Federal Register / Vol. 65, No. 78 / Friday, April 21, 2000 / Notices 21441

concern over the relatively high price of

gasoline on the West Coast, but people

will be cruelly disappointed if they are

led to believe that the export restriction

would have a detectable effect on the

situation. Moreover, it is not the

Commission’s mandate to use merger

enforcement as a vehicle for imposing

its own notions of how competition may

be ‘‘improved.’’ Instead, Congress has

directed the Commission only to

prevent any harm to competition that is

likely to flow from a merger. We believe

that the planned divestitures already

accomplish that goal.

We acknowledge that the parties are

willing to sign an order with an export

restriction. We need not speculate about

whether they were induced to do so

because of a compelling need to strike

a deal promptly, or because they believe

the restriction in unnecessary or

unenforceable. Whatever the reason, in

light of the structural relief the proposed

order achieves, we see no need to bind

the parties to an unnecessary behavioral

provision.

For the reasons set forth above, we do

not believe that the export restriction

should be included in the proposed

order.

[FR Doc. 00–10008 Filed 4–20–00; 8:45 am]

BILLING CODE 6750–01–M

FEDERAL TRADE COMMISSION

[File No. 981 0124]

Texas Surgeons, P.A., et al.; Analysis

to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

SUMMARY: The consent agreement in this

matter settles alleged violations of

federal law prohibiting unfair or

deceptive acts or practices or unfair

methods of competition. The attached

Analysis to Aid Public Comment

describes both the allegations in the

draft complaint that accompanies the

consent agreement 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 May 15, 2000.

ADDRESSES: Comments should be

directed to: FTC/Office of the Secretary,

Room 159, 600 Pennsylvania Ave., NW.,

Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

Richard Feinstein or Alan Friedman,

FTC/S–3115, 600 Pennsylvania Ave.,

NW., Washington, DC 20580. (202) 326–

3688 or 326–2742.

SUPPLEMENTARY INFORMATION: Pursuant

to section 6(f) of the Federal Trade

Commission Act, 38 Stat. 721, 15 U.S.C.

46 and section 2.34 of the Commission’s

Rules of Practice (16 CFR 2.34), notice

is hereby given that the above-captioned

consent agreement containing a consent

order to cease and desist, having been

filed with and accepted, subject to final

approval, by the Commission, has been

placed on the public record for a period

of thirty (30) days. The following

Analysis to Aid Public Comment

describes the terms of the consent

agreement, and the allegations in the

complaint. An electronic copy of the

full text of the consent agreement

package can be obtained from the FTC

Home Page (for April 13, 2000), on the

World Wide Web, at ‘‘http://

www.ftc.gov/ftc/formal.htm.’’ A paper

copy can be obtained from the FTC

Public Reference Room, Room H–130,

600 Pennsylvania Avenue, NW.,

Washington, DC 20580, either in person

or by calling (202) 326–3627.

Public comment is invited. Comments

should be directed to: FTC/Office of the

Secretary, Room 159, 600 Pennsylvania

Ave., NW., Washington, DC 20580. Two

paper copies of each comment should

be filed, and should be accompanied, if

possible, by a 31⁄2 inch diskette

containing an electronic copy of the

comment. Such comment or views will

be considered by the Commission and

will be available for inspection and

copying at its principal office in

accordance with section 4.9(b)(6)(ii) of

the Commission’s Rules of Practice (16

CFR 4.9(b)(6)(ii)).

Analysis of Agreement Containing

Consent Order to Aid Public Comment

The Federal Trade Commission has

accepted, subject to final approval, an

agreement to a proposed consent order

by the Texas Surgeons, P.A. (‘‘Texas

Surgeons IPA’’) and six medical practice

groups comprised of Texas Surgeons

IPA members—Austin Surgeons,

P.L.L.C.; Austin Surgical Clinic

Association, P.A.; Bruce McDonald &

Associates, P.L.L.C.; Capital Surgeons

Group, P.L.L.C.; Central Texas Surgical

Associates, P.A.; and Surgical

Associates of Austin, P.A. The

agreement settles charges by the Federal

Trade Commission that the Texas

Surgeons IPA and the six medical

practice groups (the ‘‘respondents’’)

violated section 5 of the Federal Trade

Commission Act, 15 U.S.C. 45, by fixing

prices and other terms of dealing with

third-party payers; collectively refusing

to deal with third-party payers or

threatening to do so; and agreeing to

deal with third-party payers only on

collectively determined terms. The

proposed consent order has been placed

on the public record for thirty (30) days

for reception of comments by interested

persons. Comments received during this

period will become part of the public

record. After thirty (30) days, the

Commission will review the agreement

and the comments received, and will

decide whether it should withdraw from

the agreement or make it and the

proposed order final.

