[Federal Register Volume 75, Number 124 (Tuesday, June 29, 2010)]
[Notices]
[Pages 37438-37442]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-15745]
-----------------------------------------------------------------------
FEDERAL TRADE COMMISSION
[File No. 051 0199]
Minnesota Rural Health Cooperative; Analysis of the Agreement
Containing Consent Order to Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed Consent Agreement.
-----------------------------------------------------------------------
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 July 19, 2010.
ADDRESSES: Interested parties are invited to submit written comments
electronically or in paper form. Comments should refer to``Minnesota
Health, File No. 051 0199'' 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\
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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://public.commentworks.com/ftc/mnhealth) 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://public.commentworks.com/ftc/mnhealth). 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 ``Minnesota
Health, File No. 051 0199'' 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
[[Page 37439]]
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: Bradley Albert (202-326-3670), Bureau
of Competition, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580.
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 18, 2010), 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 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 the
Minnesota Rural Health Cooperative (MRHC). 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 order has been entered into for
the settlement purposes only and does not constitute an admission by
MRHC that it violated the law or that the facts alleged in the
complaint (other than jurisdictional facts) are true.
I. The Complaint
The MRHC is a for-profit corporation of physicians and hospitals
located in southwestern Minnesota. In addition, between early 2005 and
late 2007, the MRHC also had pharmacy members. The complaint charges
that the MRHC has 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 MRHC members to fix the price
at which they contract with health plans and to refuse to deal except
on collectively-determined price terms. The allegations of the
complaint are summarized below.
A. Price fixing for hospital and physician services
The MRHC has approximately 25 hospital members, which constitute
the vast majority of hospitals in the area of southwestern Minnesota in
which the MRHC operates. The organization has approximately 70
physician members practicing in 41 clinics, who represent roughly half
of the primary care physicians in southwestern Minnesota. The MRHC is
controlled by a Board of Directors composed of physicians and hospitals
elected by the members.
When providers join MRHC, they agree that MRHC will negotiate and
contract with health plans on their behalf and agree to participate in
all MRHC contracts. The Board oversees contract negotiations undertaken
by a contracting committee of physician and hospital representatives
and approves all contracts between MRHC and health plans.
The MRHC has negotiated prices and other competitively significant
terms, on behalf of MRHC physician and hospital members, with numerous
payers in Minnesota, including Blue Cross Blue Shield of Minnesota,
HealthPartners, Medica Health Plans, MultiPlan, Inc., Preferred One,
and America's PPO. After its Board of Directors approved, the MRHC
entered into and administered each contract.
The MRHC has threatened to terminate these group contracts with
payers to pressure them to increase prices for physician and hospital
services. For example, during 2003 contract renewal negotiations with
HealthPartners, the MRHC notified HealthPartners that it would
terminate the contract unless HealthPartners agreed to higher
reimbursement rates. HealthPartners acceded to the MRHC's demands,
eventually agreeing to pay MRHC physician members 27 percent more than
comparable non-MRHC physicians and to pay MRHC hospital members ten
percent more than comparable non-MRHC hospitals. A similar tactic
forced Preferred One to pay MRHC members higher rates than it paid
comparable non-MRHC providers.
The MRHC informed payers that the MRHC ``expect[s] our group to be
accepted or rejected as a group.'' It told payers that resisted the
MRHC's price demands that they would be unable to negotiate
individually with MRHC members. When these payers attempted to contract
directly with individual MRHC hospitals or physicians, the members
referred the payers back to MRHC.
Through its collective negotiations and coercive tactics, the MRHC
succeeded in obtaining higher payments to MRHC members by obtaining
higher reimbursement rates than comparable providers, more favorable
payment methods, and increased reimbursements for new MRHC members.
(1) Higher Rates: Five payers -- HealthPartners, Medica, MultiPlan,
Preferred One, and America's PPO -- paid MRHC members more than they
paid comparable rural hospitals and physicians elsewhere in Minnesota.
