] to change
the current reimbursement structure." The RVG would be prescrip-
tive in nature, describing a set of pricing relationships that ASIM
would be supporting as what should be. The RVG would be designed
to change future market transactions with respect to physician
charges and output. Such pricing information programs are more
likely to result in agreements in restraint of trade than are exchanges
')f descriptive data, which merely describe or reflect historical or
:urrent market transactions.6 Indeed, there is a danger that use of the
:?.VG could lead to an agreement among physicians on a single conver-
:ion factor to apply to each service on the RVG. Thus, the RVG could
asily become the means for physicians in at least some communities
') coordinate a collusive pricing scheme.
Further, for a number of reasons there appears to be a substantial
; See generally Monsanto v. Spray-Rite Service Corp., 104 S.Ct. 1464, 1471 (1984) (To find an agreement, "[t]here
1st be evidence that tends to exclude the possibility that the manufacturer and the nonterminated distributors
re acting independently .... [T]he antitrust plaintiff should present direct or circumstantial evidence that
.sonably tends to prove that the manufacturer and others 'had a conscious commitment to a common scheme
igned to achieve an unlawful objective.'" (citation omitted)); First Nat'l Bank v. Cities Service Co., 391 U.S. 253,
-88 (1962) (the inference of a conspiracy does not logically follow in the absence of either direct conspiratorial
lence or motive to enter a tacit agreement).
See Goldfarb v. Virginia State Bar, 421 U.S. 773, 781 (1975); Maple Flooring Mfrs' Ass'n v. United States, 268
563, 58&-86 (1925).

(;!
I
i
ADVISORY OPINION 	509
danger that concerted adheren~e t? t:ti_e __ B,VG by physicians in re-
sponse to ASIM's invitation would be widespread. The· invitaticm.-·to
use the RVG would emanate from a leading national medical special-
ty association and would presumably have the support of the other
medical organizations that would have helped to build the "consen.,.
sus" the RVG reflects. Concerted adherence to an ASIM RVG would
appear more likely than if an independent outside organization were
to formulate an RVG. Moreover, ASIM's invitation to adhere to the
RVG would be attractive to the many primary care physicians who
would benefit financially from increased reimbursement for ,cognitive
services. Also, the RVG would be circulated in a form easity used by
individual physicians in setting their prices. It would require only
that the physician identify the appropriate code for each medical
service rendered· and apply a conversion factor he or she selects to
each listed relative value to determine his or her charge for every
service.
Widespread adherence to the RVG by physicians in local communi-
ties would likely be interdependent because it would probably not be
in the economic self-interest of individual physicians to charge on the
basis of the RVG unless they believe most competing physicians
would be doing likewise. Physicians choosing_to price in conformance
with the RVG would likely do so to effect increases in the absolute
level of their charges for cognitive services. 7 If only a few physicians
were to increase their charges for cognitive services, insurers might
refuse to pay the increased amounts on the ground that for each such
physician, it reflected a fee exceeding the "usual and customary"
charge of internists. In light ofincreasing competition at the primary
care level, individual physicians considering adherence to the RVG
would know that patients who were not fully reimbursed by insurance
and who incurred higher out-of-pocket costs for cognitive services
could over time go elsewhere for their medical care (e.g., to other
private practice physicians or to health maintenance organizations).
If most primary care physicians in an area adhered to the RVG, in
contrast, insurers' "customary" screen levels would over time in-
crease, likely resulting in higher reimbursement allowances. Patients
would then have less incentive to seek, and could less easily find, a
lower-cost provider. Thus, concerted or interdependent conduct by a
very substantial number of physicians could succeed, and would prob-
ably be necessary to succeed, in raising the relative· price level of
cognitive services. If concerted conduct were not necessary, physi-
cians concerned about the disparity identified by ASIM could address
it unilaterally, and presumably already would have in their own
7 Adherence to the RVG would likely require physicians to depart from their current fee schedules. It would
be unlikely that physicians would.voluntarily elect to conform to the RVG and choose conversion factors that would
keep their prices for cognitive services at roughly their current levels and would result in reduction of their charges
for procedural services.

510 	FEDERAL TRADE COMMISSIO'ffDECISIONS
practices, by increasing charges for cognitive services. ASIM's likely
knowledge that individual physicians probably could only effectively
use the RVG interdependently, or concertedly, would help support a
finding that ASIM contemplated a concerted response by physicians
to its promulgation of the RVG.
Finally, to the extent third-party payor coverage "desensitizes"
insured patients to price increases, concerted conformance to the
RVG in an effort to raise charges for cognitive services would be more
likely contemplated, attempted, and successful in the medical mar-
ketplace than restraints of trade in other market contexts in which
consumers are more "price sensitive." If the RVG were adhered to by
a substantial number of physicians, then "discounting" might not be
as advantageous for physician competitors as it typically is for other
competitors seeking to undercut higher charges resulting from collu-
sion. As noted above, general adherence to the RVG would likely
create a new range of "customary" charges, so that third-party payors
would, as time passes, likely recognize and pay higher charges for
cognitive services. In this event, even if some physicians did not adopt
the RVG and charged lower prices for cognitive services, they might
not be able to undercut effectively those adhering to the RVG because
fees below those recognized as customary by insurers might not at-
tract many insured patients away from other physicians. Patients
with paid-in-full insurance coverage or only small co-payment obliga-
tions, who are treated by physicians whose fees are within the "cus-
tomary" range, could have little, if any, monetary incentive to switch
physicians.
The Commission recognizes, notwithstanding the foregoing discus-
sion, that substantial arguments can be made against the likelihood
that concerted adherence to the RVG would result from ASIM's
proposed conduct. For example, physicians' different cost structures
and diversity across the country in practice patterns and pricing
relationships among various medical subspecialties may make it un-
likely that physicians would reach a common understanding to utilize
any single RVG. Also, the cost-containment practices of third-party
payors would pose a major obstacle. Nonetheless, although the Com-
mission cannot, in this advisory opinion context, predict that wide-
spread concerted conformance to the RVG would necessarily result
from its dissemination by ASIM, the available information on this
specific RVG proposal indicates that this type of agreement in re-
straint of trade is a substantial danger.
ASIM also proposes to disseminate its RVG to insurers and other
third-party payors and encourage them to adopt the RVG as a basis
for their reimbursement structures. This conduct raises the question
of whether ASIM's proposal may lead to the second type of possible

