[Federal Register: January 5, 2009 (Volume 74, Number 2)]
[Notices]
[Page 289-291]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05ja09-58]
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FEDERAL TRADE COMMISSION
[File No. 051 0252]
Boulder Valley Individual Practice Association, et al.; Agreement
Containing Consent Order To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed Consent Agreement.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices or unfair methods of competition. The attached Analysis to
Aid Public Comment describes both the allegations in the draft
complaint and the terms of the consent order--embodied in the consent
agreement--that would settle these allegations.
DATES: Comments must be received on or before January 22, 2009.
ADDRESSES: Interested parties are invited to submit written comments.
Comments should refer to ``Boulder Valley IPA, File No. 051 0252,'' to
facilitate the organization of comments. A comment filed in paper form
should include this reference both in the text and on the envelope, and
should be mailed or delivered to the following address: Federal Trade
Commission/Office of the Secretary, Room 135-H, 600 Pennsylvania
Avenue, N.W., Washington, D.C. 20580. Comments containing confidential
material must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with Commission Rule 4.9(c). 16 CFR
4.9(c) (2005).\1\ The FTC is requesting that any comment filed in paper
form be sent by courier or overnight service, if possible, because U.S.
postal mail in the Washington area and at the Commission is subject to
delay due to heightened security precautions. Comments that do not
contain any nonpublic information may instead be filed in electronic
form by following the instructions on the web-based form at (http://
secure.commentworks.com/ftc-BoulderValleyIPA). To ensure that the
Commission considers an electronic comment, you must file it on that
web-based form.
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\1\ The comment must be accompanied by an explicit request for
confidential treatment, including the factual and legal basis for
the request, and must identify the specific portions of the comment
to be withheld from the public record. The request will be granted
or denied by the Commission's General Counsel, consistent with
applicable law and the public interest. See Commission Rule 4.9(c),
16 CFR 4.9(c).
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The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. All timely and responsive public comments, whether filed
in paper or electronic form, will be considered by the Commission, and
will be available to the public on the FTC website, to the extent
practicable, at www.ftc.gov. As a matter of discretion, the FTC makes
every effort to remove home contact information for individuals from
the public comments it receives before placing those comments on the
FTC website. More information, including routine uses permitted by the
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Privacy Act, may be found in the FTC's privacy policy, at (http://
_____________________________________-
www.ftc.gov/ftc/privacy.shtm).
FOR FURTHER INFORMATION CONTACT: Constance M. Salemi, FTC Bureau of
Competition, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580, (202)
326-2701.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec. 2.34 of
the Commission Rules of Practice, 16 CFR 2.34, notice is hereby given
that the above-captioned consent agreement containing a consent order
to cease and desist, having been filed with and accepted, subject to
final approval, by the Commission, has been placed on the public record
for a period of thirty (30) days. The following Analysis to Aid Public
Comment describes the terms of the consent agreement, and the
allegations in the complaint. An electronic copy of the full text of
the consent agreement package can be obtained from the FTC Home Page
(for December 24, 2008), on the World Wide Web, at (http://www.ftc.gov/
os/2008/12/index.htm). A paper copy can be obtained from the FTC Public
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW, Washington,
D.C. 20580, either in person or by calling (202) 326-2222.
Public comments are invited, and may be filed with the Commission
in either paper or electronic form. All comments should be filed as
prescribed in the ADDRESSES section above, and must be received on or
before the date specified in the DATES section.
Analysis of Agreement Containing Consent Order To Aid Public Comment
The Federal Trade Commission has accepted, subject to final
approval, an agreement containing a proposed consent Order with Boulder
Valley Individual Practice Association (``BVIPA''). The agreement
settles charges that BVIPA violated Section 5 of the Federal Trade
Commission Act, 15 U.S.C. Sec. 45, by, among other things,
orchestrating and implementing agreements among competing physician
members of BVIPA to fix the price at which BVIPA physicians contract
with health plans.