Indeed, the MRHC told its members at the 2005 annual member meeting
that improvements in its contract with Preferred One would be ``worth
$100,000s annually for MRHC members.''
(2) Favorable Payment Methods: Two payers -- Medica and Preferred
One -- pay MRHC hospital and physician members based on a percentage of
billed charges, rather than a fixed fee for each service. This
mechanism allows MRHC members to increase unilaterally their
reimbursement, by increasing their billed charges up to the maximum
specified in the contract.
(3) Increased New Member Reimbursements: The MRHC has forced payers
to reimburse new MRHC members at the higher MRHC rates, even though
these new members had existing contracts with the payer at lower rates.
For example, Medica told the MRHC that ``because of the Co-op
relationship all of the clinics and hospitals, except Rice, are being
paid higher reimbursement then they were prior to our Medica agreement
with the Co-op.''
B. Price fixing for pharmacy services
In 2004, after being approached by pharmacies, MRHC expanded its
[[Page 37440]]
membership to include pharmacies and began recruiting pharmacists for
the purpose of collectively negotiating agreements with pharmacy
benefit managers (PBMs). The MRHC encouraged pharmacies to join to
increase the reimbursement levels they would receive under the new
Medicare Part D prescription drug program. Between early 2005 and late
2007, the MRHC had approximately 70 pharmacist members.
The MRHC urged pharmacies not to deal individually with PBMs and
instead to act together through MRHC. The MRHC repeatedly reminded
pharmacies of the benefits of acting collectively, advising them to
``stand together and speak with ONE voice to the PBMs.'' For example,
in letters to members and prospective members, MRHC stated:
``We have to stand together in this effort or once again
the PBMs will intimidate us and pick us off one by one with contracts
we don't want.''
``Do NOT sign and return your Medicare Part D PBM
contracts. MRHC will review and negotiate these for you during the next
few weeks. The contracting deadline is not until later this summer and
our best leverage is to take our time to negotiate as a block. The
bigger block the better [sic].''
``We are asking all MRHC members NOT to sign and return
their Medicare Part D PBM contracts. MRHC will review and negotiate
these for them during the next couple of weeks. Our best leverage is to
take our time to negotiate as a block, and the bigger block the better
[sic]. . . . Don't sign contracts but notify the PBMs who will act as
your agent - the MRHC!''
To ``speed up'' the PBMs' acceptance of the MRHC as the pharmacies'
bargaining agent, the MRHC provided each pharmacy member with pre-
printed labels stating that MRHC would act as the pharmacy's
contracting agent. Many member pharmacies followed the MRHC's
instructions to return contract offers from PBMs with these labels
attached.
The MRHC negotiated with at least eight PBMs over Medicare Part D
reimbursement levels and reached agreements on behalf of the MRHC
establishing prices and other competitively significant terms with six
of them. The MRHC terminated the pharmacist memberships in November
2007 and transferred management of these agreements to a pharmacy
services administration organization in early 2008.
C. Lack of justification
Price agreements among competing sellers, as a general rule, are
price fixing and are summarily condemned by the antitrust laws as per
se illegal. But joint price setting by provider networks is not per se
illegal if: (1) the participants have integrated their activities
through the network (whether financially, clinically, or otherwise) in
a way that is likely to produce significant efficiencies that benefit
consumers; and (2) the price agreements are reasonably necessary to
realize those efficiencies. The MRHC's price fixing for hospital,
physician, and pharmacy services, however, was unrelated to any
efficiency-enhancing integration of its members' clinical services.
1. Hospital and physician services
One form of efficiency-enhancing integration among otherwise
competing health care providers involves arrangements in which the
participants share with one another substantial financial risk for the
services provided through the network. Such risk sharing occurs when
mechanisms are in place that make the network providers as a group
accountable for the total cost of defined services delivered to a group
of covered individuals, so that the providers have incentives to
cooperate in controlling costs and improving quality by managing the
provision of services. The Statements of Antitrust Enforcement Policy
in Health Care issued by the FTC and the Department of Justice provide
several examples of types of arrangements through which participants
can potentially share substantial financial risk.