The purpose of this analysis is to

facilitate public comment on the

proposed order. The analysis is not

intended to constitute an official

interpretation of the agreement and

proposed order, or to modify in any way

their terms. Further, the proposed

consent order has been entered into for

settlement purposes only and does not

constitute an admission by any

respondent that the law has been

violated as alleged in the complaint.

The Complaint

Under the terms of the agreement, a

complaint will be issued by the

Commission along with the proposed

consent order. The allegations in the

Commission’s proposed complaint are

summarized below.

Respondent Texas Surgeons IPA is an

association of general surgeons who

practice in the Austin, Texas area.

Members of the Texas Surgeons IPA are,

and at all times relevant to the

complaint have been, the majority of

general surgeon private practitioners

serving the adult population in the

Austin area.

Nearly all of the members of the Texas

Surgeons IPA belong to one of six

general surgery practice groups, which

are also respondents in this matter. At

all times relevant to the complaint, the

Texas Surgeons IPA has been governed

by a board of directors composed of

representatives from each of the

respondent medical practice groups.

The Texas Surgeons IPA has served as

a vehicle for the six respondent medical

practice groups (and the few solo

practitioner members) to engage in

actual or threatened concerted refusals

to deal, and to negotiate collectively, in

order to obtain higher prices from Blue

Cross Blue Shield of Texas (‘‘Blue

Cross’’) and United HealthCare of Texas

(‘‘United’’). The six respondent medical

practice groups actively furthered the

unlawful conduct through their

collective control of the Texas Surgeons

IPA board of directors, and through

their direct participation in collective

fee negotiations between United and the

Texas Surgeons IPA.

In April 1997, Blue Cross changed its

reimbursement system from one based

on historical charges to one based on a

21442 Federal Register / Vol. 65, No. 78 / Friday, April 21, 2000 / Notices

Resource Based Relative Value Scale,

similar to the system used by the federal

government in its Medicare program.

The effect of this change was to increase

rates paid to primary care physicians,

and to reduce rates to all physician

specialists, including general surgeons.

Soon thereafter, respondents, through

the Texas Surgeons IPA, began

collectively negotiating higher rates.

Despite multiple attempts by Blue

Cross to negotiate individually with the

six respondent medical practice groups,

those groups insisted on negotiating

only through the Texas Surgeons IPA. In

September 1997, the Texas Surgeons

IPA sent Blue Cross a package of

identically worded contract termination

notices for each general surgeon

member of the Texas Surgeons IPA,

with a cover letter stating that the

termination notices were due to Blue

Cross’s ‘‘unacceptable’’ rate reductions.

In November 1997, the Texas Surgeons

IPA asked Blue Cross to waive its right

to bring a private antitrust action

regarding the Texas Surgeons IPA’s rate

negotiations with Blue Cross, but Blue

Cross refused to sign the waiver. In

December 1997, 26 members of the

Texas Surgeons IPA, dissatisfied with

Blue Cross’s payment offers, collectively

effected their resignations from Blue

Cross, and jointly announced that action

in a prominent advertisement in

Austin’s major daily newspaper.

In early 1998, Blue Cross experienced

difficulty in securing the services of a

general surgeon for an emergency room

patient. At about the same time, two

more general surgeons resigned from

Blue Cross. These two general surgeons

had been advised by one of the

respondent medical practice groups that

their inclusion in an arrangement with

that practice group regarding back-up

surgical coverage would end if they

continued to deal with Blue Cross.

After these events, Blue Cross

concluded that it needed to reach a rate

agreement with the respondents as soon

as possible to avoid inadequate general

surgery coverage for Blue Cross

subscribers in the Austin area. The

collective rate agreement between the

six respondent medical practice groups

and Blue Cross that resulted in early

1998 increased Blue Cross general

surgery rates nearly 30% above the

April 1997 levels.

Respondents began collective price

negotiations with United soon after it

announced fee reductions for general

surgeons and other physicians in

October 1997. The new fees went into

effect on January 1, 1998 for surgical

procedures not usually performed by

general surgeons, but comparable

proposed fee reductions for general

surgeons never went into effect. Instead,

respondents caused general surgery fees

for United’s various plans to increase at

least 12% to 40% above the fees that

United announced in October 1997.

In early November 1997, United

received a written notice from the Texas

Surgeons IPA that all of its members

would be terminating their contracts

with United effective January 1, 1998

due to the proposed fee reductions for

1998. The Texas Surgeons IPA indicated

its desire to collectively negotiate higher

fees and rejected United’s request to

negotiate with the six respondent

medical practice groups on an

individual basis. United explored the

possibility of creating a panel of general

surgeons that did not include general

surgeons from the six respondent

medical practice groups, but it

concluded that such a panel would not

provide adequate general surgery

coverage and that it had no realistic

alternative to beginning collective fee

negotiations with the Texas Surgeons

IPA.

