B256330

UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

COMMISSIONERS:
Robert Pitofsky, Chairman
Sheila F. Anthony
Mozelle W. Thompson
Orson Swindle

In the Matter of

MESA COUNTY PHYSICIANS INDEPENDENT PRACTICE ASSOCIATION, INC., a corporation.

DOCKET NO. 9284

DECISION AND ORDER

The Commission having heretofore issued its complaint charging the respondent named in the caption hereof with violation of Section 5 of the Federal Trade Commission Act, as amended, and the respondent having been served with a copy of that complaint, together with a notice of contemplated relief; and

The respondent, its attorneys, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondent of all of the jurisdictional facts set forth in the complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondent that the law has been violated as alleged in such complaint, or that the facts as alleged in such complaint, other than jurisdictional facts, are true and waivers and other provisions as required by the Commission's Rules; and

The Secretary of the Commission having thereafter withdrawn this matter from adjudication in accordance with 3.25(c) of its Rules; and

The Commission having considered the matter and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, and having thereafter determined to modify the order contained in that consent agreement by adding Paragraphs I.J, I.K, I.L, and II.F, and to issue an amended complaint to accompany that modified order, now in further conformity with the procedure prescribed in  3.25(f) of its Rules, the Commission hereby makes the following jurisdictional findings and enters the following order:

1. Respondent Mesa County Physicians Independent Practice Association, Inc., is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Colorado, with its office and principal place of business located at 751 Horizon Court, Suite 256, Grand Junction, Colorado 81506.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of respondent, and the proceeding is in the public interest.

ORDER

I.

IT IS ORDERED that, for the purposes of this order, the following definitions shall apply:

A. "Mesa IPA" means Mesa County Physicians I. P. A., Inc., its directors, officers, employees, agents and representatives, predecessors, successors, and assigns; its subsidiaries, divisions, groups, and affiliates controlled by Mesa IPA, and the respective directors, officers, employees, agents and representatives, successors, and assigns of each.
 
B. "Payer" means any person that purchases, reimburses for, or otherwise pays for all or part of any health care services for itself or for any other person. Payer includes, but is not limited to, any health insurance company; preferred provider organization; prepaid hospital, medical, or other health service plan; health maintenance organization; government health benefits program; employer or other person providing or administering self-insured health benefits programs; and patients who purchase health care for themselves.
 
C. "Person" means both natural persons and artificial persons, including, but not limited to, corporations, unincorporated entities, and governments.
 
D. "Physician" means a doctor of allopathic medicine ("M.D.") or a doctor of osteopathic medicine ("D.O.").
 
E. "Participating physician" means any physician (1) who is a stockholder, owner, or member of Mesa IPA; (2) who has agreed to provide services through Mesa IPA; or (3) whose services have been offered to any payer through Mesa IPA.
 
F. "Provider" means any person that supplies health care services to any other person, including, but not limited to, physicians, hospitals, and clinics.
 
G. "Qualified risk-sharing joint arrangement" means an arrangement to provide physician services in which (1) the arrangement does not restrict the ability, or facilitate the refusal, of physicians participating in the arrangement to deal with payers individually or through any other arrangement, and (2) all physicians participating in the arrangement share substantial financial risk from their participation in the arrangement through: (a) the provision of physician services to payers at a capitated rate; (b) the provision of physician services for a predetermined percentage of premium or revenue from payers; (c) the use of significant financial incentives (e.g., substantial withholds) for its participating physicians, as a group, to achieve specified cost-containment goals; or (d) the provision of a complex or extended course of treatment that requires the substantial coordination of care by physicians in different specialties offering a complementary mix of services, for a fixed, predetermined payment, where the costs of that course of treatment for any individual patient can vary greatly due to the individual patient's condition, the choice, complexity, or length of treatment, or other factors.
 
H. "Qualified clinically integrated joint arrangement" means an arrangement to provide physician services in which (1) the arrangement does not restrict the ability, or facilitate the refusal, of physicians participating in the arrangement to deal with payers individually or through any other arrangement, and (2) all physicians participating in the arrangement participate in active and ongoing programs of the arrangement to evaluate and modify the practice patterns of, and create a high degree of interdependence and cooperation among, the physicians participating in the arrangement, in order to control costs and ensure quality of the services provided through the arrangement.
 
I. "Reimbursement" means any payment, whether cash or non-cash, or other benefit received for the provision of physician services.
 
J. "Payer contract" means any contract, whether actual or proposed, offered by any payer to any physician.
 
K. "Payer contract review" means any activity, other than a qualified risk-sharing joint arrangement or a qualified clinically integrated joint arrangement, in which information concerning the terms or conditions of a payer contract is transmitted to a physician practicing in Mesa County and in which such activity

1. facilitates collective decision-making among physicians,

2. coordinates physicians' responses to a payer contract,

3. disseminates to physicians the views or intentions of other physicians as to a payer contract,

4. includes expressions of opinion as to whether the terms or conditions of a payer contract should be accepted by physicians,

5. constitutes collective negotiation by physicians with a payer, or

6. involves decisions as to whether to convey information concerning a payer contract to physicians based, at least in part, on judgments about the attractiveness of the terms or conditions of the contract.