The proposed consent Order has been placed on the public record for
30 days to receive comments from interested persons. Comments received
during this period will become part of the public record. After 30
days, the Commission will review the agreement and the comments
received and decide whether to withdraw from the agreement or make the
proposed Order final.
The purpose of this analysis is to facilitate public comment on the
proposed Order. The analysis is not intended to constitute an official
interpretation of the agreement and proposed Order or to modify their
terms in any way. Further, the proposed consent Order has been entered
into for settlement purposes only and does not constitute an admission
by the proposed respondent that it violated the law or that the facts
alleged in the Complaint (other than jurisdictional facts) are true.
The Complaint
The allegations of the Complaint are summarized below.
BVIPA is a type of organization commonly referred to in the health
care industry as an ``independent practice association'' because its
members consist of independent physicians in solo and small group
practices. BVIPA is controlled by its approximately 365 physician
members in the Boulder County, Colorado area.
The Complaint challenges BVIPA's conduct starting in 2001, when
BVIPA, on behalf of its members, began to negotiate the prices and
terms in payer contracts at which its otherwise competing physician
members would provide services to subscribers of health plans. BVIPA is
governed by a board of directors consisting of physician members
elected by the membership. Physicians joining BVIPA sign an agreement
that gives BVIPA the authority to contract with health plans on their
behalf, and they agree to accept the payment for their services that
BVIPA negotiates. Members can provide input to BVIPA on whether a
proposed rate level was acceptable.
Between 2001 and 2006, BVIPA, on behalf of its members, negotiated
and signed agreements with approximately 17 payers and conducted
periodic renegotiations of its contracts with large payers to obtain
rate increases. BVIPA threatened payers facing rate increases with
termination of their contracts when they refused to negotiate or
otherwise respond to BVIPA's demands. Payers threatened with
termination ultimately yielded to BVIPA's price demands.
BVIPA actively discouraged members from contracting directly with
payers. Some payers attempted to contract with some of BVIPA's
physician members with specialties that were important for the
marketing of a provider network, and found that the providers refused
to contract with payers outside BVIPA. Consequently, payers had to
negotiate and sign contracts with BVIPA to ensure that these physicians
would participate in the payers' health plans.
In 2004, BVIPA purported to offer payers three options for
contracting with BVIPA members: a single-signature contract that
``delivered the entire BVIPA network,'' a ``modified messenger model''
that ``may or may not deliver our entire network;'' and direct
contracting with individual members outside the IPA. Although BVIPA
claimed to offer payers a choice of contracting methods, BVIPA did not
develop or use a messenger model, and it continued to encourage its
members not to contract outside the IPA.
BVIPA's conduct had the effect of unreasonably restraining trade
and hindering competition in the provision of physician services by
unreasonably restraining price and other forms of competition among
physicians; increasing prices for physician services; and depriving
health plans, employers, and individual consumers of the benefits of
competition among physicians. BVIPA members did not engage in any
efficiency-enhancing integration of their practices sufficient to
justify the its challenged conduct. Accordingly, the Complaint alleges
that BVIPA violated Section 5 of the FTC Act.
The Proposed Consent Order
The proposed Order is designed to remedy the illegal conduct
charged in the Complaint and prevent its recurrence, while leaving
BVIPA free to engage in legitimate, potentially procompetitive conduct.
It is similar to recent consent orders that the Commission has issued
to settle charges that physician groups engaged in unlawful agreements
to raise fees they receive from health plans.
The proposed Order's specific provisions are as follows:
Paragraph II.A prohibits BVIPA from entering into or facilitating
any agreement between or among any physicians: (1) to negotiate with
payers on any physician's behalf; (2) to refuse to deal, or threaten to
refuse to deal, with payers in furtherance of any conduct or agreement
prohibited by any other provision of Paragraph II, (3) on any terms on
which a physician is willing to deal with any payer; or (4) not to deal
individually with any payer, or not to deal with any payer other than
through BVIPA.