MRHC's hospital and physician members have not shared, and do not
share, substantial financial risk in the provision of patient care.
MRHC considers only three of its contracts with payers to be ``risk''
contracts, and these contracts pertain only to physician services.
Moreover, these contracts do not provide significant financial
incentives for members to collaborate to improve the performance of the
group as a whole.\2\ For example, under two of the three ``risk''
contracts, the payers withheld a relatively modest portion of the
payments owed to participating physicians (typically no more than 10
percent), and return of these sums did not depend on the group meeting
cost containment or quality improvement performance targets. Instead,
physicians merely had to participate in a quality improvement project
in which they reported their compliance with clinical practice
guidelines for treatment of a few specific conditions. These
arrangements, while perhaps benefitting some physicians' individual
delivery of health care, would thus be unlikely to create incentives to
motivate MRHC physicians to work together to improve significantly
group-wide care to patients. Health Care Statements at 68.
---------------------------------------------------------------------------
\2\ Even if MRHC were financially integrated for some contracts,
that fact alone would not justify their jointly negotiating on
behalf of their physicians for contracts where there was no
financial integration. See, e.g., North Texas Specialty Physicians
v. FTC, 528 F.3d 346, 368-70 (5th Cir. 2008) (existence of risk
contract did not justify physician group's joint price setting for
non-risk contracts).
---------------------------------------------------------------------------
Arrangements among competing health care providers that do not
involve the sharing of financial risk may also involve integration that
has the potential to create significant efficiencies in the provision
of health care services. The Health Care Statements discuss an example
of such integration: a ``clinically integrated'' program, which
involves ``an active and ongoing program to evaluate and modify
practice patterns by the network's physician participants and create a
high degree of interdependence and cooperation among the physicians to
control costs and ensure quality.'' Health Care Statements at 72-73.
The MRHC has not undertaken any integration regarding its members'
provision of services, clinical or otherwise, that might justify its
members' jointly negotiated fees with health plans. It verifies the
qualifications of its members, conducts patient satisfaction surveys,
collects patient complaints, and organizes meetings to discuss quality
of care issues. In addition, it has a few programs that relate solely
to physicians: quality improvement projects involving diabetes and
preventative services and inspections of physician clinics. Although
these activities may be beneficial, they do not involve any integration
among MRHC members that could significantly improve the quality and
efficiency of the services MRHC members provide.
First, the scope of these activities is very limited. The clinical
programs most likely to improve the quality of patient care do not
involve the hospital members at all, and the activities involving
physicians are limited to just a few of the many medical conditions the
physicians treat. Moreover, even in these limited areas, the programs
do not create any collaborative activity or interdependence among the
physician members. Although the activities may lead individual
physicians to modify their behavior, none of the programs creates
enforceable obligations for physicians to improve their clinical
[[Page 37441]]
operations or provides members with a shared stake in the performance
of the group as a whole. Indeed, all of these activities are
essentially informational and each physician clinic could engage in
them on its own without any involvement from the other clinics.
Finally, the challenged conduct -- jointly negotiating with payors and
agreeing on prices and other competitively sensitive terms -- is
unnecessary for members to engage in any of these activities.
2. Pharmacy services
Similarly, the MRHC's joint price setting for pharmacy services was
not related to any integration among its members. The MRHC recruited
pharmacies for the purpose of increasing the pharmacies' bargaining
leverage in negotiations with PBMs. Aside from inviting pharmacists to
attend continuing education programs that it was already providing for
its non-pharmacist members, the MRHC's sole activity relating to its
pharmacy members was negotiating and administering contracts.
In sum, MRHC's horizontal price fixing does not plausibly promote
any efficiency-enhancing integration of its members services and so
violates Section 5 of the FTC Act.
D. Lack of protection from the state action doctrine
The MRHC's anticompetitive conduct is not shielded by the state
action doctrine because there was no active supervision of MRHC's
conduct and Minnesota does not appear to have articulated a policy to
immunize concerted refusals to deal or other forms of coercive conduct.
