[Federal Register Volume 82, Number 18 (Monday, January 30, 2017)]
[Notices]
[Pages 8752-8755]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-01899]
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FEDERAL TRADE COMMISSION
[File No. 141 0194]
Cooperativa de M[eacute]dicos Oftalm[oacute]logos de Puerto Rico
(OftaCoop); Analysis 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 methods of competition.
The attached Analysis to Aid Public Comment describes both the
allegations in the 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 February 21, 2017.
ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/oftacoopconsent online or on paper, by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Write ``In the Matter of
Cooperativa de Medicos Oftalmologos de Puerto Rico, File No. 1410194--
Consent Agreement'' on your comment and file your comment online at
https://
[[Page 8753]]
ftcpublic.commentworks.com/ftc/oftacoopconsent by following the
instructions on the web-based form. If you prefer to file your comment
on paper, write ``In the Matter of Cooperativa de Medicos Oftalmologos
de Puerto Rico, File No. 1410194--Consent Agreement'' on your comment
and on the envelope, and mail your comment to the following address:
Federal Trade Commission, Office of the Secretary, 600 Pennsylvania
Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580, or deliver
your comment to the following address: Federal Trade Commission, Office
of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor,
Suite 5610 (Annex D), Washington, DC 20024.
FOR FURTHER INFORMATION CONTACT: Synda Mark (202-326-2353), Bureau of
Competition, 600 Pennsylvania Avenue NW., Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34,
notice is hereby given that the above-captioned consent agreement
containing 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 January 19, 2017), on the World Wide Web,
at http://www.ftc.gov/os/actions.shtm.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before February 21,
2017. Write ``In the Matter of Cooperativa de Medicos Oftalmologos de
Puerto Rico, File No. 1410194--Consent Agreement'' on your comment.
Your comment--including your name and your state--will be placed on the
public record of this proceeding, including, to the extent practicable,
on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission tries to
remove individuals' home contact information from comments before
placing them on the Commission Web site.
Because your comment will be made public, you are solely
responsible for making sure that your comment does not include any
sensitive personal information, like anyone's Social Security number,
date of birth, driver's license number or other state identification
number or foreign country equivalent, passport number, financial
account number, or credit or debit card number. You are also solely
responsible for making sure that your comment does not include any
sensitive health information, like medical records or other
individually identifiable health information. In addition, do not
include any ``[t]rade secret or any commercial or financial information
which . . . is privileged or confidential,'' as discussed in Section
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR
4.10(a)(2). In particular, do not include competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
If you want the Commission to give your comment confidential
treatment, you must file it in paper form, with a request for
confidential treatment, and you have to follow the procedure explained
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept
confidential only if the FTC General Counsel, in his or her sole
discretion, grants your request in accordance with the law and the
public interest.
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\1\ In particular, the written request for confidential
treatment that accompanies the comment must include the factual and
legal basis for the request, and must identify the specific portions
of the comment to be withheld from the public record. See FTC Rule
4.9(c), 16 CFR 4.9(c).
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Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/oftacoopconsent by following the instructions on the web-based
form. If this Notice appears at http://www.regulations.gov/#!home, you
also may file a comment through that Web site.
If you file your comment on paper, write ``In the Matter of
Cooperativa de Medicos Oftalmologos de Puerto Rico, File No. 1410194--
Consent Agreement'' on your comment and on the envelope, and mail your
comment to the following address: Federal Trade Commission, Office of
the Secretary, 600 Pennsylvania Avenue NW., Suite CC-5610 (Annex D),
Washington, DC 20580, or deliver your comment to the following address:
Federal Trade Commission, Office of the Secretary, Constitution Center,
400 7th Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC
20024. If possible, submit your paper comment to the Commission by
courier or overnight service.
Visit the Commission Web site at http://www.ftc.gov to read this
Notice and the news release describing it. The FTC Act and other laws
that the Commission administers permit the collection of public
comments to consider and use in this proceeding as appropriate. The
Commission will consider all timely and responsive public comments that
it receives on or before February 21, 2017. You can find more
information, including routine uses permitted by the Privacy Act, in
the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.
Analysis of Agreement Containing Consent Order To Aid Public Comment
I. Overview
The Federal Trade Commission (Commission), has accepted, subject to
final approval, an agreement containing a proposed consent order with
the Cooperativa de M[eacute]dicos Oftalm[oacute]logos de Puerto Rico
(Respondent or OftaCoop). The agreement settles charges that OftaCoop
violated Section 5 of the Federal Trade Commission Act, as amended, 15
U.S.C. 45, by orchestrating a concerted refusal to deal by
ophthalmologists in Puerto Rico to preclude a third-party payor and its
network administrator from implementing a cost-savings program to
manage ophthalmology services and reduce reimbursement rates.
