Advocate Health Partners, et al.; Analysis of Agreement Containing Consent Order To Aid Public Comment, 784-787 [E7-27]
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Federal Register / Vol. 72, No. 4 / Monday, January 8, 2007 / Notices
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persons may express their views in
writing on the standards enumerated in
the BHC Act (12 U.S.C. 1842(c)). If the
proposal also involves the acquisition of
a nonbanking company, the review also
includes whether the acquisition of the
nonbanking company complies with the
standards in section 4 of the BHC Act
(12 U.S.C. 1843). Unless otherwise
noted, nonbanking activities will be
conducted throughout the United States.
Additional information on all bank
holding companies may be obtained
from the National Information Center
website at www.ffiec.gov/nic/.
Unless otherwise noted, comments
regarding each of these applications
must be received at the Reserve Bank
indicated or the offices of the Board of
Governors not later than February 2,
2007.
A. Federal Reserve Bank of Chicago
(Patrick M. Wilder, Assistant Vice
President) 230 South LaSalle Street,
Chicago, Illinois 60690-1414:
1. Capitol Bancorp, Ltd., Lansing,
Michigan and Capitol Development
Bancorp Limited VI, Lansing, Michigan;
to acquire 51 percent of the voting
shares of Sunrise Community Bank (in
organization), Palm Desert, California.
2. Millennium Bancorp, Inc. Morton
Grove, Illinois; to become a bank
holding company by acuiring 100
percent of the voting shares of
Millennium Bank (in organization), Des
Plaines, Illinois to be acquired.
B. Federal Reserve Bank of St. Louis
(Glenda Wilson, Community Affairs
Officer) 411 Locust Street, St. Louis,
Missouri 63166-2034:
1. Stifel Financial Corp. St. Louis
Missouri; to become a bank holding
company by acquiring 100 percent of
First Service Financial Company, St.
Louis, Missouri, and therby indirectly
acquire FirstService Bank, Crestwood,
Missouri.
C. Federal Reserve Bank of Kansas
City (Donna J. Ward, Assistant Vice
President) 925 Grand Avenue, Kansas
City, Missouri 64198-0001:
1. Columbian Financial Corporation,
Overland Park, Kansas; to acquire 100
percent of the voting shares of The
Bank, Weatherford, Texas.
2. Nodaway Valley Bancshares, Inc.,
Maryville, Missouri; to acquire 100
percent of the voting shares of Exchange
Bank, Mound City, Missouri.
Board of Governors of the Federal Reserve
System, January 3, 2007.
Robert deV. Frierson,
Deputy Secretary of the Board.
[FR Doc. E7–25 Filed 1–5–07; 8:45 am]
FEDERAL RESERVE SYSTEM
FEDERAL TRADE COMMISSION
Notice of Proposals to Engage in
Permissible Nonbanking Activities or
to Acquire Companies that are
Engaged in Permissible Nonbanking
Activities
[File No. 031 0021]
The companies listed in this notice
have given notice under section 4 of the
Bank Holding Company Act (12 U.S.C.
1843) (BHC Act) and Regulation Y (12
CFR Part 225) to engage de novo, or to
acquire or control voting securities or
assets of a company, including the
companies listed below, that engages
either directly or through a subsidiary or
other company, in a nonbanking activity
that is listed in § 225.28 of Regulation Y
(12 CFR 225.28) or that the Board has
determined by Order to be closely
related to banking and permissible for
bank holding companies. Unless
otherwise noted, these activities will be
conducted throughout the United States.
Each notice is available for inspection
at the Federal Reserve Bank indicated.
The notice also will be available for
inspection at the offices of the Board of
Governors. Interested persons may
express their views in writing on the
question whether the proposal complies
with the standards of section 4 of the
BHC Act. Additional information on all
bank holding companies may be
obtained from the National Information
Center website at www.ffiec.gov/nic/.
Unless otherwise noted, comments
regarding the applications must be
received at the Reserve Bank indicated
or the offices of the Board of Governors
not later than February 2, 2007.
A. Federal Reserve Bank of
Philadelphia (Michael E. Collins, Senior
Vice President) 100 North 6th Street,
Philadelphia, Pennsylvania 19105-1521:
1. Community Banks, Inc., Harrisburg,
Pennsylvania; to acquire BUCS
Financial Corp., Owings Mills,
Maryland, and thereby acquire BUCS
Federal Bank, Owings Mills, Maryland,
and engage in operating a savings and
loan association, pursuant to section
225.28(b)(4)(ii) of Regulation Y.