ADVISORY OPINION 	511
tween ASIM, on behalf of its members, and third-party _payors that
such third-party payors will adhere to the RVG in their reimburse::.
ment systems. Such an agreement between ASIM and a third-party
payor could lessen competition among ASIM's members over the
terms of their dealings with the third-party payor. The Commission
does not find a substantial danger that this type of an agreement
would result from the proposed conduct.a
No agreement in restraint of trade involving ASIM occurs if a
third-party payor decides to adopt an RVG as the basis for its reim-
bursement system, even if its decision results from discus§ions with
ASIM, so long as the third-party payor's decision is a unilateral one,
i.e., is not the result of coercion by ASIM or of an agreement, coerced
or voluntary, between ASIM and the third-party payor.9
In this regard, ASIM's request letter states that its discussions with
third-party payors would be advisory and not coercive in nature.
ASIM also states that it would not be acting as a common agent or in
a representative capacity for its members in its dealing with third-
party payors; rather it would simply seek to persuade third-party
payors of the efficacy of reimbursement systems based on the RVG.
Based on these representations and the absence of factors indicating
serious risk in this regard, the Commission does not believe there is
a substantial danger that ASIM will negotiate an agreement with, or
coerce, third-party payors to use the RVG, so as to constitute an
agreement in restraint of trade.lo
Reasonableness of Potential Agreement in Restraint of Trade
Because the Commission has concluded there is a substantial dan-
ger that ASIM's proposed conduct would involve an agreement in
restraint of trade among ASIM and physicians to concertedly adhere
to the RVG, the remaining issue is whether such an agreement would
unreasonably restrain trade and therefore be illegal. The Commission
concludes that such an agreement would be inherently suspect, in
light of its purposes and likely anticompetitive effects. The Commis-
sion further concludes that the likely anticompetitive effects of sue}
an agreement probably would not be outweighed by any countervail
8 Because of the conclusion reached in this advisory opinion, it is not necessary to reach the question ofwheth
an agreement to adopt and promulgate an RVG by a medical society could result in an unreasonable restraint
trade, even absent a finding of concerted adherence to it by physicians or an agreement between the medical soci,
and any third-party payors.
9 See Virginia Academy of Clinical Psychologists v. Blue Shield of Va., 624 F.2d 4_76, 483 (4th Cir. 1980), c
denied, 450 U.S. 916 (1981); Michigan State Medical Soc'y, 101 F.T.C. 191,286 (1983) ("MSMS"); Monsanto,
S.Ct. at 1471.
10 ASIM's development of an RVG for dissemination to third-party payors, although not raising an appa
substantial danger of agreement in restraint of trade between ASIM and third-party payors, could noneth,
result in an agreement between ASIM and its members to adhere to the RVG. If ASIM were to develop an :
and support it in discussions with third-party payors, its members' knowledge of this action and the specif
the RVG could result in concerted adherence to it for many of the same reasons stated above. Althoug·
evidentiary situation would be different, this conduct could raise antitrust risks like those resulting from ,
dissemination of the RVG to ASIM's members with encouragement to use it.

512 	FEDERAL TRADE COMMISSION DECISIONS
. .,- .
ing efficiency justifications that may flow from ASIM's proposed con-
duct. As a result, as is discussed below, an agreement among physi-
cians to adhere·to the ASIM RVG would be likely to restrain trade
unreasonably. The Commission, therefore, cannot approve ASIM's
proposed actions.
Naked horizontal agreements to restrict output or tamper with
price are per se illegal. No elaborate inquiry into market power or
actual effects is required for condemnation of such agreementS,:under
the antitrust laws, and -insistence on the "need" in the marketplace
for such arrangements cannot provide a defense.11 An agreement on
precise fees is not required for a finding ofillegality.12 "Any combina-
tion which tampers with price structures is engaged in unlawful ac-
tivity .... [T]o the extent that they raised, lowered, or stabilized prices
they would be directly interfering with the free play of market
forces."13 As the Supreme Court has recognized, "An agreement to
pay or charge rigid, uniform prices would be an illegal agreement
under the Sherman Act. But so would agreements to raise or lower
prices whatever machinery for price-fixing was used."14 Thus, an
agreement to use a particular formula, like an RVG, could support a
finding of illegal price-fixing,15 because "tampering with the means
of setting prices is tantamount to tampering with reimbursement
levels."16 Similarly, the Supreme Court has condemned as per se un-
lawful a horizontal agreement to fix only one element of price, such
as credit terms.17
If an agreement encompassing promulgation and adherence to the
~SIM RVG is found, the agreement would have purposes and likely
?ffects that under the foregoing precedent would condemn the agree-
nent as per se unlawful absent plausible efficiency justifications. The
greement would tamper with market pricing structures, and pose a
~rious danger of higher prices, at least with respect to some medical
!fvices, and other anticompetitive effects.
United States v. Socony- Vacuum Oil Co., 310 U.S. 150, 218 (1940); NCAA v. Board of Regents of University
)klahoma, 104 S.Ct. 2948, 2960, 2965 (1984).
Per se condemnation has been deemed appropriate even when 1} suggested prices were used by a trade
ciation's members only as a "starting point" for individual negotiations and price competition continued,
wuth Dealers Ass'n of N. Cal. v. United States, 279 F.2d 128, 132 (9th Cir. 1960), and 2) there were no sanctions
1st members not adhering to the suggested prices and suggested prices in fact were not strictly adhered to
embers, United States v. Nationwide Trailer Rental Sys., Inc., 156 F.Supp. 800, (D. Kan.}, affd per curiam,
·.S. 10 (1957). In regard to "advisory" price schedules possibly supporting a finding of agreement in restraint
de compare dictum in Goldfarb, 421 U.S. at 781 (1975} ("[a] purely advisory fee schedule issued to provide
ines ... • without a showing ofan actual restraint on trade, would present us with a different question"} with
l States v. National Ass'n of Real Estate Bds., 339 U.S. 485, 488-89 (1950} (in regard to a "non-mandatory"
hedule, "[s]ubtle influences may be just as effective as the threat or use of formal sanctions to hold people
''}.
izona v. Maricopa County Med. Soc'y, 457 U.S. 332, 346 (1982) (quoting Socony-Vacuum). See also MSMS,
'.C. at 291.
·ony- Vacuum, 310 U.S. at 222 (emphasis added}.
Morrison v. Nissan Motor Co., 601 F.2d 139 (4th Cir. 1979} (regarding an automobile repair flat rate
\1S, 101 F.T.C. at 291.
tlano, Inc. v. Target Sales, Inc., 446 U.S. 643 (1980).