L. "Conducting payer contract review" means participating, or assisting, in the generation or transmission of information from payer contract review.

II.

IT IS FURTHER ORDERED that Mesa IPA, directly or indirectly, or through any corporate or other device, in connection with the provision of physician services in or affecting commerce, as "commerce" is defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C.  44, cease and desist from:

A. Entering into, adhering to, participating in, maintaining, organizing, implementing, enforcing, or otherwise facilitating any combination, conspiracy, agreement, or understanding to:

1. Negotiate on behalf of any participating physicians with any payer or provider;

2. Deal, or refuse to deal, with any payer or provider;

3. Determine any terms, conditions, or requirements upon which participating physicians deal with any payer or provider, including, but not limited to, terms of reimbursement; or

4. Restrict the ability of participating physicians to deal with payers individually or through any arrangement outside Mesa IPA.

B. Coordinating terms of contracts with payers with any other group of physicians, including independent practice associations, located in Mesa County, Colorado, or any county contiguous to Mesa County, Colorado.
 
C. Exchanging, or facilitating the exchange of, information among physicians concerning the terms or conditions, including reimbursement, on which any physicians are willing to deal with payers.
 
D. Encouraging, advising, pressuring, inducing, or attempting to induce any person to engage in any action that would be prohibited if the person were subject to this order.
 
E. For a period of five (5) years from the date this order becomes final, acting as an agent for participating physicians in dealings with any payer, including transmitting terms on which participating physicians may wish to independently contract with payers, unless each of the following conditions is met:

1. Mesa IPA's role in the contracting process between payers and participating physicians is limited to:

a. Soliciting or receiving from any participating physician, and conveying to the payer, information relating to reimbursement, outcomes data, practice parameters, utilization patterns, credentials, and qualifications of such individual physician;

b. Conveying to a participating physician any contract offer made by the payer;

c. Soliciting or receiving from the payer, and conveying to a participating physician, clarifications of proposed contract terms;

d. Providing to a participating physician objective information about proposed contract terms, including comparisons with terms offered by other payers;

e. Conveying to a participating physician any response made by the payer to information conveyed, or clarifications sought, by Mesa IPA;

f. Conveying, in individual or aggregate form, to the payer, the acceptance or rejection by a participating physician of any contract offer made by the payer; and

g. At the request of the payer, providing the individual response, information, or views of each participating physician concerning any contract offer made by such payer;

2. Each participating physician makes an independent, unilateral decision to accept or reject each contract offer made by the payer;

3. Mesa IPA does not:

a. Disseminate to any physician information about another physician's proposed or actual reimbursement, or views or intentions as to possible terms of dealing with the payer;

b. Act as an agent for the collective negotiation or agreement by the participating physicians; or

c. Encourage or facilitate collusive behavior among participating physicians; and

4. Each participating physician remains free to deal individually with any payer.

F. For a period of five (5) years from the date this order becomes final, allowing a person to be a participating physician or an employee of Mesa IPA if any managerial or professional employee, or any director of Mesa IPA, has knowledge that such person

1. is conducting payer contract review, either directly or through an agent,

2. has requested, and is receiving, information from payer contract review conducted by a physician practicing in Mesa County, or

3. has entered into an agreement, other than a qualified risk-sharing joint arrangement or a qualified clinically integrated joint arrangement, with another physician practicing in Mesa County to obtain, and is receiving, information from payer contract review conducted by any person.

PROVIDED that nothing in this order shall be construed to prohibit any agreement or conduct by Mesa IPA that is reasonably necessary to form, facilitate, manage, operate, or participate in:

a. A qualified risk-sharing joint arrangement; or

b. A qualified clinically integrated joint arrangement, if Mesa IPA has provided the prior notification(s) as required by this paragraph (b). Such prior notification must be filed with the Secretary of the Commission at least thirty (30) days prior to forming, facilitating, managing, operating, participating in, or taking any action, other than planning, in furtherance of any joint arrangement requiring such notice ("first waiting period"), and shall include for such arrangement the identity of each participant; the location or area of operation; a copy of the agreement and any supporting organizational documents; a description of its purpose or function; a description of the nature and extent of the integration expected to be achieved, and the anticipated resulting efficiencies; an explanation of the relationship of any agreement on reimbursement to furthering the integration and achieving the expected efficiencies; and a description of any procedures proposed to be implemented to limit possible anticompetitive effects resulting from such agreement(s).