ACTION:
Board of Governors of the Federal Reserve
System, January 3, 2007.
Robert deV. Frierson,
Deputy Secretary of the Board.
[FR Doc. E7–24 Filed 1–5–07; 8:45 am]
BILLING CODE 6210–01–S
BILLING CODE 6210–01–S
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Advocate Health Partners, et al.;
Analysis of Agreement Containing
Consent Order To Aid Public Comment
Federal Trade Commission.
Proposed Consent Agreement.
AGENCY:
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 30, 2007.
ADDRESSES: Interested parties are
invited to submit written comments.
Comments should refer to ‘‘Advocate
Health Partners, File No. 031 0021,’’ 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, NW.,
Washington, DC 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 as
part of or as an attachment to e-mail
messages directed to the following email box: consentagreement@ftc.gov.
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
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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considered by the Commission, and will
be available to the public on the FTC
Web site, to the extent practicable, at
https://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 Web site. More information,
including routine uses permitted by the
Privacy Act, may be found in the FTC’s
privacy policy, at https://www.ftc.gov/
ftc/privacy.htm.
FOR FURTHER INFORMATION CONTACT:
Garth Huston (202) 326–3695, Bureau of
Competition, Room NJ–7264, 600
Pennsylvania Avenue, NW.,
Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant
to section 6(f) of the Federal Trade
Commission Act, 38 Stat. 721, 15 U.S.C.
46(f), and § 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 29, 2006), on
the World Wide Web, at https://
www.ftc.gov/os/2006/12/index.htm. A
paper copy can be obtained from the
FTC Public Reference Room, Room 130H, 600 Pennsylvania Avenue, NW.,
Washington, DC 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.
jlentini on PROD1PC65 with NOTICES
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 Advocate Health
Partners (‘‘AHP’’) and other related
parties. The agreement settles charges
that the proposed respondents violated
Section 5 of the Federal Trade
Commission Act, 15 U.S.C. 45, by
orchestrating, implementing, and
participating in agreements among
physician practices to fix prices and
other terms on which they would deal
with health plans and to refuse to deal
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with certain health plans except on
collectively determined terms.
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 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
respondents that they 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.
AHP is a ‘‘super physician-hospital
organization’’ whose members consist of
the non-profit Advocate Health Care
Network (‘‘AHCN’’) hospital system and
eight physician-hospital organizations
organized at each of the AHCN hospital
sites (the ‘‘PHO Respondents’’). Each
PHO Respondent, in turn, consists of a
hospital member (a non-profit
subsidiary of AHCN) and a portion of
physicians on staff at the hospital.
Approximately 2,600 independently
practicing physicians in the Chicago
metropolitan area belong to the PHO
Respondents. In addition, two AHCN
for-profit subsidiaries named in the
complaint (the ‘‘Advocate System
Respondents’’) contract with health
plans, often through AHP, to provide
the services of approximately 300
physicians who are employed by or
under contract to provide services
exclusively to the Advocate System
Respondents.
The complaint challenges conduct
during the period 1995 to 2004, during
which the respondents negotiated the
prices and other terms at which their
otherwise competing member
physicians would provide services to
the subscribers of health plans without
any efficiency-enhancing integration of
their practices sufficient to justify their
conduct. Between 1995 and 2001, AHP
staff negotiated contracts on behalf of
each PHO Respondent, with each PHO
Respondent retaining authority to
approve offers and counteroffers.
Ultimately, each PHO Respondent
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785
would approve a negotiated contract on
behalf of its member physicians, who
could then opt in or opt out of the
negotiated contract. In 2001, the
respondents centralized contract
approval at the super-PHO level. AHP
staff continued to negotiate contracts,
but AHP (rather than each PHO
Respondent) had the authority to
approve offers and counteroffers and,
ultimately, to approve negotiated
contracts on behalf of the AHP
physicians, who could then opt in or
opt out of the negotiated contract. At
various times, the Advocate System
Respondents participated in these
collective negotiations by utilizing AHP
to negotiate on their behalf, jointly with
AHP’s independent physicians. Under
both approaches, AHP acted as the
collective bargaining agent for physician
practices that would otherwise compete.