ADVISORY OPINION 	51;:j
First, the agreement would tamper witfrthe market's pricing struc-
tures by locking competing physicians into use of a particular pricing
formula, if not uniform prices. It would fix the relationships among
each physician's prices for different services, so that ratio would not
depend upon the production costs or quality of each physician's ser-
vice, nor on the degree of demand he or she faces for various services.
Second, use by physicians of the proposed RVG would apparently
be designed to achieve, and would likely result in, payment and reim-
bursement for cognitive services at higher absolute levels than pre-
vail currently. It can be inferred from ASIM's own statements that
ASIM's purpose in developing the RVG includes raising·~ prices for
cognitive services on an absolute basis as well as on a relative basis.
Examples include an ASIM resolution in 1983 stating: "Resolved, that
in ASIM's campaign to reduce the discrepancy in reimbursement
between cognitive and procedural services, the Board of Trustees
continues to actively promote enhanced reimbursement for cognitive
services .... "18 In proposing in 1982 that the Department of Health
and Human Services adopt an RVG demonstration project, ASIM
stated, ''A new schedule of allowance providing for increased reim-
bursement for internist's cognitive services would be created."19 More-
over, ASIM very likely knows that its members would have every
incentive to use the RVG to increase the absolute level of their prices
for cognitive services. As noted above, physicians who voluntarily
convert their current fee schedules to the new ASIM RVG wouid be
unlikely to adopt a conversion factor that would result in lower prices
for procedural services and no increase in their cognitive services
charges. The effect of widespread use of the ASIM RVG by physicians
to bill higher fees for cognitive services, even without the RVG's
explicit adoption by third-party payors, would likely be incorporated
into third-party payors' physician fee profile data for computing usu-
al, customary, and reasonable charges and raise third-party payors'
reimbursement levels for cognitive services.
Third, a "fragmentation" phenomenon of new billing categoriet
being created has apparently arisen with use of some other RV Gs an,
could in the instant case result in increases in overall billing charge£
For example, a study of the California Medical Association RVG cm
eluded that more detailed and fractionalized RVG descriptive cod,
resulted in overall increases in payments to physicians.20 Here, the·
is some danger, for example, of ASIM's RVG providing for m
charges by procedure-oriented physicians for cognitive aspects of s,
vices, when patients were previously charged only for a procedu
18 ASIM, Reference Committee B Report, 1983 House of Delegates 4 (emphasis added).
19 ASIM, Proposal for a Demonstration Project 3 (Oct. 1982) (emphasis added).
20 Sobaski, Health Ins. Statistics, USDHEW, Effects of the 1969 California Relative Value Studies on Cr
Physician Services Under SMI, Pub. No. (SSA) 75-11702 (June 20, 1975), at 5; see also Urban Institute, Alter
Methods of Developing a Relative Value Scale of Physicians' Services: Year End Report 7-8 (1983) ("
Institute Study").

Dl4 	FEDERAL TRADE COMMISSION DECISIONS
Such a tendency in the ASIM RVG could arise in the evolution of the
"consensus" needed among both cognitive and procedure-oriented
physicians for the RVG's contents.21
Fourth, widespread adherence to the RVG could also tend to stabil-
ize prices artificially. Such a phenonemon could be in contrast to the
stability of price one might expect in a competitive market in which
homogeneous, fungible goods are sold. The price relationships of dif-
ferent services, and possibly absolute prices as wen,22 would be~stabil-
ized to a degree not already effected by third-party payment and
without regard to differences in the quality of each physician's ser-
vices or his or her efficiency.
Fifth, the RVG may also facilitate direct price fixing. In the absence
of an RVG the difficulties in forming a consensus among physicians
on a fee schedule would involve deciding which services to include in
a price-fixing agreement and agreeing on what value each service
should have in relation to another. Agreement on a full-blown fee
schedule would be facilitated by adherence to the RVG and would
involve additional agreement only on a conversion factor. Although
ASIM has disclaimed any intent to encourage such conduct, agree-
ments among physicians to use a particular conversion factor with an
RVG can arise. Agreement on conversion factors does not appear to
be a part of ASIM's plan nor an inevitable result of it, but it is a
possible result of ASIM's conduct, particularly in subspecialties at
local levels.
Finally, in addition to affecting price, concerted adherence to
\.SIM's RVG would also appear to fix or restrict output of certain
ervices, also a type of agreement that can be per se illegal.23 ASIM's
tated intent is to change the mix of cognitive and procedural services
~livered by internists, if not all physicians, through change in reim-
1rsement levels. ASIM's proposal apparently contemplates a reduc-
m in the output of procedural services, and could, depending on the
tpact on demand of any significant price increases for cognitive
·vices, reduce output of cognitive services.
3ecause of its apparent purpose to raise price levels for some ser-
~s and the substantial danger of anticompetitive effects on price
?e Am. Med. News, Nov. 23/30, 1984, at 30, col. 3 (surgical society official quoted as stating there is "cognition
OR [operating room] too"); see also Am. Med. News, Oct. 14, 1983, at 14, col. 1 (surgical society official quoted
ing "surgeons use cognition before, during and after surgery"; physician quoted as stating that "resistance"
{eons to concept of reducing cognitive and procedural services disparity began to "disappear" in state
1 society when internists explained to surgeons that, "because of the reimbursement bias," "surgeons do
· cognitive consultations that they have to consider throwaways" or "time lost").
empirical study suggests that RVG use is associated with less fee dispersion, although not necessarily
fees. B. Eisenberg, Information Exchange Among Competitors: The Issue of Relative Value Scales for
:ns' Services, 23 J.L. & Econ. 441, 457-58 (1980). The study's data were not sufficient to indicate whether
ction in dispersion reflected more efficient market performance, or a possibly unwarranted trend toward
ized prices by physicians offering differing quality service. The study did find a positive association
RVG use and higher prices, but the association was not statistically significant.
A, 104 S.Ct. at 2948; National Macaroni Mfrs. v. FTC, 65 F.T.C. 583 (1964), affd, 345 F.2d 421 (7th Cir.

