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9810261
B259134
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
- COMMISSIONERS:
-
Robert Pitofsky, Chairman
Sheila F. Anthony
Mozelle W. Thompson
Orson Swindle
In the Matter of
NORTH LAKE TAHOE MEDICAL GROUP, INC., a corporation.
Docket No. C-3885
DECISION AND ORDER
The Federal Trade Commission ("Commission")
having initiated an investigation of certain acts and practices of North
Lake Tahoe Medical Group, Inc. ("Tahoe IPA"), hereinafter
sometimes referred to as "respondent," and the respondent
having been furnished thereafter with a copy of a draft of complaint
that the Bureau of Competition proposed to present to the Commission for
its consideration and which, if issued by the Commission, would charge
respondent with violation of the Federal Trade Commission Act; and
The respondent, its attorney, and counsel for the
Commission having thereafter executed an agreement containing a consent
order, an admission by the respondent of all the jurisdictional facts
set forth in the aforesaid draft of 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 Commission having thereafter considered the matter
and having determined that it had reason to believe that the respondent
has violated the said Act, and that a complaint should issue stating its
charges in that respect, and having thereupon accepted the executed
consent agreement and placed such agreement on the public record for a
period of sixty (60) days, now in further conformity with the procedure
prescribed in § 2.34 of its Rules, the Commission hereby issues its
complaint, makes the following jurisdictional findings, and enters the
following order:
1. Respondent North Lake Tahoe Medical Group, Inc. is
a corporation organized, existing, and doing business under and by
virtue of the laws of the State of California, with its office and
principal place of business located at P.O. Box 2466, Truckee,
California 96160. North Lake Tahoe Medical Group, Inc., also has
traded and done business as North Lake Tahoe IPA, North Lake IPA, and
Tahoe IPA.
2. The Federal Trade Commission has jurisdiction of
the subject matter of this proceeding and of the 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. "Tahoe IPA" means North Lake Tahoe
Medical Group, Inc., its directors, officers, employees, agents,
representatives, predecessors, successors, and assigns; and its
subsidiaries, divisions, groups, affiliates controlled by Tahoe IPA,
and the respective directors, officers, employees, agents,
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 Tahoe IPA;
(2) who has agreed to provide services through Tahoe IPA; or (3) whose
services have been offered to any payer through Tahoe 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) 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; (2) any agreement on prices or terms
of reimbursement entered into by the arrangement is reasonably
necessary to obtain significant efficiencies through the joint
arrangement; and (3) 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.
H. "Qualified clinically integrated joint
arrangement" means an arrangement to provide physician services
in which: (1) 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; (2) any agreement on
prices or terms of reimbursement entered into by the arrangement is
reasonably necessary to obtain significant efficiencies through the
joint arrangement; and (3) 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.
I. "Reimbursement" means any payment,
whether cash or non-cash, or other benefit received for the provision
of physician services.
II.
IT IS FURTHER ORDERED that Tahoe 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 physicians with any
payer or provider for physician services;
2. Deal, or refuse to deal, with any payer or
provider;
3. Determine or influence any terms, conditions, or
requirements upon which any physician deals, or is willing to deal,
with any payer or provider, including, but not limited to, terms of
reimbursement; or
4. Restrict the ability of any physician to deal
with any payer or provider individually or through any arrangement
outside Tahoe IPA.
B. Exchanging, or facilitating the exchange of,
information among physicians concerning the terms or conditions,
including reimbursement, on which any physician is willing to deal
with payers.
C. 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.
PROVIDED that nothing in this order shall be construed
to prohibit any agreement or conduct by Tahoe 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 Tahoe 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 prices, or terms of 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, Tahoe 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.
PROVIDED FURTHER, that nothing in this order shall
prevent the Tahoe IPA from refusing to transmit any information to
less than all of its participating physicians. Notwithstanding this
proviso, the IPA shall not require, as a condition of transmitting
information to participating physicians or for any other reason, that
any offer by a payer or provider be made to all participating
physicians or to any particular physician.
III.
IT IS FURTHER ORDERED that Tahoe IPA shall:
A. Within five (5) days after the date this agreement
is signed by Tahoe IPA, provide to Blue Shield of California the names
and addresses of all participating physicians, and request from Blue
Shield of California the names of all participating physicians who
either have terminated participation, or have given notice of intent
to terminate future participation, in any Blue Shield of California
health plan at any time between January 1, 1998, and the date this
agreement is signed by Tahoe IPA.
B. Within ten (10) days after Tahoe IPA has received
from Blue Shield of California the names and addresses requested in
accordance with Paragraph III.A. of this agreement, give notice of the
requirements of Paragraph III.C. of this agreement to any
participating physician who either has terminated participation, or
has given notice of future intent to terminate participation, in any
Blue Shield of California health plan at any time between January 1,
1998, and the date this agreement is signed by Tahoe IPA.
C. Within twenty (20) days after Tahoe IPA has
received from Blue Shield of California the names and addresses
requested in accordance with Paragraph III.A. of this agreement,
terminate the participation in Tahoe IPA of any physician who either
has terminated participation, or has given notice of intent to
terminate future participation, in any Blue Shield of California
health plan at any time between January 1, 1998, and the date this
agreement is signed by Tahoe IPA, unless any such physician:
1. who has terminated participation in any Blue
Shield of California health plan, attempts in good faith to
reestablish such participation for a period of at least six (6)
months thereafter, or
2. who has given notice of intent to terminate
future participation in any Blue Shield of California health plan,
rescinds in writing such notice and continues such participation for
a period of at least six (6) months thereafter.
IV.
IT IS FURTHER ORDERED that Tahoe 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; and
2. Revise the Provider Services Agreement so that it
is in conformance with the provisions of this order.
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; and
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.
V.
IT IS FURTHER ORDERED that Tahoe IPA shall file verified
written reports 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, Tahoe IPA shall include in such reports: (1) information
identifying each payer that has contacted Tahoe IPA for the purpose of
contracting for physician services, the terms of any contract the payer
was seeking with Tahoe IPA, and Tahoe 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 they participate; and (3) copies of
the minutes of Tahoe IPA's annual meetings.
VI.
IT IS FURTHER ORDERED that Tahoe IPA shall notify the
Commission at least thirty (30) days prior to any proposed change in
Tahoe 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 Tahoe IPA that may affect
compliance obligations arising out of this order.
VII.
IT IS FURTHER ORDERED that, for the purpose of
determining or securing compliance with this order, Tahoe 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 the control of Tahoe IPA relating to any
matter contained in this order; and
B. Upon five (5) days' notice to Tahoe IPA, and
without restraint or interference from it, to interview officers,
directors, or employees of Tahoe IPA.
VIII.
IT IS FURTHER ORDERED that this order shall terminate on
July 21, 2019.
By the Commission.
Donald S. Clark
Secretary
SEAL:
ISSUED: July 21, 1999
Attachment A
Admar Corporation
Barton Memorial Hospital
Blue Shield of California
Blue Cross of California
CCN
First Health (Affordable Healthcare)
Health Net
Hometown Health Plan
Interplan Corporation
Multiplan
MMC/Cigna
Mutual of Omaha
PacifiCare
School Insurance Group
St. Mary's Health Network
Tahoe Forest Hospital
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