[Federal Register Volume 60, Number 191 (Tuesday, October 3, 1995)]
[Notices]
[Pages 51808-51817]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-24365]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Health Choice of Northwest Missouri, Inc., et
al.; Proposed Final Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Stipulation, and a Competitive Impact Statement have been filed with
the United States District Court for the Western District of Missouri
in United States v. Health Choice of Northwest Missouri, Inc., et al.,
Civil No. 95-6171-CV-SJ-6 as to Health Choice of Northwest Missouri,
Inc., Heartland Health Systems, Inc. and St. Joseph Physicians, Inc.
The Complaint alleges that the defendants entered into an agreement
with the purpose and effect of restraining competition unreasonably, in
violation of Section 1 of the Sherman Act, 15 U.S.C. 1, by preventing
managed care plans from developing in Buchanan County, Missouri.
The proposed Final Judgment eliminates the continuance or
recurrence of Defendants' agreement to prevent or delay the development
of managed care in Buchanan County.
Public comment on the proposed Final Judgment is invited within the
statutory 60-day comment period. Such comments and responses thereto
will be published in the Federal Register and filed with the Court.
Comments should be directed to Gail Kursh, Chief; Professionals and
Intellectual Property Section/Health Care Task Force; United States
Department of Justice; Antitrust Division; 600 E Street, N.W.; Room
9300; Washington, D.C., 20530 (telephone: 202/307-5799.
Rebecca P. Dick,
Deputy Director of Operations.
United States District Court for the Western District of Missouri
In the matter of: United States or America, Plaintiff, vs.
Health Choice of Northwest Missouri, Inc., Heartland Health System,
Inc., and St. Joseph Physicians, Inc. Defendants Civil Action No.
95-6171-CV-SJ-6.
Stipulation
It is stipulated by and between the undersigned parties, by their
respective attorneys, that:
1. The Court has jurisdiction over the subject matter of this
action and over each of the parties hereto, and venue of this action is
proper in the Western District of Missouri;
2. The parties consent that a Final Judgment in the form hereto
attached may be filed and entered by the Court, upon the motion of any
party or upon the Court's own motion, at any time after compliance with
the requirements of the Antitrust Procedures and Penalties Act (15
U.S.C. 16), and without further notice to any party or other
proceedings, provided that plaintiff has not withdrawn its consent,
which it may do at any time before the entry of the proposed Final
Judgment by serving notice thereof on defendants and by filing that
notice with the Court; and
3. Defendants agree to be bound by the provisions of the proposed
Final Judgment pending its approval by the Court. If plaintiff
withdraws its consent, or if the proposed Final Judgment is not entered
pursuant to the terms of the Stipulation, this Stipulation shall be of
no effect whatsoever, and the making of this Stipulation shall be
without prejudice to any party in this or in any other proceeding.
[[Page 51809]]
For Plaintiff, United States of America:
Anne K. Bingaman,
Assistant Attorney General.
Rebecca P. Dick,
Deputy Director, Office of Operations.
Gail Kursh,
Chief, Professions & Intellectual Property Section, Antitrust Division,
U.S. Department of Justice.
For Defendant Health Choice of Northwest Missouri, Inc.:
510 Francis Avenue, St. Joseph, MO 64501.
For Defendant Heartland Health System, Inc.
Thomas D. Watkins,
Watkins, Boulware, Lucas Miner, Murphy & Taylor, 3101 Frederick Avenue,
St. Joseph, MO 64506.
For Defendant St. Joseph Physicians, Inc.
Richard D. Raskin,
Sidley & Austin, One First National Plaza, Chicago, IL 60603, (312)
853-2170.
Lawrence R. Fullerton,
Chief of Staff.
Edward D. Eliasberg, Jr.,
Dando B. Cellini,
Mark J. Botti,
John B. Arnett, Sr.,
Gregory S. Asciolla,
Attorneys, Antitrust Division, U.S. Dept. of Justice, 600 E Street,
NW., Room 9429, BICN Bldg., Washington, DC 20530, (202) 307-0808.
United States District Court for the Western District of Missouri
In the matter of: United States of America, Plaintiff, vs.
Health Choice of Northwest Missouri, Inc., Heartland Health System,
Inc., and St. Joseph Physicians, Inc., Defendants.
Final Judgment
Plaintiff, the United States of America, having filed its Complaint
on September 13, 1995, and plaintiff and defendants, by their
respective attorneys, having consented to the entry of this Final
Judgment without trial or adjudication of any issue of fact or law, and
without this Final Judgment constituting any evidence against or an
admission by any party with respect to any issue of fact or law;
And Whereas defendants have agreed to be bound by the provisions of
this Final Judgment pending its approval by the Court;
Now, therefore, before the taking of any testimony, and without
trial or adjudication of any issue of fact or law, and upon consent of
the parties, it is hereby ordered, adjudged, and decreed:
I
Jurisdiction
This Court has jurisdiction over the subject matter of and each of
the parties to this action. The Complaint states claims upon which
relief may be granted against the defendants under Section 1 of the
Sherman Act, 15 U.S.C. 1.
II
Definitions
As used in this Final Judgment:
(A) ``Ancillary services'' means home health care, hospice care,
outpatient rehabilitation services, and durable medical equipment.
(B) ``Competing physicians'' means physicians in the same relevant
physician market in separate medical practices.
(C) ``General adult primary care'' (``GAPC'') means family practice
and general internal medicine, whether or not physicians practicing in
these areas are Board certified or Board eligible.
(D) ``Health Choice'' means Health Choice of Northwest Missouri,
Inc., each organization controlled by or under common control with it,
and its directors, officers, agents, employees, and successors.
(E) ``Heartland'' means Heartland Health System, Inc., each
organization controlled by or under common control with it, and its
directors, officers, agents, employees, and successors, but does not
include Heartland Health Foundation.
(F) ``Messenger model'' means the use of an agent or third party to
convey to purchasers any information obtained from individual providers
about the fees which each provider is willing to accept from such
purchasers, and to convey to providers any contract offer made by a
purchaser, where (1) each provider makes a separate, independent, and
unilateral decision to accept or reject a purchaser's offer, (2) the
fee information conveyed to purchasers is obtained separately from each
individual provider, and (3) the agent or third party (a) does not
negotiate collectively for the providers, (b) does not disseminate to
any provider the agent's or third party's or any other provider's views
or intentions as to the proposal and (c) does not otherwise serve to
facilitate any agreement among providers on price or other significant
terms of competition.
(G) ``Non-Heartland physician'' means a physician who is not
employed by Heartland and whose practice is not owned by Heartland.
(H) ``Provider panel'' means those health care providers whom an
organization authorizes to provide care to its enrollees and whom
enrollees are given financial incentives to use.