ADVISORY OPINION 	515
and output, the agreement to adhere to· "the RVG- that. could result
from ASIM's proposal would be inherently suspect or prima lac"ie
anticompetitive. Such an agreement would not be condemned out-
right under the per se rule as a naked restraint of trade if a plausible
procompetitive efficiency rationale existed for it, but the burden
would be on ASIM to establish justifications legitimizing the agree-
ment.24 If ASIM established procompetitive efficiency justifications,
they would then be weighed against the anticompetitive effects of the
conduct to determine net competitive effects. If such justifications
were not shown to be valid, the prima facie anticompetitive or inher-
ently suspect conduct in question would be condemned without fur-
ther proof of anticompetitive effects.25 This method of analysis can be
deemed a truncated, quick-look, or limited rule of reason analysis.26
Showing adequate justification for concerted promulgation and ad-
herence to ASIM's RVG would be particularly critical given the
power of ASIM and those physicians, both ASIM members and others,
who might concertedly use the RVG to effect significant changes in
the marketplace. ASIM membership includes 19,000 physicians, a
significant portion of the nation's 63,000 internists. The Commission
understands that ASIM also has the support of at least 12 other
physician organizations in its effort to make cognitive services reim-
bursement more ''equitable." Concerted action by physicians who are
members of these organizations to adhere to the RVG would likely
have a substantial effect on the marketplace. In addition, primary
care physicians who are not members of these organizations might
also be attracted to the ASIMRVG because use ofit would be in their
financial interest. Finally, future proposed ASIM RVG activity en-
compassing all physician services could command widespread, across-
the-board adherence by physicians in all specialties.
24 NCAA, 104 S.Ct. at 2967; cf. MSMS, 101 F.T.C. at 291; see generally Brunet, Streamlining Antitrust Litigation
By "Facial Examination" Of Restraints: The Burger Court And The Per Se - Rule Of Reason Distinction, 60 Wash.
L. Rev. 1 (1984).
25 United States v. American Soc'y of Anesthesiologists, Inc., 473 F.Supp. 147 (S.D.N.Y. 1979) ("ASA"), cited by
ASIM, warrants discussion. In that case, the court rejected the. Department of Justice's contention that ASA
committed a per se violation of the Sherman Act through its dissemination ofan RVG for anesthesia services an,
found no violation under the rule of reason. The ASA case was tried solely on a per se theory so there was no fu~
exposition of possible anticompetitive effects. The court, in fact, found no agreement to adhere to the RVG wit
the purpose or effect ofraising or stabilizing price, ASA at 159, and instead found that ASA had not "encourage<'
anyone to use its RVG. No evidence was cited showing any intent on the part of ASA to achieve an increase '
fee levels. ASA at 159-60. The court also emphasized that delivery of anesthesia services is somewhat unique
medical practice-little or no contact with patients prior to surgery and virtually 100 percent insurance covera
of fees. Id. The present matter differs significantly in these respects. 	·
26 See, e.g., General Leaseways v. National Truck Leasing Ass'n, 744 F.2d 588, 595-96 (7th Cir. 1984} (prelimim
injunction}; Brief for the United States as Amicus Curiae in Support of Affirmance,J\TCAA at 9-12. In refere1
to the quick-look rule of reason, "[s]easoned antitrust lawyers recognize that the threshold facial examinatio1
not that novel and is entirely consistent with older landmark cases. United States v. Addyston Pipe and Steel
evidences the historical foundation underlying the quick look method." Brunet, supra note 24, at 22. Even
full-blown rule ofreason analysis were the appropriate mode of analysis for an agreement encompassing conce
adherence to ASIM's RVG, the apparently anticompetitive purposes and potential effects discussed above, anc'
likelihood that ASIM members and other physicians collectively using the RVG could exercise market pow,
discussed below, would very likely make out a prima facie case, once established in an evidentiary record. A
would then, as in a truncated rule of reason analysis, have to proffer evidence showing procompetitive effe,
greater or at least equivalent weight.