By 2002, AHP had served as the
collective bargaining agent for member
physicians in numerous contracts with
health plans. Blue Cross Blue Shield of
Illinois, however, was one of a few
payors that had not contracted with
AHP. Instead, Blue Cross contracted
directly with the vast majority of AHP
physicians. In early 2002, AHP began
developing a strategy to force Blue Cross
to replace those individual contracts
with a group AHP contract, at higher
rates than Blue Cross was paying AHP
physicians under their individual
contracts.
To carry out its strategy to increase
the prices Blue Cross paid to AHP
physicians, AHP requested that all of its
physicians submit what it termed
‘‘Agency Agreements,’’ which
authorized AHP to terminate the
physicians’’ existing individual
contracts with Blue Cross, and to
collectively negotiate new contract
terms on their behalf. In seeking this
authority, AHP reminded its physicians
that ‘‘[a] major part’’ of the value AHP
offers ‘‘has been your access to the
favorable rates negotiated by AHP for
many of your fee-for-service managed
care contracts.’’ Moreover, AHP’s
President instructed AHP staff to warn
physicians attempting to rescind their
Agency Agreement that ‘‘if they rescind
there is no hope of getting increases
going forward and it will impact
everyone’s ability to get increases from
other payors as [other payors] won’t be
able to compete [with Blue Cross].’’
AHP obtained signed Agency
Agreements from approximately 1,700
physicians and, on October 1, 2002,
terminated the physicians’ individual
contracts with Blue Cross, effective
January 1, 2003.
AHP ultimately abandoned its plan to
coerce Blue Cross to negotiate a group
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contract on price terms set by AHP, but
only after Blue Cross sued AHP for
violating the antitrust laws and agreed
to make certain payments to AHP as
part of the settlement of that dispute.
Although Blue Cross’s payments to AHP
were supposed to be used by AHP to
‘‘encourage outcome-based
reimbursement’’ and to support efforts
to implement electronic-claimsubmission capabilities for all AHP
physicians, in fact AHP distributed the
money only to physicians that had
collectively threatened not to deal with
Blue Cross.
The complaint also discusses AHP’s
dealings with United Healthcare of
Illinois, Inc. in 2001, as an example of
AHP’s collective bargaining on behalf of
its member physicians. In order to
establish a minimum acceptable rate for
the United negotiations, AHP obtained
input from each PHO Respondent’s
Board of Directors and established a
single benchmark for the entire group
that was higher than the minimum rate
that some PHO Respondent’s Boards
were willing to accept. Ten days after
United failed to agree to AHP’s
benchmark price for physician services,
AHP terminated United’s contracts not
only with the AHP physicians, but also
with the AHCN hospitals. After United
attempted to enter into direct contracts
with AHP physicians, AHP threatened
that United would be unable to contract
for AHCN hospital services unless
United agreed to a group contract for
AHP physician services. United
ultimately agreed to a group contract
containing fees for physician services
that were 20 to 30 percent higher than
United’s direct contracts with
individual physicians in the Chicago
area.
As the complaint alleges, the
respondents engaged in no efficiencyenhancing integration sufficient to
justify the conduct challenged in the
complaint. Accordingly, the complaint
alleges that they 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. 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 the
respondents from entering into or
facilitating any agreement between or
among any physicians: (1) To negotiate
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with payors on any physician’s behalf;
(2) to deal, not to deal, or threaten not
to deal with payors; (3) on what terms
to deal with any payor; or (4) not to deal
individually with any payor, or to deal
with any payor only through an
arrangement involving the respondents.
Other parts of Paragraph II. reinforce
these general prohibitions. Paragraph
II.B. prohibits the respondents from
facilitating exchanges of information
between physicians 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 the
respondents 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,
the respondents are not precluded from
engaging in conduct that is reasonably
necessary to form or participate in
legitimate joint contracting
arrangements among competing
physicians in a ‘‘qualified risk-sharing
joint arrangement’’ or a ‘‘qualified
clinically-integrated joint arrangement.’’
The arrangement, however, must not,
for three years, restrict the ability of, or
facilitate the refusal of, physicians who
participate in it to contract with payors
outside of the arrangement.