(I) ``Qualified managed care plan'' means an organization that is
owned, in whole or in part, by any or all of the defendants and that
offers a provider panel. A qualified managed care plan must satisfy
each of the following criteria:
(1) Its owners or not-for-profit members (``members'') who compete
either with other owners or members or with providers participating on
the organizations' provider panel (a) share substantial financial risk
and (b) either directly or through ownership or membership in another
organization comprise no more than 30% of the physicians in any
relevant physician market, except that it may include Heartland, any
single physician, or any single physician practice group for each
relevant physician market,
(2) it has a provider panel that includes no more than 30% of the
physicians in any relevant physician market, unless, for those
subcontracting physicians whose participation increases the panel
beyond 30%, (a) there is a sufficient divergence of economic interest
between those physicians and the owners or members of the organization
so that the owners or members have the incentive to bargain down the
fees of the subcontracting physicians, (b) the organization does not
directly pass through to the payer substantial liability for making
payments to the subcontracting physicians, and (c) the organization
does not compensate those subcontracting physicians in a manner that
substantially replicates ownership in the organization, and
(3) it does not facilitate agreements between any subcontracting
physicians and the owners or members concerning charges to payors not
contracting with the organization.
Nothing herein shall be deemed to limit the ability of a qualified
managed care plan to create financial incentives for improved
performance goals for a provider or the organization or to shift risk
to a provider, consistent with this Paragraph.
(J) ``Relevant physician market'' means GAPC physicians,
pediatricians, obstetricians or gynecologists in Buchanan County,
Missouri, unless defendants obtain plaintiff's prior written approval
of a different definition for any or all of these markets, or any other
relevant market for physician services. This definition is for the sole
and limited purposes of this Final Judgment, and shall not constitute
an admission or agreement that the
[[Page 51810]]
relevant physician market for any other purpose is limited to Buchanan
County, Missouri.
(K) ``SJPI'' means St. Joseph Physicians, Inc., each organization
controlled by or under common control with it, and its directors,
officers, agents, employees, and successors.
(L) ``Subcontracting physician'' means any physician who provides
health care services to a qualified managed care plan, but does not
hold, directly or indirectly, any ownership interest in that plan.
(M) ``Substantial financial risk'' means financial risk such as
that achieved when an organization receives revenue through capitation
or payment of insurance premiums, or when the organization creates
significant financial incentives for providers to achieve specified
cost-containment goals, such as withholding a substantial amount of
their compensation, with distribution of that amount made only if the
cost-containment goals are met.
III
Applicability
This Final Judgment applies to Health Choice, Heartland, and SJPI,
and to all other persons who receive actual notice of this Final
Judgment by personal service or otherwise and then act or participate
in concert with any or all of the defendants.
IV
SJPI Injunctive Relief
SJPI is enjoined from:
(A) Requiring any physician to provide physician services
exclusively through SJPI, Health Choice, or any managed care plan in
which SJPI has an ownership interest, precluding any physician from
contracting with any payor or urging any physician not to contract with
another payor; provided that, nothing in this Final Judgment shall
prohibit SJPI from paying dividends to its owners;
(B) Disclosing to any physician any financial or price or similar
competitively sensitive business information about any competing
physician, except as is reasonably necessary for the operation of any
qualified managed care plan in which SJPI has an ownership interest, or
requiring any physician to disclose to SJPI any financial, price or
similar competitively sensitive business information about any
competitor of SJPI or managed care plan in which SJPI has an ownership
interest; provided that, nothing in this Final Judgment shall prohibit
the disclosure of information already generally available to the
medical community or the public;
(C) Setting the fees or other terms of reimbursement or negotiating
for competing physicians unless SJPI is a qualified managed care plan;
provided that, nothing in this Final Judgment shall prohibit SJPI from
using a messenger model, even if SJPI is not a qualified managed care
plan; and
(D) Owning an interest in any organization that sets fees or other
terms of reimbursement for, or negotiates for, competing physicians,
unless that organization is a qualified managed care plan and complies
with Paragraphs (A) and (B) of this Section IV of the Final Judgment as
if those Paragraphs applied to that organization; provided that,
nothing in this Final Judgment shall prohibit SJPI from owning an
interest in an organization that uses a messenger model, even if the
organization is not a qualified managed care plan.
Health Choice Injunctive Relief
Except as permitted in Section VIII, Health Choice is enjoined
from:
(A) Requiring any physician to provide physician services
exclusively through SJPI, Health Choice, or any managed care plan in
which Health Choice has an ownership interest, precluding any physician
from contracting with any payor, or urging any physician not to
contract with another payor;
(B) Disclosing to any physician any financial, price or similar
competitively sensitive business information about any competing
physician, except as is reasonably necessary for the operation of
Health Choice or any managed care plan in which Health Choice has an
ownership interest, or requiring any physician to disclose to Health
Choice any financial, price or similar competitively sensitive business
information about any competitor of Health Choice or any managed care
plan in which Health Choice has an ownership interest; provided that,
nothing in this Final Judgment shall probibit the disclosure of
information already generally available to the medical community or the
public;
(C) Setting the fees or other terms of reimbursement or negotiating
for competing physicians unless Health Choice is a qualified managed
care plan; provided that, nothing in this Final Judgment shall prohibit
Health Choice from using a messenger model, even if Health Choice is
not a qualified managed care plan; and
(D) Owning an interest in any organization that sets fees or other
terms of reimbursement for, or negotiates for, competing physicians,
unless that organization is a qualified managed care plan and complies
with Paragraphs (A) and (B) of this Section V of the Final Judgment as
if those Paragraphs applied to that organization; provided that,
nothing in this Final Judgment shall prohibit Health Choice from owning
an interest in an organization that uses a messenger model, even if the
organization is not a qualified managed care plan.
VI
Heartland Injunctive Relief
Except as permitted in Section VIII, Heartland is enjoined from:
(A) (1) Disclosing to any person directly responsible for pricing
physician or ancillary services of Heartland any price or, without
appropriate consent, other proprietary business information about any
other physician or ancillary services provider, except as is reasonably
necessary for the operation of any qualified managed care plan in which
Heartland has an ownership interest, and
(2) Disclosing to any competing physician or ancillary services
provider any price or, without appropriate consent, other proprietary
business information about any other physician or ancillary services
provider; provided that, nothing in this Final Judgment shall prohibit
the disclosure of information already generally available to the
medical community or the public;
(B) Owning an interest in any organization that sets fees or other
terms of reimbursement for, or negotiates for, competing physicians,
unless that organization is a qualified managed care plan and complies
with Paragraphs (A) and (B) of Section V of the Final Judgment as if
those Paragraphs applied to that organizaton; provided that, nothing in
this Final Judgment shall prohibit Heartland from owning an interest in
an organization that uses a messenger model, even if the organization
is not a qualified managed care plan;
(C) Agreeing with a competitor to allocate or divide the market
for, or set the price for, any competing service, except as is
reasonably necessary for the operation of any qualified managed care
plan or legitimate joint venture in which Heartland has an ownership
interest;
(D) Acquiring during the next five years:
(1) The practice of any non-Heartland physician who at the filing
of this Final Judgment has active staff privileges in family practice
or general internal medicine (diagnosticians excluding subspecialties
of internal medicine) or the practice of any physician who after
[[Page 51811]]
the filing of this Final Judgment establishes a practice and provides
services as a GAPC physician in Buchanan County, Missouri, without the
prior written approval of the plaintiff; and
(2) Any physician practice located in Buchanan County, Missouri
that has provided services in Buchanan County, Missouri within five
years prior to the date of the proposed acquisition, unless Heartland
provides plaintiff with 90 days' prior written notice of the proposed
acquisition; and
(E) Conditioning the provision of any inpatient hospital service to
patients of any competing managed care plan by making that service
available only if the competing managed care plan;
(1) Purchases or utilizes (a) Heartland's utilization review
program, (b) any Heartland managed care plan, or (c) Heartland's
ancillary or outpatient services or any physician's services, unless
such services are intrinsically related to the provision of acute
inpatient care, such as but not limited to where Heartland's provision
of inpatient care inherently gives rise to Heartland bearing
professional responsibility for such services, so long as Heartland
otherwise makes its inpatient services available to competing managed
care plans as set forth in this Paragraph; or
(2) Contracts with or deals with Health Choice, Community Health
Plan, or any other Heartland managed care plan.