U.10 	FEDERAL TRADE COMMISSION DECISIONS
ASIM's stated justification is ess~ntially that imperfections in the
insurance payment system for reimbursing physicians have created
"wrong incentives," i.e., a high level ofreimbursement for costly tech-
nological and procedural services, which encourages overuse and
more expensive medical care, and a low level of reimbursement for
cognitive services, which discourages their use. ASIM further claims
that redressing the reimbursement disparity between procedural and
cognitive services through its proposed RVG would encourage greater
use of more personalized cognitive services and provide new fucen-
tives for more physicians to choose primary care specialties. ASIM
claims that its proposed RVG, besides influencing physicians to better
meet the public's overall health needs, would be designed to reduce
health care costs.
ASIM's purported objective-a lower-cost medical services market-
place, with concomitant health benefits to patients-is laudable.
However, that objective would not provide a cognizable justification
or defense under the antitrust laws for an agreement to supplant
determination of prices by market forces on the ground that prevail-
ing prices were not at a level the parties to the agreement believed
was optimal for them or society.27 In Professional Eng'rs, the Supreme
Court confirmed that activities of professional societies are subject to
the traditional antitrust test of reasonableness-"whether the chal-
lenged agreement is one that promotes competition or one that sup-
presses competition" -and may not be defended on the ground that
the special characteristics of professional services markets make com-
?etitively determined prices undesirable.
The difficulties in recognizing the availability of such a defense for
m agreement to adhere to the ASIM RVG are illustrated by the issues
hat would have to be resolved to determine its validity. A principal
1ctual issue would be determining the accuracy of ASIM's claim that
ricing levels and output in the medical services marketplace are not
; appropriate levels. If such nonoptimal performance is proven, one
)uld then have to determine whether the results of the conduct in
.estion would be improvement or worsening of the market. A court
ght well have to assess the likely result of physicians forming and
;ing upon a subjective consensus judgment, based on cost and other
tors, of what pricing relationships would prevail in the market
'."e the market working properly. This inquiry would be akin to the -
ulatory determination of a public utility commission and would go
ond any inquiry undertaken in prior antitrust cases. Indeed, to
mpt to resolve empirically whether competition and consumers
Id ultimately be served or harmed by concerted agreement on a
·.ng formula would require an inquiry that courts have long es-
red in antitrust cases-i.e., to "set sail on a sea of doubt" seeking
National Soc'y of Prof. Eng'rs v. United States, 435 U.S. 679, 688, 692 (1978).

ADVISORY OPINION 	0.1,
to decide "how much restraint ofcompetition is ip_ the public int~rest,
and how much is not," with the court trying to assess the-reasonable-
ness of the prices charged.28 Also, even if it were demonstrated that
the market changes ASIM proposes would in fact produce prices and
output at a more optimal level in the immediate short term, they
could over time produce unreasonable prices and output, with it being
virtually impossible to police the ongoing effects of such concerted use
of ASIM's pricing formula.29
Even if a defense by ASIM premised on the appropriateness of
agreed-upon changes of industry pricing structures and output levels
were legally cognizable as an efficiency-enhancing device,o.it is doubt-
ful that ASIM could successfully establish, on the facts, that market
performance would improve through its proposed conduct to a closer
approximation of optimal market pricing. For example, ASIM's
proposal may drive up those prices that are now close to or at a
competitive level, while leaving largely undisturbed prices for proce-
dural services that may be reimbursed excessively. It is possible that
market forces may be permitting above-optimal prices for procedural
services, while keeping the prices of cognitive services at approxi-
mately optimal levels.30 If so, ASIM's efforts could raise cognitive
service prices above competitive levels. Thus, if it enhanced reim-
bursement for cognitive services, concerted adherence to ASIM's
proposed RVG could distort the market to a point even further from
optimal competitive performance than now exists.
There is certainly no assurance that the price of procedural services
will be reduced by the ASIM RVG in the long run. ASIM's efforts to
reduce the reimbursement disparity between procedural and cogni-
tive services have reportedly met with concern from representatives
of some internal medicine subspecialty groups whose members en-
gage more heavily in procedural services. These groups reportedly do
not object to increasing reimbursement for cognitive services, but
question a decrease in reimbursement for procedural services.31 Ith
very possible that, once consensus on the RVG is reached, use in th,
market of the relative values accorded different services would resu}
in increases in reimbursement for cognitive services with little or n
decrease in reimbursement for procedural services. Moreover, 1
reach consensus among physician representatives with divergent i
28 United States v. Addyston Pipe & Steel Co., 85 F. 271, 283-84, 291 (6th Cir. 1898), affd as modified, 175.l
211 (1899). See also MSMS; 101 F.T.C. at 293.
29 See United States v. Trenton Potteries Co., 273 U.S. 392, 397-98 (1927).
30 Market forces that may be restraining the price of cognitive services to a greater degre11 than proced
services could include better consumer knowledge of what a "fair" price is for cognitive services; more acfr
effective consumer involvement in determining whether and when to seek primary care services; a gr,
proportion of out-of-pocket costs for patients receiving cognitive services because of the terms of insu:
coverage; the growth of ambulatory care centers that have extended hours; and growing competition frorr
physician health care providers. See, e.g., AMA Council on Med. Service, Effects of Competition in Medicin
J. A.M.A. 1864 (Apr. 1983); ASIM, Reimbursement for Physicians' Cognitive and Procedural Services: A
Paper 1 (Jan. 1981).
31 See, e.g., Am. Med. News, Oct. 14, 1983, at 14, col. 1.

