California Medical Association

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IN THE MATTER OF CALIFORNIA MEDICAL ASSOCIATION MODIFYING ORDER IN REGARD TO ALLEGED VIOLATIONS OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-2967. Consent Order, April 17, 1979-Modifying Order, April, 198.5 In response to a petition fied by the California Medical Association ("CMA"), this Order reopens the proceeding and modifies the consent order entered in Docket G-2967, 93 F. G 519, by deleting Paragraph mC), which prohibits the association from advising in favor of or against any relative value scale developed by third parties, and inserting a provision that permits CMA more freedom to discuss issues relating to reimbursement with governmental entities and third-party payers. Such modification is consistent with the Commission s decision in Docket 9219 Michigan State Medical Society, 101 F.'l. C. 191 , and its modified order in Docket C-2855 American College of Obstetricians and Gynecologists 104 F. C. 524 (1985). The Commission, however, denied the other modifications requested by CMA holding that CMA had failed to show that changed circumstances or the public interest warranted further modification of the order. ORDER REOPENING AND MODIFYING FINAL ORDER By petition fied October 1, 1984, the California Medical Association CMA") asked the Commission to reopen and modify the Commission order in Docket No. G-2967 ("Order ) entered with CMA's consent on April 17, 1979 (93 F. C. 519). CMA requested that the Commission modify the Order by a) deleting Paragraph n(C) of the Order, which prohibits CMA from advising in favor of or against any relative value scale developed by third parties (except that CMA is permitted provide historical data), and b) inserting a provision identical to a provision contained in the Commission s Order in Michigan State Medical Society, Docket No. 9129, 101 F. C. 191 (1983) ( Michigan State that would allow CMA more freedom to discuss issues relating to reimbursement with third-party payers and governmental entities. CMA also requested that the Commission modify the order so that it would no longer prohibit CMA from developing and disseminating a relative value scale. CMA's petition was placed on the public record for comment, and none of the comments received specifically related to the modification of Paragraph mC).

Upon consideration ofCMA' s petition and other relevant information, the Commission finds that the public interest would be served by deleting Paragraph mC) ofthe Order and by inserting the relevant provision contained in the order in Michigan State. Modification is consistent with both the Commission s decision in Michigan State _ _ .... .. .. y. Modifying Order 105 F. and its modification ofthe Order in American College of Obstetricians and Gynecologists, Docket No. G-2855, August 28, 1984 (104 F. 5241- The Commission has denied the other modifications requested by CMA because CMA failed to show that changed circumstances or the public interest requires such modifications of the order. Th refore the Order continues to prohibit CMA from developing or circulating its own relative value guide for use by its members. Relative value studies may have anticompetitive consequences in several ways. First, they establish price relationships that may become stable without regard to quality or eficiency differences. Second, they may result in new and separate billing categories that are fragmented from others, thereby resulting in higher prices simply because charges are made for more numerous services. Third, ifmedical associations were permitted to publish RVS's it could lead to concerted or interdependent adherence to an RVS by physicians. Fourth, RVS' s may facilitate an actual agreement by physicians to fix prices by providing a "starting point" from which collusion may occur. Given these possibilities of competitive harm and the absence of a convincing showing of the need for CMA to develop an RVS, we believe the public interest lies in the continuation of the prohibition against CMA.

In addition, although the Order no longer wil prohibit CMA from discussing relative value scales with governmental entities and thirdparty payers, serious antitrust concerns would arise were CMA to negotiate or attempt to negotiate an agreement with any such party or engage in any type of coercive activity to effect such an agreement. Accordingly, It is ordered That this matter be, and it hereby is, reopened and that the Order in Docket No. G-2967 be modified 1) to delete Paragraph IIC) and to redesignate Paragraphs II(D) and II(E) ofthe Order as Paragraphs II(C) and IID) respectively; 2) to renumber Paragraphs , IV and V of the Order as Paragraphs IV, V and VI respectively; and 3) to insert the following:

II.

It is further ordered That this order shall not be construed to prevent CMA from:

A. Exercising rights permitted under the First Amendment to the United States Constitution to petition any federal or state government, executive agency, or legislative body concerning legislation ,J.,-,... T'.. ....nT r1Cl.,", t", i..- \"l\.Ll.U.tl 11\. lVl viCAL Ati UC. 'L(': 277 Modifying Order B. Providing information or views, on its own behalf or on behalf of its members, to third-party payers concerning any issue, including reimbursement.

Complaint 105 F.