Criminalizing Independent Physician Practices

DrRich | December 13th, 2010 - 5:27 am


It should by now be obvious to everyone that, in its great push to take over the American healthcare system, our government will do everything it must to eliminate private practice physicians. This is necessary because Obamacare (or any government-controlled healthcare system) simply cannot operate unless physicians cooperate completely with the Central Authority. Physician behavior absolutely must be controlled, and so doctors who insist on acting independently must either be reeducated or eliminated.

(Don’t get too exercised about DrRich’s language here – he is talking mainly about forcing recalcitrants into early retirement, or career changes. The other kind of “elimination” probably will not become necessary.)

Accordingly, under Obamacare all doctors are to be driven into federally-sanctioned organizations that will operate strictly under government directives. The current parlance for such an organization is the “Accountable Care Organization.”

The ACOs will be run by administrators who (theoretically) will become expert at navigating the morass of rules and regulations now being conjured up under Obamacare.  These administrators will interpret the rules and regulations in such a way as to determine The Way It Must Be Done, and then will pass The Way It Must Be Done down to the ACOs’ clinical chiefs (doctors who perhaps used to practice medicine, and maybe still do, a little, but who are now mainly brevet administrators), and the clinical chiefs will finally pass the restrictive rules of engagement down to the doctors who will actually take care of the patients. These doctors, struggling in the trenches, will attempt assiduously to follow those rules without exception, if they would like to keep their jobs as well as avoid a federal fraud rap. The patients, of course, will get whatever they get, but always with official assurances that whatever it is they get, it will be of the highest quality.

As DrRich has pointed out, doctors have very little leverage under this kind of system. Not only do they have the full weight of the federal government pushing them toward their fate as functionaries within ACOs, but they also are being pushed to so assimilate by their own professional organizations. Indeed, thanks to the New Age medical ethics which their professional organizations have promulgated on their behalf, joining collectives such as ACOs is about to become the only ethical way of practicing medicine. (DrRich has shown that this is explicitly so, and that Dr. Berwick agrees.) Doctors who try to make a go of it on their own will not only be practicing extra-legally, but also extra-ethically.

So this is where we are headed.

But we’re not there yet. Far too many physicians are still fundamentally independent-minded; there is still a lot of work to be done to get all the doctors to assimilate into the Borg.

And a major step in this direction will be to eliminate Independent Practice Associations. While the systematic emasculation of IPAs has been going on for years, it is to accelerate rapidly under Obamacare.

IPAs are groups of doctors who own independent medical practices, and who join together to provide bulk services to health insurers at rates of payment that are negotiated collectively. IPAs have a long and respected history for over a half-century. But they have been on the Fed’s hit list since at least the Clinton administration.

The rules under which IPAs must operate in legally negotiating with insurance companies have become complex, illogical, restrictive, arbitrary and ultimately ironic. The full weight of the federal government has been brought to bear against IPAs, apparently to protect the large and powerful health insurance companies, not to mention government health insurers, against “price fixing” by independent doctors – while simultaneously imposing price fixing by those same insurers upon the IPA physicians .

So: not only is it a violation of anti-trust for two random doctors to have a cup of coffee and mention anything to each other about their respective reimbursement rates, it is also illegal for fellow members of an IPA (who are joined together in collective bargaining with insurers) to do so. Indeed, the only kind of negotiation that is apparently allowed (“apparently” because the actual rules are not explicit but implied, and change arbitrarily depending on which administrators are running the Federal Trade Commission) is called the “messenger model” of negotiation.  The messenger model is necessitated by the fact that physician members of the IPA are not allowed to communicate with each other about rates, so each IPA must hire a “negotiator” who communicates between individual physician IPA members and the insurer. Furthermore, physicians are not allowed to declare to the insurer what level of reimbursement they will accept (because that would be price fixing), but rather, they can only hear the proposed reimbursement rates from the insurer, and accept or reject them. And in recent years, rejecting the offer by insurers, especially government insurers, has sometimes been determined also to be physician price fixing. This system, for reasons unfathomable to DrRich, is NOT to be considered price fixing on the part of the insurers.

DrRich is not sure he has this entirely right, because it is far more complex than he has allowed, and indeed, the rules are manifestly changeable and unclear, even to professional IPA negotiators.

In fact, it has proven to be very easy (and progressively easier as the years have gone by) for IPAs to get into serious trouble with the FTC, and incur massive fines, for “violations” that are not only fundamentally harmless to any party, but that had been perfectly acceptable behaviors in the recent past. To get the full flavor of the runaway prosecutorial zeal with which the FTC has been acting against IPAs, DrRich strongly recommends that you read this article in the December Reason Magazine by S. M. Oliva. (Many thanks to concerned reader Robert R. for pointing DrRich to this article.)