t.J.1.0 	FEDERAL TRADE COMMISSION DECISIONS
-- .
terests, compromises might result in identification of new cognitive
services~ not previously billed for, that procedural service oriented
physicians can bill to insurers and patients.32
In addition, ASIM's implicit prediction that physicians would
switch to providing more cognitive instead of procedural services and
thereby contain health care costs is speculative. Even if some switch-
ing did occur, would it be enough to offset any. increase in the· price
of cognitive services so as to lower overall health care costs? Would
the resulting output be more beneficial to consumers than the current
one? These questions demonstrate the risk inherent in permitting
price and output mix to be determined or redirected by private agree-
ment among competitors who have a sta.ke in the· outcome.33
Finally, the means ASIM plans to use to develop its RVG highlights
some of the dangers. ASIM proposes to derive appropriate relative
values through a "consensus" building process-polling physicians by
means of the Delphi technique. A recent study on the pros and cons
of various relative value guide alternatives prepared for the Depart-
ment of Health and Human Services, noted that if the Delphi tech-
nique is used, the representational nature of the polled group is
critically important.34 Physicians "would have a financial stake in the
outcome of the RVS determinations and thereby have a substantial
conflict of interest if empanelled to determine an RVS."35 The study
explains:
ro the extent that various goals of an RVS would be encouraged as part of a group
lecision process, e.g., [the goal of] more adequately reward[ing] cognitive services, the
rocess becomes less that of finding a solution and more that of achieving the most
olitically acceptable choice. The findings of research on formal, group decision-making
•r problem solving tasks [showing the potential efficacy of such efforts] are unlikely
be valid for group choice tasks in which participants have a stake in the outcome
'.d no objectively correct solution exists. Id.
,r this and the other foregoing reasons it is not at all clear that
1certed use of the ASIM RVG would achieve the cost reductions and
1eficial public health policy results ASIM has projected;
)ther possible justifications are also unlikely to provide an ade-
tte ground of defense. Widespread adherence to a single RVG could
vide a common benchmark for physician pricing. Arguably, this
'd facilitate enhanced price competition and comparison shopping 	-
ng physicians by consumers and };ealth plans on the basis of the
rent conversion factors used by physicians. Some procompetitive
fits of this sort could conceivably result from standard adherence ·
,ingle RVG, but it is entirely speculative how substantial those
;upra p. 12.
A, 104 S.Ct. at 2948.
oson, Group Decision-Making Methods, in Urban Institute Study, supra note 20, at 123.
; 121.
-

ADVISORY OPINION
benefits would be and they would iikely not outweigh the anticompeti-
tive impact of concerted use of the RVG. Although insurers-could
possibly have benefitted significantly some years ago from such pric-
ing by physicians, most insurers now have or can obtain computer
profiles on physician fees that provide data on pricing differentials
among physicians.36
RVGs in some contexts can serve the legitimate, unilateral business
needs of third-party payors, promoting competition and efficiency. An
RVG adopted for use by an insurer, self-insured employer, health
maintenance organization, or the government for its O'Yn use as a
third-party payor could well be valuable. Here, when a horizontal
agreement among physicians to adhere to the ASIM RVG is a realistic
possibility, it is also possible that some procompetitive efficiency ben-
efits could be achieved from its unilateral use by individual third-
party payors. It is, however, unclear how substantial such benefits
would be. More important, if third-party payors have had a critical
need for an RVG, it is not clear why private entrepreneurs, research
centers, or the payors themselves would not have already satisfied
that need, with whatever physician consultation was necessary, short
of medical society promulgation of the proposed RVG with its attend-
ant risks.37
Finally, informational benefits could flow from the availability of
the ASIM RVG for unilateral use by physicians in the marketplace.
Such benefits,· however, would not be present when physicians con-
spire to adhere to the RVG, and do not merely use it as an informa-
tional tool. Such efficiencies would not, therefore, appear to constitute
a valid justification for the unreasonable pricing agreement that is a
risk of ASIM's proposal.
The Commission concludes, on balance, that any procompetitivf
efficiency benefits flowing from ASIM's proposed conduct would no
be likely to outweigh the anticompetitive dangers of the agreemen
to adhere to ASIM's RVG that is a serious risk of its proposal t
develop an RVG raising the relative prices of cognitive services.
Alternative Actions to Address the Cognitive/Procedural Disparit
There are actions ASIM can take to further its goal of reducing t
alleged reimbursement disparity between cognitive and procedu:
services that would not appear to raise antitrust problems and tJ
may be helpful to public and private third-party payors. To aid thi
party payors in developing sound reimbursement-programs and
teria, ASIM ·has available a range of actions that do not requin
incurring antitrust risk through development of a comprehen
36 This information is based upon staff interviews with representatives of large and small insurers anc
party payor administrators.
37 Commission staff interviews of representatives of insurers generally indicated a lack of enthusias:
medical society developed RVG.

v~V 	FEDERAL TRADE COMMISSION· DECISIONS
RVG and its dissemination to both thi;d-party payors and all its
member physicians. For example, ASIM can seek to persuade third.;.
party payors to change their reimbursement methods or arnounts
without running afoul of the antitrust laws so long as there· is no
coercive conduct engaged in or threatened, nor any price agreement
entered into between ASIM and any third-party payor lessening com-
petition among ASIM's members. ASIM can•. lobby Congress or the
Department of Health and Human Services for changes it desires in
physician reimbursement. Expressions of opinion on the policy "ques-
tion of reducing the reimbursement disparity between cognitive and
procedural services as would be contained in an ASIM "white paper"
do not constitute a restraint of trade and also fall within the ambit
of protected free speech. Finally, ASIM can conduct research and
analyses that could be used with other information by the Depart-
ment of Health and Human Services or other third-party payors in
constructing an RVG. ASIM could, for example, study, analyze and
report on the time, complexity, or costs of specific services performed
by internists without developing a formal RVG mechanism and dis-
seminating it to ASIM's member physicians.
Conclusion
The Commission has determined that the danger of an anticompeti-
ive agreement in restraint of trade is sufficiently great that it cannot
ive approval to ASIM's proposed course of conduct. ASIM can,
1ough, legitimately engage in alternative actions to redress the reim-
irsement inequities that it perceives. This advisory opinion does not
·fleet a determination by the Commission that ASIM's proposed
nduct would necessarily violate the antitrust laws if undertaken.
lr does it denigrate ASIM's concerns about the public health and
it implications of current third-party payor reimbursement pat-
ns. Rather, the Commission has determined only that advance
,roval cannot be given for the specific actions ASIM has proposed.
s advisory opinion, like all those the Commission issues, is limited
he proposed conduct about which advice has been requested.
v direction of the Commission.
Letter of Request
March 1, 1984
Mr. Muris:
behalf of our client the American Society of Internal Medicine
W'), we hereby request an advisory opinion pursuant to 16
§§ 1.1 to 1.4, concerning the development and dissemination of

