[Federal Register Volume 74, Number 113 (Monday, June 15, 2009)]
[Notices]
[Pages 28246-28248]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-13956]
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FEDERAL TRADE COMMISSION
[File No. 051 0260]
Alta Bates Medical Group; Analysis of Proposed 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 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 July 6, 2009.
ADDRESSES: Interested parties are invited to submit written comments
electronically or in paper form. Comments should refer to``Alta Bates,
File No. 051 0260'' to facilitate the organization of comments. Please
note that your comment--including your name and your state--will be
placed on the public record of this proceeding, including on the
publicly accessible FTC website, at (http://www.ftc.gov/os/publiccomments.shtm).
Because comments will be made public, they should not include any
sensitive personal information, such as an individual's Social Security
Number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. Comments also
should not include any sensitive health information, such as medical
records or other individually identifiable health information. In
addition, comments should not include any ``[t]rade secret or any
commercial or financial information which is obtained from any person
and which is privileged or confidential. . . .,'' as provided in
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and Commission Rule
4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing material for which
confidential treatment is requested must be filed in paper form, must
be clearly labeled ``Confidential,'' and must comply with FTC Rule
4.9(c), 16 CFR 4.9(c).\1\
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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 FTC Rule 4.9(c), 16 CFR
4.9(c).
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Because paper mail addressed to the FTC is subject to delay due to
heightened security screening, please consider submitting your comments
in electronic form. Comments filed in electronic form should be
submitted by using the following weblink: (https://secure.commentworks.com/ftc-altabates) (and following the instructions
on the web-based form). To ensure that the Commission considers an
electronic comment, you must file it on the web-based form at the
weblink: (https://secure.commentworks.com/ftc-altabates). If this
Notice appears at (http://www.regulations.gov/search/index.jsp), you
may also file an electronic comment through that website. The
Commission will consider all comments that regulations.gov forwards to
it. You may also visit the FTC website at http://www.ftc.gov/ to read
the Notice and the news release describing it.
A comment filed in paper form should include the ``Alta Bates, File
No. 051 0260`` 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 H-135 (Annex D), 600
Pennsylvania Avenue, NW, Washington, DC 20580. 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.
The Federal Trade Commission Act (``FTC Act'') and other laws the
Commission administers permit the collection of public comments to
consider and use in this proceeding as appropriate. The Commission will
consider all timely and responsive public comments that it receives,
whether filed in paper or electronic form. Comments received will be
available to the public on the FTC website, to the extent practicable,
at (http://www.ftc.gov/os/publiccomments.shtm). As a matter of
discretion, the Commission 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 Privacy Act, may be found in the FTC's
privacy policy, at (http://www.ftc.gov/ftc/privacy.shtm).
FOR FURTHER INFORMATION CONTACT: Sylvai Kundig or Linda Badger, FTC
Western Region, San Francisco, 600 Pennsylvania Avenue, NW, Washington,
D.C. 20580, (415) 848-5100.
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 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 June 4, 2009), on the World Wide Web, at (http://www.ftc.gov/os/actions.shtm). 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
[[Page 28247]]
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 Alta
Bates Medical Group, Inc., (``ABMG'' or ``Respondent''). The agreement
settles charges that ABMG violated Section 5 of the Federal Trade
Commission Act, 15 U.S.C. Sec. 45, by fixing prices charged to those
offering coverage for health care services (``payors'') in the Berkeley
and Oakland, California, area and refusing to deal with payors except
on a collectively determined basis. 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 will decide whether it
should withdraw from the agreement or make the proposed Consent Order
final.
The purpose of this analysis is to facilitate public comment on the
proposed Consent Order. The analysis is not intended to constitute an
official interpretation of the agreement and proposed Consent 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 Respondent that it violated the law or that
the facts alleged in the Complaint (other than jurisdictional facts)
are true.
Alta Bates Medical Group, Inc.
ABMG is a multi-specialty independent practice association
(``IPA'') comprised of multiple, independent medical practices serving
the Berkeley and Oakland, California area. It has a total of
approximately 600 physician members, of which approximately 200 are
devoted to primary care. Since its formation, ABMG has negotiated group
contracts with payors under which it receives capitated (per member per
month) payments. These contracts shift the risk of patient illness to
the IPA by specifying that the health plan will pay the IPA a flat
monthly fee for each enrollee, with almost no regard for patient
utilization. This type of contracting is a form of financial
integration, so for anititrust purposes, the IPA is treated as a single
entity for purposes of these contract negotiations, and not as a group
of competing physicians. The complaint does not challenge ABMG's
activities concerning these contracts.
ABMG, however, also contracts on behalf of its member physicians
with health plans to provide fee-for-service medical care. Under these
arrangements, the payor compensates physicians or group practices for
services actually rendered pursuant to agreed-upon fee schedules. In
the absence of financial risk-sharing or clinical integration on the
part of providers, the IPA members are competitors for purposes of
antitrust analysis. It is ABMG's negotiation of fee-for-service
contracts that is the subject of the allegations in the Commission's
Complaint.
The Complaint
Since at least 2001, ABMG, acting as a combination of its physician
members, and in conspiracy with its members, has acted to restrain
competition with respect to fee-for-service contracts by, among other
things, facilitating, entering into, and implementing agreements,
express or implied, to fix the prices and other terms at which they
would contract with payors; to engage in collective negotiations over
terms and conditions of dealing with payors; and to have ABMG members
refrain from negotiating individually with payors or contracting on
terms other than those approved by ABMG. This type of collective
conduct by competitors is inherently suspect under the antitrust laws.