This Paragraph (E) shall not apply to any contract with an
organization in which Heartland has a substantial financial risk.
This Paragraph (E) shall not limit Heartland's ability to condition
the provision of any inpatient hospital service on the purchase or
utilization of ancillary or outpatient services or physician's services
selected by Heartland, pursuant to any contract in which Heartland
bears financial risk, so long as Heartland otherwise makes its
inpatient services available to competing managed care plans as set
forth in this Paragraph.
VII
Additional Provisions
(A) Health Choice shall:
(1) Inform each physician on its provider panel annually in writing
that the physician is free to contract separately with any other
managed care plan on any terms; and
(2) Notify in writing each payor with which Health Choice has or is
negotiating a contract that each provider on Health Choice's provider
panel is free to contract separately with such payor on any terms,
without consultation with Health Choice; and
(B) Heartland shall:
(1) Observe the attached and incorporated Heartland Referral Policy
relating to the provision of ancillary services;
(2) File with plaintiff each year on the anniversary of the filing
of the Complaint in this action a written report disclosing the rates,
terms, and conditions for inpatient hospital services Heartland
provides to any managed care plan or hospice program, including those
affiliated with Heartland. Plaintiff agrees not to disclose this
information unless in connection with a proceeding to enforce this
Final Judgment or pursuant to court or Congressional order; and
(3) Give plaintiff reasonable access to its credentialing files for
the purpose of determining if Heartland used its credentialing
authority to deny hospital privileges to physicians employed by or
otherwise affiliated with a competing managed care plan, provided
Heartland is given all necessary authorizations for the release of such
records.
VIII
Heartland Permitted Activities
Notwithstanding any of the prohibitions or requirements of Sections
IV through VII of this Final Judgment, Heartland may:
(A) Own 100% of an organization that includes competing physicians
on its provider panel and either uses a messenger model or sets fees or
other terms of reimbursement or negotiates for physicians so long as
the organization complies with Paragraphs (A) and (B) of Section V of
the Final Judgment as if those Paragraphs applied to that organization,
and with the subcontracting requirements of a qualified managed care
plan;
(B) Employ or acquire the practice of any physician not located in
Buchanan County, Missouri, who derived less than 20% of his or her
practice revenues from patients residing within Buchanan County,
Missouri, in the year before the employment or acquisition;
(C) If Plaintiff does not disapprove under the procedures set out
in this Paragraph (C), employ or acquire the practice of any GAPC
physician so long as Heartland incurs substantial costs recruiting such
physician for the purpose of beginning the offering of GAPC services in
Buchanan County, Missouri, or gives either substantial financial
support or an income guarantee to such physician to induce that
physician to begin offering GAPC services in Buchanan County, Missouri,
and employs the physician or acquires the practice within two years of
the physician first offering GAPC services in Buchanan County,
Missouri. Heartland must give the plaintiff an opportunity to
disapprove, by giving plaintiff 30 days prior written notice and such
information in Heartland's possession as is necessary to determine
whether the above criteria have been met. Plaintiff shall not
disapprove if these criteria are met. If plaintiff disapproves,
plaintiff will set forth the reasons for disapproval. If plaintiff
fails to disapprove within 30 days of receipt of the requisite
information, the criteria shall be deemed to have been met, and
Heartland may employ or acquire the practice of the GAPC physician; and
(D) With plaintiff's prior written approval, employ or acquire the
practice of any physician who will cease to be a GAPC physician in
Buchanan County, Missouri, unless Heartland acquires the practice or
employs the physician.
IX
Judgment Modification
In the event that any of the provisions of this Final Judgment
proves impracticable as to any defendant or in the event of a
significant change in fact or law, that defendant may move for, and
plaintiff will reasonably consider, an appropriate modification of this
Final Judgment. Nothing in this Section limits the right of any
defendant to seek any modification of this Final Judgment it deems
appropriate.
X
Compliance Program
Each defendant shall maintain a judgment compliance program, which
shall include:
(A) Distributing within 60 days from the entry of this Final
Judgment, a copy of the Final Judgment and Competitive Impact Statement
to all senior administrative officers and directors;
(B) Distributing in a timely manner a copy of the Final Judgment
and Competitive Impact Statement to any person who succeeds to a
position described in Paragraph (A) of this Section X;
(C) Briefing annually those persons designated in Paragraphs (A)
and (B) of this Section X on the meaning and requirements of this Final
Judgment and the antitrust laws, including penalties for violation
thereof;
(D) Obtaining from those persons designated in Paragraphs (A) and
(B) of this Section X annual written certifications that they (1) have
read, understand, and agree to abide by this
[[Page 51812]]
Final Judgment, (2) understand that their noncompliance with this Final
Judgment may result in conviction for criminal contempt of court and
imprisonment and/or fine, and (3) have reported any violation of this
Final Judgment of which they are aware to counsel for the respective
defendant; and
(E) Maintaining for inspection by plaintiff a record of recipients
to whom this Final Judgment and Competitive Impact Statement have been
distributed and from whom annual written certifications regarding this
Final Judgment have been received.
XI
Certifications
(A) Within 75 days after entry of this Final Judgment, each
defendant shall certify to plaintiff that it has made the distribution
of the Final Judgment and Competitive Impact Statement as required by
Paragraph (A) of Section X above;
(B) For five years after the entry of this Final Judgment, on or
before its anniversary date, each defendant shall certify annually to
plaintiff whether it has complied with the provisions of Section X
above applicable to it; and
(C) Each defendant shall provide written notice to plaintiff if at
any time during the period that this Final Judgment is in effect (1)
that defendant owns an interest in a qualified managed care plan, (2)
that qualified managed care plan includes among its owners or members
any single physician practice group which comprises more than 30% of
the physicians in any relevant physician market, and (3) that single
physician practice group adds additional physicians.