ADVISORY OPINION 	521
a relative value guide designed to reduce the cfisparity in reimburse-
ment between cognitive and procedural physician services.
I. Background
The American Society of Internal Medicine is the national associa-
tion of physicians specializing in internal medicine. ASIM believes
that current reimbursement policy provides the wrong incentives for
utilizing physician services and that these incentives need to be reeva-
luated. For example, under present insurance payment systems
physicians are encouraged, by the high level ofreimbursement, to use
costly technological and procedural services-EKGs, X-rays and sur-
gical and diagnostic procedures. At the same time, physicians are
discouraged, by the low level of reimbursement, from utilizing more
time consuming cognitive services-diagnosing patient health prob-
lems, providing preventive education, and evaluating lifestyle effects
on health.
ASIM believes that the physician reimbursement system should be
revalued to increase the relative value .of cognitive services and de-
crease the relative value of procedural services, in order to encourage
the use of more personal services and discourage the overuse of proce-
dural services. It is further believed that an increase in the relative
amount at which cognitive services are reimbursed, as compared to
procedural services, would encourage physicians to spend more time
and effort in personalized aspects of care. The increased value of
cognitive services should also provide new incentives for more physi-
cians to choose primary care specialities utilizing relatively large
amounts of cognitive services.
II. Activities in Question
ASIM wishes to promote the concept of changing the physiciar
reimbursement incentives, away from costly technical services am
toward less costly personal care services-the cognitive services. l1
this effort, ASIM will develop and disseminate its evaluation as t
how cognitive services can be valued when compared to procedun
services to supply an alternative to the current reimbursement sy
tern. ASIM will also propose relative value guides for listed medic:
and surgical services based on factors designed to reduce the discre
ancy between cognitive and procedural services.
Initially, ASIM proposes to develop relative value guides only f
those cognitive and procedural services provided by physicians w
specialize in internal medicine. ASIM intends in the future to we
with other physician organizations-including the surgical societ
-to develop relative value guides for all listed medical and surgi
services, also based on factors designed to reflect· relative differen
in the cognitive skills and costs required to provide each service

522 	FEDERAL.TRADE COMMISSION DECISIONS
. - .
These relativ.e value guides("RVG proposal") will contain no con-
version factors or pricing information of any kind and will· in noway
constitute a fee schedule but, instead, "7illmerely list medical services
against which relative values will be assigned based on a listed set of
relevant factors. As a result, the RVG proposal will merely describe
the relative cost and difficulty of certain cognitive services in relation
to otherservices .. In_this regard, many third party payors agree with
the need to reduce the disparity in payment incentive but point to the
unavailability of any RVG that accomplishes the desired resuft.
The development of such a relative value guide for internists' ser.;.
vices will necessitate that ASIM consult with various other physician
organizations -representing the subspecialties of internal medicine
(cardiology, gastroenterology, infectious disease, allergy, et al). Each
organization will be asked to share with ASIM its assessment of the
relative time, complexity, training, and overhead costs involved in
each service commonly provided by internists in its subspecialty, and
the recommended relative value for each based on these factors.
ASIM will then take these recommendations, develop a draft RVG,
and attempt to build a consensus among the various internal medi-
cine organizations in support of the new RVG as a valid basis for
reducing the disparity between cognitive and procedural services.
The RVG proposal will be developed in a "white paper" which will
explain the problems caused by the cognitive-procedural service reim-
bursement disparity and will provide written examples, by way of
relative value guides, as a method to reduce such disparity. The
"white paper" will illustrate "how to" use the relative value guides
~o change the reimbursement structure from the current procedural
1ervice basis to a cost of resources basis. The purpose of the "white
)aper" will be to pursuade and it will itself emphasize its voluntary
.nd advisory nature. It will contain no explicit or implicit threats of
ny kind against physicians, payors or purchasers. Nor will ASIM
;sue any such threats in connection with its dissemination or. other-
ise.
ASIM intends to send the RVG proposal to its members, third party
1yors, and preferred provider organizations ("PPOs") and request
at they consider using the RVG proposal as a guide to develop a
imbursement program consistent with the approach contained in
e proposal. ASIM also intends to hold follow up discussions and-
,etings with interested payors. ASIM will further advise each ofits
ysician members to evaluate the proposal and will recommend that
vsicians supportive of the concept request a reevaluation of the
1tive values of physician services in existing or proposed PPO
angements, and to participate in any such reevaluat1on. ASIM will
, however, engage in coercive conduct of any kind in this connec-
(, nor will it serve as common agent for any of its members which