If, within the first waiting period, a representative of the Commission makes a written request for additional information, Mesa IPA shall not form, facilitate, manage, operate, participate in, or take any action, other than planning, in furtherance of such joint arrangement until thirty (30) days after substantially complying with such request for additional information ("second waiting period") or such shorter waiting period as may be granted by letter from the Bureau of Competition.

III.

IT IS FURTHER ORDERED that Mesa IPA shall:

A. Within thirty (30) days after the date on which this order becomes final:

1. Distribute by first-class mail a copy of this order and the complaint to each participating physician, officer, director, manager, and employee; and to each payer enumerated in Attachment A to this order;

2. Amend its "Physician Manual" to bring it into compliance with this order and the antitrust laws, and distribute the amended Physician Manual to participating physicians; and

3. Abolish its Contract Review Committee.

B. Terminate any agreement or contract with any payer for the provision of physician services that does not comply with Paragraph II. of this order at the earlier of: (1) the termination or renewal date (including any automatic renewal date) of such agreement or contract; or (2) receipt of a written request from a payer to terminate such agreement or contract.
 
C. For a period of five (5) years after the date this order becomes final:

1. Distribute by first-class mail a copy of this order and the complaint to each new participating physician, officer, director, manager, and employee within thirty (30) days of his or her admission, election, appointment, or employment;

2. Annually publish in an official annual report or newsletter sent to all participating physicians, a copy of this order and the complaint with such prominence as is given to regularly featured articles; and

3. Annually brief participating physicians on the meaning and requirements of this consent order and the antitrust laws, including penalties for the violation of this consent order.

IV.

IT IS FURTHER ORDERED that Mesa IPA shall file a verified written report within sixty (60) days after the date this order becomes final, annually thereafter for five (5) years on the anniversary of the date this order becomes final, and at such other times as the Commission may by written notice require, setting forth in detail the manner and form in which it has complied and is complying with the order. In addition to any other information that may be necessary to demonstrate compliance, Mesa IPA shall include in such reports: (1) information identifying each payer that has contacted Mesa IPA for the purpose of contracting for physician services, the terms of any contract the payer was seeking with Mesa IPA, and Mesa IPA's response to the payer; (2) information sufficient to describe the manner in which participating physicians share financial risk in each qualified non-exclusive risk-sharing arrangement in which it participates; (3) a copy of the roster of the participating physicians who have attended the annual briefings required in Paragraph III.C.3., and the text of such briefings; and (4) copies of the minutes of Mesa IPA's annual meetings.

V.

IT IS FURTHER ORDERED that Mesa IPA shall notify the Commission at least thirty (30) days prior to any proposed change in Mesa IPA such as dissolution, assignment, sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries, or any other change in Mesa IPA that may affect compliance obligations arising out of this order.

VI.

IT IS FURTHER ORDERED that, for the purpose of determining or securing compliance with this order, Mesa IPA shall permit any duly authorized representative of the Commission:

A. Access, during office hours and in the presence of counsel, to inspect and copy all books, ledgers, accounts, correspondence, memoranda, calendars, and other records and documents in the possession or under its control relating to any matter contained in this order; and
 
B. Upon five (5) days' notice to Mesa IPA, and without restraint or interference from it, to interview officers, directors, or employees of Mesa IPA.

VII.

IT IS FURTHER ORDERED that this order shall terminate on May 4, 2019.

By the Commission.

Donald S. Clark
Secretary

ISSUED: May 4, 1999

ATTACHMENT A


ADMAR
Aetna/U.S. Healthcare
AllNet
America's Health Plan
Antero Health Plan
Blue Cross & Blue Shield of Colorado
Casualty Care Network
Colorado Access
Colorado Health Care Network
Colorado Health Care Purchasing Alliance, Inc.
Colorado Child Health Plan
Colorado Physician Networks
Community Health Networks
Community Health Plan of the Rockies
Comprehensive Rehabilitation Associates, Inc.
Compusys
Continental Medical Systems, Inc.
CorVel Corporation
Educators Mutual
Foundation Health Corporation
FHP Health Care
Health Payors Organization Limited
HMO Colorado
Health Care Excellence
Health Care Options
HealthCare/Compare/Affordable/ OUCH
Humana Health Care Plan
Kaiser Permanente
Liberty Preferred Care
MEDCO Behavioral Care Systems
Medical Practice Associates
MedView Services, Inc.
Mountain Medical Associates
Mutual of Omaha Management Care/Exclusicare
New York Life/Corporate Medical Management, Inc.
Preferred Physician Agreement
Primera-First Federal
Private Healthcare Systems, Inc.
ProHealth, Inc.
Prudential Health Care
QMC3-CRA Managed Care
Rio Grande Employees Hospital Association
Rocky Mountain HMO
Sierra Health & Life Insurance
Sloans Lake Managed Care
State Farm of the Western Slope
The Healthcare Initiative, Inc.
The Segal Company
United HealthCare
USA Health Network