Advisory Opinion to Cox (07-27-95)

July 27, 1995

Ms. Jacqueline C. Cox
Competitive Strategies, Inc.
100 West Grove
Suite 250
Reno, NV 89509

Re: Northwestern Nevada Orthopaedic Surgery Alliance;

Supplemental Request for Advisory Opinion

Dear Ms. Cox:

This is in response to your letter of July 15, 1995, describing NNOSA's restated plan of operation as a messenger model IPA. In that letter you state that NNOSA intends to operate as a messenger model IPA in accordance with the principles discussed in the staff advisory opinion letter to you dated July 11, 1995. Specifically, you state that the agent used to transmit information to payers on behalf of the providers will not act as a collective bargaining representative of the providers or a pricing intermediary between the providers and payers, and will have no authority to make offers, negotiate, agree for or bind NNOSA members. Rather, according to your letter, the agent will give payers information solely for their use in formulating proposals to the physicians, and each member of NNOSA will make an independent, unilateral decision to accept or reject each contract offer. Payers will be free to contract with NNOSA members outside the IPA. The agent will not disseminate to NNOSA members information that could be used to coordinate the individual members' responses to payers' offers.(1)

The formation and operation of NNOSA in the manner described in our letter dated July 11, 1995, as modified by your letter of July 15, would not appear to violate any law enforced by the Federal Trade Commission. This letter sets out the views of the staff of the Bureau of Competition, as authorized by the Commission's Rules of Practice. Under Commission Rule § 1.3(c), 16 C.F.R. § 1.3(c) (1994), the Commission is not bound by this staff opinion and reserves the right to rescind it at a later time. In addition, this office retains the right to reconsider the questions involved and, with notice to the requesting party, to rescind or revoke the opinion if implementation of the proposed program results in substantial anticompetitive effect, if the program is used for improper purposes, or if it would be in the public interest to do so.

Sincerely yours,

Mark J. Horoschak
Assistant Director

  1. Your letter states that the agent will "coordinate the individual providers responses to the individual proposals." Reading this statement in the context of the letter as a whole, we interpret this to mean that the agent will submit providers' individual responses to the payer in aggregate form, not that the agent will work to achieve an understanding among NNOSA members on a coordinated response to a particular contract offer. As our July 11 letter explained, the latter course of action would raise serious concerns under the antitrust laws.