Since 1999,\3\ Minnesota law has authorized health care provider
cooperatives to contract with purchasers on a fee-for-service basis and
specified that, with certain limitations, such contracts ``are not
contracts that unreasonably restrain trade.''\4\ Although state
economic regulation can immunize private parties from federal antitrust
liability, states may not simply authorize private parties to violate
the antitrust laws.\5\ Instead, a state must substitute its own control
for that of the market. Thus, as the Supreme Court explained in
California Retail Liquor Dealers Assen v. Midcal Aluminum, Inc.,
private parties claiming the protection of the state action doctrine
must demonstrate that their challenged conduct was both (1) undertaken
pursuant to a clearly articulated state policy to displace competition
with regulation and (2) actively supervised by state officials.\6\
---------------------------------------------------------------------------
\3\ Minnesota's original 1994 statute authorized contracting
only ``on a substantially capitated or similar risk-sharing basis.''
Minn. Laws 1994, c.625, art. 11, Sec. 6, available at (https://www.revisor.mn.gov/laws/?doctype=Chapter&year=1994&type=0&id=625). A
1999 amendment permitted fee-for-service or other financial
arrangements. Minn. Laws 1999, c. 245, art. 2, Sec. 14, available
at (https://www.revisor.mn.gov/laws/?doctype=Chapter&year=1997&type=0&id=245).
\4\ Minn. Stat. Sec. 62R.06, subd. 3 (2009) (``Subject to
section 62R.08, a health care provider cooperative is not a
combination in restraint of trade, and any contracts or agreements
between a health care provider cooperative and its members regarding
the price the cooperative will charge to purchasers of its services,
or regarding the prices the members will charge to the cooperative,
or regarding the allocation of gains or losses among the members, or
regarding the delivery, quality, allocation, or location of services
to be provided, are not contracts that unreasonably restrain
trade.'').
\5\ Federal Trade Commission v. Ticor Title Ins. Co., 504 U.S.
621, 633 (1992) (``a State may not confer antitrust immunity on
private persons by fiat''); Parker v. Brown, 341 U.S. 351 (1943)
(``a state does not give immunity to those who violate the Sherman
Act by authorizing them to violate it, or declaring that their
action is lawful'').
\6\ 445 U.S. 97, 105 (1980).
---------------------------------------------------------------------------
First, it is undisputed that state officials did not supervise the
MRHC's anticompetitive conduct. Active state supervision requires that
state officials ``exercise ultimate control over the challenged
anticompetitive conduct.''\7\ A private party must therefore
demonstrate that state officials have ``exercised sufficient
independent judgment and control so that the details of the rates or
prices have been established as a product of deliberate state
intervention, not simply by agreement among private parties.''\8\ But,
until recently, Minnesota law did not provide for state review and
approval of health care provider cooperative contracting.\9\ No review
or approval of MRHC's anticompetitive conduct, or the prices that
resulted from that conduct, took place during the relevant time period.
---------------------------------------------------------------------------
\7\ Patrick v. Burget, 486 U.S. 94, 100 (1988).
\8\ Ticor, 504 U.S. at 634-35.
\9\ From its inception, the Health Care Cooperative Act has
required provider network cooperatives to file contracts with the
state health department (see Minn. Stat.Sec. 62R.06),but until the
2009 amendments, the law did not require state officials to review
and approve the contracts.
---------------------------------------------------------------------------
In 2009, Minnesota enacted a law establishing a process by which
the state Department of Health is to review and approve or disapprove
health care provider contracts with third-party payers.\10\ The
prospect of state review of MRHC's contracts in the future does not
provide antitrust immunity for MRHC's prior unsupervised conduct, and
the absence of state supervision by itself establishes that the conduct
challenged in the complaint is not protected by the state action
doctrine.\11\
---------------------------------------------------------------------------
\10\ Minn. Laws 2009, c. 97 Sec. 2 (codified at Minn. Stat.
Sec. 62R.09), available at (https://www.revisor.mn.gov/laws/?doctype=Chapter&year=2009&type=0&id=97).