XII
Plaintiff's Access
For the sole purpose of determining or securing compliance with
this Final Judgment, and subject to any recognized privilege,
authorized representatives of the United States Department of Justice,
upon written request of the Assistant Attorney General in charge of the
Antitrust Division, shall on reasonable notice be permitted during the
term of this Final Judgment:
(A) Access during regular business hours of any defendant to
inspect and copy all records and documents in the possession or under
the control of that defendant relating to any matters contained in this
Final Judgment;
(B) To interview officers, directors, employees, and agents of any
defendant, who may have counsel present, concerning such matters; and
(C) To obtain written reports from any defendant, under oath if
requested, relating to any matters contained in this Final Judgment.
XIII
Notifications
To the extent that it may affect compliance obligations arising out
of this Final Judgment, each defendant shall notify the plaintiff at
least 30 days prior to any proposed (1) dissolution, (2) sale or
assignment of claims or assets of that defendant resulting in the
emergence of a successor corporation, or (3) change in corporate
structure of that defendant.
XIV
Jurisdiction Retained
This Court retains jurisdiction to enable any of the parties to
this Final Judgment, but no other person, to apply to this Court at any
time for further orders and directions as may be necessary or
appropriate to carry out or construe this Final Judgment, to modify or
terminate any of its provisions, to enforce compliance, and to punish
violations of its provisions.
XV
Expiration of Final Judgment
This Final Judgment shall expire five (5) years from the date of
entry; provided that, before the expiration of this Final Judgment,
plaintiff, after consultation with defendants and in plaintiff's sole
discretion, may extend the judgment, except for Section VI(D), for an
additional five years.
XVI
Public Interest Determination
Entry of this Final Judgment is in the public interest.
Dated:.----------------------------------------------------------------
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United States District Judge.
Referral Policy
I. General Statement
After a patient or the patient's family or other appropriate
person (collectively ``patient'') has been identified (via
screening, assessment, discharge planning, staff, family, physician,
or other means) as being in need of appropriate home health care,
hospice, DME, or outpatient rehabilitation services (referred to
collectively as ``Ancillary Service''), and, if necessary, a
physician's order has been obtained, the following procedures will
be used by a referring person when connecting patients to the
appropriate Ancillary Service. Our focus is on patient choice.
II. Ancillary Service Referrals
A. If a physician orders an Ancillary Service and specifies the
provider to be used (whether specifically written in the chart or
other written notification), then a referring person shall contact
the patient indicating that the physician has ordered an Ancillary
Service and has ordered that a particular provider be used. The
patient should be asked whether this is acceptable, and if so,
referred to that provider. (If the patient does not wish that
provider, see subsection B below.)
B. If a physician orders an Ancillary Service, but does not
specify the provider to use, then the patient shall contacted and
informed that his physician has ordered an Ancillary Service, and
shall be asked if he has a preference as to which provider to use:
1. If the patient has a preference, that preference shall
honored.
2. If the patient has no preference, a referring person shall
indicate that Heartland has an excellent, fully accredited Ancillary
Service that is available to the patient, and the appropriate
Heartland brochure may be given. If the patient accepts, then the
referral shall be made to Heartland's Ancillary Service.
3. If the patient has not accepted Heartland's Ancillary Service
(see subsection B(2) above), or asks what other providers are
available, a referring person shall state that there are other
providers in the community that offer the Ancillary Service;
however, the referring person cannot make a recommendation as to
these other providers, but there is a listing of them in the
telephone book. [PATIENT SHALL BE GIVEN A REASONABLE AMOUNT OF TIME
TO INVESTIGATE OTHER OPTIONS] If the patient at this point chooses a
provider, that choice is to be honored. However, if the patient
again requests that a referring person provide them with the names
of other providers, the social worker should indicate that Heartland
has done no independent review or evaluation of these providers and
cannot speak to the quality of care they provide, and then verbally
name these providers. The patient's choice shall be honored.
In the United States District Court for the Western District of
Missouri
In the matter of: United States of America, Plaintiff, vs.
Health Choice of Northwest Missouri, Inc., Heartland Health System,
Inc., and St. Joseph Physicians, Inc., Defendants. [Case No. 95-
6171-CV-SJ-6.]
Competitive Impact Statement
Pursuant to Section 2(b) of the Antitrust Procedures and Penalties
Act, 15 U.S.C. 16(b)-(h) (``APPA''), the United States files this
Competitive Impact Statement relating to the proposed Final Judgment
submitted for entry in this civil antitrust proceeding.
I
Nature and Purpose of the Proceeding
On September 13, 1995, the United States filed a civil antitrust
Complaint
[[Page 51813]]
alleging that defendant Health Choice of Northwest Missouri, Inc.
(``Health Choice''), defendant Heartland Health System, Inc.
(``Heartland''), and defendant St. Joseph Physicians, Inc. (``SJPI''),
with others not named as defendants, entered into an agreement, the
purpose and effect of which was to restrain competition unreasonably by
preventing or delaying the development of managed care in Buchanan
County, Missouri (``Buchanan County''), in violation of Section 1 of
the Sherman Act, 15 U.S.C. 1. The Complaint seeks injunctive relief to
enjoin continuance or recurrence of the violation.
The United States filed with the Complaint a proposed Final
Judgment intended to settle this matter. Entry of the proposed Final
Judgment by the Court will terminate this action, except that the Court
will retain jurisdiction over the matter for further proceedings that
may be required to interpret, enforce, or modify the Judgment, or to
punish violations of any of its provisions.
Plaintiff and all defendants have stipulated that the Court may
enter the proposed Final Judgment after compliance with the Antitrust
Procedures and Penalties Act, 15 U.S.C. Sec. 16(b)-(h) (``APPA''),
unless prior to entry plaintiff has withdrawn its consent. The proposed
Final Judgment provides that its entry does not constitute any evidence
against, or admission by, any party concerning any issue of fact or
law.
The present proceeding is designed to ensure full compliance with
the public notice and other requirements of the APPA. In the
Stipulation to the proposed Final Judgment, defendants have also agreed
to be bound by the provisions of the proposed Final Judgment pending
its entry by the Court.
II
Practices Giving Rise to the Alleged Violations
SJPI is a Missouri for-profit corporation, with its principal place
of business in St. Joseph, Missouri (``St. Joseph'').\1\ SJPI was
incorporated in April 1986 by roughly 85 percent of the approximately
130 physicians practicing or living in Buchanan County. The physicians
who own SJPI have never integrated their separate, individual medical
practices or shared substantial financial risk for SJPI's failure to
achieve predetermined cost containment goals.
\1\St. Joseph is the county seat of Buchanan County, which has a
population of about 72,000 and is located about 55 miles northwest
of Kansas City, Missouri.
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SJPI was formed primarily to negotiate collectively about fees and
other contract terms with managed care plans seeking to enter Buchanan
County. Managed care is a type of health care financing and delivery
that seeks to contain costs through using administrative procedures and
granting financial incentives to providers and patients. Typically,
under such an approach, individual health care providers either are
paid one set, predetermined fee for meeting all or nearly all of an
enrollee's health care needs, regardless of the frequency or severity
of the needed services, or are subject to a substantially discounted
fee schedule and rigorous utilization review (i.e., assessment of the
necessity and appropriateness of treatment). Beginning almost
immediately after its incorporation, SJPI entered into fee negotiations
collectively on behalf of its physicians with various managed care
plans attempting to enter Buchanan County.