At times, however, IPAs will act as a conduit between physician
members and health plans regarding fee-for-service contracts to
facilitate the contracting process. Under this model, the IPA merely
acts as a messenger and does not negotiate the terms of the contract.
Although claiming to employ a lawful messenger arrangement, ABMG,
on behalf of its physician members, instead orchestrated collective
negotiations for fee-for-service contracts. Specific acts by ABMG that
are alleged in the complaint are: making proposals and counter-
proposals, as well as accepting or rejecting offers, without consulting
with its individual physician members regarding the prices they
unilaterally would accept, and without transmitting the payors' offers
to its individual physician members until ABMG had approved the
negotiated prices.
The complaint also alleged a concerted refusal to deal intended to
impede competition by one of ABMG's major competitors, the Permanente
Medical Group, which provides physician services exclusively to Kaiser
Foundation Health Plan, Inc. In 2006, Kaiser\2\ was expanding a fee-
for-service product, under which covered individuals could access
physician services through a national third-party network that included
ABMG physicians. This expansion by Kaiser threatened ultimately to
reduce ABMG's business under its capitated contracts, by giving Kaiser
the ability to offer employers both a capitated and fee-for-service
health plan option. To impede this expansion, ABMG attempted a
concerted refusal to serve Kaiser fee-for-service enrollees. Although
ABMG's refusal to deal was ultimately unsuccessful, the sole purpose of
this action was to impede competition in the provision of physician
services in and around Berkeley and Oakland, California.
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\2\ Kaiser is a trade name for an association of three entities:
Kaiser Foundation Health Plan, Inc.; Kaiser Foundation Hospitals;
and the Permanente Medical Groups.
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ABMG did not engage in any activity that might justify collective
agreements on the prices its members would accept for their services.
For example, the physicians in ABMG have not clinically or financially
integrated their practices to create efficiencies sufficient to justify
their acts and practices. As a consequence, the Respondent's actions
have restrained price and other forms of competition among physicians
in the Berkeley and Oakland, California, area and thereby harmed
consumers (including health plans, employers, and individual consumers)
by increasing the prices for physician services.
The Proposed Consent Order
The proposed Consent Order is designed to prevent the continuance
and recurrence of the illegal conduct alleged in the complaint while it
allows ABMG to engage in legitimate, joint conduct. The proposed
Consent Order does not affect ABMG's activities in contracting with the
payors on a capitated basis.
Paragraph II.A prohibits Respondent from entering into or
facilitating any agreement between or among any health care providers:
(1) to negotiate on behalf of any physician with any payor; (2) to
refuse to deal, or threaten to refuse to deal with any payor; (3)
regarding any term, condition, or requirement upon which any physician
deals, or is willing to deal, with any payor, including, but not
limited to price terms; or (4) not to deal individually with any payor,
or not to deal with any payor other than through ABMG.
The other parts of Paragraph II reinforce these general
prohibitions.
[[Page 28248]]
Paragraph II.B prohibits the Respondent from facilitating exchanges of
information between health care providers concerning whether, or on
what terms, to contract with a payor. Paragraph II.C bars attempts to
engage in any action prohibited by Paragraph II.A or II.B, and
Paragraph II.D proscribes encouraging, suggesting, advising,
pressuring, inducing, or attempting to induce any person to engage in
any action that would be prohibited by Paragraphs II.A through II.C.
As in other Commission orders addressing health care providers'
collective bargaining with health care payors, certain kinds of
agreements are excluded from the general bar on joint negotiations.
Paragraph II does not preclude ABMG from engaging in conduct that is
reasonably necessary to form or participate in legitimate ``qualified
risk-sharing'' or ``qualified clinically-integrated'' joint
arrangements, as defined in the proposed Consent Order. Also, Paragraph
II would not bar agreements that only involve physicians who are part
of the same medical group practice, defined in Paragraph I.B, because
it is intended to reach agreements between and among independent
competitors.
Paragraphs III through VI require ABMG to notify the Commission
before it initiates certain contacts regarding contracts with payors.
Paragraphs III and IV apply to arrangements under which ABMG would be
acting as a messenger on behalf of its member physicians. Paragraphs V
and VI discuss arrangements under which ABMG plans to achieve financial
or clinical integration.
Paragraph VII.A requires ABMG to send a copy of the Complaint and
Consent Order to its physician members, its management and staff, and
any payors who communicated with ABMG, or with whom ABMG communicated,
with regard to any interest in contracting for physician services, at
any time since January 1, 2001.
Paragraph VII.B requires ABMG to terminate, without penalty, pre-
existing payer contracts that it had entered into since 2001, at the
earlier of (1) receipt by ABMG of a written request for termination by
the payer; or (2) the termination date, renewal date, or anniversary
date of the contract. This provision is intended to eliminate the
effects of ABMG's illegal collective behavior. The payer can delay the
termination for up to one year by making a written request to ABMG.
Paragraph VII.D contains three-year notification provisions
relating to future contact with physicians, payors, management and
staff. This provision requires ABMG to distribute a copy of the
Complaint and Consent Order to each physician who begins participating
in ABMG; each payor who contacts ABMG regarding the provision of
physician services; and each person who becomes an officer, director,
manager, or employee for five years after the date on which the Consent
Order becomes final. In addition, Paragraph VII.D requires ABMG to
publish a copy of the Complaint and Consent Order, annually, in any
official publication that it sends to its participating physicians.
Paragraphs VII.E and VIII-IX impose various obligations on ABMG to
report or to provide access to information to the Commission to
facilitate monitoring its compliance with the Consent Order.
Pursuant to Paragraph X, the proposed Consent Order will expire in
20 years from the date it is issued.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. E9-13956 Filed 6-12-09: 8:45 am]
BILLING CODE: 6750-01-S