The relationship between medical organizations of doctors and health plans like Blue Shield "raises inherent antitrust and conflict-of-interest problems." according to a staff report of the Federal Trade Commission.
The control over health plans by such doctors groups results in "significantly higher reimbursement rates." according to the three-year investigation, which calls for new FTC regulations prohibiting physicians groups from certain forms of participation in medical plan management.
The staff investigation uncovered internal documents from physician organizations and Blue Shield plans referring to the plans as the "economic arm of the medical profession," and as "(agencies) of the medical profession."
The report found "numberous specific instances in which the medical profession's interests have prevailed over subscribers' interests in the making of Blue Shield policy."
"We have found," the staff said, "that medical participation in the control of many Blue Shield plans in sufficiently great that physicians and physician organizations are able to control or influence economically significant decisions made by the plans.
The staff called for the FTC Bureau of Competition to begin a rulemaking proceeding toward developing a rule that would prohibit physicians organizations from participating in the control of medical plans, and limit the extent to which individual physicians participate in controlling them.
As of 1978, the report noted, physicians organizations selected the majority of members of the governing boards of 32 of the 70 Blue Shield plans across the nation.
The report concludes that it is unfair for any physician organization to participate directly or indirectly in controlling "open-panel" medical prepayment plans.
"Open-panel" plans are those, like Blue Shield plans, that finance medical services rendered by physicians who compete with each other on a fee-for service basis to provide services to plan subscribers.
"Although we cannot at this time calculate the cost savings that would result from the bill," the staff said, "we believe that they would be substantial."