\11\ But, as discussed below, the Commission has considered this
legislative change in framing prospective relief in this case.
---------------------------------------------------------------------------
Second, the Minnesota statute does not appear to articulate a
policy to protect MRHC's activities insofar as they involved concerted
refusals to deal or other forms of coercive conduct. The statutory
provision declaring that health care provider cooperative contracts are
not unreasonable restraints of trade is expressly limited, for it is
made ``[s]ubject to Section 62R.08,'' a provision entitled ``Prohibited
Practices'' that bars certain types of conduct by provider
cooperatives.\12\ That provision, among other things, states:
---------------------------------------------------------------------------
\12\ See note 2, supra.
It shall be unlawful for any health care provider cooperative to
engage in any acts of coercion, intimidation, or boycott of, or any
concerted refusal to deal with, any health plan company seeking to
contract with the cooperative on a competitive, reasonable, and
nonexclusive basis.\13\
---------------------------------------------------------------------------
\13\ Minn. Stat. Sec. 62R.08(d).
Thus, to successfully assert a state action defense, MRHC would
have to demonstrate not only active state supervision, but also that
the Minnesota Legislature expressed a policy to supplant competition
with regulation with respect to all of MRHC's challenged conduct,
including acts of ``coercion.'' Given the express limitations placed on
the state policy regarding health care provider contracting, the
Minnesota legislature does not appear to have expressed such a broad
policy.
II. The Proposed Order
The proposed order takes into account the change in Minnesota law
that occurred during the pendency of the investigation.
A. Impact of the new statute
As noted above, the Minnesota Legislature in 2009 enacted
legislation designed to provide state supervision of the contracts that
health care provider cooperatives enter into with health plans. The
Commission cannot, at this time, determine whether this new law will
result in that state engaging in the detailed, substantive review that
the Supreme Court has held is required for ``active supervision.''
Determining whether the active supervision prong of the state action
doctrine has been met will require a factual inquiry into the
Departments of Health's actual
[[Page 37442]]
implementation of its new authority in specific instances. Although
there is no single prescribed method for a state to conduct an adequate
review of private anticompetitive conduct, such as the price fixing by
the MRHC, such review must include an assessment of the substantive
merits of the pricing conduct, based on a factual record that enables
the state to exercise ``sufficient independent judgment and control so
that the details of the rates or prices have been established as a
product of deliberate state intervention.''\14\
---------------------------------------------------------------------------
\14\ Ticor, 504 U.S. at 634-35; see also Kentucky Household Good
Carriers Assn, 139 F.T.C. 404, 426 (2005), aff'd per curiam, 2006
U.S. App. LEXIS 21864 (2006) (unpublished) (noting the importance of
procedural mechanisms to ensure that ``relevant facts -- especially
those that might contradict the proponent's contentions -- are
brought to the state decision-maker's attention'').
---------------------------------------------------------------------------
Although it is too early to assess the state's implementation of
the new statute, the Commission believes the circumstances here make it
appropriate to defer to Minnesota's expressed intention to actively
supervise the contracts that result from the MRHC's price fixing.\15\
The Commission has in the past taken a different remedial approach
where state officials had authority to actively supervise private
conduct but failed to exercise it.\16\ Here Minnesota officials have
only been recently granted that authority, and it is appropriate to
allow them an opportunity to utilize that authority.
---------------------------------------------------------------------------
\15\ Engrossed version of SF 203, Section 2, Subdivision 1,
(b)(1), available at (https://www.revisor.mn.gov/laws/?id=97&doctype=chapter&year=2009&type=0).
\16\ See Kentucky Household Good Carriers Assn, at 26 (order
prohibiting collective rate-making to remain in effect until the
respondent demonstrates to the Commission that the state has
implemented a program of active supervision).
---------------------------------------------------------------------------
As a result, the proposed order does not bar collective price
negotiations. At the same time, there is certain anticompetitive
activity that the state will not supervise and would not be protected
under the state action doctrine and the order prohibits such activity.