Heartland operates the only acute care hospital in the three-county
area of Buchanan and Andrew Counties, Missouri, and Doniphan County,
Kansas.\2\ On several occasions before January 1990, Heartland
supported SJPI's efforts to deal collectively with managed care plans
seeking to enter Buchanan County, and, in at least one instance,
represented SJPI in such dealings. Between April 1986 and December
1989, no managed care plan was able to obtain a contract with SJPI or
with any individual SJPI physician.
\2\Heartland also provides home health care, hospice,
rehabilitation, and other ``ancillary'' health care services in
Buchanan County. There was some evidence that Heartland may have
used its market power in inpatient hospital services to gain a
competitive advantage in various ancillary health care services.
---------------------------------------------------------------------------
In January 1990, SJPI and Heartland formed Health Choice, a for-
profit Missouri corporation, to provide managed care services to
individuals in Buchanan County. Heartland and SJPI each own 50% of the
common stock of Health Choice.
The Health Choice physician provider panel consists of
approximately 85% of the physicians working or residing in Buchanan
County, including nearly all of the SJPI physicians. Heartland is the
primary provider of hospital services for Health Choice.
SJPI and Heartland established, through Health Choice, a
utilization review program and a fee schedule for competing physicians
in Buchanan County and agreed on several occasions that SJPI physicians
and Heartland would deal with managed care plans only through Health
Choice. In general, SJPI and Heartland advised managed care plans that
they had to use Health Choice's provider panel, fee schedule, and
utilization review program. At no time, however, did Heartland, SJPI or
the physicians participating on the Health Choice provider panel share
substantial risk in connection with the achievement by Health Choice of
predetermined cost containment goals. Since the formation of Health
Choice, no managed care plan has been able to enter Buchanan County
without contracting with Health Choice, despite the efforts of several
plans to do so. Because of the high percentage of local doctors
participating in Health Choice, no managed care plan could assemble an
adequate panel of providers without including some physicians who
participated in Health Choice.\3\ By refusing to deal with managed care
plans except through Health Choice, Heartland and SJPI physicians were
able to obtain higher compensation and a more favorable hospital
utilization review program from managed care plans than they would have
been able to obtain independently.
\3\Shortly before Health Choice became operational, HealthNet, a
competing managed care plan, entered Buchanan County. HealthNet
contracted with several self-insured plans in Buchanan County but
with no managed care plans.
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Based on the facts described above, the Complaint alleges that the
defendants entered into a contract, combination, or conspiracy to
reduce or eliminate the development of managed care in Buchanan County
in violation of Section 1 of the Sherman Act, 15 U.S.C. 1. The
Complaint further alleges that this conduct had the effect of (1)
unreasonably restraining price and other competition among managed care
plans, (2) unreasonably restraining price competition among physicians,
and (3) depriving consumers and third-party payors of the benefits of
free and open competition in the purchase of health care services in
Buchanan County.
III
Explanation of the Proposed Final Judgment
The proposed Final Judgment is intended to prevent the continuance
or recurrence of defendants' agreement to discourage the development of
managed care in Buchanan County. The overarching goal of the proposed
Final Judgment is to enjoin defendants from engaging in any activity
that unreasonably restraints competition among physicians and among
managed care plans in Buchanan County, while
[[Page 51814]]
still permitting defendants to market a provider-controlled plan.\4\
\4\This relief comports with the Statements of Enforcement
Policy and Analytical Principles Relating to Health Care and
Antitrust that the U.S. Department of Justice and the Federal Trade
Commission issued jointly on September 27, 1994, 4 Trade Reg. Rep.
(CCH) para.13,152, at 20,787-98, and in particular with the
principles enunciated therein that a provider network (1) should not
prevent the formation of rival networks; and (2) may not negotiate
on behalf of providers, unless those providers share substantial
financial risk or offer a new product to the market place. Statement
8, id. at 20,788-89; Statement 9, id. at 20,793-94, 20,796.
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A. Scope of the Proposed Final Judgment
Section III of the proposed Final Judgment provides that the Final
Judgment shall apply to defendants and to all other persons (including
SJPI stockholders) who receive actual notice of this proposed Final
Judgment by personal service or otherwise and then act or participate
in concert with any defendant. The proposed Final Judgment applies to
SJPI, Health Choice, Heartland, and Heartland's healthcare-related
entities. The proposed Final Judgment does not apply to Heartland's
entities that do not provide health care services.
B. Prohibitions and Obligations
Sections IV through VIII of the proposed Final Judgment contain the
substantive provisions of the consent decree. Section IV applies to
SJPI, Section V to Health Choice, and Section VI to Heartland. Section
VII contains additional provisions that apply to Health Choice and to
Heartland. Section VIII applies only to Heartland.
In Sections IV(A) and V(A), SJPI and Health Choice are enjoined
from requiring any physician to provide physician services exclusively
through SJPI, Health Choice, or any managed care plan in which SJPI or
Health Choice has an ownership interest. SJPI and Health Choice are
also barred from precluding any physician from contracting, or urging
any physician not to contract, with any purchaser of physician
services.
Sections IV(B), V(B), and VI(A) prohibit the sharing of
competitively sensitive information. SJPI, Health Choice, and Heartland
are enjoined from disclosing to any physician any financial, price, or
similarly competitively sensitive business information about any
competing physician or any competitor of defendants. An exception
permits any defendant to disclose such information if disclosure is
reasonably necessary for the operation of a qualified managed care plan
(``QMCP''--as defined in the proposed Final Judgment and discussed
below) in which that defendant has an ownership interest, or if the
information is already generally available to the medical community or
the public.
Sections IV(C) and V(C) prohibit fee setting and provide that SJPI
and Health Choice, respectively, are enjoined from collectively
negotiating or setting fees or other terms of reimbursement, or
negotiating on behalf of competing physicians, unless the negotiating
entity is a QMCP. However, SJPI and Health Choice are permitted to use
a messenger model (as defined in the proposed Final Judgment and
discussed below).
Sections IV(D), V(D), and VI(B) enjoin SJPI, Health Choice, and
Heartland, respectively, from owning an interest in any organization
that sets fees or other terms of reimbursement, or negotiates for
competing physicians, unless that organization is a QMCP and it
complies with Sections IV(A) and (B) (for SJPI) and Sections V(A) and
(B) (for Health Choice and Heartland). However, defendants may own an
interest in an organization that uses a messenger model, as discussed
below.
