Boulder Valley Individual Practice Association, et al.; Agreement Containing Consent Order To Aid Public Comment, 289-291 [E8-31384]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 74, Number 2 (Monday, January 5, 2009)]
[Notices]
[Pages 289-291]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-31384]


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FEDERAL TRADE COMMISSION

[File No. 051 0252]


Boulder Valley Individual Practice Association, et al.; 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 22, 2009.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Boulder Valley IPA, File No. 051 0252,'' 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, N.W., Washington, D.C. 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 by following the instructions on the web-based form at (https://
secure.commentworks.com/ftc-BoulderValleyIPA). To ensure that the 
Commission considers an electronic comment, you must file it on that 
web-based form.
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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 considered by the Commission, and 
will be available to the public on the FTC website, to the extent 
practicable, at 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 website. More information, including routine uses permitted by the

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Privacy Act, may be found in the FTC's privacy policy, at (https://
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www.ftc.gov/ftc/privacy.shtm).

FOR FURTHER INFORMATION CONTACT: Constance M. Salemi, FTC Bureau of 
Competition, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580, (202) 
326-2701.

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 24, 2008), on the World Wide Web, at (https://www.ftc.gov/
os/2008/12/index.htm). 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 Boulder 
Valley Individual Practice Association (``BVIPA''). The agreement 
settles charges that BVIPA 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 physician 
members of BVIPA to fix the price at which BVIPA physicians contract 
with health plans.
    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 consent Order has been entered 
into for settlement purposes only and does not constitute an admission 
by the proposed respondent that it 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.
    BVIPA is a type of organization commonly referred to in the health 
care industry as an ``independent practice association'' because its 
members consist of independent physicians in solo and small group 
practices. BVIPA is controlled by its approximately 365 physician 
members in the Boulder County, Colorado area.
    The Complaint challenges BVIPA's conduct starting in 2001, when 
BVIPA, on behalf of its members, began to negotiate the prices and 
terms in payer contracts at which its otherwise competing physician 
members would provide services to subscribers of health plans. BVIPA is 
governed by a board of directors consisting of physician members 
elected by the membership. Physicians joining BVIPA sign an agreement 
that gives BVIPA the authority to contract with health plans on their 
behalf, and they agree to accept the payment for their services that 
BVIPA negotiates. Members can provide input to BVIPA on whether a 
proposed rate level was acceptable.
    Between 2001 and 2006, BVIPA, on behalf of its members, negotiated 
and signed agreements with approximately 17 payers and conducted 
periodic renegotiations of its contracts with large payers to obtain 
rate increases. BVIPA threatened payers facing rate increases with 
termination of their contracts when they refused to negotiate or 
otherwise respond to BVIPA's demands. Payers threatened with 
termination ultimately yielded to BVIPA's price demands.
    BVIPA actively discouraged members from contracting directly with 
payers. Some payers attempted to contract with some of BVIPA's 
physician members with specialties that were important for the 
marketing of a provider network, and found that the providers refused 
to contract with payers outside BVIPA. Consequently, payers had to 
negotiate and sign contracts with BVIPA to ensure that these physicians 
would participate in the payers' health plans.
    In 2004, BVIPA purported to offer payers three options for 
contracting with BVIPA members: a single-signature contract that 
``delivered the entire BVIPA network,'' a ``modified messenger model'' 
that ``may or may not deliver our entire network;'' and direct 
contracting with individual members outside the IPA. Although BVIPA 
claimed to offer payers a choice of contracting methods, BVIPA did not 
develop or use a messenger model, and it continued to encourage its 
members not to contract outside the IPA.
    BVIPA's conduct had the effect of unreasonably restraining trade 
and hindering competition in the provision of physician services by 
unreasonably restraining price and other forms of competition among 
physicians; increasing prices for physician services; and depriving 
health plans, employers, and individual consumers of the benefits of 
competition among physicians. BVIPA members did not engage in any 
efficiency-enhancing integration of their practices sufficient to 
justify the its challenged conduct. Accordingly, the Complaint alleges 
that BVIPA 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, while leaving 
BVIPA free to engage in legitimate, potentially procompetitive conduct. 
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 BVIPA from entering into or facilitating 
any agreement between or among any physicians: (1) to negotiate with 
payers on any physician's behalf; (2) to refuse to deal, or threaten to 
refuse to deal, with payers in furtherance of any conduct or agreement 
prohibited by any other provision of Paragraph II, (3) on any terms on 
which a physician is willing to deal with any payer; or (4) not to deal 
individually with any payer, or not to deal with any payer other than 
through BVIPA.
    Other parts of Paragraph II reinforce these general prohibitions. 
Paragraph II.B prohibits BVIPA from facilitating exchanges of 
information between physicians concerning any physician's willingness 
to deal with a payer or the terms or conditions, including price terms, 
on which the physician is willing to deal with a payer. Paragraph II.C 
bars

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attempts to engage in any action prohibited by Paragraph II.A, or II.B, 
and Paragraph II.D. proscribes BVIPA 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, BVIPA is not 
precluded from engaging in conduct that is reasonably necessary to form 
or participate in legitimate joint contracting arrangements among 
competing physicians, such as a ``qualified risk-sharing joint 
arrangement'' or a ``qualified clinically-integrated joint 
arrangement.'' The arrangement, however, must not restrict the ability 
of, or facilitate the refusal of, physicians who participate in it to 
contract with payers outside of the arrangement.
    As defined in the proposed Order, a ``qualified risk-sharing joint 
arrangement'' possesses two characteristics. First, all physician 
participants must share substantial financial risks 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.
    Paragraph III, for three years, requires BVIPA to notify the 
Commission before it enters into any arrangements to act as a messenger 
or an agent on behalf of any physicians, with payers regarding 
contracts. Paragraph IV sets out the information necessary to make the 
notification complete.
    Paragraph V, for three years, requires BVIPA to notify the 
Commission before participating in contracting with health plans on 
behalf of either a qualified risk-sharing or a qualified clinically-
integrated joint arrangement. Paragraph VI sets out the information 
necessary to satisfy the notification requirement.
    Paragraph VII imposes other notification obligations on BVIPA and 
requires the termination of certain contracts that were entered into 
illegally. Paragraphs VII.A requires BVIPA to distribute the Complaint 
and the Order to (1) physicians who have participated in BVIPA since 
2001; (2) to various past and current personnel of BVIPA; and (3) to 
payers with whom BVIPA has dealt since 2001. Paragraph VII.B requires 
BVIPA, at any payer's request and without penalty, to terminate its 
existing contracts with the payer for the provision of physician 
services. Paragraph VII.B. allows certain contracts currently in effect 
to be extended at the written request of the payer no longer than one 
year from the date that the Order becomes final. Paragraph VII.C 
requires BVIPA to distribute payer requests for contract termination to 
physicians who participate in the contract. Paragraph VII.D requires 
BVIPA, for three years, to provide new members, personnel, and payers 
not previously receiving a copy, a copy of the Order and the Complaint. 
Paragraph VII.D also requires BVIPA to publish annually a copy of the 
Order and the Complaint in its newsletter.
    Paragraphs VIII, IX, and X impose various obligations on BVIPA to 
report or provide access to information to the Commission to facilitate 
the monitoring of compliance with the Order. Finally, Paragraph XI 
provides that the Order will expire in 20 years.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. E8-31384 Filed 1-2-09: 8:45 am]
BILLING CODE 6750-01-S