Fee setting not the same as illegal price fixing

by • May 1, 2009 • UncategorizedComments Off on Fee setting not the same as illegal price fixing1946

© 2009 The Medical-Legal News


By Pat Bemis

My last article on a formula for the fair market value of nurse consultant fees raised some issues. One was regarding discussing fees locally. I was told it was illegal to discuss fees because it is “price fixing.” I have often heard this same refrain on listservs and at local AALNC meetings. In this article, I will set the record straight and hopefully, bust the myth once and for all.
Fee setting is trying to determine a fee for your consulting services. It is a prudent action when determining your fees. Price fixing is when prices are set in advance rather than by the free market.
Consumers rely on free and open competition to receive the best goods and services at the lowest prices. The competition process only works when vendors set prices honestly and independently. Price fixing, rigging of bids, and other forms of collusion are illegal. Perpetrators are subject to federal criminal prosecution by the Department of Justice under the Sherman Act of 1890.
Most states also have statutes that prohibit fixing the price of a product or service with another individual or business. The general rule is vendors (providers of products and services) may not agree to set a certain price to create a fixed price within a specific market that has an anti-competitive intent or effect. Conformity of fees (set individually) within a certain consulting area is common and is not illegal.
An example of price fixing taken from an archived USA Today article by David Lieberman reveals that in the late 1990s, attorneys general in New York and Florida joined in a lawsuit by 39 other states saying that consumer CD prices were artificially high between 1995 and 2000 from a practice known as minimum-advertised pricing. The record companies subsidized ads for retailers and in return the stores agreed to sell CDs at or above a certain price. The five largest music companies and three of the U.S.’s largest music retailers agreed in April to pay $67.4 million and distribute $75.7 million in CDs to public and non-profit groups to settle a lawsuit.
Understanding the difference between fee setting and price fixing can promote free and open competition among consultants and other professionals. I recommend that you determine your fees by the formula presented in my last article and discuss the fee setting process with your colleagues.
As always, I am available to answer questions. You can reach me by email atbemis@nnba.net or at (321) 633-4610. •

Pat Bemis is president of the National Nurses in Business Association,www.nnba.net.

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