Section VI(C) enjoins Heartland from agreeing with a competitor to
allocate or divide any markets or set the price for any competing
service, except as is reasonably necessary for the operation of any
QMCP or legitimate joint venture in which Heartland has an ownership
interest.\5\
\5\Statements 2 and 3 of the Statements of Enforcement Policy
and Analytical Principles Relating to Health Care and Antitrust, 4
Trade Reg. Rep. (CCH) para.13,152 at 20,775-81 (1994), discuss how
to assess whether collateral agreements are reasonably necessary for
the operation of a particular legitimate joint venture.
---------------------------------------------------------------------------
Section VI(D) enjoins Heartland from acquiring any family or
general internal medicine practice without plaintiff's prior approval,
or from acquiring any other physician practice located in Buchanan
County without 90 days prior notification.
Section VI(E) enjoins Heartland from conditioning the provision of
its inpatient hospital services on the purchase or use of Heartland's
utilization review program, managed care plan, or ancillary,
outpatient, or physician services, unless such services are
intrinsically related to the provision of acute inpatient care. (These
prohibitions, however, do not apply to any organization or any contract
in which Heartland has a substantial financial risk.)
Section VII of the proposed Final Judgment contains additional
provisions with respect to Health Choice and Heartland. Section VII(A)
requires Health Choice to notify participating physicians annually that
they are free to contract separately with any other managed care plan
on any terms, and to notify in writing each payor with whom Health
Choice has or is negotiating a contract that each of its participating
physicians is free to contract separately with such payor on any terms
and without consultation with Health Choice.
Under Section VII(B)(1), Heartland is required to observe its
formal written policy relating to the provision of ancillary services.
This policy was developed by Heartland and is attached to the proposed
Final Judgment. Heartland must under Section VII(B)(2) file with
plaintiff annually on the anniversary of the filing of the Complaint a
written report disclosing the rates, terms, and conditions for
inpatient hospital services that Heartland provides to any managed care
plan or hospice program, including those affiliated with Heartland.
Heartland is required under Section VII(B)(3) to give plaintiff
reasonable access to its credentialing files for the purpose of
determining if Heartland misused its credentialing authority, such as
by denying hospital privileges to physicians affiliated with managed
care plans that compete with Health Choice.
Section VIII permits Heartland to engage in certain activities.
Under Section VIII(A), Heartland may own 100% of an organization that
includes competing physicians on its provider panel and sets fees or
other terms of reimbursement or negotiates for physicians, provided the
organization complies with Sections V(A) and (B) and with the
subcontracting requirements of a QMCP.
Section VIII(B) permits Heartland to employ or acquire the practice
of any physician not located in Buchanan County, who derived less than
20% of his or her practice revenues from patients residing in Buchanan
County in the year before employment or acquisition.
Section VIII(C) permits Heartland to employ or acquire the practice
of any general practice, family practice, or internal medicine
physician, provided Heartland actively recruited the physician to begin
offering those services in Buchanan County, gave either substantial
financial support or an income guarantee to such physician, and is
employing the physician or acquiring the practice within two years of
the first offering of those services by that physician in Buchanan
County. Heartland must give plaintiff 30 days notice and all
information in its possession necessary to determine
[[Page 51815]]
whether the above criteria have been met.
Under Section VIII(D), Heartland may employ or acquire, with
plaintiff's approval, any physician who would cease practicing in
Buchanan County but for Heartland's employment or acquisition.
Section IX of the proposed Final Judgment describes the
circumstances under which defendants may seek a modification of the
proposed Final Judgment. It provides that any defendant may move for a
modification of the proposed Final Judgment, and plaintiff will
reasonably consider an appropriate modification, in the event that any
of the provisions of the proposed Final Judgment proves impracticable
or in the event of a significant change in law or fact.
Section X of the proposed Final Judgment requires the defendants to
implement a judgment compliance program. Section X(A) requires that
within 60 days of entry of the Final Judgment, defendants must provide
a copy of the proposed Final Judgment and the Competitive Impact
Statement to certain officers and all directors. Sections X (B) and (C)
require defendants to provide a copy of the proposed Final Judgment and
Competitive Impact Statement to persons who assume those positions in
the future and to brief such persons annually on the meaning and
requirements of the proposed Final Judgment and the antitrust laws,
including penalties for violating them. Section X(D) requires
defendants to maintain records of such persons' written certifications
indicating that they (1) have read, understand, and agree to abide by
the terms of the proposed Final Judgment, (2) understand that their
noncompliance with the proposed Final Judgment may result in conviction
for criminal contempt of court, and imprisonment, and/or fine, and (3)
have reported any violation of the proposed Final Judgment of which
they are aware to counsel for defendants. Section X(E) requires
defendants to maintain for inspection by plaintiff a record of
recipients to whom the proposed Final Judgment and Competitive Impact
Statement have been distributed and from whom annual written
certifications regarding the proposed Final Judgment have been
received.
The proposed Final Judgment also contains provisions in Section XI
requiring defendants to certify their compliance with specified
obligations of Section IV through X of the proposed Final Judgment.
Section XII of the proposed Final Judgment sets forth a series of
measures by which the plaintiff may have access to information needed
to determine or secure defendants' compliance with the proposed Final
Judgment. Section XIII provides that each defendant must notify
plaintiff of any proposed change in corporate structure at least 30
days before that change to the extent the change may affect compliance
obligations arising out of the proposed Final Judgment.
Finally, Section XV states that the decree expires five years from
the date of entry, except that plaintiff during that five year period
may, in its sole discretion, after consultation with defendants, extend
for an additional five years all provisions of the decree except the
provisions of Section VI(D), that portion of the Final Judgment dealing
with Heartland's acquisition of physician practices.
C. Effect of the Proposed Final Judgment on Competition
1. The Prohibitions on Setting and Negotiating Fees and Other Contract
Terms
The prohibitions on setting and negotiating fees and other contract
terms set forth in Sections IV (C) and (D), V (C) and (D), and VI(B)
provide defendants with essentially two options for complying with the
proposed Final Judgment.\6\ First, Health Choice may change its manner
of operation and no longer set or negotiate fees on behalf of competing
physicians, for example by using a ``messenger model,'' a term defined
in the proposed Final Judgment. Second, Health Choice may restructure
its ownership and provider panels to become a QMCP.\7\
\6\For convenience, this Statement discusses Health Choice's
options. However, the same options are available to SJPI and
Heartland, should they choose to utilize them.
\7\Of course, Health Choice could simply cease operations and
dissolve. Defendants have indicated, however, that they will not
pursue that approach. In any event, the Judgment's prohibitions on
setting and negotiating fees and other contract terms (as well as a
number of other prohibitions) apply to any organization in which the
defendants own an interest, not just to Health Choice.
---------------------------------------------------------------------------
Currently, SJPI owns 50% of Health Choice and includes among its
shareholders competing physicians who do not share substantial
financial risk. In addition, Heartland, which owns the other 50% of
Health Choice, employs physicians who compete with the SJPI physicians
and other physicians on the Health Choice provider panel. The SJPI and
Heartland physicians on the provider panel also do not share financial
risk. The proposed Final Judgment prevents Health Choice, under its
present structure, from continuing to set or negotiate fees or other
terms of reimbursement collectively on behalf of these competing
physicians. (Section V(C).)\8\ Such conduct would constitute naked
price fixing. Arizone v. Maricopa County Medical Soc'y, 457 U.S. 332,
356-57 (1982).