When the FTC decides to prosecute an IPA for price fixing or other violations-du-jour of the negotiating process, the IPA’s only reasonable course of action is to cave in immediately, sign a consent decree, pay the always-huge and always-arbitrary fine, and then abjectly accept whatever reimbursement rates the insurance company is willing to pay. This resolution to federal charges is unattractive, but at least it gives the IPA some chance of continued survival.

And if you don’t like the terms of the consent decree being imposed upon you, for God’s sake keep your mouth shut about it. When the director of a Colorado IPA recently told the press that her organization had done nothing materially wrong, but had signed the consent decree because they simply could not afford to fight the FTC in court (a truism for any IPA), the FTC sanctioned her as an individual, and barred her from negotiating with insurance companies for two years (effectively ending her career, simply for exercising her right of free speech). Even one of the FTC’s own commissioners, in a dissenting opinion, agreed that this latter action had been a travesty. (It was carried out nonetheless).

And so, operating a medical practice in an IPA has been a pretty dicey thing for several years now.

But Obamacare escalates the risk to a whole new level.

While dealing with the FTC is itself a decidedly nasty proposition, it’s nothing compared to dealing with the Justice Department. And Obamacare brings the DOJ into the fight to eliminate “price fixing” by doctors. That is, a violation of arbitrary and unpredictably changeable rules during IPA negotiations is not just a civil matter anymore, but is potentially (at the discretion of the Feds) a criminal matter.

It looks more and more like the handwriting is on the wall for IPAs, or for any independent, private practice physician who wants to take care of insured patients.

So, once again, DrRich begs his physician friends to consider the alternatives. Think about getting out now, dropping out of the system altogether while you still can, and establishing a direct-pay practice before that, too, is rendered illegal. The window of opportunity is closing.

And, sadly, you may want to re-read DrRich’s helpful suggestions regarding black market healthcare, as that may become the only viable alternative to the Borg – and much sooner than DrRich had previously thought.

9 Responses to “Criminalizing Independent Physician Practices”

  1. Mr. Karl says:

    “…doctors who insist on acting independently must either be reeducated or eliminated.” Dr. Rich, so primitive. Try “liquidated.” It’s so much more…. Soviet.

    And yes, some doctors WILL be liquidated, eliminated, what have you, via the .50 cal, so as to put the fear of the State into any others that might be thinking of resisting.

  2. DrPoor says:

    I transitioned to a direct payment model several years ago because I could not pay off my accumulated debt and I was tired of compromising (rationing) time with my patients for the sake of third party payers. Unfortunately, I’m afraid this practice model will soon be illegal. When that happens I will look for another way to make a living.

  3. Mr. Karl says:


    Instead of looking for another way to make a living, try looking for another country that likes doctors.

    Some may say you are a traitor for leaving the Empire. “They” said the same thing about our forefathers, back in the Old World. We call them “pioneers.”

    “Every exit is an entrance to someplace else.” – Tom Stoppard

    • Gary Kerber, MD says:

      What country or countries are left that have not villified physicians or criminalized the practice of medicine?

  4. Kristina says:

    OBAMACARE how much do they care?

    If these doctors cannot operate independently, will the quality of service be affected? Yes.

    So it’s either early retirement, shift of career of migrating to other countries…

  5. I made a public comment against the Colorado IPA decision, and immediately became the target of the bile of the head of the FTC, who publicly cited me in a speech to AMA as “an unreasonable physician.”

    My comment: “This goes beyond is a return to serfdom.”

  6. amieres says:

    I believe Insurance Companies incur in price-fixing and cartelization when they affiliate doctors and other healthcare providers. They shouldn’t be allowed to negotiate anything at all with any doctors. By affiliating doctors and patients they become the ultimate broker with complete control of the negotiation process. This cartelization eliminates competition and drives up healthcare costs to levels not seen anywhere else in the world.

    A Healthcare insurance agreement should be only between the patient and the IC. An agreement to pay up to certain amounts for certain services with limitations provided in the policy. But it should be up to the patient to shop around and decide which doctors and hospitals he wishes to use depending on what he can and cannot afford or how much he wants to spend. To prevent abuse by individuals and promote rational use of the policy, premiums should be allowed to go up temporarily for those that use more of the policy allowances or, alternatively, limits should go temporarily down.

  7. Paula Berrier says:

    We must stop Obamacare…We must get rid of Obama as the president..We can not allow this to happen. We had the best medical care in the world…That will be no more when this is fully in place…

    • Dee says:

      It is already “no more”. The government reached its goal, and destroyed any semblance of medical care for the citizens. it cannot do what the constitution limits it to do, and now is destroying every industry it chooses to crush under the guise of quality. Their agenda isn’t medical care, it’s health care and their means to reach population control involves cooperation from all the compliant doctors is can produce. Kaiser killed my mother by starving her of food and water, by abandoning her for 10 days, while she lay in the hospital suffering one stroke after another and one heart attack after another. We watched, protesting with passion, to no avail. It’s not coming, it’s here. Just as evil as the Nazis, as determined as the Nazi’s, and with an agenda that ain’t pretty. RIP Mom.

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