The key prohibitions in the proposed order are aimed at preventing MRHC
from using concerted refusals to deal or other coercive tactics to
extract favorable contract terms from payers. This relief is
appropriate because the new statute only authorizes the Department of
Health to supervise the final contracts, not the negotiating process
itself, which is where coercive tactics would occur. Further, the new
statute does not authorize the Department of Health to reject a
contract on the ground that it is the product of coercion. Thus the
order is drafted to protect consumers from coercion by the MRHC. In
addition, the proposed order provides a remedy for past conduct by
requiring renegotiation of all existing contracts and their submission
for state approval consistent with the recently enacted Minnesota
statute.
B. Order provisions
Paragraph II.A bars MRHC from organizing or implementing agreements
to refuse to deal, or to threaten to refuse to deal, with a payer over
contract terms, as well as agreements not to deal individually with
payers, or to deal only through the MRHC. Paragraph II.B prohibits the
MRHC from submitting for state approval any payer contract that it
negotiated using acts of coercion, intimidation, or boycott, or any
concerted refusal to deal. The prohibitions apply to agreements for
hospital, physician, or pharmacy services.
The remaining portions of Paragraph II prohibit conduct that would
facilitate a violation of Paragraph II.A. Paragraph II.C bars
information exchanges to further conduct that violates the core
prohibitions of Paragraph II. Paragraphs II.D and II.E ban attempts and
encouragement of such violations.
The order also includes a proviso designed to clarify the scope of
the prohibitions in Paragraph II. First, it provides that the
provisions of Paragraph II do not prohibit the MRHC, in exercising its
business judgment, from rejecting a contract on behalf of its members,
so long as there is no agreement between the MRHC and any of its
members that the member will refuse to deal individually (or will deal
only though the MRHC), with a payer whose contract the MRHC rejects.
Second, the order does not prevent the MRHC from exchanging information
when necessary to conduct joint payer contract negotiations on behalf
of its members. Such information would not, however, ordinarily include
whether an individual member is participating in a particular contract
or the terms on which it is negotiating with a payer independently of
the MRHC.
As this proviso reflects, nothing in the order prohibits the MRHC,
in the exercise of its business judgment, from rejecting a contract on
behalf of its members, so long as there is no agreement between the
MRHC and any of its members that the members refuse to deal
individually with the payor whose contract the MRHC rejected, or that
the members will only deal with that payor through the MRHC.
Additionally, the order does not address any actions taken by any
individual MRHC member, acting alone in exercising its business
judgment. Thus, for example, the order does not bar any member from
unilaterally declining to contract with any payer.
Paragraph III.A requires MRHC to send a copy of the complaint and
consent order to its members, its management and staff, and any payers
who communicated with MRHC, or with whom MRHC communicated, with regard
to any interest in contracting for physician services, at any time
since January 1, 2001.
Paragraph III.B requires MRHC to terminate, without penalty, pre-
existing payer contracts that it had entered into since 2001, at the
earlier of (1) receipt by MRHC 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 MRHC's past alleged illegal collective behavior. The payer
can delay the termination for up to one year by making a written
request to MRHC.
Paragraph III.D contains notification provisions relating to future
contact with members, payers, management and staff. For three years
after the date on which the consent order becomes final, MRHC is
required to distribute a copy of the complaint and consent order to
each member who begins participating in MRHC; each payer who contacts
MRHC regarding the provision of member services; and each person who
becomes an officer, director, manager, or employee. In addition,
Paragraph III.D requires MRHC to publish a copy of the complaint and
consent order, annually for three years, in any official publication
that it sends to its participating members.
Paragraphs IV, V, and VI impose various obligations on MRHC to
report or provide access to information to the Commission to facilitate
the monitoring of compliance with the order.
Finally, Paragraph VII provides that the proposed order will expire
in 20 years.
By direction of the Commission.
Donald S. Clark
Secretary.
[FR Doc. 2010-15745 Filed 6-28-10: 7:22 am]
BILLING CODE 6750-01-S