\8\Similarly, Section IV(C) prevents SJPI from setting or
negotiating fees and other contract terms for just SJPI physicians,
and Sections (V(D) and VI(B) prevent physicians and Heartland from
engaging in such conduct through their ownership of Health Choice.
---------------------------------------------------------------------------
The proposed Final Judgment does not, however, prohibit Health
Choice as presently structured from engaging in activities that are not
anticompetitive.\9\ In particular, while the proposed Judgment enjoins
Health Choice from engaging in price fixing or similar anticompetitive
conduct, it permits Health Choice to use an agent or third party to
facilitate the transfer of information between individual physicians
and purchasers of physician services. Appropriately designed and
administered, such messenger models rarely present substantial
competitive concerns and indeed have the potential to reduce the
transition costs of negotiations between health plans and numerous
physicians.
\9\For example, nothing in the proposed Final Judgment prevents
Health Choice from continuing to offer billing, utilization
management, and third party administrator services, provided it does
not violate the Judgment's prohibitions, in Sections V (A) and (B),
on exclusivity and the collection and dissemination of competitively
sensitive information.
---------------------------------------------------------------------------
The proposed Final Judgment makes clear that the critical feature
of a properly devised and operated messenger model is that individual
providers make their own separate decisions about whether to accept or
reject a purchaser's proposal, independent of other physicians'
decisions and without any influence by the messenger. (Section II(F).)
The messenger may not, under the proposed Judgment, coordinate
individual providers' responses to a particular proposal, disseminate
to physicians the messenger's or other physicians' views or intentions
concerning the proposal, act as an agent for collective negotiation and
agreement, or otherwise serve to facilitate collusive behavior.\10\ The
[[Page 51816]]
proper role of the messenger is simply to facilitate the transfer of
information between purchasers of physician services and individual
physicians or physician group practices and not to coordinate or
otherwise influence the physicians decision-making process.\11\
\10\For example, it would be a violation of the proposed Final
Judgment if the messenger selected a fee for a particular procedure
from a range of fees previously authorized by the individual
physician, or if the messenger were to convey collective price
offers from physicians to purchasers or negotiate collective
agreements with purchasers on behalf of physicians. This would be so
even if individual physicians were given the opportunity to ``opt
out'' of any agreement. In each instance, it would really be the
messenger, not the individual physician, who would be making the
critical decision, and the purchaser would be faced with the
prospect of a collective response.
\11\For example, the messenger may convey to a physician
objective or empirical information about proposed contract terms,
convey to a purchaser any individual physician's acceptance or
rejection of a contract offer, canvass member physicians for the
rates at which each would be willing to contract even before a
purchaser's offer is made, and charge a reasonable, non-
discriminatory fee for messenger services, provided the messenger
otherwise acts consistently with the proposed Final Judgment.
---------------------------------------------------------------------------
If, on the other hand, Health Choice wants to negotiate on behalf
of competing physicians, it must restructure itself to meet the
requirements of a QMCP as set forth in the proposed Final Judgment. To
comply, (1) the owners of members of Health Choice (to the extent they
compete with other owners or members or compete with physicians on
Health Choice's provider panels) must share substantial financial risk,
and comprise no more than 30% of the physicians in any relevant market;
and (2) to the extent Health Choice has a provider panel that exceeds
30% of the physicians in any relevant market, there must be a
divergence of economic interest between the Health Choice owners and
the subcontracting physicians, such that the owners have the incentive
to bargain down the fees of the subcontracting physicians. (Section
II(I)(2).) As explained below, the requirements of a QMCP are necessary
to avoid the creation of a physician cartel while at the same time
allowing payors access to such panel.
The financial risk-sharing requirement of a QMCP ensures that the
physician owners in the venture share a clear economic incentive to
achieve substantial cost savings and provide better services at lower
prices to consumers. This requirement is applicable to all provider-
controlled organizations since without this requirement a network of
competing providers would have both the incentive and the ability to
increase prices for health care services.
The requirement that a QMCP not include more than 30% of the local
physicians in certain instances is designed to ensure that there are
available sufficient remaining physicians in the market with the
incentive to contract with competing managed care plans or to form
their own plans. This limitation is particularly critical in this case
in view of the defendants' prior conduct in forming negotiating groups
with up to 85% of the local physicians.
Many employers and payors in the St. Joseph area indicated that
they may want managed care products with all or many of the physicians
in St. Joseph on the provider panel. The QMCP's subcontracting
requirements are designed to let Health Choice (or any other QMCP)
offer a large physician panel, but with restrictions to avoid the risk
of competitive harm. To offer panels above 30%, Health Choice must
operate with the same incentives as a nonprovider-controlled plan.
Specifically, the owners of Health Choice must bear significant
financial risk for the payments to, and utilization practices of, the
panel physicians. These requirements prevent Health Choice from using
the subcontracts as a mechanism for increasing fees for physician
services.
Consequently, the proposed Final Judgment permits a QMCP to
subcontract with any number of physicians in a market provided three
important safeguards are met. Under Section II(I)(2) of the proposed
Final Judgment, the subcontracting physician panel may exceed the 30%
limitation only if (1) there is a sufficient divergence of economic
interest between those subcontracting physicians and the owners such
that the owners have the incentive to bargain down the fees of the
subcontracting physicians, (2) the organization does not directly pass
through to the payor substantial liability for making payments to the
subcontracting physicians, and (3) the organization does not compensate
those subcontracting physicians in a manner that substantially
replicates ownership.
Health Choice would meet the subcontracting requirements if, for
example, Health Choice were compensated on a capitated, per diem, or a
diagnostic related group basis and, in turn, reimbursed subcontracting
physicians pursuant to a fee schedule. In such a situation, an increase
in the fee schedule to subcontracting physicians during the term of the
Health Choice contract with the particular payor would not be directly
passed through to the payor and, instead, would be borne by Health
Choice itself. This would provide a substantial incentive for Health
Choice to bargain down its fees to the subcontracting physicians.
On the other hand, the subcontracting requirements would not be met
if a Health Choice contract with a payor were structured so that
significant changes in the payments by Health Choice to its physicians
directly affected payments from the payor to Health Choice, or if the
payor directly bears the risk for paying the panel physicians or pays
the panel physicians pursuant to a fee-for-service schedule. The
requirements would also not be satisfied if contracts between Health
Choice and the subcontracting physicians provided that payments to the
physicians depended on, or varied in response to, the terms and
conditions of Health Choice's contracts with payors.\12\ Any of these
scenarios would permit Health Choice to pass through to payors, rather
than bear, the risk that its provider panel will charge fees that are
too high or deliver services ineffectively.\13\
\12\Nothing in the proposed Final Judgment prohibits Health
Choice or any other QMCP from entering into arrangements that shift
risk to providers so long as those provisions are consistent with
the criteria for a QMCP set forth in Section II(I) of the Judgment.