As defined in the proposed order, a
‘‘qualified risk-sharing joint
arrangement’’ possesses two key
characteristics. First, all physician
participants must share substantial
financial risk 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
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terms of dealing must be reasonably
necessary to achieve the efficiency goals
of the joint arrangement. Second, the
respondents are not precluded by
Paragraph II. from engaging in conduct
that solely involves the Advocate
System Respondents, which are
subsidiaries of the AHCN hospital
system, and other physicians employed
by AHCN because they are all part of a
single entity.
Finally, the order does not prohibit
the respondents from engaging in
conduct solely related to their
participation in a program that AHP
refers to as its ‘‘Clinical Integration
Program’’ (the ‘‘Program’’). The
complaint does not allege a violation of
the FTC Act with respect to that
conduct, and the Commission has made
no determination with respect to its
legality. The order, while not
prohibiting conduct related to the
Program, ensures that the illegal
conduct charged in the complaint does
not continue or recur. In addition,
Paragraph VI.D. provides certain
mechanisms designed to allow the
Commission to monitor the further
development, implementation, and
results of the Program. The Commission
retains the ability to challenge conduct
related to the Program if it later
determines that such a challenge is
warranted and would be in the public
interest.
Paragraph III., for three years, requires
the respondents to notify the
Commission before entering into any
arrangement to act as a messenger, or as
an agent on behalf of any physicians,
with payors regarding contracts.
Paragraph III. also sets out the
information necessary to make the
notification complete.
Paragraph IV., for three years, requires
the respondents to notify the
Commission before participating in
contracting with health plans on behalf
of a qualified risk-sharing joint
arrangement or a qualified clinicallyintegrated joint arrangement. The
contracting discussions that trigger the
notice provision may be either among
physicians or between AHP and health
plans. Paragraph IV. also sets out the
information necessary to satisfy the
notification requirement.
Paragraph V. imposes certain
notification obligations on AHP and
requires the termination of contracts
that were entered into illegally.
Paragraphs V.A. and V.D. require AHP
to distribute the complaint and order to
(1) Physicians who have participated in
AHP and the PHO Respondents in the
past or who do so within the next three
years; (2) to various past and future
personnel of the respondents and AHCN
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subsidiaries that offer physician services
to payors; and (3) to payors with whom
the respondents have dealt in the past
or deal with in the next three years.
Paragraph V.B. requires AHP, at any
payor’s request and without penalty, or,
at the latest, within one year after the
order is made final, to terminate its
existing contracts for the provision of
physician services to payors, other than
those contracts covering the program
which AHP refers to as its Clinical
Integration Program. Paragraph V.B. also
allows any such contract currently in
effect to be extended, upon mutual
consent of AHP and the contracted
payor, to any date no later than one year
from when the order became final. This
extension allows both parties to
negotiate a termination date that would
equitably enable them to prepare for the
impending contract termination.
Paragraph V.C. requires AHP to
distribute payor requests for contract
termination to physicians who
participate in the respondents.
Paragraph V.E. requires AHP to notify
the Commission of certain
organizational changes to any
respondent or other changes that may
affect compliance with the order.
Paragraphs VI., VIII., and IX. impose
various obligations on the respondents
to report or provide access to
information to the Commission to
facilitate the monitoring of compliance
with the order. Because Paragraphs V.
and VI. impose on AHP, in the first
instance, obligations to provide notice
and reporting on behalf of all
respondents, Paragraph VII. requires
that any respondents for which AHP has
not acted fulfill those obligations.
Finally, Paragraph X. provides that
the order will expire in 20 years.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. E7–27 Filed 1–5–07; 8:45 am]
BILLING CODE 6750–01–P
FEDERAL TRADE COMMISSION
[File No. 061 0150]
General Dynamics Corporation;
Analysis of Agreement Containing
Consent Orders To Aid Public
Comment
Federal Trade Commission.
Proposed Consent Agreement.
AGENCY:
jlentini on PROD1PC65 with NOTICES
ACTION:
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
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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 29, 2007.
ADDRESSES: Interested parties are
invited to submit written comments.
Comments should refer to ‘‘General
Dynamics, File No. 061 0150,’’ 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, NW.,
Washington, DC 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 as
part of or as an attachment to e-mail
messages directed to the following email box: consentagreement@ftc.gov.