The proposed consent order has been placed on the public record for
30 days to solicit comments from interested persons. Comments received
during this period will become part of the public record. After 30
days, the Commission will again review the proposed consent order along
with the comments received, and decide whether it should withdraw from
the consent agreement, modify it, or make final the proposed consent
order.
The purpose of this analysis is to facilitate public comment on the
proposed consent order. The analysis is not intended to constitute an
official interpretation of the proposed consent order or to modify its
terms in any way. Further, the proposed consent order has been entered
into for settlement purposes only and does not constitute an admission
by Respondent that it violated the law or that the facts alleged in the
Complaint (other than jurisdictional facts) are true.
II. The Complaint
OftaCoop is a healthcare cooperative with about 100
ophthalmologists organized under the laws of the
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Commonwealth of Puerto Rico. The proposed complaint charges that
OftaCoop facilitated an agreement among competing ophthalmologists to
refuse to deal with MCS Advantage, Inc. (MCS), a payor, and Eye
Management of Puerto Rico (Eye Management), MCS's network
administrator. The allegations of the proposed complaint are summarized
below.
MCS provides healthcare coverage to enrollees of its Medicare
Advantage plans pursuant to a contract with Medicare. Medicare pays MCS
a premium; in exchange, MCS arranges and pays for healthcare services
for its enrollees. To participate in the Medicare Advantage program,
MCS must offer a provider network with a sufficient number of
physicians to comply with the program's network adequacy requirement
designed to ensure enrollees have adequate access to healthcare
services. MCS sought to lower its costs after Medicare reduced the
premiums it was paying to MCS.
In April 2014, MCS asked Eye Management to create and manage a
network of ophthalmologists in Puerto Rico to help lower costs and
better manage ophthalmology services provided to its Medicare Advantage
enrollees. Eye Management would administer ophthalmology services and
benefits provided to MCS enrollees, including credentialing,
utilization review, claims processing, and other management services.
Under the arrangement, Eye Management would enter into contracts
directly with each ophthalmologist to replace MCS's existing contracts
with each ophthalmologist. In early June 2014, Eye Management sent a
proposed contract to every ophthalmologist contracted with MCS at the
time. These contracts offered payments at rates that were about 10%
lower, on average, than the rates under the existing contracts between
MCS and each ophthalmologist.
OftaCoop convened a meeting on June 14, 2014 with OftaCoop members
and non-member ophthalmologists to discuss their dissatisfaction with
Eye Management. The attendees agreed not to sign a new contract with
Eye Management in order to prevent Eye Management from creating a
network on behalf of MCS. After the meeting, OftaCoop's former
Secretary of the Board of Directors, with help from OftaCoop's
president, sent an email to OftaCoop member and non-member
ophthalmologists with the subject line ``DO NOT SIGN THE MCS/EYE
MANAGEMENT AGREEMENT.'' The email was signed ``Board of Directors
OFTACOOP'' and sent from OftaCoop's official email account. The email
urged the ophthalmologists not to sign the contract with Eye Management
so they could collectively negotiate with payors through OftaCoop.
Eye Management's medical director was one of the recipients of the
email. In response to the email, Eye Management's counsel sent OftaCoop
a cease-and-desist letter on June 19, 2014, asking OftaCoop to stop
interfering with negotiations between Eye Management and individual
ophthalmologists. The letter also notified OftaCoop that any agreement
among competing ophthalmologists to jointly refuse to contract with Eye
Management was illegal under the antitrust laws.
OftaCoop next met on June 22, 2014. The stated purpose of that
meeting, according to the June 14, 2014 email, was ``to turn this
around and for us to trample over MCS.'' At the meeting, OftaCoop's
president told the attendees they should make their own decision about
payor contracting. Notwithstanding Eye Management's cease-and-desist
letter, the former Secretary of the Board told the meeting attendees
that they had to be united against Eye Management.
The collective refusal to deal among the ophthalmologists prevented
Eye Management from creating a lower-cost network. Few ophthalmologists
joined the Eye Management network. In early August 2014, Eye Management
informed MCS of its inability to form a viable network of
ophthalmologists. MCS directed Eye Management to suspend further
efforts to develop a network.
MCS next tried to lower costs through its direct contracts with the
ophthalmologists. In early August 2014, MCS offered to continue
contracting directly with the ophthalmologists at rates about 10% below
rates under its existing contracts with the ophthalmologists. Just as
they had rejected Eye Management's proposed contracts, many
ophthalmologists refused to accept MCS's offer and cancelled, or
threatened to cancel, their existing contracts with MCS. The contract
cancellations jeopardized MCS's ability to meet network adequacy
requirements for its Medicare Advantage enrollees. It also threatened
to imperil patient care: MCS received hundreds of phone calls from its
enrollees complaining that ophthalmologists were not offering
appointments or cancelling previously scheduled surgeries. MCS had no
choice but to abandon its plan to lower rates and instead continued
paying ophthalmologists the higher rates to retain its network.