\13\Similarly, Health Choice would fail the ownership
replication restriction of Section II(I) of the proposed Final
Judgment if, for example, the owners paid themselves a dividend and
then, through declaration of a bonus, paid the same or similar
amount to the subcontracting physicians. The same would be true if
the owners otherwise structured dividends, bonuses, and incentive
payments in such a way that ensures that subcontracting and owning
physicians receive equal overall compensation.
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2. Prohibition on Exclusivity
Sections IV(A), V(A), and VI(B) of the proposed Final Judgment
enjoin defendants from requiring physicians to deal exclusively with
their managed care plans or urging physicians not to contract with
other payors. Health choice is also required to inform both its
providers and payors with which it has or is negotiating contracts,
that each provider is free to contract separately with any managed care
plan on any terms. (Section VII(A) (1) and (2).) These provisions will
encourage the development of competing managed care plans in the St.
Joseph area by ensuring that physicians remain free to decide
individually whether, and on what terms, to participate in any managed
care plan.
3. Physician Acquisitions
Section VI(D) of the proposed Final Judgment enjoins Heartland from
acquiring additional family practice and general internal medicine
physician practices in Buchanan County without plaintiff's prior
written approval, and from acquiring any other active physician
practice in Buchanan County without 90 days' prior notification.\14\
[[Page 51817]]
These provisions will prevent Heartland from obtaining such physician
concentration that would permit it to raise prices for physician
services above competitive levels or otherwise thwart the ability of
competing managed care plans to enter and compete effectively in St.
Joseph.\15\
\14\By letter dated June 8, 1995, from Chief of Staff, Antitrust
Division, Lawrence R. Fullerton, to counsel for Heartland, Thomas P.
Watkins, Esq., plaintiff has indicated to Heartland that it does not
intend to challenge the acquisition of Internal Medicine Associates
of St. Joseph, a three-physician practice group providing general
internal medicine services in St. Joseph. (See Attachment.)
\15\The proposed Final Judgment permits Heartland to employ or
acquire other physician practices where the employment or
acquisition would not result in a substantial lessening of
competition in the St. Joseph area either because (1) the physician
derived only limited revenues from patients in Buchanan County, (2)
Heartland actively recruited the physician to the St. Joseph area,
or (3) the physician would exit the market but for Heartland's
employment or acquisition. (Section VIII (B), (C) and (d).)
---------------------------------------------------------------------------
4. Other Substantive Provisions
Sections IV(B), V(B), and VI(A) of the proposed Final Judgment
enjoin the disclosure to any physician of any financial or
competitively sensitive business information about any competing
physician or competitor of defendants. These provisions will ensure
that defendants do not exchange information that could lead to price
fixing or other anticompetitive harm.
Section VII(B)(3) provides plaintiff access to Heartland's
credentialing files to ensure that Heartland does not abuse its
credentialing authority by denying privileges to or otherwise
disciplining physicians who participate in a competing managed care
plan. Similarly, Section VII(B)(1) requires Heartland to abide by its
formal written referral policy regarding ancillary services to ensure
that Heartland will not abuse its control over inpatient hospital
services to reduce or eliminate competition among providers of
ancillary services in St. Joseph.
Section VI(E) enjoins Heartland from requiring managed care plans
to use other Heartland services such as its utilization review program
or managed care plan in order to obtain inpatient hospital services.
This Section will permit managed care plans to use their own physician
panels, utilization review, and fee schedule, thereby fostering the
development of truly competitive health care delivery systems in St.
Joseph.
Section VII(B)(2) requires Heartland to file annually with
plaintiff a report of the rates, terms, and conditions for inpatient
hospital services that Heartland provides any managed care plan or
hospice program. This will assist plaintiff in assessing whether
Heartland has abused its power in the inpatient hospital market.
Finally, Section XI(C) requires any defendant owning an interest in
a QMCP that includes any single physician practice group comprising
more than 30% of the physicians in any relevant market to notify
plaintiff if the practice group acquires additional physicians. This
will ensure that the United States knows of any such acquisition and
can evaluate its potential anticompetitive effects.
5. Conclusion
The Department of Justice believes that the proposed Final Judgment
contains adequate provisions to prevent further violations of the type
upon which the Complaint is based and to remedy the effects of the
alleged conspiracy. The proposed Final Judgment's injunctions will
restore the benefits of free and open competition in St. Joseph and
will provide consumers with a border selection of competitive health
care plans.
IV
Alternatives to the Proposed Final Judgment
The alternative to the proposed Final Judgment would be a full
trial on the merits of the case. In the view of the Department of
Justice, such a trial would involve substantial costs to both the
United States and defendants and is not warranted because the proposed
Final Judgment provides all of the relief necessary to remedy the
violations of the Sherman Act alleged in the Complaint.
V
Remedies Available to Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages suffered, as well as costs and a reasonable attorney's fee.
Entry of the proposed Final Judgment will neither impair nor assist in
the bringing of such actions. Under the provisions of Section 5(a) of
the Clayton Act, 15 U.S.C. 16(a), the proposed Final Judgment has no
prima facie effect in any subsequent lawsuits that may be brought
against one or more defendants in this matter.
VI
Procedures Available for Modification of the Proposed Final Judgment
As provided by Sections 2 (b) and (d) of the APPA, 15 U.S.C. 16 (b)
and (d), any person believing that the proposed Final Judgment should
be modified may submit written comments to Gail Kursh, Chief;
Professions & Intellectual Property Section/Health Care Task Force;
Department of Justice; Antitrust Division; 600 E Street, N.W.; Room
9300; Washington, D.C. 20530, within the 60-day period provided by the
Act. Comments received, and the Government's responses to them, will be
filed with the Court and published in the Federal Register. All
comments will be given due consideration by the Department of Justice,
which remains free, pursuant to Paragraph 2 of the Stipulation, to
withdraw its consent to the proposed Final judgment at any time before
its entry, if the Department should determine that some modification of
the Final Judgment is necessary for the public interest. Moreover, the
proposed Final Judgment provides in section XIV that the Court will
retain jurisdiction over this action, and that the parties may apply to
the Court for such orders as may be necessary or appropriate for the
modification, interpretation, or enforcement of the proposed Final
Judgment.
VII
Determinative Documents
No materials and documents of the type described in Section 2(b) of
the APPA, 15 U.S.C. 16(b), were considered in formulating the proposed
Final Judgment. Consequently, none are filed herewith.
Dated: September 13, 1995.
Respectfully submitted,
Edward D. Eliasberg, Jr.,
John B. Arnett, Sr.,
Dando B. Cellini,
Mark J. Botti,
Gregory S. Asciolla,
Attorneys, Antitrust Division, U.S. Dept. of Justice, 600 E Street,
N.W., Room 9420, Washington, D.C. 20530, (202) 307-0808.
[FR Doc. 95-24365 Filed 10-2-95; 8:45 am]
BILLING CODE 4410-01-M