Other parts of Paragraph II reinforce these general prohibitions.
Paragraph II.B prohibits BVIPA from facilitating exchanges of
information between physicians concerning any physician's willingness
to deal with a payer or the terms or conditions, including price terms,
on which the physician is willing to deal with a payer. Paragraph II.C
bars
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attempts to engage in any action prohibited by Paragraph II.A, or II.B,
and Paragraph II.D. proscribes BVIPA from inducing anyone to engage in
any action prohibited by Paragraphs II.A through II.C.
As in other Commission orders addressing providers' collective
bargaining with health-care purchasers, Paragraph II excludes certain
kinds of agreements from its prohibitions. First, BVIPA is not
precluded from engaging in conduct that is reasonably necessary to form
or participate in legitimate joint contracting arrangements among
competing physicians, such as a ``qualified risk-sharing joint
arrangement'' or a ``qualified clinically-integrated joint
arrangement.'' The arrangement, however, must not restrict the ability
of, or facilitate the refusal of, physicians who participate in it to
contract with payers outside of the arrangement.
As defined in the proposed Order, a ``qualified risk-sharing joint
arrangement'' possesses two characteristics. First, all physician
participants must share substantial financial risks through the
arrangement, such that the arrangement creates incentives for the
physician participants jointly to control costs and improve quality by
managing the provision of services. Second, any agreement concerning
reimbursement or other terms or conditions of dealing must be
reasonably necessary to obtain significant efficiencies through the
joint arrangement.
A ``qualified clinically-integrated joint arrangement,''on the
other hand, need not involve any sharing of financial risk. Instead, as
defined in the proposed Order, physician participants must participate
in active and ongoing programs to evaluate and modify their clinical
practice patterns in Order to control costs and ensure the quality of
services provided, and the arrangement must create a high degree of
interdependence and cooperation among physicians. As with qualified
risk-sharing arrangements, any agreement concerning price or other
terms of dealing must be reasonably necessary to achieve the efficiency
goals of the joint arrangement.
Paragraph III, for three years, requires BVIPA to notify the
Commission before it enters into any arrangements to act as a messenger
or an agent on behalf of any physicians, with payers regarding
contracts. Paragraph IV sets out the information necessary to make the
notification complete.
Paragraph V, for three years, requires BVIPA to notify the
Commission before participating in contracting with health plans on
behalf of either a qualified risk-sharing or a qualified clinically-
integrated joint arrangement. Paragraph VI sets out the information
necessary to satisfy the notification requirement.
Paragraph VII imposes other notification obligations on BVIPA and
requires the termination of certain contracts that were entered into
illegally. Paragraphs VII.A requires BVIPA to distribute the Complaint
and the Order to (1) physicians who have participated in BVIPA since
2001; (2) to various past and current personnel of BVIPA; and (3) to
payers with whom BVIPA has dealt since 2001. Paragraph VII.B requires
BVIPA, at any payer's request and without penalty, to terminate its
existing contracts with the payer for the provision of physician
services. Paragraph VII.B. allows certain contracts currently in effect
to be extended at the written request of the payer no longer than one
year from the date that the Order becomes final. Paragraph VII.C
requires BVIPA to distribute payer requests for contract termination to
physicians who participate in the contract. Paragraph VII.D requires
BVIPA, for three years, to provide new members, personnel, and payers
not previously receiving a copy, a copy of the Order and the Complaint.
Paragraph VII.D also requires BVIPA to publish annually a copy of the
Order and the Complaint in its newsletter.
Paragraphs VIII, IX, and X impose various obligations on BVIPA to
report or provide access to information to the Commission to facilitate
the monitoring of compliance with the Order. Finally, Paragraph XI
provides that the Order will expire in 20 years.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. E8-31384 Filed 1-2-09: 8:45 am]
BILLING CODE 6750-01-S