Prior to the start of a collective fee

negotiation session in November 1997,

the Texas Surgeons IPA required United

to sign a waiver of its right to bring a

private antitrust action against the Texas

Surgeons IPA or its members stemming

from those fee negotiations. At that

collective fee negotiation session,

respondents demanded and received an

agreement from United to pay higher

fees in 1998 and 1999, as described

above. Representatives from the six

respondent medical practice groups

assembled together and collectively

participated in this collective fee

negotiation session through frequent

telephone and fax contact with the

Texas Surgeons IPA’s lead negotiator.

The Texas Surgeons IPA did not

engage in any activity that might justify

collective agreements on the prices they

would accept for their services.

Respondents’ actions have restrained

competition among general surgeons in

the Austin area and thereby have

harmed, or tended to harm, consumers

(including third-party payers,

subscribers, and their employers) by:

• Depriving consumers of the benefits

of competition;

• Increasing by over one million

dollars the amount that Blue Cross,

United, their individual subscribers,

and employers (including the State of

Texas Employees Retirement System

and other self-insured employers that

utilize Blue Cross or United physician

network) paid for the services of

surgeons during the period from January

1, 1998 to December 31, 1999;

• Fixing the payments or copayments that individual patients, their

employers, and third-party payers make

for the services of surgeons;

• Fixing the terms and conditions

upon which general surgeons would

deal with third-party payers; and

• Raising the prices that individuals

and employers pay for health plan

coverage offered by third-party payers.

The Proposed Consent Order

The proposed order is designed to

prevent recurrence of the illegal

concerted actions alleged in the

complaint, while allowing respondents

to engage in legitimate joint conduct.

The Commission notes that in 1999,

some time after the investigation of this

matter began, the State of Texas enacted

legislation that permits the State

Attorney General to approve, under

certain conditions, joint negotiations

between health plans and groups of

competing physicians. Texas Senate Bill

1468, 76th Leg., R.S. ch., 1586 (1999).

That conduct that gave rise to the

investigation and consent agreement

predated enactment of the law, and thus

was not approved under its terms.

Moreover, the conduct described in the

complaint would not necessarily have

met the conditions for approval set forth

in the Act.

Enactment of the statute does not

eliminate the need for an order in this

matter. The statute permits only

collective negotiations that are approved

by the Attorney General, imposes

conditions under which that approval

may be granted, and by its terms expires

on September 1, 2003. As is discussed

below, the Commission’s order does not

prohibit future conduct that is approved

and supervised by the State of Texas

pursuant to its statute and protected

from federal antitrust liability under the

state action doctrine. It is necessary and

appropriate, however, to provide a

remedy against future conduct by the

respondents that is not approved and

supervised by the State of Texas.

The core operative provisions of the

proposed order are contained in Section

II. Section II.A prohibits respondents

from entering into or facilitating any

agreement: (1) To negotiate physician

services on behalf of any physicians

with any payer or provider; (2) to deal,

refuse to deal, or threaten to refuse to

deal with any payer or provider; (3)

regarding any term on which any

physicians deal, or are willing to deal,

with any payer or provider; (4) to

restrict the ability, or facilitate the

refusal, of any physician to deal with

any payer or provider on an individual

basis or through any other arrangement;

or (5) to convey to any payer or

provider, through any Austin area

physician, any information concerning

Federal Register / Vol. 65, No. 78 / Friday, April 21, 2000 / Notices 21443

actual or potential dealings by any

physician with any payer or provider.

The fifth provision listed above

(section II.A.5 of the proposed order)

ensures that communications between

any respondent and any payer within a

‘‘messenger model’’ arrangement be

conveyed by a neutral third party

(someone other than a physician with

an active practice in the Austin area). In

a messenger model arrangement,

physicians individually convey and

receive, through a third party,

information, offers, and responses from

and to payers or providers. See

Statements of Antitrust Enforcement

Policy in Health Care. Issued jointly by

the Federal Trade Commission and the

U.S. Department of Justice (August 28,

1996) at 43–52, 89–92, 125–27, 138–40,

4 Trade Reg. Rep. (CCH) ¶ 13,153. In

addition, section V.A.2 of the order

ensures that any respondent intending

to use a messenger model arrangement

provide prior notification to the

Commission.

Section II.B prohibits respondents

from exchanging, transferring, or

facilitating the exchange or transfer of

information among Austin area

physicians concerning: (1) Negotiation

with any payer or provider regarding

reimbursement terms; or (2) actual or

contemplated intentions or decisions

with respect to any terms, dealings or

refusals to deal with any payer or

provider. Section II.C prohibits

respondents from encouraging, advising,

or pressuring any person, other than the

government, to engage in any action that

would be prohibited if the person were

subject to the order.