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
Web site, to the extent practicable, at
https://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 Web site. More information,
including routine uses permitted by the
Privacy Act, may be found in the FTC’s
privacy policy, at https://www.ftc.gov/
ftc/privacy.htm.
FOR FURTHER INFORMATION CONTACT:
Christina R. Perez, Bureau of
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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787
Competition, 600 Pennsylvania Avenue,
NW., Washington, DC 20580, (202) 326–
2048.
SUPPLEMENTARY INFORMATION: Pursuant
to section 6(f) of the Federal Trade
Commission Act, 38 Stat. 721, 15 U.S.C.
46(f), and § 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 28, 2006), on
the World Wide Web, at https://
www.ftc.gov/os/2006/12/index.htm. A
paper copy can be obtained from the
FTC Public Reference Room, Room 130–
H, 600 Pennsylvania Avenue, NW.,
Washington, DC 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
I. Introduction
The Federal Trade Commission
(‘‘Commission’’) has accepted, subject to
final approval, an Agreement
Containing Consent Orders (‘‘Consent
Agreement’’) from General Dynamics
Corporation (‘‘GD’’). The purpose of the
proposed Consent Agreement is to
remedy the competitive harm that
would otherwise result from GD’s
acquisition of SNC Technologies, Inc.
and SNC Technologies, Corp.
(collectively ‘‘SNC’’). Under the terms of
the proposed Consent Agreement, GD is
required to divest its interest in
American Ordnance LLC to a buyer
approved by the Commission in a
manner approved by the Commission
within four months of acquiring SNC.
The proposed Consent Agreement has
been placed on the public record for
thirty days to solicit comments from
interested persons. Comments received
during this period will become part of
the public record. After thirty days, the
Commission will again review the
proposed Consent Agreement and the
comments received, and will decide
whether it should withdraw the
E:\FR\FM\08JAN1.SGM
08JAN1
]]>Agencies
[Federal Register Volume 72, Number 4 (Monday, January 8, 2007)]
[Notices]
[Pages 784-787]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-27]
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FEDERAL TRADE COMMISSION
[File No. 031 0021]
Advocate Health Partners, et al.; Analysis of 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 30, 2007.
ADDRESSES: Interested parties are invited to submit written comments.
Comments should refer to ``Advocate Health Partners, File No. 031
0021,'' 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, NW., Washington, DC 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 as part of or as an attachment to e-mail messages
directed to the following e-mail box: consentagreement@ftc.gov.
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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
[[Page 785]]
considered by the Commission, and will be available to the public on
the FTC Web site, to the extent practicable, at https://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 Web site. More
information, including routine uses permitted by the Privacy Act, may
be found in the FTC's privacy policy, at https://www.ftc.gov/ftc/
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privacy.htm.
FOR FURTHER INFORMATION CONTACT: Garth Huston (202) 326-3695, Bureau of
Competition, Room NJ-7264, 600 Pennsylvania Avenue, NW., Washington, DC
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 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 29, 2006), on the World Wide Web, at https://www.ftc.gov/
os/2006/12/index.htm. A paper copy can be obtained from the FTC Public
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington,
DC 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
Advocate Health Partners (``AHP'') and other related parties. The
agreement settles charges that the proposed respondents violated
Section 5 of the Federal Trade Commission Act, 15 U.S.C. 45, by
orchestrating, implementing, and participating in agreements among
physician practices to fix prices and other terms on which they would
deal with health plans and to refuse to deal with certain health plans
except on collectively determined terms.
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 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 respondents that they 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.
AHP is a ``super physician-hospital organization'' whose members
consist of the non-profit Advocate Health Care Network (``AHCN'')
hospital system and eight physician-hospital organizations organized at
each of the AHCN hospital sites (the ``PHO Respondents''). Each PHO
Respondent, in turn, consists of a hospital member (a non-profit
subsidiary of AHCN) and a portion of physicians on staff at the
hospital. Approximately 2,600 independently practicing physicians in
the Chicago metropolitan area belong to the PHO Respondents. In
addition, two AHCN for-profit subsidiaries named in the complaint (the
``Advocate System Respondents'') contract with health plans, often
through AHP, to provide the services of approximately 300 physicians
who are employed by or under contract to provide services exclusively
to the Advocate System Respondents.