Finally, the complaint alleges that OftaCoop has not undertaken any
activities to create any integration among OftaCoop members in their
delivery of ophthalmology services and thus cannot justify the alleged
conduct.
III. The Proposed Consent Order
The proposed consent order is designed to prevent recurrence of the
illegal conduct alleged in the complaint. The key provisions are aimed
at preventing OftaCoop from using concerted refusals to deal or other
coercive tactics to extract favorable contract terms from payors. The
proposed consent order also takes into account a change in Puerto Rico
law that authorizes healthcare cooperatives to jointly negotiate with
payors. Therefore, the proposed consent order does not prohibit
OftaCoop from jointly contracting with payors.
A. Proposed Consent Order Provisions
Paragraph II.A bars OftaCoop from organizing or implementing
agreements to refuse to deal, or to threaten to refuse to deal, with a
payor over contract terms, as well as agreements not to deal
individually with payors, or to deal only through OftaCoop. Paragraph
II.B prohibits OftaCoop from submitting for state approval any payor
contract that it negotiated using acts of coercion, intimidation,
boycott, or concerted refusal to deal.
The remaining portions of Paragraph II prohibit conduct that would
facilitate a violation of Paragraph II.A. Paragraph II.C bars
information exchanges to further conduct that violates the core
prohibitions of Paragraph II. Paragraphs II.D and II.E. ban attempts
and encouragement of such violations.
Paragraph III.A requires OftaCoop to send a copy of the complaint
and consent order to its members, officers, directors, managers, and
employees. Paragraph III.B contains notification provisions relating to
future contact with its members, officers, directors, managers and
employees. For five years after the date on which the consent order is
issued, OftaCoop is required to distribute a copy of the consent order
and complaint to each member who begins participating in OftaCoop and
each person who becomes an officer director, manager, or employee.
Paragraph III.B also requires OftaCoop to publish a copy of the consent
order and complaint, annually for five years, on its Web site, if any,
or any official publication it sends to its members.
Paragraphs IV, V, and VI impose various obligations on OftaCoop to
report or provide access to information to the Commission to facilitate
monitoring of compliance with the consent order.
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Finally, paragraph VII provides that the consent order will expire
in 20 years.
B. Impact of New Puerto Rico Law on the Proposed Consent Order and
Inclusion of a Proviso
During the investigation, Puerto Rico passed a new law (Act 228 of
December 15, 2015) permitting healthcare cooperatives such as OftaCoop
to jointly negotiate contracts with payors. Under this new law,
healthcare cooperatives must file their payor agreements with the
Puerto Rico Public Corporation for the Supervision and Insurance of
Cooperatives (COSSEC). A committee whose members are not competitors in
the market will oversee the negotiations, and must approve or
disapprove each agreement.
Puerto Rico has neither issued any regulations nor do we have any
record to evaluate how Puerto Rico will supervise negotiations.
Therefore, the Commission is unable to assess to whether Act 228
complies with state action requirements.\2\ Although it is too early to
assess Puerto Rico's implementation of the new law, the Commission
believes the circumstances here make it appropriate to defer to Puerto
Rico's expressed intention to actively supervise joint negotiations
between healthcare cooperatives and payors. Puerto Rico officials have
only been recently granted that authority, and it is appropriate to
allow them an opportunity to utilize that authority. As a result, the
proposed consent order does not bar collective price negotiations. This
is consistent with the consent order in another matter involving
healthcare providers where state officials had authority to actively
supervise private conduct but had not exercised it.\3\
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\2\ The state action doctrine shields certain anticompetitive
conduct by the states from federal antitrust scrutiny. See Parker v.
Brown, 317 U.S. 341 (1943).
\3\ See Minnesota Rural Health Cooperative, C-4311 (Jan. 4,
2011) (consent order, in settling charges that a group of doctors
and hospitals used coercive tactics in negotiations with payors,
prohibited using coercion in negotiations, but did not bar joint
negotiations), available at https://www.ftc.gov/news-events/press-releases/2010/06/minnesota-health-care-provider-group-settles-ftc-price-fixing.
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In light of Act 228, the order also includes a proviso designed to
clarify the scope of the prohibitions in Paragraph II. First, it
provides that the provisions of Paragraph II do not prohibit OftaCoop,
in exercising its business judgment, from rejecting a contract on
behalf of its members, so long as there is no agreement between
OftaCoop and any of its members that the member will refuse to deal
individually (or will deal only through OftaCoop). Second, the proposed
consent order does not prevent OftaCoop from exchanging information
when necessary to conduct joint payor contract negotiations on behalf
of its members. Such information would not, however, ordinarily include
whether an individual member is participating in a particular contract
or the terms on which it is negotiating with a payor independently of
OftaCoop.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2017-01899 Filed 1-27-17; 8:45 am]
BILLING CODE 6750-01-P