f\.LJ V .11.Jvu,,. ---- __ ..
may be negotiating payments, pricing and reimbursement issues with
PPOs, third party payors or purchasers,- or-other perso:r:i~ or organiza-
tions.
Finally, to facilitate the critical discussion of the issues involved
and to promote the concept of RVG within the medical profession,
ASIM will exchange information regarding the relative value of vari-
ous services with the American Academy of Family Physicians, the
American Academy of Pediatrics or other primary care organizations.
However, no price information of any kind will be considered, dis-
cussed, or transmitted in any such communication, nor will any ex-
plicit or 	implicit 	threat 	or coercive 	condu~t 	of any 	kind 	be
undertaken.
III. Statutory. P~ovision
The foregoing activities raise questions under Section 1 of the Sher-
man Actl and Section 5 of the Federal Trade Commission Act.2
IV. Present Law
It is clear that agreements to fix prices or to set fee schedules, or
other arrangements which produce anticompetitive effects, violate
the antitrust laws. Arizona v. Maricopa County Medical Society, 102
S.Ct. 2466 (1982) (''Maricopa").
The Supreme Court has recently determined that an agreement to
establish a fee schedule constitutes per se price fixing. See Maricopa.
Although the Federal Trade Commission ("FTC") has not litigated
that issue, it has obtained consent orders by which certain profession-
al association agreed to withdraw and to refrain from developing in
the future any RVG which also contained conversion factors. In re
California Medical Association, 93 F.T.C. 519 (1979); In re Minnesota
State Medical Association, 90 F.T.C. 337 (1977).3
Nevertheless, the mere development and circulation of an RVG,
without conversion factors, is price neutral and does not necessarily
have an anticompetitive purpose or effect. Moreover, activities
proposed herein would not involve the implementation of any particu-
lar RVG. Indeed individual physicians, third party programs and
purchasers of health care all would be explicitly advised to make
independent decisions regarding the implementation of any such
proposal. Finally, it is significant that the ASIM proposed RVG is
designed to reduce total health care costs by creating incentives to
I 15 U.8.C. 1
2 15 U.s.c. 45
3 Although the complete facts are not known, the FTC has also made agreements and obtained consent orderi
wherein certain professional society have agreed, among other things, to refrain from developing relative valu1
studies where no mention of conversion factor was made. In re American College of Radiology, 89 F.T.C. 144 (1977)
In re American College of Orthopaedic Surgeons, 88 F.T.C. 968 (1976); In re American College of Obstetricians an,
Gynecologists, 88 F.T.C. 955 (1976).

524
('
I
\~
FEDERAL TRADE COMMISSION DECISIONS
. - . 	.,. - - -- -
substitute low cost care for high cost care. Many of the existing physi-
cian reimbursement systems create precisely the opposite incentive.
Judicial precedent has determined that without conversion factors
the circulation of relative value guides among association members,
individual physicians, component societies, agencies of federal and
local government and third party payors, does not violate the anti-
trust prohibitions against price fixing when the RVG is intended only
as suggested methodology for arriving at appropriate fees. J.]nited
States v. American Society of Anethesiologist, 473 F. Supp. 147 (1979).
CASA"). In ASA the court found that the publication and circulation
of RVG did not amount to an agreement to use the RVG in pricing
services and that the circulation of RVG did not curtail competition
or interfere with the setting of prices in the marketplace. Id.
Indeed, the FTC has recently addressed the issue of whether the
mere circulation of even price related information amounted to price
fixing and concluded that merely providing information, opinions or
advice does not violate Section 5 of the Federal Trade Commission Act
("FTCA"). In re Michigan State Medical Society, Dkt No. 9129, 3
Trade Reg. Rep. (CCH) n21,991 (Feb. 17, 1983). ("Michigan"). Al-
though the Commission in Michigan determined that the medical
society's agreement to fix prices and to boycott third party payors
violated Section 5 of the FTCA, the Commission exempted exchanges
of information which did not amount to an imposition of a price
related agreement. Accordingly, price related communications that
do not involve an explicit or implicit agreement or an attempt to
reach an agreement were held not to violate Section 5.
The Supreme Court has also recognized that even the mere sharing
of price related information does not in itself violate the antitrust
laws. United States v. United States Gypsum Co., 428 U.S. 422 (1979).
CGypsum" ). In this regard the Court has stated that:
[t]he exchange of price data and other information among competitors does not invaria-
bly have anticompetitive effects; indeed such practices in certain circumstances in-
crease economic efficiency and render markets more, rather than less, competitive.
438 U.S. 422, 440 n. 16 (1978). Thus, the Supreme Court refused to
mandate the conclusion that a price fixing violation automatically
follows from a finding that the exchange of price information has ?n
impact on prices.
With regard to discussions with third party payors, an association
may send information and may express the views of its membership.
Michigan at 22,469 (where the Commission determined that the order
;o cease and desist did not reach noncoercive expressions of the medi-
~al society's views or the views of its members when made to third
>arties). 4 Moreover, advocating physician participation in decision
4 Although binding joint negotiation with third party payors may amount to price fixin" _c;:.,,.t, 0 - " ~ •

ADVISORY OPINION 	525
making, does not create anticompetitive effects; as long as Sl!Gh ad-
vocacy is 11oncoercive. Michigan at 22,470; Maricopa, 102 S.CT-it
2477-78.
V. Conclusion
ASIM believes that its activities with regard to the development
and circulation of the RVG proposal will not have a probable or
foreseeable anticompetitive effect on physician's fees and should not
be precluded by the antitrust laws. ASA; Michigan at 22,469. Indeed,
we believe that our proposal, if adopted, will be procompetitive and
reduce medical care costs. As previously indicated, ASIM 1
s efforts will
be purely advisory in nature and are intended only as a suggested
methodology to reduce the disparity in relative values between cogni-
tive and procedural physician services. In addition, no conversion
factors will be developed, proposed or disseminated so that the propos-
al is price neutral.
The circulation of the RVG proposal among individual physicians,
PPOs and third party payors will notinterfere with the PPO's or third
party payor's ability to establish whatever pricing strategy they so
desire. Moreover, ASIM will not bind nor attempt to bind or coerce
its members in any way. Each member will continue to be free to
make independent fee decisions.
We will be happy to supply additional information and to discuss
this proposal with you in person. We appreciate your prompt atten-
tion to.this matter.
Respectfully submitted,
Isl William G. Kopit
Epstein Becker Borsody & Green,
P.C.
preclude third party payor discussions where each member reserves and exercises independence in pricin1
sions. Virginia Excelsior Mills Inc. v. ITC ("Virginia") 256 F.2d 538, 541 (where the court noted that the
a common agent is not illegal when each member reserves and exercises independence in pricing and
material matters). Here, of course, ASIM has stated explicitly that it would not act as a bargaining agent
.,....,mhers or any other person or organization attempting to implement the RVG.