The complaint challenges conduct during the period 1995 to 2004,
during which the respondents negotiated the prices and other terms at
which their otherwise competing member physicians would provide
services to the subscribers of health plans without any efficiency-
enhancing integration of their practices sufficient to justify their
conduct. Between 1995 and 2001, AHP staff negotiated contracts on
behalf of each PHO Respondent, with each PHO Respondent retaining
authority to approve offers and counteroffers. Ultimately, each PHO
Respondent would approve a negotiated contract on behalf of its member
physicians, who could then opt in or opt out of the negotiated
contract. In 2001, the respondents centralized contract approval at the
super-PHO level. AHP staff continued to negotiate contracts, but AHP
(rather than each PHO Respondent) had the authority to approve offers
and counteroffers and, ultimately, to approve negotiated contracts on
behalf of the AHP physicians, who could then opt in or opt out of the
negotiated contract. At various times, the Advocate System Respondents
participated in these collective negotiations by utilizing AHP to
negotiate on their behalf, jointly with AHP's independent physicians.
Under both approaches, AHP acted as the collective bargaining agent for
physician practices that would otherwise compete.
By 2002, AHP had served as the collective bargaining agent for
member physicians in numerous contracts with health plans. Blue Cross
Blue Shield of Illinois, however, was one of a few payors that had not
contracted with AHP. Instead, Blue Cross contracted directly with the
vast majority of AHP physicians. In early 2002, AHP began developing a
strategy to force Blue Cross to replace those individual contracts with
a group AHP contract, at higher rates than Blue Cross was paying AHP
physicians under their individual contracts.
To carry out its strategy to increase the prices Blue Cross paid to
AHP physicians, AHP requested that all of its physicians submit what it
termed ``Agency Agreements,'' which authorized AHP to terminate the
physicians'' existing individual contracts with Blue Cross, and to
collectively negotiate new contract terms on their behalf. In seeking
this authority, AHP reminded its physicians that ``[a] major part'' of
the value AHP offers ``has been your access to the favorable rates
negotiated by AHP for many of your fee-for-service managed care
contracts.'' Moreover, AHP's President instructed AHP staff to warn
physicians attempting to rescind their Agency Agreement that ``if they
rescind there is no hope of getting increases going forward and it will
impact everyone's ability to get increases from other payors as [other
payors] won't be able to compete [with Blue Cross].'' AHP obtained
signed Agency Agreements from approximately 1,700 physicians and, on
October 1, 2002, terminated the physicians' individual contracts with
Blue Cross, effective January 1, 2003.
AHP ultimately abandoned its plan to coerce Blue Cross to negotiate
a group
[[Page 786]]
contract on price terms set by AHP, but only after Blue Cross sued AHP
for violating the antitrust laws and agreed to make certain payments to
AHP as part of the settlement of that dispute. Although Blue Cross's
payments to AHP were supposed to be used by AHP to ``encourage outcome-
based reimbursement'' and to support efforts to implement electronic-
claim-submission capabilities for all AHP physicians, in fact AHP
distributed the money only to physicians that had collectively
threatened not to deal with Blue Cross.
The complaint also discusses AHP's dealings with United Healthcare
of Illinois, Inc. in 2001, as an example of AHP's collective bargaining
on behalf of its member physicians. In order to establish a minimum
acceptable rate for the United negotiations, AHP obtained input from
each PHO Respondent's Board of Directors and established a single
benchmark for the entire group that was higher than the minimum rate
that some PHO Respondent's Boards were willing to accept. Ten days
after United failed to agree to AHP's benchmark price for physician
services, AHP terminated United's contracts not only with the AHP
physicians, but also with the AHCN hospitals. After United attempted to
enter into direct contracts with AHP physicians, AHP threatened that
United would be unable to contract for AHCN hospital services unless
United agreed to a group contract for AHP physician services. United
ultimately agreed to a group contract containing fees for physician
services that were 20 to 30 percent higher than United's direct
contracts with individual physicians in the Chicago area.