Section II contains three provisos. The

first permits each respondent medical

practice group to participate in

arrangements for the provision of

physician services that are limited to

physicians from the same medical

practice group. The second proviso, as

noted above, permits respondents to

engage in conduct that is approved and

supervised by the State of Texas, so long

as that conduct is protected from

liability under the federal antitrust laws

pursuant to the state action doctrine.

The state action doctrine protects from

federal antitrust liability any private

conduct that is both: (1) in accordance

with a clearly articulated and

affirmatively expressed state policy to

supplant competition; and (2) actively

supervised by the state itself. See, e.g.,

FTC v. Ticor Title Insurance Co., 504

U.S. 621 (1992); California Retail Liquor

Dealers Ass’n v. Midcal Aluminum, Inc.,

445 U.S. 97, 105 (1980).

The third proviso allows respondents

to engage in conduct (including

collectively determining reimbursement

and other terms of contracts with

payers) that is reasonably necessary to

operate any ‘‘qualified risk-sharing joint

arrangement’’ or ‘‘qualified clinicallyintegrated joint arrangement,’’ provided

respondents comply with the prior

notification requirements set forth in

section V of the order. The prior

notification mechanism will allow the

Commission to evaluate a specific

proposed arrangement and assess its

likely competitive impact. This

requirement will help guard against any

recurrence of acts and practices that

have restrained competition and injured

consumers.

As defined in the order, a ‘‘qualified

risk-sharing joint arrangement’’ must

satisfy three conditions. First, all

physicians participating in the

arrangement must share substantial

financial risk from their participation in

the arrangement. The definition

illustrates ways in which physicians

might share financial risk, tracking the

types of financial risk-sharing set forth

in the 1996 FTC/DOJ Statements of

Antitrust Enforcement Policy in Health

Care. Second, any agreement on prices

or terms of reimbursement entered into

by the arrangement must be reasonably

necessary to obtain significant

efficiencies through the joint

arrangement. Third, the arrangement

must be non-exclusive—i.e., it must not

restrict the ability, or facilitate the

refusal, of physicians participating in

the arrangement to deal with payers

individually or through any other

arrangement.

A ‘‘qualified clinically-integrated joint

arrangement’’ pertains to arrangements

in which the physicians undertake

cooperative activities to achieve

efficiencies in the delivery of clinical

services, without necessarily sharing

substantial financial risk. As with risksharing arrangements, the definition of

clinically integrated joint arrangements

reflects the analysis contained in the

1996 FTC/DOJ Statements of Antitrust

Enforcement Policy in Health Care.

According to the order’s definition, the

participating physicians must have a

high degree of interdependence and

cooperation through their use of

programs to evaluate and modify their

clinical practice patterns, in order to

control costs and assure the quality of

physician services provided through the

arrangement. In addition, as with risksharing arrangements, the arrangement

must be non-exclusive and any

agreement on prices or terms of

reimbursement entered into by the

arrangement must be reasonably

necessary to obtain significant

efficiencies through the joint

arrangement.

Sections III.A and III.B require

respondents to distribute the order and

complaint to its members and other

specified persons, including payers.

Sections III.C and III.D require that each

respondent, for the next five years: (2)

Distribute copies of the order and

complaint to new members and other

specified persons; (2) publish annually

to members and owners a copy of the

order and complaint; and (3) brief

members and owners annually on the

meaning and requirements of the order

and the antitrust laws.

Sections IV and VI consist of standard

Commission reporting and compliance

procedures. Section IV specifies that

Texas Surgeons IPA must include in its

annual reports information identifying

each payer or provider that has

communicated with Texas Surgeons IPA

concerning a possible contract for

physician services, the proposed terms

of any such contract, and Texas

Surgeons IPA’s response to the payer or

provider.

Finally, section VII of the proposed

order contains a twenty year ‘‘sunset’’

provision under which the order

terminates twenty years after the date

the order was issued.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 00–10009 Filed 4–20–00; 8:45 am]

BILLING CODE 6750–01–M

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Centers for Disease Control and

Prevention

[Program Announcement 00037]

Cancer Prevention and Control

Activities; Notice of Availability of

Funds

A. Purpose

The Centers for Disease Control and

Prevention (CDC) announces the

availability of fiscal year (FY) 2000

funds for a sole source cooperative

agreement program for Cancer

Prevention and Control Activities. This

program addresses the ‘‘Healthy People

2010’’ priority area(s) related to Cancer.

The purpose of the program is to

assist with the following:

1. Developing and disseminating

current national, state, and communitybased comprehensive information on

cancer prevention and early detection.

2. Developing and disseminating

professional education programs.

3. Promoting the analysis and

development of surveillance and