As the complaint alleges, the respondents engaged in no efficiency-
enhancing integration sufficient to justify the conduct challenged in
the complaint. Accordingly, the complaint alleges that they 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. 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 the respondents from entering into or
facilitating any agreement between or among any physicians: (1) To
negotiate with payors on any physician's behalf; (2) to deal, not to
deal, or threaten not to deal with payors; (3) on what terms to deal
with any payor; or (4) not to deal individually with any payor, or to
deal with any payor only through an arrangement involving the
respondents.
Other parts of Paragraph II. reinforce these general prohibitions.
Paragraph II.B. prohibits the respondents from facilitating exchanges
of information between physicians 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 the respondents 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, the respondents are
not precluded from engaging in conduct that is reasonably necessary to
form or participate in legitimate joint contracting arrangements among
competing physicians in a ``qualified risk-sharing joint arrangement''
or a ``qualified clinically-integrated joint arrangement.'' The
arrangement, however, must not, for three years, restrict the ability
of, or facilitate the refusal of, physicians who participate in it to
contract with payors outside of the arrangement.
As defined in the proposed order, a ``qualified risk-sharing joint
arrangement'' possesses two key characteristics. First, all physician
participants must share substantial financial risk 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. Second, the respondents are not
precluded by Paragraph II. from engaging in conduct that solely
involves the Advocate System Respondents, which are subsidiaries of the
AHCN hospital system, and other physicians employed by AHCN because
they are all part of a single entity.
Finally, the order does not prohibit the respondents from engaging
in conduct solely related to their participation in a program that AHP
refers to as its ``Clinical Integration Program'' (the ``Program'').
The complaint does not allege a violation of the FTC Act with respect
to that conduct, and the Commission has made no determination with
respect to its legality. The order, while not prohibiting conduct
related to the Program, ensures that the illegal conduct charged in the
complaint does not continue or recur. In addition, Paragraph VI.D.
provides certain mechanisms designed to allow the Commission to monitor
the further development, implementation, and results of the Program.
The Commission retains the ability to challenge conduct related to the
Program if it later determines that such a challenge is warranted and
would be in the public interest.
Paragraph III., for three years, requires the respondents to notify
the Commission before entering into any arrangement to act as a
messenger, or as an agent on behalf of any physicians, with payors
regarding contracts. Paragraph III. also sets out the information
necessary to make the notification complete.
Paragraph IV., for three years, requires the respondents to notify
the Commission before participating in contracting with health plans on
behalf of a qualified risk-sharing joint arrangement or a qualified
clinically-integrated joint arrangement. The contracting discussions
that trigger the notice provision may be either among physicians or
between AHP and health plans. Paragraph IV. also sets out the
information necessary to satisfy the notification requirement.
Paragraph V. imposes certain notification obligations on AHP and
requires the termination of contracts that were entered into illegally.
Paragraphs V.A. and V.D. require AHP to distribute the complaint and
order to (1) Physicians who have participated in AHP and the PHO
Respondents in the past or who do so within the next three years; (2)
to various past and future personnel of the respondents and AHCN
[[Page 787]]
subsidiaries that offer physician services to payors; and (3) to payors
with whom the respondents have dealt in the past or deal with in the
next three years. Paragraph V.B. requires AHP, at any payor's request
and without penalty, or, at the latest, within one year after the order
is made final, to terminate its existing contracts for the provision of
physician services to payors, other than those contracts covering the
program which AHP refers to as its Clinical Integration Program.
Paragraph V.B. also allows any such contract currently in effect to be
extended, upon mutual consent of AHP and the contracted payor, to any
date no later than one year from when the order became final. This
extension allows both parties to negotiate a termination date that
would equitably enable them to prepare for the impending contract
termination. Paragraph V.C. requires AHP to distribute payor requests
for contract termination to physicians who participate in the
respondents. Paragraph V.E. requires AHP to notify the Commission of
certain organizational changes to any respondent or other changes that
may affect compliance with the order.
Paragraphs VI., VIII., and IX. impose various obligations on the
respondents to report or provide access to information to the
Commission to facilitate the monitoring of compliance with the order.
Because Paragraphs V. and VI. impose on AHP, in the first instance,
obligations to provide notice and reporting on behalf of all
respondents, Paragraph VII. requires that any respondents for which AHP
has not acted fulfill those obligations.
Finally, Paragraph X. provides that the order will expire in 20
years.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. E7-27 Filed 1-5-07; 8:45 am]
BILLING CODE 6750-01-P
